U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CD MEMORIES.COM, INC.
(Name of Small Business Issuer in its charter)
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Nevada 8700 86-0865665
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(State or Jurisdiction of (Primary Standard Industrial (IRS Employer
Organization) Classification Code Number) Identification Number
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2915 West Charleston Blvd. Suite 7 Las Vegas, Nevada 89102
(702) 383-6520
(Address and telephone number of Registrant's principal executive
offices and principal place of business)
Neil J. Beller, LTD.
2345 Red Rock Street, Las Vegas, Nevada 89102; (702) 368-7767
(Name, address, and telephone number of agent for service)
Approximate date of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective
If this Form is filed to register additional securities for an offering pursuant
to Rule 462 (b) under the Securities Act, please check the following box and
list the Securities Act. [ ] __________________.
If this Form is a post-effective amendment filed pursuant to Rule 462 (c) under
the Securities Act, please check the following box and list the Securities Act
registration statement number [ ] __________________.
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, please check the following box and list the Securities Act
registration statement number [ ] _________________.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
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CALCULATION OF REGISTRATION FEE
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Title of Each Class of Amount to be Proposed Maximum offering Proposed Maximum Amount of
Securities to be registered: registered price per share (2) aggregate offering price registration fee
(1)
Common stock, $.001 3,109,375 $0.32 $995,000.00 $262.68
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The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
(1) Pursuant to Rule 416, such additional amounts to prevent dilution from
stock splits or similar transactions.
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PART ONE. INFORMATION REQUIRED IN PROSPECTUS
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PROSPECTUS
CD MEMORIES.COM, INC.
3,109,375
Common Stock
Offering Price $0.32 per share
CD Memories.com, Inc., a Nevada corporation ("Company"), is hereby offering up
to 109,375 shares of its $0.001 par value common stock ("Shares") at an offering
price of $0.32 per Share pursuant to the terms of this Prospectus for the
purpose of providing working capital for the Company. All costs incurred in the
registration of these shares are being borne by CD Memories. No underwriter or
broker/dealer has been retained by CD Memories.com, Inc. to assist in the sale
of the shares. All shares sold will be offered by the Officers and Directors of
CD Memories.com, Inc.
The Shares offered hereby are highly speculative and involve a high degree of
risk to public investors and should be purchased only by persons who can afford
to lose their entire investment (See "Risk Factors").
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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Underwriting, Discounts, and
Price to Public Commissions Proceeds to Issuer
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Per Share $0.32 -0- $0.32
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Total $35,000.00 -0- $35,500.00
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Information contained herein is subject to completion or amendment. The
registration statement relating to the securities has been filed with the
Securities and Exchange Commission. The securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Subject to Completion, Dated ________________, 1999
The shares being offered by CD Memories.com, Inc. are subject to prior sale,
acceptance of the subscriptions by CD Memories.com, Inc. and approval of certain
legal matters by counsel to CD Memories.com, Inc. This is our initial public
offering of common stock.
The initial offering price per share is .32. We may apply to list our common
stock on the OTC:BB after an acquisition has been conducted. No public market
currently exists for the shares of common stock.
CD Memories.com, Inc.. has the right to accept or reject any subscriptions, in
whole or in part, for any reason. Until ______ 2000, all dealers effecting
transactions in registered securities may be required to deliver a prospectus
This is true whether or not the dealer is participating in this distribution.
Dealers also have an obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
CD Memories is conducting a "Blank Check" offering subject to Rule 419 of
Regulation C as promulgated by the U.S. Securities and Exchange Commission (the
"S.E.C.") under the securities act of 1933, as amended (the "Securities Act").
The net offering proceeds, after deduction for offering expenses (estimated at
$20,000) and sales commissions, and the securities to be issued to investors
must be deposited in an escrow account (the "deposited funds" and "deposited
securities," respectively). While held in the escrow account, the deposited
securities may not be traded or transferred. Except for an amount up to 10% of
the deposited funds otherwise releasable under rule 419, the deposited funds and
the deposited securities may not be released until an acquisition meeting
certain specified criteria has been consummated and a sufficient number of
investors reconfirm their investment in accordance with the procedures set forth
in rule 419.
Pursuant to these procedures, a new prospectus, which describes an acquisition
candidate and its business and includes audited financial statements, will be
delivered to all investors. CD Memories must return the pro rata portion of the
deposited funds to any investor who does not elect to remain an investor.
Unless a sufficient number of investors elect to remain investors, all investors
will be entitled to the return of a pro rata portion of the deposited funds
(plus interest) and none of the deposited securities will be issued to
investors. In the event an acquisition is not consummated within 7 months of the
effective date of this prospectus, the deposited funds will be returned on a pro
rata basis to all investors. See "risk factors" and "release of deposited
securities and deposited funds."
Until 90 days after the date funds and securities are released from the escrow
or trust account pursuant to Rule 419, all dealers effecting transactions in the
registered securities, whether or not participating in this distribution, may be
required to deliver a prospectus.
This prospectus is not an offer to sell or a solicitation to buy the securities
offered. It is unlawful to make such an offer or solicitation.
The delivery of this prospectus, nor a sale of the mentioned securities shall
create an implication that there has been no change in the information in this
prospectus. If a material change does occur, however, this prospectus will be
amended or supplemented accordingly for all existing shareholders and
prospective investors.
This prospectus does not intentionally contain a false statement or material
fact, nor does it intentionally omit a material fact. No person or entity has
been authorized by CD Memories.com, Inc.. to give any information or make a
representation, warranty, covenant, or agreement which is not expressly provided
for or continued in this prospectus. Any such information that is given should
not be relied upon as having been authorized.
This Company is not a Reporting Company. Upon written or oral request, any
person who receives a prospectus will have an opportunity to meet with
representatives of CD Memories.com, Inc. to verify any of the information
included in the prospectus and to obtain additional information. Such a person
shall also, upon written or oral request, receive a copy of any information that
is incorporated by reference in the prospectus and the address (including title
or department) and telephone number. Such information shall be provided without
charge.
All offerees and subscribers will be asked to acknowledge in the subscription
agreement that they have read this prospectus carefully and thoroughly, they
were given the opportunity to obtain additional information; and they did so to
their satisfaction.
A maximum of 2,000,000 shares may be sold on a direct participation offering
basis. All of the proceeds from the sale of shares will be placed in an
interest-bearing escrow account by 12 o'clock noon of the fifth business day
after receipt thereof, until the sum of the minimum offering, is received. If
less than $20,000, is received from the sale of the shares within 240 days of
the date of this prospectus, all proceeds will be refunded promptly to
purchasers with interest and without deduction for commission or other expenses.
Subscribers will not be able to obtain return of their funds while in escrow. No
commissions are anticipated.. There will be a minimum purchase of 3,125 shares
at $1,000.00.
No commissions are anticipated. No sales commission will be paid in connection
with the sales of these shares. The net proceeds to CD Memories are after the
payment of certain expenses in connection with this offering. See "Use of
Proceeds."
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Table of Contents:
Prospectus Summary
1
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Risk Factors 2
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Investors' Rights and Substantive Protection Under Rule 419 3
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Use of Proceeds 4
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Determination of Offering Price 5
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Dilution 6
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Plan of Distribution 7
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Legal Proceedings 8
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Directors, Executive Officers, Promoters, and
Control Persons 9
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Security Ownership of Certain Beneficial Owners
and Management 10
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Description of Securities 11
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Interest of Named Experts and Counsel 12
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Disclosure of Commission Position on Indemnification
For Securities Act Liabilities 13
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Organization Within the Last Five Years 14
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Description of Business 15
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Plan of Operation 16
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Description of Property 17
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Certain Relationships and Related Transactions 18
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Market for Common Equity and Related Stockholder Matters 19
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Executive Compensation 20
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Financial Statements 21
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Changes in and Disagreements with Accountants of Accounting Matters 22
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Prospectus Summary
The following summary is qualified in its entirety by detailed information
appearing elsewhere in this prospectus ("Prospectus"). Each prospective investor
is urged to read this Prospectus, and the attached Exhibits, in their entirety.
CD Memories
CD Memories.com, Inc., was incorporated on April 15th, 1999, under the laws of
the State of Nevada, to engage in any lawful corporate undertaking, including,
but not limited to, selected mergers and acquisitions. The Company has been in
the developmental stage since inception and has no operations to date. Other
than issuing shares to its original shareholders, CD Memories never commenced
any operational activities.
CD Memories was formed by Cort W. Christie, the initial director, for the
purpose of creating a corporation which could be used to consummate a merger or
acquisition. CD Memories was initially formed in April 1997 as Foster
Enterprises. Mr. Christie was replaced as the sole officer and director in Bill
G. Smith who was elected the President and Secretary. Mr. Smith had been acting
as a consultant to Foster Enterprises since inception in April 1997. Mr. Smith
serves as President, Secretary and Director. Mr. Smith determined next to
proceed with filing a Form SB-2.
Mr. Smith, the President, Secretary, and Director, elected to commence
implementation of CD Memories' principal business purpose, described below under
"Item 2, Plan of Operation". As such, CD Memories can be defined as a "shell"
company, whose sole purpose at this time is to locate and consummate a merger or
acquisition with a private entity.
The proposed business activities described herein classify CD Memories as a
"blank check" company. Many states have enacted statutes, rules and regulations
limiting the sale securities of "blank check" companies in their prospective
jurisdictions. Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities until such time as CD Memories has
successfully implemented its business plan described herein.
