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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
Amendment No. 1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BALSAM VENTURES, INC.
(Name of small business issuer in its charter)
NEVADA 52-2219056
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
SEC File No.: 333-33574
BALSAM VENTURES, INC.
12 - 5880 Hampton Place
Vancouver, British Columbia V6T 2E9
Tel: (604) 222-2657
(NAME, ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICE)
--------------------------------
ROBERT SMITH, PRESIDENT
12 - 5880 Hampton Place
Vancouver, British Columbia, Canada V6T 2E9
Tel: (604) 222-2657
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
--------------------------------
COPIES OF COMMUNICATIONS TO:
MICHAEL A. CANE, ESQ.
101 Convention Center Dr., Suite 1200
Las Vegas, NV 89109
(702) 312-6255
--------------------------------
Approximate date of proposed sale to the public: As soon as practicable
after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |__|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |__|
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |__|
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. |__|
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH PROPOSED PROPOSED
CLASS OF MAXIMUM MAXIMUM
SECURITIES OFFERING AGGREGATE AMOUNT OF
TO BE AMOUNT TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED UNIT (1) PRICE (2) FEE (2)
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Common Stock 5,100,000 shares $0.20 $1,020,000 $270
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(1) Based on last sales price on December 31, 1999
(2) Estimated solely for the purpose of calculating the registration fee
in accordance with Rule 457 under the Securities Act.
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 SECTION 8(a), MAY DETERMINE.
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PROSPECTUS
BALSAM VENTURES, INC.
5,100,000 SHARES
COMMON STOCK
----------------
The selling shareholders named in this prospectus are offering all of
the shares of our common stock offered through this prospectus. See
the section entitled "Selling Shareholders." The shares were
acquired by the selling shareholders directly from us in two private
offerings that were exempt from registration under the US securities
laws. See the section entitled "Description of Securities."
Our common stock is presently not traded on any market or securities
exchange.
----------------
The purchase of the securities offered through this prospectus
involves a high degree of risk. See section entitled "Risk Factors"
on pages 4 - 8.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities
or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
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The Date Of This Prospectus Is: May 19, 2000
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TABLE OF CONTENTS
PAGE
Summary ....................................................... 3
Risk Factors .................................................. 4
Use of Proceeds ............................................... 8
Determination of Offering Price ............................... 8
Dilution ...................................................... 9
Selling Shareholders .......................................... 9
Plan of Distribution .......................................... 12
Legal Proceedings ............................................. 13
Directors, Executive Officers, Promoters and Control Persons .. 14
Security Ownership of Certain Beneficial Owners and Management 14
Description of Securities ..................................... 15
Interests of Named Experts and Counsel ........................ 16
Disclosure of Commission Position of Indemnification for
Securities Act Liabilities ................................. 16
Organization Within Last Five Years ........................... 16
Description of Business ....................................... 16
Plan of Operation ............................................. 22
Description of Property ....................................... 23
Certain Relationships and Related Transactions ................ 23
Market for Common Equity and Related Stockholder Matters ...... 23
Executive Compensation ........................................ 24
Financial Statements .......................................... 25
Changes in and Disagreements with Accountants Disclosure ...... 25
Available Information ......................................... 26
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SUMMARY
The following summary is only a shortened version of the more
detailed information, exhibits and financial statements appearing
elsewhere in this prospectus. Prospective investors are urged to
read this prospectus in its entirety.
Balsam Ventures, Inc.
Our plan is to develop and market a web site on the Internet at
www.usacitizenship.net designed to provide information on the process
of immigrating into the United States from foreign countries. Our
target users are citizens of foreign countries seeking to work or
immigrate to the United States. Our objective is to become a leading
web site for information on the process of immigrating into the
United States. Once development of our USA citizenship web site is
complete, we plan to sell advertising on the site to generate income.
We were incorporated on August 17, 1999 under the laws of the state
of Nevada. We acquired the domain name for our
www.usacitizenship.net Internet web site in October 1999. The
website is currently under development and is thus not operational at
this time.
We have not begun any business operations. We have only recently
commenced the development of our web site which is in a conceptual
stage and will require substantial development before it can be
offered on a commercial basis. Accordingly, our business is in the
start-up phase and we have not earned any revenues to date.
OFFERING
Securities Being Offered Up to 5,100,000 shares of common stock. See
section entitled "Description of Securities
to be Registered."
Securities Issued
And to be Issued 10,100,000 shares of common stock were issued
and outstanding as of the date of this
prospectus. All of the common stock to be
sold under this prospectus will be sold by
existing shareholders. See section entitled
"Description of Securities to be Registered."
Use of Proceeds We will not receive any proceeds from the
sale of the common stock by the selling
shareholders. See section entitled "Use of
Proceeds."
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RISK FACTORS
An investment in our common stock involves a high degree of risk.
You should carefully consider the risks described below and the other
information in this prospectus and any other filings we may make with
the United States Securities and Exchange Commission in the future
before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could
be seriously harmed. The trading price of our common stock could
decline due to any of these risks, and you may lose all or part of
your investment.
Risks Related To Our Financial Condition And Business Model
If We Are Not Successful in Earning Revenues or If Our Development and
Marketing Costs Are Greater Than Anticipated, We Will Require
Additional Financing Which May Not Be Available To Us
We had cash in the amount of $70,872 as of December 31, 1999. Our
business plan calls for significant expenses in connection with the
development and marketing of our web site. In addition, we
anticipate that revenues from operations will not be realized until
sometime after the development of our web site is complete. While we
have sufficient cash to complete our business plan over the next
twelve months, we may require additional financing in order to
complete development and marketing of our business if the costs of
the development and marketing of our web site are greater than
anticipated. In addition, we may require additional financing to
sustain our business operations if we are not successful in earning
revenues once development and marketing of our web site is complete.
We do not currently have any arrangements for financing and we can
provide no assurance to investors that we will be able to find such
financing if required. Obtaining additional financing would be
subject to a number of factors, including market conditions, investor
acceptance of our business plan, and investor sentiment. These
factors may make the timing, amount, terms or conditions of
additional financing unavailable to us.
Because We Have Only Recently Commenced Business Operations, We Face
A High Risk of Business Failure
We were incorporated in August 1999. We acquired our domain name for
our web site in October 1999. We are presently in the process of
starting development of our web site. We have not yet earned any
revenues. Accordingly, we have no operating history for investors to
evaluate our business. An investor should consider the risks,
expenses and uncertainties that an early stage company like ours
faces. These risks include our ability to:
(1) develop a functioning and marketable web site focused on
United States immigration information;
(2) attract users to our web site once development is complete;
(3) successfully market our web site to advertisers once
development is complete;
(4) respond effectively to competitive pressures;
(5) continue to develop and upgrade our web site once
development is complete.
If we are unsuccessful in addressing these risks, our business will
most likely fail.
4
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Because We Have Only Recently Commenced Business Operations, We
Expect to Incur Operating Losses For The Foreseeable Future
We have never been profitable. As of December 31, 1999, we had an
accumulated deficit of approximately $2,926. Prior to completion of
our web site, we anticipate that we will incur increased operating
expenses without realizing any revenues. We therefore expect to
incur significant losses into the foreseeable future and recognize
that if we are unable to generate significant revenues from the sale
of advertising on our web site, we will not be able to achieve
profitability or continue operations.
Risks Related To Our Market And Strategy
If The Internet Is Not Widely Accepted As A Medium For Advertising
And Commerce, Our Business May Fail
We expect to derive the majority of our revenue from Internet
advertising. Internet advertising constitutes a new and rapidly
evolving market. If the Internet is not accepted as a medium for
advertising, then we may not be able to generate revenues and our
business may fail.
If The Audience Targeted By Our Web Site Does Not Prove Desirable To
Potential Advertisers, Our Business May Fail
Companies may choose not to advertise on our web site if they
perceive that our audience demographic is not desirable for their
products or that advertising on our web site is not effective for
their sales. Factors which will affect our ability to attract
advertisers include our ability to develop a desirable audience
demographic for our web site, the attractiveness of our audience
demographic to web site advertisers and the presence of alternative
web sites that offer competition to advertising on our web site. If
we are not successful in entering into agreements with advertisers
for advertising on our web site, then we may not be able to generate
revenues and our business may fail.
If We Are Unable To Develop A Marketable Web Site, Then Our Business
Will Fail
Our web site is in its development stage. If we are unable to
develop an operating web site that is capable of attracting users and
convincing advertisers to pay for advertising, then we will not be
able to generate revenues. If we fail to earn revenues which exceed
our operating costs upon the completion and subsequent marketing of
our web site, our business will most likely fail.
If We Are Unable To Hire And Retain Key Personnel, We May Not Be Able
To Implement Our Business Plan And Our Business Will Fail
Our success will be largely dependent on our ability to hire highly
qualified computer programmers, sales and technical personnel who can
develop the web site. These individuals are in high demand and we may
not be able to attract the staff we need. In addition, we may not be
able to afford the high salaries and fees demanded by qualified
personnel, or may lose such employees after they are hired.
