UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
COMMISSION FILE NUMBER: __________
CYPRESS INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 91-1959475
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(State of jurisdiction (I.R.S. Employer
of Incorporation) Identification No.)
5067 East 26th Drive, Bellingham, Washington 98226
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(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (360) 592-9013
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is sought to be registered
------------------- -------------------------------------
Common Shares; $0.0001 par value OTC Electronic Bulletin Board
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
TABLE OF CONTENTS
PART I...................................................................... 3
ITEM 1. DESCRIPTION OF BUSINESS....................................... 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..... 9
ITEM 3. DESCRIPTION OF PROPERTY....................................... 10
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT................................................ 10
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.. 11
ITEM 6. EXECUTIVE COMPENSATION........................................ 11
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................ 11
ITEM 8. DESCRIPTION OF SECURITIES..................................... 12
PART II..................................................................... 13
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON
EQUITY AND OTHER RELATED SHAREHOLDER MATTERS.................. 13
ITEM 2. LEGAL PROCEEDINGS............................................. 14
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS................. 14
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES....................... 14
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS..................... 14
PART F/S.................................................................... 16
ITEM 1. INDEX TO FINANCIAL STATEMENTS................................. 16
PART III.................................................................... 24
ITEM 1. INDEX TO EXHIBITS............................................. 24
SIGNATURES.................................................................. 24
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Cypress International, Inc. ("the Company") was incorporated in the State of
Delaware on November 18, 1998. The Company's activities to date have been to
develop its business plan and become actively engaged in the business of buying,
trading and leasing arcade model coin or token operated sports and entertainment
games for revenue in appropriate venues in the United States and Canada.
The Company's planned operating strategy is to create profit by buying, trading
and leasing arcade model and tabletop model sports and entertainment machines
and placing these sports and entertainment machines in various locations for
revenue. In addition, the Company emphasizes high levels of customer service to
create "playing conditions" targeted for persons over age ten. The Company
believes its current management team brings experience, industry relationships
and specific expertise that will enhance the ability of the Company to
successfully complete its proposed strategy of furnishing arcade model and
tabletop model sports and entertainment machines to customers for revenue. The
current management team is limited to one officer of the Company. The amount of
time that he plans to devote promoting the Company's business plan will be
limited to a part-time basis. In addition, the above mentioned officer currently
has obligations and employment that may take priority over that of the Company.
FORWARD LOOKING STATEMENTS
Certain information detailed within this registration statement is based on
forward-looking statements. Generally, the words; "anticipates," "believes,"
"expects," "intends," and similar expressions identify such forward-looking
statements. Forward-looking statements involve risks and uncertainties. The
Company's actual results could differ materially from the results discussed in
the forward-looking statements. Forward-looking statements are current only as
of the date of this registration statement.
All parties and individuals reviewing this registration statement and
considering the Company as an investment should be aware of the financial risks
involved with investing in a development stage company. When deciding whether to
invest or not, careful review of the risk factors detailed in Item 1 of this
document and consideration of forward-looking statements contained in this
registration statement should be adhered to.
The Company has a limited operating history and revenues and must be considered
in the early development stages of embarking upon a new venture. Prospective
investors should be aware of the difficulties encountered by such new
enterprises, as the Company faces all the risks inherent in any new business,
including: competition, the absence both of an operating history and
profitability and the need for additional working capital. The likelihood of the
success of the Company must be considered in light of the problems and expenses
that are frequently encountered in connection with the operation of a new
business and the competitive environment in which the Company will be operating.
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RISK FACTORS
The Company is in the development stage and the market it intends to compete
within is new and emerging. There are several competitors within the marketplace
that have significantly greater financial and management resources than that of
the Company. The following section describes some of the risk factors specific
to the Company. Individuals should carefully consider the following risk
factors, in addition to the other information presented in this registration
statement, when evaluating the Company's business plan. Any of the following
risks could seriously harm the business and/or prevent the furtherance of the
business.
RISK FACTORS RELATING TO CYPRESS INTERNATIONAL, INC.
A. LIMITED OPERATING HISTORY TO EVALUATE.
The Company was incorporated under the laws of the State of Delaware on November
18, 1998. The Company's activities to date have been to prepare the Company's
business strategy. The Company has commenced operations through the ownership of
one video arcade game, but has not generated positive revenue. The Company has a
limited operating history and revenues and must be considered entirely
promotional and in the early development stages of embarking upon a new venture.
