As filed with the Securities and Exchange Commission on
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File # 333-41206
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM SB-2/A2
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933
______________________
CLIP 'N PIERCE FASHIONS, INC.
(Name of Small Business Issuer in its Charter)
Delaware 3911 33-0857223
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(State or other Jurisdiction (Primary Standard (IRS Employer
of Incorporation or Organization) Industrial ID No.)
Classification
Code Number)
CLIP 'N PIERCE FASHIONS, INC.
4190 Bonita Road, #105
Bonita, California 91902
(619) 267-0450 Fax: (619) 267-0452
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(Address of Principal Place of Business or
Intended Principal Place of Business)
BETTY N. MYERS
CLIP 'N PIERCE FASHIONS, INC.
4190 Bonita Road, #105
Bonita, California 91902
(619) 267-0450 Fax: (619) 267-0452
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(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies of Communications to:
EFM Venture Group, Inc.
4190 Bonita Road, #105
Bonita, CA 91902
(619) 267-0450 Fax: (619) 421-2653
Approximate date of commencement of proposed sale to the public:
as soon as possible after this Registration Statement is effective.
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If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans,
check the following box. [ ]
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
statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of Amount Proposed Proposed Amount of
Securities to be Maximum Offering Maximum Registration
to Be Registered Price Per Aggregate Fee
Registered Share Offering
Price
Common Stock 400,000 NA NA $1.07
(1) Calculated pursuant to Rule 457(a).
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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400,000 SHARES
of
CLIP 'N PIERCE FASHIONS, INC.
COMMON STOCK
All of the shares of Clip 'n Pierce Fashions, Inc. offered hereby are being
offered by TAKK, Inc. TAKK, the selling shareholder, owns 400,000 shares of
the common stock of CLIP 'N PIERCE FASHIONS, INC., a Delaware Corporation Takk
will distribute to its shareholders 400,000 shares of its Clip 'N Pierce
common stock (see "Distribution"). The distribution will be made to holders
of record of TAKK stock as of the close of business on June 1, 2000 on the
basis of one share of the Company's common stock for each one share of TAKK
stock held. Class A shares will participate equally with common shares. The
400,000 shares of the common stock distributed to TAKK shareholders will
represent approximately 4.76 percent of all the issued and outstanding shares
of the common stock of the Company. TAKK acquired the 400,000 shares of the
common stock of Clip n' Pierce on December 1, 1999 for $40. After the
distribution, the management of Clip n'Pierce will control approximately 95%
of the outstanding common stock.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK, AND
PROSPECTIVE PURCHASERS SHOULD BE PREPARED TO SUSTAIN A LOSS OF
THEIR ENTIRE INVESTMENT. (SEE "RISK FACTORS" ON PAGE 7.)
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For purposes of qualifying pursuant to a Registration Statement filed on Form
SB-2, the Company has placed an aggregate value on the 400,000 Shares of $4000
or $0.01 per Share, Such price has been arbitrarily determined and bears no
relationship to the results of operations or assets of the Company.
The date of this Prospectus is ___________,
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TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY ......................................... 5
OUR COMPANY ................................................ 5
THE OFFERING ............................................... 5
SUMMARY FINANCIAL STATUS ................................... 6
RISK FACTORS ............................................... 6
PENNY STOCK RULES ........................................ 9
THE DISTRIBUTION ........................................... 11
LIABILITY .................................................. 12
MANAGEMENT'S DISCUSSION AND ANALYSIS ....................... 14
BUSINESS ................................................... 15
MANAGEMENT ................................................. 17
PRINCIPLE SHAREHOLDERS ..................................... 18
CERTAIN TRANSACTIONS ....................................... 18
DESCRIPTION OF SECURITIES .................................. 19
LEGAL MATTERS .............................................. 20
EXPERTS .................................................... 20
FINANCIAL STATEMENTS ....................................... 22
INFORMATION NOT REQUIRED IN PROSPECTUS ..................... 41
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PROSPECTUS SUMMARY
This entire prospectus and our consolidated financial statements and related
notes should be read carefully. There is more detailed information other
places in the prospectus. Unless the context requires otherwise, 'we', 'us',
'our' and similar terms refer to Clip 'n Pierce Fashions, Inc.
Our Company
Clip 'n Pierce has developed a clip-on earring with the capability of affixing
to it any earring designed for pierced ears. Management has had a prototype
made and it has been worn and tried with several types of pierced earrings
over a period of a year or more. The product has proved satisfactory to the
wearer to the extent it has been tried. A verbal agreement has been made with
a jeweler specializing in the making of original jewelry to produce a small
quantity of the earrings for experimental marketing. The marketing plan has
been to conduct interviews with 8 to 10 jewelry outlets, inquire of their
opinion of the product and solicit their interest in placing them in their
shops. Whether this will be on consignment or purchase has not yet been
determined. It is intended that the actual manufacturing of the earrings will
be by an outside firm rather than the Company doing its own manufacturing.
Starting January 1, 2001 Clip "N Pierce has hired a part time person to
promote its product with jewelry stores. No revenues have been received yet.
A small number of pairs of earrings, approximately 25 sets, will be
manufactured by third quarter of 2001 with pre-marketing starting just prior
to that to locate retail outlets for the product. This will take advantage of
the holiday season purchasing. If manufacturing costs are as anticipated and
sales good, a profit may be seen with this first run.
Clip 'n Pierce was incorporated in Delaware on April 14, 1999. Our address
and telephone numbers are 4190 Bonita Road, #105, Bonita, CA 91902;
(619) 267-0450, Fax (619) 267-0452.
The Offering
Securities Offered(1) --------------This prospectus covers
the distribution of 400,000
shares of common stock by
TAKK, Inc. which constitutes
approximately 4.76% of the
common stock.
Number of Shares of Common Stock
Outstanding ------------------------8,400,000 shares
Risk Factors------------------------The shares of the common
stock involves a high degree
of risk. Holders should
review carefully and consider
the factors described in
"Risk Factors."
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Summary Financial Information
The following tables set forth for the periods indicated selected financial
information for CLIP 'N PIERCE FASHIONS, INC.
SUMMARY BALANCE SHEET DATA: September 30, December
31
2000 1999
Current Assets: $ 145 $ 840
Other Assets: $ 0 0
Total Assets: $ 145 840
Total Liabilities: $ 0 0
Shareholders Equity $ 145 840
SUMMARY STATEMENT OF OPERATIONS DATA: Cumulative period
(for January 1, 2000 to from April 14, 1999
September 30, 2000) (Inception) to
September 30, 2000
Total Income $ 0 $ 0
Net Loss $ 5,695 6,151
Net Loss Per Share: $ 0.0007 $ 0.0007
Clip 'n Pierce has been in the development stage since April 14, 1999
and has been actively involved in the development of its products and
studying marketing potential.
