AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 24, 2000
REGISTRATION NO. 333-33854
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CORPORATE DEVELOPMENT AND INNOVATION INC.
(EXACT NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
WASHINGTON 5499 91-2060082
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) INDUSTRIAL CODE) IDENTIFICATION NUMBER)
11229 LYON ROAD
DELTA, BRITISH COLUMBIA CANADA V4E 1J8
(604) 594-4459
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
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AGENT FOR SERVICE: WITH A COPY TO:
EDWIN LAO, PRESIDENT JAMES L. VANDEBERG
CORPORATE DEVELOPMENT AND INNOVATION INC. OGDEN MURPHY WALLACE, PLLC
11229 LYON ROAD 1601 FIFTH AVENUE, SUITE 2100
DELTA, BRITISH COLUMBIA CANADA V4E 1J8 SEATTLE, WASHINGTON 98101
(604) 594-4459 (206) 447-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
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,
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, 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.
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
--------------------------- ---------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
Class A Common Stock . . . 7,000,000 $ .01 $ 70,000.00 $ 18.48
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The registration 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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SUBJECT TO COMPLETION-[ENTER DATE, 2000]
PROSPECTUS
, 2000
CORPORATE DEVELOPMENT AND INNOVATION INC.
1129 LYON ROAD
DELTA, BRITISH COLUMBIA CANADA V4E 1J8
(604) 594-4459
7,000,000 SHARES OF COMMON STOCK
This is the initial public offering of common stock of Corporate
Development and Innovation Inc., and no public market currently exists for
shares of Corporate Development and Innovation's common stock. The initial
public offering price is $0.01 per share of common stock which was arbitrarily
determined. The offering is on a best efforts-no minimum basis. There is no
minimum purchase requirement and no arrangement to place funds in an escrow,
trust, or similar account. The latest date on which this offering will close
will be 30 days after the date of this prospectus.
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This investment involves a high degree of risk.
See "Risk Factors" beginning on Page 2.
Neither the Securities and Exchange Commission nor any state securities
Commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
We will amend and complete the information in this prospectus. The
information in this prospectus is not complete and may be changed. We may not
sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell
These securities and it is not soliciting an offer to buy these securities in
Any state where the offer or sale is not permitted.
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TABLE OF CONTENTS
PAGE
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PART I-PROSPECTUS
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PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
USE OF PROCEEDS .. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DETERMINATION OF OFFERING PRICE .. . . . . . . . . . . . . . . . . . . 3
SELLING SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . 3
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . 4
LEGAL PROCEEDINGS .. . . . . . . . . . . . . . . . . . . . . . . . . . 4
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS . . . . . 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . 4
DESCRIPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 5
INTEREST OF NAMED EXPERTS AND COUNSEL .. . . . . . . . . . . . . . . . 5
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
DESCRIPTION OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION .. . . . . . 13
DESCRIPTION OF PROPERTY .. . . . . . . . . . . . . . . . . . . . . . . 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . 14
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . . . . . . . 14
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . 15
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . F-1
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . F-7
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<PAGE>
PROSPECTUS SUMMARY
CORPORATE DEVELOPMENT AND INNOVATION INC.
Corporate Development and Innovation Inc. is a corporation formed under the
laws of the State of Washington, whose principal executive offices are located
in Delta, British Columbia, Canada.
The primary objective of the business is designed to market high-quality,
low-cost vitamins, minerals, nutritional supplements, and other health and
fitness products to medical professionals, alternative health professionals,
martial arts studios and instructors, sports and fitness trainers, other health
and fitness professionals, school and other fund raising programs and other
similar types of customers via the Internet for sale to their clients in
Illinois less the counties of Jo Davies, Stevenson, Winnebago, Rock Island,
Henry, Will, Kankakee, Iroquois and Vermillion.
NAME, ADDRESS, AND TELEPHONE NUMBER OF REGISTRANT
Corporate Development and Innovation
11229 Lyon Road
Delta, British Columbia Canada V4E 1J8
(604)594-4459
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THE OFFERING
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Price per share Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.01
Common Stock Offered by Corporate Development and Innovation . . . . . . . . . 7,000,000 shares
Common Stock Outstanding Prior to Offering . . . . . . . . . . . . . . . . . . 7,500,000 shares
Common Stock Outstanding After Offering Assuming 50% of the Offering is Sold . 11,000,000 shares
Common Stock Outstanding After Offering Assuming 100% of the Offering is Sold 14,500,000 shares
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Corporate Development and Innovation expects to use the net proceeds for
organizational purposes and to determine the feasibility of selling
Vitamineralherb.com products to specific markets.
1
<PAGE>
RISK FACTORS
Corporate Development and Innovation Has Incurred Losses Since Its Inception
August 17, 2000 and Expects Losses to Continue For the Foreseeable Future
Corporate Development and Innovation is in the extreme early stages of
development and could fail before implementing its business plan. It is a "start
up" venture that will incur net losses for the foreseeable future. Corporate
Development and Innovation has only recently acquired its principal asset.
Corporate Development and Innovation will incur additional expenses before
becoming profitable, if it ever becomes profitable. It is a relatively young
company that has no history of earnings or profit. There is no assurance that it
will operate profitably in the future or provide a return on investment in the
future.
Changes or Interruptions to Corporate Development and Innovation's Arrangements
with Its Supplier May Have an Adverse Effect on Its Ability to Operate
If Corporate Development and Innovation's licensor defaults under its
agreement with its supplier, Corporate Development and Innovation could lose
access to its manufacturing source, and Corporate Development and Innovation
distribution rights would become meaningless. Similarly, any dispute between the
supplier and licensor could prevent Corporate Development and Innovation from
selling or delivering product to its customers. Any termination or impairment of
Corporate Development and Innovation's license rights and access to products
could prevent Corporate Development and Innovation from implementing its
business plan, thereby limiting its profitability and decreasing the value of
its stock.
If the Vitamineralherb.com Business Plan Does Not Prove To Be Feasible,
Corporate Development and Innovation May Be Considered a Blank Check Company
Which Would Restrict Resales of Its Stock
If the Vitamineralherb.com business plan does not prove to be economically
feasible, and Corporate Development and Innovation does not otherwise have a
specific business plan or purpose, Corporate Development and Innovation would be
considered a "blank check company", which could limit an investor's ability to
sell its stock, thereby decreasing the value of the stock. A "blank check
company" is subject to Rule 419 of the Securities Act. Pursuant to Rule 419, all
funds raised by and securities issued in connection with a public offering by a
blank check company must be held in escrow, and any such securities may not be
transferred. Many states have also enacted statutes, rules and regulations
limiting the sale of securities of blank check companies within their respective
jurisdictions. As a result, Corporate Development and Innovation would have
great difficulty raising additional capital. In addition, there would be a
limited public market, if any, for resale of the shares of Corporate Development
and Innovation common stock issued in this offering.
