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)
Nevada 4700 86-0865665
(State or Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
organization) Classification Code Number) Identification No.)
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,
please check the following box [ ]. <TABLE> <CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed maximum Proposed maximum
offering price per aggregate offering Amount of
Title of each class of Amount to be share price registration
securities to be registered registered fee
(1) (2)
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Common stock, $.001 3,109,375 $0.32 $35,000.00 $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.
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. Additionally, the
company is registering 3,000,000 outstanding shares on behalf of the
shareholders of such common stock. 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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Price To Underwriting
Public (1) Discounts and Proceeds to Issuer
Commission
Per Share $0.32 -0- $0.32
Total $35,000.00 -0- $35,000.00
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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
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THE SHARES ARE OFFERED BY THE COMPANY SUBJECT TO PRIOR SALE, ACCEPTANCE OF THE
SUBSCRIPTIONS BY THE COMPANY AND APPROVAL OF CERTAIN LEGAL MATTERS BY COUNSEL TO
THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OPEN
OFFER TO BUY INTO SECURITIES OFFERED HEREBY A STATE IN WHICH, OR TO A PERSON
TRUE, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION CONTAINED HEREIN
SUBSEQUENT TO THE DATE THEREOF. HOWEVER, IF A MATERIAL CHANGE OCCURS, THIS
PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED ACCORDINGLY FOR ALL EXISTING
SHAREHOLDERS, AND FOR ALL PROSPECTIVE INVESTORS WHO HAVE NOT YET BEEN ACCEPTED
AS SHAREHOLDERS IN THE COMPANY.
DOES NOT INTENTIONALLY OMIT ANY MATERIAL FACT OR CONTAIN ANY UNTRUE STATEMENT OF
MATERIAL THIS PROSPECTUS FACT. NO PERSON OR ENTITY HAS BEEN AUTHORIZED BY THE
COMPANY TO GIVE ANY INFORMATION OR MAKE A REPRESENTATION, WARRANTY, COVENANT, OR
AGREEMENT WHICH IS NOT EXPRESSLY PROVIDED FOR OR CONTAINED IN THIS PROSPECTUS;
IF GIVEN OR MADE, SUCH INFORMATION, REPRESENTATION, WARRANTY, COVENANT, OR
AGREEMENT MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
EACH PERSON WHO RECEIVES A PROPSECTUS WILL HAVE AN OPPORTUNITY TO MEET WITH
REPRESENTATIVES OF THE COMPANY, DURING NORMAL BUSINESS HOURS UPON WRITTEN OR
ORAL REQUEST TO THE COMPANY, IN ORDER TO VERIFY ANY OF THE INFORMATION INCLUDED
IN THIS PROSPECTUS AND TO OBTAIN ADDITIONAL INFORMATION REGARDING THE COMPANY.
IN ADDITION, EACH SUCH PERSON WILL BE PROVIDED WITHOUT CHARGE, UPON WRITTEN OR
ORAL REQUEST, A COPY OF ANY OF THE INFORMATION THAT IS INCORPORATED BY REFERENCE
IN THE PROSPECTUS AND THE ADDRESS (INCLUDING TITLE OR DEPARTMENT) AND TELEPHONE
NUMBER TO WHICH SUCH REQUEST IS TO BE DIRECTED.
ALL OFFEREES AND SUBSCRIBERS WILL BE ASKED TO ACKNOWLEDGE IN WRITING THAT THEY
HAVE READ THIS PROSPECTUS CAREFULLY AND THOROUGHLY, AND UNDERSTOOD THE CONTENTS
THEREOF, THEY WERE GIVEN THE OPPORTUNITY TO OBTAIN ADDITIONAL INFORMATION; AND
THEY DID SO TO THEIR SATISFACTION.
(1) A maximum of 109,375 shares may be sold on a "bestefforts" basis. There is
no minimum amount of securities being offered. All proceeds from this
offering will be available to the company for use as soon as they are
received.
(2) The Net Proceeds to CD Memories.com, Inc. is before the payment of certain
expenses in connection with this offering. See "Use of Proceeds."
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Table of Contents
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Prospectus Summary 9
Risk Factors 12
Use of Proceeds 15
Determination of Offering Price 16
Dilution 16
Plan of Distribution 18
Legal Proceedings 19
Directors, Executive Officers, Promoters, and 19
Control Persons
Security Ownership of Certain Beneficial Owners 20
and Management
Description of Securities 21
Interest of Named Experts and Counsel 22
Disclosure of Commission Position on Indemnification 22
For Securities Act Liabilities
Organization Within the Last Five Years 23
Description of Business 23
Management's Discussion and Analysis of Financial
Conditions and Results of Operation
Description of Property
Certain Relationships and Related Transactions
Market for Common Equity and Related Stockholder Matters
Executive Compensation
Financial Statements
Changes in and Disagreements with Accountants of Accounting Matters
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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.
THE COMPANY
History and Organization
CD Memories.com, Inc., formerly known as Foster Enterprises, (the "Company") was
organized as a Nevada corporation in April of 1997. In December 1999, the name
was changed to CD Memories.com, Inc. As a result of the reorganization, the
Board of Directors elected Mr. Bill G. Smith as President, Chairman, and
Secretary. Mr. Smith had been acting as a consultant to Foster Enterprises since
inception of the company. As of this date, Foster Enterprises, Inc. had not been
a successful operation and had not been able to move forward with a plan of
business. There has been no revenues or operations as of this date. As of
December 10, 1999, a forward split of 3000 to 1 was placed into effect. The
Company's principal office is currently located at 2915 West Charleston
Boulevard, Suite 7, Las Vegas, Nevada, 89102. The telephone number is (702)
383-6520.
THE BUSINESS
Under development since 1996, CD Memories responded to the public's need for
high-quality preservation of home video footage.
Increasing popularity of home PC's, coupled with the faddish phenomenon of
scrapbooking as a hobby and industry (note the recent success of companies like
"Creative Memories" and retail chains like "The Scrapbook Patch."), makes this
the perfect time to market the benefits of a CD-ROM memory album.
The benefits of a CD Memories Interactive CD-ROM are threefold:
1) Video clips are captured from VHS tapes and digitized, so they will never
deteriorate or lose quality;
2) Since endless filming with a camcorder usually results in only minutes of
viewable footage, hours of footage are edited down to "highlights";
3) Clips are arranged in a non-linear, point and click interface, eliminating
the need to fast forward or rewind.
The technology industries are unanimous in their prediction: digital video is
the wave of the future.
Just as audio CDs have eclipsed cassettes in the music industry, so will digital
video overtake VHS tapes as the primary mode of recording and viewing video.
Like audio CDs, digital video CD-ROMs eliminate the bothersome need for fast
forwarding and rewinding - simply click on an icon and your video clip is
playing. These clips are saved using and MPEG1 compression scheme which, in
addition to providing optimal quality and video performance, allows you to copy,
re-distribute, edit, or send them to someone with e-mail. What's more, your
clips are fully digitized and will therefore never lose quality, despite
repeated usage.
CD Memories is the first company nationwide to recognize the need for a superior
alternative to home VHS tapes.
By digitizing video clips and burning them on to CD-ROM, CD Memories has created
a fully customizable, high-quality personal CD memory album. Current projects
include: o Wedding Day(R) Multimedia CD-ROM, which includes:
* over 30 minutes of full motion, full screen video footage from the
customer's wedding video, presented as 10 individual clips; a captured
still photo montage; a video montage, set to music of the customer's
choice; personalized 3-D graphics introduction, and; two extra copies of
the CD-ROM to distribute to friends and family.
* Baby's First Years(R), featuring: Over 40 minutes of full motion, full
screen video footage from multiple tapes; a captured still photo montage;
up to two video montages, set to music of the customer' choice; an
updateable record of baby's major milestones, and; two extra copies of the
CD-ROM to distribute to friends and family.
* Family Album (R), which includes: 60 minutes of full motion, full screen
video footage; up to two still photo montages; up to four video montages,
set to music; personalized interface with captured still photos as icons,
and; two extra copies of the CD-ROM to distribute to friends and family.
The Digital Video Advantage
Digital Video on CD-ROM is superior to home video footage on tape because:
1) CD-ROMs provide non-linear, point and click access to video footage.
2) Unlike VHS tapes, CD-ROMs maintain their quality, despite age and/or
repeated viewing.
3) Digital video may be copied with no loss in quality.
4) Digitized video clips may be transmitted to friends and family via email or
the Internet.
CD Memories Albums
The basic shell of each album consists of a static program, the interface of
which is customized for each client.
Each program was designed using Macromedia Director - the industry standard for
multimedia projects from the creators of such prominent products as Shockwave
and Flash. The interface was crafted in Adobe PhotoShop and incorporates several
royalty free images from leading graphic arts companies like Circa Art. All
video capture and editing is completed using Adobe Premiere. The video clips are
then compressed using a Xing MPEG encoder to insure the highest quality digital
video available.
Using Install Shield, programmers for CD-Memories created a self-running
installation routine the installs the program in the customer's directory of
choice, checks to see that the system is set to run in 16 bit color, and offers
free installation of Microsoft Active Movie (necessary to view digital video on
the PC.)
The programs are all backward compatible and will run on CD-ROM drives or
DVD-ROM drives.
In creating the digital memory albums, CD Memories sought to find the right
balance of artistic presentation and technological efficiency. Though we wanted
the project to be customized for each individual consumer, we needed to simplify
the labor-intensive video editing process. The result: a cookie-cutter type
project, wherein scanned or captured photos are used as icons on the interface.
Each photo is given a name that corresponds with a video clip; click the photo,
and the corresponding video clip will play.