Accordingly, each shareholder of CD Memories will execute and deliver a
"lock-up" letter agreement, affirming that his/her respective shares of CD
Memories' common stock until such time as CD Memories has successfully
consummated a merger or acquisition and CD Memories is no longer classified as a
"blank check" company. In order to provide further assurances that no trading
will occur in the CD Memories' securities until a merger or acquisition has been
consummated, each shareholder will place his/her respective certificates until
such time as legal counsel has confirmed that a merger or acquisition has been
successfully consummated. However, while management believes that the procedures
established to preclude any sale of CD Memories' securities prior to closing of
a merger or acquisition will be sufficient, there can be no assurances that the
procedures established herein will unequivocally limit any shareholder's CD
Memories to sell their respective securities before such closing.
The Offering.
Shares of CD Memories will be offered at $.32 per Share. See "Plan of
Distribution, page. The minimum purchase required of an investor is $1,000.00.
If all the Shares offered are sold the net proceeds to CD Memories will be
$35,000 less certain costs associated with this offering. See "Use of Proceeds."
This balance will be used as working capital for CD Memories..
Liquidity of Investment.
Although the Shares will be "free trading," there is no established market for
the Shares and there may not be in the future. Therefore, an investor should
consider his investment to be long-term. See "Risk Factors, page 6."
RISK FACTORS
The securities offered are highly speculative in nature and involve a high
degree of risk. They should be purchased only by persons who can afford to lose
their entire investment. Therefore, each prospective investor should, prior to
purchase, consider very carefully the following risk factors among other things,
as well as all other information set forth in this prospectus.
Rule 419 contains restrictive provisions on the sale of shares. Rule 419
generally requires that the securities to be issued and the funds received in a
blank check offering be deposited and held in an escrow account until an
acquisition meeting specified criteria is completed.
Before the acquisition can be completed and before the funds and securities can
be released, the issuer in a blank check offering is required to update its
registration statement with a post-effective amendment. After the effective date
of any such post-effective amendment, CD Memories is required to furnish
investors with the prospectus produced thereby containing information, including
audited financial statements, regarding the proposed acquisition candidate and
its business. Investors must be given no fewer than 20 and no more than 45
business days from the effective date of the post-effective amendment to decide
to remain investors or require the return of their investment funds. Any
investor not making a decision within said period is automatically to receive a
return of his investment funds.
Although investors may request the return of their investment funds in
connection with the reconfirmation offering required by Rule 419, CD Memories'
shareholders will not be afforded an opportunity specifically to approve or
disapprove any particular transaction involving the purchase of shares from
management.
Investors are prohibited from selling or offering to sell shares held in escrow.
According to Rule15g-8 as promulgated by the S.E.C. under the amended Securities
Exchange Act of 1934, it shall be unlawful for any person to sell or offer to
sell shares or any interest in or related to the shares held in the Rule 419
escrow account other than pursuant to a qualified domestic relations order or by
will or the laws of descent and distribution. As a result, contracts for sale to
be satisfied by delivery of the deposited securities are prohibited, for example
contracts for sale on a when, as, and if issued basis.
Because this is a blank check offering, investors will not be able to evaluate
the specific merits or risks of business combinations As a result of
management's broad discretion with respect to the specific application of the
net proceeds of this offering, this offering can be characterized as a blank
check offering. Although substantially all of the net proceeds of this offering
are intended generally to be applied toward effecting a business combination,
such proceeds are not otherwise being designated for any more specific purposes.
Accordingly, prospective investors will invest in CD Memories without an
opportunity to evaluate the specific merits or risks of any one or more business
combinations. Determinations ultimately made by CD Memories relating to the
specific allocation of the net proceeds of this offering do not guarantee CD
Memories will achieve its business objectives.
The ability to register shares is limited.
The ability to register or qualify for sale the shares for both initial sale and
secondary trading is limited because a number of states have enacted regulations
pursuant to their securities or "blue sky" laws restricting or, in some
instances, prohibiting, the sale of securities of blank check issuers, such as
CD Memories, within that state.
In addition, many states, while not specifically prohibiting or restricting
blank check companies, may not register the shares for sale in their states.
Because of such regulations and other restrictions, CD Memories' selling
efforts, and any secondary market which may develop, may only be conducted in
those jurisdictions where an applicable exemption is available or a blue sky
application has been filed and accepted or where the shares have been
registered.
CD Memories has had no operating revenue to date and may not become profitable.
CD Memories has had no operating history nor any revenues or earnings from
operations. CD Memories has no significant assets or financial resources. CD
Memories will, in all likelihood, sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination. This may result in CD Memories incurring a net operating loss which
will increase continuously until CD Memories can consummate a business
combination with a profitable business opportunity. CD Memories may not be able
to identify such a business opportunity and consummate such a business
combination. Additionally, because
Success of CD Memories' business operations may depend on management outside of
CD Memories' control. The success of CD Memories' proposed plan of operation
will depend to a great extent on the operations, financial condition and
management of the identified business opportunity. While management intends to
seek business combinations with entities having established operating histories,
there can be no assurance that CD Memories will be successful in locating
candidates meeting such criteria. In the event CD Memories completes a business
combination, the success of CD Memories' operations may be dependent upon
management of the successor firm or venture partner firm and numerous other
factors beyond CD Memories' control.
CD Memories is at a competitive disadvantage and in a highly competitive market
searching for business combinations and opportunities. CD Memories is and will
continue to be an insignificant participant in the business of seeking mergers
with, joint ventures with and acquisitions of small private entities. A large
number of established and well- financed entities, including venture capital
firms, are active in mergers and acquisitions of companies which may be
desirable target candidates for CD Memories. Nearly all such entities have
significantly greater financial resources, technical expertise and managerial
capabilities than CD Memories and, consequently, CD Memories will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, CD Memories will
compete in seeking merger or acquisition candidates with numerous other small
public companies.
CD Memories has no agreement for a merger nor any standards set for acceptable
candidates for merger. CD Memories has no arrangement, agreement or
understanding with respect to engaging in a merger with, joint venture with or
acquisition of, a private entity. CD Memories may not be successful in
identifying and evaluating suitable business opportunities or in concluding a
business combination. Management has not identified any particular industry or
specific business within an industry for evaluations. CD Memories has been in
the developmental stage since inception and has no operations to date. Other
than issuing shares to its original shareholders, CD Memories never commenced
any operational activities. CD Memories may not be able to negotiate a business
combination on terms favorable to CD Memories.
CD Memories has not established a specific length of operating history or a
specified level of earnings, assets, net worth or other criteria which it will
require a target business opportunity to have achieved, and without which CD
Memories would not consider a business combination in any form with such
business opportunity. Accordingly, CD Memories may enter into a business
combination with a business opportunity having no significant operating history,
losses, limited or no potential for earnings, limited assets, negative net worth
or other negative characteristics.
CD Memories' management lack certain business skills and will be devoting only
part-time work hours. While seeking a business combination, management
anticipates devoting up to twenty hours per month to the business of CD
Memories. CD Memories' two officers have not entered into written employment
agreements with CD Memories and are not expected to do so in the foreseeable
future. CD Memories has not obtained key man life insurance on either of its
officers or directors. Notwithstanding the combined limited experience and time
commitment of management, loss of the services of any of these individuals would
adversely affect development of CD Memories business and its likelihood of
continuing operations.
Furthermore, CD Memories officers and directors are not professional business
analysts. Lack of experience will be a detriment to CD Memories' efforts.
CD Memories may, on occasion, enter into business agreements that have a
conflict of interest. Currently, CD Memories' officers and directors have no
conflict of interest. However, changes in officers and directors or business
agreements entered into could potentially show conflicts of interest. In such
instance that CD Memories' officers or directors are involved in the management
of any firm with which CD Memories transacts business. CD Memories' board of
directors will adopt a resolution which prohibits CD Memories from completing a
merger with, or acquisition of, any entity in which management serve as
officers, directors or partners, or in which they or their family members own or
hold any ownership interest. Management is not aware of any circumstances under
which this policy could be changed while current management is in control of CD
Memories.
Potential merger or acquisition candidates must meet SEC requirements that may
delay or preclude CD Memories' business plan. Section 13 of the Securities
Exchange Act of 1934, requires companies falling under Section 13 of the
Securities Exchange Act of 1934 to provide certain information about significant
acquisitions, including certified financial statements for CD Memories acquired,
covering one or two years, depending on the relative size of the acquisition.
The time and additional costs that may be incurred by some target entities to
prepare such statements may significantly delay or essentially preclude
consummation of an otherwise desirable acquisition by CD Memories. Acquisition
prospects that do not have or are unable to obtain the required audited
statements may not be appropriate for acquisition so long as the reporting
requirements of the 1934 Act are applicable.
CD Memories is at a competitive disadvantage because it lacks any market
research or marketing organization. CD Memories has neither conducted, nor have
others made available to it, results of market research indicating that market
demand exists for the transactions contemplated by CD Memories. Moreover, CD
Memories does not have, and does not plan to establish, a marketing
organization. Even in the event demand is identified for a merger or acquisition
contemplated by CD Memories, there is no assurance CD Memories will be
successful in completing any such business combination.
CD Memories will limited to the business opportunities of any company CD
Memories' proposed operations, even if successful, will in all likelihood result
in CD Memories engaging in a business combination with only one business
opportunity. Consequently, CD Memories' activities will be limited to those
engaged in by the business opportunity which CD Memories merges with or
acquires. CD Memories' inability to diversify its activities into a number of
areas may subject CD Memories to economic fluctuations within a particular
business or industry and therefore increase the risks associated with CD
Memories' operations.
