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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Commission File Number 0-30669
DEL CERRO ENTERPRISES, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
NEVADA 7948 88-0453649
(STATE OR OTHER JURISDICTION OF (PRIMARY (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) SIC NUMBER) IDENTIFICATION NO.)
2635 Camino del Rio South #211, San Diego, CA 92108 619-692-2141
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (TELEPHONE)
Rodger Ward
2635 Camino del Rio South #211, San Diego, CA 92108 619-692-2141
(NAME & ADDRESS OF AGENT FOR SERVICE) (TELEPHONE)
Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------
Title of Each Proposed Proposed
Class of Maximum Maximum
Securities Offering Aggregate Amount of
to be Amount to be Price Offering Registration
Registered Registered Per Unit(1) Price(2) Fee
--------------------------------------------------------------------------------
Common 4,189,000 $0.10 $418,900 $110.59
(1) Based on the price paid per share by the selling shareholders.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS
DEL CERRO ENTERPRISES, INC.
4,189,000 SHARES
COMMON STOCK
The selling shareholders named in this prospectus are offering all of the shares
of common stock offered through this prospectus. See the section entitled
"Selling Shareholders". The shares were acquired by the 59 selling shareholders
directly from the company in a private offering that was exempt from
registration under the U.S. Securities laws. See section entitled "Description
of Securities".
Our common stock is presently not traded on any market or securities exchange.
The purchase of the securities offered through this prospectus involves a high
degree of risk. See section entitled "Risk Factors" on page 4.
Neither the Securities Exchange Commission nor any state securities commission
has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.
The date of this Prospectus is: November 15, 2000
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary ........................................................... 4
Offering .......................................................... 4
Risk Factors ...................................................... 4
Forward Looking Statements ........................................ 5
Use of Proceeds ................................................... 6
Determination of Offering Price ................................... 6
Dilution .......................................................... 6
Dividend Policy ................................................... 6
Selling Shareholders .............................................. 6
Plan of Distribution .............................................. 8
Legal Proceedings ................................................. 9
Directors, Officers, Promoters and Control Persons ................ 10
Security Ownership of Certain Beneficial Owners and Management .... 11
Description of Securities ......................................... 11
Interests of Named Experts and Counsel ............................ 12
Securities Act Indemnification Disclosure ......................... 12
Organization within the Last Five Years ........................... 12
Description of Business ........................................... 13
Plan of Operation ................................................. 18
Description of Property ........................................... 19
Certain Relationships and Related Transactions .................... 19
Market for Common Equity and Related Stockholder Matters .......... 19
Executive Compensation ............................................ 19
Financial Statements .............................................. 20
Changes in or Disagreements with Accountants Disclosure ........... 21
Available Information ............................................. 22
</TABLE>
<PAGE> 4
SUMMARY
Del Cerro Enterprises, Inc. was incorporated in Nevada on March 10, 1999 for the
purpose of developing a high performance driving school in conjunction with
annual nationwide open road races.
We received our initial funding through the sale of common stock to investors
from the period of approximately March 15, 1999 until March 31, 1999. We offered
and sold 59,000 common stock shares at $0.10 per share to non-affiliated private
investors. From inception until October 2000, we have had no material operating
activities.
OFFERING
Securities Being Offered Up to 4,189,000 shares of common stock. See
section entitled "Description of Securities to
be Registered".
Securities Issued
And to be Issued 8,449,000 shares of common stock were issued and
outstanding as of the date of this prospectus.
See section entitled "Description of Securities
to be Registered".
Use of Proceeds We will not receive any proceeds from the sale
of the common stock by the selling shareholders.
See section entitled "Use of Proceeds".
RISK FACTORS
Investors in Del Cerro should be particularly aware of the inherent risks
associated with the company's business plan. These risks include but are not
limited to:
Development Stage Status of the Company
We are in the developing or starting stages of our business plan and are
therefore more vulnerable to unexpected or uncontrollable business and
economic forces. We lack any loyalty or name recognition from potential
customers. A competitor may be able to market a similar service before
we can complete our development efforts. Economic conditions such as a
national recession or reduced consumer interest in auto racing could
lower company revenues.
Going Concern Uncertainty
We may not have sufficient cash, assets, or revenues to cover our
operating costs and allow us to continue as a going concern.
Dependence on Equity Funding
Our business plan requires that we successfully raise capital to advance
our business plan through a private placement offering of common stock
in order to raise $2,500,000. If we are unsuccessful in raising funds,
the company will be forced to rely on its existing cash in
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the bank and funds loaned by the directors and officers. In such a
restricted cash flow scenario, we would be unable to complete our
business plan steps.
Lack of Market Acceptance
Our long-term viability is substantially dependent upon market
acceptance. There is no historic evidence that this type of business
will be successful. Without sufficient customers or revenues, we would
experience a material adverse effect on the company's business,
financial condition, operating results and cash flows.
Reliance on Current Management
Del Cerro's performance and future operating results are substantially
dependent on the continued service and performance of its current
management. We intend to hire a relatively small number of additional
technical and marketing personnel in the next year. Competition for such
personnel is intense, and there can be no assurance that we will be able
to retain essential employees or that we will be able to attract or
retain highly-qualified technical and managerial personnel in the
future. The loss of the services of any of the current management or
other key employees or the inability to attract and retain the necessary
technical, and marketing personnel could have a material adverse effect
upon our business, financial condition, operating results and cash
flows.
Management's Conflict of Interest
The current officers, Mr. and Mrs. Ward, are the sole officers and
directors of the company and have control in directing the activities of
the company. Mr. Ward is involved in other business activities and may,
in the future, become involved in additional business opportunities. If
a specific business opportunity becomes available, the officers and
directors of the company may face a conflict of interest. We have not
formulated a plan to resolve any conflicts that may arise. While the
company and its sole officers and directors have not formally adopted a
plan to resolve any potential or actual conflicts of interest that exist
or that may arise, they have verbally agreed to limit their roles in all
other business activities to roles of passive investors and devote full
time services to Del Cerro after the company raises capital of
$2,500,000 through the sale of securities through a private placement
and is able to provide officers' salaries per the business plan.
While Management believes our estimates of projected occurrences and events are
within the timetable of the business plan, there can be no guarantees or
assurances that the results anticipated will occur. Although we intend to
implement our business plan through the foreseeable future and will do our best
to mitigate the risks associated with the business plan, there can be no
assurance that such efforts will be successful.
FORWARD LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risk and
uncertainties. We use words such as "anticipate", "believe", "plan", "expect",
"future", "intend", and similar expressions to identify such forward-looking
statements. Investors should be aware that all forward-looking
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statements contained within this filing are good faith estimates of management
as of the date of this filing. Our actual results could differ materially from
those anticipated in these forward-looking statements for many reasons,
including the risks faced by us as described in the "Risk Factors" section and
elsewhere in this prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock offered
through this prospectus by the selling shareholders.
DETERMINATION OF OFFERING PRICE
We will not determine the offering price of the common stock. The offering price
will be determined by market factors and the independent decisions of the
selling shareholders. See section entitled "Selling Shareholders".
