<TABLE>
<CAPTION>
File No. 333-
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<S> <C> <C>
As filed with the Securities & Exchange Commission on ___________ ,2000
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CONSUMER MARKETING CORPORATION
(Name of small business issuer in its charter)
Nevada 6770 98-0204737
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Identification No.) Classification Code No.)
Suite 104, 1456 St. Paul St., Kelowna,
British Columbia, Canada V1Y 2E6
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(Address of principal place of business or intended principal place of business)
Devinder Randhawa
Consumer Marketing Corporation
Suite 104, 1456 St. Paul St., Kelowna,
British Columbia, Canada V1Y 2E6
(250) 868-8177 tel.
(Name, address and telephone number of agent for service)
-------------------------
Copies to:
Antoine M. Devine, Esq.
Evers & Hendrickson LLP
155 Montgomery Street, Suite 1200
San Francisco, CA 94104
(415) 772-8109
Approximate date of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
</TABLE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
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Title of each Amount to be Proposed maximum Proposed maximum Amount of
class of registered offering price per unit ( 1) aggregate offering price registration
securities to be fee
registered
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<S> <C> <C> <C> <C>
Common Stock, 500,000 $.20 $100,000 $7.00
par value
$0.0001
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<FN>
(1) Estimated solely for the purpose of calculating the registration fee and pursuant to Rule 457.
</FN>
</TABLE>
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PART I - INFORMATION REQUIRED IN PROSPECTUS
<TABLE>
Cross Reference Sheet Showing the Location in Prospectus of Information Required
by Items of Form SB-2
<CAPTION>
Item No. Required Item Location of Caption in Prospectus
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<S> <C> <C>
1. Forepart of the Registration Cover Page; Outside
Statement and Outside Front Front Page of
Cover of Prospectus Prospectus
2. Inside Front and Outside Back Inside Front and
Cover Pages of Prospectus Outside Back Cover
Pages of Prospectus
3. Summary Information and Prospectus Summary;
Risk Factors Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Prospectus Summary -
Price Determination of Offering Price;
Risk Factors; Plan of Distribution
6. Dilution Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Plan of Distribution
9. Legal Proceedings Legal Proceedings
10. Director, Executive Officer, Management
Management and Promoters
and Control Persons
11. Security Ownership of Certain Principal Shareholders
Beneficial Owners and
Management
12. Description of Securities Description of Securities
13. Interest of Named Experts Not Applicable
and Counsel
14. Disclosure of Commission Indemnification of Officers and Directors
Position on Indemnification
for Securities Act Liabilities
15. Organization within Last Five Management, Certain Transactions
Years
16. Description of Business Business
ii
<PAGE>
17. Management's Discussion and Plan of Operation
Analysis or Plan of Operation
18. Description of Property Description of Property
19. Certain Relationships and Certain Transactions
Related Transactions
20. Market for Common Equity and Prospectus Summary, Market for Our
Related Stockholder Matters Common Stock; Shares
Eligible for Future Sale
21. Executive Compensation Executive Compensation
22. Financial Statements Financial Statements
23. Changes in and Disagreements Changes in and Disagreements
with Accountants on Accounting with Accountants on Accounting
and Financial Disclosure and Financial Disclosure
PART II
24. Indemnification of Directors Indemnification of
and Officers Directors and Officers
25. Other Expenses of Issuance and Other Expenses of
Distribution Issuance and Distribution
26. Recent Sales of Unregistered Recent Sales of Unregistered
Securities Securities
27. Exhibits Exhibits
o Undertakings Undertakings
</TABLE>
iii
<PAGE>
Subject To Completion, Dated , 2000
PUBLIC OFFERING
PROSPECTUS
CONSUMER MARKETING CORPORATION
500,000 SHARES OF COMMON STOCK
$.20 PER SHARE
Consumer Marketing Corporation is a startup company organized in the
State of Nevada to as a "blank check" company, whose sole purpose at this time
is to locate and consummate a merger or acquisition with a private entity.
The 500,000 shares of common stock offered by this Prospectus are being
sold by the Selling Shareholders See "Selling Shareholders." The Company will
not receive any of the proceeds from the sale of shares by the Selling
Shareholders. We will not pay commissions on stock sales.
No public market currently exists for our shares. The offering price
may not reflect the market price of our shares after the offering.
-------------------
This investment involves a high degree of Risk. You should purchase shares only
if you can afford a complete loss. See "Risk Factors" beginning on page 7.
- ---------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense
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<TABLE>
<CAPTION>
Offering Information
Per share Total
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<S> <C> <C>
Public offering price $.20 $100,000.00
Underwriting discounts/commissions (1) $.00 $.00
Estimated offering expenses(1) $.00 $.00
Net offering proceeds to Consumer Marketing Corporation $.20 $100,000.00(1)
<FN>
(1) Does not include offering costs, including filing, printing, legal, accounting, transfer agent and escrow
agent fees estimated at $9,556.00. We will pay these expenses.
</FN>
</TABLE>
The date of this Prospectus is ______________, 2000
1
<PAGE>
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY............................................................3
LIMITED STATE REGISTRATION....................................................3
SUMMARY FINANCIAL INFORMATION.................................................4
RISK FACTORS..................................................................7
YOUR RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419........................12
DILUTION.....................................................................13
USE OF PROCEEDS..............................................................13
CAPITALIZATION...............................................................14
DESCRIPTION OF BUSINESS......................................................15
PLAN OF OPERATION............................................................16
DESCRIPTION OF PROPERTY......................................................21
PRINCIPAL AND SELLING SHAREHOLDERS ..........................................22
MANAGEMENT...................................................................23
EXECUTIVE COMPENSATION.......................................................25
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...............................26
LEGAL PROCEEDINGS............................................................26
MARKET FOR OUR COMMON STOCK..................................................26
DESCRIPTION OF SECURITIES....................................................28
SHARES ELIGIBLE FOR FUTURE RESALE............................................28
WHERE CAN YOU FIND MORE INFORMATION..........................................29
REPORTS TO STOCKHOLDERS......................................................29
PLAN OF DISTRIBUTION.........................................................29
LEGAL MATTERS................................................................30
EXPERTS......................................................................31
INDEMNIFICATION OF OFFICERS AND DIRECTORS....................................31
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.........................................................31
FINANCIAL STATEMENTS........................................................F-1
Until 90 days after the date when the funds and securities are released
from the escrow account, all dealers effecting transactions in the shares,
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 to their unsold allotments or
subscriptions.
2
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus. Because this is a summary, it may not contain all of the information
that you should consider before receiving a distribution of our common stock.
You should read this entire prospectus carefully.
Consumer Marketing Corporation
We are a blank check company subject to Rule 419. We were organized as
a vehicle to acquire or merge with another business or company. We have no
present plans, proposals, agreements, arrangements or understandings to acquire
or merge with any specific business or company nor have we identified any
specific business or company for investigation and evaluation for a merger with
us. Since our organization, our activities have been limited to the sale of
initial shares for our organization and our preparation in producing a
registration statement and prospectus for this public offering. We will not
engage in any substantive commercial business following the offering. We
maintain our office at Suite 104, 1456 St. Paul St., Kelowna, British Columbia,
Canada V1Y 2E6. Our phone number is (250) 868-8177.
The Offering
Securities offered 500,000 shares of common stock,
$0.0001 par value, being offered at $.20
per share. (See "Description of Capital
Stock.")
Selling Shareholders:
Devinder Randhawa 348,000 shares
Bob Hemmerling 152,000 shares
Common stock outstanding 500,000 shares
prior to the offering
Common stock to be 500,000 shares
outstanding after the offering
LIMITED STATE REGISTRATION
Initially, our securities may be sold in New York only (although we
are considering registering the shares in other states) pursuant to an exemption
from registration provisions contained in Section 359-e of the New York Codes.
See "Risk Factors" for a discussion of the resale limitations that result from
this limited state registration.
3
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<PAGE>
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SUMMARY FINANCIAL INFORMATION
<TABLE>
The table below contains certain summary historical financial data. The
historical financial data for the fiscal year ended June 30, 1999 has been
derived from our audited financial statements which are contained in this
Prospectus. The financial statements were filed as part of the Form 10-SB we
filed with the Commission on September 3, 1999, and should be read in
conjunction with those financial statements and notes thereto.
<CAPTION>
June 30, 1999
INCOME STATEMENT:
Fiscal Year Three Months Six Months
Ended 06/30/99 Ended 09/30/99 Ended 12/31/99
(Audited) (Unaudited) (Unaudited)
--------- ----------- -----------
1998 1999 1998 1999 1998 1999
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<S> <C> <C> <C> <C> <C> <C>
Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Expenses $ 0 $ 350 $ 0 $ 5,242 $ 0 $ 7,023
Net Income(loss) $ 0 $(350) $ 0 $(5,242) $ 0 $(7,023)
Basic Earnings (loss) per share $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Basic Number of Common
Shares Outstanding 500,000 500,000 500,000 500,000 500,000 500,000
BALANCE SHEET (at end of period):
Total Assets $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Total Liabilities $ 0 $ 350 $ 0 $ 5,592 $ 0 $ 1,781
Total Shareholders Equity $50 $(300) $50 $(5,542) $50 $(1,731)
(Net Assets)
Net Income per share on a fully $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
dilated basis
</TABLE>
4
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<PAGE>
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Expiration Date
This offering will expire 18 months from the date of this prospectus.
There is no minimum number of securities that must be sold in the offering. The
offering may be extended for an additional 90 days at our sole election.
Prescribed Acquisition Criteria
Rule 419 requires that, before the funds and the securities can be
released, we must first execute an agreement to acquire a candidate meeting
certain specified criteria. The agreement must provide for the acquisition of a
business or assets for which the fair value of the business represents at least
80% of the maximum offering proceeds. The agreement must include, as a
precondition to its closing, a requirement that the number of investors
representing 80% of the maximum offering proceeds must elect to reconfirm their
investment. For purposes of the offering, the fair value of the business or
assets to be acquired must be at least $80,000 (80% of $100,000).
Post-Effective Amendment
Once the agreement governing the acquisition of a business meeting the
required criteria has been executed, Rule 419 requires us to update the
registration statement with a post-effective amendment. The post-effective
amendment must contain information about the proposed acquisition candidate and
their business, including audited financial statements, the results of this
offering and the use of the funds disbursed from the escrow account. The
post-effective amendment must also include the terms of the reconfirmation offer
mandated by Rule 419. The reconfirmation offer must include certain prescribed
conditions that must be satisfied before the funds and securities can be
released from escrow.
Reconfirmation Offering
The reconfirmation offer must commence after the effective date of the
post-effective amendment. Under Rule 419, the terms of the reconfirmation offer
must include the following conditions:
The prospectus contained in the post-effective amendment will be sent
to each investor whose securities are held in the escrow account within
5 business days after the effective date of the post-effective
amendment.
Each investor will have no fewer than 20 and no more than 45 business
days from the effective date of the post-effective amendment to notify
us in writing that the investor elects to remain an investor.
If we do not receive written notification from any investor within 45
business days following the effective date, the proportionate portion
of the funds and any related interest or dividends held in the escrow
account on the investor's behalf will be returned to the investor
within 5 business days by first class mail or other equally prompt
means.
The acquisition will be closed only if a minimum number of investors
representing 80% of the maximum offering proceeds equaling $80,000
elect to reconfirm their investment.
5
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<PAGE>
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If a closed acquisition has not occurred by ______________ (18 months
from the date of this prospectus), the funds held in the escrow account
shall be returned to all investors on a proportionate basis within 5
business days by first class mail or other equally prompt means.
Release Of Securities And Funds
The funds will be released to us, and the securities will be released
to you, only after:
The escrow agent has received a signed representation from us and
any other evidence acceptable by the escrow agent that:
We have executed an agreement for the acquisition of an
acquisition candidate whose fair market value represents at least
80% of the maximum offering proceeds and has filed the required
post-effective amendment.
The post-effective amendment has been declared effective.
We have satisfied all of the prescribed conditions of the
reconfirmation offer.
The closing of the acquisition of the business with a fair value
of at least 80% of the maximum proceeds.