Corporate Development and Innovation May Need Additional Financing Which May Not
Be Available, Or Which May Dilute the Ownership Interests of Investors
Corporate Development and Innovation's ultimate success will depend on its
ability to raise additional capital. No commitments to provide additional funds
have been made by management or other shareholders. Corporate Development and
Innovation has not investigated the availability, source or terms that might
govern the acquisition of additional financing. Corporate Development and
Innovation may raise additional funds through the issuance of equity,
equity-related or convertible debt securities. The issuance of additional
common stock will dilute existing stockholders. Corporate Development and
Innovation may issue securities with rights, preferences or privileges senior to
those of the rights of its common stock and its stockholders may experience
additional dilution. When additional capital is needed, there is no assurance
that funds will be available from any source or, if available, that they can be
obtained on terms acceptable to Corporate Development and Innovation. If not
available, Corporate Development and Innovation's operations would be severely
limited, and it would be unable to implement its business plan.
Purchasers Must Rely on Mr. Lao's Abilities For All Decisions As He Will Control
the Majority of the Stock After the Offering. Corporate Development and
Innovation Has No Employment Agreement With Mr. Lao and He Spends Only Part-time
On Its Business. His Leaving May Adversely Effect Corporate Development and
Innovation's Ability To Operate
Mr. Lao is serving as Corporate Development and Innovation's sole officer
and director. Corporate Development and Innovation will be heavily dependent
upon Mr. Lao's entrepreneurial skills and experience to implement its business
plan and may, from time to time, find that his inability to devote full time and
attention to its affairs will result in delay(s) in progress towards the
implementation of its business plan or in a failure to implement its business
plan. Moreover, Corporate Development and Innovation does not have an employment
agreement with Mr. Lao and as a result, there is no assurance that he will
continue to manage its affairs in the future. Nor has Corporate Development and
Innovation obtained a key man life insurance policy on Mr. Lao. Corporate
Development and Innovation could lose the services of Mr. Lao, or Mr. Lao could
decide to join a competitor or otherwise compete directly or indirectly with
Corporate Development and Innovation, which would have a significant adverse
effect on its business and could cause the price of its stock to be worthless.
The services of Mr. Lao would be difficult to replace.
2
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Prospectus Summary", "Risk Factors",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", "Description of Business", and elsewhere in this prospectus
constitute forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as "may", "will", "should",
"expects", "plans", "anticipates", "believes", "estimated", "predicts",
"potential", or "continue" or the negative of such terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties, and other factors that may cause Corporate Development and
Innovation's actual results, levels of activity, performance, or achievements to
be materially different from any future results, levels of activity,
performance, or achievements expressed or implied by such forward-looking
statements. These factors include, among other things, those listed under "Risk
Factors" and elsewhere in this prospectus. Although Corporate Development and
Innovation believes that the expectations reflected in the forward-looking
statements are reasonable, it cannot guarantee future results, levels of
activity, performance, or achievements.
USE OF PROCEEDS
The net proceeds to Corporate Development and Innovation from the sale of
the 7,000,000 shares of common stock offered by Corporate Development and
Innovation hereby at an assumed initial public offering price of $.01 per share
are estimated to be $70,000. Corporate Development and Innovation expects to use
the net proceeds as follows:
ASSUMING SALE OF ASSUMING SALE OF
50% OF STOCK 100% OF STOCK
PURPOSE BEING OFFERED BEING OFFERED
------- ------------------ ----------------
Organizational Purposes $ 1,000 $ 1,000
Feasibility of License/Market Research $ 13,500 $ 13,500
Operational Expenses $ 20,500 $ 55,500
Corporate Development and Innovation continually evaluates other business
opportunities that may be available to it, whether in the form of assets
acquisitions or business combinations. Corporate Development and Innovation may
use a portion of the proceeds for these purposes. Corporate Development and
Innovation is not currently a party to any contracts, letters of intent,
commitments or agreements and is not currently engaged in active negotiations
with respect to any acquisitions.
Corporate Development and Innovation has not yet determined the amount of
net proceeds to be used specifically for any of the foregoing purposes.
Accordingly, Corporate Development and Innovation's management will have
significant flexibility in applying the net proceeds of the offering.
DETERMINATION OF OFFERING PRICE
Corporate Development and Innovation is offering 7,000,000 share of common
stock at $.01 per share, which is the same price paid by Mr. Lao for his
shares. Corporate Development and Innovation arbitrarily determined the price of
the shares in this Offering. The offering price is not an indication of and is
not based upon the actual value of Corporate Development and Innovation. It
bears no relationship to the book value, assets or earnings of Corporate
Development and Innovation or any other recognized criteria of value. The
offering price should not be regarded as an indicator of the future market price
of the securities.
SELLING SECURITY HOLDERS
There are no selling security holders.
3
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PLAN OF DISTRIBUTION
Corporate Development and Innovation will offer and sell its common stock
through its sole officer and director, Edwin Lao, pursuant to and in compliance
with Rule 3a4-1 of the Exchange Act. All sales will be made in compliance with
the securities laws of local jurisdictions.
LEGAL PROCEEDINGS
Corporate Development and Innovation is not a party to any pending legal
proceeding or litigation and none of its property is the subject of a pending
legal proceeding. Further, the officer and director knows of no legal
proceedings against Corporate Development and Innovation or its property
contemplated by any governmental authority.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the name, age and position of each director
and executive officer of Corporate Development and Innovation:
NAME AGE POSITION
---- --- --------
Edwin Lao 52 President, Secretary, Treasurer, Director
In August, 2000, Mr. Lao was elected as the sole officer and director of
Corporate Development and Innovation., of which he is the sole stockholder. He
will serve until the first annual meeting of Corporate Development and
Innovation's shareholders and his successors are elected and qualified.
Thereafter, directors will be elected for one-year terms at the annual
shareholders' meeting. Officers will hold their positions at the pleasure of the
board of directors, absent any employment agreement.