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Clip 'n Pierce is not currently subject to the periodic reporting requirements
of the Securities Exchange Act of 1934, but will be subject to such
requirements after the distribution. It is the intention of Clip'n Pierce to
send to each of its shareholders an Annual Report containing certified
financial statements following the end of each fiscal year.
RISK FACTORS
PURCHASERS OF CLIP 'N PIERCE'S COMMON STOCK AND RECIPIENTS OF THE DISTRIBUTION
DESCRIBED HERE SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS, WHICH MAKE
CLIP 'N PIERCE'S COMMON STOCK A HIGH RISK SECURITY.
(1) Clip 'n Pierce is in the start-up stage and subject to all the risks
of a new business. Only recently has it begun exploring development
possibilities. Manufacturing estimates are now being obtained and may not
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prove economical For production for the general market. Since we are just
starting the proposed operations the investor is at risk that this new
business will not be able to make a profit or take a very long time to
accomplish that.
(2) Lack of history in operating a jewelry business may risk investor funds
due to the inexperience of the officers and directors who are making business
decisions. This lack of experience may result in unsatisfactory management
decisions resulting in an inability to run a successful jewelry making
business. There is no assurance that Clip 'n Pierce will every produce
earnings.
(See "Business" and "Management.")
(3) Additional funds may be needed and may not be able to be raised. Without
additional capital the original investor funds may be at risk. The balance
sheet for the year ended December 31, 1999, shows a stockholder's equity of
only $840.00 and working capital of only $ 840.00. Since January 1, 2000 a
major shareholder, EFM Venture Group, Inc., contributed $16,000 to the capital
of Clip 'n Pierce. We Estimate sufficient funds for approximately twelve
months of current operations. Thus, we may need to raise additional capital
and there is no assurance that we will be able to raise sufficient for
continuing needs. While Clip 'n Pierce intends to sell its products through
existing retail outlets and distributors, and to possibly receive prepaid
royalties, there can be no assurance that we will be successful in achieving
the objectives. As of this date Clip n Pierce has manufactured only the
rototypes and has sold no earrings.
(4) Product may have no market interest and with little or no sales the
company may not be able to continue operation. The proposed marketing of
these earrings has inherent risks. It is a new and untried product with
a possibly
limited market. We cannot accurately predict the acceptance of the product or
the time frame in which any sales will be made. We have surveyed the market to
get an indication of the potential but the results unpredictable at this time.
(5) Current selection of earrings on the market may be sufficient and
therefore there would be little demand for our product. Clip 'n Pierce will
operate in a business field where the competing companies are much larger and
more experienced in the jewelry business and much better at predicting
consumer tastes. There is a somewhat similar product that may be sufficient
for the small demand because it serves a similar purpose. Such a competing
product may reduce the desirability of our earring. Also, because other
established jewelry companies will likely have much larger amounts of capital
than this company, we may find it very difficult infuse enough money to
compete and make a profit. (See "Competition").
(6) A manufacturing source has not been found as yet and may not be
possible to obtain at a reasonable price for the product. Clip 'n Pierce
does not intend to do its own manufacturing and will be completely dependent
on outside companies for the production of its product. While the availability
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of a company to produce the earrings may not be a problem, the cost of such
production may be too high to make mass marketing feasible. If the price of
the earrings cannot be at a level that would interest the potential consumer
then no sales will lose investor money.
(7) Market study may be biased to be overly positive about the
desirability of the product. The evaluation of the Company's products has
been done solely by its officers and directors. No independent analysis or
study of its products has been done by anyone engaged by Clip 'n Pierce. The
investor is at risk if the company's studies have overestimated the
product's marketability.
(8) Product Liability. Although Clip 'n Pierce is not and does not intend
to be involved in the actual manufacturing process (since we intend to use
subcontracting arrangements), there may be liability to the Company since we
were responsible for the design. The Company presently has no product
liability insurance coverage. We believe that this is appropriate at present
considering the nature of the product and the stage of development. There can
be no assurance that this decision will not result in consequent loss to us
and therefore to the investor. (See Business.")
(9) Management is only means for product development. Clip 'n Pierce is
completely dependent on its management for its product development and it is
probable that the Company would not have sufficient capital to hire personnel
to continue the development of the product should management for any reason
cease or be unable to continue to work. Without personnel to replace
officer and director management the company could not continue to operate.
The present management acquired its controlling interest in Clip 'n
Pierce on December 1, 1999. (See "Certain Transactions.")
(10) Complete control by management leaves the company's success to just a
few people, namely the officers and directors. They will own 95% of the
Company's common stock and will be in a position to continue to control
Clip 'n Pierce. Such close control may be risky to the investor because the
entire company's operation is dependent on a very few people who could lose
their ability, or interest in pursuing the company's operation.
(11) No cash dividends are anticipated in the foreseeable future.
Since Clip 'n Pierce does not anticipate that it will pay dividends the
investor will only profit by the increase in value of his shares. Our
profits, if any, during the next several years will necessarily be used to
develop and possibly expand the product lines and business.
(12) There is no market for the common stock and even after the
distribution of the shares there is no assurance a market will develop. The
common stock will not initially be traded on NASDAQ or any Securities Exchange
which may result in the risk of minimal liquidity of the investment.
(13) Risks of low priced stocks. Because the Company's common stock is
likely to trade below $5.00 per share, we are subject to the Securities
enforcement and Penny Stock Reform Act of 1990 (the "Penny Stock Rules") . The
Penny Stock Rules may adversely affect the market liquidity for our common
stock because broker-dealers trading in Penny Stocks must, among other
things:
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* Provide customers with a risk disclosure statement setting forth
certain specified information prior to a purchase transaction;
* Disclose to the customer inside bid quotation and outside offer
quotation for this Penny Stock, or, in a principal transaction, the
broker-dealer's offer price for the Penny Stock;
* Disclose the aggregate amount of any compensation the broker-
dealer receives in the transaction;
* Disclose the aggregate amount of the cash compensation that any
associated person of the broker-dealer, who is a natural person, will
receive in connection with the transaction;
* Deliver to the customer after the transaction certain information
concerning determination of the price and market trading activity of
the Penny Stock.
Non-stock exchange and non-NASDAQ stocks would not be covered by the
definition of penny stock for:
(i) issuers who have $2,000,000 tangible assets ($5,000,000 if the issuer
has not been in continuous operation for three years);
(ii) transactions in which the customer is an institutional accredited
investor;
(iii)transactions that are not recommended by the broker-dealer.
PENNY STOCK RULE
The Securities and Exchange commission has adopted rule 15g-9 which
established the definition of a "penny stock", for the purposes relevant to
Clip 'n Pierce, as any equity security that has a market price of less than
$5.00 per share or with an exercise price of less than $5.00 per share,
subject to certain exceptions. For any transaction involving a penny stock,
unless exempt, the rules require:
(1) that a broker or dealer approve a person's account for transactions
in penny stocks: and
(2) the broker or dealer receive from the investor a written agreement to
the transaction, setting forth the identity and quantity of the penny
stock to be purchased.