Market
CD Memories will implement a pull strategy in order to build consumer awareness
and demand. Initially, CD Memories has budgeted $5,000 for promotional efforts
which will include special-offer pricing for pre-paid orders and chances to win
a complete CD Memories interactive CD-ROM. CD Memories plans to capitalize on
the growth of the Internet by promoting its web page as one of its primary modes
of advertisement. Customers will be able to contact the company, download sample
products, and download a printable order form to mail in with their marked tapes
for production.
Additionally, CD Memories will market their products at wedding - oriented trade
shows across the country. This format should prove very effective, since it
allows potential customers to view the product first hand, as opposed to reading
a brochure or flyer.
Competition
As it stands now, CD Memories has no competitors; they are the only company
nationwide to offer this service to the public.
The directors and executive officers of the Company are as follows:
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Name and Address Position
Bill G. Smith President
Chairman of the Board
Secretary
Brent Hucks Treasurer
Member of the Board of
Director
Lance Bradford Director
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The directors named above will serve until the bi-annual meeting of the
Company's shareholders. Thereafter, directors will be elected for one-year terms
at the annual shareholders' meeting. Officers will hold their positions at the
pleasure of the Board of Directors, absent any employment agreement, of which
none currently exist or are contemplated.
The directors and officers initially will devote their time to the Company's
affairs on an "as needed" basis, the amount of which is undetermined at this
time. Such time could amount to as little as ten percent of the time they devote
to their own business affairs.
There are no other persons whose activities are material to the Company's
operations.
Resumes
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
commerical 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.
The Offering.
Shares of CD Memories.com, Inc. will be offered at $0.32 per Share. See "Plan of
Distribution." The minimum purchase required of an investor is $1,000.00. If all
the Shares offered are sold, the net proceeds to the Company will be $35,000.
See "Use of Proceeds." This balance will be used as working capital for CD
Memories.com, Inc..
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."
Selected Financial Data
As more fully discussed in accompanying financial statements, The following
table sets forth selected financial data of CD Memories for the year ended
December 31, 1999. The selected financial data has been derived from the audited
consolidated financial statements and notes thereto of CD Memories which is
included elsewhere in this prospectus.
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For the Year Ended December From Inception
31 to December 31
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 - - 450
Net Income (Loss) $ - - (2,550)
Basic and Diluted Earnings per Common Share Nil Nil Nil
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Weighted Average number of common shares used in per 3,000,000 3,000,000 3,000,000
share calculations
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DEC-31-99
Current Assets ---
Total Assets 450
Current Liabilities ---
Total Liabilities ---
Stockholders' equity 450
Total Liabilities and stockholders' equity 450
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Risk Factors.
An investment in the company involved risks due in part to a limited previous
financial and operating history of Company, as well as competition in the
internet marketing industry. Also, certain potential conflicts of interest arise
due to the relationship of the Company to management and others. See "Risk
Factors."
RISK FACTORS
THE SECURITIES OFFERED HEREBY 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.
Limited Prior Operations and Experience.
The Company has no revenues from its operations, and has no assets. There can be
no assurance that the Company will generate significant revenues in the future;
and there can be no assurance that the Company will operate at a profitable
level. See "Description of Business." If the Company is unable to obtain
customers and generate sufficient revenues so that it can profitably operate,
the Company's business will not succeed. In such event, investors in the Shares
may lose their entire cash investment.
Also the Company and its management do have limited experience in the internet
business. See "Directors, Officers and Control Persons."
Dependence on the Internet/Marketing Industries
The Company's business is influenced by the rate of use and expansion in the
internet/marketing industries. Although this industry has been expanding at a
rapid rate in recent years, there is no guarantee that it will continue to do so
in the future. Declines in these industries may influence the Company's revenues
adversely.
Influence of Other External Factors.
The Company is a speculative venture necessarily involving some substantial
risk. There is no certainty that the expenditures to be made by the Company will
result in commercially profitable business. The marketability will be affected
by numerous factors beyond the control of the Company. These factors include
market fluctuations, and the general state of the economy (including the rate of
inflation, and local economic conditions), which can affect peoples'
discretionary spending. Factors which leave less money in the hands of potential
clients of the Company will likely have an adverse effect on the Company. The
exact effect of these factors cannot be accurately predicted, but the
combination of these factors may result in the Company not receiving an adequate
return on invested capital.
Regulatory Factors.
Existing and possible future consumer legislation, regulations and actions could
cause additional expense, capital expenditures, restrictions and delays in the
activities undertaken in connection with the business, the extent of which
cannot be predicted.
Competition.
The Company may experience substantial competition in its efforts to locate and
attract clients. Many competitors in the industry have greater experience,
resources, and managerial capabilities than the Company and may be in a better
position than the Company to obtain access to attractive clientele. There are a
number of larger companies which will directly compete with the Company. Such
competition could have a material adverse effect on the Company's profitability.
Success of Management.
Any potential investor is strongly cautioned that the purchase of these
securities should be evaluated on the basis of: (i) the limited diversification
of the venture capital opportunities afforded to the Company, (ii) the high-risk
nature and limited liquidity of the Company, and (iii) the Company's ability to
utilize funds for the successful development and distribution of revenues as
derived by the revenues received by the Company's yet undeveloped portfolio of
clients, and any new potentially profitable ventures, among other things. The
Company can offer no assurance that any particular client and/or property under
its management contract will become successful.
Reliance on Management.
The Company's success is dependent upon the hiring of key administrative
personnel. None of the officers or directors, or any of the other key personnel,
has any employment or non- competition agreement with the Company. Therefore,
there can be no assurance that these personnel will remain employed by the
Company. Should any of these individuals cease to be affiliated with the Company
for any reason before qualified replacements could be found, there could be
material adverse effects on the Company's business and prospects. In addition,
management has limited experience is managing companies in the same business as
the Company.
In addition, all decisions with respect to the management of the Company will be
made exclusively by the officers and directors of the Company. Investors will
only have rights associated with minority ownership interest rights to make
decision which effect the Company. The success of the Company, to a large
extent, will depend on the quality of the directors and officers of the Company.
Accordingly, no person should invest in the Shares unless he is willing to
entrust all aspects of the management of the Company to the officers and
directors.
Use of Proceeds Not Specific.
The proceeds of this offering have been allocated only generally. Proceeds from
the offering have been allocated generally to legal and accounting, and working
capital. Accordingly, investors will entrust their funds with management in
whose judgment investors may depend, with only limited information about
management's specific intentions with respect to a significant amount of the
proceeds of this offering. See "Use of Proceeds."
Lack of Diversification.
The size of the Company makes it unlikely that the Company will be able to
commit its funds to diversify the business until it has a proven track record,
and the Company may not be able to achieve the same level of diversification as
larger entities engaged in this type of business.
Non Cumulative Voting
Holders of the Shares are not entitled to accumulate their votes for the
election of directors or otherwise. Accordingly, the holders of a majority of
the Shares present at a meeting of shareholders will be able to elect all of the
directors of the Company, and the minority shareholders will not be able to
elect a representative to the Company's board of directors.
Absence of Cash Dividends
The Board of Directors does not anticipate paying cash dividends on the Shares
for the foreseeable future and intends to retain any future earnings to finance
the growth of the Company's business. Payment of dividends, if any, will depend,
among other factors, on earnings, capital requirements, and the general
operating and financial condition of the Company, and will be subject to legal
limitations on the payment of dividends out of paid-in capital.
Conflicts of Interest.
The officers and directors may have other interests to which they devote
substantial time, either individually or through partnerships and corporations
in which they have an interest, hold an office, or serve on boards of directors,
and each will continue to do so notwithstanding the fact that management time
may be necessary to the business of the Company. As a result, certain conflicts
of interest may exist between the Company and its officers and/or directors
which may not be susceptible to resolution.
In addition, conflicts of interest may arise in the area of corporate
opportunities which cannot be resolved through arm's length negotiations. All of
the potential conflicts of interest will be resolved only through exercise by
the directors of such judgment as is consistent with their fiduciary duties to
the Company. It is the intention of management, so as to minimize any potential
conflicts of interest, to present first to the Board of Directors to the
Company, any proposed investments for its evaluation.
Investment Valuation Determined by the Board of Directors.
The Company's Board of Directors is responsible for valuation of the Company's
investments. There are a wide range of values which are reasonable for an
investment for the Company's services. Although the Board of Directors can adopt
several methods for an accurate evaluation, ultimately the determination of fair
value involves subjective judgment not capable of substantiation by auditing
standards. Accordingly, in some instances it may not be possible to substantiate
by auditing standards the value of the Company's investments. The Company's
Board of Directors will serve as the valuation committee, responsible for
valuing each of the Company's investments. In connection with any future
distributions which the Company may make, the value of the securities received
by investors as determined by the Board may not be the actual value that the
investors would be able to obtain even if they sought to sell such securities
immediately after a distribution. In addition, the value of the distribution may
decrease or increase significantly subsequent to the distributee shareholders'
receipt thereof, notwithstanding the accuracy of the Board's evaluation.
Additional Financing May Be Required.
Even if all of the 109,375 Shares offered to the public are sold, the funds
available to the Company may not be adequate for it to be competitive in the
areas in which it intends to operate. See "Plan of Distribution." There is no
assurance that additional funds will be available from any source when needed by
the Company for expansion; and, if not available, the Company may not be able to
expand its operation as rapidly as it could if such financing were available.
The proceeds from this offering are expected to be sufficient for the Company to
develop and market it's line of services. Additional financing could possibly
come in the form of debt/preferred stock. If additional shares were issued to
obtain financing, investors in this offering would suffer a dilutive effect on
their percentage of stock ownership in the Company. However, the book value of
their shares would not be diluted, provided additional shares are sold at a
price greater than that paid by investors in this offering. The Company does not
anticipate having within the next 12 months any cash flow or liquidity problems
Purchases by Affiliates.
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.
No Assurance Shares Will Be Sold.