Determination of Offering Price
The offering price of $.20 per share for the shares has been
arbitrarily determined by us. This price bears no relation to our assets, book
value, or any other customary investment criteria, including our prior operating
history. Among factors considered by us in determining the offering price were:
Estimates of our business potential
Our limited financial resources
The amount of equity desired to be retained by present shareholders
The amount of dilution to the public
The general condition of the securities markets
6
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<PAGE>
RISK FACTORS
Our business is subject to numerous risk factors, including the
following:
We Have No Operating History or Revenue and Only Minimal Assets. We
have had no recent operating history nor any revenues or earnings from
operations since its inception. We have no significant assets or financial
resources. We will, in all likelihood, sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination. This may result in our incurring a net operating loss that will
increase continuously until we can consummate a business combination with a
profitable business opportunity. We cannot assure you that we can identify a
suitable business opportunity and consummate a business combination.
You Will Not Have Access to Your Funds While They are Held in
Escrow. If we are unable to locate an acquisition candidate meeting these
acquisition criteria, you will have to wait 18 months from the date of this
prospectus before a proportionate portion of your funds are returned, without
interest. You will be offered return of your proportionate portion of the funds
held in escrow only upon the reconfirmation offering required to be conducted
upon execution of an agreement to acquire an acquisition candidate that
represents 80% of the maximum offering proceeds.
We May Fail to Obtain a Sufficient Number of Investors to Reconfirm the
Offering. A business combination with an acquisition candidate cannot be closed
unless, after the reconfirmation offering required by Rule 419, a sufficient
number of investors representing 80% of the maximum offering proceeds elect to
reconfirm their investment. If, after completion of the reconfirmation offering,
a sufficient number of investors do not reconfirm their investment, the business
combination will not be closed. If so, none of the securities held in escrow
will be issued and the funds will be returned to you on a proportionate basis
without interest.
We Have Extremely Limited Capital. As of June 30, 1999, there were $0
assets and $350 in liabilities. There was $0 available in our treasury as of
June 30, 1999. Assuming the sale of all the shares in this offering, we will
receive net proceeds of approximately $100,000.00, all of which must be
deposited in the escrow account. It is unlikely that we will need additional
funds, but we may if an acquisition candidate insists we obtain additional
capital. We may require additional financing in the future in order to close a
business combination. This financing may consist of the issuance of debt or
equity securities. These funds might not be available, if needed, or might not
be available on terms acceptable to us.
Escrowed Securities Can Only be Transferred Under Limited
Circumstances. No transfer or other disposition of the escrowed securities is
permitted other than by will or the laws of descent and distribution, or under a
qualified domestic relations order as defined by the Internal Revenue Code of
1986 as amended, or Title 7 of the Employee Retirement Income Security Act, or
the related rules. Under Rule 15g-8, it is unlawful for any person to sell or
offer to sell the securities or any interest in or related to the securities
held in the Rule 419 escrow account other than under a qualified domestic
relations order in divorce proceedings. Therefore, any and all contracts for
sale to be satisfied by delivery of the securities and sales of derivative
securities to be settled by delivery of the securities are prohibited. You are
further prohibited from selling any interest in the securities or any derivative
securities whether or not physical delivery is required.
The Nature of Our Operations are Highly Speculative. The success of our
plan of operation will depend to a great extent on the operations, financial
condition and management of the identified business
7
<PAGE>
opportunity. While management intends to seek business combination(s) with
entities having established operating histories, we cannot assure you that we
will be successful in locating candidates meeting that criteria. In the event we
complete a business combination, the success of our operations may be dependent
upon management of the successor firm or venture partner firm and numerous other
factors beyond our control.
We are in a Highly Competitive Market for Small Number of Business
Opportunities. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with, joint ventures with and
acquisitions of small private and public entities. A large number of established
and well-financed entities, including venture capital firms, are active in
mergers and acquisitions of companies that may be desirable target candidates
for us. Nearly all these entities have significantly greater financial
resources, technical expertise and managerial capabilities than we do and,
consequently, we will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination.
Moreover, we will also compete in seeking merger or acquisition candidates with
numerous other small public companies.
We Have No Existing Agreement for a Business Combination or Other
Transaction. We have no arrangement, agreement or understanding with respect to
engaging in a merger with, joint venture with or acquisition of, a private or
public entity. No assurances can be given that we will successfully identify and
evaluate suitable business opportunities or that we will conclude a business
combination. Management has not identified any particular industry or specific
business within an industry for evaluation. We cannot guarantee that we will be
able to negotiate a business combination on favorable terms.
We Have No Established Criteria for a Target Company. We have not
established a specific length of operating history or a specified level of
earnings, assets, net worth or other criteria that we will require a target
business opportunity to have achieved. Accordingly, we may enter into a business
combination with a business opportunity having no significant operating history,
losses, limited or no potential for earnings, limited assets, negative net worth
or other characteristics that are indicative of development stage companies.
Management Only Devotes a Limited Amount of Time to Seeking a Target
Company. While seeking a business combination, management anticipates devoting
no more than five hours per month. None of our officers have entered into a
written employment agreements with us and none is expected to do so in the
foreseeable future. We have not obtained key man life insurance on any of its
officers or directors. Notwithstanding the combined limited experience and time
commitment of management, loss of the services of any of these individuals would
adversely affect development of our business and its likelihood of continuing
operations. See "Management."
Our Officers and Directors May Participate in Business Ventures That
Could be Deemed to Compete Directly With Us. Additional conflicts of interest
and non-arms length transactions may also arise in the event our officers or
directors are involved in the management of any firm with which we transact
business. Management has adopted a policy that we will not seek a merger with,
or acquisition of, any entity in which management serves as officers, directors
or partners, or in which they or their family members own or hold any direct or
indirect ownership interest.
Our Officers and Directors may be Affiliated With Other "Blank Check"
Companies That Were Formed Previously. In the event that management identifies a
candidate for a business combination, and the candidate expresses no preference
for a particular company, management intends to enter into a business
combination with a previously formed blank check company. As a result, there may
not be
8
<PAGE>
sufficient business opportunities to consummate a business combination.
Target Companies That Fail to Comply With SEC Reporting Requirements
May Delay or Preclude Acquisition. Sections 13 and 15(d) of the '34 Act require
reporting companies to provide certain information about significant
acquisitions, including certified financial statements for the company acquired,
covering one, two, or three years, depending on the relative size of the
acquisition. The time and additional costs that may be incurred by some target
entities to prepare these statements may significantly delay or essentially
preclude consummation of an acquisition. Acquisition prospects that do not have
or are unable to obtain the required audited statements may be inappropriate for
acquisition so long as the reporting requirements of the '34 Act are applicable.
We Have Not Conducted Market Research and Have Not Engaged a Marketing
Organization. We have neither conducted, nor have others made available to us,
results of market research indicating that market demand exists for the
transactions we contemplate. Moreover, we do not have, and do not plan to
establish, a marketing organization. Even if demand is identified for a merger
or acquisition, we cannot assure you that we will be successful in completing a
business combination.
Our Proposed Operations Lack Diversification. Our proposed operations,
even if successful, will in all likelihood result in our engaging in a business
combination with a business opportunity. Consequently, our activities may be
limited to those engaged in by business opportunities that we merge with or
acquire. Our inability to diversify its activities into a number of areas may
subject us to economic fluctuations within a particular business or industry and
therefore increase the risks associated with our operations.
We may be Subject to Further Government Regulation. Although we will be
subject to the reporting requirements under the '34 Act, as amended, management
believes we will not be subject to regulation under the '40 Act, as amended,
since we will not be engaged in the business of investing or trading in
securities. If we engage in business combinations which result in our holding
passive investment interests in a number of entities, we could be subject to
regulation under the '40 Act. If so, we would be required to register as an
investment company and could be expected to incur significant registration and
compliance costs. We have obtained no formal determination from the Securities
and Exchange Commission as to our status under the '40 Act and, consequently,
violation of the Act could subject us to material adverse consequences.
If We Enter into a Business Combination With Foreign Concern, we will
be Subject to Risks Inherent in Business Operations Outside of the United
States. These risks include, for example, currency fluctuations, regulatory
problems, punitive tariffs, unstable local tax policies, trade embargoes, risks
related to shipment of raw materials and finished goods across national borders
and cultural and language differences. Foreign economies may differ favorably or
unfavorably from the United States economy in growth of gross national product,
rate of inflation, market development, rate of savings and capital investment,
resource self-sufficiency and balance of payments positions, and in other
respects.
Entering into a Business Combination Will Probably Result in a Change
in Control and in Our Management. A business combination involving the issuance
of our common stock will, in all likelihood, result in shareholders of a private
company obtaining a controlling interest in the Company. If that occurs,
management may be required to sell or transfer all or a portion of the Company's
common stock held by them, or resign as members of the Board of Directors of the
Company. The resulting change in control could result in removal of one or more
present officers and directors and a corresponding reduction in or elimination
of their participation in our future affairs.
9
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You Will Experience a Reduction of Your Percentage Share Ownership
Following a Business Combination. Our primary plan of operation is based upon a
business combination with a private concern that, in all likelihood, would
result in the issuance of our securities to the shareholders of the private
company. The issuance of previously authorized and unissued common stock would
result in reduction in percentage of shares owned by present and prospective
shareholders of the Company and may result in a change in control or management.
There may be an Absence of a Trading Market. There currently is no
trading market for our stock and a trading market may not develop.
There may be Limitations on Your Ability to Resell Your Shares.
Initially, our securities may be sold in the State of _______ only (although we
are considering registering the shares in other states), and may be resold by
you in ____________________ only until a resale exemption is available in other
states.
We are Selling the Shares Through Our President Without the Use of a
Professional Securities Underwriting Firm. Consequently, there may be less due
diligence performed in conjunction with this offering than would be performed in
an underwritten offering.
There Will be "Penny" Stock Regulation of Broker-Dealer Sales of Our
Securities. For transactions covered by Rule 15g-9 under the '34 Act, a
broker-dealer must furnish to all investors in penny stocks, a risk disclosure
document required by the rule, make a special suitability determination of the
purchaser and have received the purchaser's written agreement to the transaction
prior to the sale. In order to approve a person's account for transactions in
penny stock, the broker or dealer must (i) obtain information concerning the
person's financial situation, investment experience and investment objectives;
(ii) reasonably determine, based on the information required by paragraph (i)
that transactions in penny stock are suitable for the person and that the person
has sufficient knowledge and experience in financial matters that the person
reasonably may be expected to be capable of evaluating the rights of
transactions in penny stock; and (iii) deliver to the person a written statement
setting forth the basis on which the broker or dealer made the determination
required by paragraph (ii) in this section, stating in a highlighted format that
it is unlawful for the broker or dealer to effect a transaction in a designated
security subject to the provisions of paragraph (ii) of this section unless the
broker or dealer has received, prior to the transaction, a written agreement to
the transaction from the person; and stating in a highlighted format immediately
preceding the customer signature line that the broker or dealer is required to
provide the person with the written statement and the person should not sign and
return the written statement to the broker or dealer if it does not accurately
reflect the person's financial situation, investment experience and investment
objectives and obtain from the person a manually signed and dated copy of the
written statement.
A penny stock means any equity security other than a security (i)
registered, or approved for registration upon notice of issuance on a national
securities exchange that makes transaction reports available pursuant to 17 CFR
11Aa3-1 (ii) authorized or approved for authorization upon notice of issuance,
for quotation on the Nasdaq NMS ; (iii) that has a price of five dollars or more
or . . . . (iv) whose issuer has net tangible assets in excess of $2,000,000
demonstrated by financial statements dated less than fifteen months previously
that the broker or dealer has reviewed and has a reasonable basis to believe are
true and complete in relation to the date of the transaction with the person.
Consequently, the rule may affect the ability of broker-dealers to sell the
Company's securities.
Federal and State Tax Consequences Will, in All Likelihood, be Major
Considerations in any Business Combination We May Undertake. Currently, a
transaction may be structured so as to result in tax-free treatment to both
companies, as prescribed by various federal and state tax provisions. We intend
10
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to structure any business combination so as to minimize the federal and state
tax consequences to both the Company and the target entity; however, we cannot
guarantee that the business combination will meet the statutory requirements of
a tax- free reorganization or that the parties will obtain the intended tax-free
treatment upon a transfer of stock or assets. A non-qualifying reorganization
could result in the imposition of both federal and state taxes that may have an
adverse effect on both parties to the transaction.