Currently, we have hired any key personnel. Our failure to hire key
personnel when needed would have a significant negative effect on our
business.
5
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If We Are Not Able To Effectively Respond To Competitors, Our
Business May Fail
There are other companies who provide information similar to what we
propose to offer on our proposed web site. Competition for customers
is likely to be intense and is expected to increase significantly in
the future because of the growth of the Internet. Increased
competition could result in:
(1) lower than projected usage of our web site;
(2) our inability to attract advertisers who are prepared to
pay for advertising;
(3) decreased advertising rates that advertisers are prepared
to pay;
(4) our inability to develop a web site with features and
usability sought by potential customers.
Any one of these results could adversely affect our business,
financial condition and results of operations. In addition, our
competitors may develop competing web sites or traditional media
products that achieve greater market acceptance. It is also possible
that new competitors may emerge and acquire significant market share.
Our inability to achieve sales and revenue due to competition will
have a adverse effect on our business, financial condition and
results of operations.
Risks Related To Legal Uncertainty
If the Legal and Regulatory Environment of the Internet Changes, then
the Growth of the Internet Could be Significantly Slowed and Our
Business Will Be Negatively Effected
To date, governmental regulations have not materially restricted use
of the Internet. However, the legal and regulatory environment that
pertains to the Internet is uncertain and may change. Uncertainty and
new regulations could increase our costs of doing business and
prevent us from operating or marketing our web site. The growth of
the Internet may also be significantly slowed. This could delay
growth in potential demand for our web site information and limit our
ability to generate revenues. In addition to new laws and regulations
being adopted, existing laws which could impede growth of usage of
the Internet may be applied to the Internet that have not as yet been
applied. New and existing laws may cover issues that include:
(1) sales and other taxes;
(2) user privacy;
(3) pricing controls;
(4) characteristics and quality of products and services;
(5) consumer protection;
(6) cross-border commerce;
(7) libel and defamation;
(8) copyright, trademark and patent infringement; and
(9) other claims based on the nature and content of Internet
materials.
These new laws may impede the growth in usage of the Internet. If
the growth of the Internet and usage of the Internet is slowed, then
our ability to generate advertising revenues may be adversely
impacted with the result that our financial condition will be harmed.
6
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If We Are Required To Qualify To Do Business In Multiple
Jurisdictions, Our Business May Be Harmed
Because we may sell advertising for our web site in a number of
states and foreign countries, we may be subject to the laws and the
court systems of multiple jurisdictions. Such jurisdictions may claim
that we are required to qualify to do business as a foreign company.
This process of qualifying to do business can be costly and time
consuming and will generally have a negative effect on our ability to
show a profit from operations. Failure to qualify as a foreign
company in a jurisdiction where required to do so could subject us to
taxes and penalties.
Because We Will Provide Information To Users on Our Site, We May Be
Subject To Legal Claims Based On Inaccurate Information
If we are successful in developing and marketing our web site, we may
become subject to claims from our users based on allegations of
inaccurate or incomplete information regarding the immigration
process. Users who have relied on the immigration information on our
website may claim that the information is inaccurate or incomplete
and then may claim damages and commence legal actions against us to
enforce their claims. Although we plan to carry general liability
insurance when we commence marketing our web site, our insurance may
not cover all potential claims to which we are exposed or may not be
adequate to indemnify us for all liability. Any imposition of
liability that is not covered by insurance or is in excess of
insurance coverage could have an adverse effect on our business,
financial condition and results of operations. In addition, we can
provide no assurance that we will be able to obtain general liability
insurance coverage for our business.
Risks Related To This Offering
Because our President, Mr. Robert Smith, Owns 49.5% Of Our
Outstanding Common Stock, Investors May Find That Future Corporate
Decisions Are Controlled By Mr. Smith Who May Use This Control to
Advance his Own Interests at the Expense of Other Stockholders.
Mr. Robert S. Smith, our sole director and President, owns
approximately 49.5% of the outstanding shares of our common stock.
Accordingly, he will have a significant influence in determining the
outcome of all corporate transactions or other matters, including
mergers, consolidations and the sale of all or substantially all of
our assets, and also the power to prevent or cause a change in
control. The interests of Mr. Smith may differ from the interests of
the other stockholders. Factors which could cause the interests of
Mr. Smith to differ from the interest of other stockholders include
the impact of a corporate transaction on the business time required
to be devoted by Mr. Smith to our business and the ability of Mr.
Smith to continue to manage our business in the absence of the
anticipated corporate transaction.
Mr. Smith presently works up to fifteen days a month as a professional
airline pilot. While Mr. Smith presently possesses adequate time every
month to attend to the interests of Balsam, it is possible that the
demands of Mr. Smith's principal employment as a pilot could increase
with the result that he would no longer be able to devote sufficient
time to the management of our business. In addition, Mr. Smith may not
possess sufficient time for devotion to our business if the demands of
managing our business increase substantially beyond current levels.
Competing demands on Mr. Smith's business time may cause Mr. Smith to
have differing interests in approving significant corporate
transactions than other stockholders.
7
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If A Market For Our Common Stock Does Develop, Our Stock Price May Be
Volatile.
There is currently no market for our common stock and we can provide
no assurance that a market will develop. If a market develops, we
anticipate that the market price of our common stock will be subject
to wide fluctuations in response to several factors, including:
(1) actual or anticipated variations in our results of
operations;
(2) our ability or inability to generate new revenues;
(3) increased competition; and
(4) conditions and trends in the Internet and electronic
commerce industries.
Further, if our common stock is traded on the Nasdaq over the counter
bulletin board, our stock price may be impacted by factors that are
unrelated or disproportionate to our operating performance. The
trading prices of many technology companies' stocks are at or near
historical highs and reflect price earnings ratios substantially
above historical levels. These market fluctuations, as well as
general economic, political and market conditions, such as
recessions, interest rates or international currency fluctuations may
adversely affect the market price of our common stock.
We can provide no assurance that our common stock will be traded on
the Bulletin Board.
If Our Stock Price Drops Significantly, We May Become Subject To
Securities Litigation That Would Result In A Harmful Diversion Of Our
Resources
In the past, following periods of volatility in the market price of a
particular company's stock, securities class action litigation has
been brought against that company. Any litigation arising from the
volatility in the price of our common stock could have a adverse
effect upon our business, financial condition and results of
operations.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve
risks and uncertainties. We use words such as "anticipate,"
"believe," "plan," "expect," "future," "intend" and similar
expressions to identify such forward-looking statements. You should
not place too much reliance on these forward-looking statements. Our
actual results could differ materially from those anticipated in
these forward-looking statements for many reasons, including the
risks faced by us described in the "Risk Factors" section and
elsewhere in this prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock
offered through this prospectus by the selling shareholders.
DETERMINATION OF OFFERING PRICE
We will not determine the offering price of the common stock. The
offering price will be determined by market factors and the
independent decisions of the selling shareholders. See section
entitled "Selling Shareholders".
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DILUTION
The common stock to be sold by the selling shareholders is common
stock that is currently issued and outstanding. Accordingly, there
will be no dilution to our existing shareholders.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common
stock. We currently intend to retain future earnings, if any, to
finance the expansion of our business. As a result, we do not
anticipate paying any cash dividends in the foreseeable future.
SELLING SHAREHOLDERS
The selling shareholders named in this prospectus are offering all of
the 5,100,000 shares of common stock offered through this prospectus.
The shares include the following:
(A) 5,000,000 shares of our common stock that the selling
shareholders acquired from us in an offering that was
exempt from registration under Regulation S of the
Securities Act of 1933 and completed on October 29, 1999;
(B) 100,000 shares of our common stock that the selling
shareholders acquired from us in an offering that was
exempt from registration under Regulation D of the
Securities Act of 1933 and completed on December 24, 1999.
The following table provides as of March 15, 2000, information
regarding the beneficial ownership of our common stock held by each
of the selling shareholders, including:
(A) the number of shares owned by each prior to this offering;
(B) the total number of shares that are to be offered for each;
(C) the total number of shares that will be owned by each upon
completion of the offering;
(D) the percentage owned by each; and
(E) the identity of the beneficial holder of any entity that
owns the shares.
To the best of our knowledge, the named parties in the table that
follows are the beneficial owners and have the sole voting and
investment power over all shares or rights to the shares reported.
In addition, the table assumes that the selling shareholders do not
sell shares of common stock not being offered through this prospectus
and do not purchase additional shares of common stock. The column
reporting the percentage owned upon completion assumes that all
shares offered are sold, and is calculated based on 10,100,000 shares
outstanding on March 15, 2000.