DILUTION
The common stock to be sold by the selling shareholders is common stock that is
currently issued and outstanding. Accordingly there will be no dilution to our
existing shareholders.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance the expansion of
the business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
SELLING SHAREHOLDERS
The selling shareholders named in this prospectus are offering all of the
4,189,000 shares of common stock offered through this prospectus. The shares
include the following:
1. 59,000 shares of our common stock that the selling shareholders acquired
from us in an offering that was exempt from registration pursuant to
Section 4(2) as amended of the Securities Act of 1933 and completed on
March 31, 1999; and
2. 4,130,000 shared of our common stock that the selling shareholders
received pursuant to an 71 for 1 forward stock split executed March 15,
2000.
The following table provides as of November 15, 2000, information regarding the
beneficial ownership of our common stock held by each of the selling
shareholders, including:
1. The number of shares owned by each prior to this offering;
2. The total number of shares that are to be offered for each;
3. The total number of shares that will be owned by each upon completion of
the offering;
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4. The percentage owned by each; and
5. The identity of the beneficial holder of any entity that owns the
shares.
To the best of our knowledge, the named parties in the table that follows are
the beneficial owners and have the sole voting and investment power over all
shares or rights to the shares reported. In addition, the table assumes that the
selling shareholders do not sell shares of common stock not being offered
through this prospectus and do not purchase additional shares of common stock.
The column reporting the percentage owned upon completion assumes that all
shares offered are sold, and is calculated based on 4,189,000 shares outstanding
on November 15, 2000.
<TABLE>
<CAPTION>
Shares Total of Total Percent
Owned Prior Shares Shares Owned
Name of To This Offered After After
Selling Shareholder Offering For Sale Offering Offering
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ross Aguiar 71,000 71,000 0 0
Clarence Allen 71,000 71,000 0 0
Ronalene Apodaca 71,000 71,000 0 0
Barbara Auberry 71,000 71,000 0 0
Molly Baldwin 71,000 71,000 0 0
Jo Ann Banks 71,000 71,000 0 0
Richard R. Beeghly 71,000 71,000 0 0
Richard S. Beeghly 71,000 71,000 0 0
Ruth Blumberg 71,000 71,000 0 0
Richard Bowen 71,000 71,000 0 0
Robert Boyd 71,000 71,000 0 0
Gary Brafford 71,000 71,000 0 0
Gail Brown 71,000 71,000 0 0
Rita Cannizzaro 71,000 71,000 0 0
Donald Clark 71,000 71,000 0 0
Kimberly Culver 71,000 71,000 0 0
Angela Dawson 71,000 71,000 0 0
Ray Decker 71,000 71,000 0 0
John Dolan 71,000 71,000 0 0
Paula Downing 71,000 71,000 0 0
Charles Ferlatte 71,000 71,000 0 0
Louis Freeman 71,000 71,000 0 0
Gary Gil 71,000 71,000 0 0
Patrick Gilmore 71,000 71,000 0 0
Kenneth Gingras 71,000 71,000 0 0
C.S. Hill 71,000 71,000 0 0
Thomas Hodges 71,000 71,000 0 0
Scott Hodges 71,000 71,000 0 0
Frank Ikeler 71,000 71,000 0 0
Stephen Jiroch 71,000 71,000 0 0
Lorne Johnson 71,000 71,000 0 0
Paul Lane 71,000 71,000 0 0
Brandee Lee 71,000 71,000 0 0
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
Randy Long 71,000 71,000 0 0
Lyle Mason 71,000 71,000 0 0
Robert Mason 71,000 71,000 0 0
Patricia Matteo 71,000 71,000 0 0
Alice Maxwell 71,000 71,000 0 0
Gerald McDonald 71,000 71,000 0 0
Bill McMillen 71,000 71,000 0 0
George Millar 71,000 71,000 0 0
Alan Mooers 71,000 71,000 0 0
Barbara Morrison 71,000 71,000 0 0
Angele Navares 71,000 71,000 0 0
George Obi 71,000 71,000 0 0
Eric Olsen 71,000 71,000 0 0
Charles Perkins 71,000 71,000 0 0
Paula Rightmire 71,000 71,000 0 0
Karen Smith 71,000 71,000 0 0
Michele Sterner 71,000 71,000 0 0
John Sturtevant 71,000 71,000 0 0
Vi Sweet 71,000 71,000 0 0
Yvonne Terry 71,000 71,000 0 0
Denise & Kevin Tirrell 71,000 71,000 0 0
Lisa Tom 71,000 71,000 0 0
Janet Usher 71,000 71,000 0 0
Michelle Walsh 71,000 71,000 0 0
Patricia White 71,000 71,000 0 0
Ramona Whyno 71,000 71,000 0 0
</TABLE>
To our knowledge, none of the selling shareholders:
1. Has had a material relationship with Del Cerro Enterprises other than as
a shareholder as noted above at any time within the past three years; or
2. Has ever been an officer or director of Del Cerro Enterprises.
PLAN OF DISTRIBUTION
The selling shareholders have not informed us of how they plan to sell their
shares. However, they may sell some or all of their common stock in one or more
transactions, including block transactions:
1. on such public markets or exchanges as the common stock may from time to
time be trading;
2. in privately negotiated transactions;
3. through the writing of options on the common stock;
4. in short sales; or
5. in any combination of these methods of distribution.
The sales price to the public may be:
1. the market price prevailing at the time of sale;
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2. a price related to such prevailing market price; or
3. such other price as the selling shareholders determine from time to
time.
The shares may also be sold in compliance with the Securities and Exchange
Commission's Rule 144.
The selling shareholders may also sell their shares directly to market makers
acting as principals or brokers or dealers, who may act as agent or acquire the
common stock as a principal. Any broker or dealer participating in such
transactions as agent may receive a commission from the selling shareholders,
or, if they act as agent for the purchaser of such common stock, from such
purchaser. The selling shareholders will likely pay the usual and customary
brokerage fees for such services. Brokers or dealers may agree with the selling
shareholders to sell a specified number of shares at a stipulated price per
share and, to the extent such broker or dealer is unable to do so acting as
agent for the selling shareholders, to purchase, as principal, any unsold shares
at the price required to fulfill the respective broker's or dealer's commitment
to the selling shareholders. Brokers or dealers who acquire shares as principals
may thereafter resell such shares from time to time in transactions in a market
or on an exchange, in negotiated transactions or otherwise, at market prices
prevailing at the time of sale or at negotiated prices, and in connection with
such re-sales may pay or receive commissions to or from the purchasers of such
shares. These transactions may involve cross and block transactions that may
involve sales to and through other brokers or dealers. If applicable, the
selling shareholders also may have distributed, or may distribute, shares to one
or more of their partners who are unaffiliated with us. Such partners may, in
turn, distribute such shares as described above. We can provide no assurance
that all or any of the common stock offered will be sold by the selling
shareholders.