From 1992 through 1998, Mr. Lao was the owner and operator of Service King
Construction Ltd., a private construction company in the Lower Mainland of
Vancouver, British Columbia, Canada. Service King Construction provides water
and fire restoration, building maintenance, flooring installation, and general
building construction services. Since 1996, Mr. Lao has provided market
development and sales services for real estate projects to the Middlehaven Group
of Companies, a private real estate corporation in British Columbia. From
1998-2000, Mr. Lao was also the owner and developer of a nine story luxury
building in Melbourne, Australia, which has now been sold. Since 1999, Mr. Lao
has served as a director of Corporate Development & Innovation Pty. Ltd., a
private Australian corporation which specializes in the acquisition and
deployment of leading edge technologies in the telephony wireless industry.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 31, 2000, Corporate
Development and Innovation's outstanding common stock owned of record or
beneficially by each Executive Officer and Director and by each person who owned
of record, or was known by Corporate Development and Innovation to own
beneficially, more than 5% of its common stock, and the shareholdings of all
Executive Officers and Directors as a group. Each person has sole voting and
investment power with respect to the shares shown.
SHARES PERCENTAGE OF
NAME OWNED SHARES OWNED
------------------------------------------------- --------- --------------
Edwin Lao .. . . . . . . . . . . . . . . . . . 7,500,000 100%
President, Secretary, Treasurer, and Director
11229 Lyon Road
Delta, BC Canada V4E 1J8
All Executive Officers and Directors as a Group
(1 Individual) .. . . . . . . . . . . . . . . 7,500,000 100%
4
<PAGE>
DESCRIPTION OF SECURITIES
The following description of Corporate Development and Innovation's capital
stock is a summary of the material terms of its capital stock. This summary is
subject to and qualified in its entirety by Corporate Development and
Innovation's articles of incorporation and bylaws, and by the applicable
provisions of Washington law.
The authorized capital stock of Corporate Development and Innovation
consists of 120,000,000 shares: 100,000,000 shares of Common Stock having a par
value of $0.0001 per share and 20,000,000 shares of Preferred Stock. The
articles of incorporation do not permit cumulative voting for the election of
directors, and shareholders do not have any preemptive rights to purchase shares
in any future issuance of Corporate Development and Innovation's common stock.
The holders of shares of common stock of Corporate Development and
Innovation do not have cumulative voting rights in connection with the election
of the Board of Directors, which means that the holders of more than 50% of such
outstanding shares, voting for the election of directors, can elect all of the
directors to be elected, if they so choose, and, in such event, the holders of
the remaining shares will not be able to elect any of Corporate Development and
Innovation's directors.
The holders of shares of common stock are entitled to dividends, out of
funds legally available therefor, when and as declared by the Board of
Directors. The Board of Directors has never declared a dividend and does not
anticipate declaring a dividend in the future. Each outstanding share of common
stock entitles the holder thereof to one vote per share on all matters. The
holders of the shares of common stock have no preemptive or subscription rights.
In the event of liquidation, dissolution or winding up of the affairs of
Corporate Development and Innovation, holders are entitled to receive, ratably,
the net assets of Corporate Development and Innovation available to shareholders
after payment of all creditors.
All of the issued and outstanding shares of common stock are duly
authorized, validly issued, fully paid, and non-assessable. To the extent that
additional shares of Corporate Development and Innovation's common stock are
issued, the relative interests of existing shareholders may be diluted.
INTEREST OF NAMED EXPERTS AND COUNSEL
Neither Manning Elliott nor Ogden Murphy Wallace, PLLC was employed on a
contingent basis in connection with the registration or offering of Corporate
Development and Innovation's common stock.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Corporate Development and Innovation's articles of incorporation provide
that it will indemnify its officers and directors to the full extent permitted
by Washington state law. Corporate Development and Innovation's bylaws provide
that it will indemnify and hold harmless each person who was, is or is
threatened to be made a party to or is otherwise involved in any threatened
proceedings by reason of the fact that he or she is or was a director or officer
of Corporate Development and Innovation or is or was serving at the request of
Corporate Development and Innovation as a director, officer, partner, trustee,
employee, or agent of another entity, against all losses, claims, damages,
liabilities and expenses actually and reasonably incurred or suffered in
connection with such proceeding.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
Corporate Development and Innovation pursuant to the forgoing provisions or
otherwise, Corporate Development and Innovation has been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in that Act and is, therefore, unenforceable.
5
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DESCRIPTION OF BUSINESS
General
Corporate Development and Innovation was incorporated under the laws of the
State of Washington on August 17, 2000, and is in its early developmental and
promotional stages. To date, Corporate Development and Innovation's only
activities have been organizational, directed at acquiring its principal asset,
raising its initial capital and developing its business plan. Corporate
Development and Innovation has not commenced commercial operations. Corporate
Development and Innovation has no full time employees and owns no real estate.
Acquisition of The License
On August 17, 2000, Corporate Development and Innovation's sole
shareholder, Edwin Lao, in return for 3,500,000 shares of Corporate Development
and Innovation's common stock, transferred to Corporate Development and
Innovation his rights under that certain License Agreement with
Vitamineralherb.com. The License Agreement grants an exclusive right to
distribute Vitamineralherb.com products to health and fitness professionals in
Illinois less the counties of Jo Davies, Stevenson, Winnebago, Rock Island,
Henry, Will, Kankakee, Iroquois and Vermillion via the Internet. Mr. Lao
acquired the license from Vitamineralherb.com for $35,000.
The License
Corporate Development and Innovation has a three year license to market and
sell vitamins, minerals, nutritional supplements, and other health and fitness
products to medical professionals, alternative health professionals, martial
arts studios and instructors, sports and fitness trainers, other health and
fitness professionals, school and other fund raising programs and other similar
types of customers via the Internet for sale to their clients. Corporate
Development and Innovation's territory is Illinois less the counties of Jo
Davies, Stevenson, Winnebago, Rock Island, Henry, Will, Kankakee, Iroquois and
Vermillion. The license will be automatically renewed unless Corporate
Development and Innovation or Vitamineralherb.com gives the other notice of its
intent not to renew.
Vitamineralherb.com has agreed to provide certain business administrative
services to Corporate Development and Innovation, including product development,
store inventory, website creation and maintenance, establishment of banking
liaisons, and development and maintenance of an order fulfillment system,
thereby enabling Corporate Development and Innovation to focus strictly on
marketing and sales. Some services, such as development of the website and the
order fulfillment system, will be provided by Vitamineralherb.com, while others,
such as product development and store inventory, will be provided by the product
supplier. Vitamineralherb.com sets the price for products based on the
manufacturer's price, plus a mark up which Vitamineralherb.com and Corporate
Development and Innovation share equally.