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Total Total
Number Of Shares Percent
Shares To To Owned
Be Offered Be Owned Upon
Shares For Selling Upon Com-
Owned Prior Share- Completion pletion
Name and Address To This holders Of This Of This
Of Selling Stockholder Offering Account Offering Offering
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Thomas J. Brady 400,000 400,000 NIL NIL
1106 - 1100 Harwood Street
Vancouver, BC V6E 1R7
Deanna Centanni 450,000 450,000 NIL NIL
503 - 7321 Halifax Street
Burnaby, BC V5A 4R5
Cyrus Driver 450,000 450,000 NIL NIL
#1220 - 701 West
Georgia Street
P.O. Box 10123
Vancouver, BC V7Y 1C6
Dalton Dupasquier 350,000 350,000 NIL NIL
601 - 431 Pacific Street
Vancouver, BC V6Z 2P6
Paul A. Dumas 420,000 420,000 NIL NIL
1579 Jamestown
Ormstown, Quebec J0S 1K0
Gail Ginnetti 375,000 375,000 NIL NIL
7547 Lindrick Court
North Burnaby, BC
Terri Harper 450,000 450,000 NIL NIL
3424 Tunnah Road
Nanaimo, BC V9T 2V9
Jack Gilmour Morgan 450,000 450,000 NIL NIL
Box 55 Station A
Nanaimo, BC
Robert Morgan 450,000 450,000 NIL NIL
5435 Mildmay Road
Nanaimo, BC V9T 4Z3
Wayne Morgan 450,000 450,000 NIL NIL
#407 - 1128 Quebec Street
Vancouver, BC V6A 4E1
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-Table continued-
Total Total
Number Of Shares Percent
Shares To To Owned
Be Offered Be Owned Upon
Shares For Selling Upon Com-
Owned Prior Share- Completion pletion
Name and Address To This holders Of This Of This
Of Selling Stockholder Offering Account Offering Offering
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Karen Woodburn 400,000 400,000 NIL NIL
1516 Price Road, Box 255
Errington, BC V0R 1V0
James Worrall 355,000 355,000 NIL NIL
#406, 7272 Kingsway
Burnaby, BC
Michael J. Chikites 12,500 12,500 NIL NIL
2261 McBain Avenue
Vancouver, BC V6L 3B2
Wendy Furlan-Morgan 2,500 2,500 NIL NIL
4259 Clubhouse Drive
Nanaimo, BC V9T 4H8
Robert Dean 5,000 5,000 NIL NIL
3699 Hamond Bay Road
Nanaimo, BC
Brad Baker 2,500 2,500 NIL NIL
1002 - 3707 West 7th Avenue
Vancouver, BC V6Z 1W7
William Ban 5,000 5,000 NIL NIL
1315 Jordan Street
Coquitlam, BC V3B 6X5
Brenda Prebushewski 2,500 2,500 NIL NIL
#34 - 6380 121st Street
Surrey, BC V3X 1Y6
Chris Ahern 10,000 10,000 NIL NIL
3348 Tenyson Crescent
North Vancouver, BC V7K 2A8
Robert A. Ginnetti 10,000 10,000 NIL NIL
1328 Glen Abbey Drive
Burnaby, BC V5A 3Y4
Martyn Element 10,000 10,000 NIL NIL
24th Fl., 1177 W. Hastings St.
Vancouver, BC V6E 2K3
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-Table continued-
Total Total
Number Of Shares Percent
Shares To To Owned
Be Offered Be Owned Upon
Shares For Selling Upon Com-
Owned Prior Share- Completion pletion
Name and Address To This holders Of This Of This
Of Selling Stockholder Offering Account Offering Offering
--------------------------------------------------------------------------
Ian G. Watson 5,000 5,000 NIL NIL
2259 Ash Street
Vancouver, BC V5Z 4J8
Brian Dorman 5,000 5,000 NIL NIL
2496 Pirary Road
Nanaimo, BC V9R 5K3
Ted Harris 7,500 7,500 NIL NIL
4884 Fillinger Crescent, Box 865
Nanaimo, BC V9R 5N2
Bruce H. Campbell 2,500 2,500 NIL NIL
Box 16, Suite 404 - 595
Howe Street
Vancouver, BC V6C 2T5
Karen Woodburn 10,000 10,000 NIL NIL
1516 Price Road
Errington, BC V0R 1V0
Basilios Pantages 10,000 10,000 NIL NIL
Penthouse, 2033 Beach Avenue
Vancouver, BC V6G 1Z3
To our knowledge, none of the selling shareholders:
(1) has had a material relationship with Balsam other than as a
shareholder as noted above at any time within the past three
years; or
(2) has ever been an officer or directors of Balsam.
PLAN OF DISTRIBUTION
The selling shareholders have not informed us of how they plan to
sell their shares. However, they may sell some or all of their
common stock in one or more transactions, including block
transactions:
(1) on such public markets or exchanges as the common stock may
from time to time be trading;
(2) in privately negotiated transactions;
(3) through the writing of options on the common stock;
(4) in short sales; or
(5) in any combination of these methods of distribution.
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The sales price to the public may be:
(1) the market price prevailing at the time of sale;
(2) a price related to such prevailing market price; or
(3) such other price as the selling shareholders determine from
time to time.
The shares may also be sold in compliance with the Securities and
Exchange Commission's Rule 144.
The selling shareholders may also sell their shares directly to
market makers acting as principals or brokers or dealers, who may act
as agent or acquire the common stock as a principal. Any broker or
dealer participating in such transactions as agent may receive a
commission from the selling shareholders, or, if they act as agent
for the purchaser of such common stock, from such purchaser. The
selling shareholders will likely pay the usual and customary
brokerage fees for such services. Brokers or dealers may agree with
the selling shareholders to sell a specified number of shares at a
stipulated price per share and, to the extent such broker or dealer
is unable to do so acting as agent for the selling shareholders, to
purchase, as principal, any unsold shares at the price required to
fulfill the respective broker's or dealer's commitment to the selling
shareholders. Brokers or dealers who acquire shares as principals may
thereafter resell such shares from time to time in transactions in a
market or on an exchange, in negotiated transactions or otherwise, at
market prices prevailing at the time of sale or at negotiated prices,
and in connection with such re-sales may pay or receive commissions
to or from the purchasers of such shares. These transactions may
involve cross and block transactions that may involve sales to and
through other brokers or dealers. If applicable, the selling
shareholders also may have distributed, or may distribute, shares to
one or more of their partners who are unaffiliated with us. Such
partners may, in turn, distribute such shares as described above. We
can provide no assurance that all or any of the common stock offered
will be sold by the selling shareholders.
We are bearing all costs relating to the registration of the common
stock. Any commissions or other fees payable to brokers or dealers
in connection with any sale of the common stock, however, will be
borne by the selling shareholders or other party selling such common
stock.
The selling shareholders must comply with the requirements of the
Securities Act of 1933 and the Securities Exchange Act of 1934 in the
offer and sale of their common stock. In particular, during such
times as the selling shareholders may be deemed to be engaged in a
distribution of the common stock, and therefore be considered to be
an underwriter, they must comply with applicable law and may, among
other things:
(1) not engage in any stabilization activities in connection
with our common stock;
(2) furnish each broker or dealer through which common stock
may be offered, such copies of this prospectus, as amended
from time to time, as may be required by such broker or
dealer; and
(3) not bid for or purchase any of our securities or attempt to
induce any person to purchase any of our securities other
than as permitted under the Securities Exchange Act.
LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings.
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DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our sole executive officer and director and his respective age as of
March 15, 2000 is as follows:
Directors:
Name of Director Age
---------------------- ----
Robert S. Smith 54
Executive Officers:
Name of Officer Age Office
-------------------- ---- -------
Robert S. Smith 54 President, Secretary and
Treasurer
Set forth below is a brief description of the background and business
experience of Mr. Smith for the past five years.
Mr. Robert S. Smith is our President, Secretary and Treasurer and is
the sole member of our board of directors. Mr. Smith has been our
President, Secretary and Treasurer and a director since August 17,
1999. Mr. Smith has been a pilot with Air B.C., an airline with
operations in British Columbia, Canada, since 1994. Mr. Smith was
also employed by Air B.C. from 1986 to 1992. Mr. Smith was employed
by a private airline during the period from 1992 to 1994. Mr. Smith
commenced his aviation career as a pilot in 1975. Mr. Smith served
with the Canadian Armed Forces from 1964 to 1972. Mr. Smith
graduated from Prince of Wales College of St. Johns, Newfoundland,
Canada in 1963. Mr. Smith is also a partner in a private boat
building company.
Term of Office
Our Directors are elected for one-year terms, to hold office until
the next annual general meeting of the shareholders, or until removed
from office in accordance with our bylaws. Our officers are
appointed by our board of directors and hold office until removed by
the board.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person
known to us to own more than 5% of our outstanding common stock as of
March 15, 2000, and by the officers and directors, individually and
as a group. Except as otherwise indicated, all shares are owned
directly.
The percentage provided in the percent of class column is based on
10,100,000 shares of common stock issued and outstanding as of March
15, 2000.