We are bearing all costs relating to the registration of the common stock. Any
commissions or other fees payable to brokers or dealers in connection with any
sale of the common stock, however, will be borne by the selling shareholders or
other party selling the common stock.
The selling shareholders must comply with the requirements of the Securities Act
of 1933 and the Securities Exchange Act of 1934 in the offer and sale of their
common stock. In particular, during times that the selling shareholders may be
deemed to be engaged in a distribution of the common stock, and therefore be
considered to be an underwriter, they must comply with applicable law and may,
among other things:
1. not engage in any stabilization activities in connection with our common
stock;
2. furnish each broker or dealer through which common stock may be offered,
such copies of this prospectus, as amended from time to time, as may be
required by such broker or dealer; and
3. not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under
the Securities Exchange Act.
LEGAL PROCEEDINGS
Del Cerro is not currently involved in any legal proceedings and is not aware of
any pending or potential legal actions.
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DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,
AND CONTROL PERSONS
The directors and officers of Del Cerro, all of those whose one year terms will
expire 3/31/01, or at such a time as their successors shall be elected and
qualified are as follows:
<TABLE>
<CAPTION>
Name & Address Age Position Date First Elected Term Expires
-------------- --- -------- ------------------ ------------
<S> <C> <C> <C> <C>
Rodger Ward 79 President, 3/15/99 3/31/01
2635 Camino del Rio S. #211 Treasurer,
San Diego, CA 92108 Director
Sherrie Ward 49 Secretary, 3/15/99 3/31/01
2635 Camino del Rio S. #211 Director
San Diego, CA 92108
</TABLE>
Each of the foregoing persons may be deemed a "promoter" of the company, as that
term is defined in the rules and regulations promulgated under the Securities
and Exchange Act of 1933.
Directors are elected to serve until the next annual meeting of stockholders and
until their successors have been elected and qualified. Officers are appointed
to serve until the meeting of the board of directors following the next annual
meeting of stockholders and until their successors have been elected and
qualified.
No executive officer or director of the corporation has been the subject of any
Order, Judgement, or Decree of any Court of competent jurisdiction, or any
regulatory agency permanently or temporarily enjoining, barring suspending or
otherwise limiting him from acting as an investment advisor, underwriter, broker
or dealer in the securities industry, or as an affiliated person, director or
employee of an investment company, bank, savings and loan association, or
insurance company or from engaging in or continuing any conduct or practice in
connection with any such activity or in connection with the purchase or sale of
any securities.
No executive officer or director of the corporation has been convicted in any
criminal proceeding (excluding traffic violations) or is the subject of a
criminal proceeding which is currently pending.
No executive officer or director of the corporation is the subject of any
pending legal proceedings.
Resumes
Rodger Ward, President, Treasurer & Director
1995 - Current President, Classic Auto Racing Society, El Cajon, California.
Company specializes in staging open road competition races in
various states. Responsible for staff and safety personnel
training, public relations, marketing, technical rule
enforcement, technical inspection personnel training, course
design and selection.
1980 - Current Racing Analyst, Speaker.
1979 - 1984 Director of Special Events, Circus Circus Hotel & Casino, Las
Vegas, NV Manager, Circus Circus Unlimited Hydroplane Racing
Team.
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1975 - 1978 Owner/Promoter, Owasso Motor Speedway, Michigan.
1969 - 1972 Director of Public Relations, Ontario Motor Speedway,
California.
Indianapolis 500 Champion 1959 & 1962.
USAC National Champion 1959 & 1962.
Sherrie Ward, Secretary & Director
1994 - Current Secretary, Treasurer, Classic Auto Society, El Cajon,
California. Company specializes in staging open road competition
races in various states. Responsible for licensing, state and
local permits, pre-event planning and setup, administration,
accounting, contract preparation, television broadcasting
negotiations, event scheduling, sponsorships, and daily
operations management.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information on the ownership of the company's
voting securities by officers, directors and major shareholders as well as those
who own beneficially more than five percent of the company's common stock
through the most current date - November 15, 2000:
<TABLE>
<CAPTION>
Title Of Amount & Percent
Class Name Nature of owner Owned
----- ---- --------------- -----
<S> <C> <C> <C>
Common Rodger Ward 2,130,000(a) 25%
Common Sherrie Ward 2,130,000(b) 25%
Total Shares Owned by Officers
& Directors As a Group 4,260,000 50%
</TABLE>
(a) Mr. Ward received 30,000 shares of the company's common stock on March 12,
1999 for administrative services and services related to the company's business
plan. 2,100,000 shares of the company's common stock were issued to him per a 71
for 1 stock split on March 15, 2000.
(b) Mrs. Ward received 30,000 shares of the company's common stock on March 12,
1999 for administrative services and services related to the company's business
plan. 2,100,000 shares of the company's common stock were issued to her per a 71
for 1 stock split on March 15, 2000.
DESCRIPTION OF SECURITIES
Del Cerro's Certificate of Incorporation authorizes the issuance of 50,000,000
shares of common stock, .001 par value per share. There is no preferred stock
authorized. Holders of shares of common stock are entitled to one vote for each
share on all matters to be voted on by the
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stockholders. Holders of common stock have cumulative voting rights. Holders of
shares of common stock are entitled to share ratably in dividends, if any, as
may be declared, from time to time by the board of directors in its discretion,
from funds legally available therefore. In the event of a liquidation,
dissolution, or winding up of the company, the holders of shares of common stock
are entitled to share pro rata all assets remaining after payment in full of all
liabilities. Holders of common stock have no preemptive or other subscription
rights, and there are no conversion rights or redemption or sinking fund
provisions with respect to such shares. All of the outstanding common stock is,
and the shares offered by the company pursuant to this offering will be, when
issued and delivered, fully paid and non-assessable.
INTEREST OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant. Nor was any such person
connected with the registrant as a promoter, managing or principal underwriter,
voting trustee, director, officer or employee.
Jennifer Pulver, our independent counsel, has provided an opinion on the
validity of our common stock.
SECURITIES ACT INDEMNIFICATION DISCLOSURE
Del Cerro's By-Laws allow for the indemnification of company officers and
directors in regard to their carrying out the duties of their offices. We have
been advised that in the opinion of the Securities and Exchange Commission
indemnification for liabilities arising under the Securities Act is against
public policy as expressed in the Securities Act, and is, therefore
unenforceable. In the event that a claim for indemnification against such
liabilities is asserted by one of our directors, officers, or other controlling
persons in connection with the securities registered, we will, unless in the
opinion of our legal counsel the matter has been settled by controlling
precedent, submit the question of whether such indemnification is against public
policy to a court of appropriate jurisdiction. We will then be governed by the
court's decision.
ORGANIZATION WITHIN LAST FIVE YEARS
Del Cerro Enterprises, Inc. was incorporated in Nevada on March 10, 1999 for the
purpose of developing a high performance driving school in conjunction with
annual nationwide open road races. We received our initial funding through the
sale of common stock to investors from the period of approximately March 15,
1999 until March 31, 1999. We offered and sold 59,000 common stock shares at
$0.10 per share to non-affiliated private investors. From inception until
October 2000, the Company had no material operating activities.