In order to approve a person's account for transactions in penny stocks, the
broker or dealer must
(1) obtain financial information and investment experience
objectives of the person; and
(2) make a reasonable determination that the transactions in penny stocks
are suitable for that person and the person has sufficient knowledge
and experience in financial matters to be capable of evaluating the
risks of transactions in penny stocks. The broker or dealer must also
deliver, prior to any transaction in a penny stock,
(1) a disclosure schedule prepared by the Commission relating to the
penny stock market, which, in highlight form,
(2) sets forth the basis on which the broker or dealer made the
suitability determination; and
(3) that the broker or dealer received a signed, written agreement from
the investor prior to the transaction. Disclosure also has to be made
about the risks of investing in penny stocks
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in both public offerings and in secondary trading and about
(1) the commissions payable to both the broker-dealer and the registered
representative,
(2) current quotations for the securities, and
(3) the rights and remedies available to an investor in cases of fraud
in penny stock transactions.
(4) monthly statements have to be sent disclosing recent price
information for the penny stock held in the account and information
on the limited market in penny stocks.
(14) Potential Future Sales Pursuant to Rule 144. Of the 8,400,000 shares
of Clip 'n Pierce's common stock outstanding prior to this Offering, all are
"Restricted Securities," as that term is defined under Rule 144 promulgated
under the Securities Act of 1933 (the "Act"). In general, under Rule 144, a
person (or persons whose shares are aggregated) who has satisfied a one-year
holding period may sell, within any three-month period, a number of shares
which does not exceed the greater of one percent of the then outstanding
shares of common stock or the average weekly trading volume during the four
calendar weeks prior to such sale. Rule 144 also permits the sale of shares,
without any quantity limitation, by a person who is not an affiliate of the
Company and who has beneficially owned the shares a minimum period of two
years. Hence, the possible sale of these restricted shares may, in the
future, dilute an investor's percentage of free-trading shares and may have a
depressive effect on the price of Clip 'n Pierce's common stock. No shares,
other than the 400,000 shares which are the subject of this registration and
be sold free of restriction. All shares other than the 400,000 to be
distributed are held by affiliates and subjection to the restrictions of Rule
144. (See" Certain Transactions.")
(15) Potential Anti-Takeover Effect of Authorized Preferred Stock. The
Company is authorized to issue 20,000,000 shares of $0.001 par value preferred
stock with the rights, preferences, privileges and restrictions thereof to be
determined by the Board of Directors of Clip 'n Pierce. Preferred stock can
thus be issued without the vote of the holders of common stock. Rights could
be granted to the holders of preferred stock which could reduce the
attractiveness of Clip 'n Pierce as a potential takeover target, make the
removal of Management more difficult, or adversely impact the rights of
holders of common stock. No preferred stock is currently outstanding, and we
have no present plans for the issuance of any shares of preferred stock.
(16) Product Patent. We have elected not to pursue a product patent at this
time until further development of the company's potential is explored. There
is risk that the product will be seen and copied and we will lose the
competitive edge.
(17) Possible conflict in Management. Since there are common individuals on
the board of directors of both Clip 'N Pierce and Takk and the companies have
some common officers, there may arise conflicts of interest in their duties to
the individual companies. After the distribution the companies will have
mostly common shareholders.
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THE DISTRIBUTION
General
Approximately 4.75% of the outstanding Common stock of Clip 'n Pierce is
presently owned by TAKK. TAKK is primarily a consulting company. TAKK
shareholders will not be required to pay for shares of our common stock
received in the distribution or to exchange shares of TAKK in order to receive
our common stock.
Material Relationships
Clip n' Pierce has common members on their boards of Directors. Common
directors include Edward F. Myers and Betty N. Myers. As such these persons
control both Clip n' Pierce and TAKK, Inc.
Manner of Distribution
Pursuant to the plan of distribution, TAKK will distribute to its shareholders
400,000 Shares of the Common stock of Clip 'n Pierce, or one Share for each
share of TAKK held of record as of June 1, 2000. Fractional Shares will be
rounded up to the next full Share. On December 31, 1999. TAKK had issued and
outstanding approximately 200,000 common shares and 200,000 class A shares. On
December 31, 1999 TAKK had approximately 200 shareholders of record. Shares
of Clip n'Pierce will be mailed to TAKK shareholders as soon a practical after
the affectivity of this registration statement. Tax Consequences of TAKK
Distribution
Tax Consequences of TAKK Distribution
Clip 'n Pierce believes the following are the material federal income tax
consequences expected to result from the distribution under currently
applicable law. The following discussion is intended as general information
only. It may not be applicable to stockholders who are neither citizens nor
residents of the United States. It does not discuss the state, local and
foreign tax consequences of the distributor. Stockholders should consult
their own tax advisors regarding the consequences of the distribution in their
particular circumstances under federal, state, local and foreign tax laws.
TAKK will recognize a gain or loss based upon the fair market value of the
Common stock at the date of the Distribution. This gain or loss is measured
by the difference between TAKK's tax basis in the Common stock distributed in
the Distribution and the fair market value of that stock.
As a result of TAKK having no current or accumulated earnings and profits
allocable to the Distribution no portion of the amount distributed will
constitute a dividend for federal income tax purposes. Therefore, no portion
of the amount received constitutes a dividend, and will not be eligible for
the dividends-received deduction for corporations. Each TAKK stockholder will
have a tax basis in Clip 'n Pierce's Common stock distributed equal to the
fair market value of the Common stock distributed on the Distribution date.
The Distribution is not taxable as a dividend. The distribution will be
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treated as a tax-free return of capital to the extent that the fair market
value of such portion of the amount received does not exceed the stockholder's
basis in the TAKK common stock held, and as a capital gain if and to the
extent that the fair market value of such portion is greater than such tax
basis.
Any taxes payable by any recipient of Shares of Clip'n Pierce's common stock
in the distribution will be the responsibility of such recipient.
The foregoing is only a summary of certain federal income tax consequences of
the Distribution under current law and is intended for general information
only. Each stockholder should consult his tax advisor as to the particular
consequences of the distribution to such stockholder, including the
application of state, local and foreign tax laws.
EACH TAKK SHAREHOLDER IS ADVISED TO SEEK
PROFESSIONAL TAX COUNSEL REGARDING ANY TAX
LIABILITY
THAT MAY ARISE FROM THIS Distribution
Blue Sky Laws
This Distribution is not being made in any jurisdictions of the United States
in which this Distribution would not be in compliance with the securities or
blue sky laws of such jurisdiction. Only shareholders of TAKK residing in the
states set forth below may obtain the Shares pursuant to the Distribution.