Corporate Development and Innovation and its customers will also be able to
request quotes for and order custom-formulated and custom-labeled products via
the website. Three different labeling options are available to customers:
First, products may be ordered with the manufacturer's standard label with no
customization. Second, the fitness or health professional may customize the
labels by adding its name, address, and phone number to the standard label. In
most cases, these labels would be a standardized label with product information
and a place on the label for the wording "Distributed by." This gives these
health and fitness professionals a competitive edge. Third, labels may be
completely customized for the health or fitness professional.
When a fitness or health professional becomes a client, Corporate
Development and Innovation's salesperson will show the client how to access the
Vitamineralherb.com website. The client is assigned an identification number
that identifies it by territory, salesperson, and business name, address, and
other pertinent information. The health or fitness professional may then order
the products it desires directly through the Vitamineralherb.com website. It is
anticipated that the customer will pay for the purchase with a credit card,
electronic check ("e-check"), or debit card. All products will be shipped by
the manufacturer directly to the professional or its clients.
The website is maintained by Vitamineralherb.com, and each licensee pays an
annual website maintenance fee of $500. All financial transactions are handled
by Vitamineralherb.com's Internet clearing bank. The Vitamineralherb.com
webmaster downloads e-mail orders several times a day, checks with clearing bank
for payment and then submits the product order and electronic payment to Ives
Formulation Co. Vitamineralherb.com then forwards the money due Corporate
Development and Innovation via electronic funds transfer. Vitamineralherb.com's
software tracks all sales through the customer's identification number, and at
month end, e-mails to Corporate Development and Innovation and customer a
detailed report including sales commissions. Vitamineralherb.com has indicated
that it will use e-commerce advertising such as banner ads on major servers and
websites, as well as trying to insure that all major search engines pick
Vitamineralherb.com first. Sales originating from the website to customers
located in Illinois less the counties of Jo Davies, Stevenson, Winnebago, Rock
Island, Henry, Will, Kankakee, Iroquois and Vermillion will automatically be
assigned to Corporate Development and Innovation.
6
<PAGE>
Background on the Manufacturer and Distributor
Vitamineralherb.com entered into a Manufacturing Agreement, dated June 9,
2000, with Ives Formulation Co., of San Diego, California. Ives Formulation is a
wholly-owned subsidiary of Ives Health Company, Inc., a public company traded on
the Bulletin Board under the symbol "IVEH". Ives Formulation has been a contract
manufacturer of vitamin, mineral, nutritional supplement, and alternative health
products for various marketing organizations. In addition to a line of standard
products, Ives Formulation is able to manufacture custom blended products for
customers, and to supply privately labeled products for Corporate Development
and Innovation's customers at a minimal added cost. Vitamineralherb.com has just
begun developing its vitamin marketing and distributorship business.
Implementation of Business Plan: Milestones
Corporate Development and Innovation's business plan is to determine the
feasibility of selling Vitamineralherb.com products to targeted markets. Should
Corporate Development and Innovation determine that its business plan is
feasible, it intends to employ salespeople to call on medical professionals,
alternative health professionals, martial arts studios and instructors, sports
and fitness trainers, other health and fitness professionals, school and other
fund raising programs and other similar types of customers to interest these
professionals in selling to their clients high-quality, low-cost vitamins,
minerals, nutritional supplements, and other health and fitness products. These
professionals would sell the products to their clients via the Internet.
Corporate Development and Innovation will achieve implementation of its business
plan by meeting the following milestones:
- MILESTONE 1-MARKET SURVEY. In order to determine the feasibility of
its business plan, Corporate Development and Innovation must conduct
research into the various potential target markets. The market
analysis research will likely consist of a telephone survey to 100-200
potential clients, focusing on three or four of the core target
markets, such as chiropractors, health clubs, and alternative medicine
practitioners. The survey would likely contain questions which would
determine the marketing approach and acceptability of specific
products. The survey would take approximately four to six weeks. The
cost of the survey is estimated to range from $10,000-$13,500, which
would be paid for in part out of the proceeds of this offering.
- MILESTONE 2:-HIRE SALESPEOPLE. Should Corporate Development and
Innovation determine that the exploitation of the license is feasible,
it will then have to engage salespeople to market the products.
Corporate Development and Innovation expects that it may hire two
salespeople during its first year of operation. The hiring process
would include running advertisements in the local newspaper and
conducting interviews. It is anticipated that hiring the salespeople
may take four to eight weeks. The cost of hiring the salespeople, not
including compensation, is estimated at $20,000.
- MILESTONE 3: ESTABLISH AN OFFICE. Corporate Development and Innovation
would then have to establish an office or offices for the sales force
in the appropriate market or markets. This would include an office,
equipment such as computers and telephones, and sample inventory for
the salespeople. It is anticipated that it may take eight to twelve
weeks to locate acceptable office space and select and purchase
equipment. The expense of office rental, equipment and inventory
samples is estimated to be $45,000 per year.
- MILESTONE 4: DEVELOPMENT OF ADVERTISING CAMPAIGN. The next step would
be to develop an advertising campaign, including establishing a list
of prospects based on potential clients identified in the market
survey, and designing and printing sales materials. It is anticipated
that it would take approximately six to ten weeks to develop the
advertising campaign, although, depending on the availability of
resources, Corporate Development and Innovation will attempt to
develop its advertising campaign concurrently with establishing an
office. The cost of developing the campaign is estimated at
approximately $12,000 per year.
- MILESTONE 5: IMPLEMENTATION OF ADVERTISING CAMPAIGN/SALES CALLS.
Implementation of the advertising campaign would begin with mailing
the sales materials to the identified list of prospects. Approximately
two to four weeks thereafter, the salespeople would begin telephone
follow ups and scheduling of sales calls. Although it will be
necessary to make sales calls throughout the life of the company, it
is estimated that the first round of sales calls will take
approximately eight to twelve weeks to complete. The cost of salary
and expenses for two salespeople is estimated at $248,000 per year.
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- MILESTONE 6: ACHIEVE REVENUES. It is difficult to quantify how long it
will take to convert a sales call into actual sales and revenues.
Corporate Development and Innovation will not begin receiving orders
until its sales force is able to convince potential clients to begin
offering such products to their customers, or to convert from an
existing supplier. Corporate Development and Innovation hopes that
clients would begin placing orders within weeks of a sales call, but
it may take several months before people begin to purchase products.
Moreover, customers may not be willing to pay for products at the time
they order, and may insist on buying on account, which would delay
receipt of revenues another month or two. Assuming Corporate
Development and Innovation has received all necessary approvals to
begin raising funds by January 1, 2001, and assuming an offering
period of approximately one month, in a best case scenario Corporate
Development and Innovation may receive its first revenues as early as
July 1, 2001. However, a more realistic estimate of first revenues
would be January 1, 2002 or later.