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<PAGE>
Name and address Amount of Percent
Title of class of beneficial owner beneficial ownership of class
-------------- ------------------- -------------------- --------
Common Stock Robert S. Smith 5,000,000 shares 49.5%
Director, President
Secretary and Treasurer
Common Stock All Officers
and Directors 5,000,000 shares 49.5%
as a Group (1 person)
DESCRIPTION OF SECURITIES
General
Our authorized capital stock consists of 100,000,000 shares of common
stock at a par value of $0.001 per share.
The following description of our capital stock discloses all material
information relating to our common stock but is not a full summary of
all information relating to our common stock. The description is
subject to and qualified in its entirety by our articles of
incorporation and bylaws, which are included as exhibits to the
registration statement of which this prospectus forms a part, and by
the provisions of applicable Nevada law.
Common Stock
As of March 15, 2000, there were 10,100,000 shares of our common
stock issued and outstanding that were held by approximately 28
stockholders of record.
Holders of our common stock are entitled to one vote for each share
on all matters submitted to a stockholder vote. Holders of common
stock do not have cumulative voting rights. Therefore, holders of a
majority of the shares of common stock voting for the election of
directors can elect all of the directors. Holders of our common stock
representing a majority of the voting power of our capital stock
issued and outstanding and entitled to vote, represented in person or
by proxy, are necessary to constitute a quorum at any meeting of our
stockholders. A vote by the holders of a majority of our outstanding
shares is required to effectuate certain fundamental corporate
changes such as a liquidation, merger or an amendment to our Articles
of Incorporation.
Holders of common stock are entitled to share in all dividends that
the board of directors, in its discretion, declares from legally
available funds. In the event of a liquidation, dissolution or
winding up, each outstanding share entitles its holder to participate
pro rata in all assets that remain after payment of liabilities and
after providing for each class of stock, if any, having preference
over the common stock. Holders of our common stock have no pre-
emptive rights, no conversion rights and there are no redemption
provisions applicable to our common stock.
All shares offered by the selling stockholders are validly issued,
fully paid and non-assessable shares of our capital stock.
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<PAGE>
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or
certified any part of this prospectus or having given an opinion upon
the validity of the securities being registered or upon other legal
matters in connection with the registration or offering of the common
stock was employed on a contingency basis, or had, or is to receive,
in connection with the offering, a substantial interest, direct or
indirect, in the registrant or any of its parents or subsidiaries.
Nor was any such person connected with the registrant or any of its
parents or subsidiaries as a promoter, managing or principal
underwriter, voting trustee, director, officer, or employee.
Michael A. Cane of Cane & Company, LLC, our independent counsel, has
provided an opinion on the validity of our common stock.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
Our directors and officers are indemnified as provided by the Nevada
Revised Statutes (the "NRS") and our Bylaws. We have been advised
that in the opinion of the Securities and Exchange Commission
indemnification for liabilities arising under the Securities Act is
against public policy as expressed in the Securities Act, and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities is asserted by one of our
directors, officers, or controlling persons in connection with the
securities being registered, we will, unless in the opinion of our
legal counsel the matter has been settled by controlling precedent,
submit the question of whether such indemnification is against public
policy to a court of appropriate jurisdiction. We will then be
governed by the court's decision.
ORGANIZATION WITHIN LAST FIVE YEARS
We were incorporated on August 17, 1999 under the laws of the state
of Nevada. We acquired the domain name, www.usacitizenship.net, in
October 1999.
DESCRIPTION OF BUSINESS
Our business plan is to develop and market a free immigration
information service on the Internet from our "www.usacitizenship.net"
web site. We will design our web site to provide information on the
process of immigrating to the United States from foreign countries.
Our target users will be persons who are citizens of foreign
countries seeking to work in or immigrate to the United States. Our
objective is to become a leading web site for information on the
process of immigrating into the United States.
We acquired our "www.usacitizenship.net" domain name through the
domain name registration process in October 1999 at a cost of $70.
The website is currently under development and is thus not
operational at this time. Once development of our web site is
complete, we plan to sell advertising. We plan to solicit
advertisers whose target market includes the users of our web site.
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<PAGE>
Our web site is still in a conceptual stage of development and will
require substantial development before we are able to operate it on a
commercial basis. Accordingly, our business operations are in a
start-up phase and we have not earned any revenues to date.
Industry Background
Growth of the Internet and the World Wide Web
The Internet and the World Wide Web are experiencing dramatic growth
in terms of the number of users. The growth in the number of web
users and the amount of time users spend on the web is being driven
by the increasing importance of the Internet as a communications
medium and an information resource and a sales and distribution
channel. As Internet usage continues to grow, advertisers and
electronic commerce marketers are increasingly using the web to
locate customers, advertise and facilitate transactions.
Growth of Online Electronic Commerce
The Internet is dramatically affecting the methods by which consumers
and businesses are buying and selling goods and services. Electronic
commerce offers the opportunity to establish new competitive
standards by expanding distribution channels, integrating internal
and external processes and offering a cost-effective method of
providing products and services. Integration of internal and
external processes is the process where a customer's outside order is
integrated directly into a company's internal systems, such as
procurement, shipping and accounting. This integration streamlines
both the external and internal processes, increasing efficiency and
accuracy that, in turn, works to create a more competitive business
process. The Internet provides online merchants with the ability to
reach a global audience, operate with minimal infrastructure, reduced
overhead and increase economies of scale, while providing consumers
and businesses with a broad selection, increased pricing power and
convenience. As a result, a growing number of parties are transacting
business on the web.
Advertising on the Internet
The Internet allows advertisers to more precisely target desired
audiences while tracking impression levels, user demographics and the
effectiveness of the advertising. As a result, a growing number of
businesses are marketing their products and services on the Internet.
Immigration to the United States
The United States continues to be attractive to immigrants due to its
high standard of living, quality of life and employment
opportunities. People wishing to immigrate to the United States are
faced with the difficult task of finding information on the process
and applying it. These people have traditionally relied on a variety
of information sources, including the United States Department of
Immigration and Naturalization, lawyers and immigration advisers.
Developing the Web Site
Our basic plan is to develop a free web site that provides a reliable
source of information on immigration into the United States in order
to draw users to the site so that we can sell and generate revenues
from the sale of web site advertisements. We believe that the an
Internet web site which offers free information on the process of
immigrating into the United States would attract substantial
17
<PAGE>
usage.
We believe that if we are successful in attracting people to our web
site, we will be able to generate revenues from advertisers who are
interested in the demographics of our web site users
Features of the Web Site
We plan to design our web site to be an exciting, interactive and
easy to use information source on how to immigrate into the United
States. We plan to incorporate the following features into our Web
site in order to accomplish this objective:
(1) We will include information which is current and relevant
on the process of immigrating to the United States;
(2) We will present this immigration information in a clear and
easy to understand format;
(3) We will include immigration information in four principal
languages, in addition to English: Chinese, Hindi, French
and Japanese;
(4) We will include an on-line five-stage seminar on how to
immigrate;
(5) We will include links to the necessary forms required to be
submitted during the process of immigration;
(6) We will list addresses and contact information for national
and overseas United States Immigration and Naturalization
Service's offices;
(7) We will list names, address and contact information of
legal counsel who specialize in immigration into the United
States;
(8) We will provide a list of links to organizations that can
assist in the process of immigration.
(9) We will design the web site in order to allow the easy
addition or modification of content and advertisements in
order to reduce our long term operating cots.
Advertising Revenues
We plan to sell advertising space on the web site in the form of pay-
per-click advertising on banners, buttons and links. Pay-per-click
advertising is advertising in which an advertiser pays an advertising
fee based on the number of time visitors click on the advertiser's
advertisement on our web site. We plan to sell pay-per-click
advertising in pre-paid lots based on the number of clicks. The size
of the pre-paid lots will range from 500 clicks to 20,000 or more
clicks. We plan to sell in lots in order to attract only serious
advertisers. This advertising would be pre-paid as advertisers
would pay for advertising prior to an advertisement being placed on
our web site. If the number of clicks on an advertisement were to be
less than the total number of clicks purchased, there would be no
reimbursement to the advertiser.
We will design the web site so that it can have as many as 30
advertisers at one time. However, we will ensure that any one page
on our Web site will be limited to two advertisers in order to ensure
that advertisers and their products get the proper exposure. The
price charged for each button or banner advertisement will vary based
on the number of clicks bought and the positioning of the button or
banner on the site. The premium position on our Web site and the
most expensive for advertisements will be our home page.
For companies that are not comfortable with the pay-per-click method,
we plan to also offer advertising based on a weekly flat rate fee.
For advertising on a flat rate fee, the cost of each button or banner
will also vary based on the positioning of the advertisement within
the web site.
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<PAGE>
We plan to retain the services of a secured counter and tracking
company that will provide independent verification on the number of
click-throughs that occur. This independent verification will assist
in marketing our web site to advertisers.
Marketing
Our objective will be to commence marketing of the web site upon
completion of its development. This marketing strategy is subject to
our having sufficient funding to carry out our plan which should
include the following elements:
(1) A banner advertising program whereby we would pay for
advertising of the web site on other Internet web sites
where we feel exposure would help to increase traffic on
our web site.
