U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
H BAR C, INC.
(Name of Small Business Issuer in its charter)
Delaware 315000 65-0785470
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation Classification Code Number) Identification No.)
118 Murray Avenue, Port Washington, New York 11050; (917) 250-0250
(Address and telephone number of Registrant's principal executive
offices and principal place of business)
Brian F. Faulkner, Esq., 3900 Birch Street, Suite 113, Newport Beach, Ca;
(949) 975-0544
(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 registration number of the earlier effective
registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box.
CALCULATION OF REGISTRATION FEE
Title of Amount to be Proposed Proposed Amount of
Securities Registered Maximum Maximum Registration
to be Offering Aggregate Fee
Registered Price Per Offering
Unit Price
Common
Stock 4,149,500 $1.00 $4,149,500 $1,037.37
The company hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date
until the company 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
PROSPECTUS
H BAR C, INC.
4,149,500 Shares
Common Stock
H Bar C, Inc., a Delaware corporation, is hereby offering shares
of common stock on a delayed basis under a shelf registration
under Rule 415 pursuant to the terms of this prospectus. A total
of 4,149,500 shares of common stock are to be registered, as
follows (maximum amounts):
The company's initial public offering consists of 4,000,000
shares of common stock, par value $0.001 (of this amount, up to
3,500,000 shares will be sold for cash). This offering is being
made on a best-efforts basis by the company, with no minimum
purchase required. The company's common stock in not publicly
traded.
Concurrent with this initial public offering, is an offering
by certain selling shareholders of the company, in the total
amount of 149,500 shares of common stock. These selling
shareholders may offer their stock through public or private
transactions, on or off the Over the Counter Bulletin Board
(should the company be listed on this exchange), at prevailing
market prices, or at privately negotiated prices.
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" on page 5).
These securities have not been approved or disapproved by the
U.S. Securities and Exchange Commission or any state securities
commission nor has the U.S. 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.
Price to Public Underwriting Proceeds to
Discounts Issuer
And
Commissions
Per Share $1.00 $0 $1.00
Total Maximum $3,500,000 $0 $3,500,000
Information contained herein is subject to completion or
amendment. The registration statement relating to the securities
has been filed with the U.S. 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: ______________, 2000
TABLE OF CONTENTS
PROSPECTUS SUMMARY 4
RISK FACTORS 6
USE OF PROCEEDS 12
DETERMINATION OF OFFERING PRICE 13
PLAN OF DISTRIBUTION 13
LEGAL PROCEEDINGS 14
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 16
DESCRIPTION OF SECURITIES 17
INTEREST OF NAMED EXPERTS AND COUNSEL 18
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES 18
ORGANIZATION WITHIN LAST FIVE YEARS 21
DESCRIPTION OF BUSINESS 21
PLAN OF OPERATION 30
DESCRIPTION OF PROPERTY 31
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 31
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 32
EXECUTIVE COMPENSATION 33
FINANCIAL STATEMENTS 34
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 55
AVAILABLE INFORMATION 55
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by detailed
information appearing elsewhere in this prospectus. Each
prospective investor is urged to read this prospectus in its
entirety.
The Company.
The team is currently planning a Re-launch of the traditional H
Bar C line to the western wear market as well as the creation of
a new line able to achieve a crossover of the brand into to other
clothing segments. H Bar C currently has in excess of 500
western wear product designs, which have been offered over the
years. The Company intends to establish three or four products
constituting a crossover line for introduction to a much larger
casual wear market. Once the clothing of H Bar C brand is
established into the retail network with an extensive marketing
and publicity campaign, the company intends to offer
complementary products such as high end luggage and other
products able to capitalize on the loyal following of customers
looking for a western theme in the products they purchase.
The principal offices of the company's are currently located at
118 Murray Avenue, Port Washington, New York 11050. The
telephone number for the company is (917) 250-0250.
The Offering.
4,149,500 shares of common stock of the company will be sold on a
delayed basis under a shelf registration under Rule 415 (shares
outstanding prior to this offering: 7,360,000) (shares to be
outstanding after this offering, assuming a full subscription:
11,360,000), as follows:
Selling shareholders: 149,500.
Shares to be sold for cash ($1.00 per share): 3,500,000.
Shares for possible future acquisitions by the company of other
companies and/or assets: 250,000.
Shares to be issued for consulting services: 250,000.
Liquidity of Investment.
Although the shares will be free trading, there is no public
market for the shares. Therefore, an investor may not be able to
sell shares when he or she wishes; therefore, an investor may
consider his or her investment to be long-term.
Risk Factors.
An investment in the company involved risks due in part to a
limited previous financial and operating history of the Company,
as well as competition in the industry of the Company. Also,
certain potential conflicts of interest arise due to the
relationship of the company to management and others.
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.
Only Limited Prior Operations on which to Assess Prospects for
the Company.
The company has only had limited prior operations and has
embarked on a new business direction within the past twelve
months. Thus, the company is subject to all the risks inherent
in the creation of a new business. The likelihood of the success
of the company must be considered in the light of the problems,
expenses, difficulties, complications, and delays frequently
encountered in connection with the expansion of a business and
the competitive environment in which the company operates.
Unanticipated delays, expenses and other problems such as
setbacks in product development, and market acceptance are
frequently encountered in connection with the expansion of a
business.
Consequently, there is only a limited operating history upon
which to base an assumption that the company will be able to
achieve its business plans. In addition, the company has only
limited assets. As a result, 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. 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.
As a result of the fixed nature of many of the
company's expenses, the company may be unable to adjust spending
in a timely manner to compensate for any unexpected delays in the
development and marketing of the company's products or any
capital raising or revenue shortfall. Any such delays or
shortfalls will have an immediate adverse impact on the company's
business, operations and financial condition.
The Company Will Need Additional Financing to Implement its
Business Plan and Such Financing May Be Unavailable or Too Costly.
The working capital requirements associated with the
plan of business of the company will continue to be significant.
The company anticipates, based on currently proposed assumptions
relating to its operations (including with respect to costs and
expenditures and projected cash flow from operations), that it
can generate sufficient cash flow to continue its operations for
the next twelve months at the current level without requiring
additional financing. However, the company will need to raise
additional capital in the next six months (at least $1,000,000),
through debt or equity, to implement fully implement its sales
and marketing strategy and grow. In the event that the
company's plans change or its assumptions change or prove to be
inaccurate or if cash flow from operations proves to be
insufficient to fund operations (due to unanticipated expenses,
technical difficulties, problem or otherwise), the company would
be required to seek additional financing sooner than currently
anticipated or may be required to significantly curtail or cease
its operations.
Fashion and Apparel Industry Risks.
The company believes that its success depends in substantial part
on its ability to originate and define product and fashion trends
as well as to anticipate, gauge and react to changing consumer
demands in a timely manner. There can be no assurance that the
management will be successful in this regard. If management
misjudges the market for its products, it may be faced with
significant excess inventories for some products and missed
opportunities with others. In addition, weak sales and
resulting markdown requests from customers could have a material
adverse effect on the company's business, results of operations
and financial condition.
The industries in which the company intends to operate are
cyclical. Purchases of apparel and related merchandise and home
products tend to decline during recessionary periods and also may
decline at other times. There can be no assurance that the
company will be able to maintain a positive rate of growth in
revenues and earnings, or become profitable in the future.
Further, uncertainties regarding future economic prospects could
affect consumer-spending habits and have an adverse effect on the
company's results of operations.
Dependence on Licensing Partners for a Substantial Portion of Net
Income; Risks Associated with a Lack of Operational and Financial
Control Over Licensed Businesses.
A substantial portion of the company's net income is expected
from licensing revenue received from its licensing, in addition
to any number of possible risks specific to a licensing partner's
business, including for example risks associated with a
particular licensing partner's ability to obtain capital and
manage its labor relations. The company's competitors, generally
the company's licensing partners, are not precluded from
offering, under other brands, the types of products covered by
their license agreements with the company. A substantial portion
of sales of the company's products by its domestic licensing
partners are also made to the company's largest customers. While
the company has significant control over its licensing partners'
products and advertising, it relies on its licensing partners
for, among other things, operational and financial control over
their businesses. In addition, failure by the company to
maintain its existing licensing alliances could adversely affect
the company's financial condition and results of operations.
Although the company believes in most circumstances it could
replace existing licensing partners if necessary, its inability
to do so for any period of time could adversely affect the
company's revenues, both directly from reduced licensing revenue
received and indirectly from reduced sales of the company's other
products.
Risks Associated with Consolidations, Restructurings And Other
Ownership Changes in the Retail Industry.
In recent years, the retail industry has experienced
consolidation and other ownership changes. In addition, some of
the company's competitors have operated under the protection of
the federal bankruptcy laws. In the future, retailers in United
States and in foreign markets may consolidate, undergo
restructurings or reorganizations, or realign their affiliations,
any of which could decrease the number of stores that carry the
company' products or increase the ownership concentration within
the retail industry. While such changes in the retail industry
to date have not had a material adverse effect on the company's
business or financial condition, there can be no assurance as to
the future effect of any such changes.
Competition in the Apparel Industry is Intense.
Competition is strong in the segments of the fashion and consumer
product industries in which the company intends to operate. The
company will compete with numerous domestic and foreign
designers, brands and manufacturers of apparel, some of which may
be significantly larger and more diversified and have greater
resources than the company. The company's business will depend
on its ability to shape, stimulate and respond to changing
consumer tastes and demands by producing innovative, attractive
and exciting products, brands and marketing, as well as on its
ability to remain competitive in the areas of quality and price.
Risk of Uncertainty Relating To Ability To Implement Growth
Strategy
As part of its growth strategy, the company seeks to create new
brands, develop new product categories and businesses within
existing brands and introduce new brands and product categories
to international markets. In addition, the company seeks to
capitalize on its brand name's reputation as a leading brand of
westernwear. There can be no assurance that these strategies
will be successful. The company intends to expand its retail
customers beyond the westernwear market.
Possible Adverse Impact of Unaffiliated Manufacturers' Inability
to Manufacture in a Timely Manner to Meet Quality Standards or to
Use Acceptable Labor Practice.
The company does not own and no longer operates a manufacturing
facility and will therefore be dependent upon independent third
parties for the manufacture of all of its products. The company's
products will be manufactured to its specifications by both
domestic and international manufacturers. The inability of a
manufacturer to ship orders of the company's products in a timely
manner or to meet the company's quality standards could cause the
company to miss the delivery date requirements of its customers
for those items, which could result in cancellation of orders,
refusal to accept deliveries or a reduction in purchase prices,
any of which could have a material adverse effect on the
company's financial condition and results of operations.
Although the Company will enter into a number of purchase order
commitments each season specifying a time frame for delivery,
method of payment, design and quality specifications and other
standard industry provisions, the company does not have long-term
contracts with any manufacturer. None of the manufacturers to be
used by the company will produce the company's products
exclusively.
The Company will require its licensing partners and independent
manufacturers to operate in compliance with applicable laws and
regulations. While the company's internal and vendor operating
guidelines promote ethical business practices and the company's
staff will periodically visit and monitor the operations of its
independent manufacturers, the company does not control such
manufacturers or their labor practices. The violation of labor
or other laws by an independent manufacturer of the company or by
one of the company's licensing partners, or the divergence of an
independent manufacturer's or licensing partner's labor practices
from those generally accepted as ethical in the United States,
could have a material adverse effect on the company's financial
condition and results of operations.