Prospective investors should be aware of the difficulties encountered by such
new enterprises, as the Company faces all the risks inherent in any new
business, including: competition, the absence both of an operating history and
profitability and the need for additional working capital. The likelihood of the
success of the Company must be considered in light of the problems and expenses
that are frequently encountered in connection with the operation of a new
business and the competitive environment in which the Company will be operating.
B. NEED FOR ADDITIONAL WORKING CAPITAL - CONTINUATION OF GOING CONCERN NOT
ASSURED.
As of October 31, 2000, the Company had working capital of $1,511 and faces the
need for substantial additional working capital in the near future. If the
capital needs of the Company are greater than currently anticipated, the Company
will be required to seek other sources of financing. No assurance can be given
that the Company will sell any of the Shares or that other financing will be
available, if required; or if available, will be available on terms and
conditions satisfactory to management.
The Company has prepared audited financial statements as of October 31, 2000,
reporting that the Company is in the development stage and its ability to
establish itself as a going concern is dependent upon the Company obtaining
sufficient financing to continue its development activities. There is no
assurance that the Company will achieve profitable operations in the future. The
Company could be required to secure additional financing to implement further
development plans. There is no assurance that such financing will be available
to the Company, or if available, will be available on terms and conditions
satisfactory to management.
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C. THE PROGRESS AND OVERALL SUCCESS OF THE COMPANY IS SUBSTANCIALLY DEPENDENT
UPON THE ABILITIES OF THE CURRENT OFFICERS AND DIRECTORS OF THE COMPANY.
The Company's performance and operating results are substantially dependent on
the continued service and performance of its officer and director. The Company
intends to hire additional technical, sales and other personnel as they move
forward with their business model, though competition for such personnel is
intense. There can be no assurance that the Company can retain key technical
employees, or to attract or retain highly qualified technical and managerial
personnel in the future. The loss of the services of the Company's key employee
or the inability to attract and retain the necessary technical, sales, and other
personnel, would likely limit the chances for success and have a negative effect
upon the Company's business, financial condition, operating results and cash
flows. In addition, the concentrated ownership the sole officer and director has
over the Company, which will not be significantly affected and may have a
material adverse effect on future business progress. Furthermore, the current
officer and director is involved with other employment other than that of the
Company, which may take time from developing the business of the Company and
effect the overall success.
D. COMPETITION.
The amusement/entertainment game industries are highly competitive. There are a
great number of service operations and entertainment businesses that compete
directly and indirectly with the Company. Many of these entities are larger and
have significantly greater financial resources and a greater number of model
game units than does the Company. The Company may encounter increased
competition in the future, which may have an adverse effect on the profitability
of the Company. In addition, the legalization of casino gambling in geographic
areas near any entertainment complex that features the Company's games would
create the possibility for entertainment alternatives that could have a material
adverse effect on the Company's business.
E. LACK OF CASH DIVIDENDS.
The Company has not paid any cash dividends on its Common Shares to date and
there are no plans for paying cash dividends in the foreseeable future. Initial
earnings that the Company may realize, if any, will be retained to finance the
growth of the Company. Any future dividends, of which there can be no assurance,
will be directly dependent upon earnings of the Company, its financial
requirements and other factors.
F. PRODUCT LIABILITY.
The Company presently does not maintain any product liability insurance and will
not secure such insurance until the Company deems it necessary. Ultimately, such
coverage may be a requirement under certain agreements. As a result of the
Company's limited operations to date, no threatened or actual claims have been
made upon the Company for product liability.
G. PURCHASE OF INVENTORY; CAPITAL RESOURCE REQUIREMENTS.
The Company presently plans to purchase, trade or lease additional video arcade
games within the next 12 months. Acquiring inventory will depend upon a number
of factors, including the Company's ability to raise sufficient capital, locate
and obtain appropriate sites to place the video arcade games and providing
quality customer service to those locations.
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H. THE COMPANY'S FUTURE OPERATING RESULTS ARE SUBJECT TO FLUCTUATIONS.
The Company's potential operating results are expected to be unpredictable and
we expect them to fluctuate in the future due to a number of factors, many of
which are outside the Company's control. These factors include: (i) the ability
to significantly increase their customer base, (ii) the ability to maintain
gross margins, (iii) the ability to maintain customer satisfaction, (iv) costs
relating to the expansion of their operations and the introduction of new types
of services and (v) services offered by their competitors and the success of
their competitors;
I. THE COMPANY'S LIMITED HISTORY OF OPERATIONS AND EXPECTED OPERATING LOSSES
IN THE FORESEEABLE FUTURE.
The Company expects to incur operating losses for the foreseeable future and if
they ever have operating profits, they may not be able to sustain them. Expenses
will increase as they build an infrastructure to implement their business model.