(2) An e-mail program whereby advertisements for our web site
would be delivered to potential users and potential
advertisers.
(3) Strategic listing of our web site with major search engines
in order to increase the visibility of our web site when
users enter applicable keywords, such as "immigration",
with major search engines. We believe that many of the
people looking for information concerning immigration into
the United States will enter keywords such as
"immigration", "USA" and "United States" with major search
engines in order to find relevant web sites. Our objective
will be to ensure that our site is frequently cited by
major search engines when these keywords are searched.
(4) Reciprocal click-through agreements with complementary web
sites who are prepared to allow us to place links to our
web site on their web sites in consideration for us
permitting a reciprocal link to their web site on our web
site.
(5) We plan to make contact with many of the immigrant
communities across the United States to promote our web
site and also establish contacts for the web site. Many of
those who want to immigrate have relatives in the United
States and look to those relatives for assistance. We may
use traditional advertising media, such as newspaper
advertisements and flyers, to reach this market. We would
target our advertising through advertising in community
newspapers and flyers to neighborhoods with high
populations of immigrant communities.
The exact nature of our marketing plan will depend on a number of
factors, including the availability of funds to implement our
marketing plan and Internet marketing conditions and practices at the
time we complete development of our web site. We may pursue
different marketing strategies from the marketing strategies listed
above.
Operations
While we have formulated our business plan for the development of our
web site, we have not yet commenced the development of our web site.
This development work will consist of three components:
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<PAGE>
(1) the gathering of information on immigration for posting on
our Web site;
(2) web site design and programming;
(3) input of information on immigration into our web site.
Once this development work is complete, we will be able to commence
operations of our web site on the Internet.
We anticipate that we will purchase a computer server that will host
our web site on the Internet. We also anticipate that we will enter
into an agreement with an Internet service provider for the hosting
of our web site on the Internet. We will operate our web site and
computer server using commercially available computer software
programs and operating systems.
For more information on our plan of operations, see section entitled
"Plan of Operations".
Competition
We will compete with others, including:
(A) at least eight (8) web sites which are currently providing
information on the process of immigrating into the United
States, including:
(1) U.S. Immigration and Naturalization Office -
www.ins.usdoj.gov
(2) Canada Small Business Service Center -
www.sb.gov.bc.ca/smallbus
(3) www.visalaw.com
(4) www.burnslaw.com
(5) www.immigrationquide.com
(6) www.sirtech.com
(7) www.4immigration.com
(8) www.citizenshipvideo.com
(B) Law firms and immigration specialists who provide
information on immigration to the United States, sometimes
over the Internet on their own web sites.
The presence of established competitors could adversely affect our
ability to successfully implement our business plan and sell
advertising. If we are not successful in implementing our business
plan, then our business may fail.
We plan to differentiate our web sites from the competition by
including information which is not only accurate and up-to-date but
which is presented in an easy to use and understand format. We also
believe we will be the first to target advertisers who are seeking to
market products and services to people who are attempting to
immigrate to the United States. In order to sell to advertisers, we
may offer special rates that are below our cost.
We have limited financial, marketing, technical and other resources
that are necessary to implement our business plan. Many of our
current and potential competitors have significantly greater
financial, marketing, technical and other resources than we do. Our
competitors will most likely be able to devote greater resources to
the development, promotion and sale of their web sites that we can.
In
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<PAGE>
addition, our competitors may be able to offer the information we
are planning to offer, thereby reducing our ability to earn revenue.
Government Regulation
Due to the increasing popularity and use of the Internet, it is
possible that a number of laws and regulations may be adopted with
respect to the Internet generally, covering issues such as user
privacy, pricing, and characteristics and quality of products and
services. Similarly, the growth and development of the market for
Internet commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on those companies
conducting business over the Internet. The adoption of any
additional laws or regulations may decrease the growth of commerce
over the Internet, increase our cost of doing business or otherwise
have a harmful effect on our business.
To date, governmental regulations have not materially restricted use
of the Internet. However, the legal and regulatory environment that
pertains to the Internet is uncertain and may change. New and
existing laws may cover issues which include:
(1) sales and other taxes;
(2) user privacy;
(3) pricing controls;
(4) characteristics and quality of products and services;
(5) consumer protection;
(6) cross-border commerce;
(7) libel and defamation;
(8) copyright, trademark and patent infringement; and
(9) other claims based on the nature and content of Internet
materials.
These new laws may impact on the information we are able to post on
our web site and our ability to market and sell advertising on our
web site in accordance with our business plans.
We may have to qualify to do business in other jurisdictions. If we
achieve sales of advertising for our web site, we anticipate that our
sales and our customers will be in multiple states and foreign
countries. Such jurisdictions may claim that we are required to
qualify to do business as a foreign company. Failure to qualify as a
foreign company in a jurisdiction where required to do so could
subject us to taxes and penalties.
We are not aware of any environmental laws that will be applicable to
the operation of our Internet business.
Research and Development Expenditures
We have spent $170 on start-up and development expenses since the
commencement of our business in October 1999. These start-up and
development expenses have consisted of expenses associated with
acquisition of the domain name and the web site and a business plan
for the development of the web site. We have paid for all start-up
and development expenses incurred.
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<PAGE>
Employees
We have no full-time employees and one (1) part-time employee. Our
part-time employee is Mr. Robert S. Smith, our President, Secretary
and Treasurer. We plan to conduct our business primarily through
agreements with consultants and arms-length third parties.
PLAN OF OPERATIONS
Our plan of operations for the twelve months following the date of
this Registration Statement is to complete the following objectives
within the time period specified, subject to our obtaining financing
for the development and marketing of our web site:
(1) Complete development of the web site. We anticipate that
this development will be completed by August 2000. We
anticipate that the cost of this development will be
approximately $5,000.
(2) Complete research of information on immigration into the
United States for posting on our web site. We anticipate
that this research will be completed by April 2000. We
anticipate that the costs of this development expense will
be approximately $5,000.
(3) We plan to undertake an advertising and marketing campaign
once the development of our web site is complete. We
anticipate that the cost of these marketing expenses will
be approximately $15,000.
(4) We anticipate spending approximately $10,000 on ongoing
operating and administrative expenses. We anticipate that
our monthly operating costs of our Web site will be
approximately $1,000 per month. We also anticipate
spending approximately $500 per month on maintaining the
accuracy of the immigration information on our web site.
We anticipate that we will be spending approximately $53,000 over the
next twelve month period pursuing this plan of operations. Of these
anticipated expenditures, we anticipate that $10,000 will be spent on
our plan of operations in the next six months. Our cash position as
of December 31, 1999 was $70,872.
We anticipate that our present cash reserves are sufficient for us to
sustain our business operations without additional financing for
approximately twelve months. We anticipate that we may require
additional financing in order to pursue our business plan if: (a) the
costs of implementing our business plan are greater than anticipated;
or (b) we are unsuccessful in earning sufficient revenues after
commencement of operations in order to sustain continued operations.
We anticipate that if we pursue any additional financing, the
financing would be an equity financing achieved through the sale of
our common stock. We do not have any arrangement in place for any
debt or equity financing. If we are successful in completing an
equity financing, existing shareholders will experience dilution of
their interest in our company. In the event we are not successful in
obtaining such financing when necessary, we may not be able to
proceed with our business plan.
Our actual expenditures and business plan may differ from the one
stated above. Our board of directors may decide not to pursue this
plan. In addition, we may modify the plan based on available
financing.
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We anticipate continuing operating losses in the foreseeable future.
We base this expectation in part on the fact that we will incur
substantial operating expenses in completing our stated plan of
operations before we will have the opportunity to earn revenues. Our
future financial results are also uncertain due to a number of
factors, many of which are outside our control. These factors
include, but are not limited to:
(1) our ability to develop a commercially marketable Internet
web site with information and features sought by Internet
users desiring information on immigration to the United
States;
(2) our ability to successfully market our web site to our
potential users;
(3) our ability to successfully market our web site to
advertisers who are prepared to pay for advertising on our
site;
(4) the introduction of competing.
We believe the above statements to be forward-looking statements.
Our actual results and our actual plan of operations may differ
materially from what is stated above. Factors that may cause our
actual results or our actual plan of operations to vary include,
among other things, decisions of our board of directors not to pursue
a specific course of action based on its re-assessment of the facts
or new facts, changes in the Internet business or general economic
conditions and those other factors identified in this prospectus.
DESCRIPTION OF PROPERTY
We do not lease or own any real property.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None of the following parties has, since our date of incorporation,
had any material interest, direct or indirect, in any transaction
with us or in any presently proposed transaction that has or will
materially affect us:
(1) Any of our directors or officers;
(2) Any person proposed as a nominee for election as a
director;
(3) Any person who beneficially owns, directly or indirectly,
shares carrying more than 10% of the voting rights attached
to our outstanding shares of common stock;
(4) Any of our promoters;
(5) Any relative or spouse of any of the foregoing persons who
has the same house as such person.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No Present Public Market
There is presently no public market for our common stock. We
anticipate applying for trading of our stock with the Over the
Counter Bulletin Board upon the effectiveness of the registration
statement of which this prospectus forms a part. However, we can
provide no assurance that our shares will be traded on the OTC
Bulletin Board or if traded, that a public market will materialize.