Risk Associated with Changes in Social, Political, Economic and
Other Conditions Affecting Foreign Operations and Sourcing;
Possible Adverse Impact Of Changes In Import Restrictions
A portion of the company's products will be sourced outside the
United States. Risks inherent in foreign operations include
changes in social, political and economic conditions which could
result in the disruption of trade from the countries in which the
company's manufacturers or suppliers are located, the imposition
of additional regulations relating to imports, the imposition of
additional duties, taxes and other charges on imports,
significant fluctuations of the value of the dollar against
foreign currencies, or restrictions on the transfer of funds, any
of which could have a material adverse effect on the company's
financial condition and results of operations.
The company's import operations are subject to constraints
imposed by bilateral textile agreements between the United States
and a number of foreign countries. These agreements, which have
been negotiated bilaterally either under the framework
established by the Arrangement Regarding International Trade in
Textiles, known as the Multifiber Agreement, or other applicable
statutes, impose quotas on the amounts and types of merchandise
which may be imported into the United States from these
countries. These agreements also allow the signatories to adjust
the quantity of imports for categories of merchandise that, under
the terms of the agreements, are not currently subject to
specific limits. The company's imported products will also be
subject to United States customs duties, which comprise a
material portion of the cost of the merchandise. The United
States and the countries in which the company's products are to
be produced or sold may, from time to time, impose new quotas,
duties, tariffs, or other restrictions, or may adversely adjust
prevailing quota, duty or tariff levels, any of which could have
a material adverse effect on the Company's financial condition
and results of operations.
Risk of Trademark and Tradename Protection.
The company believes that its trademarks and other proprietary
rights are important to its success and its competitive position.
Accordingly, the company will devote adequate resources to the
establishment and protection of its trademarks on a worldwide
basis. There can be no assurance that the actions taken by the
company to establish and protect its trademarks and other
proprietary rights will be adequate to prevent imitation of its
products by others or to prevent others from seeking to block
sales of the company's products as violative of the trademarks
and proprietary rights of others. Moreover, no assurance can be
given that others will not assert rights in, or ownership of,
trademarks and other proprietary rights of the company or that
the company will be able to successfully resolve such conflicts.
In addition, the laws of certain foreign countries may not
protect proprietary rights to the same extent as do the laws of
the United States.
Risk of Foreign Currency Fluctuations.
The company will generally purchases its products in U.S.
dollars. However, the company will source products overseas and,
as such, the cost of these products may be affected by changes in
the value of the relevant currencies. The company's
international licensing revenue will generally be derived from
sales in foreign currencies and such revenue could be materially
affected by currency fluctuations. There can be no assurance that
foreign currency fluctuations will not have a material adverse
impact on the company's financial condition and results of
operations.
Risk of Acceptance And Effectiveness Of Internet Electronic
Commerce.
The company's success in establishing an e-commerce business
web site will be dependent on consumer acceptance of e-retailing
and an increase in the use of the Internet for e-commerce. If
the markets for e-commerce do not develop or develop more slowly
than the company expects, its e-commerce business may be harmed.
If Internet usage does not grow, the company may not be able to
increase revenues from Internet advertising and sponsorships
which also may harm both our retail and e-commerce business.
Internet use by consumers is in an early stage of development,
and market acceptance of the Internet as a medium for content,
advertising and e-commerce is uncertain. A number of factors may
inhibit the growth of Internet usage, including inadequate
network infrastructure, security concerns, inconsistent quality
of service, and limited availability of cost-effective, high-
speed access. If these or any other factors cause use of the
Internet to slow or decline, our results of operations could be
adversely affected.
Risk of Competition in Internet Commerce.
Increased competition from e-commerce could result in
reduced margins or loss of market share, any of which could harm
both our retail and e-commerce businesses. Competition is likely
to increase significantly as new companies enter the market and
current competitors expand their services. Many of the company's
present and potential competitors are likely to enjoy substantial
competitive advantages, including larger numbers of users, more
fully-developed e-commerce opportunities, larger technical,
production and editorial staffs, and substantially greater
financial, marketing, technical and other resources. If the
company does not compete effectively or if it experiences any
pricing pressures, reduced margins or loss of market share
resulting from increased competition, the company's business
could be adversely affected.
Risk of Unreliability of Internet Infrastructure.
If the Internet continues to experience increased numbers of
users, frequency of use or increased bandwidth requirements, the
Internet infrastructure may not be able to support these
increased demands or perform reliably. The Internet has
experienced a variety of outages and other delays as a result of
damage to portions of its infrastructure, and could face
additional outages and delays in the future. These outages and
delays could reduce the level of Internet usage and traffic on
the company website. In addition, the Internet could lose its
viability due to delays in the development or adoption of new
standards and protocols to handle increased levels of activity.
If the Internet infrastructure is not adequately developed or
maintained, use of the company website may be reduced. Even if
the Internet infrastructure is adequately developed, and
maintained, the company may incur substantial expenditures in
order to adapt its services and products to changing Internet
technologies. Such additional expenses could severely harm the
company's financial results.
Risk of Transactional Security Concerns.
A significant barrier to Internet e-commerce is the secure
transmission of confidential information over public networks.
Any breach in our security could cause interruptions in the
operation of our website and have an adverse effect on the
company's business.
Risk of Governmental Regulation of the Internet.
There are currently few laws that specifically regulate
communications or commerce on the Internet. Laws and regulations
may be adopted in the future, however, that address issues
including user privacy, pricing, taxation and the characteristics
and quality of products and services sold over the Internet. An
increase in regulation or the application of existing laws to the
Internet could significantly increase our costs of operations and
harm the company's business.
Success of Company Dependent on Management.
The company's success is dependent upon the hiring of key
administrative personnel. None of the company's officers,
directors, and key employees have an employment agreement with
the company; therefore, there can be no assurance that these
personnel will remain employed by the company after the
termination of such agreements. 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 no 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.
Control of the Company by Officers and Directors.
The company's officers and directors beneficially own
approximately 42% of the outstanding shares of the company's
common stock. As a result, such persons, acting together, have
the ability to exercise significant influence over all matters
requiring stockholder approval. Accordingly, it could be
difficult for the investors hereunder to effectuate control over
the affairs of the company. Therefore, it should be assumed that
the officers, directors, and principal common shareholders who
control the majority of voting rights will be able, by virtue of
their stock holdings, to control the affairs and policies of the
company.
Limitations on Liability, and Indemnification, of Directors and Officers.
The articles of incorporation of the company provide
for indemnification of officer or directors of the company; in
addition, the Delaware General Corporation Law provides for
permissive indemnification of officers and directors and the
company may provide indemnification under such provisions. Any
limitation on the liability of any director, or indemnification
of directors, officer, or employees, could result in substantial
expenditures being made by the company in covering any liability
of such persons or in indemnifying them.
Risk of Conflicts of Interest Involving Management.
Currently, the officers and directors of the company devote only
a portion of their time to the business of the company.
Therefore, 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.
Risk of 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.
Risk of No Public Market for Company's Securities.
Prior to this offering, there has been no public market for the
shares of common stock 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. As a result, an investor may find it difficult to
dispose of the company's securities for the foreseeable future.
Upon reaching 300 shareholders, the company will become reporting
under Section 15(d) of the Securities Exchange of 1934.
Thereafter, the company will apply for listing on the Over the
Counter Bulletin Board.
Even if the shares become publicly traded, 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, electronic 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 may not be able to liquidate an investment in
the shares readily, or at all.
Risk of Low Priced Securities.
The common stock will be subject to the low-priced
security or so called "penny stock" rules that impose additional
sales practice requirements on broker-dealers who sell such
securities. The Securities Enforcement and Penny Stock Reform
Act of 1990 requires additional disclosure in connection with any
trades involving a stock defined as a penny stock (generally,
according to recent regulations adopted by the U.S. Securities
and Exchange Commission, any equity security that has a market
price of less than $5.00 per share, subject to certain
exceptions), including the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock
market and the risks associated therewith. The regulations
governing low-priced or penny stocks sometimes limit the ability
of broker-dealers to sell the company's common stock and thus,
ultimately, the ability of the investors to sell their securities
in the secondary market.
Risk of Failure to Maintain Market Makers.
If the company obtains listing on the Over the Counter
Bulletin Board, and thereafter if the company is unable to
maintain National Association of Securities Dealers, Inc. member
broker/dealers as market makers, the liquidity of the common
stock could be impaired. This true not only in the number of
shares of common stock which could be bought and sold, but also
through possible delays in the timing of transactions, and lower
prices for the common stock than might otherwise prevail.
Furthermore, the lack of market makers could result in persons
being unable to buy or sell shares of the common stock on any
secondary market. There can be no assurance the company will be
able to maintain such market makers.
Risk of "Shelf" Offering
The shares are offered directly by the company on a delayed
basis. No assurance can be given that any or all of the shares
will be issued. No broker-dealer has been retained as an
underwriter and no broker-dealer is under any obligation to
purchase any of the shares. In addition, the officers and
directors of the company, collectively, have limited experience
in the offer and sale of securities on behalf of the company.
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.
Shares Eligible For Future Sale
All of the 3,525,000 shares of common stock which are currently
held, directly or indirectly, by management have been issued in
reliance on the private placement exemption under the Securities
Act of 1933. Such shares will not be available for sale in the
open market without separate registration except in reliance upon
Rule 144 under the Securities Act of 1933. In general, under
Rule 144 a person (or persons whose shares are aggregated) who
has beneficially owned shares acquired in a non-public
transaction for at least one year, including persons who may be
deemed affiliates of the company (as that term is defined under
that rule) 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 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 these shareholders were sold pursuant to Rule 144
or a registered offering, the market price of the common stock
could be adversely affected.
Risk of 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. 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 suppliers) or
material costs caused by undetected errors or defects in the
technology used in its internal systems. Furthermore, the
purchasing patterns of customers may be affected by Year 2000
issues. The company does not currently have any information
about the Year 2000 status of its potential material suppliers.
The company's Year 2000 plans are based on management's best
estimates.
USE OF PROCEEDS
The amount of proceeds from this offering will depend on the
offering price per share and the number of shares sold for cash.
The initial offering price of the shares has been set at $1.00
per share. The proceeds of the cash offering ($3,500,000), 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 (with three scenarios assuming 25%, 50%, and 100%
subscriptions of the shares for cash):
Use of Subscriptions of Subscriptions of Subscriptions of
Proceeds of 25% of Total of 50% of Total of 100% of Total
Transfer
Agent Fees
of $1,000 0.11% 0.06% 0.03%
Printing
Costs of $1,000 0.11% 0.06% 0.03%
Legal Fees
of $22,500 2.57% 1.29% 0.64%
Accounting
Fees of $5,000 0.57% 0.29% 0.14%
Working Capital 96.64% 98.30% 99.16%
($845,500) ($1,720,500) ($3,470,500)
Total $875,000 $1,750,000 $3,500,000
The following are estimated uses of a portion of the working capital of the
company:
Repayment of bank loan: $100,000
Salaries and labor: 100,000
Product design and sampling: 45,000
Marketing and promotion: 50,000
Purchase of computer equipment: 20,000
Office and facilities: 15,000
Inventory: 400,000
Total: $730,000
The amount of the net proceeds that will be invested in
particular areas of the company's business will depend upon
future economic conditions and business opportunities. To the
extent that the company may incur a loss from operations, such
loss will be funded from the company's general funds, including
the net proceeds of the offering. In such event, the amount
available for use in the expansion of the various aspects of the
company's business will be reduced by the amounts expended in the
course of day-to-day operations, including working capital
requirements and by any operating losses. A portion of the
proceeds may be used by the company to diversify into
complementary businesses, either by internal growth or by
acquisition. As of the date hereof, the company does not have
any contract with any such acquisition candidate, and no
assurance can be given that any business acquisition opportunity
may be obtained in the future, or if obtained, may be negotiated
on terms, which are favorable to the company.