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DESCRIPTION OF BUSINESS
ORGANIZATION
Del Cerro Enterprises, Inc. was incorporated in Nevada on March 10, 1999 for the
purpose of developing a high performance driving school in conjunction with
annual nationwide open road races. During March 1999, we received our initial
funding through the sale of common stock to investors. From inception until
March 2000, we have had no material operating activities.
Any Bankruptcy, Receivership, Or Similar Proceedings
There have been no bankruptcy, receivership or similar proceedings.
Any Material Reclassification, Merger, Consolidation, Or Purchase Or Sale Of A
Significant Amount Of Assets Not In The Ordinary Course Of Business
There have been no material reclassifications, mergers, consolidations, or
purchase or sale of a significant amount of assets not in the ordinary course of
business.
Principal Products Or Services And Their Markets
We intend to offer high speed driving courses at local road racing facilities in
conjunction with established open road races. The extensive instruction will
include a structured curriculum of classroom and track sessions that will
provide an understanding of the fundamentals of road racing. Classroom sessions
will emphasize techniques, racing lines, equipment preparation, technical
inspections and safety procedures. For those participating in the open road
races, sessions will also be offered to cover timing, driver/navigator team
participation, pre-run videos and detailed course notes. Track time will be an
intensive series of slalom, braking and downshifting exercises that give the
participant the opportunity to utilize the techniques and skills discussed in
the classroom in a systematic and controlled environment. Additional track time
will allow the instructor to critique the racer's skill application in a series
of lapping sessions at progressively higher speeds, utilizing radio
communication between instructor and student.
We will initially focus on the participants in the three established open road
races organized by Rodger Ward's Classic Auto Racing Society:
Big Bend Open Road Race
US Highway 285, Fort Stockton - Sanderson - Ft. Stockton, Texas. 120
mile "boomerang" event held each April.
Gambler's Run Twin 50's
Nevada State Route 225, Elko - Wild Horse - Elko, Nevada. 100 mile
"boomerang" event held each June.
Pony Express Open Road Race
Nevada State Route 305, Battle Mountain - Austin, Nevada. 84 mile event
held each
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September.
Open Road Races are conducted on a section of State or Federal Highway,
generally 50 miles or more in length. The participants race the entire distance
at a target speed that they have qualified for based upon the tech speed of
their vehicle. The cars are started in a staggered format with the faster cars
starting first at two to three minute intervals. There is virtually no passing
and no wheel to wheel competition. Participants are required to show proof of
completion of an approved high speed driving course. Awards are given to
participants who come closest to averaging their target speed. Speed divisions
are differentiated by vehicle safety equipment and driver's racing experience -
Touring: 95-110mph, Grand Touring: 115-130mph, Grand Sport: 135-160mph, Super
Sport: 170-180mph, and Unlimited: 180+ mph.
Utilizing management's experience in and knowledge of the motorsport industry,
we plan to conduct multi-day courses at a selection of the more than 25 road
courses located in the states surrounding the open road races. These include:
Arizona
Firebird Intl. Raceway Chandler 1.6 mile
Phoenix Intl. Raceway Mesa 1.51 mile
California
Holtville Raceway Holtville 1.43 mile
Buttonwillow Raceway Buttonwillow 3 mile
Laguna Seca Monterey 2.24 mile
Sears Point Raceway Sonoma 2.52 mile
Willow Springs Motorsports Park Rosamond 2.5 mile
Colorado
Pueblo Motorsports Park Pueblo 2.2 mile
Aspen Sports Car Club Woody Creek 1.1 mile
LaJunta Raceway LaJunta 1.6 mile
Mountain View Motor Sport Park Mead 1.8 mile
Pikes Peak Intl Raceway Fountain 1.3 mile
Second Creek Raceway Denver 1.7 mile
Nevada
Las Vegas Motor Speedway Las Vegas 2.5 mile
Reno-Fernley Raceway Fernley 15 mile
Texas
Cabaniss N.A.S. Corpus Cristi 2.6 mile
Texas Motor Speedway Fort Worth 2.5 mile
Texas World Speedway College Stn. 3.1 mile
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Abilene Municipal Airport Abilene 1.7 mile
Oak Hill Raceway Henderson 1.8 mile
Additional courses for those not participating in the open road races will also
be offered. These may include High Performance Driving - a course combining
advanced street driving skills with techniques refined through years on the
racetrack; Highway Survival Training - emphasizing defensive driving skills and
elements of car control such as accident avoidance, skid control and high-speed
braking; and Teenage Defensive Driving - teaching teens skills such as accident
avoidance, skid control, advanced braking and ABS techniques.
Auto Racing is the nation's fastest-growing spectator and TV sport, with an
attendance rising 11.4% annually over the past five years. According to a 1998
study conducted by Performance Research of Newport, RI, auto racing fans are the
most loyal of any sports fans to sponsor products and industry related
businesses. 78% of NASCAR fans and 68% of IndyCar fans claim they "almost
always" purchase a sponsor's product over a non-sponsor's product. Corporate
sponsorships for auto racing and race related businesses increased 9% in 1997
and is expected to continue at a growth rate of 5% - 10% annually. The study
shows the demographics of the auto racing audience to be:
<TABLE>
<CAPTION>
NASCAR INDYCAR
------ -------
<S> <C> <C>
Median Age 25-44 21-44
Gender 60% Male / 40% Female 69% Male / 31% Female
Marital Status 76% Married 71% Married
Median Income 38K - 49K 40K - 51K
Own 2 or more vehicles 86% 92%
Own 3 or more vehicles 61% 69%
</TABLE>
The company's business plan proposes to utilize its founders' backgrounds to
develop its racing school. The business plan requires we, during the first six
months, raise capital of $2,500,000 through the sale of common stock in a
private placement. After raising the projected capital, we have a planned budget
for months seven through twelve of $957,000 for development of its school to
include $215,000 for five track vehicles and one pre-run van, $240,000 for one
equipment hauler, $80,000 for two full-time instructors, $30,000 for temporary
track personnel, $180,000 for facility rentals - including insurance and safety
personnel, $25,000 for one marketing manager, $17,000 for one office staff
assistant, $25,000 for purchase of computers and fixed assets, $75,000 for
advertising, $20,000 for travel expenses, and $50,000 for rent and other
operating expenses.
DISTRIBUTION METHODS OF PRODUCTS OR SERVICES
For the first two years of our business plan, we plan to advertise the driving
school through our directors' web site, www.openroadracing.com. In addition, we
plan to advertise in publications, such as AutoWeek, AutoRacingDigest, and
Grassroots Motorsports, maintain links on Internet web pages such as
racingschools.com, TheRaceNet.com, and RacingPress.com. Ads in local newspapers
and track publications surrounding the open road races may be placed prior to
each event. Sponsorships for drivers in local events may also be considered.
15
<PAGE> 16
PLANNED NEW PRODUCT OR SERVICE
Del Cerro has no new product or service planned or announced to the public.