For example, they expect to hire additional employees, expand information
technology systems and lease more space for their corporate offices. In
addition, the Company plans to significantly increase their operating expenses
to include: (i) purchasing video arcade games, (ii) seeking locations sites for
these arcade games and (iii) providing customer service to service location
sites of games.
Expenses may also increase, due to the potential effect of goodwill amortization
and other charges resulting from future partnerships and/or alliances, if any.
If any of these and other expenses are not accompanied by increased revenue, the
operating losses will be even greater than anticipated.
J. WE MAY INCUR LOSSES AS A RESULT OF ACCUMULATING INVENTORY.
In addition, the Company could incur losses as a result of accumulating video
arcade game machine and not having a site location in place.
K. DEPENDENCE ON DISCRETIONARY SPENDNG.
The Company's profits are dependent on discretionary spending by consumers,
particularly by consumers living in the communities in which the video arcade
games are located. A significant weakening in the national economy or any of the
local economies in which the Company operates may cause the Company's patrons to
curtail discretionary spending which, in turn, could materially affect the
profitability of the Company.
L. TRADITIONAL VIDEO ARCADE BUSINESS IS HIGHLY COMPETITIVE.
The traditional video arcade business is also highly competitive. The Company
will compete directly with other companies that specialize in the video arcade
business and have an industry reputation in the industry. These companies have
greater name recognition and have greater financial and marketing resources than
the Company. In addition, the legalization of casinos created the possibility
for entertainment alternatives that could have a material adverse effect on the
Company's business.
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M. GROWTH AND ACQUISITION MAY STRAIN THE MANAGEMENT, OPERATIONAL AND FINANCIAL
RESOURCES.
There can be no assurances that the proposed business model will be adequate to
support any future operations. In addition, there is a risk that the Company may
not be able to expand their video arcade operations to allow for additional
capacity at the same rate as market demand may be created.
If appropriate opportunities present themselves, the Company intends to seek out
business opportunities to expand their video arcade business. The process of
integrating and acquiring any business or video arcade game(s), may result in
operating difficulties and expenditures which cannot be anticipated and may
absorb significant management attention that would otherwise be available for
further development of their existing business. Moreover, the anticipated
benefits of any acquisition may not be realized. Any future acquisitions of
other businesses, technologies, services or products might require the Company
to obtain additional equity or debt financing, which might not be available to
the Company on favorable terms or at all and might dilute current shareholders.
Additionally, the Company may not be able to successfully identify, negotiate or
finance future acquisitions or to integrate acquisitions with the current
proposed business.
N. SHARES SUBJECT TO RULE 144.
On October 31, 2000, the Company had 5,000,000 Common Shares issued and
outstanding that have not been registered with the Commission or any State
securities agency and which are currently restricted pursuant to Rule 144
promulgated by the Commission under the 1933 Act. Rule 144 provides, in essence,
that a person holding restricted securities for one year from the date the
securities were purchased from the issuer, or an affiliate of the issuer, and
fully paid, may sell limited quantities of the securities to the public without
registration, provided there shall be certain public information with respect to
the issuer. Pursuant to Rule 144, securities held by non-affiliates for more
than two years may generally be sold without reference to the current public
information or broker transaction requirements, or the volume limitations. None
of the current outstanding restricted shares are available for resale pursuant
to Rule 144.
The sale of some or all of the currently restricted Common Shares could have a
material negative impact upon the market price of the Common Shares, if a market
for the Common Shares should develop in the future.
O. OTHER NON PUBLIC SALES OF SECURITIES.
As part of the Company's plan to raise additional working capital, the Company
may make a limited number of offers and sales of its Common Shares to qualified
investors in transactions that are exempt from registration under the 1933 Act.
There can be no assurance the Company will not make other offers of its
securities at different prices, when, in the Company's discretion, such prices
are deemed by the Company to be reasonable under the circumstances.
P. NO ASSURANCE OF LIQUIDITY.
There is currently no public market for the Common Shares or any other
securities of the Company and there can be no assurance that a trading market
will develop in the future.
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BUSINESS STRATEGY
The Company's planned operating strategy is to create profit by buying, trading
and leasing arcade model and tabletop model sports and entertainment machines
and placing these sports and entertainment machines in various locations for
revenue. In addition, the Company emphasizes high levels of customer service to
create "playing conditions" targeted for persons over age ten. The Company
believes its current management team brings experience, industry relationships
and specific expertise that will enhance the ability of the Company to
successfully complete its proposed strategy of furnishing arcade model and
tabletop model sports and entertainment machines to customers for revenue. The
current management team is limited to one officer of the Company and the amount
of time that he plans to devote promoting the Company's business plan will be
limited to a part-time basis. In addition, the above mentioned officer currently
has obligations and employment that may take priority over that of the Company.