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.
DETERMINATION OF OFFERING PRICE
The cash offering price of the shares will be initially
determined based on the selling price of the share in a private
offering done by the company between March 3, 2000 and June 15,
2000. This offering price may be adjusted in the future by the
filing of a 424 prospectus with the Securities and Exchange
Commission.
DILUTION
The cash offering price of the shares of common stock of the
company is $1.00 per share. Since the inception of the company
in 1997, one of the current principals of the company and its
founding shareholders have been permitted to purchase shares at
prices ranging from $0.003 per share to $0.0118 per share between
December 15, 1997 and December 31, 1999.
The offering price of the shares bears no relation to book value,
assets, earnings or any other objective criteria or value. The
shares' price has been arbitrarily determined by the Company.
However, there will be a dilution in the value of the shares in
this offering.
"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 offering price of a security, such as the shares
(where "shares" are defined as shares of common stock), and its
net tangible book value per share immediately after the offering,
giving effect to the receipt of net proceeds in the offering.
The net tangible book value per company common share at September
30, 2000 was $0.019 (net tangible book value of $125,652 divided
by the number of shares outstanding of 7,360,000). Giving effect
to the sale by the company of all the shares being offered for
cash under this offering, the pro-forma net tangible book value
of the company would be $3,625,652 or $0.339 per share, a
dilution to new investors of $0.661 per share. The following
table illustrates the pro forma per share dilution:
Assuming Assuming Assuming
Subscriptions Subscriptions Subscriptions
of 25% of Total of 50% of Total of 100% of Total
Offering Price (1) $1.00 $1.00 $1.00
Net tangible book value
per share before offering (2) $0.017 $0.017 $0.017
Increase attributable to
purchase of stock by new
investors (3) $0.106 $0.192 $0.322
Net tangible book value
per Share after offering
(4) $0.122 $0.206 $0.339
Dilution to new
investors (5) $0.878 $0.794 $0.661
Percent Dilution to new
investors (6) 87.8% 79.4% 66.1%
(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 is
determined by dividing the net tangible book value at September
30, 2000 of $125,652 by the number of shares outstanding on that
date of 7,360,000.
(3) The increase in the net tangible book value attributable to
the cash purchase of shares under this offering is determined by
subtracting the net tangible book value before the offering from
the net tangible book value after the offering.
(4) The net tangible book value per share after the offering is
determined by dividing the number of shares that will be
outstanding after this cash offering into the net tangible book
value after the offering.
(5) The dilution to new investors is determined by subtracting
the net tangible book value per share after the offering from the
offering price of $1.00.
(6) The percent dilution to new investors is determined by
dividing the dilution to new investors by the offering price per
Share of $1.00.
SELLING SHAREHOLDERS
Selling shareholders will be offering a total of 149,500
shares of common stock of the company, as follows:
Selling Shares Shares Being Shares Percentage
Offering Offering(1)
Brendan Quinn 50,000 10,000 40,000 0.54%
Jerry Hopkins 50,000 10,000 40,000 0.54%
Rick Morrison 50,000 10,000 40,000 0.54%
James Logan 50,000 10,000 40,000 0.54%
Lester Cole 75,000 15,000 60,000 0.82%
Frank Kern 20,000 4,000 16,000 0.22%
Thomas Woon 25,000 5,000 20,000 0.27%
Vincent Benincasa 5,000 1,000 4,000 0.05%
GNS Suisse Fund 5,000 1,000 4,000 0.05%
Harish Shah 210,000 42,000 168,000 2.28%
Toscano & Pudell 5,000 2,500 2,500 0.03%
Jerald Dineen 2,500 2,000 500 0.01%
Jack Stancampiano 50,000 10,000 40,000 0.54%
Richard Stancampiano 50,000 10,000 40,000 0.54%
Jalil Hamedani 50,000 10,000 40,000 0.54%
Jim Goodwin 25,000 5,000 20,000 0.27%
Warren Lee 10,000 2,000 8,000 0.11%
Total 732,500 149,500 582,500 7.91%
(1) Based on the issued and outstanding shares of common stock
of 7,360,000 as of September 30, 2000.
PLAN OF DISTRIBUTION
The company does not presently intend to use any underwriters, dealers, or
finders in connection with the sales of shares under this offering.
Registration under this Offering.
4,149,500 shares of common stock of the company will be sold on a
delayed basis under a shelf registration under Rule 415 (shares
outstanding prior to this offering: 7,360,000) (shares to be
outstanding after this offering, assuming a full subscription:
11,360,000), as follows:
Selling shareholders: 149,500.
Shares to be sold for cash ($1.00 per share): 3,500,000.
Shares for possible future acquisitions by the company of other
companies and/or assets: 250,000.
Shares to be issued for consulting services: 250,000.
There can be no assurance that all of these shares will be issued
or that any of them will be sold for cash. The gross proceeds to
the company will depend on the amount actually sold for cash. 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 shares. These
securities are offered by the company subject to prior issue and
to approval of certain legal matters by counsel.
Selling Shareholders.
(a) Manner of Sales; Broker-Dealer Compensation.
The selling shareholders, or any successors in interest to the
selling shareholders, may sell their shares of common stock in
one or more of the following methods:
ordinary brokers' transactions;
transactions involving cross or block trades or otherwise on the
Bulletin Board;
purchases by brokers, dealers or underwriters as principal and
resale by these purchasers for their own accounts pursuant to
this prospectus;
"at the market" to or through market makers or into an existing
market for the company's common stock;
in other ways not involving market makers or established
trading markets, including direct sales to purchases or sales
effected through agents;
through transactions in options, swaps or other derivatives
(whether exchange-listed or otherwise);
in privately negotiated transactions;
to cover short sales; or
any combination of the foregoing.
The selling shareholders also may sell their shares in reliance
upon Rule 144 under the Securities Act at such times as they are
eligible to do so. The company has been advised by the selling
shareholders that they have not made any arrangements for the
distribution of the shares of common stock. Brokers, dealers or
underwriters who effect sales for the selling shareholders may
arrange for other brokers, dealers or underwriters to
participate. Brokers, dealers or underwriters engaged by the
selling shareholders will receive commissions or discounts from
them in amounts to be negotiated prior to the sale. These
brokers, dealers or underwriters may act as agent or as
principals.
From time to time, one or more of the selling shareholders may
pledge, hypothecate or grant a security interest in some or all
of the shares of common stock being offered for sale, and the
pledgees, secured parties or persons to whom these securities
have been pledged shall, upon foreclosure in the event of
default, be considered a selling shareholder hereunder. In
addition, a selling shareholders may, from time to time, sell
short their common stock. In these instances, this prospectus
may be delivered in connection with these short sales and the
shares of the common stock may be used to cover these short
sales.
From time to time one or more of the selling shareholders may
transfer, pledge, donate or assign shares of their common stock
to lenders or others and each of these persons will be considered
a selling shareholder for purposes of this prospectus. The
number of shares of the company's common stock beneficially owned
by those selling shareholders who so transfer, pledge, donate or
assign shares of their common stock will decrease as and when
they take these actions. The plan of distribution for the
company's common stock by the selling shareholders set forth
herein will otherwise remain unchanged, except that the
transferees, pledgees, donees or other successors will be
considered selling shareholders hereunder.
Subject to the limitations discussed above, a selling shareholder
may enter into hedging transactions with broker-dealers and the
broker-dealers may engage in short sales of the company's common
stock in the course of hedging the positions they assume with
this selling shareholders, including in connection with
distributions of the common stock by these broker-dealers. A
selling shareholder may also enter into option or other
transactions with broker-dealers that involve the delivery of the
company's common stock to the broker-dealers, who may then
resell or otherwise transfer these shares. A selling
shareholder also may loan or pledge the company's common stock
to a broker-dealer and the broker-dealer may sell the common
stock so loaned or upon a default may sell or otherwise transfer
the pledged common stock.
(b) Filing of a Post-Effective Amendment In Certain Instances.
If any selling shareholders notifies the company that he, she, or
it has entered into a material arrangement (other than a
customary brokerage account agreement) with a broker or dealer
for the sale of shares of common stock under this prospectus
through a block trade, purchase by a broker or dealer or similar
transaction, the company will file a post- effective amendment to
the registration statement for this offering. The post-
effective amendment will disclose:
The name of each broker-dealer involved in the transaction.
The number of shares of common stock involved.
The price at which those shares of common stock were sold.
The commissions paid or discounts or concessions allowed to the
broker-dealer(s).
If applicable, that these broker-dealer(s) did not conduct any
investigation to verify the information contained or incorporated
by reference in this prospectus, as supplemented.
Any other facts material to the transaction.
(c) Certain Persons May Be Deemed to Be Underwriters.
The selling shareholders and any broker-dealers who execute sales
for them may be deemed to be "underwriters" within the meaning of
the Securities Act of 1933 because of the number of shares of
common stock to be sold or resold by these persons or entities or
the manner of sale of these shares, or both. If a selling
shareholder or any broker-dealer or other holders were determined
to be underwriters, any discounts, concessions or commissions
received by them or by brokers or dealers acting on their behalf
and any profits received by them on the resale of their shares of
common stock might be deemed to be underwriting discounts and
commissions under the Securities Act.
(d) Regulation M.
The company has informed the selling shareholders that Regulation
M promulgated under the Securities Exchange Act of 1934 may be
applicable to them with respect to any purchase or sale the
company's common stock. In general, Rule 102 under Regulation M
prohibits any person connected with a distribution of the
company's common stock from directly or indirectly bidding for,
or purchasing for any account in which it has a beneficial
interest, any of the common stock or any right to purchase this
stock, for a period of one business day before and after
completion of its participation in the distribution.
During any distribution period, Regulation M prohibits the
selling shareholders and any other persons engaged in the
distribution from engaging in any stabilizing bid or purchasing
the company's common stock except for the purpose of preventing
or retarding a decline in the open market price of the common
stock. None of these persons may effect any stabilizing
transaction to facilitate any offering at the market. As the
selling shareholders will be reoffering and reselling the
company's common stock at the market, Regulation M will prohibit
them from effecting any stabilizing transaction in contravention
of Regulation M with respect to this stock.
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 the company concerning any aspect of the investment
and to obtain any additional information contained in this
prospectus, to the extent that the company possesses such
information or can acquire it without unreasonable effort or
expense.
Execution of Documents.
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 deliver 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.
LEGAL PROCEEDINGS
Other than as set forth below, the company is not a party to any
material pending legal proceedings and, to the best of its
knowledge, no such action by or against the company has been
threatened.
On September 13, 2000, a complaint was filed in the Los Angeles
County Superior Court (Roger Cook and Mary-Elizabeth Cook v. H
Bar C, Inc, Richard Stahl, et al. - Case No. BC236712). The
plaintiffs allege that defendants breached certain oral
agreements between the parties with respect to the transfer of
the name "H Bar C" and other property to the defendants in
exchange for certain promised capital infusion into the business,
as well as the issuance of certain common stock in the new
business. The plaintiffs also allege that in connection with
these transactions, the defendants committed other wrongful acts,
including fraud and misrepresentation.