COMPETITION AND COMPETITIVE POSITION
The size and financial strength of our primary competitors, The Bondurant
School, Richard Petty Driving Experience and Skip Barber Racing School are
substantially greater than those of the company. In examining major competitors,
we have concluded none offer a driving school in conjunction with a competitive
open road race. The Bondurant and Barber racing schools target the amateur and
professional race car driver seeking to improve specific areas of their driving
and racing techniques. The Petty Driving Experience targets racing enthusiasts
with programs designed to provide them the opportunity to drive a race car in a
controlled environment. However, the company's competitors have longer operating
histories, larger customer bases, and greater brand recognition than Del Cerro.
We are not aware of any significant barriers to our entry into the motorsport
market, however, at this time we have no market share of this market.
SUPPLIERS AND SOURCES OF RAW MATERIALS
Management will rely on their combined experience and knowledge in the auto
racing business to arrange for the acquisition of vehicles for the racing
school. We plan to utilize road race chassis builders to design and assemble our
vehicles and purchase engines from motorsport engine builders to be installed in
the cars. While we have no current contracts with chassis or engine builders,
management is aware of chassis builders such as Neely Motorsports,
Hutcherson-Pagan Enterprises and S&W Race Cars, and engine builders such as
Gustaf Engine & Machine, Draime Racing Engines and Skip Govia Motorsports, Inc.
Miscellaneous parts and safety equipment are available from many suppliers such
as Trac Dynamics, Simpson Racing, BSR Products and Port City Racing. Management
is also aware of opportunities to purchase turnkey vehicles from professional
race teams at auctions held annually throughout the U.S. and will consider the
most cost-efficient means for the acquisition of the vehicles while meeting all
safety specifications. We plan to enter into agreements with chassis and engine
builders per our business plan after raising capital during the first six months
of the plan.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We will not depend on any one or a few major customers. Our target market is the
millions of auto racing fans in the U.S. There are currently 1,585 race tracks
located in the United States, 286 of those located in the states surrounding the
road races organized by Del Cerro's Directors. "Auto Racing is the fastest
growing sport in America today, the economics of the motor-sports industry are
very, very attractive". (Raymond James & Assoc., Investment Analysts) "Speed
Sells... Auto Racing is America's new Favorite sport and it's hottest new
marketing vehicle. Over nine million people attended NASCAR events alone in
1998, with over 2 billion tickets sold for auto racing events worldwide.
Attendance is up 63% since 1990, and retail revenues are expected to exceed $1
billion this year, up from only $80 million in 1990." (Fortune Magazine
4/12/99). A typical Open Road Formula One race is watched by a European
television audience of 310 million. U.S. promoters are building the American
audience for road racing by bringing top European racers to the U.S.
16
<PAGE> 17
(www.businessweek.com/1997/32/b3539109.htm).
PATENTS, TRADEMARKS, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS, LABOR
CONTRACTS
We have no current plans for any registrations such as patents, trademarks,
copyrights, franchises, concessions, royalty agreements or labor contracts. When
we have sufficient funding, management will seek legal counsel to determine if
any registrations would be in the best interests of the company.
REQUIREMENTS FOR GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES
We are not required to apply for or have any government approval for our
products or services. Open Road Races are organized with State or Federal
Highway officials allowing promoters to shut down a designated section of
highway for a period of 8 to 10 hours. Drivers participating in the school will
be required to show a valid state, military or international driver's license.
EFFECT OF GOVERNMENTAL REGULATIONS ON THE COMPANY'S BUSINESS
Del Cerro's business is not subject to material regulation by federal
governmental agencies. We will be required to meet all state and local safety
standards for the vehicles used in our driving schools. Management personnel are
familiar with all state and local safety requirements based on their experience
operating open road racing events.
RESEARCH AND DEVELOPMENT FUNDING DURING THE LAST TWO YEARS
We have not expended funds for research and development costs since inception.
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS
We have not expended any funds for compliance with environmental laws and do not
anticipate our business plan will encompass any such compliance requirements.
NUMBER OF EMPLOYEES
Del Cerro's only current employees are its two officers who will devote as much
time as the board of directors determines is necessary to manage the affairs of
the company. The officers intend to work on a full-time basis when the company
raises capital per its business plan. The business plan calls for hiring four
new full time employees during the next twelve months.
REPORTS TO SECURITY HOLDERS
Del Cerro's By-laws do not require us to deliver an annual report to its
shareholders and we have not in the past provided an annual report to our
shareholders. We do make our financial information
17
<PAGE> 18
equally available to any interested parties or investors through compliance with
the disclosure rules of Regulation S-B for a small business issuer under the
Securities Exchange Act of 1934. Del Cerro became subject to disclosure filing
requirements effective July 18, 2000, was cleared of all comments on May 25,
2000, and is current in its required filings, including Form 10-KSB annually and
Form 10-QSB quarterly. In addition, we will file Form 8 and other proxy and
information statements from time to time as required. We do not intend to
voluntarily file the above reports in the event our obligation to file such
reports is suspended under the Exchange Act.
The public may read and copy any materials that we file with the Securities and
Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 450 Fifth
Street NW, Washington D. C. 20549. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy
and information statements, and other information regarding issuers that file
electronically with the SEC.
PLAN OF OPERATION
Our current cash balance is $1,439. Management believes the current cash balance
is sufficient to fund the current minimum level of operations through the first
quarter of 2001, however, in order to advance the business plan we must raise
capital through the sale of equity securities. To date, we have sold $5,900 in
equity securities. These sales of equity securities have allowed us to maintain
a positive cash flow balance.
Our two-year business plan encompasses the following steps to implement our
goals: during months one through six raise capital of $2,500,000 through the
sale of common stock in a private placement; during months seven through twelve
budget $957,000 for development of its school to include $215,000 for five track
vehicles and one pre-run van, $240,000 for one equipment hauler, $80,000 for two
full-time instructors, $30,000 for temporary track personnel, $180,000 for
facility rentals including insurance and safety personnel, $25,000 for one
marketing manager, $17,000 for one office staff assistant, $25,000 for purchase
of computers and fixed assets, $75,000 for advertising, $20,000 for travel
expenses, and $50,000 for rent and other operating expenses.
We will only be able to advance our business plan after we receive capital
funding through the sale of equity securities. After raising capital, management
intends to hire employees, rent commercial space in San Diego County,
California, purchase furniture and equipment, and begin development of its
operations. We intend to use the equity capital to fund the business plan during
the next twelve months as cash flow from sales is not estimated to begin until
year two of the business plan. We will face considerable risk in each of our
business plan steps, such as difficulty of hiring competent personnel within
budget, difficulty in securing track facility rental, and a shortfall of funding
due to our inability to raise capital in the equity securities market. If no
funding is received during the next twelve months, we will be forced to rely on
its existing cash in the bank and funds loaned by the directors and officers.
The officers and directors have no formal commitments or arrangements to advance
or loan funds to the company. In such a restricted cash flow scenario, we would
be unable to complete our business plan steps, and would, instead, delay all
cash intensive activities. Without necessary cash flow, we may be dormant during
the next twelve months, or until such time as necessary funds could be raised in
the equity securities market.