Potential determination by the SEC that CD Memories is an investment company
could cause material adverse consequences. Although CD Memories will be
regulated under the Securities Exchange Act of 1933, management believes CD
Memories will not be regulated under the Investment Company Act of 1940, insofar
as CD Memories will not be engaged in the business of investing or trading in
securities. In the event CD Memories engages in business combinations which
result in CD Memories holding passive investment interests in a number of
entities, the CD Memories could be under regulation of the Investment Company
Act of 1940. In such event, CD Memories would be required to register as an
investment company and could be expected to incur significant registration and
compliance costs CD Memories has obtained no formal determination from the
Securities and Exchange Commission as to the status of CD Memories under the
Investment Company Act of 1940 and, consequently, any violation of such Act
would subject CD Memories to material adverse consequences.
Any business combination will probably result loss of management and control by
CD Memories shareholders. A business combination involving the issuance of CD
Memories' common stock will, in all likelihood, result in shareholders of a
private company obtaining a controlling interest in CD Memories. Any such
business combination may require management of CD Memories to sell or transfer
all or a portion of CD Memories' common stock held by them, or resign as members
of the board of directors of CD Memories. The resulting change in control CD
Memories could result in removal of one or more present officers and directors
of CD Memories and a corresponding reduction in or elimination of their
participation in the future affairs of CD Memories.
Should CD Memories meet its business plan of merging, shareholders in CD
Memories will most likely suffer a reduction in percentage share ownership of
the newly formed company. CD Memories' primary plan of operation is based upon a
business combination with a private concern which, in all likelihood, would
result in CD Memories issuing securities to shareholders of such private
company. The issuance of previously authorized and unissued common stock of CD
Memories would result in reduction in percentage of shares owned by present and
prospective shareholders of CD Memories and would most likely result in a change
in control or management of CD Memories.
Potential acquisition or merger candidates may wish to avoid potential adverse
consequences of merging with CD Memories. CD Memories may enter into a business
combination with an entity that desires to establish a public trading market for
its shares. A business opportunity may attempt to avoid what it deems to be
adverse consequences of undertaking its own public offering by seeking a
business combination with CD Memories.
Such consequences may include, but are not limited to, time delays of the
registration process, significant expenses to be incurred in such an offering,
loss of voting control to public shareholders and the inability or unwillingness
to comply with various federal and state securities laws enacted for the
protection of investors. These securities laws primarily relate to provisions
regarding the registration of securities which require full disclosure of CD
Memories' business, management and financial statements.
Many business decisions made by CD Memories can have major tax consequences and
many associated risks. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination CD Memories may
undertake. Currently, such transactions may be structured so as to result in
tax- free treatment to both companies, pursuant to various federal and state tax
provisions. CD Memories intends to structure any business combination so as to
minimize the federal and state tax consequences to both CD Memories and the
target entity; however, there can be no assurance that such business combination
will meet the statutory requirements of a tax-free reorganization or that the
parties will obtain the intended tax-free treatment upon a transfer of stock or
assets. A non-qualifying reorganization could result in the imposition of both
federal and state taxes which may have an adverse effect on both parties to the
transaction.
The requirement of audited financial statements of potential merging entities
may cause some potential merger candidates to forego merging with CD Memories.
Management of CD Memories believes that any potential business opportunity must
provide audited financial statements for review, and for the protection of all
parties to the business combination. One or more attractive business
opportunities may choose to forego the possibility of a business combination
with CD Memories, rather than incur the expenses associated with preparing
audited financial statements.
CD Memories securities may be limited to only a few markets because of blue sky
laws. Because the securities registered hereunder have not been registered for
resale under the blue sky laws of any state, and CD Memories has no current
plans to register or qualify its shares in any state, the holders of such shares
and persons who desire to purchase them in any trading market that might develop
in the future, should be aware that there may be significant state blue sky
restrictions upon the ability of new investors to purchase the securities which
could reduce the size of the potential market. As a result of recent changes in
federal law, non-issuer trading or resale of CD Memories' securities is exempt
from state registration or qualification requirements in most states. However,
some states may continue to attempt to restrict the trading or resale of
blind-pool or blank-check securities. Accordingly, investors should consider any
potential secondary market for CD Memories' securities to be a limited one.
Certain officers, directors, principal shareholders or affiliates may purchase
shares, thereby increasing their percentage share. Certain officers, directors,
principal shareholders and affiliates may purchase, for investment purposes, a
portion of the shares offered hereby, which could, upon conversion, increase the
percentage of the shares owned by such persons. The purchases by these control
persons may make it possible for the offering to meet the escrow amount.
CD Memories may not be able to sale enough shares to follow through with the
business plan. The 2,000,000 common shares are to be offered directly by CD
Memories, and no individual, firm, or corporation has agreed to purchase or take
down any of the shares. It is not know whether CD Memories will be able to sell
any shares.
CD Memories's offering price is arbitrary and the value of CD Memories
securities may never actually reach the offering price. The offering price of
the shares bears no relation to book value, assets, earnings, or any other
objective criteria of value. They have been arbitrarily determined by CD
Memories. There can be no assurance that, even if a public trading market
develops for CD Memories's securities, the shares will attain market values
commensurate with the offering price.
CD Memories shares are to be offered based on a direct participation offering
basis. The shares are offered by CD Memories on a direct participation offering
basis, and no individual, firm or corporation has agreed to purchase or take
down any of the offered shares. CD Memories cannot and does not make any
statement guaranteeing that shares will be sold. Provisions have been made to
deposit in escrow the funds received from the purchase of shares sold by CD
Memories.
CD Memories' shares may never actually be traded and therefore purchasers may
never be able to resale. Prior to the offering, there has been no public market
for the shares being offered. An active trading market may not develop.
Consequently, purchasers of the shares may not be able to resell their
securities at prices equal to or greater than the respective initial public
offering prices. The market price of the shares may be affected significantly by
factors such as announcements by CD Memories or its competitors, variations in
CD Memories' results of operations, and market conditions in the retail,
electron commerce, and internet industries in general. Movements in prices of
stock may also affect the market price in general. As a result of these factors,
purchasers of the shares offered hereby may not be able to liquidate an
investment in the shares readily or at all.
Shares sold in the future may have to comply with Rule 144.
All of the 1,500,000 shares, which are held by management, have been issued in
reliance on the private placement exemption under the amended Securities Act of
1933. Such shares will not be available for sale in the open market without
separate registration except in reliance upon Rule 144 under the Act. CD
Memories also has one other shareholder that owns 1,500,shares of its common
stock. These shares were issued in reliance on the private placement exemption
under the amended Securities Act of 1933.
In general, under Rule 144 a person (or persons whose shares are aggregated) who
has beneficially owned shares acquired in a non-public transaction for at least
one year, including persons who may be deemed affiliates of CD Memories (as that
term is defined under the Act) would be entitled to sell within any three-month
period a number of shares that does not exceed the greater of 1% of the then
outstanding shares of common stock, or the average weekly reported trading
volume on all national securities exchanges and through NASDAQ during the four
calendar weeks preceding such sale, provided that certain current public
information is then available. If a substantial number of the shares owned by
management were sold pursuant to Rule 144 or a registered offering, the market
price of the common stock could be adversely affected.
Investors' rights and substantive protection under rule 419.
Deposit of offering proceeds and securities.
Rule 419 requires that the net offering proceeds, after
deduction for underwriting compensation and offering costs, and all securities
to be issued be deposited into an escrow or trust account (the "Deposited Funds"
and "Deposited Securities," respectively) governed by an agreement which
contains certain terms and provisions specified by the rule. Under Rule 419, the
Deposited Funds and Deposited Securities will be released to CD Memories and to
investors, respectively, only after the Company has met the following three
conditions:
First, CD Memories must execute an agreement for an acquisition(s) meeting
certain prescribed criteria;
second, CD Memories must successfully complete a reconfirmation offering which
includes certain prescribed terms and conditions;
and third, the acquisition(s) meeting the prescribed criteria must be
consummated.
Prescribed acquisition criteria.
Rule 419 requires that before the Deposited Funds and the
Deposited Securities can be released, CD Memories must first execute an
agreement(s) to acquire an acquisition candidate(s) meeting certain specified
criteria. The agreement must provide for the acquisition of a business(es) or
assets valued at not less than 80% of the maximum offering proceeds, but
excluding underwriting commissions, underwriting expenses and dealer allowances
payable to non-affiliates. Once the acquisition agreements meeting the above
criteria have been executed, CD Memories must successfully complete the mandated
reconfirmation offering and consummate the acquisitions(s).
Post-effective amendment.
Once the agreement(s) governing the acquisition(s) of a business(es) meeting the
above criteria has (have) been executed, Rule 419 requires CD Memories to update
the registration statement of which this prospectus is a part with a
post-effective amendment. The post-effective amendment must contain information
about: the proposed acquisition candidate(s) and its business(es), including
audited financial statements; the results of this offering; and the use of the
funds disbursed from the escrow account. The post-effective amendment must also
include the terms of the reconfirmation offer mandated by Rule 419. The offer
must include certain prescribed conditions which must be satisfied before the
Deposited Funds and Deposited Securities can be released from escrow.
Reconfirmation offering.
The reconfirmation offer must commence within five business
days after the effective date of the post-effective amendment. Pursuant to Rule
419, the terms of the reconfirmation offer must include the following
conditions:
(1) The prospectus contained in the post-effective amendment will be sent to
each investor whose securities are held in the escrow account within five
business days after the effective date of the post-effective amendment;
2) Each investor will have no fewer than 20, and no more than 45, business days
from the effective date of the post-effective amendment to notify the Company in
writing that the investor elects to remain an investor;
(3) If CD Memories does not receive written notification from any investor
within 45 business days following the effective date, the pro rata portion of
the Deposited Funds (and any related interest or dividends) held in the escrow
account on such investor's behalf will be returned to the investor within five
business days by first class mail or other equally prompt means;
(4) The acquisition(s) will be consummated only if investors having contributed
80% of the maximum offering proceeds elect to reconfirm their investments; and
(5) If a consummated acquisition(s) has not occurred within 7 months from the
date of this prospectus, the Deposited Funds held in the escrow account shall be
returned to all investors on a pro rata basis within five business days by first
class mail or other equally prompt means.