On November 7, 2000, the defendants filed an answer to the
complaint. In addition, H Bar C and Mr. Stahl on that date filed
a cross-complaint against the plaintiffs, alleging
misrepresentation, trade libel, slander, and other causes of
action. The company cannot as yet express any opinion as to the
probable outcome of these litigation matters. However, the
company intends to defend the complaint filed by the plaintiffs
vigorously and to pursue the cross-complaint.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,AND CONTROL PERSONS
The names, ages, and respective positions of the directors,
executive officers, and key employee of the company are set forth
below. The directors named below will serve until the next
annual meeting of the company's stockholders or until their
successors are duly elected and have qualified. Directors are
elected for a one-year term at the annual stockholders'
meeting. Officers will hold their positions at the will of the
board of directors, absent any employment agreement, of which
none currently exist or are contemplated. There are no
arrangements, agreements or understandings between non-management
shareholders and management under which non-management
shareholders may directly or indirectly participate in or
influence the management of the company's affairs. There are no
other promoters or control persons of the company. There are
legal proceedings involving the first listed director of the
company.
Richard Stahl, President/Chief Executive Officer/Treasure/Chief
Financial Officer/Director.
Mr. Stahl, age 36, also serves as a director and chief financial
officer of the of the company's subsidiary, H Bar C Ranchwear
Corp. From 1996 to 1999, Mr. Stahl served as Managing Director
of RBJ Holdings LLC, a private holding company controlled in part
by Mr. Stahl which had interests in brokerage and investment
management. Since July of 1995 until present, Mr. Stahl has also
served as President and Director of Fincom Holdings, a corporate
financial consulting firm. Mr. Stahl holds a Bachelor of
Science degree in Marketing from the State University of New York
at Plattsburgh, and a Master of Business Administration Degree
from Ohio University.
Kermit Alexander, Secretary/Director.
Mr. Alexander, age 59, also serves as a director and secretary of
H Bar C Ranchwear Corp. Mr. Alexander is the President and
Director of Sacre Coeur, a consulting company advising capital
projects on financial and political matters. Mr. Alexander spent
many years in professional football where he was an All-Pro
defensive back with the San Francisco 49ers, and President of the
NFL Players Union. He is a former UCLA All-American in football
and track where he received a Bachelor of Science Degree in
Kinesiology
Lee Rosenberg, Director.
Mr. Rosenberg, age 72, also serves as a director of H Bar C
Ranchwear Corp. Mr. Rosenberg has substantial experience in the
apparel industry: all areas of the business with his primary
interest being in the areas of sales and marketing. Mr.
Rosenberg began his career with J.H. Collectibles where he spent
20 years before joining Cole of California. In 1975, Mr.
Rosenberg left Cole of California as vice president of
merchandising to join "Esprit" as vice president of sales and
Marketing. Since he left that firm in 1987, Mr. Rosenberg has
remained active in the industry by consulting with various
companies in all aspects of the apparel business. He is familiar
with the brand of H Bar C as he worked with Shootout Mountain
Outfitters who owned the labels of H Bar C and California
Ranchwear in 1997.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the
beneficial ownership of shares of the company's common stock as
of September 30, 2000 (7,360,000 issued and outstanding) by (i)
all stockholders known to the company to be beneficial owners of
more than 5% of the outstanding common stock; and (ii) all
officers and directors of the company individually and as a group
(each person has sole voting power and sole dispositive power as
to all of the shares shown as beneficially owned by them):
Title of Name and Address of Amount Percent of
Class Beneficial Owner and Nature Class
Of
Benficial
Ownership(1)
Common Tiffany Smith 3,388,888 46.04%
Stock 2007 Bedford Drive
West Palm Beach, Florida 33403
Common Richard Stahl 3,500,000(2) 41.87%
Stock 118 Murray Avenue
Port Washington, New York 11050
Common Kermit Alexander 25,000 0.34%
Stock 351 North Buffalo Drive
Suite A
Las Vegas, Nevada 89145
Common Lee Rosenberg 0 0.00%
Stock 11733 Goshen Avenue
Los Angeles, California 90049
Common Shares of all directors and 3,525,000 42.16%
Stock executive officers as a group (3
persons)
(1) Other than as set forth below, none of these security
holders has the right to acquire any amount of the shares within
sixty days from options, warrants, rights, conversion privilege,
or similar obligations.
(2) On December 31, 1999, Mr. Stahl purchased an option for
1,000,000 shares of common stock of the company. This option is
exercisable at any time prior to the end of 10 years from the
date of issuance at $0.10 per share. The option covering these
shares is included in the total for Mr. Stahl.
DESCRIPTION OF SECURITIES
Common Stock.
The securities being offered are shares of common stock. The
company's articles of incorporation authorize the issuance of
15,000,000 shares of common stock, with a par value of $0.001.
The holders of the shares:
have equal ratable rights to dividends from funds legally
available therefore, when, as, and if declared by the board of
directors of the company
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, and
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:
special voting rights
preference as to dividends or interest
preemptive rights to purchase in new issues of shares
preference upon liquidation, or
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. As of September 30,
2000, the company had 7,360,000 shares of common stock issued and
outstanding.
Preferred Stock.
The company's articles of incorporation authorize the issuance of
5,000,000 shares of common stock, with a par value of $0.01.
None of the preferred stock has been issued to date.
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 4,000,000 shares is sold, the company's authorized
but unissued common capital stock will consist of 3,640,000
shares of common stock (based on the issued and outstanding
shares of 7,360,000 as of September 30, 2000). 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 Corporate Stock Transfer,
3200 Cherry Creek Drive South, Suite 430, Denver, Colorado 80209,
to act as transfer agent and registrar.
INTEREST OF NAMED EXPERTS AND COUNSEL
Other than as set forth below, 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 company.
Brian F. Faulkner, Esq., counsel for the Registrant named in this
registration statement as giving an opinion on the validity of
the securities, will be receiving 5,000 shares of the company's
restricted common stock in exchange for legal services to be
rendered in the future to the Registrant. These legal services
will consist of advice and preparation work in connection with
reports of the Registrant to be filed under the Securities
Exchange Act of 1934, and other general corporate and securities
work for the Registrant.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Limitation of Liability.
Under provisions of the articles of incorporation, directors of
the company are not liable to the company corporation, as
follows:
"The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the
provisions of the paragraph (7) of subsection (b) of Section 102 of the
General Corporation Law of the State of Delaware, as the same may
be amended and supplemented."
Indemnification.
(a) Articles of Incorporation.
The articles of incorporation of the company contain the
following provisions with regard to indemnification of its
directors and officers:
"The corporation shall, to the fullest extent permitted by the
provisions of Secion 145 of the General Corporation Law of the State
of Delaware, as the same as may be amended and supplemented,
indemnify any and all of the expenses, liabilities, or other
matters referred to in or covered by said section, and the
Indemnification provided for herein shall not be deemed exclusive
of any other rights to which those indemnified may be entitled
under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such
office, and 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 a
person."
The bylaws of the company do not contain any provisions regarding
indemnification.
(b) Delaware Statutes.
The Delaware General Corporation Law provides or permissive
indemnification of officers and directors and the company may
provide indemnification under such provisions:
"Section 145. Indemnification of officers, directors, employees and
agents; insurance.
(a) A corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason
of the fact that the person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by the person in connection with such
action, suit or proceeding if the person acted in good faith and
in a manner the person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe the person's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which the person
reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the person's
conduct was unlawful.
(b) A corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by
reason of the fact that the person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by the person in connection with
the defense or settlement of such action or suit if the person
acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery or the court in
which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a present or former director or officer
of a corporation has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of this section, or in defense of any
claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the present or former
director, officer, employee or agent is proper in the
circumstances because the person has met the applicable standard
of conduct set forth in subsections (a) and (b) of this section.
Such determination shall be made, with respect to a person who is
a director or officer at the time of such determination, (1) by a
majority vote of the directors who are not parties to such
action, suit or proceeding, even though less than a quorum, or
(2) by a committee of such directors designated by majority vote
of such directors, even though less than a quorum, or (3) if
there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (4) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer
or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount if it shall
ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this section.
Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so
paid upon such terms and conditions, if any, as the corporation
deems appropriate.
(f) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other subsections of this section
shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be
entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity
while holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify such
person against such liability under this section.
(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall
stand in the same position under this section with respect to the
resulting or surviving corporation as such person would have with
respect to such constituent corporation if its separate existence
had continued.
(i) The indemnification and advancement of expenses provided by,
or granted pursuant to, this section shall, unless otherwise
provided when authorized or ratified, 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 a person."
Undertaking.
The company undertakes the following:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 U.S. Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore,
unenforceable.
ORGANIZATION WITHIN LAST FIVE YEARS
The names of the officers and directors as disclosed
elsewhere in this Form SB-2. None of these individuals, as
promoters, have received anything of value from the company.
DESCRIPTION OF BUSINESS
Background of the Company.
(a) History of Campus Live Corp.
The company, formerly known as Campus Live Corp., was
incorporated in the State of Delaware in September 1997, and is
a development stage company that originally intended to provide
an alternative yearbook format using an electronic medium.
During May 2000, the company's management determined that its
pursuit of the alternative yearbook would not be as widely
acceptable as originally expected and began seeking other
operations for future development.
In June 2000, the company acquired all outstanding capital
stock of H Bar C Ranchwear Corp. (previously known as H Bar C,
Inc.) in exchange for 3,472,500 shares of the company's common
stock pursuant to a tax-free reorganization. The acquisition of
this firm has been accounted for as a pooling of interests.
This enabled the company to chang its focus to manufacture and
retail western wear clothing under the label and tradename H Bar
C. In August 2000, an amendment to the company's articles of
incorporation changed the corporate name from Campus Live Corp.
to H Bar C, Inc.
(b) History of H Bar C Ranchwear Corp.
After operating the business as a tailoring concern by
Christenfeld for the first 10 years, in 1917, a partnership was
formed between Mr. S.H. Christenfeld and Mr. M. Halpern to make
English riding breeches and jodphurs for men and women. In
1929, Mr. Halpern passed away and Christenfeld became the sole
owner of the firm Halpern and Christenfeld. By this time they
had become the quality leader in the English riding clothing
market and added coats to their line of breeches and jodphurs.
In 1935 the firm opened a west coast office in Los Angeles to
cater to the needs west of the Mississippi. They changed the
name to H-Bar-C, and started making western pants and shirts for
studios making pictures of the Wild West. Garments worn by Gene
Autry, Roy Rogers, and later John Wayne were made by H-Bar-C.
The movies made the clothing popular and stores began to order
the same garments for their customers.
As demand increased, specialty stores evolved specializing in
western shirts, pants, and suits. These stores opened not only
in the west, but east of the Mississippi as well. The name of
H-Bar-C was known as the quality leader in fit, styling, and
fabrication.
Popularity of the clothing increased dramatically with the
introduction of television, and the increasing popularity of
rodeos. Bands began wearing the garments, and western theme
clubs were formed on the western themes. H-Bar-C products can
be found worldwide, as visitors from England, France, Germany,
Belgium, Japan, and Australia have shown strong interest in this
line of clothing.
Through the past decade, the Christenfeld family was unable to
manage the business effectively and sold the business to
Shootout Mountain Outfitters in 1996. Shootout was never able
to revive the brand as a private company with insufficient
operating capital to produce, market, and advertise the products
on a national basis.
In an Agreement dated February 1, 2000, H Bar C, Inc. purchased
all of the assets of what was previously known as Shootout
Mountain Outfitters and Dry Goods , Inc., from the Los Angeles
Community Development Bank (a non-commercial bank); this firm
was an unaffiliated company in default of their loan with the
bank. Included in those assets were all of the equipment,
inventory, supplies, and intangibles which were acquired through
the course of the century from when the original business began
as tailoring by Christenfeld in 1896. In the intangibles, H Bar
C, Inc. received the entire customer base which had been
nurtured since inception and the registered trademarks H Bar C
Ranchwear and Christenfeld. The balance of $175,000 purchase
price, which is secured by all present and future assets of H
Bar C, Inc., is payable in monthly installments of $25,000,
bearing an imputed interest rate of 8.5%, and due on demand. In
June 2000, the name of this firm was changed from H Bar C, Inc.
to H Bar C Ranchwear Corp.