The 109,375 Shares being offered to the public are to be offered directly by the
Company, and no individual, firm, or corporation has agreed to purchase or take
down any of the shares. No assurance can be given that any or all of the Shares
will be sold.
Arbitrary Offering Price.
The offering price of the Shares bears no relation to book value, assets or
earnings. They have been arbitrarily determined by the officers of the company.
There can be no assurance that the Shares will maintain values commensurate with
the offering price. See "Determination of Offering Price."
Uncertainty Due to Year 2000 Problem.
The Year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
the year 2000 date is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 issue may be experienced before, on, or after
January 1, 2000, and if not addressed, the impact on operations and financial
reporting may range from minor errors to significant system failure which could
affect the Company's ability to conduct normal business operations. This creates
potential risk for all companies, even if their own computer systems are Year
2000 compliant. It is not possible to be certain that all aspects of the Year
2000 issue affecting the Company, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.
The Company currently believes that its systems are Year 2000 compliant in all
material respects, its current systems and products may contain undetected
errors or defects with Year 2000 date functions that may result in material
costs. Although management is not aware of any material operational issues or
costs associated with preparing its internal systems for the Year 2000, the
Company may experience serious unanticipated negative consequences (such as
significant downtime for one or more of its web site properties) or material
costs caused by undetected errors or defects in the technology used in its
internal systems. Furthermore, the purchasing patterns of advertisers may be
affected by Year 2000 issues as companies expend significant resources to
correct their current systems for Year 2000 compliance. The Company does not
currently have any information about the Year 2000 status of its advertising
customers. However, these expenditures may result in reduced funds available for
web advertising or sponsorship of web services, which could have a material
adverse effect on its business, results of operations, and financial condition.
The Company's Year 2000 plans are based on management's best estimates.
"Best Efforts" Offering
The Shares are offered by CD Memories.com, Inc. on a "best efforts" basis, and
no individual, firm or corporation has agreed to purchase or take down any of
the offered Shares. No assurance can be given that any or all of the Shares will
be sold. Provisions have been made to deposit in escrow the funds received from
the purchase of Shares sold by CD Memories.com, Inc. In the event that the
offering is not fully subscribed within one hundred twenty (120) days of the
effective date of this Prospectus, the offer will be extended for another 120
days.
Shares Eligible For Future Sale
All of the Shares which are held by management have been issued in reliance on
the private placement exemption under the Securities Act of 1933, as amended
("Act"). Such Shares will not be available for sale in the open market without
separate registration except in reliance upon Rule 144 under the Act. In
general, under Rule 144 a person (or persons whose shares are aggregated) who
has beneficially owned shares acquired in a nonpublic transaction for at least
on year, including persons who may be deemed Affiliates of CD Memories.com, Inc.
(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.
USE OF PROCEEDS
Following the issuance of the 109,375 Shares for common stock offered for sale
by the Company to the public, this will represent gross proceeds to the Company
of approximately $35,000 (less certain expenses of this offering). These
proceeds, less the expenses of the offering, will be used to provide working
capital for the Company.
The following table sets forth the use of proceeds from this offering (based on
the maximum offering amounts are subscribed):
------------------------------- ------------------ ----------------
Minimum Amount
Use of Proceeds Percent
------------------------------- ------------------ ----------------
------------------------------- ------------------ ----------------
Transfer Agent Fee $1,000 2.85%
------------------------------- ------------------ ----------------
------------------------------- ------------------ ----------------
Printing Costs $1,000 2.85%
------------------------------- ------------------ ----------------
------------------------------- ------------------ ----------------
Legal Fees $10,000 28.57%
------------------------------- ------------------ ----------------
------------------------------- ------------------ ----------------
Web Site Development $10,000 28.57
------------------------------- ------------------ ----------------
------------------------------- ------------------ ----------------
Accounting Fees $2,500 7.14%
------------------------------- ------------------ ----------------
------------------------------- ------------------ ----------------
Working Capital $10,500 30%
------------------------------- ------------------ ----------------
------------------------------- ------------------ ----------------
Total $35,000 100%
------------------------------- ------------------ ----------------
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.
Each person desiring to be issued Shares, either as a conversion of a debenture,
or an exercise of a warrant, must complete, execute, acknowledge, and delivered
to the Company certain documents, By executing these documents, the subscriber
is agreeing that such subscriber will be, a shareholder in the Company and will
be otherwise bound by the articles of incorporation and the bylaws of the
Company in the form attached to this Prospectus.
Opportunity to Make Inquiries.
The Company will make available to each Offeree, prior to any sale of the
Shares, the opportunity to ask questions and receive answers from CD
Memories.com, Inc. concerning any aspect of the investment and to obtain any
additional information contained in this Memorandum, to the extent that CD
Memories.com, Inc. 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 the Company 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 the Company, such a subscriber will be, a shareholder in the Company
and will be otherwise bound by the articles of incorporation and the bylaws of
CD Memories.com, Inc. in the form attached to this Prospectus.
Promptly upon receipt of subscription documents by CD Memories.com, Inc., it
will make a determination as to whether a prospective investor will be accepted
as a shareholder in the Company. CD Memories.com, Inc. 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.com, Inc., or such other reasons other as CD
Memories.com, Inc. determines to be in the best interest of CD Memories.com,
Inc. 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.
DETERMINATION OF OFFERING PRICE
The offering price is not based upon the Company's net worth, total asset value,
or any other objective measure of value based upon accounting measurements.
DILUTION
"Net tangible book value" is the amount that results from subtracting the total
liabilities and intangible assets of an entity from its total assets. "Dilution"
is the difference between the public offering price of a security and its net
tangible book value per Share immediately after the Offering, giving effect to
the receipt of net proceeds in the Offering. As of December 31, 1999, the net
tangible book value of the Company was $3,000.00 or $.001 per Share. Giving
effect to the sale by the Company of all offered Shares (109,375) at the public
offering price, the pro forma net tangible book value of the Company would be
$38,000 or $0.012 per Share, which would represent an immediate increase of
$0.011 in net tangible book value per Share and $0.31 per Share dilution per
share to new investors. Dilution of the book value of the Shares may result from
future share offerings by CD Memories.com, Inc.
The following table illustrates the pro forma per Share dilution:
Assuming
Maximum Shares
Sold
<TABLE>
<S> <C>
-------------------------------------------- -----------------
Offering Price (1) .32
-------------------------------------------- -----------------
-------------------------------------------- -----------------
Net tangible book value before Offering (2) .001
-------------------------------------------- -----------------
-------------------------------------------- -----------------
Increase Attributable to .012
purchase of stock by new
investors (3)
-------------------------------------------- -----------------
-------------------------------------------- -----------------
Net tangible book value per Share after .011
offering (4)
-------------------------------------------- -----------------
-------------------------------------------- -----------------
Dilution to new investors (5) .31
-------------------------------------------- -----------------
-------------------------------------------- -----------------
Percent Dilution to new 96.8%
investors (6)
-------------------------------------------- -----------------
</TABLE>
(1) Offering price before deduction of offering expenses, calculated on a
"Common Share Equivalent" basis.
(2) The net tangible book value per share before the offering ($0.001) is
determined by dividing the number of Shares outstanding prior to this
offering into the net tangible book value of CDMEMORIES.COM, Inc.
(3) The net tangible book value after the offering is determined by adding
the net tangible book value before the offering to the estimated
proceeds to the Corporation from the current offering (assuming all the
Shares are subscribed), and dividing by the number of common shares
outstanding.
(4) The net tangible book value per share after the offering ($0.012) is
determined by dividing the number of Shares that will be outstanding,
assuming sale of all the Shares offered, after the offering into the
net tangible book value after the offering as determined in note 3
above.
5) The Increase Attributable to purchase of stock by new investors is
derived by taking the net tangible book value per share after the
offering ($0.011) and subtracting from it the net tangible book value
per share before the offering ($0.32) for an increase of $0.31.
(6) The Percent Dilution to new investors is determined by dividing the
Dilution to new investors ($0.31) by the offering price per Share
($.32) giving a dilution to new investors of 96.8%.
(7)
PLAN OF DISTRIBUTION
0The Company 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 gross proceeds to CD Memories.com, Inc.
will be $35,000 if all the Shares offered are sold. No commissions or other fees
will be paid, directly or indirectly, by the Company, or any of its principals,
to any person or firm in connection with solicitation of sales of the; 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
the Company's common stock. These securities are offered by CD Memories.com,
Inc. subject to prior sale and to approval of certain legal matters by counsel.
Limited Public Market for Company's Securities.
Prior to the Offering, there has been no public market for the Shares being
offered. There can be no assurance that an active trading market will develop or
that purchasers of the Shares will 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 the Company or its competitors, variations in the Company's
results of operations, and market conditions in the retail, electron commerce,
and internet industries in general. The market price may also be affected by
movements in prices of stock 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.
Penny Stock Regulations.
The Company's Shares will be quoted on the "Electronic Bulletin Board"
maintained by the National Quotation Bureau, Inc., which reports quotations by
brokers or dealers making a market in particular securities. In view of the fact
that no broker will be involved in the Offering, it is likely to be difficult to
find a broker who is willing to make an active market in the stock. The
Securities and Exchange Commission (the "Commission") has adopted regulations
which generally define "penny stock" to be any equity security that has a market
price less than $5.00 per share. The Company's shares will become subject to
rules that impose additional sales practice requirements on broker-dealers who
sell penny stocks to persons other than established customers and accredited
investors (generally those with assets in excess of $1,000,000 or annual income
exceeding $200,000, or $300,000 together with their spouse). For transactions
covered by these rules, broker-dealers must make a special suitability
determination for the purpose of such securities and must have received the
purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction effected involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a
disclosure schedule prepared by the Commission relating to the penny stock
market. A broker-dealer also must disclose the commissions payable to both the
broker-- dealer and the registered representative, and current quotations for
the securities. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, these rules may restrict the
ability of broker-dealers to sell the Company's Shares and may affect the
ability of purchasers in the Offering to sell the Company's securities in the
secondary market. There is no assurance that a market will develop for the
Company's Shares.