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Holders of Our Common Stock
As of the date of this registration statement, we had twenty-eight
(28) registered shareholders.
Registration Rights
We have not granted registration rights to the selling shareholders
or to any other persons.
Dividends
There are no restrictions in our articles of incorporation or bylaws
that restrict us from declaring dividends. The Nevada Revised
Statutes, however, do prohibit us from declaring dividends where,
after giving effect to the distribution of the dividend:
(1) we would not be able to pay our debts as they become due in
the usual course of business; or
(2) our total assets would be less than the sum of our total
liabilities, plus the amount that would be needed to
satisfy the rights of shareholders who have preferential
rights superior to those receiving the distribution.
We have not declared any dividends. We do not plan to declare any
dividends in the foreseeable future.
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below summarizes the compensation earned for services
rendered for the fiscal year ended December 31, 1999 by our chief
executive officer. Note that the company only has one executive
officer and director.
Annual Compensation Long Term Compensation
------------------- ----------------------
Other Restricted
Annual Stock Options/* LTIP All
Name Title Year Salary Bonus Compen- Awarded SARs (#) pay- Other
sation outs($) Compen-
sation
---- ----- ----- ------ ----- ------ ---------- ------- ------- -------
Robert Pres- 1999 $0 0 0 0 0 0 0
S. ident,
Smith CEO
and
Director
Stock Option Grants
We did not grant any stock options to any executive officers or
directors during our most recent fiscal year ended December 31,1999.
We have not granted any stock options to any executive officers or
directors since December 31, 1999.
24
<PAGE>
Employment Agreements
We do not have an employment or consultant agreement with Mr. Robert
S. Smith, our President, Secretary and Treasurer and sole director.
Mr. Smith provides his services to us on a part-time basis. We do
not pay any salary or consulting fee to Mr. Smith. For more
information on Mr. Smith, see the Section entitled "Directors,
Executive Officers and Significant Employees".
INDEPENDENT PUBLIC ACCOUNTANTS
Our balance sheet as of December 31, 1999 and the related statements
of loss and deficit, stockholders deficiency, cash flows for the
period ending December 31, 1999, appearing elsewhere in this
prospectus, have been included herein in reliance on the report of
Morgan & Company, Chartered Accountants, given on the authority of
said firm as experts in accounting and auditing.
INDEX TO FINANCIAL STATEMENTS
1. Report of Independent Accountants
2. Audited Financial Statements:
a. Balance Sheet as of December 31, 1999
b. Statement of Loss and Deficit for the period ending December
31, 1999
c. Statement of Cash Flows for the period ending December 31,
1999
d. Statement of Stockholders Equity for the period ending
December 31, 1999
e. Notes to Audited Financial Statements
3. Un-audited Financial Statements for quarter ending March 31, 2000:
a. Balance Sheet
b. Statement of Loss and Deficit
c. Statement of Cash Flows
d. Statement of Stockholders Equity
e. Notes to Financial Statements
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have had no changes in or disagreements with our accountants since
our incorporation in August, 1999.
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BALSAM VENTURES INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Stated in U.S Dollars)
<PAGE>
AUDITORS' REPORT
To the Sole Director
Balsam Ventures Inc.
We have audited the balance sheet of Balsam Ventures Inc. (a
development stage company) as at December 31, 1999 and the
statements of loss and deficit accumulated during the development
stage, cash flows and stockholders' equity for the period then
ended. 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 United States and
Canadian generally accepted auditing standards. Those standards
require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the Company as at
December 31, 1999 and the results of its operations and the cash
flows for the period then ended in accordance with United States
generally accepted accounting principles.
Vancouver, B.C. "Morgan & Company"
February 2, 2000 Chartered Accountants
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1999
(Stated in U.S. Dollars)
-------------------------------------------------------------------------
ASSETS
Current
Cash $ 70,872
=========================================================================
LIABILITIES
Current
Accounts payable $ 1,298
----------
SHAREHOLDER'S EQUITY
Share Capital
Authorized:
100,000,000 common shares, par value with
$0.001 per share
Issued and outstanding
10,100,000 common shares 10,100
Additional paid in capital 64,900
Less: subscriptions receivable (2,500)
Deficit Accumulated During The Development Stage (2,926)
----------
69,574
----------
$ 70,872
======================================================================
Approved by the Sole Director:
--------------------------------
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
STATEMENT OF LOSS AND DEFICIT
(Stated in U.S. Dollars)
----------------------------------------------------------------------
PERIOD FROM
DATE OF
ORGANIZATION INCEPTION
AUGUST 17, AUGUST 17,
1999 1999
TO DECEMBER 31, TO DECEMBER 31,
1999 1999
----------------------------------------------------------------------
Expenses
Consulting services $ 100 $ 100
Domain registration 70 70
Professional fees 2,703 2,703
Office and sundry 53 53
----------------------------------
Net Loss For The Period 2,926 $ 2,926
===============
Deficit Accumulated During
The Development Stage,
Beginning Of Period -
---------------
Deficit Accumulated During
The Development Stage,
End Of Period $ 2,926
===============
Net Loss Per Share $0.01
===============
Weighted Average Number Of
Shares Outstanding 7,316,176
===============
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Stated in U.S. Dollars)
----------------------------------------------------------------------
PERIOD FROM
DATE OF
ORGANIZATION INCEPTION
AUGUST 17, AUGUST 17,
1999 1999
TO DECEMBER 31, TO DECEMBER 31,
1999 1999
----------------------------------------------------------------------
Cash Flows From Operating
Activities
Net loss for the period $ (2,926) $ (2,926)
Adjustments To Reconcile Net
Loss To Net Cash Used By
Operating Activities
Change in accounts payable 1,298 1,298
----------------------------------
(1,628) (1,628)
----------------------------------
Cash Flow From Financing Activities
Share capital 75,000 75,000
Subscriptions receivable (2,500) (2,500)
----------------------------------
72,500 72,500
----------------------------------
Increase In Cash 70,872 70,872
Cash, Beginning Of Period - -
----------------------------------
Cash, End Of Period $ 70,872 $ 70,872
======================================================================
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
DECEMBER 31, 1999
(Stated in U.S. Dollars)
Common Stock
Additional Share
Paid-in Subscriptions
Shares Amount Capital Receivable Deficit Total
-----------------------------------------------------
Shares issued for cash @
$0.001 5,000,000 $ 5,000 $ - $ - $ - $ 5,000
Shares issued for cash @
$0.01 5,000,000 5,000 45,000 - - 50,000
Shares issued for cash @
$0.20 100,000 100 19,900 - - 20,000
Less: subscriptions
receivable - - - (2,500) - (2,500)
Net loss for the period - - - - (2,926)(2,926)
-----------------------------------------------------
Balance
December 31, 1999 10,100,000 $10,100 $64,900 $(2,500) $(2,926)$69,574
=====================================================
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Stated in U.S. Dollars)
1. NATURE OF OPERATIONS
a) Organization
The Company was incorporated in the State of Nevada, U.S.A.
on August 17, 1999.
b) Development Stage Activities
The Company plans to launch a free information Website to
assist and attract the people wanting information on
immigration to the USA. The Company plans to use the Website
to earn income from companies who are prepared to pay to
have Web advertising in the form of a button or banners on
the Website selling their products or services. The Company
plans to solicit advertisers are targeting sales of their
products and services at people using the Company's website.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the
United States. Because a precise determination of many assets
and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily
involves the use of estimates which have been made using
careful judgement.
The financial statements have, in management's opinion, been
properly prepared within reasonable limits of materiality and
within the framework of the significant accounting policies
summarized below:
a) Development Stage Company
The Company is a developed stage company as defined in the
Statements of Financial Accounting Standards No. 7. The
Company is devoting substantially all of its present efforts
to establish a new business and none of its planned
principal operations have commenced. All losses accumulated
since inception have been considered as part of the
Company's development stage activities.
b) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues
and expenses for the reporting period. Actual results could
differ from these estimates.
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
c) Income Taxes
The Company has adopted Statement of Financial Accounting
Standards No. 109 -
"Accounting for Income Taxes" (SFAS 109). This standard
requires the use of an asset and liability approach for
financial accounting and reporting on income taxes. If it is
more likely than not that some portion or all if a deferred
tax asset will not be realized, a valuation allowance is
recognized.
d) Financial Instruments
The Company's financial instruments consist of cash and
accounts payable.