By taking a new course of direction with adequate funding to
execute a national re-launch campaign, the company is hoping to
capture the American desire to hold onto its history and make H
Bar C a household name once again.
Rebuilding The Core Business.
The apparel operations of the company will be managed by an
experienced team already in the industry with a successful
history of managing apparel brands. The company is currently in
negotiations with several large apparel companies and will
execute a deal upon completing the current round of financing.
Product Offering.
The management team is currently planning a re-launch of the
traditional H Bar C line to the western wear market as well as
the creation of a new line able to achieve a crossover of the
brand into to other clothing segments.
The company currently has in excess of 500 western wear product
designs, which have been offered over the years. Initially, the
company will focus on a very limited number of styles offering
the quickest turnover, the highest profitability, and the widest
customer acceptance. The biggest obstacle facing the company
today is its recent lack of reputation to deliver the goods and
fill orders. For five years, the company has gone to the
clothing shows, taken orders and not been able to produce or
ship. By limiting the product line, making on time deliveries,
and publicizing the fact that the company is doing so, the hope
is that the name brand's reputation can be quickly restored and
customer confidence can be reassured to support an expanded
product offering down the road.
The company intends to establish three or four products
constituting a crossover line for introduction to a much larger
casual wear market. The products are being chosen primarily on
the anticipated acceptance by the end consumer so that the
products sell through the retailers to gain their confidence and
influence them to order an expanded line the following year. The
company intends to monitor the progress and feedback of the
limited product offering to determine the product mix and launch
timing of the full line.
Once the clothing of H Bar C brand is established into the retail
network with an extensive marketing and publicity campaign, the
company intends to offer complementary products such as high end
luggage and other products able to capitalize on the loyal
following of customers looking for a western theme in the
products they purchase. The company will again be focused on the
H Bar C brand as quality westernwear.
Raw materials for manufacture of the company's products are
readily available in the marketplace from many sources. The
company at this time does not have any principal suppliers but
will be purchasing from many different suppliers. The company
will not be dependent on one or a few customers for it's the sale
of its products.
Corporate Brand Marketing.
As the clothing lines begin to regain form under the H Bar C
label, the company will work on the revival of its historical
brand name in other areas. Just as another American legend,
Harley Davidson expanded into areas such as clothing and
accessories merchandising beyond motorcycles, the company intends
to take advantage of a world market looking to hold onto history
as society enters a new century and millennium.
Regardless of what products people are buying, the Brand name is
what has the impact. The revival of the H Bar C label will allow
the company to seek licensing deals and other such arrangements
on numerous products such as western style accessories,
cosmetics, native american arts and crafts, home decorating and
design items, or western style furniture. By selecting the
rights partners in every agreement or venture, the integrity of
the label can be maintained, and profits can be generated for
years to come.
One of the immediate tasks for the company will be to produce a
book describing the history of H Bar C and what it meant to so
many Americans in the middle of the 20th century. Although most
people affiliated to the western wear industry still know the
name very well, many people have lost the top of mind awareness
of the brand. However, when introduced to the pictures and
stories relating to the name, they are often reminded of personal
memories from years past. By creating the storybook of H Bar C,
the product marketing team will have a definite use with
retailers and consumers, the design and procurement team will
have a use in brand positioning, and the corporate marketing team
will have a use in licensing and stock market related promotions.
Expansion Through Consolidation.
Once the core business of the company is re-established in the
clothing industry, and the H Bar C label is getting a high level
of recognition, the company intends to look to capitalize on the
momentum of an American comeback story by consolidating what it
considers to be a fragmented western wear market. Just as many
small competitors came in for a fragment of the market share when
they began, the growth of each company has been limited to their
specialty, and the owners of these businesses are looking for
ways to recapture part of their investments. By using the
traditional advantages of a consolidation strategy such as
economies of scale, and increased industry leverage, the company
intends to identify the best available targets, and invite them
to join the company team. The company has already identified
several potential candidates who have expressed an interest in
joining such a venture. These candidates typically have sales in
the $1.5 to $3 million ranges
Twelve Month Plan.
The company can satisfy its cash requirements for approximately
two months with the cash available at September 30, 2000. The
company will need to raise additional capital in the next twelve
months in order to meet its continuing requirements; this will be
a minimum of $1,000,000 in order to fully implement its plan of
business. Operating capital will be used primarily to secure
credit and factoring services in the apparel industry. The
capital will be held in money market funds or equivalent.
Milestones to be achieved for the company during the next twelve
months:
December 2000/ January 2001 - Complete design and sampling of new line.
January 2001 - Cash flow from sales in November 2000 to begin.
- Funding from stock sales to be used to
establish factoring relationships and credit
facilities to begin sourcing orders.
- Launch new product line to established
H bar C customers.
- Begin marketing campaign to western wear
industry
March 2001 - Launch e-commerce business through website
April 2001 - Begin shipments of product orders
from January 2001
- Factor receivables from sales to begin cash
flow from new product line.
May 2001 - Begin campaign to obtain licensing
arrangements.
The company currently has no employees. Members of the
management team and several support personnel are treated as
independent contractors at this time. It is the intention of the
company to establish a payroll and benefits with some of the
working capital from this offering for these individuals. Other
than this, the company does not expect to increase employees over
the next twelve months.
Forward-Looking Statements.
This prospectus, including the foregoing plan of business,
contains "forward looking statements" within the meaning of Rule
175 of the Securities Act of 1933, as amended, and Rule 3b-6 of
the Securities Act of 1934, as amended, 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, among others, the
following: reduced or lack of increase in demand for the
company's products, competitive pricing pressures, changes in the
market price of ingredients used in the company's products and
the level of expenses incurred in the company's operations. In
light of these risks and uncertainties, there can be no assurance
that the forward-looking information contained herein will in
fact transpire or prove to be accurate.
PLAN OF OPERATION
The company generated only a small amount of revenue from
operations in the last two fiscal years and the interim period up
to the date of this Form SB-2; the revenue shown for the last
two years was from development of school year books on compact
discs (which is not part of the current business plan of the
company). Therefore, the company believes that a plan of
operation, which is incorporated into the plan of business, will
be more meaningful that a management's discussion and analysis of
financial condition and results of operations.
DESCRIPTION OF PROPERTY
The company currently owns or controls the following property in
connection with its operations:
Personal Property.
(a) Equipment.
This includes storage racks, sewing and overlock machines,
cutting table, cutting machines, transportation racks, furniture
and office equipment, sampling tools and tables, and computers to
have a total book value of approximately $50,000.
(b) Inventory.
Inventory of previously manufactured western wear with a fair value of
approximately $65,000; fabrics and raw materials with a book value of
approximately $5,000; and all of the other goods, including zippers, trim,
buttons, snaps, boxes, bags, labels, with a book value of approximately
$5,000.
(c) Patterns.
The company currently has 515 clothing patterns, which have been
designed and prepared over the course of time; they have an
approximate book value of $150,000.
All of the above items are currently located in storage in Los
Angeles, California.
Real Property.
The company currently leases its warehouse space in Los
Angeles, California, but this lease expires at the end of
November 2000 (management is attempting to locate new space in
the Los Angeles area). Mr. Stahl currently Randolph provides
office space to the company without charge. This office space
consists of one room of approximately 250 square feet in the home
of Mr. Stahl, located at 118 Murray Avenue, Port Washington, New
York 11050. This office space is suitable for the purposes of
the company at this time.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past two years, there have not been any transaction
that have occurred between the company and its officers,
directors, and five percent or greater shareholders, except as
follows:
On November 1, 1999, H Bar C Ranchwear Corp. (formerly known as
H Bar C, Inc.) entered into a promissory note with Richard Stahl.
This promissory note, in the principal amount of $12,455 reflects
certain monies advanced by Mr. Stahl for the company, accrues interest
at 10% per annum, and is due and payable in full within one year from
that date. By a resolution of the board of directors, dated
December 11, 1999, the principal amount of the note was waived by
permitting Mr. Stahl to do the following:
Purchase 1,500,000 shares of common stock of the company for $0.003
per share, or a total value of $7,500), and
Purchase an option for 1,000,000 shares of common stock of the company
for a total value of $4,955, exercisable at $0.10 share for a period
of ten years from the date of issuance.
On February 1, 2000, the company entered into a consulting
agreement with Richard Stahl wherein he agreed to perform for the
company services and consulting. Consulting services include,
but are not limited to acting in the capacity of chairman, chief
executive officer, chief financial officer, and treasurer until
such time that the company is able to engage officers and
employees to assume such positions. Under this agreement, Mr.
Stahl will represent the company concerning matters relating to
the management and organization of the company, its financial
policies, the terms and conditions of employment, and generally
any matter arising out of the business affairs of the company.
Under the terms of this agreement, Mt. Stahl is to be paid
$120,000 per annum; however, he acknowledges that the company may
not have the funds necessary to establish regular interval
payments. Therefore, Mr. Stahl has agreed to receive payments
when funds are available. If at the end of the term of the
agreement the company has not paid the full amount owed to Mr.
Stahl, the company will have the option to substitute stock in
lieu of cash at fair market value for the outstanding amount
payable.
MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
Market Information.
There is currently no public trading market for the company's
shares of common stock. The amount of common stock of the
company that fall under the following categories is set forth
below:
(a) That is subject to outstanding options or warrants to
purchase, or securities convertible into, common equity of the
registrant:
(1) Purchase of assets - On February 1, 2000, the Company
consummated a Business Loan Agreement with Los Angeles Community
Development Bank (a non-commercial bank) ("LACDB") in exchange
for the assets of Shootout Mountain Outfitters and Dry Goods,
Inc. ("Shootout Mountain"), an unaffiliated company in default of
their loan with LACDB. The balance of $175,000, which is secured
by all present and future assets of Ranchwear, is payable in
monthly installments of $25,000, bearing an imputed interest rate
of 8.5%, and due on demand.
In addition, the Company issued 250,000 shares of common stock to
LACDB, which included a Put Option. The Put Option requires the
Company to notify LACDB on or before September 1, 2000 in which
LACDB shall have 60 calendar days to elect to sell all or part of
the shares to the Company at a price of $4.00 per share.
Effective October 1, 2000, the price of the Put Option will
increase by $0.05 per share every 30 days thereafter until such
notice is made to LACDB. The Put Option will expire if LACDB
sells all of its shares or receives total compensation equal to
or greater than the amount LACDB would have received from the
Company had the Put Option been exercised on all of the shares of
the Company's common stock.
(2) During 1999, the Company borrowed $62,455 from certain
stockholders of the Company. The Company granted one stockholder
an option to purchase 1,000,000 shares of the Company's common
stock at $0.10 per share over a 10 year period in exchange for a
$4,955 reduction of the outstanding balance. In addition, the
Company issued to the same stockholder 2,500,000 shares of the
Company's common stock in exchange for a $7,500 reduction of the
outstanding balance, resulting in a net outstanding balance of
$50,000 at December 31, 1999. The note is secured by a
debenture, which gives the holder of the note the option to
convert any unpaid principal and interest into shares of the
Company's common stock at $.25 per share until December 2000
(maturity date). Interest is stated at 5.0% and is payable at the
time of each conversion.
(b) That the company has agreed to register under the Securities
Act for sale by security holders in this offering: 150,000 shares
of restricted common stock.
(c) That is being proposed to be publicly offered by the company
under this offering: 5,000,000.
Holders of Common Equity.
As of September 30, 2000, there were 23 shareholders of record of
the company's common stock.