Clip 'n Pierce initially selected the jurisdictions in which Shareholders may
participate in the Distribution after determining from the Shareholder records
of TAKK and from record owners the states where substantially all the known
owners reside.
IF A BENEFICIAL OWNER RESIDES IN A STATE OF THE UNITED STATES OF AMERICA NOT
SET FORTH BELOW, SUCH OWNER MAY NOT PARTICIPATE IN THE DISTRIBUTION.
California
Clip 'n Pierce may add additional states to the list if it determines
additional beneficial owners are in other states. This Prospectus will be
delivered to those Shareholders of TAKK eligible to participate in this
Distribution.
This Prospectus relates to the shares received in the Distribution to the TAKK
shareholders. The Distribution of the Company's Common stock will be made to
TAKK shareholders without any consideration being paid and without any
exchange of Shares by the shareholders of TAKK. Neither TAKK nor the Company
will receive any proceeds from the Distribution by TAKK of such Shares of the
Company's common stock nor from the sale of any such Shares by any persons who
may be deemed to be the underwriters.
A copy of this Prospectus is being mailed to each TAKK shareholder of record
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on June 1, 2000, together with the certificate representing the number of the
Clip n' Pierce Shares to which he is entitled. Persons wishing to evaluate the
Clip n' Pierce Shares being distributed to them should review this Prospectus
carefully.
Reason for the Distribution
The board of directors of Takk has decided that the shares of Clip n'Pierce in
the hands of individual shareholders will provide more value to the Takk
shareholders than if corporately owned. If at some future date the shares
of Clip 'N Pierce are publicly traded then shareholders may determine for
themselves on a individual basis whether they wish to sell their shares and
obtain personal liquity or wish to retain the shares for possible future
potential. There can be no assurance that the shares will be publicly traded
or if so whether the market will provide any particular return to the
shareholder.
Costs of Distribution
Clip 'n Pierce estimates that the total cost of the Distribution will be
approximately $7,300. TAKK has agreed to pay all such costs.
Listing and Trading of our Common Stock
There is not currently a public market for our common stock. After the
distribution is complete we intend to request trading on the Nasdaq bulletin
board. We cannot assure you as to the price at which our common stock might
trade after the distribution date or wither or not Clip n' Pierce can qualify
for listing.
The shares distributed to TAKK shareholders will be freely transferable,
except for shares received by people who may have a special relationship or
affiliation with us. People who may be considered our affiliates after the
distribution generally include individuals or entities that control, are
controlled by or under common control with us. This may include some or all of
our officers and directors. Persons who are our affiliates will be permitted
to sell their shares only pursuant to an effective registration statement
under the Securities Act of 1933 , as amended, or an exemption from the
registration requirements of the Securities Act, such as exemptions afforded
by Section 4(2) of the Securities Act or Rule 144 thereunder.
DETERMINATION OF OFFERING PRICE
Since the Distribution is a dividend by a present stockholder, there is no
offering price and no dilution to existing stockholders of Clip 'n Pierce. For
the purpose of computing the instant registration fee, Clip 'n Pierce and TAKK
arbitrarily set the price per share at $0.01, but such price has no
relationship to Clip 'n Pierce's results of operations or assets and may not
reflect the true value of such Common stock.
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MANAGEMENT'S DISCUSSIONS AND ANALYSIS OR PLAN OF OPERATION
Certain Forward-looking Information
Information provided in this SB-2 filing on Form SB-2 may contain forward-
looking statements within the meaning of Section 21E or Securities Exchange
Act of 1934 that are not historical facts and information. These statements
represent the Company's expectations or beliefs, including, but not limited
to, statements concerning future and operating results, statements concerning
industry performance, the Company's operations, economic performance,
financial conditions, margins and growth in sales of the Company's products,
capital expenditures, financing needs, as well as assumptions related to
the foregoing. For this purpose, any statements contained in the SB-2 filing
that are not statements of historical fact may be deemed to be forward-looking
statements. These forward-looking statements are based on current expectations
and involve various risks and uncertainties that could cause actual results
and outcomes for future periods to differ materialy from any forward-looking
statment or views expressed herein.
Clip 'n Pierce has sufficient cash resources to operate at the present level
of expenditure for the next twelve months. On February 28, 2000 a major
shareholder, EFM Venture Group, Inc. contributed $5,000 and on November 28,
2000 another $5,000 to the capital of the Company and on January 12, 2001,
$6,000. Clip 'n Pierce may raise additional capital either through debt or
equity. No assurances can be given that such efforts will be successful. The
Company has no specific plans at present for raising additional capital.
The following is the history and projected future activities of the company in
milestone format.
Milestone:
1. Development of prototype idea. This was done prior to the organization of
Clip 'N Pierce.
2. Production of a physical prototype. This was done prior to the
organization of Clip 'N Pierce.
3. Inital small market study. Done during November 2000.
4. Develop product brochure. January 2001. Estimated cost $300.
5. Additional store to store market study using brochure. Late January 2000
to February 2001. Cost estimate $300.
6. Mail brochures to qualified jewelry stores in San Diego and follow up with
telephone interviews. $500.
7. Develop list of manufactures and assess pricing. Decide on 18 or 14 karat
gold. Determine price, quantity and delivery. March to June 2001.
8. Place order for small initial product production. July 2001. Cost will
depend on information obtained in milestone 7.
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9. Fall of 2001. Market initial production to stores identified in mile
stones 5 and 6. Cost will depend on information from milestone 5 and 6
as to number of stores. This mile stone should mark the first revenues for
Clip 'N Pierce.
10. Determine future production and sales effort from information gained from
initial sales effort. Depending on the size of the production and potential
Clip 'N Pierce may need to obtain addition capital from loans or sale of
additional equity.
The pricing of the product will depend on the quality of gold and/or silver
selected for production. The cost to produce the prototype was approximately
$300 in 18 karat gold. That cost will need to be brought down when
manufacturing in quantity in order to appeal to the general market. It can be
made of a lesser karat gold for instance. We believe a cost under $150 for
gold and under $100 for silver will allow mark-up and still generate
profit for the company. Details are not firm and there is no assurance that
the price goals can be met.
In the next twelve months, Clip 'n Pierce will pursue arrangements for the
sale of its products. The market study conducted in November of this past year
in two shopping centers in San Diego County. The results indicate some
probable success of the item. If the price of production can be kept
reasonable, revenues could be expected early in 2002. A manufacturing
source will be sought early in 2001. Initial placement of the product in
retail outlets will take place in the fourth quarter of 2001 in San Diego
County as a starting location.
(See "Business-History.")
Clip 'n Pierce plans to develop additional variations of the product
including types of metals and size of the earring. Clip 'n Pierce does not
plan to employ additional personnel during the next twelve months. Clip 'n
Pierce plans to make use of contracted, short-term or leased personnel, if
any.