The Requirement of Audited Financial Statements May Disqualify
Potential Business Opportunities. Management believes that any potential
business opportunity must provide audited financial statements for review for
the protection of all parties to the business combination. One or more
attractive business opportunities may choose to forego the possibility of a
business combination with us, rather than incur the expenses associated with
preparing audited financial statements.
11
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YOUR RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419
DEPOSIT OF OFFERING PROCEEDS AND SECURITIES
Rule 419 requires that offering proceeds, after deduction for
underwriting commissions, underwriting expenses and dealer allowances, if any,
and the securities purchased by you and other investors in this offering, be
deposited into an escrow or trust account governed by an agreement that contains
certain terms and provisions specified by Rule 419. Under Rule 419, the funds
will be released to us and the securities will be released to you only after we
have met the following three basic conditions:
First, we must execute an agreement for an acquisition of a
business or asset that will constitute our business and for which the fair value
of the business or net assets to be acquired represents at least 80% of the
maximum offering proceeds, but excluding underwriting commissions, underwriting
expenses and dealer allowances, if any.
Second, we must file a post-effective amendment to the registration
statement that includes the results of this offering including, but not limited
to, the gross offering proceeds raised to date, the amounts paid for
underwriting commissions, underwriting expenses and dealer allowances, if any,
amounts dispersed to us and amounts remaining in the escrow account. In
addition, we must disclose the specific amount, use and appropriation of funds
disbursed to us to date, including, payments to officers, directors, controlling
shareholders or affiliates, specifying the amounts and purposes of these
payments, and the terms of a reconfirmation offer that must contain conditions
prescribed by the rules. The post-effective amendment must also contain
information regarding the acquisition candidate and business, including audited
financial statements.
Third, we will mail to each investor within five business days of a
post-effective amendment, a copy of the prospectus contained therein. The
Reconfirmation Offering shall be made as described under "Prospectus Summary;
Reconfirmation Offering. " After we submit a signed representation to the escrow
agent that the requirements of Rule 419 have been met and after the acquisition
is closed, the escrow agent can release the funds and securities.
Accordingly, we have entered into an escrow agreement with City
National Bank, N.A. San Francisco, California, which provides that:
The proceeds are to be deposited into the escrow account
maintained by the escrow agent promptly upon receipt. While Rule 419
permits 10% of the funds to be released to us prior to the
reconfirmation offering, we do not intend to release these funds. The
funds and any dividends or interest thereon, if any, are to be held for
the sole benefit of the investor and can only be invested in bank
deposit, in money market mutual funds, federal government securities or
securities for which the principal or interest is guaranteed by the
federal government.
All securities issued for the offering and any other
securities issued, including stock splits, stock dividends or similar
rights are to be deposited directly into the escrow account promptly
upon issuance. Your name must be included on the stock certificates or
other documents evidencing the securities. The securities held in the
escrow account are to remain as issued, and are to be held for your
sole benefit. You retain the voting rights, if any, to the securities
held in your name. The securities held in the escrow account may
neither be transferred or disposed of nor any interest created in them
other than by will or the laws of descent and distribution, or under a
qualified domestic relations order as defined by the Internal Revenue
Code of 1986 or Table 1 of the Employee Retirement Income Security Act.
12
<PAGE>
Warrants, convertible securities or other derivative
securities relating to securities held in the escrow account may be
exercised or converted in accordance with their terms, provided that,
however, the securities received upon exercise or conversion, together
with any cash or other consideration paid for the exercise or
conversion, are to be promptly deposited into the escrow account.
DILUTION
The difference between the public offering price per share of common
stock and the net tangible book value per share after this offering constitutes
the dilution to investors in this offering. Net tangible book value per share of
common stock is determined by dividing our net tangible book value (total
tangible assets less total liabilities) by the number of shares of common stock
outstanding.
As of June 30, 1999, our net tangible book value was $-350 or $-.0007
per share of common stock. Net tangible book value represents the amount of our
total assets, less any intangible assets and total liabilities. After giving
effect to the sale of the 500,000 shares of common stock offered through this
prospectus (at an public offering price of $.20 per share), and after deducting
estimated expenses of the offering), our adjusted pro forma net tangible book
value as of June 30, 1999, would have been $-350 or $0.0007 per share. This
represents no change in net tangible book value in this offering.
<TABLE>
<CAPTION>
Number of Shares Before Money Received For Shares Net Tangible Book Value
Offering Before Offering Per Share Before Offering
-------- --------------- -------------------------
<S> <C> <C>
500,000 $100 $0.0007
Total Number of Shares After Total Amount of Money Pro-Forma Net Tangible Book
Offering Received For Shares Value Per Share After Offering
-------- ------------------- ------------------------------
500,000 $0.00 $0.0007
</TABLE>
<TABLE>
As of the date of this prospectus, the following table sets forth the
percentage of equity to be purchased by investors in this offering compared to
the percentage of equity to be owned by the present stockholders, and the
comparative amounts paid for the shares by the investors in this offering as
compared to the total consideration paid by our present stockholders.
<CAPTION>
- --------------------------------------------------------------------------------------------
Average Price
-------------
Shares Purchased Total Consideration Paid Per Share
---------------- ------------------- --------------
Number Percent Amount Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
New Investors 500,000 100% $100,000 99.95% $.20
Existing shareholders 500,000 0.00% $ 50 .0005% $.0001
- --------------------------------------------------------------------------------------------
</TABLE>
USE OF PROCEEDS
We will not receive any of the proceeds of the offering. This offering
is not contingent on a minimum member of shares to be sold and will be sold on a
first come, first served basis. If subscriptions
13
<PAGE>
exceed the amount being offered, these excess subscriptions will be promptly
refunded without deductions for commissions or expenses. Accordingly, we will
receive these funds in the event a business combination is closed in accordance
with Rule 419.
We have not incurred and do not intend to incur in the future any debt
from anyone other than management for our organizational activities. Debt to
management will not be repaid. Management is not aware of any circumstances that
would change this policy. Accordingly, no portion of the proceeds are being used
to repay debt. It is anticipated that management will pay the expenses of the
offering, estimated to be $9,507.00.
Under Rule 419, after the reconfirmation offering and the closing of
the business combination, and assuming the sale of all the shares in this
offering, $100,000, plus any dividends received, but less any amount returned to
investors who did not reconfirm their investment under Rule 419, will be
released to the selling shareholders.
If less than the maximum proceeds are raised, a greater portion of this
accrued liability will have to be borne by the acquisition candidate as a
condition of the merger. Management believes that this is in our best interest,
because it reduces the amount of liabilities an acquisition candidate must
assume in the merger, and thus, may facilitate an acquisition transaction.
The proceeds received in this offering will be put into the escrow
account pending closing of a business combination and reconfirmation. These
funds will be in an insured financial institution in either a certificate of
deposit, interest bearing savings account or in short term federal government
securities as placed by City National Bank, N.A.
CAPITALIZATION
The following table sets forth our capitalization as of June 30, 1999,
and pro-forma as adjusted to give close to the sale of 500,000 shares offered by
the selling shareholders.
Actual As Adjusted
------ -----------
Stockholders' equity:
common stock, $.001 par value;
authorized 50,000,000 shares,
issued and outstanding
500,000 shares and 500,000
shares, pro-forma as adjusted $ 50 $ 50
Additional paid-in capital -0- -0-
Deficit accumulated during the
development period (350) (350)
----- -----
Total stockholders equity (300) (300)
===== =====
Total Capitalization (300) (300)
14
<PAGE>
DESCRIPTION OF BUSINESS
Consumer Marketing Corporation (referred to as "us," "we" or "our"),
was incorporated on January 30, 1997 under the laws of the State of Nevada to
engage in any lawful corporate purpose. Other than issuing shares to its
shareholders, we never commenced any other operational activities. We can be
defined as a "blank check" company, whose sole purpose at this time is to locate
and consummate a merger or acquisition with a private entity. The Board of
Directors has elected to commence implementation of our principal business
purpose, described below under "Plan of Operation."
The proposed business activities classifies us as a "blank check"
company. The Securities and Exchange Commission defines these companies as "any
development stage company that is issuing a penny stock (within the meaning of
section 3 (a)(51) of the Securities Exchange Act of 1934) and that has no
specific business plan or purpose, or has indicated that its business plan is to
merge with an unidentified company or companies." Many states have enacted
statutes, rules and regulations limiting the sale of securities of "blank check"
companies in their respective jurisdictions. Management does not intend to
undertake any efforts to cause a market to develop in our securities, either
debt or equity, until we have successfully implemented our business plan. We
intend to comply with the periodic reporting requirements of the Securities
Exchange Act of 1934 for so long as it is subject to those requirements.
Lock-up Agreement
Each of our shareholders has executed and delivered a "lock-up" letter
agreement, affirming that they shall not sell their respective shares of common
stock until we have successfully consummated a merger or acquisition and we are
no longer classified as a "blank check" company. In order to provide further
assurances that no trading will occur in our securities until a merger or
acquisition has been consummated, each shareholder has agreed to place their
respective stock certificate with our legal counsel, Evers & Hendrickson, LLP,
who will not release these respective certificates until they have confirmed
that a merger or acquisition was successfully consummated. However, while
management believes that the procedures established to preclude any sale of our
securities prior to closing of a merger or acquisition will be sufficient, we
cannot assure you that the procedures established will unequivocally limit any
shareholder's ability to sell their respective securities before a closing.
Investment Company Act of 1940
Although we will be subject to regulation under the Securities Act of
1933, as amended (the "'33 Act"), and the Securities Exchange Act of 1934, as
amended (the "'34 Act"), management believes we will not be subject to
regulation under the Investment Company Act of 1940, as amended (the "'40 Act"),
since we will not be engaged in the business of investing or trading in
securities. In the event we engage in business combinations that result in our
holding passive investment interests in a number of entities, we could be
subject to regulation under the '40 Act. If that occurs, we would be required to
register as an investment company and could be expected to incur significant
registration and compliance costs. We have obtained no formal determination from
the Securities and Exchange Commission as to our status under the '40 Act and,
consequently, a violation of the Act could subject us to material adverse
consequences.
Investment Advisors Act of 1940
Under Section 202(a)(11) of the Investment Advisors Act of 1940, as
amended, an "investment adviser" means any person who, for compensation, engages
in the business of advising others, either
15
<PAGE>
directly or through publications or writings, as to the value of securities or
as to the advisability of investing in, purchasing, or selling securities, or
who, for compensation and as part of a regular business, issues or promulgates
analyses or reports concerning securities. We seek to locate a suitable merger
of acquisition candidate, and we do not intend to engage in the business of
advising others in investment matters for a fee or other type of consideration.
Dissenter's Rights
In accordance with Nevada Revised Statutes ("NRS") ss. 78.3793, on the
10th day following the acquisition of a controlling interest by an acquiring
person, if the control shares are accorded full voting rights pursuant to NRS
ss.ss. 78.378 to 78.3793, inclusive, and the acquiring person has acquired a
majority interest of the voting shares, any stockholder of record, other than
the acquiring person, who has not voted in favor of authorizing voting rights
for the control shares is entitled to demand payment for the fair value of his
shares by making a written demand.
Forward Looking Statements
Because we desire to take advantage of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), we caution
readers regarding forward looking statements found in the following discussion
and elsewhere in this registration statement and in any other statement made by,
or on our behalf, whether or not in future filings with the Securities and
Exchange Commission. Forward looking statements are statements not based on
historical information and that relate to future operations, strategies,
financial results or other developments. Forward looking statements are
necessarily based upon estimates and assumptions that are inherently subject to
significant business, economic and competitive uncertainties and contingencies,
many of which are beyond our control and many of which, with respect to future
business decisions, are subject to change. These uncertainties and contingencies
can affect actual results and could cause actual results to differ materially
from those expressed in any forward looking statements made by or on our behalf.