Dividends.
The company has not declared or paid a cash dividend to
stockholders since it was incorporated on September 19, 1997.
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) The current officers and directors have not received
any cash compensation to date. They will not be remunerated
until the company turns profitable. However, on December 31,
1999, Mr. Stahl was granted an option for 1,000,000 shares of
common stock of the company. This option is exercisable at any
time prior to the end of 10 years from the date of issuance at
$0.10 per share.
SUMMARY COMPENSATION TABLE
Annual compensation Long-term
compensation
Awards Payouts
Other Securi All
Annual ties other
Name and compen Restrict under compen
Principal Year Salary Bonus sation stock lying LTIP sation
Position award options payouts
SARs
($) ($) ($) ($) (#)(1) ($) ($)
Richard 1999 0 0 0 0 1,000,000
Stahl, 1998 0 0 0 0 0 0 0
President 1997 0 0 0 0 0 0 0
Chief
Executive
Off.
(1) This compensation consisted of restricted stock paid in the
year 2000 in lieu of salary earned in 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Ended December 31, 1999)
[Individual Grants]
Name Number of Percent of Exercise Expiration
Securities total or base date
Underlying options/SARs price
Options/ granted to ($/Sh)
SARs employees in
Granted (#) fiscal year
Richard 1,000,000 100% 0.10 December 31, 2009
Stahl,
President
Chief
Executive
Off.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Name Shares Value Number of Value of
Acquired realized securities unexercised
On exercise ($) underlying in-the-money
(#) unexercised options/SARs
options/SARS at FY-end ($)
at FY-end (#) exercisable/
exercisable unexercisable
unexercisable (1)
(a) (b) (c) (d) (e)
Richard - - 1,000,000 0
Stahl, exercisable
President
Chief
Executive
Off.
(1) As of fiscal year end (December 31, 1999), none of the
unexercised options were in-the-money.
(b) There are no annuity, pension or retirement benefits
proposed to be paid to officers, directors, or employees of the
company in the event of retirement at normal retirement date as
there is no existing plan provided for or contributed to by the
company.
(c) No remuneration is proposed to be paid in the future
directly or indirectly by the company to any officer or director
since there is no existing plan which provides for such payment,
including a stock option plan.
FINANCIAL STATEMENTS
H BAR C, INC. AND SUBSIDIARY
(FORMERLY CAMPUS LIVE CORP.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
September 30, 2000
Current assets
Cash $ 11,352
Inventory 75,000
Total current assets 86,352
Fixed assets, net 50,704
Other assets
Organization costs, net 14,281
Intangible assets, net 151,667
Other assets, net 130,000
295,948
Total assets $ 433,004
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 39,490
Accrued liabilities 2,764
Due to related party 200
Note payable 98,950
Total current liabilities 141,404
Total liabilities 141,404
Stockholders' equity
Preferred stock; $.01 par
value; 5,000,000 shares
authorized, no shares issued
or outstanding -
Common stock; $.001 par value;
15,000,000 shares
Authorized, 7,360,000
shares issued and outstanding 7,360
Additional paid-in capital 944,950
Accumulated deficit (660,710)
Total stockholders' equity 291,600
Total liabilities and stockholders' equity 433,004
See Accompanying Notes to Consolidated Financial Statements
H BAR C, INC. AND SUBSIDIARY
(FORMERLY CAMPUS LIVE CORP.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Period from
September 19
For the three For the nine 1997 (Date of
months ended months ended inception
September 30 September 30 through
2000 1999 2000 1999 September 30
2000
Revenue 422 16,928 422 27,820 36,010
Cost of revenue - 3,910 - 8,216 10,967
Gross profit 422 13,018 422 19,604 25,043
Operating expenses
Depreciation and
amortization 17,999 1,749 56,398 3,497 74,594
General and
administrative 73,392 6,651 567,083 14,189 602,090
Total operating
expenses 91,391 8,400 623,481 17,686 676,684
Net income (loss)
from operations (90,969) 4,618 (623,059) 1,918 (651,641)
Other expense
Interest expense 1,865 - 8,861 - 9,069
1,865 - 8,861 - 9,069
Net income (loss)
before provision
for income taxes (92,834) 4,618 (631,920) 1,918 (660,710)
Provision for income
taxes - - - - -
Net income (loss) (92,834) 4,618 (631,920) 1,918 (660,710)
Basic and diluted
income (loss) per
common share (0.01) 0.00 (0.09) 0.00 (0.14)
Basic and diluted
weighted average
common shares
outstanding 7,346,141 3,812,500 6,923,704 3,812,500 4,724,453
See Accompanying Notes to Consolidated Financial Statements
H BAR C, INC. AND SUBSIDIARY
(FORMERLY CAMPUS LIVE CORP.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Period from
September 19
For the nine 1997 (date of
months ended inception
September 30 through
2000 1999 September 30
2000
Cash flows from operating
activities:
Net income (loss) (631,920) 1,918 (660,710)
Adjustments to reconcile net
income (loss) to net cash used
by operating activities:
Depreciation and amortization 56,398 3,497 74,594
Interest satisfied through the transfer
of common stock 2,500 - 2,500
Common stock issued for expenses 82,500 - 82,500
Changes in operating assets and
liabilities:
Increase in inventory (32,524) - (32,524)
Increase in organization costs - - (34,972)
Increase in accounts payable 36,990 - 39,490
Increase in accrued liabilities 1,856 - 2,764
Increase in due to related party 200 - 200
Net cash provided (used) by
operating activities (484,000) 5,415 (526,158)
Cash flows from investing
activities:
Purchase of fixed assets (22,926) (5,642) (32,957)
Purchase of intangible assets (75,890) - (75,890)
Purchase of other assets (65,048) - (65,048)
Net cash used by investing
activities (163,864) (5,642) (173,895)
Cash flows from financing
activities:
Proceeds from issuance of notes
payable 195,145 - 257,600
Principal payments on notes payable (96,195) - (96,195)
Proceeds from issuance of common stock 505,000 - 550,000
Net cash provided by financing
activities 603,950 - 711,405
Net increase (decrease) in cash (43,914) (227) 11,352
Cash, beginning of period 55,266 6,375 -
Cash, end of period 11,352 6,148 11,352
Supplemental cash flow information:
Cash paid for interest 3,586 - 3,586
Cash paid for taxes - - -
Schedule of non-cash investing and
financing activities:
2,500,000 common shares
issued for principal reduction on
note payable - - 7,500
Issuance of options to
purchase 1,000,000
shares of common stock for
principal reduction on note
payable - - 4,955
210,000 common shares issued
for principal and interest reduction
on note payable 52,500 - 52,500
250,000 common shares issued
for assets 254,855 - 254,855
See Accompanying Notes to Consolidated Financial Statements
H BAR C, INC. AND SUBSIDIARY
(FORMERLY CAMPUS LIVE CORP.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been
prepared in accordance with Securities and Exchange Commission
requirements for interim consolidated financial statements.
Therefore, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete consolidated financial statements. The consolidated
financial statements should be read in conjunction with this
prospectus, specifically, the audited consolidated financial
statements for the proceeding year ended December 31, 1999 of
H Bar C, Inc. and Subsidiary (formerly Campus Live Corp.) ("the
Company").
The results of operations for the interim periods shown in this
report are not necessarily indicative of results to be expected
for the full year. In the opinion of management, the information
contained herein reflects all adjustments necessary to make the
results of operations for the interim periods a fair statement of
such operation. All such adjustments are of a normal recurring
nature.
Inventory - Inventory consists of $65,000 of finished goods and
$10,000 of raw materials. The inventory value is based upon
first-in first-out ("FIFO") cost, which should not exceed market
value.
2. PURCHASE OF ASSETS
In February 2000, the Company consummated a Business Loan
Agreement with Los Angeles Community Development Bank (a non-
commercial bank) ("LACDB") in exchange for the assets of Shootout
Mountain Outfitters and Dry Goods, Inc. ("Shootout Mountain"), an
unaffiliated company in default of their loan with LACDB. The
assets acquired, pursuant to the Business Loan Agreement,
included the following:
Inventory $ 75,000
Equipment 50,000
Trade name 175,000
Clothing patterns 150,000
$ 450,000
3. NOTE PAYABLE
Note payable as of September 30, 2000 consists of the following:
Promissory note payable to LACDB,
secured by the Company's assets, bearing
an imputed interest rate of 8.5%, and is
due on demand $ 98,950
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
H Bar C, Inc. and Subsidiary (formerly Campus Live Corp.)
(A Development Stage Company)
Santa Ana, California
We have audited the accompanying consolidated balance sheet of H
Bar C, Inc. and Subsidiary (formerly Campus Live Corp.) (A
Development Stage Company) as of December 31, 1999, and the
related consolidated statements of operations, stockholders'
equity, and cash flows for the year ended December 31, 1999.
These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audit. The financial statements of Campus Live Corp. for the
year ended December 31, 1998 and the period from September 19,
1997 (Date of Inception) through December 31, 1997, were audited
by other auditors whose report dated August 5, 1999, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of H Bar C, Inc. and Subsidiary (formerly Campus Live
Corp.) (A Development Stage Company) as of December 31, 1999, and
the results of its activities and cash flows for the year ended
December 31, 1999 in conformity with generally accepted
accounting principles.
/s/ L.L. Bradford & Company, LLC
L.L. Bradford & Company, LLC
October 4, 2000
Las Vegas, Nevada
Independent Auditors' Report
Board of Directors
Campus Live Corp.
Jupiter, Florida
We have audited the accompanying balance sheet of Campus Live
Corp. (A Development Stage Company) as of December 31, 1998, and
the related statements of income and retained earnings and cash
flows for the year ended December 31, 1998, and
the period from September 19, 1997 (date of inception) to
December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the consolidated 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 statements presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion the financial statements referred to above present
fairly, in all material respects, the financial position of
Campus Live Corp. (A Development Stage Company) as of December
31, 1998, and the results of its operations and its cash flows
for the year then ended and the period from September 19, 1997
(date of inception) to December 31, 1998 in conformity with
generally accepted accounting principles.