Forward-Looking Statements.
This Prospectus contains "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Act of 1934, as amended, and as contemplated under the Private
Securities Litigation Reform Act of 1995, including statements regarding, among
other items, the Company's business strategies, continued growth in the
Company's markets, projections, and anticipated trends in the Company's business
and the industry in which it operates. The words "believe," "expect,"
"anticipate," "intends," "forecast," "project," and similar expressions identify
forward-looking statements. These forward-looking statements are based largely
on the Company's expectations and are subject to a number of risks and
uncertainties, certain of which are beyond the Company's control. The Company
cautions that these statements are further qualified by important factors that
could cause actual results to differ materially from those in the forward
looking statements, including those factors described under "Risk Factors" and
elsewhere herein In light of these risks and uncertainties, there can be no
assurance that the forward-looking information contained in this Prospectus will
in fact transpire or prove to be accurate. All subsequent written and oral
forward- looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this section.
LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings.
DIRECTORS, EXECUTIVE OFFICERS
AND CONTROL PERSONS
The names, ages, and respective positions of the directors, officers, and
significant employees of the Company are set forth below. There are no other
persons which can be classified as a controlling person of the Company.
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
Treasurer, Chief Financial Officer
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.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 31, 1999, 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 the Company to own beneficially, more than
5% of the Company's 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>
All shares were issued at inception of the corporation 04-22-97 for initial
consulting. Mr. Mochoruk was issued 500 shares for initial investment banking
consulting. Mr. Smith was issued shares for general business consulting.
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 $0.001. 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 the Company available for distribution upon winding up of
the affairs of the Company; (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 the Company,
attached as Exhibit 3.1, Exhibit 3.2, and Exhibit 3.3, respectively, to this
Form SB-2.
Non-Cumulative Voting.
The holders of Shares of Common Stock of the Company 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.
The Company does not currently intend to pay cash dividends. The Company's
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 the Company 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 the Company.
A distribution of revenues will be made only when, in the judgment of the
Company's Board of Directors, it is in the best interest of the Company's
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 the company's 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, assuming the maximum offering of 109,375
is sold, the Company's authorized but unissued capital stock will consist of
96,890,625 shares 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 the Company by means
of a merger, tender offer, proxy contest, or otherwise, and thereby to protect
the continuity of the Company's 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 the Company's 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 acquiror 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 has engaged the services of Pacific Stock Transfer, Las Vegas,
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, will receive a
direct or indirect interest in the small business issuer, or 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 the Company will have personal liability to the Company 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 the Company 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 the Company 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 the Company are accountable to the Company as
fiduciaries, which means they are required to exercise good faith and fairness
in all dealings affecting the Company. In the event that a shareholder believes
the officers and/or directors have violated their fiduciary duties to the
Company, 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 the Company 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
Increasing popularity of home PC's, coupled with the faddish phenomenon of
scrapbooking as a hobby and industry (note the recent success of companies like
"Creative Memories" and retail chains like "The Scrapbook Patch."), makes this
the perfect time to market the benefits of a CD-ROM memory album.
The benefits of a CD Memories Interactive CD-ROM are threefold:
1) Video clips are captured from VHS tapes and digitized, so they will never
deteriorate or lose quality;
2) Since endless filming with a camcorder usually results in only minutes of
viewable footage, hours of footage are edited down to "highlights";
3) Clips are arranged in a non-linear, point and click interface, eliminating
the need to fast forward or rewind.
The technology industries are unanimous in their prediction: digital video is
the wave of the future.
Just as audio CDs have eclipsed cassettes in the music industry, so will digital
video overtake VHS tapes as the primary mode of recording and viewing video.Like
audio CDs, digital video CD-ROMs eliminate the bothersome need for fast
forwarding and rewinding - simply click on an icon and your video clip is
playing. These clips are saved using and MPEG1 compression scheme which, in
addition to providing optimal quality and video performance, allows you to copy,
re-distribute, edit, or send them to someone with e-mail. What's more, your
clips are fully digitized and will therefore never lose quality, despite
repeated usage.
CD Memories is the first company nationwide to recognize the need for a superior
alternative to home VHS tapes.
By digitizing video clips and burning them on to CD-ROM, CD Memories has created
a fully customizable, high-quality personal CD memory album. Current projects
include:
* Wedding Day(R) Multimedia CD-ROM, which includes: over 30 minutes of full
motion, full screen video footage from the customer's wedding video,
presented as 10 individual clips; a captured still photo montage; a video
montage, set to music of the customer's choice; personalized 3-D graphics
introduction, and; two extra copies of the CD-ROM to distribute to friends
and family.
* Baby's First Years(R), featuring: Over 40 minutes of full motion, full
screen video footage from multiple tapes; a captured still photo montage;
up to two video montages, set to music of the customer' choice; an
updateable record of baby's major milestones, and; two extra copies of the
CD-ROM to distribute to friends and family.
* Family Album (R), which includes: 60 minutes of full motion, full screen
video footage; up to two still photo montages; up to four video montages,
set to music; personalized interface with captured still photos as icons,
and; two extra copies of the CD-ROM to distribute to friends and family.
The Digital Video Advantage
Digital Video on CD-ROM is superior to home video footage on tape because:
1) CD-ROMs provide non-linear, point and click access to video footage.
2) Unlike VHS tapes, CD-ROMs maintain their quality, despite age and/or
repeated viewing.
3) Digital video may be copied with no loss in quality.
4) Digitized video clips may be transmitted to friends and family via email or
the Internet.
CD Memories Albums
The basic shell of each album consists of a static program, the interface of
which is customized for each client.
Each program was designed using Macromedia Director - the industry standard for
multimedia projects from the creators of such prominent products as Shockwave
and Flash. The interface was crafted in Adobe PhotoShop and incorporates several
royalty free images from leading graphic arts companies like Circa Art. All
video capture and editing is completed using Adobe Premiere. The video clips are
then compressed using a Xing MPEG encoder to insure the highest quality digital
video available.
Using Install Shield, programmers for CD-Memories created a self-running
installation routine the installs the program in the customer's directory of
choice, checks to see that the system is set to run in 16 bit color, and offers
free installation of Microsoft Active Movie (necessary to view digital video on
the PC.)
The programs are all backward compatible and will run on CD-ROM drives or
DVD-ROM drives.
In creating the digital memory albums, CD Memories sought to find the right
balance of artistic presentation and technological efficiency. Though we wanted
the project to be customized for each individual consumer, we needed to simplify
the labor-intensive video editing process. The result: a cookie-cutter type
project, wherein scanned or captured photos are used as icons on the interface.
Each photo is given a name that corresponds with a video clip; click the photo,
and the corresponding video clip will play.
Market
CD Memories will implement a pull strategy in order to build consumer awareness
and demand. Initially, CD Memories has budgeted $5,000 for promotional efforts
which will include special-offer pricing for pre-paid orders and chances to win
a complete CD Memories interactive CD-ROM. CD Memories plans to capitalize on
the growth of the Internet by promoting its web page as one of its primary modes
of advertisement. Customers will be able to contact the company, download sample
products, and download a printable order form to mail in with their marked tapes
for production.
Additionally, CD Memories will market their products at wedding - oriented trade
shows across the country. This format should prove very effective, since it
allows potential customers to view the product first hand, as opposed to reading
a brochure or flyer.
Competition
As it stands now, CD Memories has no competitors; they are the only company
nationwide to offer this service to the public.
Internet E-Commerce Marketing
The Internet has become the latest, hottest, fastest growing medium for
communication and advertising. Current estimates are that the Internet is
growing at a rate of 20% percent a month, and that there are currently over 60
million Internet users worldwide. Over 40% of all US households are estimated to
now have a PC, with up to 30% of those owners using the Internet on a regular
basis. The Internet's pace of growth accelerates each month. It is spreading
faster than cable television, VCRs, cellular phones, and fax machines-faster
than any telecommunication product in history. Current projections indicate that
by the year 2000, 187 million host computers will be connected to an Internet
constituting 4.1 million networks dispersed around the globe. CD Memories plans
to capitalize and effectively use the ever- growing internet e-commerce to reach
to promote its products to the public.
Advertising and E-Commerce.
CD Memories intends to cater to people are familiar with using a computer, but
unfamiliar with the technical, programming end. The Interactive Memory Albums
created by CD Memories are self-installing, self-contained, professional
projects and could not be duplicated by
Market
While there are only a few other cyber cafes established in Las Vegas, CD
Memories Internet Kiosks will have a competitive edge due to their comparatively
low overhead costs and more technologically advanced hardware. The consistent
popularity of coffee, combined with the growing interest in the Internet, bodes
well for the success of expansion in this market. Additionally, Las Vegas has
proven itself as a market enamoured of technology and should be receptive to CD
Memories Internet Kiosks.
CD Memories's customers can be divided into two groups. The first group is
familiar with the Internet and desires a progressive and inviting atmosphere
where they can get out of their offices or bedrooms and enjoy a great cup of
Coffee. The second group is not familiar with the Internet, yet, is just waiting
for the right opportunity to enter the online community. CD Memories's target
market falls anywhere between the ages of 18 and 50. This extremely wide range
of ages is due to the fact that both computers and scrapbooks appeal to a
variety of people Future Products
As CD Memories grows, more upgrades and options will be added to their list of
products. They are currently exploring the possibility of offering their
products in a DVD format, as well as continually engineering improvement in the
artistic design and technical development.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following financial review and analysis is intended to assist prospective
investors in understanding and evaluating the financial condition and results of
operations of the Company, for the year ended December 31, 1999. This
information should be read in conjunction with the Company's Financial
Statements and accompanying notes thereto, "Selected Financial Data" and other
detailed information regarding the Company appearing elsewhere in this
Prospectus.