18
<PAGE> 19
There are no current plans for additional product research and development. We
plan to purchase approximately $25,000 in furniture, computers, and software
during the next twelve months from proceeds of the equity security sales. The
business plan provides for an increase of four employees during the next twelve
months.
DESCRIPTION OF PROPERTY
Del Cerro's principal executive office address is 2635 Camino del Rio South
#211, San Diego, CA 92108. The principal executive office and telephone number
are provided by an officer of the corporation. The costs associated with the use
of the telephone and mailing address were deemed by management to be immaterial
as the telephone and mailing address were almost exclusively used by the officer
for other business purposes. Management considers the current principal office
space arrangement adequate until such time as we are able to achieve our
business plan goal of raising capital of $2,500,000 and then begin hiring new
employees per the business plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The principal executive office and telephone number are provided by Mr. Ward, an
officer of the corporation. The costs associated with the use of the telephone
and mailing address were deemed by management to be immaterial as the telephone
and mailing address were almost exclusively used by the officer for other
business purposes.
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
Del Cerro plans to file for trading on the OTC Electronic Bulletin Board which
is sponsored by the National Association of Securities Dealers (NASD). The OTC
Electronic Bulletin Board is a network of security dealers who buy and sell
stock. The dealers are connected by a computer network which provides
information on current "bids", "asks" and volume.
As of the date of this filing, there is no public market for our securities.
There has been no public trading of our securities, and, therefore, no high and
low bid pricing. As of November 15, 2000, Del Cerro had 61 shareholders of
record. We have paid no cash dividends and have no outstanding options.
EXECUTIVE COMPENSATION
Del Cerro's current officers receive no compensation.
19
<PAGE> 20
Summary Compensation Table
<TABLE>
<CAPTION>
Other
Name & annual Restricted LTIP All other
principle Salary Bonus compen- stock Options Payouts compen-
position Year ($) ($) sation($) awards($) SARs ($) sation($)
-------- ---- ------ ----- --------- ---------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R Ward 1999 -0- -0- -0- 3,000 -0- -0- -0-
President 2000 -0- -0- -0- -0- -0- -0- -0-
S Ward 1999 -0- -0- -0- 3,000 -0- -0- -0-
Secretary 2000 -0- -0- -0- -0- -0- -0- -0-
</TABLE>
There are no current employment agreements between Del Cerro and its executive
officers.
The Board agreed to pay Mr. Ward for administrative services and services
related to the company's business plan 30,000 shares of the company's common
stock on March 12, 1999. The stock was valued at the price unaffiliated
investors paid for stock sold by the company, $.10 per share. On March 15, 2000,
2,100,000 shares of the company's common stock were issued to him per a 71 for 1
stock split.
The Board agreed to pay Mrs. Ward for administrative services and services
related to the company's business plan 30,000 shares of the company's common
stock on March 12, 1999. The stock was valued at the price unaffiliated
investors paid for stock sold by the company, $.10 per share. On March 15, 2000,
2,100,000 shares of the company's common stock were issued to her per a 71 for 1
stock split.
The terms of these stock issuances were as fair to Del Cerro, in the board's
opinion, as could have been made with an unaffiliated third party.
The officers currently devote an immaterial amount of time to manage the affairs
of the company. The directors and principal officers have agreed to work with no
remuneration until such time as we receive sufficient revenues necessary to
provide proper salaries to all officers and compensation for directors'
participation. The officers and the board of directors have the responsibility
to determine the timing of remuneration for key personnel based upon such
factors as positive cash flow to include stock sales, product sales, estimated
cash expenditures, accounts receivable, accounts payable, notes payable, and a
cash balance of not less than $25,000 at each month end. When positive cash flow
reaches $25,000 at each month end and appears sustainable the board of directors
will readdress compensation for key personnel and enact a plan at that time
which will benefit the company as a whole. At this time, management cannot
accurately estimate when sufficient revenues will occur to implement this
compensation, or the exact amount of compensation.
There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors or employees of the corporation in the event of retirement
at normal retirement date pursuant to any presently existing plan provided or
contributed to by the corporation or any of its subsidiaries, if any.
FINANCIAL STATEMENTS
The audited financial statements of Del Cerro for the years ended September 30,
2000 and 1999 and related notes which are included in this offering have been
examined by Barry Friedman, CPA,
20
<PAGE> 21
and have been so included in reliance upon the opinion of such accountants
given upon their authority as an expert in auditing and accounting.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING CONTROL
AND FINANCIAL DISCLOSURE
None.
21
<PAGE> 22
PART II
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Del Cerro's By-Laws allow for the indemnification of the officers and directors
in regard to their carrying out the duties of their offices. The board of
directors will make determination regarding the indemnification of the director,
officer or employee as is proper under the circumstances if he/she has met the
applicable standard of conduct set forth in the Nevada General Corporation Law.
As to indemnification for liabilities arising under the Securities Act of 1933
for directors, officers or persons controlling the company, we have been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy and unenforceable. See section entitled
"Disclosure of Commission Position on Indemnification for Securities Act
Liabilities".
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated costs of the offering are denoted below. Please note all amounts
are estimates other than the Commission's registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $111
Accounting fees and expenses $1000
Legal fees $500
Total $1611
</TABLE>
Del Cerro will pay all expenses of the offering listed above. No portion of
these expenses will be borne by the selling shareholders.
RECENT SALES OF UNREGISTERED SECURITIES
On March 12, 1999, the shareholders authorized the issuance of 30,000 shares of
common stock for services to each of the officers and directors of the company
for a total of 60,000 shares. We relied upon Section 4(2) of Securities Act of
1933, as amended (the "Act"). We issued the shares in satisfaction of management
services rendered by the officers and directors, which does not constitute a
public offering.
From the period of approximately March 15, 1999 until March 31, 1999, we offered
and sold 59,000 shares at $0.10 per share to 59 non-affiliated private
investors. We relied upon Section 4(2) of the Securities Act of 1933, as amended
(the "Act"). Each prospective investor was given a private placement memorandum
designed to disclose all material aspects of an investment in Del Cerro,
including the business, management, offering details, risk factors and financial
statements. Each investor also completed a subscription confirmation letter and
private placement subscription agreement whereby the investors certified that
they were purchasing the shares for their own accounts, with investment intent
and that each investor was either "accredited", or were "sophisticated"
purchasers, having prior investment experience or education, and having adequate
and reasonable opportunity and access to any corporate information necessary to
make an informed investment decision. This offering was not accompanied by
general advertisement or
22
<PAGE> 23
general solicitation and the shares were issued with a Rule 144 restrictive
legend.
Under the Securities Act of 1933 , all sales of an issuers's securities or by a
shareholder, must either be made (i) pursuant to an effective registration
statement filed with the SEC, or (ii) pursuant to an exemption from the
registration requirements under the 1933 Act.