BUSINESS
Product
Clip 'n Pierce has developed a clip-on earring with the capability of affixing
to it any earring designed for pierced ears. The prototype can be described
as a bowl- shaped circle, 3/8 of an inch in diameter made of 18K gold. A part
of this round clip-on earring is a very small hole for the purpose of
inserting a stud earring. The studded earring and the gold circle appear as a
unit. A silver prototype has now also been developed, slightly smaller but the
same in every other way.
-15-
<PAGE>
History
The principals conceived the idea several years ago and proceeded to hire a
professional jewelry designer to produce the prototype. The prototype has been
worn since mid 1999 with a large variety of studded earrings for over a year
with complete wearer satisfaction by the president of the company. Reactions
to the product's appearance, of approximately twelve women at three different
social occasions late in 1999, was positive. Since the idea's birth the
principles of the company have tested the product for convenience, durability
and flexibility of use. A second prototype, developed in mid 2000, is meeting
with the same experience in wear ability. Inquiries of jewelry stores has
produced mixed reactions but primarily favorable for a nitch market.
Present Business Activities.
Clip 'n Pierce has just completed a market study of ten jewelry outlets in
San Diego County at Plaza Bonita in National City and Grossmont Shopping
Center in La Mesa, CA. The purpose of the study was to gather information
from jewelers about their opinions of the product's desirability, and to
determine their interest in selling the product. Jewelry shops in two malls,
one middle and one higher end economically. Of the ten shop keepers
interviewed, six liked the product very much and four of those felt confident
there was a market and at least three of those were interested in carrying the
product in their store. Those not favorably disposed to the product sited a
somewhat similar product which seemed in their opinion to satisfy this small
market.
Leads from these interviews pointed to a possible manufacturer and several
suggestions as to the nature of the customer most likely to be interested, ie.
senior citizen age. Also from the study it appears the higher end mall showed
more favorable interest. Other current activities, including the last
quarter of 2000 and into the first quarter of 2001 include searching for a
manufacturer and determining a reasonable price for the product.
Competition
Later the possibility of Internet marketing will be researched. Competition
The jewelry industry is vast and varied. While there are many earring products
of both clip-on and pierced variety, to Clip 'n Pierce's knowledge no product
of this kind is on the market currently. The current market study has revealed
a product called the French Clip, discussed by at least four of the jewelers
interviewed. The product enables a studded earring to be permanently placed on
a clip by the jeweler. While this product does not have the flexibility of the
Clip 'n Pierce earring, it may serve the purpose for some customers. That
product is the closest to our product that any of the jewelers has seen.
Properties
Clip 'n Pierce shares 475 square feet of office space with EFM Venture
Group, Inc., an affiliated company. Clip 'N Pierce pays $200 per month. This
amount Is considerd market rate considering the physical space and hours used
by Clip 'N Pierce. Clip 'N Pierce begain paying rent as of January 1, 2001.
-16-
<PAGE>
Employees
As of January 1, 2001 Clip 'N Pierce has hired a part time person to spend up
to ten hours per week visiting jewelery stores to promote its product. All
other activities are carried out by the officers and directors.
Legal Proceedings
Clip 'n Pierce is not a party to any legal proceeding.
MANAGEMENT
The Executive Officers and Directors of Clip 'n Pierce and their ages are as
follows:
Name Age Position Date Elected
Betty N. Myers 63 President, April 14, 1999
Chief Financial
Officer, and
Director
Edward F. Myers II 68 Secretary and April 14, 1999
Director
Betty N. Myers has served President and as a Director since its inception.
Since December 13, 1999 she has served as Secretary of American Electric
Automobile Co., Inc. ("AEAC"). AEAC is a publicly traded company under the
symbol AEAC. She also currently serves as President and a Director of EFM
Venture Group, Inc., a real estate company, as the licensed broker. She is
President of Exchange Accommodation Corp., a company specializing in the
accommodation of 1031 tax deferred exchanges. She is the wife of Edward F.
Myers,II.
Edward F. Myers, II has served as Secretary and a Director of Clip 'n Pierce
since its inception. He currently serves as Chairman and a Director of
American Electric Automobile Company, Inc. a publicly traded company. He is
Also Secretary and a Director of EFM Venture Group, Inc., a real estate
company. He is the husband of Betty Myers.
The Directors are elected to serve until the next annual meeting of
shareholders or until their successors have been elected and qualified.
Executive officers serve at the discretion of the Board of Directors.
Each of the foregoing persons may be deemed a "promoter" and "parent" of the
Company as that term is defined in the rules and regulations promulgated under
the Securities and Exchange Act of 1933.
Executive Compensation
At present Clip 'n Pierce is operated by its Executive Officers and Directors
-17-
<PAGE>
at no compensation and no compensation has been paid to date. No Executive
Officer or Director is expected to earn in excess of $50,000 in the
Foreseeable future.
Clip 'n Pierce has no pension or profit sharing plan. Clip 'n Pierce may
Change or increase salaries as Clip 'n Pierce's profits and cash flow allow;
however, there are no present plans to do so.
Options
There are no options outstanding.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of January 1, 2001, the name,
address and number of Shares owned directly or beneficially by persons who own
5% or more of the Company's Common stock and by each executive officer and
director and owner after the Distribution.
Beneficial Owner Shares/Percent as of Shares/Percent after
January 1, 2001 the Distribution
Edward F. Myers II(1) 8,400,000 100.00% 8,000,000 95.2%
4190 Bonita Rd. #105
Bonita, CA
EFM Venture Group, Inc. 8,400,000 100.00% 8,000,000 95.2%
4190 Bonita Rd. #105
Bonita, CA 91902
Betty N. Myers 8,400,000 100.00% 8,000,000 95.2%
505 Camino Elevado
Bonita, CA 91902
All Executive Officers 8,400,000 100.00% 8,000,000 95.2%
and Directors as a
Group (2 persons)
1) Betty N. Myers is a 33% shareholder and a director of EFM Venture
Group, Inc. Edward F. Myers is the husband of Betty N. Myers. EFM Venture
Group, Inc. is the controlling shareholder of TAKK.
2) Based on 8,400,000 shares outstanding on January 1, 2001.
3) EFM Venture Group, Inc is a controlling shareholder of TAAK.
CERTAIN TRANSACTIONS
On December 1, 1999 Clip 'n Pierce sold 4,000,000 shares of common stock to
-18-
<PAGE>
Edward F. Myers II for a total of $400; 4,000,000 shares of common stock to
EFM Venture Group, Inc. for $400, and 400,000 common shares to Takk, Inc. for
$40.00.