The Company is unaware of the need for governmental approval for its proposed
business plan. The Company is not currently subject to direct federal, state or
local regulation and laws or regulations applicable to video games, other than
regulations applicable to businesses generally.
The Company is currently not aware of any federal, state or local laws and
regulations regulating the video arcade game market at this time that would
materially affect its business activities. In addition, the Company is unaware
of any environmental laws that would have an effect on its operations.
The Company has spent no money over the past two years on research and
development.
THE COMPANY'S PRODUCTS
Currently, the Company owns one video arcade game machine located at Family Fun
Center, Mission, British Columbia.
The Company does not rely on raw materials for conducting its business.
COMPETITION
The amusement/entertainment game industries are highly competitive. There are a
great number of service operations and entertainment businesses that compete
directly and indirectly with the Company. Many of these entities are larger and
have significantly greater financial resources and a greater number of model
game units than does the Company. The Company may encounter increased
competition in the future, which may have an adverse effect on the profitability
of the Company. In addition, the legalization of casino gambling in geographic
areas near any entertainment complex that features the Company's games would
create the possibility for entertainment alternatives that could have a material
adverse effect on the Company's business.
Initially, the Company will be dependent on one or a few major customers on its
game machines, but will rely on the broad-based vending market for developing
customers over time.
The Company currently has no patents, trademarks, licenses, franchise, royalty
agreements, or labor contracts in place.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following Management's Discussion and Analysis of Operations contains
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those anticipated in these
forward-looking statements, as a result of certain factors, including those set
forth under "Risk Factors" and elsewhere in this registration statement. The
following should be read in conjunction with the audited Consolidated Financial
Statements included within this registration statement.
PLAN OF OPERATION
The Business Plan for the Company over the next twelve months is to become a
full-service provider of sports and entertainment machines placed in strategic
locations for play. The Company initially plans to seek income from the play of
its sports and entertainment machines by placing these machines in strategic
locations and providing customer service for its inventory.
ANALYSIS OF FINANCIAL CONDITION
The Company has not yet generated positive cash from operating activities. The
Company does not expect to generate positive cash from operations for the year
ending December 31, 2000. From November 18, 1998 to October 31, 2000, the
Company has a net loss of $12,012. The losses were a result of organization and
other start-up related costs. As of October 31, 2000 the Company has $1,511 in
cash.
The Company does not foresee a material increase in operating expenses until
such time that sufficient capital can be raised and the Company proceeds with
its business plan. Management believes that the Company must be successful in
raising equity or debt financing sufficient to meet its current working capital
requirements and to support the expenses associated with developing the
Company's plans to locate and open future locations for video arcade game
machines.
Management's immediate plan is to focus its efforts on raising capital and
contacting potential companies for site location of video arcade game machines.
Management hopes to raise sufficient capital within the next twelve months to
initiate operations that include expanding the Company's officers and directors
make up. The sole director, officer and majority shareholder may have other
obligations and plans to initially devote minimal time to promoting the
company's strategic business plan. If other obligations take priority for the
officer and director over that of the Company's, it could have a material
adverse impact on the progress of the Company. In addition, there has been and
are no plans for compensation to be paid to the officer and director until
sufficient revenue flow can be generated.
Currently management has not determined the dollar amount required to adequately
initiate its operation and has not determined a minimum or maximum amount it
plans to raise. The Company may encounter business initiatives that require
significant cash commitments or unanticipated problems or expenses that could
result in a requirement for additional cash before that time. If the Company
raises additional funds through the issuance of equity or convertible debt
securities, the percentage ownership of its shareholders would be reduced and
such securities might have rights, preferences or privileges senior to its
common stock. Additional financing may not be available upon acceptable terms,
or at all.
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If adequate funds are not available or are not available on acceptable terms,
the Company's ability to fund its expansion, take advantage of business
opportunities, develop, or enhance its business plan or otherwise respond to
competitive pressures would be significantly limited and it may significantly
restrict the Company's operations.