Release of deposited securities and deposited funds.
The Deposited Funds and Deposited Securities may be released to CD Memories and
the investors, respectively, after:
(1) The Escrow Agent has received written certification from CD Memories and any
other evidence acceptable by the Escrow Agent that CD Memories has executed an
agreement for the acquisition(s) of a business(es) the value of which represents
at least 80% of the maximum offering proceeds and has filed the required
post-effective amendment, the post-effective amendment has been declared
effective, the mandated reconfirmation offer having the conditions prescribed by
Rule 419 has been completed, and CD Memories has satisfied all of the prescribed
conditions of the reconfirmation offer; and
(2) The acquisition(s) of the business(es) the value of which represents at
least 80% of the maximum offering proceeds is (are) consummated.
Escrowed funds not to be used for salaries or reimbursable expenses.
No funds (including any interest earned thereon) will be
disbursed from the escrow account for the payment of salaries or reimbursement
of expenses incurred on CD Memories' behalf by CD Memories' officers and
directors. Other than the foregoing, there is no limit on the amount of such
reimbursable expenses, and there will be no review of the reasonableness of such
expenses by anyone other than CD Memories' board of directors, both of whom are
officers. In no event will the escrowed funds (including any interest earned
thereon) be used for any purpose other than implementation of a business
combination. See "Risk Factors," "Use Of Proceeds" and "Certain Transactions."
Use of Proceeds
Following the sale of the 109,375 Shares Offered by CD Memories, there will be
net proceeds of $35,000. The net proceeds are calculated as $35,000 minus sales
commission costs, which are zero. Net proceeds do not include any legal or
accounting fees. These proceeds will be used to provide start-up and working
capital for the Company.
The following table sets forth the use of proceeds from this offering (based on
the minimum and maximum offering amounts):
<TABLE>
<S> <C> <C> <C> <C>
------------------------------- ---------------------------------- -----------------------------------
Use of Proceeds Minimum Offering Maximum Offering
------------------------------- ---------------------------------- -----------------------------------
------------------------------- -------------- ------------------- ------------------ ----------------
Amount Percent Amount Percent
------------------------------- -------------- ------------------- ------------------ ----------------
------------------------------- -------------- ------------------- ------------------ ----------------
Working Capital $15,000 100% $35,000 100%
------------------------------- -------------- ------------------- ------------------ ----------------
------------------------------- -------------- ------------------- ------------------ ----------------
Total $15,000 100% $35,000 100%
------------------------------- -------------- ------------------- ------------------ ----------------
</TABLE>
Management anticipates expending these funds for the purposes indicated above.
To the extent that expenditures are less than projected, the resulting balances
will be retained and used for general working capital purposes or allocated
according to the discretion of the Board of Directors. Conversely, to the extent
that such expenditures require the utilization of funds in excess of the amounts
anticipated, supplemental amounts may be drawn from other sources, including,
but not limited to, general working capital and/or external financing. The net
proceeds of this offering that are not expended immediately may be deposited in
interest or non- interest bearing accounts, or invested in government
obligations, certificates of deposit, commercial paper, money market mutual
funds, or similar investments.
Management may advance money to the Company or on behalf of the Company. There
are no set limits to the maximum amount that management will advance or loan to
the Company. However, the amount is obviously limited by the resources of the
officers and directors. Management anticipates that repayment would come from
the acquisition of a target company. The advances would be expected to be in an
amount well below the minimum expected from any viable operating business
target.
Determination of offering price
The offering price is not based upon CD Memories' net worth, total asset value,
or any other objective measure of value based upon accounting measurements. The
offering price is determined by the Board of Directors of CD Memories and was
determined arbitrarily based upon the amount of funds needed by CD Memories to
start-up the business, and the number of shares that the initial shareholders
were willing to allow to be sold.
Dilution
Our net tangible book value as of December 31, 1999 was $3,000.00 or .001 per
share. Our net Tangible book value per share is determined by subtracting the
total amount of our liabilities from the total amount of tangible assets and
dividing by the amount of shares outstanding before the offering.
The adjusted pro forma book net tangible book value after this offering will be
$0.012 based on an assumed initial public offering price of $0.32 per share.
Therefore, purchasers of shares of common stock in this offering will realize
immediate dilution of $0.31 cents per share or over 99% of their investment. The
following table illustrates dilution:
<TABLE>
<S> <C> <C>
------------------------------------------------------------------------------------------------ -------------------- -----------
Assumed initial public offering price per share $0.32
------------------------------------------------------------------------------------------------ -------------------- -----------
------------------------------------------------------------------------------------------------ -------------------- -----------
Net tangible book value per share as of December 31, 1999 $0.001
------------------------------------------------------------------------------------------------ -------------------- -----------
------------------------------------------------------------------------------------------------ -------------------- -----------
Increase in net tangible book value per share attributable to new investors $0.011
------------------------------------------------------------------------------------------------ -------------------- -----------
------------------------------------------------------------------------------------------------ -------------------- -----------
Pro Forma net tangible book value per share after this offering $0.012
------------------------------------------------------------------------------------------------ -------------------- -----------
------------------------------------------------------------------------------------------------ -------------------- -----------
Dilution per share to new investors $0.31
------------------------------------------------------------------------------------------------ -------------------- -----------
</TABLE>
The following table presents the following data as of December 31, 1999 and
assumes an offering price of $0.32 per share for our new investors:
o the average price per share paid before deducting estimated underwriting
fees and our estimated offering expenses; and
o the average price per share when the stock was issued for payment.
<TABLE>
<S> <C> <C> <C>
--------------------------------- ------------------------- ------------------------------------------- --------------------
Shares of Common Stock Consideration Average Price Per
Acquired share:
--------------------------------- ------------------------- ------------------------------------------- --------------------
--------------------------------- ------------------------- --------------------- --------------------- --------------------
Amount Percent
--------------------------------- ------------------------- --------------------- --------------------- --------------------
--------------------------------- ------------------------- --------------------- --------------------- --------------------
Existing Shareholders 3,000,000 $3,000 .03% $.001
--------------------------------- ------------------------- --------------------- --------------------- --------------------
--------------------------------- ------------------------- --------------------- --------------------- --------------------
New Investors 109,375 $35,000 97% $.32
--------------------------------- ------------------------- --------------------- --------------------- --------------------
--------------------------------- ------------------------- --------------------- --------------------- --------------------
Totals 3,109,375 $38,000 100% 100%
--------------------------------- ------------------------- --------------------- --------------------- --------------------
</TABLE>
Plan of distribution.
CD Memories will sell a maximum of 109,375 shares of its common stock, par value
$.001 per Share to the public on a "best efforts" basis. The minimum purchase
required of an investor is $1,000.00. There can be no assurance that any of
these shares will be sold.
The net proceeds to CD Memories will be $35,000, if all the shares offered are
sold. No commissions or other fees will be paid, directly or indirectly, by CD
Memories, or any of its principals, to any person or firm in connection with
solicitation of sales of the shares, certain costs are to be paid in connection
with the offering (see "Use of Proceeds").
The public offering price of the shares will be modified, from time to time, by
amendment to this prospectus, in accordance with changes in the market price of
CD Memories' common stock. These securities are offered by CD Memories subject
to prior sale and to approval of certain legal matters by counsel.
The officers and directors of CD Memories will be offering and selling shares on
behalf of CD Memories.
Those officers and directors offering the securities on behalf of CD
Memories.com will be relying on the safe harbor from broker-dealer registration
rule set out in Rule 3a4-1.
We have been informed by these officers and directors that:
they are not subject to statutory disqualification as
defined in Section 3(a)(39) of the Securities Exchange Act of 1934,
these officers and directors are not compensated in connection with their
participation by the payment of commissions or other remuneration based either
directly or indirectly on transactions in securities,
and,
these officers and directors are not an associated person of a broker or dealer.
Additionally, the officers and directors offering and selling securities in CD
Memories meet the conditions of part (a)(4)(iii) where participation will be
restricted to:
(A) Preparing any written communication or delivering such communication through
the mails or other means that does not involve oral solicitation by the
associated person of a potential purchaser; provided, however, that the content
of such communication is approved by a partner, officer or director of the
issuer;
(B) Responding to inquiries of a potential purchaser in a communication
initiated by the potential purchaser; provided, however, that the content of
such responses are limited to information contained in a registration statement
filed under the Securities Act of 1933 or other offering document; or
(C) Performing ministerial and clerical work involved in effecting any
transaction.
Limited State Registration.
CD Memories anticipates that there will be no State registration of its
securities. Any sale of its securities will depend on exemptions under the Blue
Sky laws of states in which the securities are sold.
Opportunity To Make Inquires.
CD Memories will make available to each Offeree, prior to any sale of the
Shares, the opportunity to ask questions and receive answers from CD Memories
concerning any aspect of the investment and to obtain any additional information
contained in this Memorandum, to the extent that CD Memories possesses such
information or can acquire it without unreasonable effort or expense.
Execution of Documents
Each person desiring to subscribe to the Shares must complete, execute,
acknowledge, and delivered to CD Memories
a Subscription Agreement, which will contain, among other provisions,
representations as to the investor's qualifications to purchase the common stock
and his ability to evaluate and bear the risk of an investment in the Company.