Rule 144 under the 1933 Act sets forth conditions which if satisfied, permit
persons holding control securities (affiliated shareholders, i.e., officers,
directors or holders of at least ten percent of the outstanding shares) or
restricted securities (non-affiliated shareholders) to sell such securities
publicly without registration. Rule 144 sets forth a holding period for
restricted securities to establish that the holder did not purchase such
securities with a view to distribute. Under Rule 144, several provisions must be
met with respect to the sales of control securities at any time and sales of
restricted securities held between one and two years. The following is a summary
of the provisions of Rule 144: (a) Rule 144 is available only if the issuer is
current in its filings under the Securities an Exchange Act of 1934. Such
filings include, but are not limited to, the issuer's quarterly reports and
annual reports; (b) Rule 144 allows resales of restricted and control securities
after a one year hold period, subjected to certain volume limitations, and
resales by non-affiliates holders without limitations after two years; ( c ) The
sales of securities made under Rule 144 during any three-month period are
limited to the greater of: (i) 1% of the outstanding common stock of the issuer;
or (ii) the average weekly reported trading volume in the outstanding common
stock reported on all securities exchanges during the four calendar weeks
preceding the filing of the required notice of the sale under Rule 144 with the
SEC.
On March 15, 2000, the board of directors authorized a forward stock split of 71
for 1 resulting in a total of 8,449,000 shares of common stock issued and
outstanding.
<TABLE>
<CAPTION>
EXHIBITS
<S> <C> <C>
Exhibit 1 Underwriting Agreement None
Exhibit 2 Plan of acquisition, reorganization or liquidation None
Exhibit 3(i) Articles of Incorporation and Amendment Included
Exhibit 3(ii) By-laws Included
Exhibit 4 Instruments defining the rights of holders None
Exhibit 5 Opinion re: Legality Included
Exhibit 8 Opinion re: Tax Matters None
Exhibit 9 Voting Trust Agreement None
Exhibit 10 Material Contracts None
Exhibit 11 Statement re: computation of per share earnings See Financials
Exhibit 13 Annual or Quarterly Reports
The company's 10K-SB for the year ended 9/30/00 and the company's
10QSB for the quarter ended 6/30/00 are available through EDGAR
on the Securities and Exchange Commission web site (www.sec.gov)
Exhibit 15 Letter on unaudited interim financial information None
Exhibit 16 Letter on change of certifying accountant None
Exhibit 21 Subsidiaries of the registrant None
Exhibit 23 Consent of experts and counsel Included
Exhibit 24 Power of Attorney None
</TABLE>
23
<PAGE> 24
<TABLE>
<S> <C> <C>
Exhibit 25 Statement of eligibility of trustee None
Exhibit 26 Invitations for competitive bids None
Exhibit 27 Financial Data Schedule Included
</TABLE>
UNDERTAKINGS
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers of sales are being made, a
post-effective amendment to this registration statement to:
1. Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
2. Reflect in the prospectus any facts or events arising after the
effective date of this registration statement, or most recent
post-effective amendment, which, individually or in the
aggregate, represent a fundamental change in the information set
forth in this registration statement; and
3. Include any material information with respect to the plan of
distribution not previously disclosed in this registration
statement or any material change to such information in the
registration statement.
2. That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and
that the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any
of the securities being registered hereby which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities is asserted by
one of our directors, officers, or other controlling persons in connection with
the securities registered, we will, unless in the opinion of our legal counsel
the matter has been settled by controlling precedent, submit the question of
whether such indemnification is against public policy to a court of appropriate
jurisdiction. We will then be governed by the final adjudication of such issue.
24
<PAGE> 25
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe it meets all of
the requirements for filing Form SB-2 and authorized this registration statement
to be signed on its behalf by the undersigned, in the city of San Diego, state
of California, on November 15, 2000.
Del Cerro Enterprises, Inc.
By /s/ Rodger Ward
-------------------------------------
Rodger Ward, President & Director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
dates stated.
/s/ Rodger Ward , President, Treasurer & Director 11/15/00
----------------------- -------------------
Rodger Ward Date
/s/ Sherrie Ward , Secretary 11/15/00
----------------------- & Director -------------------
Sherrie Ward Date
25
<PAGE> 26
DEL CERRO ENTERPRISES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
SEPTEMBER 30, 1999
<PAGE> 27
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE #
------
<S> <C>
INDEPENDENT AUDITORS REPORT F-1
ASSETS F-2
LIABILITIES AND STOCKHOLDERS' EQUITY F-3
STATEMENT OF OPERATIONS F-4
STATEMENT OF STOCKHOLDERS' EQUITY F-5
STATEMENT OF CASH FLOWS F-6
NOTES TO FINANCIAL STATEMENTS F-7-F-11
</TABLE>
<PAGE> 28
[BARRY L FRIEDMAN, P.C. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
Board of Directors October 23, 2000
DEL CERRO ENTERPRISES, INC.
San Diego, California
I have audited the accompanying Balance Sheets of DEL CERRO ENTERPRISES,
INC. (A Development Stage Company), as of September 30, 2000, and September 30,
1999, and the related statements of operations, stockholders' equity and cash
flows for the year ended September 30, 2000, and the period March 10, 1999,
(inception), to September 30, 1999. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of DEL CERRO
ENTERPRISES, INC. (A Development Stage Company), as of September 30, 2000, and
September 30, 1999, and the related statements of operations, stockholders'
equity and cash flows for the year ended September 30, 2000, and the period
March 10, 1999, (inception), to September 30, 1999, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note #5 to the
financial statements, the Company has suffered recurring losses from operations
and has no established source of revenue. This raises substantial doubt about
its ability to continue as a going concern. Management's plan in regard to these
matters is described in Note #5. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Barry L. Friedman
---------------------------
Barry L. Friedman
Certified Public Accountant
1582 Tulita Drive
Las Vegas, NV 89123
(702) 361-8414
F-1
<PAGE> 29
DEL CERRO ENTERPRISES, INC.
(A Development Stage Company)
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER SEPTEMBER
30, 2000 30, 1999
-------- --------
<S> <C> <C>
CURRENT ASSETS
CASH $1,554 $5,900
------ ------
TOTAL CURRENT ASSETS $1,554 $5,900
------ ------
OTHER ASSETS $ 0 $ 0
------ ------
TOTAL OTHER ASSETS $ 0 $ 0
------ ------
TOTAL ASSETS $1,554 $5,900
------ ------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-2
<PAGE> 30
DEL CERRO ENTERPRISES, INC.