As discussed more fully in the Management's Discussion and
Analysis-Liquidity and Capital Resources section, the expenses of implementing
Corporate Development and Innovation's business plan will likely exceed the
funds raised by this offering, and Corporate Development and Innovation will
have to obtain additional financing through an offering or through capital
contributions by current shareholders. No commitments to provide additional
funds have been made by management or shareholders. Accordingly, there can be no
assurance that any additional funds will be available on terms acceptable to
Corporate Development and Innovation or at all.
Industry Background
Growth of the Internet and electronic commerce. The Internet has become an
increasingly significant medium for communication, information and commerce.
According to NUA Internet Surveys, as of February 2000, there were approximately
275.5 million Internet users worldwide. At the IDC Internet Executive Forum held
on September 28-29, 1999, IDC stated that in 1999 US $109 billion in purchases
were impacted by the Internet. IDC's vice president, Sean Kaldor, indicated that
figure is expected to increase more than ten-fold over the next five years to US
$1.3 trillion in 2003, with $842 million completed directly over the Web.
Corporate Development and Innovation believes that this dramatic growth presents
significant opportunities for online retailers.
The vitamin, supplement, mineral and alternative health product market. In
recent years, a growing awareness of vitamins, herbs, and other dietary
supplements by the general public has created a whole new segment in the field
of medicine and health care products. According to Jupiter Communications,
online sales of such products are expected to be US $434 million in the year
2003, up from $1 million in 1998. Corporate Development and Innovation believes
that several factors are driving this growth, including a rapidly growing
segment of the population that is concerned with aging and disease, a growing
interest in preventative health care, favorable consumer attitudes toward
alternative health products and a favorable regulatory statute, the Dietary
Supplement Health and Education Act of 1994.
Competition
The electronic commerce industry is new, rapidly evolving and intensely
competitive, and Corporate Development and Innovation expects competition to
intensify in the future. Barriers to entry are minimal and current and new
competitors can launch sites at a relatively low cost. In addition, the vitamin,
supplement, mineral and alternative health product market is very competitive
and highly fragmented, with no clear dominant leader and increasing public and
commercial attention.
Corporate Development and Innovation's competitors can be divided into
several groups including:
- traditional vitamins, supplements, minerals and alternative health
products retailers;
- the online retail initiatives of several traditional vitamins,
supplements, minerals and alternative health products retailers;
- online retailers of pharmaceutical and other health-related products
that also carry vitamins, supplements, minerals and alternative health
products;
- independent online retailers specializing in vitamins, supplements,
minerals and alternative health products;
- mail-order and catalog retailers of vitamins, supplements, minerals
and alternative health products, some of which have already developed
online retail outlets; and
- direct sales organizations, retail drugstore chains, health food store
merchants, mass market retail chains and various manufacturers of
alternative health products.
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Many of Corporate Development and Innovation's potential competitors have
longer operating histories, larger customer or user bases, greater brand
recognition and significantly greater financial, marketing and other resources
than Corporate Development and Innovation has. In addition, an online retailer
may be acquired by, receive investments from, or enter into other commercial
relationships with, larger, well-established and well-financed companies as use
of the Internet and other electronic services increases. Competitors have and
may continue to adopt aggressive pricing or inventory availability policies and
devote substantially more resources to website and systems development than
Corporate Development and Innovation does. Increased competition may result in
reduced operating margins and loss of market share.
Corporate Development and Innovation believes that the principal
competitive factors in its market are:
- ability to attract and retain customers;
- breadth of product selection;
- product pricing;
- ability to customize products and labeling;
- quality and responsiveness of customer service.
Corporate Development and Innovation believes that it can compete favorably
on these factors. However, Corporate Development and Innovation will have no
control over how successful its competitors are in addressing these factors. In
addition, with little difficulty, Corporate Development and Innovation's online
competitors can duplicate many of the products or services offered on the
Vitamineralherb.com site.
Corporate Development and Innovation believes that traditional retailers of
vitamins, supplements, minerals and other alternative health products face
several challenges in succeeding:
- Lack of convenience and personalized service. Traditional retailers
have limited store hours and locations. Traditional retailers are also
unable to provide consumers with product advice tailored to their
particular situation.
- Limited product assortment. The capital and real estate intensive nature
of store-based retailers limit the product selection that can be
economically offered in each store location.
- Lack of Customer Loyalty. Although the larger traditional retailers
often attract customers, many of these customers are only one-time
users. People are often attractive to the name brands, but find the
products too expensive. It is understood that these are quality
products and have value, but the multilevel structure of marketing often
employed by large retailers mandate high prices.
As a result of the foregoing limitations, Corporate Development and
Innovation believes there is significant unmet demand for an alternative
shopping channel that can provide consumers of vitamins, supplements, minerals
and other alternative health products with a broad array of products and a
convenient and private shopping experience.
Corporate Development and Innovation hopes to attract and retain consumers
through the following key attributes of its business:
- Broad Expandable Product Assortment. Corporate Development and
Innovation's product selection is substantially larger than that
offered by store-based retailers.
- Low Product Prices. Product prices can be kept low due to volume
purchases through Corporate Development and Innovation's affiliation
with Vitamineralherb.com and other licensees. Product prices will also
be lower due to Corporate Development and Innovation's lack of need of
inventory and warehouse space. All products are shipped from Ives
Formulation Company's inventory.
- Accessibility to Customized Products. At minimal cost, health and
fitness practitioners may offer their customers customized products.
- Access to Personalized Programs. Health or fitness professional can
tailor vitamin and dietary supplement regimes to their clients.
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Regulatory Environment
The manufacturing, processing, formulating, packaging, labeling and
advertising of the products Corporate Development and Innovation sells may be
subject to regulation by one or more U.S. federal agencies, including the Food
and Drug Administration, the Federal Trade Commission, the United States
Department of Agriculture and the Environmental Protection Agency. These
activities also may be regulated by various agencies of the states, localities
and foreign countries in which consumers reside.
The Food and Drug Administration, in particular, regulates the formulation,
manufacture, labeling and distribution of foods, including dietary supplements,
cosmetics and over-the- counter or homeopathic drugs. Under the Federal Food,
Drug, and Cosmetic Act, the Food and Drug Administration may undertake
enforcement actions against companies marketing unapproved drugs, or
"adulterated" or "misbranded" products. The remedies available to the Food and
Drug Administration include: criminal prosecution; an injunction to stop the
sale of a company's products; seizure of products; adverse publicity; and
"voluntary" recalls and labeling changes.