OVERVIEW
CD Memories is the first company nationwide to offer digitized home video
footage on CD-ROM.
CD Memories multimedia producers have created a self-installing, self-contained
program that combines artistic presentation with cutting-edge technology, giving
consumers a multimedia, interactive memory album that will last a life time.
RESULTS OF OPERATIONS:
Limited operations.
CD Memories.com, Inc. has only had limited operations and has had no revenues to
date since incorporation.
Capital and Liquidity.
Liquidity is a measure of a company's ability to meet potential cash
requirements, including ongoing commitments to fund lending activities and for
general purposes. Cash for originating loans and general operating expenses is
primarily obtained through cash flows from operations and private investors.
The Company has significant ongoing liquidity needs to support its existing
business and continued growth. The Company's liquidity is actively managed on a
periodic basis and the Company's financial status, including its liquidity, is
reviewed periodically by the Company's management. This process is intended to
ensure the maintenance of sufficient funds to meet the needs of the Company.
Management believes that cash generated from operations is not sufficient to
provide for its capital requirements for at least the next 12 months. The
Company may seek additional equity financing in the early part of 2000 through
an offering of its common stock, and contemplate that this offering, before
expenses relating to the offering, will be $35,000.
During the year ended December 31, 1999, there were no cash flows from operating
activites.
CD Memories.com, Inc. has no assets and does not appear to have sufficient
working capital.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 133, ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, which establishes accounting and
reporting standards for derivative instruments and hedging activities. SFAS No.
133 requires recognition of all derivative instruments in the statement of
financial position as either assets or liabilities and the measurement of
derivative instruments at fair value. SFAS No. 133 is effective for fiscal years
beginning after June 15, 1999. The adoption of SFAS No. 133 is not expected to
affect the consolidated financial statements of the Company.
MARKET SUMMARY
CD Memories's market varies with its products, as follows:
* Wedding Day Multimedia CD-ROM - marketed to "generation x"
brides and grooms, for whom computers are a part of every day
life. The product has received a fantastic response when
demonstrated at wedding trade shows.
* Family Album - marketed to families who own both
video/camcorders and home computers, as well as to mothers
interested in traditional memory albums who do not yet own
computers.
* Baby's First Year -- marketed to parents, as well as to
godparents, grandparents, or those searching for a unique baby
shower gift idea. Gift Certificates are available.
PLAN OF OPERATION
A discussion of the Company's plan of operation over the next 12 months in
incorporated into the discussion of the Company's business. See "Description of
Business."
DESCRIPTION OF PROPERTY
The Company currently owns the following property in connection with its
operations:
(a) The Company is currently utilizing the personal property of the
President of the Company. The Company anticipates purchasing
additional equipment with the proceeds of this offering.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
(a) Market Information.
The Company's Shares are not traded.
(b) Holders of Common Equity.
As of December 31, 1999, there were 2 shareholders of record of the
Company's common stock.
(c) Dividends.
The Company has not declared or paid a cash dividend to Stockholders.
The Board of Directors presently intends to retain any earnings to
finance Company operations and does not expect to authorize cash
dividends in the foreseeable future. Any payment of cash dividends in
the future will depend upon the Company's earnings, capital
requirements and other factors.
EXECUTIVE COMPENSATION
(a) No officer or director of CD Memories.com, Inc. 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
The Financial Statements required by Item 310 of Regulation S-B are incorporated
by reference in this Prospectus, and are set forth in their entirety as Exhibits
13.1 to this Form SB-2.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
<PAGE>
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.
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 section10(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.
(b) 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 "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. 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.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Las
Vegas, State of Nevada on January 13, 2000
CDMEMORIES.COM, Inc.
By:/s/ Bill G. Smith
Bill G. Smith
<PAGE>
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>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
<S> <C> <C>
Exhibit Description Method of
Number Filing
3.1 Articles of Incorporation See Below
3.2 Certificate of Amendment of Articles of See Below
Incorporation Changing Name filed with the
Nevada Secretary of State on September 30,
1999)
3.3 Bylaws See Below
5.1 Opinion Re: Legality See Below
13.1 Audited Financials Statements
dated December 31, 1999 See Below
23.1 Consent of Counsel See Below
23.2 Consent of Accountant See Below
24.1 Special Power of Attorney See Signature Pages
27.1 Financial Data Schedule See Below
</TABLE>
<PAGE>
<PAGE>
CD MEMORIES.COM, INC.
INDEX TO FINANCIAL STATEMENTS
Page No.
This schedule contains summary financial information extracted from the
balance sheet and statements of operations found on pages F-1 ex seq. of
the Company's Form SB-2 for the year ended September 30, 1999, and is
qualified in its entirety by reference to such financial statements.
ARTICLES OF INCORPORATION
OF
FOSTER ENTERPRISES
a Nevada corporation
I, the undersigned, being the original incoporator herein named, for
the purpose of forming a corporation under the General Corporation Laws of the
State of Nevada, to do business both within and without the State of Nevada, do
make and file these Articles of Incorporation, hereby declaring and certifying
that the facts herein stated are true:
ARTICLE I
NAME
The name of the corporation is FOSTER ENTERPRISES.
ARTICLE II
RESIDENT AGENT & REGISTERED OFFICE
Section 2.01 Resident Agent. The name and address of the Resident Agent for
service of process is Nevada Corporate Headquarters, Inc., 5300 West Sahara,
Suite 101, Las Vegas, Nevada 89102 . The Mailing Address is P.O. Box 27740, Las
Vegas, Nevada 89126.
Section 2.02 Registered Office. The address of its Registered Office is
5300 West Sahara, Suite 101, Las Vegas, Nevada 89102.
Section 2.03 Other Offices. The Corporation may also maintain offices for
the transaction of any business at such other places within or without the State
of Nevada as it may from time to time determine. Corporate business of every
kinds and nature may be conducted, and meetings of directors and stockholders
held outside the State of Nevada with the same effect as if in the
State of Nevada.
ARTICLE III
PURPOSE
The corporation is organized for the purpose of engaging in any lawful
activity, within or without the State of Nevada.
ARTICLE IV
SHARES OF STOCK
Section 4.01 Number and Class. The total number of shares of authorized
captial stock of the Corporation shall consist of a single class of twenty-five
thousand (25,000) shares of common stock, no par value.
The common stock may be issued from time to time without action by the
stockholders. The common stock may be issued for such consideration as may be
fixed from time to time by the Board of Directors.
The Board of Directors may issue such shares of Common Stock in one or
more series, with such voting powers, designations, preferences and rights or
qualifications, limitations or restrictions thereof as shall be stated in the
resolution or resolutions adopted by them.
Section 4.02. No Preemptive Rights. Holders of the Common Stock of the
corporation shall not have any preferences, preemptive right, or right of
subscription to acquire any shares of of the corporation authorized, issued or
sold, or to be authorized, issued or sold, and convertible into shares of the
Corporation, nor to any right of subscription thereto, other than to the extent,
if any, the Board of Directors may determine from time to time.
Section 4.03. Non-Assessability of Shares. The Common Stock of the
corporation, after the amount of the subscription price has been paid, in money,
property, or services, as the directors shall determine, shall not e subject to
assessment to pay the debts of the crporation, nor for any other puropse, and no
stock issued as fully paid shall ever be assessable or assessed, and the
Articles of Incorporation shall not be amended in the particular.
ARTICLE V
DIRECTORS
Section 5.01 Governing Board. The members of the Governing Board of the
Corporation shall be styled as directors.
Section 5.02 Initial Board of Directors. The initial Board of Directors
shall consist of one (1) member. The name and address of the initial member of
the Board of Directors is as follows:
NAME ADDRESS
Cort W. Christie P.O. Box 27740
Las Vegas, Nevada 89126
This individual shall serve as Director until the first annual meeting of the
stockholders or until his successor(s) shall have been elected and qualified.
Section 5.03. Change in Number of Directors. The number of directors may be
increased or decreased by a duly adopted amendment to the Bylaws of the
corporation.
ARTICLE VI
INCORPORATOR
The name and address of the incorporator is Nevada Corporate Headquarters,
Inc., P.O. Box 27740, Las Vegas, Nevada 89126.
ARTICLE VII
PERIOD OF DURATION
The corporation is to have a perpetual existence.
ARTICLE VIII
DIRECTORS' AND OFFICERS' LIABILITY
A Director or officer of the corporation shall not be personally liable
to this corporation or its stockholders for damages for breach of fiduciary duty
as a director or officer, but this Article shall not eliminate or limit the
liability of a director or officer for (I) acts or omissions which involve
intentional misconduct, fraud, or a knowing violation of law or (ii) the
unlawful payment of distributions. Any repeal or modification of this article by
the stockholders of the corporation shall be prospective only, and shall not
adversely affect any limitations on the personal liability of a director or
officer of the corporation for acts or omissions prior to such repeal or
modification.
ARTICLE IX
INDEMNITY
Every person who was or is a party to, or is threatened to be made a
party to, or is involved in any action, suit, or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he , or a
person of whom he is the legal representative, is or was a director or officer
of the corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless to the fullest extent legally permissible under the laws of the
State of Nevada from time to time against all expenses, liability, and loss
(including attorneys' fees, judgments, fines, and amounts paid or to be paid in
settlement) reasonable incurred or suffered by him in connection therewith. Such
right of indemnification shall be a contract right which may be enforced in any
manner desired by such person. The expenses of officers and directors incurred
in defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiciton that he is not entitled to be indemnified by the
corporation. Such right of indemnification shall not be exclusive of any other
right which such directors, officers or representatives may have or hereafter
acquire, and, without limiting the generality of such statement, they shall be
entitled to their respective rights of indemnification under any by-laws,
agreement, vote of stockholders, provision of law, or otherwise, as well as
their rights under this Article.