/s/ Ives & Sultan, LLP
Ives & Sultan, LLP
Certified Public Accountants
August 5, 1999
Woodbury, New York
H BAR C, INC. AND SUBSIDIARY
(FORMERLY CAMPUS LIVE CORP.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
ASSETS
December 31, 1999
Current assets
Cash $ 55,266
Total current assets 55,266
Fixed assets, net 7,280
Other assets
Organization costs, net 19,527
Total assets $ 82,073
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 2,500
Accrued liabilities 908
Note payable - related party 50,000
Total current liabilities 53,408
Total liabilities 53,408
Commitments and contingencies -
Stockholders' equity
Preferred stock; $.01 par
value; 5,000,000 shares authorized, no
shares issued or outstanding -
Common stock; $.001 par
value; 15,000,000 shares authorized,
6,312,500 shares issued and outstanding 6,312
Additional paid-in capital 51,143
Accumulated deficit (28,790)
Total stockholders' equity 28,665
Total liabilities and stockholders' equity 82,073
See Accompanying Notes to Consolidated Financial Statements
H BAR C, INC. AND SUBSIDIARY
(FORMERLY CAMPUS LIVE CORP.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Period from
September 19 1997
(Date of
inception)
Year Ended Year Ended through
December 31 December 31 December 31
1999 1998 1999
Revenue 27,820 7,768 35,588
Cost of revenue 8,696 2,271 10,967
Gross profit 19,124 5,497 24,621
Operating expenses
Depreciation and amortization 9,526 7,213 18,196
General and administrative 30,196 4,695 35,007
Total operating expenses 39,722 11,908 53,203
Loss from operations (20,598) (6,411) (28,582)
Other expense
Interest expense 208 - 208
Loss before provision for
income taxes (20,806) (6,411) (28,790)
Provision for income taxes - - -
Net loss (20,806) (6,411) (28,790)
Basic and diluted loss
per common share (0.005) (0.002) (0.007)
Basic and diluted
weighted average
common shares outstanding 4,175,514 3,812,500 3,994,007
See Accompanying Notes to Consolidated Financial Statements
H BAR C, INC. AND SUBSIDIARY
(FORMERLY CAMPUS LIVE CORP.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Addi Total
tional Accumu Stock
Outstanding Pre Common Paid-In lated holders
Shares ferred Stock Capital Deficit Equity
Pre Common Stock
ferred
Balance at
September 19
1997 (Date of
inception) - - - - - - -
Common stock
issued for
cash, $0.012 - 3,600,694 - 3,601 38,899 - 42,500
Net loss - - - - - (1,573) (1,573)
Balance
December 31,
1997 - 3,600,694 - 3,601 38,899 (1,573) 40,927
Common stock
issued for
cash, $0.012 - 211,806 - 211 2,289 - 2,500
Net loss - - - - - (6,411) (6,411)
Balance
December 31,
1998 - 3,812,500 - 3,812 41,188 (7,984) 37,016
Common stock
issued
for principal
reduction on
note payable,
$.003 - 2,500,000 - 2,500 5,000 - 7,500
Issuance of
options to
purchase
1,000,000
common
stock for
principal
reduction on
note payable - - - - 4,955 - 4,955
Net loss - - - - - (20,806) (20,806)
Balance
December 31,
1999 - 6,312,500 - 6,312 51,143 (28,790) 28,665
Common stock
Isued for
Cash $1.00 - 505,000 - 505 504,495 505,000
Common stock
Issued for
Expenses $1.00 - 82,500 - 83 82,417 82,500
$52,500 debt
(including
interest of
common
stock $.250 - 210,000 - 210 52,290 52,500
Common stock
Issued for
Assets $1.018 - 250,000 - 250 254,605 254,855
Net loss - - - - - (631,920) (631,920)
Balance
September 30
2000 - 7,360,000 - 7,360 944,950 (660,710) 291,600
See Accompanying Notes to Consolidated Financial Statements
H BAR C, INC. AND SUBSIDIARY
(FORMERLY CAMPUS LIVE CORP.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Period from
September 19
1997
(Date of
inception)
Year Ended Year Ended through
December 31 December 31 December 31
1999 1998 1999
Cash flows from operating
activities:
Net loss (20,806) (6,411) (28,790)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation and
amortization 9,526 7,213 18,196
Changes in operating assets
and liabilities:
Increase in organization
costs - (5,839) (34,972)
Increase in accounts payable 2,500 - 2,500
Increase (decrease) in
accrued liabilities 858 (661) 908
Net cash used by
operating activities (7,922) (5,698) (42,158)
Cash flows from investing
activities:
Purchase of fixed assets (5,642) (4,389) (10,031)
Net cash used by
investing activities (5,642) (4,389) (10,031)
Cash flows from financing
activities:
Proceeds from issuance of
note payable 62,455 - 62,455
Proceeds from issuance of
common stock - 2,500 45,000
Net cash provided by
financing activities 62,455 2,500 107,455
Net increase (decrease)
in cash 48,891 (7,587) 55,266
Cash, beginning of period 6,375 13,962 -
Cash, end of period 55,266 6,375 55,266
Supplemental cash flow
information:
Cash paid for interest - - -
Cash paid for taxes - - -
Supplemental schedule of
non-cash investing and
financing activities:
2,500,000 common shares
issued for principal
reduction on note payable 7,500 - 7,500
Issuance of options to
purchase 1,000,000
shares of common stock for
principal reduction on note
payable 4,955 - 4,955
See Accompanying Notes to Consolidated Financial Statements
H BAR C, INC. AND SUBSIDIARY
(FORMERLY CAMPUS LIVE CORP.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
Description of business - H Bar C, Inc. and Subsidiary (formerly
Campus Live Corp.) (hereinafter referred collectively as the
"Company") is a development stage company that originally
intended to provide an alternative yearbook format using an
electronic medium. During May 2000, the Company's management
changed its focus to manufacture and retail western wear clothing
under the label and tradename H Bar C, as further discussed in
Note 8. The Company is considered a development stage company
since it has not commenced its plan of operations.
History - H Bar C, Inc., formerly known as Campus Live Corp., was
incorporated in the State of Delaware in September 1997.
In August 2000, a certificate of Amendment to the Articles of
Incorporation changed the corporate name from Campus Live Corp.
to H Bar C, Inc.
Principles of consolidation - The consolidated financial
statements include the accounts of the Company and its
subsidiary, H Bar C Ranchwear Corp. All significant intercompany
balances and transactions have been eliminated.
Use of estimates - The preparation of consolidated financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results
could differ from those estimates.
Fixed assets - Fixed assets are stated at cost less accumulated
depreciation. Depreciation is provided principally on the
straight-line method over the estimated useful lives of the
assets, which is generally 3 to 5 years. The cost of repairs and
maintenance is charged to expense as incurred. Expenditures for
property betterments and renewals are capitalized. Upon sale or
other disposition of a depreciable asset, cost and accumulated
depreciation are removed from the accounts and any gain or loss
is reflected in other income (expense).
The Company periodically evaluates whether events and
circumstances have occurred that may warrant revision of the
estimated useful lives of fixed assets or whether the remaining
balance of fixed assets should be evaluated for possible
impairment. The Company uses an estimate of the related
undiscounted cash flows over the remaining life of the fixed
assets in measuring their recoverability.
Organization costs - The organization costs are amortized
principally on the straight-line method over a period of 5 years.
Earnings (loss) per share - Basic earnings (loss) per share
exclude any dilutive effects of options, warrants and convertible
securities. Basic earnings (loss) per share is computed using
the weighted-average number of outstanding common shares during
the applicable period. Diluted earnings (loss) per share is
computed using the weighted average number of common and common
stock equivalent shares outstanding during the period. Common
stock equivalent shares are excluded from the computation if
their effect is antidilutive.
Income taxes - The Company accounts for its income taxes in
accordance with Statement of Financial Accounting Standards No.
109, which requires recognition of deferred tax assets and
liabilities for future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases
and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates
is recognized in operations in the period that includes the
enactment date.
Comprehensive income (loss) - The Company has no components of
other comprehensive loss. Accordingly, net loss equals
comprehensive loss for all periods.
Advertising costs - The Company recognizes advertising expenses
in accordance with Statement of Position 93-7 "Reporting on
Advertising Costs." Accordingly, the Company expenses the costs
of producing advertisements at the time production occurs, and
expenses the costs of communicating advertisements in the period
in which the advertising space or airtime is used. The Company
has recorded no significant advertising costs for the years ended
December 31, 1999 and 1998.
Stock-based compensation - The Company accounts for stock-based
employee compensation arrangements in accordance with provisions
of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and complies with the
disclosure provisions of Statements of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation." Under APB No. 25, compensation expense is based
on the difference, if any, on the date of the grant, between the
fair value of the Company's stock and the exercise price. The
Company accounts for stock issued to non-employees in accordance
with the provisions of SFAS No. 123 and the Emerging Issues Task
Force ("EITF") Issue No. 96-18.
2. BUSINESS COMBINATIONS
In June 2000, the Company completed an acquisition of H Bar C
Ranchwear Corporation, a Delaware Corporation, as further
discussed in Note 8. This acquisition was recorded using the
pooling method and in accordance with APB No. 16, all
identifiable assets and liabilities are carried at their
historical costs. Additionally, the financial statements are
consolidated as if the combination had taken place in 1999.
3. FIXED ASSETS
Fixed assets consist of the following as of December 31, 1999:
Computers, equipment and software $ 10,031
Less: accumulated depreciation 2,751
Fixed assets, net $ 7,280
4. ORGANIZATION COSTS
Organization costs consist of the following as of December 31, 1999:
Organization costs $ 34,972
Less: accumulated amortization 15,445
Organization costs, net $ 19,527
5. NOTE PAYABLE - RELATED PARTY
During 1999, the Company borrowed $62,455 from certain
stockholders of the Company. The Company granted one stockholder
an option to purchase 1,000,000 shares of the Company's common
stock at $0.10 per share over a 10 year period in exchange for a
$4,955 reduction of the outstanding balance. In addition, the
Company issued to the same stockholder 2,500,000 shares of the
Company's common stock in exchange for a $7,500 reduction of the
outstanding balance, resulting in a net outstanding balance of
$50,000 at December 31, 1999. The note is secured by a
debenture, which gives the holder of the note the option to
convert any unpaid principal and interest into shares of the
Company's common stock at $.25 per share until December 2000
(maturity date). Interest is stated at 5.0% and is payable at the
time of each conversion.
6. STOCKHOLDERS' EQUITY
Stock Option - As of December 31, 1999, the Company granted one
stockholder of the Company the option to purchase 1,000,000
shares of the Company's common stock at $0.10 per share over a 10
year period in exchange for a reduction on a note payable (as
discussed in Note 5).
Stock option activity - The following table summarizes the
Company's stock option activity:
Number Weighted
Of Average
Shares Exercise
Price
Balance, September 19, 1997 (Date of inception) - -
Options granted and assumed - -
Options canceled - -
Options exercised - -
Balance, December 31, 1997 - -
Options granted and assumed - -
Options canceled - -
Options exercised - -
Balance, December 31, 1998 - -
Options granted and assumed 1,000,000 .10
Options canceled - -
Options exercised - -
Balance, December 31, 1999 1,000,000 .10
The following table summarizes information about options
outstanding and exercisable at December 31, 1999:
Shares Underlying Options Outstanding Shares Underlying
Weighted Options Exercisable
Shares Average Shares
Underlying Remaining Weighted Underlying Weighted
Options Contractual Average Options Average
Exercise Price Outstanding Life Exercise Price Exercisable Exercise
Price
$ 0.10 1,000,000 10 years $0.10 1,000,000 $0.10
Potential common stock with an antidilutive effect - As of
December 31, 1999, 1998 and 1997 options on 1,000,000, 0 and 0
shares of common stock, respectively, were not included in
computing loss per common share because their effects were
antidilutive.
7. INCOME TAXES
The Company did not record any current or deferred income tax
provision or benefit for any of the periods presented due to
continuing net losses and nominal differences.
The Company has provided a full valuation allowance on the
deferred tax asset, consisting primarily of net operating losses,
due to the uncertainty regarding its realizability.
As of December 31, 1999, the Company had available net operating
loss carryovers of approximately $29,000. Utilization of the net
operating loss, which begins to expire at various times starting
in 2017, may be subject to certain limitations under Section 382
of the Internal Revenue Code of 1986, as amended, and other
limitations under state and foreign tax laws.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of the Company's
deferred tax assets are approximately as follows:
December 31 December 31
1999 1998
Net operating loss $ (9,789) $ (2,715)
Depreciation - -
Total deferred tax assets (9,789) (2,715)
Valuation allowance for deferred tax assets 9,789 2,715
Net deferred tax assets $ - $ -
8. SUBSEQUENT EVENTS
Alternative yearbook - In May 2000, the Company determined that
its pursuit of the alternative yearbook would not be as widely
acceptable as originally expected and began seeking other
operations for future development. As discussed further below,
the Company acquired all outstanding capital stock of H Bar C
Ranchwear, Corporation ("Ranchwear") to pursue new operational
activities.