By executing the subscription agreement, the subscriber is agreeing that if the
Subscription Agreement it is excepted by CD Memories, such a subscriber will be,
a shareholder in CD Memories and will be otherwise bound by the articles of
incorporation and the bylaws of CD Memories in the form attached to this
Prospectus.
Promptly, upon receipt of subscription documents by the Company, it will make a
determination as to whether a prospective investor will be accepted as a
shareholder in CD Memories. CD Memories may reject a subscriber's Subscription
Agreement for any reason. Subscriptions will be rejected for failure to conform
to the requirements of this Prospectus (such as failure to follow the proper
subscription procedure), insufficient documentation, over subscription to CD
Memories, or such other reasons other as CD Memories determines to be in the
best interest of the Company.
If a subscription is rejected, in whole or in part, the subscription funds, or
portion thereof, will be promptly returned to the prospective investor without
interest by depositing a check (payable to said investor) in the amount of said
funds in the United States mail, certified returned-receipt requested.
Subscriptions may not be revoked, cancelled, or terminated by the subscriber,
except as provided herein.
Legal Proceedings
CD Memories is not a party to any material pending legal proceedings and, to the
best of its knowledge, no such action by or against CD Memories has been
threatened.
Directors, Executive Officers, Promoters,
and Control Persons
The names, ages, and respective positions of the directors, officers, and
significant employees of the Company are set forth below. All these persons have
held their positions since December 1999. Each director and officer shall serve
for a term ending on the date of the third Annual Meeting. There are no other
persons which can be classified as a promoter or controlling person of CD
Memories.
Bill G. Smith,
President, Secretary
Bill Smith received his bachelor of science in business administration from
Southwestern Oklahoma University in 1988. He began his career with City bank in
April of 1989, serving first as a loan processor, then moving to the loan sales
and management training department. He gained experience in accounting, systems,
marketing, and distribution.
In December of 1992, Mr. Smith was promoted to the position of branch manager.
In this capacity, he was responsible for overall management of branch operation.
Under his direction, deposits increased by $21 million. Mr. Smith achieved the
"exceptional Service" rating in 1994.
In December or 1994, Bill became the manager of a de-novo branch, which opened
in March of 1995. He was responsible for developing and implementing sales and
service plans that generated deposit balances of $40 million in 14 months,
project payback in 14 months, and the highest customer service scores in the
Nevada area.
By January of 1997, Mr. Smith had be promoted to Area Sales Manager, in which
capacity he was responsible for implementation and management of the Citibank
sales process for five branch locations. He developed and implemented a
proactive customer care program to reduce attrition and increase customer
referrals. Mr. Smith held the number two position in the Nevada Area and served
as Officer in Charge as required.
Currently, Mr. Smith holds the position of Area Director and is directly
responsible for financial performance, customer satisfaction, sales production,
personnel, operations and partner relations of national pilot for Citibank
Financial Centers.
Brent Hucks, CPA
Chief Financial Officer, Treasurer
Mr. Hucks graduated from Brigham Young University in 1993. Having majored in
accountancy and information systems, Brent sought and found employment with KPMG
Peat Marwick, L.L.P., where he was immediately assigned to more significant
roles during the consulting process. He has played an active role in working
with clients, planning the engagement, and overseeing budgets. Additionally, he
is assigned to assemble consulting service packages, to assist in constructing
client-specific marketing plans, and to help negotiate potential client
contracts. Mr. Hucks has performed market feasibility studies, due diligence
work, asset underwriting, financial/cashflow modeling, and played a major role
in building custom database/spreadsheet software products.
Brent was elected with little industry experience to become a management
consultant in the area of financial services. He has consulted major clients,
including: J.P. Morgan, Morgan Stanley, Bear Stearns & Co., Dai-Ichi Kangyo
Bank, Daiwa Bank, Sanwa Bank, and Colony Capital. Larger assignments included
assimilating, collecting, and analyzing data for detailed strategy-oriented
projects. Mr. Hucks has worked closely with smaller and larger clients alike on
asset valuation and asset acquisition engagements; he has also built custom
information systems for a number of major clients.
Lance Bradford, CPA
Director
Lance Bradford is the managing partner for L.L. Bradford & Company, which he
founded in 1991. Previously, Mr. Bradford's
experience was with Ernst & Young in the Reno/Sacramento area.
Mr. Bradford serves as the Chief Financial Officer and Director for Sunderland
Corp., a mortgage company that facilitates mortgages for both residential and
commercial projects (which trades on the OTC Bulletin Boards under the symbol
DLMA) and several non-profit organizations.
He received a B.S. in B.A. from the University of Nevada, Reno and is a
Certified Public Accountant licensed in the State of Nevada.
He is a member of the Nevada Society of Certified Public Accountants and
American Institute of Certified Public Accountants.
None of the Officers and Directors have been involved in legal proceedings that
impair their ability to perform their duties as Officers and Directors.
There is no family relationship between any of the officers or directors.
Security Ownership of Certain
Beneficial Owners and Management
The following table sets forth, as of the date of this Prospectus, the
outstanding Shares of common stock of the Company owned of record or
beneficially by each person who owned of record, or was known by CD Memories to
own beneficially, more than 5% of CD Memories' Common Stock, and the name and
share holdings of each officer and director and all officers and directors as a
group.
<TABLE>
<S> <C> <C> <C> <C>
---------------- ------------------------------------------ ---------------------- ---------------- -------------------
Title of Class Name and Address of Beneficial Owner Amount and Nature of Percent of Percent of Class
Beneficial Owner Class before After Offering
Offering
---------------- ------------------------------------------ ---------------------- ---------------- -------------------
---------------- ------------------------------------------ ---------------------- ---------------- -------------------
Bill G. Smith
Common 10701 New Boro Ave 1,500,000 50% 48.2%
Las Vegas, Nevada 89144
---------------- ------------------------------------------ ---------------------- ---------------- -------------------
---------------- ------------------------------------------ ---------------------- ---------------- -------------------
Troy Mochoruck
Common 9435 Pioneer Ave 1,500,000 50% 48.2%
Las Vegas, Nevada 89117
---------------- ------------------------------------------ ---------------------- ---------------- -------------------
</TABLE>
None of the Officers, Directors or existing shareholders have the right to
acquire any amount of the Shares within sixty days from options, warrants,
rights, conversion privilege, or similar obligations.
Description of Securities
General description.
The securities being offered are shares of common stock. The Articles of
Incorporation authorize the issuance of 100,000,000 shares of common stock, with
a par value of $.001. The holders of the Shares: (a) have equal ratable rights
to dividends from funds legally available therefore, when, as, and if declared
by the Board of Directors of the Company; (b) are entitled to share ratably in
all of the assets of CD Memories available for distribution upon winding up of
the affairs of CD Memories; (c) do not have preemptive subscription or
conversion rights and there are no redemption or sinking fund applicable
thereto; and (d) are entitled to one non-cumulative vote per share on all
matters on which shareholders may vote at all meetings of shareholders. These
securities do not have any of the following rights: (a) cumulative or special
voting rights; (b) preemptive rights to purchase in new issues of Shares; (c)
preference as to dividends or interest; (d) preference upon liquidation; or (e)
any other special rights or preferences. In addition, the Shares are not
convertible into any other security. There are no restrictions on dividends
under any loan other financing arrangements or otherwise. See a copy of the
Articles of Incorporation, and amendments thereto, and Bylaws of CD Memories,
attached as Exhibit 3.1 and Exhibit 3.2, respectively, to this Form SB- 2. As of
the date of this Form SB-2, CD Memories has 3,000,000 Shares of common stock
outstanding.
Non-cumulative Voting
The holders of Shares of Common Stock of CD Memories do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
Shares, voting for the election of directors, can elect all of the directors to
be elected, if they so choose. In such event, the holders of the remaining
Shares will not be able to elect any of the Company's directors.
Dividends
CD Memories does not currently intend to pay cash dividends. CD Memories'
proposed dividend policy is to make distributions of its revenues to its
stockholders when the Company's Board of Directors deems such distributions
appropriate. Because CD Memories does not intend to make cash distributions,
potential shareholders would need to sell their shares to realize a return on
their investment. There can be no assurances of the projected values of the
shares, nor can there be any guarantees of the success of CD Memories.
A distribution of revenues will be made only when, in the judgment of CD
Memories' Board of Directors, it is in the best interest of CD Memories'
stockholders to do so. The Board of Directors will review, among other things,
the investment quality and marketability of the securities considered for
distribution; the impact of a distribution of the investee's securities on its
customers, joint venture associates, management contracts, other investors,
financial institutions, and CD Memories' internal management, plus the tax
consequences and the market effects of an initial or broader distribution of
such securities.
Possible Anti-Takeover Effects of Authorized but Unissued Stock.
Upon the completion of this Offering, CD Memories' authorized but unissued
capital stock will consist of
96,890,625 shares (assuming the entire offering is sold) of common stock. One
effect of the existence of authorized but unissued capital stock may be to
enable the Board of Directors to render more difficult or to discourage an
attempt to obtain control of CD Memories by means of a merger, tender offer,
proxy contest, or otherwise, and thereby to protect the continuity of CD
Memories' management.
If, in the due exercise of its fiduciary obligations, for example, the Board of
Directors were to determine that a takeover proposal was not in CD Memories'
best interests, such shares could be issued by the Board of Directors without
stockholder approval in one or more private placements or other transactions
that might prevent, or render more difficult or costly, completion of the
takeover transaction by diluting the voting or other rights of the proposed
acquirer or insurgent stockholder or stockholder group, by creating a
substantial voting block in institutional or other hands that might undertake to
support the position of the incumbent Board of Directors, by effecting an
acquisition that might complicate or preclude the takeover, or otherwise.