ITEM 3. DESCRIPTION OF PROPERTY
The Company owns no real property. The Company is provided sufficient space to
do its present business by a director of the Company. Going forward, the Company
plans to use the offices of the director, at no cost to the Company. Both
parties have agreed to continue this arrangement until the Company begins
operations and/or generates revenue.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At October 31, 2000, the Company had 5,136,000 Common Shares issued and
outstanding. The following tabulates the holdings of Common Shares of the
Company by each person who holds of record or is known by management of the
Company to own beneficially more than 5% of the Common Shares and, in addition,
by all directors and officers of the Company, individually and as a group:
NUMBER OF PERCENT
NAME AND ADDRESS SHARES OF CLASS
---------------- ------ --------
Mr. Robert Card 5,000,000 97.35%
744 West Hastings Street
Suite 317
Vancouver
British Columbia
Canada
ALL OFFICERS/DIRECTORS AS A GROUP (ONE) 5,000,000 97.35%
CHANGES IN CONTROL
The Company is not aware of any arrangement, including the pledge by any person
of securities of the Company, which may at a subsequent date result in a change
in control of the Company.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the names and ages of the members of the
Company's Board of Directors, executive officers and the position with the
Company held by each:
NAME AGE POSITION
---- --- --------
Robert Card 63 Chairman of the Board, Chief Executive Officer,
President and Secretary
Each director is elected to hold office until the next annual meeting of
shareholders and until his successor has been elected and qualified. Officers
are elected annually by the Board of Directors and hold office until successors
are duly elected and qualified. The following is a brief account of business
experience of each director and executive officer of the Company.
ROBERT CARD. Mr. Card has been the Chairman of the Board, Chief Executive
Officer, President and Secretary of the Company since it was founded on November
18, 1998. Mr. Card has been a Financial Consultant to Sumac Investments Ltd.
from 1992 to present. During the period from June 1980 through 1991, Mr. Card
was a Financial Consultant for Aries Management Ltd., Vancouver, B.C. Mr. Card
was an Auditor with the Revenue Department of Canada from 1975 through June
1980. Mr. Card received his Bachelor of Arts in Economics and Commerce from
Simon Fraser University, Burnaby, British Columbia. Mr. Card has served on the
board of directors and as an officer of numerous junior and start-up companies
on the Vancouver Stock Exchange/CDNX since 1980.
ITEM 6. EXECUTIVE COMPENSATION
The Officer of the Company has received no compensation, including no bonus or
incentive plans - stock, cash, or otherwise. The Company plans to begin
compensating the officer only at such time the Company is generating sufficient
revenues. Presently, the Company has not established any dates or other
requirements for the officer to begin receiving compensation. If, and when, the
time is deemed appropriate for the officer to receive compensation, the matter
will be brought before the Board of Directors to vote.
COMPENSATION OF DIRECTORS
During the most recently completed financial year ended September 30, 2000,
there was no compensation paid, by the Company to its director, for services as
a director. There is no standard arrangements for any such compensation to be
paid other than reimbursement for expenses incurred in connection with their
services as director, although the Company from time to time may grant options
to acquire Common Shares for directors. As at the date hereof the Company has no
outstanding options to the Director that has been granted for his service.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On November 18, 1998, the Company issued 5,000,000 Common Shares, par value
$0.0002 per share, to Robert Card, Chairman of the Board, Chief Executive
Officer, President and Secretary of the Company, in consideration for $1,000.00.
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ITEM 8. DESCRIPTION OF SECURITIES
CURRENT CAPITAL STRUCTURE
As of October 31, 2000, the Company had 80,000,000 Shares of Common Stock, with
a par value of $0.0001 per share, authorized, with 5,136,000 Shares issued and
outstanding. As of October 31, 2000, the Company had 20,000,000 Shares of
Preferred Stock, with a par value of $0.0001, authorized. The Company does not
have any issued and outstanding shares of Preferred Stock.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by the shareholders. There is no cumulative
voting with respect to the election of directors with the result that the
holders of more than 50 percent of the Shares voted for the election of
directors can elect all of the directors. The holders of Common Stock are
entitled to receive dividends when, as and if declared by the board of directors
out of funds legally available there for. In the event of liquidation,
dissolution, or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining available for distribution to
them after payment of liabilities and after provision has been made for each
class of stock, if any, having preference over the Common Stock. All of the
outstanding Shares of Common Stock are and the Shares of Common Stock Offered
hereby, when issued for the consideration set forth in offering documents, will
be fully paid and non-assessable.
PREFERRED STOCK
The Company does not have any issued and outstanding shares of Preferred Stock.
OPTIONS AND WARRANTS
The Company has no outstanding options or warrants to purchase Common Stock.
DEBT SECURITIES
The Company has no debt securities.