Unless otherwise noted, it is management's opinion that this
Company is not exposed to significant interest or credit
risks arising from these financial instruments. The fair
value of these financial instruments approximate their
carrying values, unless otherwise noted.
e) Net Loss Per Share
Net loss per share is based on the weighted average number
of common shares outstanding during the period plus common
share equivalents, such as options, warrants and certain
convertible securities. This method requires primary
earnings per share to be computed as if the common share
equivalents were exercised at the beginning of the period or
at the date of issue and as if the funds obtained thereby
were used to purchase common shares of the Company at its
average market value during the period.
3. NEW ACCOUNTING STANDARDS
a) Effective December 15, 1995, Statement of Financial
Accounting Standards No. 123 ("SFAS-123") "Accounting for
Stock-based Compensation" was adopted for United States GAAP
purposes. SFAS-123 enables a company to elect to adopt a
fair value methodology for accounting for stock based
compensation. The exercise price of the Company's stock
options is equal to the fair value of the underlying stock.
The Company does not expect to elect to adopt the fair value
methodology, although the pro forma results of operations and
earnings per share determined as if the fair value
methodology had been applied will be disclosed as required
under SFAS-123 in future years.
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Stated in U.S. Dollars)
3. NEW ACCOUNTING STANDARDS (Continued)
b) In March, 1995, Statement of Financial Accounting Standards
No. 121 (SFAS-121) "Accounting for Impairment of long-lived
assets and for long-lived assets to be disposed of" was
issued. Certain long-lived assets held by the Company must
be reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may
not be recoverable. Accordingly, the impairment loss is
recognized in the period it is determined. The Company has
adopted these standards. There was no material effect on its
financial position or results of operations of the Company
from its adoption.
4. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems
use two digits rather than four to identify a year. Date-
sensitive systems may recognize the year 2000 as 1900 or some
other date, resulting in errors when information using year
2000 dates is processed. In addition, similar problems may
arise in some systems which use certain dates in 1999 to
represent something other than a date. Although the change in
date has occurred, it is not possible to conclude that all
aspects of the Year 2000 Issue that may affect the entity,
including those related to customers, suppliers, or other
third parties, have been fully resolved.
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
(Stated in U.S Dollars)
<PAGE>
AUDITORS' REPORT
To the Sole Director
Balsam Ventures Inc.
We have audited the balance sheet of Balsam Ventures Inc. (a
development stage company) as at December 31, 1999 and the
statements of loss and deficit accumulated during the development
stage, cash flows and stockholders' equity for the period then
ended. 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 United States and
Canadian generally accepted auditing standards. Those standards
require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the Company as at
December 31, 1999 and the results of its operations and the cash
flows for the period then ended in accordance with United States
generally accepted accounting principles.
Vancouver, B.C.
February 2, 2000 Chartered Accountants
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
BALANCE SHEET
(Unaudited)
(Stated in U.S. Dollars)
--------------------------------------------------------------------------
MARCH 31, DECEMBER 31,
2000 1999
--------------------------------------------------------------------------
ASSETS
Current
Cash $ 63,724 $ 70,872
==========================================================================
LIABILITIES
Current
Accounts payable $ 4,389 $ 1,298
-------------------------
SHAREHOLDER'S EQUITY
Share Capital
Authorized:
100,000,000 common shares, par value
with $0.001 per share
Issued and outstanding
10,100,000 common shares 10,100 10,100
Additional paid in capital 64,900 64,900
Less: subscriptions receivable - (2,500)
Deficit Accumulated During The Development Stage (15,665) (2,926)
-------------------------
59,335 69,574
-------------------------
$ 63,724 $ 70,872
==========================================================================
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
STATEMENT OF LOSS AND DEFICIT
(Unaudited)
(Stated in U.S. Dollars)
--------------------------------------------------------------------------
INCEPTION
THREE MONTHS AUGUST 17,
ENDED 1999
MARCH 31, TO MARCH 31,
2000 2000
--------------------------------------------------------------------------
Expenses
Consulting services $ - $ 100
Domain registration - 70
Professional fees 10,652 13,355
Office and sundry 22 75
Stock Transfer Services 1,065 1,065
Web Site Design 1,000 1,000
----------------------------
Net Loss For The Period $ 12,739 $ 15,665
===========
Deficit Accumulated During The Development
Stage, Beginning Of Period 2,926
------------
Deficit Accumulated During The Development
Stage, End Of Period $ 15,665
============
Net Loss Per Share $ 0.01
============
Weighted Average Number Of Shares Outstanding 10,100,000
============
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
--------------------------------------------------------------------------
INCEPTION
THREE MONTHS AUGUST 17,
ENDED 1999
MARCH 31, TO MARCH 31,
2000 2000
--------------------------------------------------------------------------
Cash Flows From Operating Activities
Net loss for the period $ (12,739) $ (15,665)
Adjustments To Reconcile Net Loss To Net
Cash Used By Operating Activities
Change in accounts payable 3,091 4,389
-----------------------------
(9,648) (11,276)
-----------------------------
Cash Flow From Financing Activities
Share capital - 75,000
Subscriptions receivable 2,500 -
-----------------------------
2,500 75,000
-----------------------------
Increase (Decrease) In Cash (7,148) 63,724
Cash, Beginning Of Period 70,872 -
-----------------------------
Cash, End Of Period $ 63,724 $ 63,724
==========================================================================
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
MARCH 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
Common Stock
Additional Share
Paid-in Subscriptions
Shares Amount Capital Receivable Deficit Total
---------------------------------------------------------------
Shares issued
for cash @
$0.001 5,000,000 $ 5,000 $ - $ - $ - $ 5,000
Shares issued
for cash @
$0.01 5,000,000 5,000 45,000 - - 50,000
Shares issued
for cash @
$0.20 100,000 100 19,900 - - 20,000
Subscriptions
Receivable - - - (2,500) - (2,500)
Net loss for
the period - - - - (2,926) (2,926)
---------------------------------------------------------------
Balance
December 31,
1999 10,100,000 10,100 64,900 (2,500) (2,926) 69,574
Subscriptions
Receivable - - - 2,500 - 2,500
Net Loss for
the period - - - - (12,739) (12,739)
---------------------------------------------------------------
Balance
March 31,
2000 10,100,000 $ 10,100 $ 64,900 $ - $(15,665)$ 59,335
===============================================================
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
1. BASIS OF PRESENTATION
The unaudited financial statements as of March 31, 2000
includes herein have been prepared without audit pursuant to
the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with United States generally accepted principles
have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. It is suggested
that these financial statements be read in conjunction with
December 31, 1999 audited financial statements and notes
thereto.
2. NATURE OF OPERATIONS
a) Organization
The Company was incorporated in the State of Nevada, U.S.A.
on August 17, 1999.
b) Development Stage Activities
The Company plans to launch a free information Website to
assist and attract the people wanting information on
immigration to the USA. The Company plans to use the Website
to earn income from companies who are prepared to pay to
have Web advertising in the form of a button or banners on
the Website selling their products or services. The Company
plans to solicit advertisers are targeting sales of their
products and services at people using the Company's website.
3. SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the
United States. Because a precise determination of many assets
and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily
involves the use of estimates which have been made using
careful judgement.
The financial statements have, in management's opinion, been
properly prepared within reasonable limits of materiality and
within the framework of the significant accounting policies
summarized below:
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
a) Development Stage Company
The Company is a developed stage company as defined in the
Statements of Financial Accounting Standards No. 7. The
Company is devoting substantially all of its present efforts
to establish a new business and none of its planned
principal operations have commenced. All losses accumulated
since inception have been considered as part of the
Company's development stage activities.
b) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues
and expenses for the reporting period. Actual results could
differ from these estimates.
c) Income Taxes
The Company has adopted Statement of Financial Accounting
Standards No. 109 -
"Accounting for Income Taxes" (SFAS 109). This standard
requires the use of an asset and liability approach for
financial accounting and reporting on income taxes. If it is
more likely than not that some portion or all if a deferred
tax asset will not be realized, a valuation allowance is
recognized.
d) Financial Instruments
The Company's financial instruments consist of cash and
accounts payable.
Unless otherwise noted, it is management's opinion that this
Company is not exposed to significant interest or credit
risks arising from these financial instruments. The fair
value of these financial instruments approximate their
carrying values, unless otherwise noted.
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
c) Net Loss Per Share
Net loss per share is based on the weighted average number
of common shares outstanding during the period plus common
share equivalents, such as options, warrants and certain
convertible securities. This method requires primary
earnings per share to be computed as if the common share
equivalents were exercised at the beginning of the period or
at the date of issue and as if the funds obtained thereby
were used to purchase common shares of the Company at its
average market value during the period.
4. NEW ACCOUNTING STANDARDS
a) Effective December 15, 1995, Statement of Financial
Accounting Standards No. 123 ("SFAS-123") "Accounting for
Stock-based Compensation" was adopted for United States GAAP
purposes. SFAS-123 enables a company to elect to adopt a
fair value methodology for accounting for stock based
compensation. The exercise price of the Company's stock
options is equal to the fair value of the underlying stock.