Without limiting the application of the foregoing, the stockholders or
Board of Directors may adopt by-laws from time to time with respect to
indemnification, to provide at all times the fullest indemnification permitted
by the laws of the State of Nevada, and may cause the corporation to purchase
and maintain insurance on behalf of any person who is or as a director or
officer of the corporation, or is or was serving at the request of the
corporation as director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprises
against any liability asserted against such person and incurred in any such
capacity or arising out of such status, whether or not the corporation would
have the power to indemnify such person.
The indemnification provided in this Article shall continue as to a
person who has ceased to be a director, officer, employee or agent, and shall
inure to the benefit of the heirs, executors, and administrators of such person.
ARTICLE X
AMENDMENTS
Subject at all times to the express provisions of Section 4.03 which
cannot be amended, this corporation reserves the right to amend, alter, change,
or repeal any provision contained in these Articles of Incorporation or its
Bylaws, in the manner now or hereafter prescribed by statute or by these
Articles of Incorporation or said Bylaws, and all rights conferred upon the
stockholders are granted subject to this reservation.
ARTICLE XI
POWERS OF DIRECTORS
In furtherance and not in limitation of the powers conferred by statute
on te Board of Directors is expressly authorized:
(1) Subject to the Bylaws, if any, adopted by the stocholders, to make, alter,
or repeal the Bylaws of the corporation;
(2) To authorize and cause to be executed mortgages and liens, with or without
limit as to amount, upon the real and personal property of the corporation;
(3) To authorize the guaranty by the corporation of securities, evidences of
indebtedness and obligations of other persons, corporations and business
entities;
(4) To set apart out of any of the funds of the corporation available for
distributions a reserve or reserves for any proper purpose and to abolish
any such reserve;
(5) By resolution, to designate one or more committees, each committee to
consist of at least one director of the corporation, which, to the extent
provided in the resolution or in the Bylaws of the corporation, shall have
and may exercise the powers of the Board of Directors in the management of
the business and affairs of the corporation, and may authorize the seal of
the corporation to be affixed to all papers which may require it. Such
committee or committees shall have such name or names as may be stated in
the Bylaws of the corporation or as may be determined from time to time by
resolution adopted by the Board of Directors, and
(6) To authorize the corporation by its officers or agents to exercise all such
powers and to do all such acts and things as may be exercised or done by
the corporation, except and to the extent tht any such statute shall
require action by the stockholders of the corporation with regard to the
exercising of any such power or the doing of any such act or thing.
In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon them, the Board of Directors may exercise all such
powers and do all such acts and things as may be exercised or done by the
corporation, except as otherwise provided herein and by law.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of APRIL,
1997, hereby declaring and certifying that the facts stated hereinabove are
true.
------------------------------------
Cort W. Christie
(For Nevada Headquarters, Inc.)
ACKNOWLEDGMENT
STATE OF NEVADA)
) SS:
COUNTY OF CLARK)
On this 15th day of April, 1997, personally appeared before me, a
Notary Public (or judge or other authorized person, as the case may be ), CORT
W. CHRISTIE, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.
------------------------------------
/s/ Adele DeWitt
Adele DeWitt
I, NEVADA CORPORATE HEADQUARTERS, INC., hereby accept as Resident Agent for
the previously named Corporation on April 15, 1997.
-----------------------------------
/s/ Adele DeWitt
Adele DeWitt
----------------------------------
April 15, 1997
Telephone: (775) 684-5708
STATE OF NEVADA
OFFICE OF THE SECRETARY OF STATE
101 N. CARSON ST., STE. 3
CARSON CITY, NEVADA 89701-4786
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
For Profit Nevada Corporations
(Pursuant to NRS 78.380 - Before Issuance of Stock)
-- Remit in Duplicate -
1. Name of Corporation FOSTER ENTERPRISES
2. The articles have been amended as follows (provide article numbers, if
available): Article I. The name of the corporation is CDMEMORIES.COM, INC.
and Article IV Section 4.01 is hereby amended to read as follows:
The total number of shares of authorized capital stock of the Corporation shall
consist of the following: One hundred million (100,000,000) shares of Common
stock, at a par value of .001.
The Common stock may be issued from time to time without action by the
stockholders. The Common stock may be issued for such consideration as may be
fixed from time to time by the Board of Directors.
3. The undersigned declare that they constitute at least two-thirds of the
incorporators (check) _____ or the board of directors (check) X .
4. The date upon which the original articles of incorporation were filed with
the Secretary of State: 04/15/97.
5. The undersigned affirmatively declare that to the date of this certificate,
no stock of the corporation has been issued.
6. Signatures (all signatures must be acknowledged):
- -----------------------------
/s/ Maurice O Bannon
Maurice O Bannon
BYLAWS
OF
FOSTER ENTERPRISES
A Nevada Corporation
ARTICLE ONE
Stockholders
Section 1. Annual Meeting. Annual meetings of the stockholders,
commencing with the year 1997, shall be held on the 22nd day of April each year,
if not a legal holiday, and, if a legal holiday, then on the next secular day
following, or at such other time as may be set by the Board of Directors from
time to time, at which the stockholders shall elect by vote of a Board of
Directors and shall transact such other business as may properly be brought
before the meeting.
Section 2. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation, may be called by the President or the Secretary by
resolution of the Board of Directors or at the request in writing of a
stockholder owing a majority in amount of the entire capital stock of the
corporation issued and outstanding and entitled to vote. Such request shall
state the purpose of the proposed meeting.
Section 3. Place of Meetings. All annual meetings of the stockholders
shall be held at the registered office of the corporation or at such other place
within or without the State of Nevada as the directors shall determine. Special
meetings of the stockholders may be held at such time and place within or
without the State of Nevada as shall be stated in the notice of the meeting, or
in a duly executed waiver of notice thereof. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice.
Section 4. Quorum; Adjourned Meeting. The holders of a majority of the
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute or by the Articles of Incorporation. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
the power to adjourn the meeting from time to time, without notice othyer than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 5. Voting. Each stockholder of record of the corporation
holding stock which is entitled to vote at this meeting shall be entitled at
each meeting of the stockholders to one vote for each share of stock standing in
his name on the books of the corporation. Upon the demand of any stockholder,
the cote for directors and the vote upon any question before the meeting shall
be by ballot.
When a quorum is present or represented at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall be sufficient to elect directors or to decide any
question brought before such meeting, unless the question is one upon which by
express provision of the statutes or of the Articles of Incorporation, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 6. Proxies. At any meeting of the stockholders, any stockholder
may be represented and vote by a proxy or proxies appointed by an instrument in
writing. In the event that any such instrument in writing shall designate two or
more persons to act as proxies, a majority of such persons present at the
meeting, or, if only one shall be present, then that one shall have and may
exercise all of the powers conferred by such written instrument upon all of the
persons so designated unless the instrument shall otherwise provide. No proxy or
power of attorney to vote shall be used to vote at a meeting of the stockholders
unless it shall have been filed with the secretary of the meeting. All questions
regarding the qualification of voters, the validity of proxies and the
acceptance or rejection of votes shall be decided by the inspectors of election
who shall be appointed by the Board of Directors, or if not so appointed, then
by the presiding officer of the meeting.
Section 7. Action Without Meeting. Any action which may be taken by the
cote of the stockholders at a meeting may be taken without a meeting if
authorized by the written consent of stockholders holding at least a majority of
the voting power, unless the provisions of the statutes or of the Articles of
Incorporation require a greater proportion of voting power to authorize such
action, in which case such greater proportion of written consents shall be
required.
ARTICLE II
Directors
Section 1. Management of Corporation. The business of the corporation
shall be managed by its Board of Directors, which may exercise all such powers
of the corporation and do all such lawful acts and thins as are not by statute
or by the Articles of Incorporation or by these Bylaws directed or required to
be exercised or done by the stockholders.
Section 2. Number, Tenure, and Qualifications. The number of directors
may from time to time be increased or decreased to not less than one nor more
than fifteen. The directors shall be elected at the annual meeting of the
stockholders and except as provided in Section 2 of Article, each director
elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
Section. Vacancies. Vacancies in the Board of Directors including those
caused by an increase in the number of director, may be filled by a majority of
the remaining directors, though less than a quorum, or by a sole remaining
director, and each director so elected shall hold office until his successor is
elected at an annual or a special meeting of the stockholders. The holders of
two-thirds of the outstanding shares of stock entitled to vote may at any time
peremptorily terminate the term of office of all or any of the directors by vote
at a meeting called for such purpose or by a written statement filed with the
secretary or, in his absence, with any other officer. Such removal shall be
effective immediately, even if successors are not elected simultaneously.
A vacancy or vacancies in the Board of Directors shall be deemed to
exist in ccase of the death, resignation, or removal of any directors, or if the
authorized number of directors be increased, or if the stockholders fail at any
annual or special meeting of the stockholders at which any director or directors
are elected to elect the full authorized number of directors to be voted for at
that meeting.
If the Board of Directors accepts the resignation of a director
tendered to take effect at a future time, the Board or the stockholders shall
have power to elect a successor to take office when the resignation is to become
effective.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.
Section 4. Annual and Regular Meetings. Regular meetings of the Board
of Directors shall be held at any place within or without the State which has
been designated from time to time by resolution of the Board or by written
consent of al members of the Board. In the absence of such designation, regular
meetings shall be held at the registered office of the corporation. Special
meetings of the Board may be held wither at a place so designated or at the
registered office.
Regular meetings of the Board of Directors may be held without call or
notice at such time and at such place as shall from time to time be fixed and
determined by the Board of Directors.
Section 5. First Meeting. The first meeting of each newly elected Board
of Directors shall be held immediately following the adjournment of the meeting
of stockholders and at the place thereof. No notice of such meeting shall be
necessary to the directors in order legally to constitute the meeting, provided
a quorum shall be present. In the event such meeting is not so held, the meeting
may be held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors.