DIVIDEND POLICY
Holders of Common Shares are entitled to dividends at the discretion of the
Board of Directors and payment thereof will depend upon, among other things, the
Company's earnings, its capital requirements and its overall financial
condition. The Company has not paid any cash dividends on its Common Shares
since inception and intends to follow a policy of retaining any earnings to
finance the development and growth of its business. Accordingly, it does not
anticipate the payment of cash dividends in the foreseeable future.
MARKET FOR COMMON SHARES
There is currently no public market for the Common Shares of the Company and
there can be no assurance that a trading market will develop in the future.
Further, the outstanding Common Shares are restricted securities, as that term
is defined in Rule 144 under the 1933 Act and cannot be resold without
registration under the 1933 Act or an exemption from registration.
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PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND OTHER
RELATED SHAREHOLDER MATTERS
MARKET PRICE
There is no trading market for the Company's Common Stock at the present time
and there has been no trading market to date. There is no assurance that a
trading market will ever develop or, if such a market does develop, that it will
continue.
If and when the Company's securities are traded, the securities may likely be
deemed a "penny stock". The Securities and Exchange Commission had adopted Rule
15g-9 which establishes the definition of a "penny stock," for purposes relevant
to the Company, as any equity security that has a market price of less than
$5.00 per share or with an exercise price of less than $5.00 per share, subject
to certain exceptions. For any transaction involving a penny stock, unless
exempt, the rules require: (i) that a broker or dealer approve a person's
account for transactions in penny stocks and (ii) the broker or dealer receive
from the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be purchased. In order to approve a
person's account for transactions in penny stocks, the broker or dealer must:
(i) obtain financial information and investment experience and objectives of the
person and (ii) make a reasonable determination that the transactions in penny
stocks are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stocks in both public offerings and
in secondary trading and about commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. The Company plans to have its securities traded
in the over-the-counter ("OTC") market. The OTC market differs from national and
regional stock exchanges in that it (1) is not cited in a single location but
operates through communication of bids, offers and confirmations between
broker-dealers and (2) securities admitted to quotation are offered by one or
more broker-dealers rather than the "specialist" common to stock exchanges. The
Company may apply for listing on the NASD OTC Bulletin Board or may offer its
securities in what are commonly referred to as the "pink sheets" of the National
Quotation Bureau. No assurance can be given by the Company that any of the above
events will occur.
DIVIDENDS
The Company has not paid any dividends to date and has no plans to do so in the
immediate future.
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ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings. None of the Company's
property is subject to any material pending or threatened legal proceeding.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On November 18, 1998, the Company was incorporated under the laws of the State
of Delaware.
The date, title and amount of unregistered securities sold/issued by Cypress
International, Inc. are as follows:
Date: February 19, 1999 to March 31, 1999
Number of Shares: 136,000
Total Offering Price: $0.10 per share
Total Proceeds: $13,600.00
Principal Underwriter: None
Total Commissions: None
Net Proceeds: $13,600.00
Commissions Paid: None
Purchasers: 48 non-affiliated private investors.
Exemption From Registration: The statutory exemption, which the Company
relied on was Regulation D, Rule 504 of the
United States Securities Act of 1933, as amended.
On November 18, 1998, the Company issued 5,000,000 shares to Robert Card in
exchange for cash consideration of $1,000.00. The Company did not pay any
commission for this transaction. In addition, the Company did not utilize the
services of an underwriter to complete this transaction. The stock was issued in
reliance on an exemption from registration from non public offerings contained
in section 4(2) of the United States Securities Act of 1933, as amended.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
DELAWARE STATUTES
Section 145 of the General Corporation Law of the State of Delaware provides
that a Delaware corporation has the power, under specified circumstances, to
indemnify its directors, officers, employees and agents, against expenses
incurred in any action, suit, or proceeding. There are no specific provisions in
either of the articles or the bylaws.
14
<PAGE>
In general, these provisions provide for indemnification in instances when such
persons acted in good faith and in a manner they reasonably believed to be in or
not opposed to, the best interests of the Company.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING
THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE
SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC
POLICY, AS EXPRESSED IN THE 1933 ACT AND IS, THEREFORE, UNENFORCEABLE.
15
<PAGE>
PART F/S
ITEM 1. INDEX TO FINANCIAL STATEMENTS
The following audited financial statements of the company were prepared by Barry
L. Friedman, P.C., 1582 Tulita Drive, Las Vegas, Nevada 89123. The statements
include an Accountant's Audit Report, Balance Sheet as of October 31, 2000 and
1999, Statement of Operations for the year ended October 31, 2000, and for the
period November 18, 1998 (inception) to October 31, 2000 and 1999, Statement of
Stockholders' Equity for the period November 18, 1998 (inception) to October 31,
2000, Statement of Cash Flows for the year ended October 31, 2000, and for the
period from November 18, 1998 (inception) to October 31, 2000 and 1999, as well
as Notes to the Financial statements.