Food and Drug Administration regulations require that certain informational
labeling be presented in a prescribed manner on all foods, drugs, dietary
supplements and cosmetics. Specifically, the Food, Drug, and Cosmetic Act
requires that food, including dietary supplements, drugs and cosmetics, not be
"misbranded." A product may be deemed an unapproved drug and "misbranded" if it
bears improper claims or improper labeling. The Food and Drug Administration
has indicated that promotional statements made about dietary supplements on a
company's website may constitute "labeling" for purposes of compliance with the
provisions of the Food, Drug, and Cosmetic Act. A manufacturer or distributor
of dietary supplements must notify the Food and Drug Administration when it
markets a product with labeling claims that the product has an effect on the
structure or function of the body. Noncompliance with the Food, Drug, and
Cosmetic Act, and recently enacted amendments to that Act discussed below, could
result in enforcement action by the Food and Drug Administration.
The Food, Drug, and Cosmetic Act has been amended several times with
respect to dietary supplements, most recently by the Nutrition Labeling and
Education Act of 1990 and the Dietary Supplement Health and Education Act of
1994. The Dietary Supplement Health and Education Act created a new statutory
framework governing the definition, regulation and labeling of dietary
supplements. With respect to definition, the Dietary Supplement Health and
Education Act created a new class of dietary supplements, consisting of
vitamins, minerals, herbs, amino acids and other dietary substances for human
use to supplement the diet, as well as concentrates, metabolites, extracts or
combinations of such dietary ingredients. Generally, under the Dietary
Supplement Health and Education Act, dietary ingredients that were on the market
before October 15, 1994 may be sold without Food and Drug Administration
pre-approval and without notifying the Food and Drug Administration. In
contrast, a new dietary ingredient, i.e., one not on the market before October
15, 1994, requires proof that it has been used as an article of food without
being chemically altered or evidence of a history of use or other evidence of
safety establishing that it is reasonably expected to be safe. Retailers, in
addition to dietary supplement manufacturers, are responsible for ensuring that
the products they market for sale comply with these regulations. Noncompliance
could result in enforcement action by the Food and Drug Administration, an
injunction prohibiting the sale of products deemed to be noncompliant, the
seizure of such products and criminal prosecution.
The Food and Drug Administration has indicated that claims or statements
made on a company's website about dietary supplements may constitute "labeling"
and thus be subject to regulation by the Food and Drug Administration. With
respect to labeling, the Dietary Supplement Health and Education Act amends, for
dietary supplements, the Nutrition Labeling and Education Act by providing that
"statements of nutritional support," also referred to as "structure/function
claims," may be used in dietary supplement labeling without Food and Drug
Administration pre-approval, provided certain requirements are met. These
statements may describe how particular dietary ingredients affect the structure
or function of the body, or the mechanism of action by which a dietary
ingredient may affect body structure or function, but may not state a drug
claim, i.e., a claim that a dietary supplement will diagnose, mitigate, treat,
cure or prevent a disease. A company making a "statement of nutritional
support" must possess substantiating evidence for the statement, disclose on the
label that the Food and Drug Administration has not reviewed the statement and
that the product is not intended for use for a disease and notify the Food and
Drug Administration of the statement within 30 days after its initial use. It
is possible that the statements presented in connection with product
descriptions on Corporate Development and Innovation' site may be determined by
the Food and Drug Administration to be drug claims rather than acceptable
statements of nutritional support. In addition, some of Corporate Development
and Innovation' suppliers may incorporate objectionable statements directly in
their product names or on their products' labels, or otherwise fail to comply
with applicable manufacturing, labeling and registration requirements for
over-the-counter or homeopathic drugs or dietary supplements. As a result,
Vitamineralherb.com may have to remove objectionable statements or products from
its site or modify these statements, or product names or labels, in order to
comply with Food and Drug Administration regulations. Such changes could
interfere with Corporate Development and Innovation' marketing of products and
could cause us to incur significant additional expenses.
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In addition, the Dietary Supplement Health and Education Act allows the
dissemination of "third party literature" in connection with the sale of dietary
supplements to consumers at retail if the publication meets statutory
requirements. Under the Dietary Supplement Health and Education Act, "third
party literature" may be distributed if, among other things, it is not false or
misleading, no particular manufacturer or brand of dietary supplement is
promoted, a balanced view of available scientific information on the subject
matter is presented and there is physical separation from dietary supplements in
stores. The extent to which this provision may be used by online retailers is
not yet clear, and Corporate Development and Innovation cannot assure you that
all pieces of "third party literature" that may be disseminated in connection
with the products Corporate Development and Innovation offers for sale will be
determined to be lawful by the Food and Drug Administration. Any such failure
could render the involved product an unapproved drug or a "misbranded" product,
potentially subjecting us to enforcement action by the Food and Drug
Administration, and could require the removal of the noncompliant literature
from Vitamineralherb.com's website or the modification of Corporate Development
and Innovation' selling methods, interfering with Corporate Development and
Innovation continued marketing of that product and causing us to incur
significant additional expenses. Given the fact that the Dietary Supplement
Health and Education Act was enacted only five years ago, the Food and Drug
Administration's regulatory policy and enforcement positions on certain aspects
of the new law are still evolving. Moreover, ongoing and future litigation
between dietary supplement companies and the Food and Drug Administration will
likely further refine the legal interpretations of the Dietary Supplement Health
and Education Act. As a result, the regulatory status of certain types of
dietary supplement products, as well as the nature and extent of permissible
claims will remain unclear for the foreseeable future. Two areas in particular
that pose potential regulatory risk are the limits on claims implying some
benefit or relationship with a disease or related condition and the application
of the physical separation requirement for "third party literature" as applied
to Internet sales.
In addition to the regulatory scheme under the Food, Drug and Cosmetic Act,
the advertising and promotion of dietary supplements, foods, over-the-counter
drugs and cosmetics is subject to scrutiny by the Federal Trade Commission. The
Federal Trade Commission Act prohibits "unfair or deceptive" advertising or
marketing practices, and the Federal Trade Commission has pursued numerous food
and dietary supplement manufacturers and retailers for deceptive advertising or
failure to substantiate promotional claims, including, in many instances, claims
made via the Internet. The Federal Trade Commission has the power to seek
administrative or judicial relief prohibiting a wide variety of claims, to
enjoin future advertising, to seek redress or restitution payments and to seek a
consent order and seek monetary penalties for the violation of a consent order.