Transfer Agent
The Company plans to engage the services of Nevada Agency and Trust Company of
Reno, Nevada to act as transfer agent and registrar.
Interest of named experts and counsel
No named expert or counsel was hired on a contingent basis. No named expert or
counsel will receive a direct or indirect interest in the small business issuer.
No named expert or counsel was a promoter, underwriter, voting trustee,
director, officer, or employee of the small business issuer.
Disclosure of commission position on indemnification for securities act
liabilities. No director of CD Memories will have personal liability to CD
Memories or any of its stockholders for monetary damages for breach of fiduciary
duty as a director involving any act or omission of any such director since
provisions have been made in the Articles of Incorporation limiting such
liability.
The foregoing provisions shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to CD Memories or
its stockholders, (ii) for acts or omissions not in good faith or, which involve
intentional misconduct or a knowing violation of law, (iii) under applicable
Sections of the Nevada Revised Statutes, (iv) the payment of dividends in
violation of Section 78.300 of the Nevada Revised Statutes or, (v) for any
transaction from which the director derived an improper personal benefit.
The By-laws provide for indemnification of the directors, officers, and
employees of CD Memories in most cases for any liability suffered by them or
arising out of their activities as directors, officers, and employees of the
Company if they were not engaged in willful misfeasance or malfeasance in the
performance of his or her duties; provided that in the event of a settlement the
indemnification will apply only when the Board of Directors approves such
settlement and reimbursement as being for the best interests of the Corporation.
The Bylaws, therefore, limit the liability of directors to the maximum extent
permitted by Nevada law (Section 78.751).
The officers and directors of CD Memories are accountable to CD Memories as
fiduciaries, which means they are required to exercise good faith and fairness
in all dealings affecting CD Memories. In the event that a shareholder believes
the officers and/or directors have violated their fiduciary duties to CD
Memories, the shareholder may, subject to applicable rules of civil procedure,
be able to bring a class action or derivative suit to enforce the shareholder's
rights, including rights under certain federal and state securities laws and
regulations to recover damages from and require an accounting by management..
Shareholders who have suffered losses in connection with the purchase or sale of
their interest in CD Memories in connection with such sale or purchase,
including the misapplication by any such officer or director of the proceeds
from the sale of these securities, may be able to recover such losses from the
Company.
The registrant undertakes the following:
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
Organization within last five years.
The names of the promoters of the registrant are the officers and directors as
disclosed elsewhere in this Form SB-2. None of the promoters have received
anything of value from the registrant.
Description of Business.
Company/Business Summary.
CD Memories.com, Inc.. was incorporated on April 15, 1997, under the laws of the
State of Nevada, as Foster Enterprises to engage in any lawful corporate
undertaking, including, but not limited to, selected mergers and acquisitions.
In December 1999 the name of the corporation was changed to CD Memories.com,
Inc. The Company has been in the developmental stage since inception and has no
operations date. Other than issuing shares for initial consulting, CD Memories
never commenced any operational activities.
Mr. Smith, the President, Treasurer and Director, elected to commence
implementation of CD Memories' principal business purpose, described below under
"Item 2, Plan of Operation". As such, CD Memories can be defined as a "shell"
company, whose sole purpose at this time is to locate and consummate a merger or
acquisition with a private entity.
The proposed business activities described herein classify CD Memories as a
"blank check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions. Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities until such time as CD Memories has
successfully implemented its business plan described herein. Accordingly, each
shareholder of CD Memories has executed and delivered a "lock-up" letter
agreement, affirming that he/she will not sell his/her respective shares of the
Company's common stock until such time as CD Memories has successfully
consummated a merger or acquisition and the Company is no longer classified as a
"blank check" company.
In order to provide further assurances that no trading will occur in CD
Memories' securities until a merger or acquisition has been consummated, each
shareholder has agreed to place his/her respective stock certificate with CD
Memories' legal counsel, who will not release these respective certificates
until such time as legal counsel has confirmed that a merger or acquisition has
been successfully consummated.
However, while management believes that the procedures established to preclude
any sale of CD Memories' securities prior to closing of a merger or acquisition
will be sufficient, there can be no assurances that the procedures established
herein will unequivocally limit any shareholder's ability to sell their
respective securities before such closing.
Item 2. Plan of Operation.
The Registrant intends to seek to acquire assets or shares of an entity actively
engaged in business which generates revenues, in exchange for its securities.
The Registrant has no particular acquisitions in mind and has not entered into
any negotiations regarding such an acquisition. None of CD Memories' officers,
directors, promoters or affiliates have engaged in any preliminary contact or
discussions with any representative of any other company regarding the
possibility of an acquisition or merger between CD Memories and such other
company as of the date of this registration statement.
While CD Memories will attempt to obtain audited financial statements of a
target entity, there is no assurance that such audited financial statements will
be available. The Board of Directors does intend to obtain certain assurances of
value of the target entity's assets prior to consummating such a transaction,
with further assurances that an audited statement would be provided within
seventy-five days after closing of such a transaction. Closing documents
relative thereto will include representations that the value of the assets
conveyed to or otherwise so transferred will not materially differ from the
representations included in such closing documents.
The Registrant has no full time employees. The Registrant's two officers have
agreed to allocate a portion of their time to the activities of the Registrant,
without compensation. Management anticipates that the business plan of CD
Memories can be implemented by each officer devoting approximately 10 hours per
month to the business affairs of CD Memories and, consequently, conflicts of
interest may arise with respect to the limited time commitment by such officers.
See "Item 5. Directors, Executive Officers, Promoters, and Control Persons."
CD Memories is filing this registration statement on a voluntary basis because
the primary attraction of the Registrant as a merger partner or acquisition
vehicle will be its status as an SEC reporting company. Any business combination
or transaction will likely result in a significant issuance of shares and
substantial dilution to present stockholders of the Registrant.
The Articles of Incorporation of CD Memories provides that CD Memories may
indemnify officers and/or directors of CD Memories for liabilities, which can
include liabilities arising under the securities laws. Therefore, assets of CD
Memories could be used or attached to satisfy any liabilities subject to such
indemnification. See "Item 12, Indemnification of directors and officers."
General Business Plan.
CD Memories's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons or firms who or which desire to seek the perceived advantages of an
Exchange Act registered corporation. CD Memories will not restrict its search to
any specific business, industry, or geographical location and CD Memories may
participate in a business venture of virtually any kind or nature.
This discussion of the proposed business is purposefully general and is not
meant to be restrictive of CD Memories' virtually unlimited discretion to search
for and enter into potential business opportunities. Management anticipates that
it will be able to participate in only one potential business venture because CD
Memories has nominal assets and limited financial resources. See Item F/S,
"Financial Statements." This lack of diversification should be considered a
substantial risk to shareholders of CD Memories because it will not permit CD
Memories to offset potential losses from one venture against gains from another.
CD Memories may seek a business opportunity with entities which have recently
commenced operations, or which wish to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate purposes. CD Memories
may acquire assets and establish wholly-owned subsidiaries in various businesses
or acquire existing businesses as subsidiaries.
The primary method CD Memories will use to find potential merger or acquisition
candidates will be to run classified ads in the Wall Street Journal periodically
seeking companies which are looking to merge with a public shell.
CD Memories anticipates that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances being made in some industries and
shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes) for all shareholders and other factors.
Business opportunities may be available in many different industries and at
various stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex.
CD Memories has, and will continue to have, no capital with which to provide the
owners of business opportunities with any significant cash or other assets.
However, management believes CD Memories will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in a publicly registered company without incurring the cost and time
required to conduct an initial public offering.
The owners of the business opportunities will, however, incur significant legal
and accounting costs in connection with the acquisition of a business
opportunity, including the costs of preparing Form 8-K's, 10-K's or 10-KSB's,
agreements and related reports and documents. The Securities Exchange Act of
1934 (the "34 Act"), specifically requires that any merger or acquisition
candidate comply with all applicable reporting requirements, which include
providing audited financial statements to be included within the numerous
filings relevant to complying with the 34 Act.
Nevertheless, the officers and directors of CD Memories have not conducted
market research and are not aware of statistical data which would support the
perceived benefits of a merger or acquisition transaction for the owners of a
business opportunity.
The analysis of new business opportunities will be undertaken by, or under the
supervision of, the officers and directors of CD Memories, none of whom is a
professional business analyst. Management intends to concentrate on identifying
preliminary prospective business opportunities which may be brought to its
attention through present associations of CD Memories' two officers, or by the
Company's shareholders.
In analyzing prospective business opportunities, management will consider such
matters as:
the available technical, financial and managerial resources, working capital
and other financial requirements, history of operations, if any, prospects for
the future, nature of present and expected competition;, the quality and
experience of management services which may be available and the depth of that
management, the potential for further research, development, or exploration,
specific risk factors not now foreseeable but which may be anticipated to impact
the proposed activities of CD Memories; the potential for growth or expansion;
the potential for profit; the perceived public, recognition or acceptance of
products, services, or trades; name identification; and other relevant factors.
Management will meet personally with management and key personnel of the
business opportunity as part of their investigation. To the extent possible, CD
Memories intends to utilize written reports and personal investigation to
evaluate the above factors. CD Memories will not acquire or merger with any
company for which audited financial statements cannot be obtained within a
reasonable period of time after closing of the proposed transaction.
Management of CD Memories, while not especially experienced in matters relating
to the new business of the Company, will rely upon their own efforts and, to a
much lesser extent, the efforts of CD Memories' shareholders, in accomplishing
the business purposes of CD Memories. It is not anticipated that any outside
consultants or advisors will be utilized by CD Memories to effectuate its
business purposes described herein.