INDEX TO FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT....................................... 17
BALANCE SHEET...................................................... 18
STATEMENT OF OPERATIONS............................................ 19
STATEMENT OF STOCKHOLDERS' EQUITY.................................. 20
STATEMENT OF CASH FLOW............................................. 21
NOTES TO FINANCIAL STATEMENTS...................................... 22
16
<PAGE>
Barry L. Friedman, P.C.
Certified Public Accountant
1582 Tulita Drive Tel: (702) 361-8414
Las Vegas, NV 89123 Fax: (702) 896-0278
Board of Directors December 13, 2000
Cypress International Inc.
Ferndale, Washington
I have audited the balance sheet of Cypress International Inc., (A Development
Stage Company), as of October 31, 2000 and October 31, 1999 and the related
Statements of Operations, Stockholders' Equity and Cash Flows for the year ended
October 31, 2000 and the period November 18, 1998, inception, to October 31,
1999. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I have conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position Cypress International, Inc., (A
Development Stage Company), as of October 31, 2000, and October 31, 1999, and
the results of its operations and cash flows for the year ende October 31, 2000
and the period November 18, 1998, inception, to October 31, 1999, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note #3 to the financial
statements, the Company has no material operations and has no established source
of revenue. This raises substantial doubt about its ability to continue as a
going concern. Management's plan in regard to these matters are also described
in Note #3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Barry L. Friedman
CERTIFIED PUBLIC ACCOUNTANT
17
<PAGE>
CYPRESS INTERNATIONAL LTD.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
October 31, October 31,
2000 1999
-------- --------
ASSETS
CURRENT ASSETS
Cash $ 925 $ 3,758
Accounts Receivable 586 66
-------- --------
TOTAL CURRENT ASSETS $ 1,511 $ 3,824
OTHER ASSETS:
Prepaid Game Machine/
Location Licenses (Net) $ 2,667 $ 4,667
Organization Costs (Net) 0 318
-------- --------
TOTAL OTHER ASSETS $ 2,667 $ 4,985
-------- --------
TOTAL ASSETS $ 4,178 $ 8,809
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 1,590 $ 0
-------- --------
TOTAL CURRENT LIABILITIES $ 1,590 $ 0
-------- --------
STOCKHOLDERS' EQUITY
Preferred Stock, $0.0001 par value, authorized
20,000,000 shares issued and outstanding at
October 31, 2000 - None $ 0
Common Stock, $0.0001 par value, authorized
80,000,000 shares issued and outstanding
December 31, 1999 - 5,136,000 shares $ 514
September 30, 2000 - 5,136,000 shares 514
Additional paid-in capital 14,086 14,086
Deficit accumulated during the development stage (12,012) (5,791)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 2,588 $ 8,809
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,178 $ 8,809
======== ========
The accompanying notes are an integral part of these financial statements
18
<PAGE>
CYPRESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
November 18, 1998 (inception) to
Year Ended -------------------------------------
October 31, 2000 October 31, 2000 October 31, 1999
---------------- ---------------- ----------------
<S> <C> <C> <C>
INCOME
Revenue $ 1,135 $ 1,480 $ 345
----------- ----------- -----------
EXPENSES
Accounting $ 1,000 $ 1,800 $ 800
Amortization-Organization cost 318 389 71
Bank charges 15 30 15
Commission 269 444 175
Filing fees 60 130 70
Legal expense 0 1,000 1,000
Location license expense 2,000 3,333 1,333
Office expense 3,348 4,916 1,568
Service fees 346 450 104
Transfer fees 0 1,000 1,000
----------- ----------- -----------
TOTAL EXPENSES $ 7,356 $ 13,492 $ 6,136
----------- ----------- -----------
NET LOSS $ (6,221) $ (12,012) $ (5,791)
=========== =========== ===========
Net Loss Per Share-Basic and Diluted $ (.0012) $ (.0023) $ (.0011)
=========== =========== ===========
Weighted average number of common
shares outstanding 5,136,000 5,110,667 5,084,000
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
19
<PAGE>
CYPRESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Common Stock Additional During
--------------------- Paid-In Development
Shares Amount Capital Stage
------ ------ ------- -----
November 18, 1998
Issued for cash 5,000,000 $ 500 $ 500 0
March 31, 1999
Issued from Sale of
private placement
(Note 1) 136,000 14 13,586 0
Net loss, November 18, 1998
(inception) to October 31, 1999 $ (5,791)
--------- ------ --------- ---------
Balance October 31, 1999 5,136,000 $ 514 $ 14,086 $ (5,791)
Net loss year ended
October 31, 2000 00 00 00 $ (6,221)
--------- ------ --------- ---------