We disclaim any obligation to update forward looking statements. Readers should
also understand that under Section 27A(b)(2)(D) of the '33 Act, and Section
21E(b)(2)(D) of the '34 Act, the "safe harbor" provisions of the PSLRA do not
apply to statements made in connection with our offering.
PLAN OF OPERATION
We intend to seek to acquire assets or shares of an entity actively
engaged in a business that generates revenues, in exchange for its securities.
We have not identified a particular acquisition target and have not entered into
any negotiations regarding an acquisition. As soon as this registration
statement becomes effective under Section 12 of the '34 Act, we intend to
contact investment bankers, corporate financial analysts, attorneys and other
investment industry professionals through various media. None of our officers,
directors, promoters or affiliates have engaged in any preliminary contact or
discussions with any representative of any other company regarding the
possibility of an acquisition or merger with us as of the date of this
registration statement.
Depending upon the nature of the relevant business opportunity and the
applicable state statutes governing how the transaction is structured, the
Company's Board of Directors expects that it will provide our shareholders with
complete disclosure documentation concerning a potential business opportunity
and the structure of the proposed business combination prior to consummation.
Disclosure is expected to be in the form of a proxy or information statement, in
addition to the post-effective amendment.
16
<PAGE>
While any disclosure must include audited financial statements of the
target entity, we cannot assure you that such audited financial statements will
be available. As part of the negotiation process, the Board of Directors does
intend to obtain certain assurances of value, including statements of assets and
liabilities, material contracts, accounts receivable statements, or other
indicia of the target entity's condition prior to consummating a transaction,
with further assurances that an audited statement would be provided prior to
execution of a merger or acquisition agreement. Closing documents will include
representations that the value of the assets transferred will not materially
differ from the representations included in the closing documents, or the
transaction will be voidable.
Due to our intent to remain a shell corporation until a merger or
acquisition candidate is identified, it is anticipated that its cash
requirements shall be minimal, and that all necessary capital, to the extent
required, will be provided by the directors or officers. We do not anticipate
that we will have to raise capital in the next twelve months. We also do not
expect to acquire any plant or significant equipment.
We have not, and do not intend to enter into, any arrangement,
agreement or understanding with non-management shareholders allowing
non-management shareholders to directly or indirectly participate in or
influence our management of the Company. Management currently holds 60.8% of our
stock. As a result, management is in a position to elect a majority of the
directors and to control our affairs.
We have no full time employees. Our President and Secretary have agreed
to allocate a portion of their time to our activities, without compensation.
These officers anticipate that our business plan can be implemented by their
devoting approximately five (5) hours each per month to our business affairs
and, consequently, conflicts of interest may arise with respect to their limited
time commitment. We do not expect any significant changes in the number of
employees. See "Management."
Our officers and directors may become involved with other companies who
have a business purpose similar to ours. As a result, potential conflicts of
interest may arise in the future. If a conflict does arise and an officer or
director is presented with business opportunities under circumstances where
there may be a doubt as to whether the opportunity should belong to the Company
or another "blank check" company they are affiliated with, they will disclose
the opportunity to all the companies. If a situation arises where more than one
company desires to merge with or acquire that target company and the principals
of the proposed target company have no preference as to which company will merge
with or acquire the target company, the company that first filed a registration
statement with the Securities and Exchange Commission will be entitled to
proceed with the proposed transaction. See "Risk Factors - Affiliation With
Other "Blank Check" Companies."
General Business Plan
Our purpose is to seek, investigate and, if investigation warrants,
acquire an interest in business opportunities presented to it by persons or
firms that desire to seek the perceived advantages of an Exchange Act registered
corporation. We will not restrict our search to any specific business, industry,
or geographical location and we may participate in a business venture of
virtually any kind or nature. This discussion of the proposed business is
purposefully general and is not meant to restrict our discretion to search for
and enter into potential business opportunities. Management anticipates that it
may be able to participate in only one potential business venture because we
have nominal assets and limited financial resources. See the financial
statements at page F-1 of this prospectus. This lack of diversification should
be considered a substantial risk to our shareholders because it will not permit
us to offset potential losses from one venture against gains from another.
17
<PAGE>
We may seek a business opportunity with entities that have recently
commenced operations, or that wish to utilize the public marketplace in order to
raise additional capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate purposes. We may
acquire assets and establish wholly owned subsidiaries in various businesses or
acquire existing businesses as subsidiaries.
We anticipate that the selection of a business opportunity will be
complex and extremely risky. Due to general economic conditions, rapid
technological advances being made in some industries and shortages of available
capital, management believes that there are numerous firms seeking the perceived
benefits of a publicly registered corporation. The perceived benefits may
include facilitating or improving the terms for additional equity financing that
may be sought, providing liquidity for incentive stock options or similar
benefits to key employees, providing liquidity (subject to restrictions of
applicable statutes) for all shareholders and other factors. Potentially,
available business opportunities may occur in many different industries and at
various stages of development, all of which will make the task of comparative
investigation and analysis of these business opportunities extremely difficult
and complex.
We have, and will continue to have, no capital to provide the owners of
business opportunities with any significant cash or other assets. However,
management believes we will be able to offer owners of acquisition candidates
the opportunity to acquire a controlling ownership interest in a publicly
registered company without incurring the cost and time required to conduct an
public offering. The owners of the business opportunities will, however, incur
significant legal and accounting costs in connection with acquisition of a
business opportunity, including the costs of preparing Form 8-K's, 10-K's or
10-KSBs, 10-Q's or 10-QSBs, agreements and related reports and documents. The
'34 Act specifically requires that any merger or acquisition candidate comply
with all applicable reporting requirements, which include providing audited
financial statements to be included within the numerous filings relevant to
complying with the '34 Act. Nevertheless, the officers and directors of the
Company have not conducted market research and are not aware of statistical data
that would support the perceived benefits of a merger or acquisition transaction
for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by our
officers and directors, none of whom is a professional business analyst.
Management intends to concentrate on identifying preliminary prospective
business opportunities that may be brought to our attention through present
associations of our officers and directors, or by our shareholders. In analyzing
prospective business opportunities, management will consider:
o the available technical, financial and managerial resources;
o working capital and other financial requirements;
o history of operations, if any;
o prospects for the future;
o nature of present and expected competition;
o the quality and experience of management services that may be
available and the depth of that management;
o the potential for further research, development, or exploration;
o specific risk factors not now foreseeable but could be anticipated
to impact our proposed activities;
o the potential for growth or expansion;
o the potential for profit;
18
<PAGE>
o the perceived public recognition of acceptance of products,
services, or trades;
o name identification; and
o other relevant factors.
Our officers and directors expect to meet personally with management
and key personnel of the business opportunity as part of their "due diligence"
investigation. To the extent possible, the Company intends to utilize written
reports and personal investigations to evaluate the above factors. We will not
acquire or merge with any company that cannot provide audited financial
statements within a reasonable period of time after closing of the proposed
transaction.
Our management, while probably not especially experienced in matters
relating to the prospective new business of the Company, shall rely upon their
own efforts and, to a much lesser extent, the efforts of our shareholders, in
accomplishing our business purposes. We do not anticipate that any outside
consultants or advisors, except for our legal counsel and accountants, will be
utilized by us to accomplish our business purposes. However, if we do retain an
outside consultant or advisor, any cash fee will be paid by the prospective
merger/acquisition candidate, as we have no cash assets. We have no contracts or
agreements with any outside consultants and none are contemplated.
We will not restrict our search for any specific kind of firms, and may
acquire a venture that is in its preliminary or development stage or is already
operating. We cannot predict at this time the status of any business in which we
may become engaged, because the business may need to seek additional capital,
may desire to have its shares publicly traded, or may seek other perceived
advantages that we may offer. Furthermore, we do not intend to seek capital to
finance the operation of any acquired business opportunity until we have
successfully consummated a merger or acquisition.
We anticipate that we will incur nominal expenses in the implementation
of its business plan. Because we has no capital to pay these anticipated
expenses, present management will pay these charges with their personal funds,
as interest free loans, for a minimum of twelve months from the date of this
registration statement. If additional funding is necessary, management and or
shareholders will continue to provide capital or arrange for additional outside
funding. However, the only opportunity that management has to have these loans
repaid will be from a prospective merger or acquisition candidate. Management
has no agreements with us that would impede or prevent consummation of a
proposed transaction. We cannot assure, however, that management will continue
to provide capital indefinitely if a merger candidate cannot be found. If a
merger candidate cannot be found in a reasonable period of time, management may
be required reconsider its business strategy, which could result in our
dissolution.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, we
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a transaction,
it is probable that our present management and shareholders will no longer be in
control. In addition, our directors may, as part of the terms of the acquisition
transaction, resign and be replaced by new directors without a vote of our
shareholders. Furthermore, management may negotiate or consent to the purchase
of all or a portion of our stock. Any terms of sale of the shares presently held
by officers and/or directors will be also afforded to all other shareholders on
similar terms and conditions. Any and all sales will only be made in compliance
with the securities laws of the United States and any applicable state.
19
<PAGE>
While the actual terms of a transaction that management may not be a
party to cannot be predicted, it may be expected that the parties to the
business transaction will find it desirable to avoid the creation of a taxable
event and thereby structure the acquisition in a so-called "tax-free"
reorganization under Sections 368(a)(1) or 351 of the Internal Revenue Code (the
"Code"). In order to obtain tax-free treatment under the Code, it may be
necessary for the owners of the acquired business to own 80% or more of the
voting stock of the surviving entity. In that event, the shareholders of the
Company would retain 20% or less of the issued and outstanding shares of the
surviving entity, which would result in significant dilution in the equity of
the shareholders.
As part of the "due diligence" investigation, our officers and
directors will meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis of verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures to the extent of our limited
financial resources and management expertise. How we will participate in an
opportunity will depend on the nature of the opportunity, the respective needs
and desires of the parties, the management of the target company and our
relative negotiation strength.
With respect to any merger or acquisition, negotiations with target
company management are expected to focus on the percentage of our Company that
the target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, our shareholders will probably hold a
substantially lesser percentage ownership interest following any merger or
acquisition. The percentage ownership may be subject to significant reduction in
the event we acquire a company with substantial assets. Any merger or
acquisition effected by us can be expected to have a significant dilutive effect
on the percentage of shares held by our then shareholders.
We will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although we cannot
predict the terms of the agreements, generally the agreements will require some
specific representations and warranties by all of the parties, will specify
certain events of default, will detail the terms of closing and the conditions
that must be satisfied by each of the parties prior to and after the closing,
will outline the manner of bearing costs, including costs associated with our
attorneys and accountants, will set forth remedies on default and will include
miscellaneous other terms.
As stated previously, we will not acquire or merge with any entity that
cannot provide independent audited financial statements concurrent with the
closing of the proposed transaction. We are subject to the reporting
requirements of the '34 Act. Included in these requirements is our affirmative
duty to file independent audited financial statements as part of its Form 8-K to
be filed with the Securities and Exchange Commission upon consummation of a
merger or acquisition, as well as our audited financial statements included in
our annual report on Form 10-K (or 10-KSB, as applicable) and quarterly reports
on Form 10-Q (or 10-QSB, as applicable). If the audited financial statements are
not available at closing, or if the audited financial statements provided do not
conform to the representations made by the candidate to be acquired in the
closing documents, the closing documents will provide that the proposed
transaction will be voidable at the discretion of our present management. If the
transaction is voided, the agreement will also contain a provision providing for
the acquisition entity to reimburse us for all costs associated with the
proposed transaction.
20
<PAGE>
Competition
We will remain an insignificant participant among the firms that engage
in the acquisition of business opportunities. There are many established venture
capital and financial concerns that have significantly greater financial and
personnel resources and technical expertise than we do. In view of our combined
extremely limited financial resources and limited management availability, we
will continue to be at a significant competitive disadvantage compared to our
competitors.
DESCRIPTION OF PROPERTY
We have no properties and at this time have no agreements to acquire
any properties.
We operate from our offices at Suite 104, 1456 St. Paul St., Kelowna,
British Columbia, Canada. Space is provided to the Company on a rent free basis
by Mr. Randhawa, an officer and director of the Company, and it is anticipated
that this arrangement will remain until we successfully consummate a merger or
acquisition. Management believes that this space will meet our needs for the
foreseeable future.