DESCRIPTION OF SECURITIES
The authorized Common stock of Clip 'n Pierce consists of 50,000,000 Shares
(par value $0.0001) per share), of which 8,400,000 shares were outstanding on
December 1, 2001. The holders of Common stock are entitled to one vote per
Share on all matters to be voted on by stockholders. Holders of Common stock
Are entitled to receive dividends when, as, and if declared by the Board of
Directors. The approval of proposals submitted to shareholders at a meeting
requires a favorable vote of the majority of shares voting. Holders of the
Common stock have no preemptive, subscription, redemption, or conversion
rights, and there are no sinking fund provisions with respect to the Common
Stock. All of the outstanding shares of Common stock are, and the Shares to
be transferred in the Distribution will be, fully paid and nonassessable. As
of January 1, 2001 Clip 'n Pierce had three common shareholders.
Preferred Stock
Clip 'n Pierce is also authorized to issue as many as 20,000,000 shares of the
preferred stock (par value $0.001). The preferred stock may be issued in one
or more series with such preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends and qualifications and
rights as the Company's Board of Directors may determine. There are no
preferred stock outstanding.
Preferred stock can thus be issued without the vote of the holders of common
stock. Rights could be granted in the future to the holders of preferred
stock which could reduce the attractiveness of Clip 'n Pierce as a potential
takeover target, make the removal of management more difficult, or adversely
impact the rights of holders of common stock.
Limitation of Liability of Directors and Indemnification of Directors and
Officers
The Certificate of Incorporation of Clip 'n Pierce provides for
indemnification of directors and officers of Clip 'n Pierce as follows:
SEVENTH. No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director
shall be liable to the extent provided by applicable law, (i) for breach
of the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
Delaware General Corporation Law or (iv) for any transaction from which the
director derived an improper personal benefit. No amendment to or repeal of
-19-
<PAGE>
this Article Seventh shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with respect to
any acts or omissions of such director occurring prior to such amendment."
Delaware General Corporation Law
Delaware General Corporation Law Section 145 provides that Clip 'n Pierce may
indemnify any officer or director who was made a party to a suit because of
his position, including derivative suits, if he was acting in good faith and
in a manner he reasonably believed was in the best interest of Clip 'n Pierce,
except, in certain circumstances, for negligence or misconduct in the
performance of his duty to Clip 'n Pierce. If the director or officer is
successful in his suit, he is entitled to indemnification for expenses,
including attorneys' fees. Article Tenth of Clip 'n Pierce's Certificate of
Incorporation provides for indemnification of Clip 'n Pierce's officers and
directors to the fullest extent permitted by law. Indemnification agreements
have been entered into with all officers and directors of Clip 'n Pierce.
Transfer Agent
The transfer agent and registration for Clip 'n Pierce's Common stock is
Signature Stock Transfer, 14675 Midway Road, Suite #221, Dallas, TX 75244.
LEGAL MATTERS
The legality of the Shares of Common stock to be registered hereby will be
passed upon for Clip 'n Pierce by Carmine J. Bua, esquire, 2655 Camino del Rio
North, Suite 333, San Diego, California 92108.
EXPERTS
The financial statements of Clip 'n Pierce for the period from April 14,
1999(incorporation date) to December 31, 1999 and related notes which are
included in this Prospectus have been examined by Weinberg & Company, P.A.,
Independent Certified Public Accountants, and have been so included in
reliance upon the opinion of such accountant given upon their authority as an
expert in auditing and accounting.
ADDITIONAL INFORMATION
We have filed with the Commission a registration statement on Form SB-2 under
the Securities Act covering the common stock offered by this prospectus. This
prospectus, which constitutes a part of the registration statement, omits some
of the information described in the registration statement under the rules
and regulations of the Commission. For further information on Clip 'n Pierce
and the common stock offered by this prospectus, please refer to the
registration statement and the attached exhibits. Statements contained in this
prospectus as to the content of any contract or other document referred to are
not necessarily complete, and in each instance, reference is made to the copy
filed as an exhibit to the registration statement; each of these statements is
-20-
<PAGE>
qualified in all respects by that reference. The registration statement and
exhibits can be inspected and copied at the public reference section at the
Commission's principal office, 450 5th Street, N.W. Judiciary Plaza,
Washington, D.C. 20549 and through the Commission's Web site
(http://www.sec.gov). Copies may be obtained from the commission's principal
office upon payment of the fees prescribed by the Commission.
-21 -
<PAGE>
CLIP 'N PIERCE FASHIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
-22 -
<PAGE>
CLIP 'N PIERCE FASHIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
-23 -
<PAGE>
CONTENTS
PAGE 1 INDEPENDENT AUDITORS' REPORT
PAGE 2 BALANCE SHEET AS OF DECEMBER 31, 1999
PAGE 3 STATEMENTS OF OPERATIONS FOR THE PERIOD FROM
APRIL 14, 1999 (INCEPTION) TO DECEMBER 31, 1999
PAGE 4 STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 14,1999 (INCEPTION)
TO DECEMBER 31, 1999
PAGES 6 - 7 NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999
-24-
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
Clip 'N Pierce Fashions, Inc.
We have audited the accompanying balance sheet of Clip 'N Pierce Fashions,
Inc.(a development stage company) as of December 31, 1999 and the related
statement of changes in stockholders' equity for the period from April 14,
1999 (inception) to December 31, 1999. These financial statements are the
responsibility of Clip 'n Pierce's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain Reasonable assurance about whether the financial statements are free of
Material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and 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 financial statements referred to above present fairly in
all material respects, the financial position of Clip 'N Pierce Fashions, Inc.
(a development stage company) as of December 31, 1999, in conformity with
generally accepted accounting principles.
WEINBERG & COMPANY, P.A.