However, if CD Memories does retain such an outside consultant or advisor, any
cash fee earned by such party will need to be paid by the prospective
merger/acquisition candidate, as CD Memories has no cash assets with which to
pay such obligation. There have been no discussions, understandings, contracts
or agreements with any outside consultants and none are anticipated in the
future. In the past, the Company's management has never used outside consultants
or advisors in connection with a merger or acquisition.
CD Memories will not restrict its search for any specific kind of firms, but may
acquire a venture which is in its preliminary or development stage, which is
already in operation, or in essentially any stage of its corporate life. It is
impossible to predict at this time the status of any business in which CD
Memories may become engaged, in that such business may need to seek additional
capital, may desire to have its shares publicly traded, or may seek other
perceived advantages which CD Memories may offer.
However, CD Memories does not intend to obtain funds in one or more private
placements to finance the operation of any acquired business opportunity until
such time as CD Memories has successfully consummated such a merger or
acquisition. CD Memories also has no plans to conduct any offerings under
Regulation S.
Acquisition of opportunities.
In implementing a structure for a particular business acquisition, CD Memories
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a transaction,
it is probable that the present management and shareholders of CD Memories will
no longer be in control of CD Memories. In addition, the Company's directors
may, as part of the terms of the acquisition transaction, resign and be replaced
by new directors without a vote of CD Memories' shareholders.
It is anticipated that CD Memories' principal shareholders may actively
negotiate or otherwise consent to the purchase of a portion of their common
stock as a condition to, or in connection with, a proposed merger or acquisition
transaction. Any terms of sale of the shares presently held by officers and/or
directors of CD Memories will be also afforded to all other shareholders of the
Company on similar terms and conditions.
The policy set forth in the preceding sentence is based on an Understanding
between the two members of management, and these two persons are not aware of
any circumstances under which this policy would change while they are still
officers and directors of CD Memories. Any and all such sales will only be made
in compliance with the securities laws of the United States and any applicable
state.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of its transaction, CD Memories may agree to register all or a part of such
securities immediately after the transaction is consummated or at specified
times thereafter.
If such registration occurs, of which there can be no assurance, it will be
undertaken by the surviving entity after CD Memories has successfully
consummated a merger or acquisition and the Company is no longer considered a
"shell" company. Until such time as this occurs, CD Memories will not attempt to
register any additional securities. The issuance of substantial additional
securities and their potential sale into any trading market which may develop in
CD Memories' securities may have a depressive effect on the value of CD
Memories' securities in the future, if such a market develops, of which there is
no assurance.
While the actual terms of a transaction to which CD Memories may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax- free" reorganization
under Sections 368a or 351 of the Internal Revenue Code (the "Code").
With respect to any merger or acquisition, negotiations with target company
management is expected to focus on the percentage of CD Memories which target
company shareholders would acquire in exchange for all of their shareholdings in
the target company. Depending upon, among other things, the target company's
assets and liabilities, CD Memories' shareholders will in all likelihood hold a
substantially lesser percentage ownership interest in the Company following any
merger or acquisition.
The percentage ownership may be subject to significant reduction in the event CD
Memories acquires a target company with substantial assets. Any merger or
acquisition effected by CD Memories can be expected to have a significant
dilutive effect on the percentage of shares held by CD Memories' then
shareholders.
CD Memories will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements.
Although the terms of such agreements cannot be predicted, generally such
agreements will require some specific representations and warranties by all of
the parties thereto.
Also, they will specify certain events of default, will detail the terms of
closing and the conditions which must be satisfied by each of the parties prior
to and after such closing, will outline the manner of bearing costs, including
costs associated with CD Memories' attorneys and accountants, will set forth
remedies on default and will include miscellaneous other terms.
As stated here-in-above, CD Memories will not acquire or merge with any entity
which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. CD Memories
is subject to all of the reporting requirements included in the 34 Act. Included
in these requirements is the affirmative duty of CD Memories to file independent
audited financial statements as part of its Form 8-K to be filed with the
Securities and Exchange Commission upon consummation of a merger or acquisition,
as well as CD Memories' audited financial statements included in its annual
report on Form 10-K (or 10-KSB, as applicable).
If such audited financial statements are not available at closing, or within
time parameters necessary to insure CD Memories' compliance with the
requirements of the 34 Act, or if the audited financial statements provided do
not conform to the representations made by the candidate to be acquired in the
closing documents, the closing documents may provide that the proposed
transaction will be voidable, at the discretion of the present management of CD
Memories.
CD Memories' officers and shareholders have verbally agreed that they will
advance to CD Memories any additional funds which CD Memories needs for
operating capital and for costs in connection with searching for or completing
an acquisition or merger. These persons have further agreed that such advances
will be made in proportion to each person's percentage ownership of CD Memories.
These persons have also agreed that such advances will be made interest free
without expectation of repayment unless the owners of the business which CD
Memories acquires or merges with agree to repay all or a portion of such
advances.
There is no dollar cap on the amount of money which such persons will advance to
CD Memories. CD Memories will not borrow any funds from anyone other than its
current shareholders for the purpose of repaying advances made by the
shareholders, and CD Memories will not borrow any funds to make any payments to
CD Memories' promoters, management or their affiliates or associates.
The Board of Directors has passed a resolution which prohibits CD Memories from
completing an acquisition or merger with any entity in which any of CD Memories'
Officers, Directors, principal shareholders or their affiliates or associates
serve as officer or director or hold any ownership interest. Management is not
aware of any circumstances under which this policy, through their own initiative
may be changed.
There are no arrangements, agreements or understandings between non-management
shareholders and management under which non-management management of the
Company's affairs. There is no agreement that non-management shareholders will
exercise their voting rights to continue to re-elect the current directors,
however, it is expected that they will do so based on the existing friendship
among such persons.
Competition.
CD Memories will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than CD Memories. In
view of the Company's combined extremely limited financial resources and limited
management availability, CD Memories will continue to be at a significant
competitive disadvantage compared to the Company's competitors.
Description of property.
CD Memories currently has no property nor does it expect to have property in the
future unless it is successful in completing a merger.
Certain relationships and related transactions.
There are no relationships, transactions, or proposed transactions to which the
registrant was or is to be a party, in which any of the named persons set forth
in Item 404 of Regulation SB had or is to have a direct or indirect material
interest.
Market for common equity and related stockholder matters.
The Shares have not previously been traded on any securities exchange. At the
present time, there are no assets available for the payment of dividends on the
Shares.
Executive compensation.
(a) No officer or director of CD Memories is receiving any remuneration at this
time.
(b) There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors, or employees of the corporation in the event of retirement
at normal retirement date pursuant to any presently existing plan provided or
contributed to by the corporation or any of its subsidiaries.
(c) No remuneration is proposed to be in the future directly or indirectly by
the corporation to any officer or director under any plan which is presently
existing.
Financial statements.
CD MEMORIES.COM
(A Development Stage Company)
FINANCIAL STATEMENTS
February 11, 2000
TABLE OF CONTENTS PAGE #
INDEPENDENT AUDITORS REPORT 1
ASSETS 2
LIABILITIES AND STOCKHOLDERS' EQUITY 2
STATEMENT OF OPERATIONS 3
STATEMENT OF STOCKHOLDERS' EQUITY 4
STATEMENT OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-9
INDEPENDENT AUDITORS' REPORT
Board of Directors CD Memories.Com, Inc.
INDEPENDENT AUDITOR'S REPORT
I have audited the accompanying balance sheet of CD Memories.Com, Inc. (Company)
as of December 31, 1999 and the related statement of operations, statement of
stockholders' equity, and the statement of cash flows for the years ended
December 31, 1999, 1998, and from April 15, 1997 (inception) to December 31,
1999. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
The Company is a development stage enterprise, as defined in Financial
Accounting Standards Board No. 7. The Company is devoting all of its present
efforts in securing and establishing a new business, and its planned principal
operations have not commenced, and, accordingly, no revenue has been derived
during the organizational period.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of December 31, 1999
and the results of its operations for the year then ended in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 4 to the
financial statements, the Company has no viable operations to date and little or
no tangible assets that raise substantial doubt about its ability to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty
S/Clyde Bailey
Clyde Bailey P.C.
San Antonio, Texas
January 23, 2000
CD Memories.Com, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Organization
CD Memories.Com, Inc. ("the Company") was incorporated under the laws of the
State of Nevada on April 22, 1997 for the purpose to promote and carry on any
lawful business for which a corporation may be incorporated under the laws of
the State of Nevada. The company has a total of 100,000,000 authorized shares
with a par value of $.001 per share and with 3,000,000 shares issued and
outstanding as of December 31, 1999. On December 13, 1999, the Company filed a
Certificate of Amendment to the Articles of Incorporation with the Nevada
Corporation Commission to change the name of the Company from Foster Enterprises
to CD Memories.Com, Inc. and to increase the authorized capital stock to
100,000,000. The Company has been inactive since inception and has no operating
revenues or expenses.
Development Stage Enterprise
The Company is a development stage enterprise, as defined in Financial
Accounting Standards Board No. 7. The Company is devoting all of its present
efforts in securing and establishing a new business, and its planned principal
operations have not commenced, and, accordingly, no revenue has been derived
during the organizational period.
Fixed Assets
The Company has no fixed assets at this time.
Federal Income Tax
The Company has adopted the provisions of Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes. The Company accounts for income
taxes pursuant to the provisions of the Financial Accounting Standards Board
Statement No. 109, "Accounting for Income Taxes", which requires an asset and
liability approach to calculating deferred income taxes. The asset and liability
approach requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax basis of assets and liabilities.