21
<PAGE>
<TABLE>
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information regrading beneficial
ownership of our common stock as of December 31, 1999, and as adjusted to
reflect the sale of Common Stock offered in this Prospectus for (i) each person
who is known by us to beneficially own more than 5% of the outstanding common
stock of the Company, (ii) each director or executive officer, (iii) each of the
selling shareholders and (iv) all directors and executive officers of the
Company as a group. We believe that the beneficial owners of the Common Stock
listed below, based upon information furnished by them, have sole investment and
voting power with respect to their shares, subject to community property laws
where applicable.
<CAPTION>
Shares Beneficially Shares to be
Owned Prior to Number of Beneficially Owned
Offering Shares After Offering
Directors, Officers ----------------- be Sold in ---------------
and 5% Stockholders Number Percent the Offering Number Percent
------------------- ------ ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Devinder Randhawa 348,000 69.6% 348,000 -0- 0.00%
Bob Hemmerling 152,000 30.4% 152,000 -0- 0.00%
All directors and officers 500,000 100.0% 500,000 -0- 0.00%
as a group (2 persons)
</TABLE>
22
<PAGE>
MANAGEMENT
Our directors and officers are as follows:
Name Age Position
- ---- --- --------
Devinder Randhawa 39 President, Chairman
Bob Hemmerling 39 Secretary, Treasurer, Director
The above listed officers and directors will serve until the next
annual meeting of the shareholders or until their death, resignation,
retirement, removal, or disqualification, or until their successors have been
duly elected and qualified. Vacancies in the existing Board of Directors are
filled by majority vote of the remaining Directors. Our officers serve at the
will of the Board of Directors. There are no family relationships between any
executive officer and director.
Resumes
Devinder Randhawa, President and chairman of the Company, was appointed
to his positions with the Company on January 30, 1997. Upon completing his MBA
in1985, Mr. Randhawa has been in the venture capital/corporate finance
(sub-investment banking). Mr. Randhawa was either a registered representative or
an analyst for 8 years before founding RD Capital Inc. RD Capital, Inc. is a
privately held consulting firm assisting emerging companies in the resource and
non-resource sectors. Mr. Randhawa was the founder of startup's such as First
Smart Sensor and Strathmore Resources Ltd. Mr. Randhawa received a Bachelors
Degree in Business Administration with Honors from Trinity Western College of
Langley, British Columbia in 1983 and received his MBA from the University of
British Columbia in 1985. He devotes only such time as necessary to the business
of the Company, which time is expected to be nominal.
Robert Hemmerling, Secretary, Treasurer and a director, was appointed
to his positions on January 30, 1997. In addition to his positions with us,
since September 1996, Mr. Hemmerling has been employed with Strathmore
Resources, Ltd., Kelowna, British Columbia in the investor relations department.
Strathmore Resources is engaged in the business of acquiring and developing
uranium properties. Prior, from January 1996 through August 1996, Mr. Hemmerling
was unemployed. From January 1992 through December 1995, Mr. Hemmerling was an
electrician with Concord Electric, Kelowna, British Columbia. He devotes his
time as necessary to our business, which time is expected to be nominal.
Prior "Blank Check" Experience
Bob Hemmerling has served as President and chairman of the following
companies since inception: Express Investments Associates, Inc., Eye-Catching
Marketing, Inc. and Quiksilver International Holdings, Inc.
Mr. Hemmerling has also served as Secretary and Treasurer of the
following companies since inception: Above Average Investments, Inc., Amiable
Investment Holdings, Ltd., Asset Dissolution Services, Ltd., Big Cat Investment
Services, Inc., Blank Resources, Ltd., Blue Moon Investments, Caddo Enterprises,
Inc., Century Plus Investments Corp., Crash Course Holdings, Ltd., Cutting Edge
Corner Corporation, Delightful Holdings Corporation, Eastern Management Corp.,
Emerald Coast Enterprises, Inc., Later Life Resources, Inc., LEK International,
Modern Day Investments, Inc., Moonwalk Enterprises,
23
<PAGE>
Multiple Assets & Investment, Inc., Profit Based Investments, Inc., Solid
Management Corp., Sunny Skies Investments, Total Serenity Company, Inc.,
Tripacific Development Corp., Triwest Management Resources Corp., and United
Management, Inc.
<TABLE>
The SEC reporting blank check companies that Bob Hemmerling served or
is serving as President and director are listed on the following table:
<CAPTION>
<S> <C> <C> <C>
Incorporation Name File Form Number Date of Filing
Express Investments Associates, Inc. 10-SB 000-27543 10-04-1999
Eye-Catching Marketing, Inc. 10-SB 000-28237 11-22-1999
Quiksilver International Holdings, Inc. 10-SB 000-28235 11-22-1999
</TABLE>
Devinder Randhawa has served as President and chairman of the following
companies since inception: Above Average Investments, Inc., Amiable Investment
Holdings, Ltd., Asset Dissolution Services, Ltd., Big Cat Investment Services,
Inc., Blank Resources, Ltd., Blue Moon Investments, Caddo Enterprises, Inc.,
Century Plus Investments Corp., Crash Course Holdings, Ltd., Cutting Edge Corner
Corporation, Delightful Holdings Corporation, Eastern Management Corp., Emerald
Coast Enterprises, Inc., Later Life Resources, Inc., LEK International, Modern
Day Investments, Inc., Moonwalk Enterprises, Multiple Assets & Investment, Inc.,
Nevada Communications, Inc., Profit Based Investments, Inc., Solid Management
Corp., Sunny Skies Investments, Total Serenity Company, Inc., Tripacific
Development Corp., Triwest Management Resources Corp., and United Management,
Inc.
Mr. Randhawa has also served as Secretary and Treasurer of the
following companies since inception: Express Investments Associates, Inc.,
Eye-Catching Marketing, Inc., and Quiksilver International Holdings, Inc.
<TABLE>
The SEC reporting blank check companies that Devinder Randhawa served
or is serving as President and director are listed on the following table:
<CAPTION>
<S> <C> <C> <C>
Incorporation Name File Form Number Date of Filing
Above Average Investments, Inc. 10-SB 000-27545 10-4-1999
Eastern Management Corp 10-SB 000-26517 6-28-1999
LEK International 10-SB 000-26321 6-09-1999
Solid Management Corp 10-SB 000-26931 8-04-1999
Tripacific Development Corp 10-SB 000-26683 8-02-1999
Triwest Management Corp 10-SB 000-27103 8-20-1999
United Management, Inc. 10-SB 000-27233 9-03-1999
Blue Moon Investments 10-SB 000-29021 1-19-2000
Caddo Enterprises, Inc. 10-SB 000-29023 1-19-2000
</TABLE>
Conflicts of Interest
Members of our management are associated with other firms involved in a
range of business activities. Consequently, there are potential inherent
conflicts of interest in their acting as officers and directors of the Company.
Because the officers and directors are engaged in other business activities,
management anticipates it will devote only a minor amount of time to our
affairs.
24
<PAGE>
Our officers and directors are now and may in the future become
shareholders, officers or directors of other companies that may be formed for
the purpose of engaging in business activities similar to those conducted by us.
Accordingly, additional direct conflicts of interest may arise in the future
with respect to individuals acting on behalf of the Company or other entities.
Moreover, additional conflicts of interest may arise with respect to
opportunities that come to the attention of these individuals in the performance
of their duties. The Company does not currently have a right of first refusal
pertaining to opportunities that come to management's attention where the
opportunity may relate to the Company's proposed business operations.
The officers and directors are, so long as they remain officers or
directors, subject to the restriction that all opportunities contemplated by our
plan of operation that come to their attention, either in the performance of
their duties or in any other manner, will be considered opportunities of, and be
made available to us and the other companies that they are affiliated with on an
equal basis. A breach of this requirement will be a breach of the fiduciary
duties of the officer or director. If we or the companies that the officers and
directors are affiliated with both desire to take advantage of an opportunity,
then those officers and directors would abstain from negotiating and voting upon
the opportunity. However, all directors may still individually take advantage of
opportunities if we should decline to do so. Except as set forth above, we have
not adopted any other conflict of interest policy with respect to those
transactions.
EXECUTIVE COMPENSATION
None of our officers and/or directors have received any compensation
for their respective services rendered unto us. They all have agreed to act
without compensation until authorized by the Board of Directors, which is not
expected to occur until the we have generated revenues from operations after
consummation of a merger or acquisition. As of the date of this registration
statement, we have no funds available to pay directors. Further, none of the
directors are accruing any compensation pursuant to any agreement with us.
It is possible that, after we successfully consummate a merger or
acquisition with an unaffiliated entity, that entity may desire to employ or
retain one or a number of members of our management for the purposes of
providing services to the surviving entity. However, we have adopted a policy
whereby the offer of any post-transaction employment to members of management
will not be a consideration in our decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Board of
Directors any discussions concerning possible employment by any entity that
proposes to undertake a transaction with us and further, to abstain from voting
on the transaction. Therefore, as a practical matter, if each member of the
Board of Directors is offered employment in any form from any prospective merger
or acquisition candidate, the proposed transaction will not be approved by the
Board of Directors as a result of the inability of the Board to affirmatively
approve the transaction. The transaction would then be presented to our
shareholders for approval.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to us. In the event we consummate a
transaction with any entity referred by associates of management, it is possible
that the associate will be compensated for their referral in the form of a
finder's fee. It is anticipated that this fee will be either in the form of
restricted common stock issued by us as part of the terms of the proposed
transaction, or will be in the form of cash consideration. However, if
compensation is in the form of cash, payment will be tendered by the acquisition
or merger candidate, because we have insufficient cash available. The amount of
any finder's fee cannot be determined as of the date of this registration
statement, but is expected to be comparable to consideration normally paid in
like transactions, which range up to ten (10%) percent of the transaction price.
No member of management will receive any finders fee, either directly or
indirectly, as a result of their respective efforts to implement our
25
<PAGE>
business plan.
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the Company for the
benefit of its employees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no related party transactions, or any other
transactions or relationships required to be disclosed pursuant to Item 404 of
Regulation S-B.
LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against us.
MARKET FOR OUR COMMON STOCK
There is no trading market for our common stock at present and there
has been no trading market to date. Management has not undertaken any
discussions with any prospective market maker concerning the participation in
the aftermarket for the Company's securities and management does not intend to
initiate any discussions until we have consummated a merger or acquisition. We
cannot guarantee that a trading market will ever develop or if a market does
develop, that it will continue.
Market Price
Our common stock is not quoted at the present time. The Securities and
Exchange Commission has adopted a Rule that established the definition of a
"penny stock," for purposes relevant to us, 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 stock in both public
offering 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.
Management intends to strongly consider undertaking a transaction with
any merger or acquisition
26
<PAGE>
candidate that will allow our securities to be traded without the aforesaid
limitations. However, we cannot predict whether, upon a successful merger or
acquisition, we will qualify our securities for listing on Nasdaq or some other
national exchange, or be able to maintain the maintenance criteria necessary to
insure continued listing. Failure to qualify our securities or to meet the
relevant maintenance criteria after qualification in the future may result in
the discontinuance of the inclusion of our securities on a national exchange.
However, trading, if any, in our securities may then continue in the non-Nasdaq
over-the-counter market. As a result, a shareholder may find it more difficult
to dispose of, or to obtain accurate quotations as to the market value of, our
securities.
Holders
There are two (2) holders of our common stock. In July 1997, we issued
500,000 of common stock for services in formation and organization valued at
$.0001 per share ($50.00). All of our issued and outstanding shares of common
stock were issued in accordance with the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933.
As of the date of this report, all of our common stock are eligible for
sale under Rule 144 promulgated under the '33 Act, as amended, subject to
certain limitations included in said Rule. In general, under Rule 144, a person
(or persons whose shares are aggregated), who has satisfied a one year holding
period, under certain circumstances, may sell within any three-month period a
number of shares that does not exceed the greater of one percent of the then
outstanding common stock or the average weekly trading volume during the four
calendar weeks prior to the sale. Rule 144 also permits, under certain
circumstances, the sale of shares without any quantity limitation by a person
who has satisfied a two-year holding period and who is not, and has not been for
the preceding three months, an affiliate.