------------------------
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
January 25, 2000, except for Note 3 as to
which the date is February 28, 2000
1
-25-
<PAGE>
CLIP 'N PIERCE FASHIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF DECEMBER 31, 1999
ASSETS
CURRENT ASSETS
Cash $ 840
------
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 20,000,000 shares authorized,
none issued and outstanding -
Common stock, $0.0001 par value, 50,000,000 shares authorized,
8,400,000 shares issued and outstanding 840
Additional paid-in capital 456
Deficit accumulated during development stage (456)
-----
TOTAL STOCKHOLDERS' EQUITY $ 840
========================== =======
See accompanying notes to financial statements
2
-26-
<PAGE>
CLIP 'N PIERCE FASHIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM APRIL 14, 1999 (INCEPTION) TO DECEMBER 31,1999
INCOME $ -
--------------
EXPENSES
Organization Costs 456
--------------
TOTAL EXPENSES: 456
--------------
NET LOSS: 456
========= ==============
Net loss per share - basic and diluted -
==============
Weighted average number of shares
outstanding during the period -
basic and diluted. 8,400,000
==============
See accompanying notes to financial statements
3
-27-
<PAGE>
CLIP 'N PIERCE FASHIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 14, 1999 (INCEPTION) TO DECEMBER 31,1999
-------------------------------------------------------------------
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
ADDITIONAL DURING
Common stock PAID-IN DEVELOPMENT
Shares AMOUNT CAPITAL STAGE TOTAL
------ ------- ---------- ------------ -----
<S> <C> <C> <C> <C> <C>
Common stock issued
for cash 8,400,000 $ 840 $ - $ - $ 840
Capital contribution
by promoter - - 456 - 456
Net loss for the period
from April 14, 1999
(inception)
to December 31, 1999 - - - (456) (456)
------ ------- ---------- ------------ -----
BALANCE, DECEMBER 31, 1999 8,400,000 $ 840 $ 456 (456) $ 840
========== ====== ======== ========== =====
</TABLE>
See accompanying notes to financial statements
4
-28-
<PAGE>
CLIP 'N PIERCE FASHIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM APRIL 14, 1999 (INCEPTION) TO DECEMBER 31,1999
Cash flows from development stage activities
Net loss $ (456)
Adjustments to reconcile net loss to net cash
used in development stage activities
Expensed paid by promoter 456
-------------
Net cash provided by (used in) development
stage activities -
-------------
Cash flows from financing activities
Proceeds from common stock issuance 840
-------------
Net cash provided by financing activities 840
=============
Net increase in cash 840
Cash - beginning of period -
-------------
CASH - END OF PERIOD $ 840
=============
See accompanying notes to financial statements
5
-29-
<PAGE>
CLIP 'N PIERCE FASHIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
-----------------------
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) Organization and Description of Business
--- -----------------------------------------
Clip 'N Pierce Fashions, Inc. (a development stage company) (the "Company")
was incorporated in Delaware on April 14, 1999.
Clip 'n Pierce's principal stockholder designed a unique jewelry product to
bridge a gap between clip-on and pierced type jewelry products. The design
was contributed to Clip 'n Pierce at zero cost basis and Clip 'n Pierce
intends to have the product manufactured by third party subcontractors and
marketed through jewelry stores and similar outlets.
Clip 'n Pierce's activities during the development stage have included
corporate formation and stock issuances.
(B) Use of Estimates
- --------------------
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reported
period. Actual results could differ from those estimates.
(C) Income taxes
- -----------------
Clip 'n Pierce accounts for income taxes under the Financial Accounting
Standard s Board Statement of Financial Accounting Standards No. 109.
"Accounting for Income Taxes" ("Statement No.109"). Under Statement No. 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. 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
income in the period that includes the enactment date. There was no current
income tax expense for the period ended December 31, 1999.
4
-30-
<PAGE>
NOTE 2 STOCKHOLDERS' EQUITY
------- --------------------
(A) Preferred Stock
--------------------
The company is authorized to issue 20,000,000 shares of preferred stock at
$0.001 par value. The Company has not issued any preferred shares through
December 31, 1999.
(B)Common stock
---------------
The Company is authorized to issue 50,000,000 shares of common stock at
$0.0001 par value. In December 1999, Clip 'n Pierce issued 8,400,000 shares
of its common stock to various stockholders pursuant to Section 4 (2) of the
Securities Act of 1933, as amended, for an aggregate consideration of $840.
Expenses incurred during the development stage of Clip 'n Pierce, for the
Period ended December 31, 1999, were paid by the promoter.
5
-31-
<PAGE>
CLIP 'N PIERCE FASHIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2000
-32 -
<PAGE>
CLIP 'N PIERCE FASHIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
------------------------------
CONTENTS
PAGE 1 ACCOUNTANTS' REVIEW REPORT
PAGE 2 BALANCE SHEET AS OF SEPTEMBER 30, 2000
PAGE 3 STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2000 AND FOR THE PERIOD FROM APRIL 14, 1999
INCEPTION) TO SEPTEMBER 30, 2000
PAGE 4 STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE
PERIOD FROM APRIL 14, 1999 (INCEPTION) TO SEPTEMBER 30, 2000
PAGE 5 STATEMENTS OF CASH FLOWS FOR THE FOUR MONTHS ENDED
SEPTEMBER 30, 2000 AND FOR THE PERIOD FROM APRIL 14, 1999
(INCEPTION) TO SEPTEMBER 30, 2000
PAGES 6 - 7 NOTES TO FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2000
-33-
<PAGE>
ACCOUNTANTS' REVIEW REPORT
--------------------------
To the Board of Directors of:
Clip 'N Pierce Fashions, Inc.
We have reviewed the accompanying balance sheet of Clip 'N Pierce, Inc. (a
development stage company) as of September 30, 2000 and the related statements
of operations, changes in stockholders' equity and cash flows for the nine
months then ended and for the period from April 14, 1999 (inception) to
September 30, 2000, in accordance with Statements on Standards for Accounting
and Review Services issued by the American Institute of Certified Public
Accountants. All information included in these financial statements is the
representation of the management of Clip 'N Pierce Fashions, Inc.
A review consist principally of inquires of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than
an audit in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements in order for them to
be in conformity with generally accepted accounting principles.
WEINBERG & COMPANY
------------------
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
November 6, 2000
-34-
<PAGE>
CLIP 'N PIERCE FASHIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
ASSETS
September 30
2000
-------------
CURRENT ASSETS
Cash $ 145
------
TOTAL ASSETS 145
======
SHAREHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 20,000,000 shares authorized,
none issued and outstanding -
Common stock, $0.0001 par value, 50,000,000 shares authorized,
8,400,000 shares issued and outstanding 840
Additional paid-in capital 5,456
Deficit accumulated during development stage (6,151)
-------
TOTAL STOCKHOLDERS' EQUITY $ 145
========================== =======
See accompanying notes to financial statements
2
-35-
<PAGE>
CLIP 'N PIERCE FASHIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OR OPERATIONS
-----------------------
Cumulative from
April 14, 1999
(Inception) to Nine Months Ended
September 30, 2000 September 30, 2000
------------------ ------------------
INCOME $ - $ -
------------------ ------------------
EXPENSES:
General and administrative 1,173 717
Legal fees 1,120 1,120
Accounting fees 3,858 3,858
------------------ ------------------
Total Expenses 6,151 5,695
------------------ ------------------
NET LOSS (6,151) $ (5,695)
================== ==================
NET LOSS PER SHARE - BASIC AND DILUTED
$ - $ -
================== ==================
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING DURING THE PERIOD -
BASIC AND DILUTE 8,400,000 8,400,000
================== ==================
See accompanying notes to financial statements
3
-36-
<PAGE>
CLIP 'N PIERCE FASHIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 14, 1999 (INCEPTION) TO SEPTEMBER 30,2000
-------------------------------------------------------------------
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
ADDITIONAL DURING
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
------ ------ ---------- ----------- ------
<S> <C> <C> <C> <C> <C>
Common stock issued
for cash 8,400,000 $ 840 $ - $ - $ 840
Capital contribution
by promoter - - 456 - 456
Net loss for the period
from April 14, 1999
(inception)
to December 31, 1999 - - - (456) (456)
------ ------ ----------- ----------- ------
BALANCE, DECEMBER 31, 1999 8,400,000 840 456 (456) 840
Capital contribution
by promoter - - 5,000 - 5,000
Net loss for the
Nine months ending
September 30, 2000 (5,695) (5,695)
------ ------ ----------- ----------- ------
BALANCE, SEPTEMBER 30,
2000 8,400,000 $ 840 $5,456 $ (6,151) $ 145
-------------------------- ========= ======= ======= ========== =====
</TABLE>
See accompanying notes to financial statements
4
-37-
<PAGE>
CLIP 'N PIERCE FASHIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
Cumulative from
April 14, 1999
(Inception) to Nine months ended
September 30, 2000 September 30, 2000
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (6,151) $ (5,695)
------------------ ------------------
Net cash used by
operating activities (6,151) (5,695)
------------------ ------------------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Capital contributions 5,456 5,000
Proceeds from common
stock issuance 840 -
------------------ ------------------
Net cash provided by
financing activities 6,296 5,000
------------------ ------------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 145 (695)
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD - 840
------------------ ------------------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 145 $ 145
================== ==================
</TABLE>
See accompanying notes to financial statements
5
-38-
<PAGE>
CLIP 'N PIERCE FASHIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30,2000
-----------------------
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------ ------------------------------------------
(A) Organization and Description of Business
--------------------------------------------
Clip 'N Pierce Fashions, Inc. (a development stage company) (the "Company")
was incorporated in Delaware on April 14, 1999.