Section 6. Special Meetings. Special meetings of the Board of Directors may
be called by the Chairman or the President or by any Vice-President or by any
two directors.
Written notice of the time and place of special meetings shall be
delivered personally to each director, or sent to each director by mail or by
other form of written communication, charges prepaid, addressed to him at this
address as it is shown upon the records or if such address is not readily
ascertainable, at the place in which the meetings of the directors are regularly
held. In case such notice is mailed or telegraphed, it shall be deposited in the
United States mail or delivered to the telegraph company at least three (3) days
prior to the time of the holding of the meeting. In case such notice is hand
delivered as above provided, it shall be so delivered at least twenty-four (24)
hours prior to the time of the holding of the meeting. Such mailing,
telegraphing, or delivery as above provided shall be due, legal and personal
notice to such director.
Section 7. Business of Meetings. The transactions of any meeting of the
Board of Directors, however called and noticed or wherever held, shall be as
valid as though had at a meeting duly held after regular call and notice, if a
quorum be present, and if, either before or after the meeting, each of the
directors not present signs a written waiver of notice, or a consent to holding
such meeting, or an approval of the minutes thereof. All such waivers, consents
or approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 8. Quorum; Adjourned Meetings. A majority of the authorized
number of directors shall be necessary to constitute a quorum for the
transaction of business, except to adjourn as hereinafter provided. Every act or
decision done or made by a majority of the directors present at a meeting duly
held at which a quorum is present shall be regarded as the act of the Board of
Directors, unless a greater number be required by law or by the Articles of
Incorporation. Any action of a majority, although not at a regularly called
meeting, and the record thereof, if assented to in writing by all of the other
members of the Board shall be as valid and effective in all respects as if
passed by the Board in regular meeting.
A Quorum of the directors may adjourn any directors meeting to meet
again at a stated day and hour; provided, however, that in the absence of a
quorum, a majority of the directors present at any directors meeting, either
regular or special, may adjourn from time to time until the time fixed for the
next regular meeting of the Board.
Notice of the time and place of holding an adjourned meeting need not
be given to the absent directors if the time and place be fixed at the meeting
adjourned.
Section 9. Committees. The Board of Directors may, by resolution
adopted by a majority of the whole Board, designate one or more committees of
the Board of Directors, each committee to consist of at least one or more of the
directors of the corporation which, to the extent provided in the resolution,
shall have and may exercise the power of the Board of Directors in the
management of the business and affairs of the corporation and may have power to
authorize the seal of the corporation to be affixed a to all papers which may
require it. Such committee or committees shall have such name or names as may be
determined from time to time by the Board of Directors. The members of any such
committee present at any meeting and not disqualified from voting may, whether
or not they constitute a quorum, unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any absent or disqualified
member. At meetings of such committees, a majority of the members or alternate
members shall constitute a quorum for the transaction of business, and the act
of a majority of the members or alternate members at any meeting at which there
is a quorum shall be the act of the committee.
The committees shall keep regular minutes of their proceedings and
report the same to the Board of Directors.
Section 10. Action Without Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without meeting if a written consent thereto is signed by all
members of the Board of Directors or of such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the Board or
committee.
Section 11. Special Compensation. The directors may be paid their
expenses of attendance at each meeting of the Board of Directors any may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or stand-in committees may be allowed like reimbursement and
compensation for attending committee meetings.
ARTICLE III
Notices
Section 1. Notice of Meetings. Notice of meetings shall be in writing
and signed by the President or a Vice-President or the Secretary or an Assistant
Secretary or by such other person or persons as the directors shall designate.
Such notice shall state the purpose or purposes for which the meeting is called
and the time and the place, which may be within or without this State, where it
is to be held. A copy of such notice shall be either delivered personally to or
shall be mailed, postage prepaid, to each stockholder of record entitled to vote
at such meeting not less than ten (10) not more than sixty (60) days before such
meeting. If mailed, it shall be directed to a stockholder at his address as it
appears upon the records of the corporation and upon such mailing of any such
notice, the service thereof shall be complete and the time of the notice shall
begin to run from the date upon which such notice to any officer of a
corporation or association, or to any member of a partnership shall constitute
delivery of such notice to such corporation, association or partnership. In the
even of the transfer of stock after delivery of such notice of and prior to the
holding of the meeting it shall not be necessary to deliver or mail notice of
the meeting to the transferree.
Section 2. Effect of Irregularly Called Meetings. Whenever all parties
entitled to vote at any meeting, whether of directors or stockholders, consent,
either by a writing on the records of the meeting or filed with the secretary,
or by presence at such meeting and oral consent entered on the minutes, or by
taking part in the deliberations at such meeting without objection, the doings
of such meeting shall be as valid as if had at a meeting regularly called and
noticed, and at such consideration of which no objection for want of notice is
made at the time, and if any meeting be irregular for want of notice or of such
consent, provided a quorum was present at such meeting, the proceedings of said
meeting may be ratified and approved and rendered likewise valid and the
irregularity or defect therein waived by a writing signed by all parties having
te right to vote at such meeting; and such consent or approval of stockholders
may be by proxy or attorney, but all such proxies and powers of attorney must be
in writing.
Section 3. Waiver of Notice. Whenever any notice whatever is required
to be given under the provisions of the statutes of the Articles of
Incorporation or of these Bylaws, a wiaver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE IV
Officers
Section 1. Election. The officers of the corporation shall be chosen by
the Board of Directors and shall be a President, a Secretary and a Treasurer,
none of whom need be directors. Any person may hold two or more offices. The
Board of Directors may appoint a Chairman of the Board, Vice-Chairman of the
Board, one or more vice presidents, assistant treasurers and assistant
secretaries.
Section 2. Chairman of the Board. The Chairman of the Board shall
preside at meetings of the stockholders and the Board of Directors, and shall
see that all orders and resolutions of the Board of Directors are carried into
effect.
Section 3. Vice Chairman of the Board. The Vice-Chairman of the Board
shall, in the absence or disability of the Chairman of the Board, perform the
duties and exercise the powers of the Chairman and shall perform such other
duties as the Board of Directors may from time to time prescribe.
Section 4. President. The President shall be the chief executive
officer of the corporation and shall have active management of the business of
the corporation. He shall execute on behalf of the corporation all instruments
requiring such execution except to the extent the signing and execution thereof
shall be expressly designated by the Board of Directors to some other officer or
agent of the corporation. In the absence of the President, the Vice President
will assume all of the President's responsibilities.
Section 5. Treasurer. The Treasurer shall act under the direction of
the President. Subject to the direction of the President he shall have custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered by
the President or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, and account of
all his transactions as Treasurer and of the financial condition of the
corporation. In the absence of the Treasurer, the Vice President will assume all
of the Treasurer's responsibilities.
If required by the Board of Directors, he shall give the corporation a
bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of his office
and for the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of al books, papers, vouchers, money and
other property of whatever kind in his possesion or under his control belonging
to the corporation.
Section 9. Assistant Treasurers. The Assistant Treasurers in the order
of their seniority unless otherwise determined by the President or the Board of
Directors, shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer. They shall perform such other
duties and have such other powers as the President or the Board of Directors may
from time to time prescribe.
Section 10. Compensation. The salaries and compensation of all officers of
the corporation shall be fixed by the Board of Directors.
Section 11. Remove; Resignation. The officers of the corporation shall
hold office at the pleasure of the Board of Directors. Any officer elected or
appointed by the Board of Directors. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. Any
vacancy occurring in any office of the corporation by death, resignation,
removal or otherwise shall be filled by the Board of Directors.
ARTICLE V
Capital Stock
Section 1. Certificates. Every stockholder shall be entitled to have a
certificate signed by the President or a Vice President and the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
corporation, certifying the number of shares owned by him in the corporation. If
the corporation shall be authorized to issue more than one class of stock or
more than one series of any class, the designations, preferences, and relative,
participating, optional or other special rights of the various classes of stock
or series thereof and the qualifications, limitations or restrictions of such
rights, shall be set forth in full or summarized on the face or back of the
certificate, which the corporation shall issue to represent such stock.
If a certificate is signed (1) by a transfer agent other than the
corporation or its employees or (2) by a registrar other than the corporation or
its employees, the signatures of the officers of the corporation may be
facsimiles. In case any officer who has signed or whose facsimile signature has
been placed upon a certificate shall cease to be such officer before such
certificate is issued, such certificate may be issued with the same effect as
though the person had not ceased to be such officer. The seal of the
corporation, or a facsimile thereof, may, but need not be, affixed to
certificates of stock.
Section 2. Surrendered; Lost or Destroyed Certificates. The Board of
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificate theretofore issued by the corporation alleged to
have been lost or destroyed upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroy certificate or certificates,
or his legal representative, to advertise the same in such manner as it shall
require and/or give the corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost or destroyed.
Section 3. Replacement Certificates. Upon surrender to the corporation
or the transfer agent of the corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the corporation, if it is
satisfied that all provisions of the laws and regulations applicable to the
corporation regarding transfer and ownership of shares have been complied with,
to issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
Section 4. Record Date. The Board of Directors may fix in advance a
date not exceeding sixty (60) days nor less than ten (10) days preceding the
date of any meeting of stockholders, or the date for the payment of any
distribution , or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or a
date in connectio with obtaining the consent of stockholders for any purpose, as
a record date for the determination of the stockholders entitled to notice of
and to vote at any such meeting, and any adjournment thereof, or entitled to
receive payment of any such distribution, or to give such consent, and in such
case, such stockholders, and only such stockholders as shall be stockholders of
record on the date fixed, shall be entitled to notice of and to vote at such
meeting, or any adjournment thereof, or to receive payment of such distribution,
or to receive such allotment of rights, or to exercise suh rights, or to give
such consent , as the case may be, notwithstanding any transfer of any stock on
the books of the corporation after any such record date fixed as aforesaid.