Dividends
We have not paid any dividends to date, and have no plans to do so in
the immediate future.
Transfer Agent
We do not have a transfer agent at this time.
27
<PAGE>
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 100,000,000 shares, of common
stock, par value $.0001 per share. There are 500,000 shares of common stock
issued and outstanding as of the date of this filing.
Common Stock
All shares of common stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to be
voted upon by shareholders. The shares of common stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as fully
paid and nonassessable shares. Cumulative voting in the election of directors is
not permitted, which means that the holders of a majority of the issued and
outstanding shares of common stock represented at any meeting where a quorum is
present will be able to elect the entire Board of Directors if they so choose.
In that event, the holders of the remaining shares of common stock will not be
able to elect any directors. In the event of liquidation, each shareholder is
entitled to receive a proportionate share of our assets available for
distribution to shareholders after the payment of liabilities and after
distribution in full of preferential amounts, if any. All shares of our common
stock issued and outstanding are fully paid and nonassessable. Holders of stock
are entitled to share pro rata in dividends and distributions with respect to
the common stock, as may be declared by the Board of Directors out of funds
legally available therefor. We have no intention to issue additional shares of
stock.
There are no outstanding options or warrants to purchase, or securities
convertible into, our common equity. The 500,000 shares of our common stock
currently outstanding are restricted securities as that term is defined in the
Securities Act. Under Rule 144 of the Securities Act, if any of the shares being
offered by the selling shareholders are unsold, the holders of the restricted
securities may each sell a portion of their shares during any three (3) month
period after January 29, 1999.
SHARES ELIGIBLE FOR FUTURE RESALE
There has been no public market for our common stock and we cannot assure
you that a significant public market for our common stock will be developed or
be sustained after this offering. Sales of substantial amounts of common stock
in the public market after this offering, or the possibility of substantial
sales occurring, could adversely affect prevailing market prices for the common
stock or our future ability to raise capital through an offering of equity
securities.
Upon completion of this offering, we will have 500,000 shares outstanding.
The 500,000 shares sold in this offering will be freely tradeable without
restriction or further registration under the Securities Act unless purchased by
"affiliates" of Consumer Marketing Corporation, as that term is defined in Rule
144 under the Securities Act ("Rule 144") described below. Sales of outstanding
shares to residents of certain states or jurisdictions may only be effected
pursuant to a registration in or applicable exemption from the registration
provisions of the securities laws of those states or jurisdictions.
In general, under Rule 144 as in effect at the closing of this
offering, beginning 90 days after the date of this prospectus, a person (or
persons whose shares are aggregated) who has beneficially owned Restricted
Shares for at least one year (including the holding period of any prior owner
who is not an affiliate of Consumer Marketing Corporation) would be entitled to
sell within any three-month period a number of shares that does not exceed the
greater of one percent of the then outstanding shares of common stock (5,000
shares immediately after this offering) or the average weekly trading volume of
the common
28
<PAGE>
stock during the four calendar weeks preceding the filing of a Form 144 with
respect to the sale. Sales under Rule 144 are also subject to certain manner of
sale and notice requirements and to the availability of current public
information about us. Under Rule 144(k), a person who is not deemed to have been
an affiliate of Consumer Marketing Corporation at any time during the 90 days
preceding a sale and who has beneficially owned the shares proposed to be sold
for at least two years (including the holding period of any prior owner who is
not an affiliate) is entitled to sell their shares without complying with the
manner of sale, public information, volume limitation or notice provisions of
Rule 144.
WHERE CAN YOU FIND MORE INFORMATION?
We are a reporting company, and are subject to the reporting
requirements of the Exchange Act. We voluntarily filed a Form 10-SB on September
3, 1999. We have filed a registration statement with the SEC on form SB-2 to
register the offer and sale of the shares. This prospectus is part of that
registration statement, and, as permitted by the SEC's rules, does not contain
all of the information in the registration statement. For further information
about us and the shares offered under this prospectus, you may refer to the
registration statement and to the exhibits and schedules filed as a part of the
registration statement. You can review the registration statement and its
exhibits and schedules at the public reference facility maintained by the SEC at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the regional offices of the SEC at 7 World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. The registration statement is also
available electronically on the World Wide Web at http://www.sec.gov.
You can also call or write us at any time with any questions you may
have. We'd be pleased to speak with you about any aspect of our business and
this offering.
REPORTS TO STOCKHOLDERS
We intend to furnish our stockholders with annual reports containing
audited financial statements as soon as practicable at the end of each fiscal
year. Our fiscal year ends on June 30th.
PLAN OF DISTRIBUTION
We offer the right to subscribe for 500,000 shares at $.20 per share.
We propose to offer the shares directly on a best efforts, no minimum basis, and
no compensation is to be paid to any person for the offer and sale of the
shares.
The offering shall be conducted by our president. Although he is an
associated person of us as that term is defined in Rule 3a4-1 under the Exchange
Act, he is deemed not to be a broker for the following reasons:
He is not subject to a statutory disqualification as that term is
defined in Section 3(a)(39) of the Exchange Act at the time of his
participation in the sale of our securities.
He will not be compensated for his participation in the sale of our
securities by the payment of commission or other remuneration based
either directly or indirectly on transactions in securities.
29
<PAGE>
He is not an associated person of a broker or dealers at the time of
his participation in the sale of our securities.
He will restrict his participation to the following activities:
A. Preparing any written communication or delivering any
communication through the mails or other means that does not
involve oral solicitation by him of a potential purchaser;
B. Responding to inquiries of potential purchasers in a communication
initiated by the potential purchasers, provided however, that the
content of responses are limited to information contained in a
registration statement filed under the Securities Act or other
offering document;
C. Performing ministerial and clerical work involved in effecting any
transaction.
As of the date of this Prospectus, no broker has been retained by us
for the sale of securities being offered. In the event a broker who may be
deemed an underwriter is retained by us, an amendment to our registration
statement will be filed.
Arbitrary Determination of Offering Price
The offering price of $.20 per share has been arbitrarily determined by
us, and bears no relationship whatsoever to our assets, earnings, book value or
any other objective standard of value. Among the factors considered by us were:
A. The lack of operating history;
B. The proceeds to be raised by the offering;
C. The amount of capital to be contributed by the public in
proportion to the amount of stock to be retained by present
stockholders;
D. The current market conditions in the over-the-counter market
Method of Subscribing
Persons may subscribe by filling in and signing the share purchase
agreement and delivering it, prior to the expiration date, to us. The purchase
price of $.20 per share must be paid in cash or by check, bank draft or postal
express money order payable in United States dollars to our order. You may not
pay in cash.
LEGAL MATTERS
The validity of the shares offered under this prospectus is being
passed upon for us by Evers & Hendrickson, LLP of San Francisco, California.
30
<PAGE>
EXPERTS
Our financial statements as of the period ended June 30, 1999 and
period ended September 30, 1999, included in this prospectus and in the
registration statement, have been so included in reliance upon the reports of
Kish, Leake & Associates, P.C., independent certified public accountants,
included in this prospectus, and upon the authority of said firm as experts in
accounting and auditing. Our financial statements as of the period ended
December 31, 1999, included in this prospectus and in the registration
statement, have been so included in reliance upon the reports of Cordovano &
Harvey, P.C., independent certified public accountants, included in this
prospectus, and upon the authority of said firm as experts in accounting and
auditing.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article XII of the Articles of Incorporation and Article VI of our
Bylaws, as amended, set forth certain indemnification rights. Our Bylaws provide
that we will possess and may exercise all powers of indemnification of officers,
directors, employees, agents and other persons and all incidental powers and
authority. Our Board of Directors is authorized and empowered to exercise all of
our powers of indemnification, without shareholder action. Our assets could be
used or attached to satisfy any liabilities subject to indemnification. See
Exhibit 3.1 hereto.
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities
The Nevada Revised Statutes, as amended, authorize us to indemnify any
director or officer under certain prescribed circumstances and subject to
certain limitations against certain costs and expenses, including attorneys'
fees actually and reasonably incurred in connection with any action, suit or
proceedings, whether civil, criminal, administrative or investigative, to which
the person is a party by reason of being a director or officer if it is
determined that the person acted in accordance with the applicable standard of
conduct set forth in the statutory provisions. Our Articles of Incorporation
provides for the indemnification of directors and officers to the full extent
permitted by Nevada law.
We may also purchase and maintain insurance for the benefit of any
director or officer that may cover claims for situations where we could not
provide indemnification.
Although indemnification for liabilities arising under the '33 Act may
be permitted to officers, directors or persons controlling us under Nevada law,
we have been informed that in the opinion of the U.S. Securities and Exchange
Commission, this form of indemnification is against public policy as expressed
in the '33 Act, and is therefore unenforceable.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
In January, 2000, we appointed Cordovano & Harvey, P.C. to replace
Kish, Leake & Associates, P.C. as our principal accountants. The report of Kish,
Leake & Associates, P.C. on our financial statements did not contain an adverse
opinion or a disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope or accounting principles. We had no disagreements with
them on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure. We did not consult with Cordovano &
Harvey, P.C. on any accounting or financial reporting matters in the periods
31
<PAGE>
prior to their appointment. The change in accountants was approved by the Board
of Directors. We filed a Form 8-K with the Commission (File No. 000-27235) on
January 24, 2000.
32
<PAGE>
Financial Statements
The following financial statements are attached to this report and
filed as a part of this Registration Statement.
Table of Contents - June 30, 1999 Financial Statements.......................F-2
Independent Auditor's Report.................................................F-3
Balance Sheet as of June 30, 1999............................................F-4
Statement of Operations as of June 30, 1999..................................F-5
Statement of Cash Flows as of June 30, 1999..................................F-6
Statement of Shareholders' Equity as of June 30, 1999.......................F-7
Notes to Financial Statements as of June 30, 1999............................F-8
Unaudited Balance Sheet as of September 30, 1999............................F-11
Unaudited Statement of Operations as of September 30, 1999..................F-12
Unaudited Statement of Cash Flows as of September 30, 1999..................F-13
Unaudited Statement of Shareholders Equity as of September 30, 1999.........F-14
Notes to Unaudited Financial Statements as of September 30, 1999............F-15
Unaudited Balance Sheet as of December 31, 1999.............................F-16
Unaudited Statement of Operations as of December 31, 1999...................F-17
Unaudited Statement of Cash Flows as of December 31, 1999...................F-18
Notes to Unaudited Financial Statements as of December 31, 1999.............F-19
F-1
<PAGE>
Consumer Marketing Corporation
Audited Financial Statements
For the Years Ended June 30, 1999 and 1998
and the Period January 30, 1997 (Inception)
through June 30, 1999
<PAGE>
Consumer Marketing Corporation
TABLE OF CONTENTS
Page
Independent Auditors' Report F-3
Financial Statements
Balance Sheet F-4
Statement of Operations F-5
Statement of Cash Flow F-6
Statement of Shareholders' Equity F-7
Notes to the Financial Statements F-8 to
F-10
F-2
<PAGE>
KISH, LEAKE, & ASSOCIATES P.C.
7901 E BELLEVIEW AVE. - SUITE 220
ENGLEWOOD, COLORADO 80111
303.779.5006
Independent Auditors' Report
We have audited the accompanying balance sheet of Consumer Marketing Corporation
( a developmental stage company), as of June 30, 1999 and the related statements
of income, shareholders' equity, and cash flows for the fiscal years ended June
30, 1999 and 1998 and period January 30, 1997 (Inception) through June 30, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Consumer Marketing Corporation
at June 30, 1999 and the results of its operations and its cash flows for the
fiscal years ended June 30, 1999 and 1998 and the period January 30, 1997
(Inception) through June 30, 1999 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5, the Company is
in the development stage and has no operations as of June 30, 1999. The
deficiency in working capital as of June 30, 1999 raises substantial doubt about
its ability to continue as a going concern. Management's plans concerning these
matters are described in Note 5. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
August 23, 1999
F-3
<PAGE>
Consumer Marketing Corporation
(A Development Stage Company)
Balance Sheet
June
30, 1999
ASSETS $ 0
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES - Due to related entity 350
SHAREHOLDERS' EQUITY
Common Stock, $.0001 Par Value
Authorized 100,000,000 Shares; Issued
And Outstanding 500,000 Shares 50
Additional Paid In Capital On Common Stock 0
Deficit Accumulated During The Development Stage (400)
TOTAL SHAREHOLDERS' EQUITY (350)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 0
The Accompanying Notes Are An Integral Part Of
These Audited Financial Statements.