Acquisition - In June 2000, the Company acquired all outstanding
capital stock of Ranchwear, in exchange for 3,472,500 shares of
the Company's common stock pursuant to a tax-free reorganization.
The acquisition of Ranchwear has been accounted for as a pooling
of interests.
As a result of the acquisition, the Company changed its focus to
manufacture and retail western wear clothing under the label and
tradename H Bar C.
Purchase of assets - On February 1, 2000, the Company consummated
a Business Loan Agreement with Los Angeles Community Development
Bank (a non-commercial bank) ("LACDB") in exchange for the assets
of Shootout Mountain Outfitters and Dry Goods, Inc. ("Shootout
Mountain"), an unaffiliated company in default of their loan with
LACDB. The balance of $175,000, which is secured by all present
and future assets of Ranchwear, is payable in monthly
installments of $25,000, bearing an imputed interest rate of
8.5%, and due on demand.
In addition, the Company issued 250,000 shares of common stock to
LACDB, which included a Put Option. The Put Option requires the
Company to notify LACDB on or before September 1, 2000 in which
LACDB shall have 60 calendar days to elect to sell all or part of
the shares to the Company at a price of $4.00 per share.
Effective October 1, 2000, the price of the Put Option will
increase by $0.05 per share every 30 days thereafter until such
notice is made to LACDB. The Put Option will expire if LACDB
sells all of its shares or receives total compensation equal to
or greater than the amount LACDB would have received from the
Company had the Put Option been exercised on all of the shares of
the Company's common stock.
The stock issued in the Business Loan Agreement also included a
Call Option, in the event LACDB does not elect to sell all of the
Shares to the Company, giving the Company the option to purchase
the stock at $8.00 per share.
Pursuant to the Business Loan Agreement, the Company agreed not
to form any new subsidiaries or enter into a merger or
consolidation with another entity, however LACDB has waived this
covenant for the acquisition between the Company and Ranchwear,
as discussed above.
Also, on February 1, 2000, the Company borrowed an additional
$24,666, which was related to the cost of the Business Loan
Agreement. The balance is payable 210 days from date of issuance
and bears interest of 8.0%
Business consultant agreement - In February 2000, Ranchwear
consummated a one-year Business Consultant Agreement, with a
stockholder to act in the capacity of Chairman, Chief Executive
Officer, Chief Financial Officer and Treasurer of the Company
until such time the Company is able to employ such officers and
employees. The consultant will receive $120,000 per annum,
payable when funds are available. At the end of the term of the
agreement, the Company will have the option to convert the
outstanding amount payable for the fair market value of the
Company's common stock
Agreement for e-commerce services - In March 2000, Ranchwear
consummated an agreement with Omnicron, whereby Omnicron agreed
to construct an Internet website, which will allow the Company to
perform e-commerce. The agreement includes monthly service and
updates for the first twelve months following the agreement. As
consideration for these services, Omnicron will receive an
initial fee of $125,000 with an additional $50,000 to be paid
upon completion of the project.
Stock issuances - During 2000 through the date of this report,
the Company raised approximately $545,000 through the issuance of
705,000 shares of the Company's common stock.
Legal proceeding - During September 2000, a legal proceeding was filed
asserting the Company and certain stockholders have breached an
agreement related to the "Purchase of Assets". The plaintiffs seek
restitution of approximately $450,000 or the return of such assets.
The Company has responded with a counter legal proceeding, believes
there is no merit to the plaintiffs' complaints and intends to defend
itself in this litigation matter vigorously.
While the results of this matter cannot be predicted with certainty,
the Company's management believes that losses, if any, resulting from
the ultimate resolution of this matter will not have a material adverse
effect on the Company's results of operation, cash flows or financial
position. However, unfavorable resolution could affect the results
of operations or cash flows for the years in which they are resolved.
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
(a) Effective on June 14, 2000, the independent accountants
who were previously engaged as the principal accountants to audit
the company's financial statements, Ives & Sultan, LLP,
resigned. These accountants' report on the financial statements
for the fiscal year ended December 31, 1998 neither contained an
adverse opinion or a disclaimer of opinion, nor was qualified or
modified as to uncertainty, audit scope, or accounting
principles.
During the company's two most recent fiscal years and any
subsequent interim period preceding such resignation, there were
no disagreements with the former accountant on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure. In addition, there
were no "reportable events" as described in Item
304(a)(1)(iv)(B)1 through 3 of Regulation S-B that occurred
within the company's two most recent fiscal years and the
subsequent interim period preceding the former accountant's
dismissal.
(b) Effective on June 15, 2000, the firm of L.L. Bradford &
Company was engaged to serve as the new principal accountant to
audit the company's financial statements. During the company's
two most recent fiscal years, and the subsequent interim period
prior to engaging that accountant, neither the company (nor
someone on its behalf) consulted the newly engaged accountant
regarding any matter.
AVAILABLE INFORMATION
The company has filed with the U.S. Securities and Exchange
Commission, Washington, D.C. 20549, a Registration Statement on
Form SB-2 under the Securities Act of 1933 with respect to the
shares of common stock offered by this prospectus. This
prospectus does not contain all of the information set forth in
the registration statement and the exhibits and schedules filed
with the registration statement. Certain items are omitted in
accordance with the rules and regulations of the Commission. For
further information with respect to the company and the common
stock offered by this prospectus, reference is made to the
registration statement and the exhibits and schedules filed with
the registration statement. Statements contained in this
prospectus as to the contents of any contract or any other
document referred to are not necessarily complete, and in each
instance, reference is made to the copy of such contract or other
document filed as an exhibit to the registration statement, each
such statement being qualified in all respects by such reference.
A copy of the registration statement, and the exhibits
and schedules filed with it, may be inspected without charge at
the public reference facilities maintained by the Commission in
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
the Commission's regional offices located at the Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago
Illinois 60661 and Seven World Trade Center, 13th Floor, New
York, New York 10048, and copies of all or any part of the
registration statement may be obtained from such offices upon the
payment of the fees prescribed by the Commission. The public may
obtain information on the operation of the public reference room
by calling the Commission at 1 (800) SEC-0330. The Commission
maintains a World Wide Web site that contains reports, proxy and
information statements and other information regarding
registrants that file electronically with the Commission,
including the company. The address of the site is
http://www.sec.gov. The registration statement, including all its
exhibits and any amendments, has been filed electronically with
the Commission.
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Information on this item is set forth in the propsectus under
the heading "Disclosure of Commission Position on
Indemnification for Securities Act Liabilities."
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the fees and expenses in
connection with the issuance and distribution of the securities
being registered hereunder, all of which are being paid by the
Company*:
Securities and Exchange Commission registration fee $ 1,000
Transfer agent's fees 1,000
Printing and engraving expenses 1,000
Legal fees and expenses 22,500
Accounting fees and expenses 15,000
State blue sky fees 5,000
Total $ 45,500*
* All fees, except the Securities and Exchange Commission
registration fee and the blue sky fees, are estimated.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Other than as set forth below, during the last three years
there have not been any sales of unregistered securities of the
company. No commissions or fees were paid in connection with
these sales. All of the these sales were undertaken pursuant to
the limited offering exemption from registration under the
Securities Act of 1933 as provided in Regulation D as
promulgated by the U.S. Securities and Exchange Commission (the
first two issuances were made under Rule 504 and the remainder
under Rule 506). In addition, all the sales were made to the
following class of persons: sophisticated investors; that is,
investor either alone or with their purchaser representative(s)
have such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and risks
of the prospective investment, or the issuer reasonably believes
immediately prior to making any sale that such purchasers comes
within this description.
(a) On December 15, 1997, the company sold 3,600,694 shares of
its common stock to two of the founding shareholders for a total
consideration of $42,500 ($0.0118 per share), as follows:
Tiffany Smith, 3,388,888 shares; and Raymond DeGiovanni, 211,806
shares.
(b) On February 4, 1998, the company sold 211,806 shares of its
common stock to Maury Warshauer, one of the founding
shareholders, for a total consideration of $2,500 ($0.0118 per
share).
(c) On December 31, 1999, the company sold 2,500,000 shares of
its common stock to Mr. Stahl for a total consideration of
$7,500 ($0.003 per share).
(d) On February 1, 2000, the company consummated a business
loan agreement with Los Angeles Community Development Bank (a
non-commercial bank) in exchange for the assets of Shootout
Mountain Outfitters and Dry Goods, Inc., an unaffiliated company
in default of their loan with this bank. The assets acquired,
pursuant to the Business Loan Agreement, included the following:
Inventory $ 75,000
Equipment 50,000
Trade name 175,000
Clothing patterns 150,000
$450,000
On February 29, 2000, the company issued 250,000 shares of its
common stock to the bank in connection with this loan agreement.
(e) From March 3, 2000 to June 15, 2000, the company sold a
total of 505,000 shares of its common stock to a total of 12
investors for a total consideration of $505,000 ($1.00 per
share).
(f) Between March 3, 2000 and June 12, 2000, the company issued
a total of 82,500 shares of its common stock to six individuals
for expenses advanced for the company in the amount of $82,500
($1.00 per share)
(g) On March 7, 2000, the company settled a $52,000 debt
(including interest of $2,500) in exchange for 210,000 shares of
its common stock ($0.25 per share) pursuant to the conversion of
a debenture between an individual and the company, dated
December 8, 1999.
ITEM 27. EXHIBITS
The Exhibits required by Item 601 of Regulation S-B, and an index
thereto, are attached.
ITEM 28. UNDERTAKINGS
The undersigned company hereby undertakes to:
(a) (1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(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 U.S. Securities
and Exchange 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 of 1933,
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.
(d) 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.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933 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 of 1933 and will be
governed by the final adjudication of such issue.
SIGNATURES
In accordance with the requirements of the Securities Act of
1933, the company certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
SB-2 and authorized this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorize, in the
City of Los Angeles, State of California, on December 8, 2000.
H Bar C, Inc.
By: /s/ Richard Stahl
Richard Stahl, President
Special Power of Attorney
The undersigned constitute and appoint Richard Stahl 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 U.S. 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:
Signature Title Date
/s/ Richard Stahl President/Chief Executive December 8, 2000
Richard Stahl Officer/Treasurer/Chief
Financial Officer (principal
financial and accounting
officer)/Director
/s/ Kermit Alexander Secretary/Director December 8, 2000
Kermit Alexander
/s/ Lee Rosenberg Director December 8, 2000
Lee Rosenberg
EXHIBIT INDEX
Number Exhibit Description
2 Agreement and Plan of Exchange between the company and
H Bar C, Inc., dated June 15, 2000 (see below).
3.1 Certificate of Incorporation, dated September 18, 1997 (see below).
3.2 Certificate for Renewal and Revival of Charter, dated
July 13, 2000 (see below).
3.3 Amendment to Certificate of Incorporation, dated August 17, 2000
(see below).
3.4 Amended and Restated Bylaws, dated November 17, 2000 (see below).
5 Opinion Re: Legality (see below).
10.1 Promissory Note between H Bar C, Inc. (now known as H Bar C
Ranchwear Corp.) and Los Angeles Community Development Bank,
dated February 1, 2000 (see below.
10.2 Business Loan Agreement between the company and H Bar C, Inc., dated
February 1, 2000 (see below).
10.3 Business Consultant Agreement between the company and
Richard Stahl, dated February 1, 2000 (see below).
21 Subsidiaries of the company (see below).
23.1 Consent of Accountants (see below).
23.2 Consent of Accountants (see below).
23.3 Consent of Counsel (see below).
27 Financial Data Schedules (see below).
99.1 Trademark filed November 18, 1974 (see below).
99.2 Trademark filed May 12, 1980 (see below).