The Company does not expect to elect to adopt the fair value
methodology, although the pro forma results of operations and
earnings per share determined as if the fair value
methodology had been applied will be disclosed as required
under SFAS-123 in future years.
b) In March, 1995, Statement of Financial Accounting
Standards No. 121 (SFAS-121) "Accounting for Impairment of
long-lived assets and for long-lived assets to be disposed
of" was issued. Certain long-lived assets held by the
Company must be reviewed for impairment whenever events or
changes in circumstances indicate the carrying amount of an
asset may not be recoverable. Accordingly, the impairment
loss is recognized in the period it is determined. The
Company has adopted these standards. There was no material
effect on its financial position or results of operations of
the Company from its adoption.
<PAGE>
BALSAM VENTURES INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
5. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems
use two digits rather than four to identify a year. Date-
sensitive systems may recognize the year 2000 as 1900 or some
other date, resulting in errors when information using year
2000 dates is processed. In addition, similar problems may
arise in some systems which use certain dates in 1999 to
represent something other than a date. Although the change in
date has occurred, it is not possible to conclude that all
aspects of the Year 2000 Issue that may affect the entity,
including those related to customers, suppliers, or other
third parties, have been fully resolved.
<PAGE>
AVAILABLE INFORMATION
We have filed a registration statement on Form SB-2 under the Act
with the Securities and Exchange Commission with respect to the
shares of our common stock offered by this prospectus. This
prospectus is filed as a part of the registration statement and does
not contain all of the information contained in the registration
statement and exhibits and reference is hereby made to such omitted
information. Statements made in this registration statement are
summaries of the material terms of these referenced contracts,
agreements or documents but are not necessarily complete. Reference
is made to each exhibit for a more complete description of the
matters involved and these statements shall be deemed qualified in
their entirety by the reference. You may inspect the registration
statement and exhibits and schedules filed with the Securities and
Exchange Commission at the Securities and Exchange Commission's
principle office in Washington, D.C. Copies of all or any part of
the registration statement may be obtained from the Public Reference
Section of the Securities and Exchange Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549. The Securities and Exchange Commission
also maintains a web site (http://www.sec.gov) that contains reports,
proxy statements and information regarding registrants that file
electronically with the Commission. For further information
pertaining to us and our common stock offered by this prospectus,
reference is made to the registration statement.
26
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the Nevada
Revised Statutes and our bylaws.
Under the NRS, director immunity from liability to a company or its
shareholders for monetary liabilities applies automatically unless it
is specifically limited by a company's articles of incorporation
which is not the case with our articles of incorporation. Excepted
from that immunity are:
(1) a willful failure to deal fairly with the company or its
shareholders in connection with a matter in which the
director has a material conflict of interest;
(2) a violation of criminal law (unless the director had
reasonable cause to believe that his or her conduct was
lawful or no reasonable cause to believe that his or her
conduct was unlawful);
(3) a transaction from which the director derived an improper
personal profit; and
(4) willful misconduct.
Our bylaws provide that we will indemnify our directors and officers
to the fullest extent not prohibited by Nevada law; provided,
however, that we may modify the extent of such indemnification by
individual contracts with our directors and officers; and, provided,
further, that we shall not be required to indemnify any director or
officer in connection with any proceeding (or part thereof) initiated
by such person unless:
(1) such indemnification is expressly required to be made by
law;
(2) the proceeding was authorized by our Board of Directors;
(3) such indemnification is provided by us, in our sole
discretion, pursuant to the powers vested us under Nevada
law; or
(4) such indemnification is required to be made pursuant to the
bylaws.
Our bylaws provide that we will advance to any person who was or is a
party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or
was a director or officer, of Balsam, or is or was serving at the
request of Balsam as a director or executive officer of another
company, partnership, joint venture, trust or other enterprise, prior
to the final disposition of the proceeding, promptly following
request therefor, all expenses incurred by any director or officer in
connection with such proceeding upon receipt of an undertaking by or
on behalf of such person to repay said amounts if it should be
determined ultimately that such person is not entitled to be
indemnified under our bylaws or otherwise.
Our bylaws provide that no advance shall be made by us to an officer
of Balsam --except by reason of the fact that such officer is or was
a director of Balsam in which event this paragraph shall not apply--
in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, if a determination is reasonably and
promptly made: (i) by the Board of Directors by a majority vote of a
quorum consisting of directors who were not parties to the
proceeding; or (ii) if such quorum is not obtainable, or, even if
obtainable, a quorum of disinterested directors so directs, by
independent legal
27
<PAGE>
counsel in a written opinion, that the facts known
to the decision-making party at the time such determination is made
demonstrate clearly and convincingly that such person acted in bad
faith or in a manner that such person did not believe to be in or not
opposed to the best interests of Balsam.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated costs of the offering are denoted below. Please note
that all amounts are estimates other than the Commission's
registration fee.
Securities and Exchange Commission registration fee $270
Federal Taxes $NIL
State Taxes and Fees $NIL
Transfer Agent Fees $500
Accounting fees and expenses $2,000
Legal fees and expenses $20,000
Blue Sky fees and expenses $NIL
Miscellaneous $NIL
--------
Total $22,770
========
We will pay all expenses of the offering listed above. No portion of
these expenses will be borne by the selling shareholders
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
We issued 5,000,000 shares of our common stock on September 24, 1999
at a price of $0.001 per share to Mr. Robert S. Smith. Mr. Smith is
our President, Secretary and Treasurer and a director of Balsam.
These shares were issued pursuant to Section 4(2) of the Securities
Act of 1933 are "restricted" shares, as defined in the Act.
We completed an offering of 5,000,000 shares of our common stock to
twelve (12) purchasers at a price of $0.01 per share on October 29,
1999. We completed the offering pursuant to Regulation S of the Act.
Each purchaser represented to Balsam that he was a "Non-U.S. Person"
as defined in the regulation. We did not engage in a distribution of
this offering in the United States. Each purchaser represented his
intention to acquire the securities for investment only and not with
a view toward distribution. Appropriate legends were affixed to the
stock certificate issued to each purchaser in accordance with
Regulation S. Each investor was given adequate access to sufficient
information about us to make an informed investment decision. None
of the securities were sold through an underwriter and accordingly,
there were no underwriting discounts or commissions involved. No
registration rights were granted to any of the purchasers.
We completed the issue of 100,000 common shares to a total of fifteen
(15) purchasers at a price of $0.20 per share pursuant to Rule 504 of
Regulation D Act on December 24, 1999. Each purchaser represented
their intention to acquire the securities for investment only and not
with a view toward distribution. Appropriate legends were affixed to
the stock certificates issued in accordance with Regulation D. All
purchasers were given adequate access to sufficient information about
us to make an informed investment decision. None of the securities
were sold through an underwriter and
28
<PAGE>
accordingly, there were no
underwriting discounts or commissions involved. No registration
rights were granted to any of the purchasers.
ITEM 27. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
------------ --------------------
3.1 Articles of Incorporation
3.2 Amended By-Laws
4.1 Share Certificate
5.1 Opinion of Cane & Company, LLC, with consent to use
23.1 Consent of Morgan & Company, Independent Auditors
27.1 Financial Data Schedule
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(A) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement to:
(1) include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(2) reflect in the prospectus any facts or events arising
after the effective date of this registration statement,
or most recent post-effective amendment, which,
individually or in the aggregate, represent a
fundamental change in the information set forth in this
registration statement; and
(3) include any material information with respect to the
plan of distribution not previously disclosed in this
registration statement or any material change to such
information in the registration statement.
(B) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(C) To remove from registration by means of a post-effective
amendment any of the securities being registered hereby
which remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the provisions above, 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. In
the event that a claim for indemnification against such liabilities,
other than the payment by us of expenses incurred or paid by one of
our directors, officers, or controlling persons in the successful
defense of any action, suit
29
<PAGE>
or proceeding, is asserted by one of our
directors, officers, or controlling person sin connection with the
securities being registered, we will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the
Securities Act, and we will be governed by the final adjudication of
such issue.
30
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1933,
the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing Form SB-2 and
authorized this registration statement to be signed on its behalf by
the undersigned in the City of Vancouver, Province of British
Columbia on May 19, 2000.
BALSAM VENTURES, INC.
By: /s/ Robert S. Smith
_________________________
Robert S. Smith, President
POWER OF ATTORNEY
ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Robert S. Smith, his true and lawful
attorney-in-fact and agent, with full power of substitution and re-
substitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all pre- or post-effective amendments
to this Registration statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-
in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be
done in and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any one of them, or
their or his substitutes, may lawfully do or cause to be done by
virtue hereof.
In accordance with the requirements of the Securities Act of 1933,
this registration statement has been signed below by the following
persons in the capacities indicated on May 19, 2000.
SIGNATURE CAPACITY IN WHICH SIGNED DATE
/s/ Robert S. Smith President May 19, 2000
-------------------- (Principal Executive Officer)
Robert S. Smith Secretary, Treasurer and Director