F-4
<PAGE>
Consumer Marketing Corporation
(A Development Stage Company)
Statement Of Operations
January
30, 1997
Fiscal Year Fiscal Year (Inception)
Ended Ended Through
June June June
30 1999 30, 1998 30 1999
Revenue $ 0 $ 0 $ 0
Expenses:
Licenses & Fees 350 0 350
Office 0 0 50
Total 350 0 400
Net (Loss) $ (350) $ 0 $(400)
Basic (Loss) Per Common Share $ 0.00 $ 0.00
Basic Common Shares Outstanding 500,000 500,000
The Accompanying Notes Are An Integral Part Of
These Audited Financial Statements.
F-5
<PAGE>
Consumer Marketing Corporation
(A Development Stage Company)
Statement Of Cash Flows
January
30, 1997
Fiscal Fiscal (Inception)
Year Ended Year Ended Through
June June June
30 1999 30, 1998 30 1999
Net (Loss) Accumulated During
The Development Stage $(350) $0 $(400)
Issuance Of Common Stock For
Services 0 0 50
0 0 0
Net Cash Flows From Operations (350) 0 (350)
Cash Flows From Investing Activities: 0 0 0
Cash Flows From Financing Activities:
Expenses paid by related entity 350 0 350
0 0 0
Cash Flows From Financing 350 0 350
Net Increase In Cash 0 0 0
Cash At Beginning Of Period 0 0 0
Cash At End Of Period $ 0 $0 $ 0
Non - Cash Activities:
Stock Issued For Services $ 0 $0 $ 50
The Accompanying Notes Are An Integral Part Of
These Audited Financial Statements.
F-6
<PAGE>
<TABLE>
Consumer Marketing Corporation
(A Development Stage Company)
Statement Of Shareholders' Equity
<CAPTION>
Deficit
Accumulated
Number Of Capital Paid During The
Common Common In Excess Development
Shares Stock of Par Value Stage Total
<S> <C> <C> <C> <C> <C>
Balance At January 30, 1997 0 $ 0 $0 $ 0 $ 0
Issuance Of Common Stock:
January 30, 1997 for Services Valued
at $.0001 Per Share 500,000 50 0 50
Net (Loss) (50) (50)
Balance At June 30, 1997 and 1998 500,000 50 0 (50) 0
Net (Loss) (350) (350)
Balance At June 30, 1999 500,000 $50 $0 $(400) $(350)
<FN>
The Accompanying Notes Are An Integral Part Of These Audited Financial Statements.
</FN>
</TABLE>
F-7
<PAGE>
Consumer Marketing Corporation
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended June 30, 1999 and 1998
Note 1 - Organization and Summary of Significant Accounting Policies
Organization:
On January 30, 1997, Consumer Marketing Corporation (the Company) was
incorporated under the laws of Nevada to engage in any lawful business or
activity for which corporations may be organized under the laws of the State of
Nevada
Development Stage:
The company entered the Development stage in accordance with SFAS No. 7 on
January 30, 1997. Its purpose is to evaluate, structure and complete a merger
with, or acquisition a privately owned corporation.
Statement of Cash Flows:
For the purpose of the statement of cash flows, the company considers demand
deposits and highly liquid-debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Cash paid for interest in fiscal year ended June 30, 1999 and 1998 was $-0-.
Cash paid for income taxes in fiscal year ended June 30, 1999 and 1998 was $-0-.
Basic (Loss) per Common Share:
Basic (Loss) per common share is computed by dividing the net loss for the
period by the weighted average number of shares outstanding at June 30, 1999 and
June 30, 1998.
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. Actual results could differ from those estimates.
F-8
<PAGE>
Consumer Marketing Corporation
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended June 30, 1999 and 1998
Note 2 - Capital Stock and Capital in Excess of Par Value
The Company initially authorized 25,000 shares of $1.00 par value common stock.
On January 30, 1997 the Board of Directors approved an increase in authorized
shares to 100,000,000 and changed the par value to $.0001. On January 30, 1997
the Company issued 500,000 shares of common stock for services valued at $.0001
per share or $50.
3 - Related Party Events
The Company maintains a mailing address at an officers place of business. This
address is located at Suite 106, 1460 Pandosy Street, Kelowna, B.C., Canada, V1Y
1P3. At this time the Company has no need for an office. As of June 30, 1999
management has incurred a minimal amount of time and expense on behalf of the
Company.
Note 4 - Income Taxes
At June 30, 1999, the company had net operating loss carryforwards available for
financial statement and Federal income tax purposes of approximately $400 which,
if not used, will expire in the year 2019.
The Company follows Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (SFAS #109), which requires, among other things,
an asset and liability approach to calculating deferred income taxes. As of June
30, 1999, the Company has a deferred tax asset of $53 which has been fully
reserved through the valuation allowance. The change in the valuation allowance
for 1999 is $53.
Note 5 - Basis of Presentation
In the course of its development activities the Company has sustained continuing
losses and expects such losses to continue for the foreseeable future. The
Company's management plans on advancing funds on an as needed basis and in the
longer term, revenues from the operations of a merger candidate, if found. The
Company's ability to continue as a going concern is dependent on these
additional management advances, and, ultimately, upon achieving profitable
operations through a merger candidate.
F-9
<PAGE>
Consumer Marketing Corporation
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended June 30, 1999 and 1998
Note 6 - Subsequent Events
On June 25, 1999 the Company filed amended articles with the state of Nevada to
change the authorized shares to the 100,000,000 original approved by the Board
of Directors on January 30, 1997. Nevada Revised Statues Section 78.385(c)
treats this amendment as if it was filed on July 18, 1997 therefore giving the
Company enough shares for the original issuance of 500,000 shares of common
stock.
The Board of Directors approved June 30, 1999 as the Company's fiscal year end.
The Company will be filing a form 10 SB with the Securities and Exchange
Commission thereby electing to be a reporting company under the Securities Act
of 1934.
F-10
<PAGE>
Consumer Marketing Corporation
(A Development Stage Company)
Unaudited Balance Sheet
Unaudited Audited
September June
30, 1999 30, 1999
ASSETS $ 0 $ 0
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Accounts Payable $ 242 $ 0
Advances Due to Related Entity 5,350 350
Total Current Liabilities 5,592 350
TOTAL LIABILITIES 5,592 350
SHAREHOLDERS' EQUITY
Common Stock, $.0001 Par Value
Authorized 100,000,000 Shares;
Issued And Outstanding 500,000 Shares 50 50
Capital Paid In Excess Of
Par Value Of Common Stock 0 0
(Deficit Accumulated During the Development Stage (5,642) (400)
TOTAL SHAREHOLDERS' EQUITY (5,592) (350)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 0 $ 0
The Accompanying Notes Are An Integral Part Of
These Unaudited Financial Statements.
F-11
<PAGE>
<TABLE>
Consumer Marketing Corporation
(A Development Stage Company)
Unaudited Statement Of Operations
<CAPTION>
Unaudited
Unaudited Unaudited January
Three Month Three Month 30, 1997
Interim Period Interim Period (Inception)
Ended Ended Through
September September September
30, 1999 30, 1998 30, 1999
<S> <C> <C> <C>
Revenue $ 0 $ 0 $ 0
Expenses:
Licenses 0 0 350
Office 0 0 50
Legal and Accounting 5,242 0 5,242
Total Expenses 5,242 0 5,642
Net Income (Loss) $ (5,242) $ 0 $5,642
Basic Earnings (Loss) Per Share $ (0.01) $ 0.00
Weighted Average Common Shares
Outstanding 500,000 500,000
<FN>
The Accompanying Notes Are An Integral Part Of These Unaudited Financial Statements.
</FN>
</TABLE>
F-12
<PAGE>
<TABLE>
Consumer Marketing Corporation
(A Development Stage Company)
Unaudited Statement Of Cash Flows
<CAPTION>
Unaudited
Unaudited Unaudited January
Three Month Three Month 30, 1997
Interim Period Interim Period (Inception)
Ended Ended Through
September September September
30, 1999 30, 1998 30, 1999
<S> <C> <C> <C>
Net (Loss) $(5,242) $0 $(5,642)
Adjustments To Reconcile Net Loss To Net Cash
Used In Operating Activities:
Stock Issued For Services 0 0 50
Expenses Paid by Related Entity on Behalf of Company 5,000 0 5,350
Increase in Accounts Payable 242 242
Net Cash Flows Provided By Operations 0 0 0
Cash Flows From Investing Activities:
Net Cash Flows Provided By Investing Activities 0 0 0
Cash Flows From Financing Activities:
Issuanance of Common Stock 0 0 0
Net Cash Flows Provided By Financing Activities 0 0 0
Net Increase In Cash 0 0 0
Cash At Beginning Of Period 0 0 0
Cash At End Of Period $ 0 $0 $ 0
Summary of non-cash investing and financing activities:
Stock Issued for Services $ 0 $0 $50
Expenses Paid by Related Entity on Behalf of Company $ 5,000 $0 $ 5,350
<FN>
The Accompanying Notes Are An Integral Part Of These Unaudited Financial Statements.
</FN>
</TABLE>
F-13
<PAGE>
<TABLE>
Consumer Marketing Corporation
(A Development Stage Company)
Unaudited Statement of Shareholders' Equity
<CAPTION>
(Deficit)
Accumulated
Number Of Additional During The
Common Common Paid-In Development
Shares Stock Capital Stage Total
<S> <C> <C> <C> <C> <C>
Balance At January 30, 1997 0 $ 0 $0 $ 0 $ 0
Issuance of Common Stock:
January 30, 1997 for Services Valued
at $.0001 Per Share 500,000 50 50
Net Loss (400) (400)
Balance At June 30, 1997, 1998 and 1999 500,000 50 0 (400) (350)
Net Loss September 30, 1999 (5,242) (5,242)
Balance At September 30, 1999 500,000 $50 $0 $(5,642) $(5,592)
<FN>
The Accompanying Notes Are An Integral Part Of These Unaudited Financial Statements.
</FN>
</TABLE>
F-14
<PAGE>
Consumer Marketing Corporation
Notes to Unaudited Financial Statements
For The Three Month Period Ended September 30, 1999
Note 1 - Unaudited Financial Information
The unaudited financial information included for the three month interim period
ended September 30, 1999 were taken from the books and records without audit.
However, such information reflects all adjustments (consisting only of normal
recurring adjustments, which are of the opinion of management, necessary to
reflect properly the results of interim period presented.) The results of
operations for the three-month period ended September 30, 1999 are not
necessarily indicative of the results expected for the fiscal year ended June
30, 2000.
Note 2 - Financial Statements
Management has elected to omit substantially all footnotes relating to the
condensed financial statements of the Company included in the report. For a
complete set of footnotes, reference is made to the Company's Report on Form 10
for the year ended June 30, 1999 as filed with the Securities and Exchange
Commission and the audited financial statements included therein.