The Company's principal stockholder designed a unique jewelry product to
bridge a gap between clip-on and pierced type jewelry products. The design
was contributed to the Company at zero cost basis and the Company intends to
have the product manufactured by third party subcontractors and marketed
through jewelry stores and similar outlets.
The Company's activities during the development stage have included corporate
formation, stock issuance, product design, and marketing studies.
(B) Use of Estimates
--------------------
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reported period. Actual
results could differ from those estimates.
(C) Income taxes
----------------
The Company accounts for income taxes under the Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 109. "Accounting for
Income Taxes" ("Statement No. 109"). Under Statement No. 109, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax basis. 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 income in the period
that includes the enactment date. There was no current or deferred income tax
expense or deferred tax liability or asset for the period ended September 30,
2000 since the Company's operations were minimal.
(D) Cash and Cash Equivalents
-----------------------------
For purposes of the statement of cash flows, the Company considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash or equivalents.
6
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<PAGE>
(E) Loss Per Share
------------------
Net loss per common share for the nine months ended September 30, 2000 and for
the period from April 14, 1999 (inception) to September 30, 2000 is computed
based upon the weighted average common shares outstanding as defined by
Financial Accounting Standards No. 128, "Earnings Per Share". There were no
common stock equivalents outstanding at September 30, 2000.
NOTE 2 STOCKHOLDERS' EQUITY
------ --------------------
(A) Preferred Stock
-------------------
The Company is authorized to issue 20,000,000 shares of preferred stock at
$0.001 par value. The Company has not issued any preferred shares through
September 30, 2000.
(B) Common Stock
----------------
The Company is authorized to issue 50,000,000 shares of common stock at
$0.0001 par value. The Company has issued 8,400,000 shares through September
30, 2000.
NOTE 3 SUBSEQUENT EVENTS
------ -----------------
On November 2, 2000 a principal stockholder of the Company contributed $2,800
to the company.
7
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Director and Officers.
Delaware General Corporation Law Section 145 provides that the Company may
indemnify any officer or director who was made a party to a suit because of
his position, including derivative suits, if he was acting in good faith and
in a manner he reasonably believed was in the best interest of Clip 'n Pierce,
except, in certain circumstances, for negligence or misconduct in the
performance of his duty to Clip 'n Pierce. If the director or officer is
successful in his suit, he is entitled to indemnification for expenses,
including attorneys' fees. Article Tenth of Clip 'n Pierce's Certificate of
Incorporation provides for indemnification of the Company's officers and
directors to the fullest extent permitted by law. Indemnification agreements
have been entered into with all officers and directors of Clip 'n Pierce.
Item 25. Other Expenses of Issuance and Distribution.
The following is an itemized statement of the estimated amounts of all
expenses in connection with the Distribution of the securities which are the
subject of this Registration Statement.
Securities and Exchange Commission
Registration Fee $ 1.07
Printing 3,500.00
Legal Fees and Expenses 1,500.00
Accounting and Audit Fees 2,200.00
___________
TOTAL $ 7,201.07
TAKK, INC. has agreed to pay all costs incurred in this filing.
Distribution of the Shares which are the subject of this Registration
Statement.
Item 26. Recent Sales of Unregistered Securities.
On December 1, 1999 Clip 'n Pierce sold 4,000,000 shares of common stock to
Edward F. Myers II for a total of $400, 4,000,000 shares of common stock to
EFM Venture Group, Inc. for $400, and 400,000 common shares to Takk, Inc. for
$40.00.
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<PAGE>
All securities described in the foregoing were sold without commission or
registration in reliance upon the exemptions provided under the provisions of
Section 4(2) of the Securities Act of 1933, as amended, including Regulation D
promulgated thereunder. In each case, the investor was sophisticated and had
a previous business or personal relationship with one or more of the directors
of Clip 'n Pierce.
Item 27. Exhibits.
The following is a list of exhibits filed as part of the Registration
Statement:
3.(i) Certificate of Incorporation,*
3.(ii) By-laws*
5.1 Copy of Opinion of Carmine J. Bua, Esq.*
11.1 Computation of per share earnings 1999
11.2 Computation of per share earnings 2000
23.1 Consent of Carmine J. Bua, Esq.*
23.2 Consent of Weinberg & Company
27 Financial Data Schedule 4/14/1999 to 9/30/2000
* Filed by reference SB2 filed on July 12,2000
Item 28. Undertakings.
Insofar as indemnification for liabilities, arising under the Securities Act
of 1933 may be permitted to Directors, Officers, or persons controlling the
Company pursuant to the foregoing provisions, or otherwise, Clip 'n Pierce has
been informed that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and
therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Clip 'n Pierce of expenses
incurred or paid by a director, officer, or controlling person of Clip 'n
Pierce in the successful defense of any action, suite or proceeding) is
asserted by such director, officer, or controlling person in connection with
the securities being registered, Clip 'n Pierce 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 as to whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form SB-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of San Diego, State of California, on the 14TH
day of January, 2001.
CLIP 'N PIERCE FASHIONS, INC.
By:
BETTY N. MYERS
----------------
BETTY N. MYERS
President and CFO
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
BETTY N. MYRES
--------------
Betty N. Myers, Director January 14,2001
EDWARD F. MYERS
---------------
Edward F. Myers II Director January 14.2001
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