In general, existing laws and regulations apply fully to transactions and other
activity on the Internet. The Federal Trade Commission is in the process of
reviewing its policies regarding the applicability of its rules and its consumer
protection guides to the Internet and other electronic media. The Federal Trade
Commission has already undertaken a new monitoring and enforcement initiative,
"Operation Cure-All," targeting allegedly bogus health claims for products and
treatments offered for sale on the Internet. Many states impose their own
labeling or safety requirements that differ from or add to existing federal
requirements.
Corporate Development and Innovation cannot predict the nature of any
future U.S. laws, regulations, interpretations or applications, nor can it
determine what effect additional governmental regulations or administrative
orders, when and if promulgated, would have on its business in the future.
Although the regulation of dietary supplements is less restrictive than that of
drugs and food additives, Corporate Development and Innovation cannot assure you
that the current statutory scheme and regulations applicable to dietary
supplements will remain less restrictive. Further, Corporate Development and
Innovation cannot assure you that, under existing laws and regulations, or if
more stringent statutes are enacted, regulations are promulgated or enforcement
policies are adopted, it is or will be in compliance with these existing or new
statutes, regulations or enforcement policies without incurring material
expenses or adjusting its business strategy. Any laws, regulations, enforcement
policies, interpretations or applications applicable to Corporate Development
and Innovation' business could require the reformulation of certain products to
meet new standards, the recall or discontinuance of certain products not capable
of reformulation, additional record keeping, expanded documentation of the
properties of certain products, expanded or different labeling or scientific
substantiation.
Regulation of the Internet
In general, existing laws and regulations apply to transactions and other
activity on the Internet; however, the precise applicability of these laws and
regulations to the Internet is sometimes uncertain. The vast majority of such
laws were adopted prior to the advent of the Internet and, as a result, do not
contemplate or address the unique issues of the Internet or electronic commerce.
Nevertheless, numerous federal and state government agencies have already
demonstrated significant activity in promoting consumer protection and enforcing
other regulatory and disclosure statutes on the Internet. Additionally, due to
the increasing use of the Internet as a medium for commerce and communication,
it is possible that new laws and regulations may be enacted with respect to the
Internet and electronic commerce covering issues such as user privacy, freedom
of expression, advertising, pricing, content and quality of products and
services, taxation, intellectual property rights and information security. The
adoption of such laws or regulations and the applicability of existing laws and
regulations to the Internet may impair the growth of Internet use and result in
a decline in Corporate Development and Innovation's sales.
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A number of legislative proposals have been made at the federal, state and
local level, and by foreign governments, that would impose additional taxes on
the sale of goods and services over the Internet, and certain states have taken
measures to tax Internet-related activities. Although Congress recently placed
a three-year moratorium on new state and local taxes on Internet access or on
discriminatory taxes on electronic commerce, existing state or local laws were
expressly excepted from this moratorium. Further, once this moratorium is
lifted, some type of federal and/or state taxes may be imposed upon Internet
commerce. Such legislation or other attempts at regulating commerce over the
Internet may substantially impair the growth of commerce on the Internet and, as
a result, adversely affect Corporate Development and Innovation' opportunity to
derive financial benefit from such activities.
Employees
Corporate Development and Innovation is a development stage company and
currently has no employees. Corporate Development and Innovation is currently
managed by Edwin Lao, its sole officer and director. Corporate Development and
Innovation looks to Mr. Lao for his entrepreneurial skills and talents.
Management plans to use consultants, attorneys and accountants as necessary and
does not plan to engage any full-time employees in the near future. Corporate
Development and Innovation may hire marketing employees based on the projected
size of the market and the compensation necessary to retain qualified sales
employees. A portion of any employee compensation likely would include the right
to acquire stock in Corporate Development and Innovation, which would dilute the
ownership interest of holders of existing shares of its common stock.
Available Information and Reports to Securities Holders
Corporate Development and Innovation has filed with the Securities and
Exchange Commission a registration statement on Form SB-2 with respect to the
common stock offered by this prospectus. This prospectus, which constitutes a
part of the registration statement, does not contain all of the information set
forth in the registration statement or the exhibits and schedules which are part
of the registration statement. For further information with respect to Corporate
Development and Innovation and its common stock, see the registration statement
and the exhibits and schedules thereto. Any document Corporate Development and
Innovation files may be read and copied at the Commission's Public Reference
Room located at 450 Fifth Street N.W., Washington D.C. 20549, and the public
reference rooms in New York, New York, and Chicago, Illinois. Please call the
Commission at 1-800-SEC-0330 for further information about the public reference
rooms. Corporate Development and Innovation's filings with the Commission are
also available to the public from the Commission's website at
http://www.sec.gov.
Upon completion of this offering, Corporate Development and Innovation will
become subject to the information and periodic reporting requirements of the
Securities Exchange Act and, accordingly, will file periodic reports, proxy
statements and other information with the Commission. Such periodic reports,
proxy statements and other information will be available for inspection and
copying at the Commission's public reference rooms, and the website of the
Commission referred to above.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of Corporate Development and
Innovation's financial condition and results of operations should be read in
conjunction with the Financial Statements and accompanying notes and the other
financial information appearing elsewhere in this Prospectus.
This prospectus contains forward-looking statements, the accuracy of which
involve risks and uncertainties. Words such as "anticipates," "believes,"
"plans," "expects," "future," "intends" and similar expressions are used to
identify forward-looking statements. This prospectus also contains
forward-looking statements attributed to certain third parties relating to their
estimates regarding the potential markets for Vitamineralherb.com products.
Prospective investors should not place undue reliance on these forward-looking
statements, which apply only as of the date of this prospectus. Corporate
Development and Innovation's actual results could differ materially from those
anticipated in these forward-looking statements for many reasons, including the
risks faced by Corporate Development and Innovation described in "Risk Factors"
and elsewhere in this prospectus. The following discussion and analysis should
be read in conjunction with Corporate Development and Innovation's Financial
Statements and Notes thereto and other financial information included elsewhere
in this prospectus.
Results of Operations
During the period from August 17, 2000 through October 31, 2000, Corporate
Development and Innovation has engaged in no significant operations other than
organizational activities, acquisition of the rights to market
Vitamineralherb.com and preparation for registration of its securities under the
Securities Act of 1933, as amended. No revenues were received by Corporate
Development and Innovation during this period.