BALANCE October 31, 2000 5,136,000 $ 514 $ 14,086 $ (12,012)
========= ====== ========= =========
The accompanying notes are an integral part of these financial statements
20
<PAGE>
CYPRESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
November 18, 1998 (inception) to
Year Ended -------------------------------------
October 31, 2000 October 31, 2000 October 31, 1999
---------------- ---------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (6,221) $(12,012) $ (5,791)
Amortization 318 389 71
CHANGES IN ASSETS AND LIABILITIES
Organizational costs 0 (389) (389)
Prepaid Game Machine/
Location Licenses 0 (6,000) (6,000)
Prepaid Game Machine/
Location License Expense 2,000 3,333 1,333
Accounts Receivable (520) (586) (66)
Accounts Payable 1,590 1,590 0
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES $ (2,833) $(13,675) $(10,842)
CASH FLOWS FROM INVESTING ACTIVITIES 0 0 0
NET CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Stock for Cash 0 $ 14,600 $ 14,600
-------- -------- --------
Net Increase in Cash $ (2,833) $ 925 $ 3,758
Cash, Beginning of Period 3,758 0 0
-------- -------- --------
CASH, END OF PERIOD $ 925 $ 925 $ 3,758
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements
21
<PAGE>
CYPRESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2000 and October 31, 1999
NOTE 1 - HISTORY AND ORGANIZAITON OF THE COMPANY
The Company was organized November 18, 1998, under the laws of the State of
Delaware, as Cypress International Inc. The Company is in the business of
placing popular coin-operated sports amusement and entertainment arcade games in
appropriate venues in the United States and Canada. The Company has no
operations and in accordance with SFAS #7, the Company is considered a
development stage company.
On November 18, 1998, the Company issued 5,000,000 shares of its $0.0001
par value common stock for cash of $1,000.00.
On March 31, 1999, the Company completed a public offering that was offered
without registration under the Securities Act of 1933, as amended (the "Act"),
in reliance upon the exemption from registration afforded by sections 4(2) and
3(b) of the Securities Act and Regulation D promulgated there under. The Company
sold 136,000 shares of commons stock at a price of $0.10 per share for a total
amount raised of $13,600.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except as
follows:
1. The Company uses the accrual method of accounting.
2. In April, 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5 ("SOP 98-5"), Reporting on the Costs
of Start--Up Activities which provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs
of start-up activities and organization costs to be expensed as
incurred. SOP 98-5 is effective for fiscal years beginning after
December 15, 1998, with initial adoption reported as the cumulative
effect of a change in accounting principle.
3. Basic earnings or loss per share ("EPS") is calculated by dividing the
income or loss available to common shareholders by the weighted
average number of shares of common stock outstanding for the period.
Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or
converted into common stock.
4. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
5. The Company has adopted a fiscal year end of October 31.
22
<PAGE>
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using the 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 has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional equity
capital through sale of its securities through private placements.
NOTE 4 - RELATED PARTY TRANSACITON
The Company neither owns or leases any real or personal property. Office
services are provided without charge, by a director. Such costs are immaterial
to the financial statements and, accordingly, have not been reflected therein.
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
NOTE 5 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
shares of common or preferred stock.
NOTE 6 - PREPAID GAME MACHINE/LOCAITON LICENSES
The Company purchased one video arcade game machine/location license at the
Royal Canadian Legion #2 in New Westminster, British Columbia for $6,000.00. The
location was relocated to TJ Family Fun Center in Mission, British Columbia.
NOTE 7 - CURRENCY TRANSACTIONS
All transactions are expressed in US Dollars.
23
<PAGE>
PART III
INDEX TO EXHIBITS
EXHIBIT 3(i) -- CERTIFICATE OF INCORPORATION
EXHIBIT 3(ii) -- BY LAWS
EXHIBIT 23 -- CONSENT OF BARRY L. FREIDMAN, P.C.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Company has duly caused this Registration statement to be singed on
its behalf by the undersigned, thereunto duly authorized.
CYPRESS INTERNATIONAL, INC.
Date: January 9, 2001 By /s/ Robert Card
-------------------------------
Robert Card
President and Director
24