(A Development Stage Company)
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SEPTEMBER SEPTEMBER
30, 2000 30, 1999
--------- ---------
<S> <C> <C>
CURRENT LIABILITIES $ 0 $ 0
------ ------
TOTAL CURRENT LIABILITIES $ 0 $ 0
------ ------
STOCKHOLDERS' EQUITY (Note #4)
Common stock
Par value $0.001
Authorized 50,000,000 shares
Issued and outstanding at
September 30, 1999-
119,000 shares $ 119
September 30, 2000-
8,449,000 shares $8,449
Additional Paid-In Capital +3,451 +11,781
Deficit accumulated during
The Development stage -10,346 -6,000
TOTAL STOCKHOLDERS' EQUITY $1,554 $5,900
------ ------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,554 $5,900
------ ------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-3
<PAGE> 31
DEL CERRO ENTERPRISES, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR MAR. 10, MAR.10,1999
ENDED 1999, TO (INCEPTION)
SEP. 30, SEPT. 30, TO SEP. 30,
2000 1999 2000
---------- ---------- -----------
<S> <C> <C> <C>
INCOME
Revenue $ 0 $ 0 $ 0
---------- ---------- ----------
EXPENSES
General, Selling and
Administrative $ 4,346 $ 6,000 $ 10,346
---------- ---------- ----------
TOTAL EXPENSES $ 4,346 $ 6,000 $ 10,346
---------- ---------- ----------
NET PROFIT/LOSS (-) $ -4,346 $ -6,000 $ -10,346
---------- ---------- ----------
Net Profit/Loss(-)
per weighted share
(Note #1) $ -.0005 $ -.0007 $ -.0012
---------- ---------- ----------
Weighted average
Number of common
shares outstanding 8,449,000 8,449,000 8,449,000
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
<PAGE> 32
DEL CERRO ENTERPRISES, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional Accumu-
Common Stock paid-in lated
Shares Amount Capital Deficit
--------- ------ ---------- ---------
<S> <C> <C> <C> <C>
March 24, 1999
Issued For Services 60,000 $ 60 $ 5,940
April 2, 1999
Issued For Cash 59,000 59 5,841
Net loss year ended
March 10, 1999
(Inception) to
September 30, 1999 $ -6,000
--------- ------ ------- ---------
Balance,
September 30, 1999 119,000 $ 119 $11,781 $ -6,000
March 15, 2000
Forward Stock Split
70 for 1 8,330,000 +8,330 -8,330
Net Loss Year Ended
September 30, 2000 -4,346
--------- ------ ------- ---------
Balance,
September 30, 2000 8,449,000 $8,449 $ 3,451 $ -10,346
--------- ------ ------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-5
<PAGE> 33
DEL CERRO ENTERPRISES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR MAR. 10, MAR.10,1999
ENDED 1999, TO (INCEPTION)
SEP. 30, SEPT. 30, TO SEP. 30,
2000 1999 2000
------- -------- -----------
<S> <C> <C> <C>
Cash Flows from
Operating Activities
Net Loss $-4,346 $-6,000 $-10,346
Adjustment to
Reconcile net loss
To net cash provided
by operating
Activities
Issue Common Stock
For Services 0 +6,000 +6,000
Changes in assets and
Liabilities 0 0 0
------ ------ --------
Net cash used in
Operating activities $-4,346 $ 0 $-4,346
Cash Flows from
Investing Activities 0 0 0
Cash Flows from
Financing Activities
Issuance of Common
Stock for Cash 0 +5,900 +5,900
------ ------ --------
Net Increase (decrease) $-4,346 $+5,900 +1,554
Cash,
Beginning of period +5,900 0 0
------ ------ --------
Cash, End of Period $1,554 $5,900 $ 1,554
------ ------ --------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-6
<PAGE> 34
DEL CERRO ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000, AND SEPTEMBER 30, 1999
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized March 10,1999, under the laws of the State of
Nevada as DEL CERRO ENTERPRISES, INC. The Company currently has no
operations and in accordance with SFAS #7, is considered a development
company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Company records income and expenses on the accrual method.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and equivalents
The Company maintains a cash balance in a non-interest-bearing
bank that currently does not exceed federally insured limits.
For the purpose of the statements of cash flows, all highly
liquid investments with the maturity of three months or less are
considered to be cash equivalents.
F-7
<PAGE> 35
DEL CERRO ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2000, AND SEPTEMBER 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
Income taxes are provided for using the liability method of
accounting in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS #109) "Accounting for Income Taxes". A
deferred tax asset or liability is recorded for all temporary
difference between financial and tax reporting. Deferred tax
expense (benefit) results from the net change during the year of
deferred tax assets and liabilities.
Reporting on Costs of Start-Up Activities
Statement of Position 98-5 ("SOP 98-5"), "Reporting on the Costs
of Start-Up Activities" which provides guidance on the financial
reporting of start-up costs and organization costs. It requires
most costs of start-up activities and organization costs to be
expensed as incurred. SOP 98-5 is effective for fiscal years
beginning after December 15, 1998. With the adoption of SOP
98-5, there has been little or no effect on the company's
financial statements.
Loss Per Share
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS #128) "Earnings Per
Share". Basic loss per share is computed by dividing losses
available to common stockholders by the weighted average number
of common shares outstanding during the period. Diluted loss per
share reflects per share amounts that would have resulted if
dilative common stock equivalents had been converted to common
stock. As of September 30, 2000, the Company had no dilative
common stock equivalents such as stock options.
F-8
<PAGE> 36
DEL CERRO ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2000, AND SEPTEMBER 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Year End
The Company has selected September 30th as its fiscal year-end.
NOTE 3 - INCOME TAXES
There is no provision for income taxes for the period ended September
30, 2000. The Company's total deferred tax asset as of September 30,
2000, is as follows:
<TABLE>
<S> <C>
Net operation loss carry forward $ 10,346
Valuation allowance $ 10,346
Net deferred tax asset $ 0
</TABLE>
The federal net operating loss carry forward will expire between 2019
and 2020.
This carry forward may be limited upon the consummation of a business
combination under IRC Section 381.
F-9
<PAGE> 37
DEL CERRO ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2000, AND SEPTEMBER 30, 1999
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock
The authorized common stock of the corporation consists of 50,000,000
shares with a par value $0.001 per share.
Preferred Stock
The Company has no preferred stock.
On March 24, 1999, the Company issued 60,000 shares of its $0.001 par
value common stock for services of $6,000 to its directors.
On March 24, 1999, the State of Nevada approved the Company's restated
Articles of Incorporation, which changed the par value from no par to
$0.001. Also, the Company's authorized common stock was increased from
25,000 shares to 50,000,000 shares.
On March 15, 2000, the Company approved a forward stock split on the
basis of 70 for 1, thus increasing the common stock from 119,000 shares
8,449,000 shares.
NOTE 5 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal
course of business. However, the Company does not have significant cash
or other material assets, nor does it have an established source of
revenues sufficient to cover its operating costs and to allow it to
continue as a going concern. The stockholders/officers and/or directors
have informally committed to advancing the operating costs of the
Company interest free, if necessary.
F-10
<PAGE> 38
DEL CERRO ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2000, AND SEPTEMBER 30, 1999
NOTE 6 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
shares of common stock.
NOTE 7 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An
officer of the corporation provides office services without charge. Such
costs are immaterial to the financial statements and accordingly, have
not been reflected therein. The officers and directors of the Company
are involved in other business activities and may in the future, become
involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The
Company has not formulated a policy for the resolution of such
conflicts.
F-11