Section 5. Registered Owner. The corporation shall be entitled to
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including voting and distribution, and the
corporation shall not be bound to recognize any equitable or other claim to
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, express or other notice thereof,
except as otherwise provided by the laws of Nevada.
ARTICLE VI
General Provisions
Section 1. Registered Office. The registered office of this corporation
shall be in the State of Nevada.
The corporation may also have offices at such other places both within
and without the State of Nevada as the Board of Directors may from time to time
determine or the business of the corporation may require.
Section 2. Distributions. Distributions upon the capital stock of the
corporation, subject to the provisions of the Articles of Incorporation, if any,
may be declared by the Board of Directors at any regular or special meeting,
pursuant to law. Distributions may be paid in cash, in property or in shares of
the capital stock, subject to the provisions of the Articles of Incorporation.
Section 3. Reserves. Before payment of any distributions, there may be
set aside out of any funds of the corporation available for distributions such
sum or sums as the directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for equalizing
distributions or for repairing or maintaining any property of the corporation or
for such other purposes as the directors shall think conducive to the interest
of the corporation, and the directors may modify or abolish any such reserve in
the manner in which it was created.
Section 4. Checks; Notes. All checks or demands for money and notes of
the corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the Board of Directors.
Section 6. Corporate Seal. The corporation may or may not have a
corporate seal, as may from time to time be determined by resolution of the
Board of Directors. If a corporate seal is adopted, it shall have inscribed
thereon the name of the corporation and the words "Corporate Seal" and "Nevada".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or in any manner reproduced.
ARTICLE VII
Indemnification
Section 1. Indemnification of Officers and Director, Employees and
Other Persons. Every person who was or is a party or is threatened to be made a
party to or is involved in any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, by reason of the fact that he or a
person of whom he is the legal representative is or was a director or officer of
the corporation or is or was serving at the request of the corporation or for
its benefit as a director or officer of another corporation, or as its
representative in a partnership, joint venture, truest, or other enterprise,
shall be indemnified and held harmless to the fullest extent legally permissible
under the general corporation law of the State of Nevada from time to time
against all expenses, liability and loss, (including attorneys' fees, judgments,
fines, and amounts paid or to be paid in settlement) reasonably incurred or
suffered by him in connection therewith. The expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding must be
paid by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not entitled to be
indemnified by the corporation. Such right of indemnification shall be a
contract right which may be enforced in any manner desired by such person. Such
right of indemnification shall not be exclusive of any other right which such
directors, officers or representatives may have or hereafter acquire and,
without limiting the generality of such statement, they shall be entitled to
their respective rights of indemnification under any bylaw, agreement, vote of
stockholders, provision of law or otherwise, as well as their rights under this
Article.
Section 2. Insurance. The Board of Directors may cause the corporation
to purchase an maintain insurance on behalf of any person who is or was a
director or officer of the corporation, or is or was serving at the request of
the corporation as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust, or other enterprise
against any liability asserted against such person and incurred in any such
capacity or arising out of such status, whether or nto the corporation would
have the power to indemnify such person.
Section 3. Further Bylaws. The Board of Directors may from time to time
adopt further Bylaws with respect to indemnification and may amend these and
such Bylaws to provide at all times the fullest indemnification permitted by the
General Corporation Law of the State of Nevada.
ARTICLE VIII
Amendments
Section 1. Amendments by Stockholders. The Bylaws may be amended by a
majority vote of all the stock issued and outstanding and entitled to vote for
the election of directors of the stockholders, provided notice of intention to
amend shall have been contained in the notice of the meeting.
Section 2. Amendments by the Board of Directors. The Board of Directors
by a majority vote of the whole Board at any meeting may amend these Bylaws,
including Bylaws adopted by the stockholders, but the stockholders may from time
to time specify particular provisions of the Bylaws which shall not be amended
by the Board of Directors.
APPROVED AND ADOPTED this 15nd day of April, 1997.
------------------------------------
/s/: Maurice O Bannon
Maurice O Bannon
CERTIFICATE OF SECRETARY
I hereby certify that I am the Secretary of FOSTER ENTERPRISES, and
that the foregoing Bylaws, consisting of 13 pages, constitute the code of Bylaws
of FOSTER ENTERPRISES, as duly adopted at a regular meeting of the Board of
Directors of the Corporation held April 15, 1997.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 15th day of
April, 1997.
--------------------------------------
/s/: Maurice O Bannon
Maurice O Bannon
Law Offices of
Neil J. Beller, LTD.
2345 Red Rock Street
Suite 301
Las Vegas, 89102
January 4, 2000
U.S. Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir/Madam:
We have acted as counsel to CDMEMORIES.COM, Inc a Nevada corporation
("Company"), in connection with its Registration Statement on Form SB-2 relating
to the registration of 3,109,375 shares of its common stock ("Shares"), $0.001
par value per Share, at a maximum offering price of $0.32 per Share.
In our representation we have examined such documents, corporate records,
and other instruments as we have deemed necessary or appropriate for purposes of
this opinion, including, but not limited to, the Articles of Incorporation and
Bylaws of the Company.
Based upon the foregoing, it is our opinion that the Company is duly
organized and validly existing as a corporation under the laws of the State of
Nevada, and that the Shares, when issued and sold, will be validly issued, fully
paid, and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Sincerely,
/s/ Neil J. Beller
Neil J. Beller, LTD.
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 year then ended.
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.
/s/ Clyde Bailey
Clyde Bailey
Certified Public Accountant
San Antonio, Texas
January 23, 2000
CD Memories.Com, Inc.
(A Development Stage Enterprise)
Balance Sheet
As of December 31, 1999
<TABLE>
<S> <C>
ASSETS $
Current Assets: $-
Total Current Assets $-
Other Assets:
Deferred Tax Benefit $450
Total Other Assets $450
Total Assets $450
LIABILITIES $-
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 $2,550
Total Equity $450
Total Liabilities and Equity $450
=============
</TABLE>
CD Memories.Com, Inc.
(A Development Stage Enterprise)
Statement of Operations
<TABLE>
<S> <C> <C>
For the Year Ended From Inception
December 31 -December 31
1998 1999 1999
Revenues $ - $ - $ -
Total Revenues - - -
Consulting Expenses $3,000
---------------- -------------- -------------------
Total Expenses $3,000
---------------- -------------- -------------------
Net Loss from Operations - - ($3,000)
Income Tax Benefit - - $450
Net Income (Loss) $ - $ - ($2,550)
================ ============== ===================
Basic and Diluted Earnings per Common Share NIL NIL NIL
Weighted Average number of Common Shares used in per 3,000,000 3,000,000 3,000,000
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>
$.001 Par Paid - in Accumulated Stockholders'
Shares Value Capital Deficit Equity
Balance January 1, 1998 3,000,000 $3,000 $ - $(2,550) $450
Net Income (Loss) - -
--------------- --------------- -------------- -------------- ----------------
Balance December 31, 1998 3,000,000 3,000 - $(2,550) $450
Net Income (Loss) - -
--------------- --------------- -------------- -------------- ----------------
Balance December 31, 1999 3,000,000 $3,000 $ - $(2,550) $450
=============== =============== ============== ============== ================
</TABLE>
CD Memories.Com, Inc.
(A Development Stage Enterprise)
Statement of Cash Flows
<TABLE>
<S> <C> <C>
For the Year Ended From Inception to
December 31 December 31,
1999 1998 1999
Cash Flows from Operating Activities $ - $ - $ (2,550)
Net Income (Loss)
Changes in Operating Assets and Liabilities:
Deferred Tax Benefit (450)
Total Adjustments (450)
Net Cash Used in Operating Activities - - (3,000)
Cash Flows from Investing Activities
Net Cash used in Investing Activities - - -
Cash Flows from Financing Activities:
Common Stock 3,000
Net Cash Used in Financing Activities 3,000
Net Increase in Cash - - -
Cash Balance, Begin Period - - -
Cash Balance, End Period $ - $ - $ -
============= ============ ===================
</TABLE>
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 15, 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.
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 - 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 3,109,375 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.
Law Offices of
Neil J. Beller, LTD.
2345 Red Rock Street
Suite 301
Las Vegas, 89102
January 4, 2000
U.S. Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir/Madam:
We have acted as counsel to CDMEMORIES.COM, Inc a Nevada corporation
("Company"), in connection with its Registration Statement on Form SB-2 relating
to the registration of 3,109,375 shares of its common stock ("Shares"), $0.001
par value per Share, at a maximum offering price of $0.32 per Share.
In our representation we have examined such documents, corporate records,
and other instruments as we have deemed necessary or appropriate for purposes of
this opinion, including, but not limited to, the Articles of Incorporation and
Bylaws of the Company.
Based upon the foregoing, it is our opinion that the Company is duly
organized and validly existing as a corporation under the laws of the State of
Nevada, and that the Shares, when issued and sold, will be validly issued, fully
paid, and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Sincerely,
/s/ Neil J. Beller
Neil J. Beller, LTD.
CLYDE BAILEY P.C.
- ------------------------------------------------------------------------------
Certified Public Accountant
10924 Vance Jackson #404
San Antonio, Texas 78230
(210) 699-1287(ofc.)
(888) 699-1287 (210) 691-2911 (fax)
Member:
American Institute of CPA's
Texas Society of CPA's
January 23, 2000
I consent to the use, of my report dated January 23, 2000, in the Form
SB2, on the financial statements of CD Memories.Com, Inc., dated December 31,
1999, included herein and to the reference made to me.
/s/ Clyde Bailey
Clyde Bailey
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet and statements of operations found on pages F-1 ex seq. of the Company's
Form SB-2 for the nine months ended September 30, 1999, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001106780
<NAME> CD MEMORIES.COM, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
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