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 on
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Accounting Method
The Company's financial statements are prepared using the
accrual method of accounting. Revenues are recognized when earned and expenses
when incurred. Fixed assets are stated at cost. Depreciation and amortization
using the straight-line method for financial reporting purposes and accelerated
methods for income tax purposes.
CD Memories.Com, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies (con't)
Earnings per Common Share
The Company adopted Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share," which simplifies the computation of earnings per share requiring the
restatement of all prior periods. Basic earnings per share are computed on the
basis of the weighted average number of common shares outstanding during each
year.
Diluted earnings per share are computed on the basis of the weighted average
number of common shares and dilutive securities outstanding. Dilutive securities
having an anti-dilutive effect on diluted earnings per share are excluded from
the calculation.
Comprehensive Income
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
No.130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. The Company does not have any assets requiring disclosure
of comprehensive income.
Segments of an Enterprise and Related Information
Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures about
Segments of an Enterprise and Related Information, supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise." SFAS 131
establishes standards for the way that public companies report information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. SFAS 131 defines
operating segments as components of a company about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. The Company has evaluated this SFAS and does not believe it is
applicable at this time.
Note 2 - Common Stock
In December of 1999, a forward split of 3,000 to 1 was place into effect
reflecting the total outstanding shares of 3,000,000 share of common stock to
the principal officers. Accordingly, the accompanying financial statements have
been retroactively restated to reflect the 3000-to-1 stock split as if such
stock split occurred as of the Company's date of inception.
CD Memories.Com, Inc.
(A Development Stage Enterprise)
Balance Sheet
As of December 31, 1999
<TABLE>
<S> <C> <C>
A S S E T S
Current Assets:
Total Current Assets $ -
----------------------
Other Assets:
Deferred Tax Benefit -
-----------------
Total Other Assets -
----------------------
Total Assets $ -
==========================
L I A B I L I T I E S
Current Liabilities: $ -
Total Current Liabilities -
------------------------
Total Liabilities -
STOCKHOLDERS' EQUITY
Common Stock 3,000
100,000,000 authorized shares, par value $.001
3,000,000 shares issued and outstanding
Additional Paid-in-Capital -
Accumulated Deficit (3,000)
----------------------
Total Equity -
Total Liabilities and
Equity $ -
=======================
</TABLE>
CD Memories.Com, Inc.
(A Development Stage Enterprise)
Statement of Operations
<TABLE>
<S> <C> <C> <C>
For the Year Ended From Inception
December 31 to December 31
Revenues: 1999 1998 1999
-----------------------------------------------------------------
Revenues $ - $ - $ -
Total Revenues - - -
Expenses:
Consulting Expenses - - 3,000
-----------------------------------------------------------------
Total Expenses - 3,000
-----------------------------------------------------------------
Net Loss from Operations - - (3,000)
Provision for Income Taxes:
Income Tax Benefit - - -
-----------------------------------------------------------------
Net Income (Loss) $ - $ - $ (3,000)
=================================================================
Basic and Diluted Earnings per Common Share Nil Nil Nil
Weighted Average number of Common Shares 3,000,000 3,000,000 3,000,000
=================================================================
used in per share calculations
</TABLE>
CD Memories.Com, Inc.
(A Development Stage Enterprise)
Statement of Stockholders' Equity
As of December 31, 1999
<TABLE>
<S> <C> <C> <C> <C> <C>
$ 0.001 Par Paid-In Accumulated Stockholders'
Shares Value Capital Deficit Equity
Balance January 1, 1998 - $ - $ $ $ -
Stock Issued for Servic 3,000,000 3,000 3,000
Net Income (Loss) (3,000) (3,000)
--------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 3,000,000 3,000 - (3,000) -
Net Income (Loss) - -
------------------------------------------ -------------------------------------------------------------
Balance December 31, 1999 3,000,000 $ 3,000 $ - $ (3,000) $ -
</TABLE>
CD Memories.Com, Inc.
(A Development Stage Enterprise)
Statement of Cash Flows
<TABLE>
<S> <C> <C>
For the Year Ended From 4/15/97
December 31 to December 31
Cash Flows from Operating Activities: 1999 1998 1999
---------------------------------------------------------------
Net Income (Loss) $ - $ - $ (3,000)
Changes in operating assets and liabilities:
Stock Issued for Services 3,000
---------------------------------------------------------------
Total Adjustments - - 3,000
---------------------------------------------------------------
Net Cash used in Operating Activities - - -
Cash Flows from Investing Activities:
---------------------------------------------------------------
Net Cash used in Investing Activities - - -
Cash Flows from Financing Activities:
Common Stock
- - -
---------------------------------------------------------------
Net Cash used in Financing Activities - - -
Net Increase in Cash - - -
Cash Balance, Begin Period - - -
---------------------------------------------------------------
Cash Balance, End Period $ - $ - $ -
===============================================================
</TABLE>
Supplementary Disclosures:
Noncash Transaction - Stock Issued for Services 3,000
Cash paid for Interest 0
Cash paid for Income Taxes 0
CD Memories.Com, Inc.
Notes to Financial Statements
Note 3 - Related Parties
The Organization has no significant related party transactions and/or
relationships any individuals or entities.
Note 4 - Going Concern
The Company has had no operations to date, has little or no tangible assets or
financial resources, and incurred losses since inception. These losses and lack
of operations raise substantial doubt about the Company's ability to continue as
a going concern.
Note 5 - Income Taxes
Deferred income taxes arise from temporary differences resulting from the
Company's subsidiary utilizing the cash basis of accounting for tax purposes and
the accrual basis for financial reporting purposes. Deferred taxes are
classified as current or non-current, depending on the classification of the
assets and liabilities to which they relate. Deferred taxes arising from timing
differences that are not related to an asset or liability are classified as
current or non-current depending on the periods in which the timing differences
are expected to reverse. The Company's previous principal temporary differences
relate to revenue and expenses accrued for financial purposes, which are not
taxable for financial reporting purposes. The Company's material temporary
differences consist of bad debt expense recorded in the financial statements
that is not deductible for tax purposes and differences in the depreciation
expense calculated for financial statement purposes and tax purposes.
The net deferred tax asset or liability is composed of the following:
<TABLE>
<S> <C> <C> <C>
From
1999 1998 Inception
Total Deferred Tax Assets $ -0- $ -0- $ 450
Less: Valuation Allowance ( -0- ) ( -0-) (450)
Net Deferred Tax Asset - -
Total Deferred Tax Liabilities - -
Net Deferred Tax Liability - -
Less Current Portion - -
Long-Term Portion $ - $ - $
</TABLE>
Note 4 - Subsequent Events
The Company is in the process of filing a Form SB2 Registration Statement with
the Securities and Exchange Commission. The "draft" of the Form SB2 describes an
offering of 109,375 shares of stock at $.32 per share for a total proposed
maximum aggregate offering proceeds of $35,000. The funds will be used for
expenses and working capital.
There were no other material subsequent events that have occurred since the
balance sheet date that warrants disclosure in these financial statements.
Part II. Information not required in prospectus.
Indemnification of officers and directors. Information on this item is set forth
in Prospectus under the heading "Disclosure of Commission Position on
Indemnification for Securities Act Liabilities."
Other expenses of issuance and distribution.
Information on this item is set forth in the Prospectus under the heading "Use
of Proceeds."
Recent sales of unregistered securities.
None. All shares issued were issued at the inception of the corporation. Each
shareholder was issued 500 shares each for initial consulting.
Exhibits.
The Exhibits required by Item 601 of Regulation S-B, and an index thereto, are
attached.
Undertakings.
The undersigned registrant hereby undertakes to:
(a) (1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to: (i) Include any
prospectus required by section 10(a)(3) of the Securities Act; (ii) Reflect in
the prospectus any facts or events which, individually or together, represent a
fundamental change in the information in the registration statement; and
Notwithstanding the forgoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation From the low or high end of the
estimated maximum offering range may be reflected in the form of prospects filed
with the Commission pursuant to Rule 424.
(b) if, in the aggregate, the changes in the volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement.
(iii) Include any additional or changed material information on the plan of
distribution. (2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering. (3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
Provide to the underwriter at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names as
required by the underwriter to permit prompt delivery to each purchaser.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised "Act") may be permitted to directors, officers
and controlling persons of the small business issuer that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the small business
issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
Signatures
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies it has reasonable grounds to believe that it meets all of
the requirements for filing on Form SB-2/A and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Las Vegas, State of Nevada.
CDMEMORIES.COM, Inc.
By:/s/ Bill G. Smith
Bill G. Smith
President
Special Power of Attorney
The undersigned constitute and appoint Brent Hucks their true and lawful
attorney-in-fact and agent with full power of substitution, for him and in his
name, place, and stead, in any and all capacities, to sign any and all
amendments, including post-effective amendments, to this Form SB-2 Registration
Statement, and to file the same with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting such
attorney-in-fact the full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the premises, as
fully and to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that such attorney-in-fact may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated:
<TABLE>
<S> <C> <C>
Signature Title Date
/s/ Bill G Smith President, Chief January 13, 2000
Bill G. Smith Executive, Director
Treasurer
/s/ Brent Hucks Chief Financial Officer, January 15, 2000
Brent Hucks Director
/s/ Lance Bradford Director January 15, 2000
Lance Bradford
</TABLE>
By:/s/ Bill G. Smith
Bill G. Smith
President
PART III
ITEM 1. INDEX TO EXHIBITS.
EXHIBIT NUMBER DESCRIPTION
<TABLE>
<S> <C>
3.1 Articles of Incorporation
3.2 By-Laws
10.1 Shareholder agreement
23.1 Consent of Accountants
27 Financial Data Schedule
</TABLE>