F-15
<PAGE>
Part I. Item 1. Financial Information
- ------- ------- ---------------------
CONSUMER MARKETING CORPORATION
(A Development Stage Company)
CONDENSED BALANCE SHEET
(Unaudited)
December 31, 1999
ASSETS
TOTAL ASSETS $ --
==============
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
LIABILITIES
Accrued liabilities........................... $ 1,781
--------------
TOTAL LIABILITIES 1,781
--------------
SHAREHOLDERS' (DEFICIT)
Common stock, $0001 par value, 100,000,000
shares authorized, 500,000 shares issued and
outstanding (See Note B).................... 50
Additional paidin capital..................... 5,592
Deficit accumulated during the development
stage....................................... (7,423)
--------------
TOTAL SHAREHOLDERS' (DEFICIT) (1,781)
$ --
==============
See accompanying notes to condensed financial staements
F-16
<PAGE>
<TABLE>
CONSUMER MARKETING CORPORATION
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Jauary 30, 1997
Three Months Ended Six Months Ended inception)
-------------------------- --------------------------- Through
December 31, December 31, December 31, December 31 December 31,
1999 1998 1999 1998 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
COSTS AND EXPENSES
Legal fees............................................. $ 1,298 $ -- $ 4,917 $ -- $ 4,917
Accounting fees........................................ 483 -- 2,106 -- 2,106
Licenses and fees...................................... -- -- -- -- 350
Stockbased compensation for
organizational costs (Note B)...................... -- -- -- -- 50
LOSS FROM OPERATIONS (1,781) -- (7,023) -- (7,423)
INCOME TAX BENEFIT (EXPENSE) (NOTE C)
Current tax benefit.................................... 339 -- 1,337 -- 1,413
Deferred tax expense................................... (339) -- (1,337) -- (1,413)
NET LOSS $ (1,781) $ -- $ (7,023) $ -- $ (7,423)
============ ============ ============= ============ ============
BASIC AND DILUTED
LOSS PER COMMON SHARE............................... $ * $ * $ * $ * $ *
============ ============ ============= ============ ============
BASIC AND DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING........................... 500,000 500,000 500,000 500,000 500,000
============ ============ ============= ============ ============
<FN>
* Less than 01 per share
See accompanying notes to condensed financial staements
</FN>
</TABLE>
F-17
<PAGE>
<TABLE>
CONSUMER MARKETING CORPORATION
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Jauary 30, 1997
Six Months Ended inception)
--------------------------- Through
December 31, December 31 December 31,
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................................... $ (7,023) $ -- $ (7,423)
Noncash transactions:
Stockbased compensation for
organizational costs (Note B)....... -- -- 50
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities 1,431 -- 1,781
------------ ------------ ------------
NET CASH (USED IN)
OPERATING ACTIVITIES $ (5,592) $ -- $ (5,592)
------------ ------------ ------------
FINANCING ACTIVITIES
Third party expenses paid by affiliate on
behalf of the company, recorded as
additionalpaidin capital................. 5,592 -- 5,592
------------ ------------ ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 5,592 -- 5,592
------------ ------------ ------------
NET CHANGE IN CASH -- -- --
Cash, beginning of period.................. -- -- --
------------ ------------ ------------
CASH, END OF PERIOD $ -- $ -- $ --
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest................................. $ -- $ -- $ --
============ ============ ============
Income taxes............................. $ -- $ -- $ --
============ ============ ============
Noncash financing activities:
500,000 shares common stock
issued for services $ -- $ -- $ 50
============ ============ ============
<FN>
See accompanying notes to condensed financial staements
</FN>
</TABLE>
F-18
<PAGE>
CONSUMER MARKETING CORPORATION
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE A: BASIS OF PRESENTATION
The condensed financial statements presented herein have been prepared by the
Company in accordance with the accounting policies in its audited financial
statements for the year ended June 30, 1999 as filed in its form 10-SB filed
September 27, 1999 and should be read in conjunction with the notes thereto. The
Company entered the development stage in accordance with Statement of Financial
Accounting Standard ("SFAS") No. 7 on January 30, 1997 and is a "blank check"
company with the purpose to evaluate, structure and complete a merger with, or
acquisition of, a privately owned corporation.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the year.
Interim financial data presented herein are unaudited.
NOTE B: RELATED PARTY TRANSACTIONS
The Company has issued an officer 500,000 shares of common stock in exchange for
services related to management and organization costs of $50. The officer will
provide administrative and marketing services as needed. The officer may, from
time to time, advance to the Company any additional funds that the Company needs
for costs in connection with searching for or completing an acquisition or
merger.
The Company does not maintain a checking account and all expenses incurred by
the Company are paid by an affiliate. For the three months ended December 31,
1999 the Company incurred legal expense of $1,298 and accounting expense of
$483. For the six months ended December 31, 1999 the Company incurred legal
expense of $4,917, and accounting expense of $2,106. The affiliate does not
expect to be repaid for the expenses it pays on behalf of the Company.
Accordingly, as the expenses are paid, they are classified as additional paid-in
capital.
NOTE C: INCOME TAXES
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". The Company incurred
net operating losses during the periods shown on the condensed financial
statements resulting in a deferred tax asset, which was fully allowed for,
therefore the net benefit and expense result in $-0- income taxes.
F-19
<PAGE>
================================================================================
You should rely only on the information
contained in this prospectus. We have
not authorized anyone to provide you 500,000 Shares
with information different from that common stock
contained in this prospectus. We are
offering to sell, and seeking offers to
buy, shares of common stock only in
jurisdictions where offers and sales are
permitted. The information contained in
this prospectus is accurate only as of
the date of this prospectus, regardless
of the time of delivery of this
prospectus or of any sale of our common
stock. In this prospectus, the words
"we," "us" and "our" refer to Consumer
Marketing Corporation (unless the
context indicates otherwise). CONSUMER MARKETING
CORPORATION
TABLE OF CONTENTS
PROSPECTUS SUMMARY ................... 3
LIMITED STATE REGISTRATION ........... 3
SUMMARY FINANCIAL INFORMATION ........ 4
RISK FACTORS ......................... 7
YOUR RIGHTS AND SUBSTANTIVE
PROTECTION UNDER RULE 419 .......... 12
DILUTION ............................. 13
USE OF PROCEEDS ...................... 13 ____________________
CAPITALIZATION ....................... 14
DESCRIPTION OF BUSINESS .............. 15 PROSPECTUS
PLAN OF OPERATION .................... 16 ____________________
DESCRIPTION OF PROPERTY .............. 21
PRINCIPAL AND SELLING SHAREHOLDERS ... 22
MANAGEMENT ........................... 23
EXECUTIVE COMPENSATION ............... 25 ________________, 2000
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS ............... 26
LEGAL PROCEEDINGS .................... 26
MARKET FOR OUR COMMON STOCK .......... 26
DESCRIPTION OF SECURITIES ............ 28
SHARES ELIGIBLE FOR FUTURE RESALE .... 28
WHERE CAN YOU FIND MORE INFORMATION .. 29
REPORTS TO STOCKHOLDERS .............. 29
PLAN OF DISTRIBUTION ................. 29
LEGAL MATTERS ........................ 30
EXPERTS .............................. 31
INDEMNIFICATION OF OFFICERS AND
DIRECTORS .......................... 31
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE ............... 31
FINANCIAL STATEMENTS .................F-1
================================================================================
<PAGE>
Part II. Information Not Required In Prospectus
Item 24. Indemnification of officers and directors
The information required by this Item is incorporated by reference to
"Indemnification of Officers and Directors" in the Prospectus.
Item 25 -- Other Expenses of Issuance and Distribution
Our estimated expenses in connection with the issuance and distribution
of the securities being registered are estimated to be as follows:
Securities and Exchange Commission filing fee $ 7.00
Blue Sky filing fees 500.00
Legal fees and expenses 6,000.00
Printing 1,500.00
Marketing expenses 1,000.00
Miscellaneous 500.00
-----------
Total $ 9,507.00
===========
We will bear all expenses shown above.
Item 26 -- Recent Sales of Unregistered Securities
On January 30, 1997, the Company issued 500,000 shares of common stock
to Devinder Randhawa, for $50. The Company relied on exemption provided by
Section 4(2) of the Securities Act of 1933, as amended, for the issuance of
500,000 shares of common stock to Mr. Randhawa. All of the shares of common
stock of the Company previously issued have been issued for investment purposes
in a "private transaction" and are "restricted" shares as defined in Rule 144
under the '33 Act, as amended. These shares may not be offered for public sale
except under Rule 144, or otherwise, pursuant to the '33 Act.
On January 30, 1997, Mr. Randhawa gifted 152,000 shares of common stock
to Bob Hemmerling, President of the Company and 196,000 shares of common stock
to seven other shareholders for a total of 348,000 shares of common stock. The
shares were gifted to increase the number of shareholders. Mr. Randhawa relied
on exemption provided by Section 4(1) of the Securities Act of 1933, as amended,
for the transfer of the 348,000 shares. As of the date of this filing, the
196,000 gifted shares were returned to Mr. Randhawa All of these shares are
"restricted" shares as defined in Rule 144 under the Securities Act of 1933, as
amended (the "Act"). As of April 24, 2000, certificates representing the 196,000
shares were returned to Mr. Randhawa.
As of the date of this report, all of the issued and outstanding shares
of the Company's common stock are eligible for sale under Rule 144 promulgated
under the '33 Act, as amended, subject to certain limitations included in said
Rule.
In general, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period, under certain
circumstances, may sell within any three-month period a number of shares that
does not exceed the greater of one percent of the then outstanding common stock
or the average weekly trading volume during the four calendar weeks prior to
such sale. Rule 144 also permits, under certain circumstances, the sale of
shares without any quantity limitation by a person who has satisfied a two-year
holding period and who is not, and has not been for the preceding three months,
an affiliate of the Company.
II-2
<PAGE>
Item 27-Exhibits
3.1* Articles of Incorporation
3.2* Amendment to Articles of Incorporation
3.3* Bylaws
4.1* Specimen Informational Statement
4.1.1* Form of Lock-up Agreement Executed by the
Company's Shareholders
5.1 Opinion of Evers & Hendrickson, LLP with respect
to the legality of the shares being registered
23.1.1** Consent of Kish, Leake & Associates, P.C.
23.1.2** Consent of Cordovano & Harvey, P.C.
23.2 Consent of Evers & Hendrickson, LLP (included in Exhibit 5.1)
27.1*** Financial Data Schedule
99.1** Escrow Agreement
*Previously filed with the Company's Form 10-SB, filed September 3, 1997.
**To be filed in an amendment.
***Previously filed with the Company's Form 10-QSB, filed February 15, 2000.
II-3
<PAGE>
Item 28 -- Undertakings
We undertake that we will:
1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information in the registration
statement; and
(iii) Include any additional or changed material
information on the plan of distribution.
2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at
that time to be the bona fide offering.
3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
We undertake to provide to the underwriters at the closing specified in
the underwriting agreement certificates in such denominations and registered in
such names as the underwriter requires to permit prompt delivery to each
purchaser.
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, we have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
II-4
<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 for filing on Form SB-2 and authorized this registration
statement on Form SB-2 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Kelowna, Province of British Columbia, Canada,
on April 24, 2000.
Consumer Marketing Corporation
/s/Devinder Randhawa
--------------------
Devinder Randhawa, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
Signature Title Date
- --------- ----- ----
/s/Devinder Randhawa April 24, 2000
- --------------------
Devinder Randhawa President, Director
/s/Bob Hemmerling April 24, 2000
- -----------------
Bob Hemmerling Director
II-5
<PAGE>
POWER OF ATTORNEY
I, Devinder Randhawa, whose signature appears below, constitute and
appoint Bob Hemmerling, my true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution in him, for him and in his name, place
and stead, and in any and all capacities, to sign the Registration Statement on
Form SB-2, and any required amendments or supplements thereto, (and any other
registration statement for the same Offering that is to be effective upon filing
pursuant to Rule 415 under the Securities Act of 1933, as amended) and to file
the same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent, full power and authority to do and perform each and every act and
thing requisite or necessary to be done in or about the premises, for to all
intents and purposes as she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or her substitute or
substitutes lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney
to be executed as of this 24th day of April, 2000.
/S/ Devinder Randhawa
---------------------
II-6
Evers &
Hendrickson, LLP
- --------------------------------------------------------------------------------
155 Montgomery Street, 12th Floor, San Francisco, CA 94104
Antoine M. Devine
Partner
Direct (415) 772-8109
Main (415) 772-8100
Fax (415) 772-8101
April 24, 2000 [email protected]
Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Consumer Marketing Corporation, Legality of Shares
Dear Madam/Sirs:
We have made reasonable inquiry and are of the opinion that the
securities being offered, will, when sold, be legally issued, fully paid and
non-assessable.
We are not opining as to any other statements contained in the Form
SB-2 registration statement, nor as to matters that occur after the date
thereof.
Very truly yours,
Evers & Hendrickson, LLP
/s/ Antoine M. Devine
--------------------------------
By: Antoine M. Devine, Partner
cc: Devinder Randhawa