For the current fiscal year, Corporate Development and Innovation
anticipates incurring a loss as a result of organizational expenses, expenses
associated with registration under the Securities Act of 1933, and expenses
associated with setting up a company structure to begin implementing its
business plan. Corporate Development and Innovation anticipates that until
these procedures are completed, it will not generate revenues, and may continue
to operate at a loss thereafter, depending upon the performance of the business.
Corporate Development and Innovation's business plan is to determine the
feasibility of marketing the Vitamineralherb.com products in various markets,
and, if the products prove to be in demand, begin marketing and selling
Vitamineralherb.com products.
Liquidity and Capital Resources
Corporate Development and Innovation remains in the development stage and,
since inception, has experienced no significant change in liquidity or capital
resources or shareholders' equity. Consequently, Corporate Development and
Innovation's balance sheet as of October 31, 2000, reflects total assets of $0
in the form of a license and capitalized organizational costs. Organizational
expenses of $40,000 were paid for by the sole shareholder and expensed to
operations.
Corporate Development and Innovation's business plan is to determine the
feasibility of selling Vitamineralherb.com products to targeted markets. Should
Corporate Development and Innovation determine that its business plan is
feasible, it intends to employ salespeople to call on medical professionals,
alternative health professionals, martial arts studios and instructors, sports
and fitness trainers, other health and fitness professionals, school and other
fund raising programs and other similar types of customers to interest these
professionals in selling to their clients high-quality, low-cost vitamins,
minerals, nutritional supplements, and other health and fitness products. These
professionals would sell the products to their clients via the Internet.
In order to determine the feasibility of its business plan, Corporate
Development and Innovation plans, during the next six to twelve months, to
conduct research into these various potential target markets. Should Corporate
Development and Innovation determine that the exploitation of the license is
feasible, it will engage salespeople to market the products. Based primarily on
discussions with the licensor, Corporate Development and Innovation believes
that during its first operational quarter, it will need a capital infusion of
approximately $25,000 to achieve a sustainable sales level where ongoing
operations can be funded out of revenues. This capital infusion is intended to
cover costs of advertising, hiring and paying two salespeople, and
administrative expenses. In addition, Corporate Development and Innovation will
need approximately $260,000 in the event it determines that its market will not
pay in advance and it will have to extend credit. These expenses will exceed
the funds raised by this offering, and Corporate Development and Innovation will
have to obtain additional financing through an offering or capital contributions
by current shareholders.
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Corporate Development and Innovation is conducting this offering, in part,
because it believes that an early registration of its equity securities will
minimize some of the impediments to capital formation that otherwise exist. By
having a registration statement in place, Corporate Development and Innovation
believes it will be in a better position, either to conduct a future public
offering of its securities or to undertake a private placement with registration
rights, than if it were a completely private company. Registering its shares
will help minimize the liquidity discounts Corporate Development and Innovation
may otherwise have to take in a future private placement of its equity
securities, because investors will have a high degree of confidence that the
Rule 144(c)(1) public information requirement will be satisfied, and a public
market will exist to effect Rule 144(g) broker transactions. Corporate
Development and Innovation believes that the cost of registering its securities,
and undertaking the affirmative disclosure obligations that such a registration
entails, will be more than offset by avoiding deep liquidity discounts in future
sales of securities. No specific private investors have been identified, but
Corporate Development and Innovation's management has general knowledge of an
investor class interested in investing in companies that can demonstrate a clear
path to an early liquidity event.
No commitments to provide additional funds have been made by management or
shareholders. Accordingly, there can be no assurance that any additional funds
will be available on terms acceptable to Corporate Development and Innovation or
at all. Corporate Development and Innovation expects to begin earning revenues
shortly after a sales force is in place.
In addition, Corporate Development and Innovation may engage in a
combination with another business. Corporate Development and Innovation cannot
predict the extent to which its liquidity and capital resources will be
diminished prior to the consummation of a business combination or whether its
capital will be further depleted by the operating losses (if any) of the
business entity with which Corporate Development and Innovation may eventually
combine. Corporate Development and Innovation has engaged in discussions
concerning potential business combinations, but has not entered into any
agreement for such a combination.
Corporate Development and Innovation will need additional capital to carry
out its business plan or to engage in a business combination. No commitments to
provide additional funds have been made by management or other shareholders.
Accordingly, there can be no assurance that any additional funds will be
available on terms acceptable to Corporate Development and Innovation or at all.
Corporate Development and Innovation has no commitments for capital
expenditures.
DESCRIPTION OF PROPERTY
Corporate Development and Innovation currently maintains limited office
space, occupied by Edwin Lao, for which it pays no rent. Its address is 11229
Lyon Road, Delta, British Columbia Canada V4E 1J8 and its phone number is (604)
594-4459. Corporate Development and Innovation does not believe that it will
need to obtain additional office space at any time in the foreseeable future
until its business plan is more fully implemented.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No director, executive officer or nominee for election as a director of
Corporate Development and Innovation, and no owner of five percent or more of
Corporate Development and Innovation's outstanding shares or any member of their
immediate family has entered into or proposed any transaction in which the
amount involved exceeds $60,000.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No established public trading market exists for Corporate Development and
Innovation's securities. Corporate Development and Innovation has no common
equity subject to outstanding purchase options or warrants. Corporate
Development and Innovation has no securities convertible into its common equity.
There is no common equity that could be sold pursuant to Rule 144 under the
Securities Act or that Corporate Development and Innovation has agreed to
register under the Securities Act for sale by shareholders. Except for this
offering, there is no common equity that is being, or has been publicly proposed
to be, publicly offered by Corporate Development and Innovation.
As of October 31, 2000, there were 7,500,000 shares of common stock
outstanding, held by 1 shareholder of record. Upon effectiveness of the
registration statement that includes this prospectus, all of Corporate
Development and Innovation's outstanding shares will be eligible for sale.
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To date Corporate Development and Innovation has not paid any dividends on
its common stock and does not expect to declare or pay any dividends on its
common stock in the foreseeable future. Payment of any dividends will depend
upon Corporate Development and Innovation's future earnings, if any, its
financial condition, and other factors as deemed relevant by the Board of
Directors.
EXECUTIVE COMPENSATION
No officer or director has received any remuneration from Corporate
Development and Innovation. Although there is no current plan in existence, it
is possible that Corporate Development and Innovation will adopt a plan to pay
or accrue compensation to its officers and directors for services related to the
implementation of Corporate Development and Innovation's business plan.
Corporate Development and Innovation has no stock option, retirement, incentive,
defined benefit, actuarial, pension or profit-sharing programs for the benefit
of directors, officers or other employees, but the Board of Directors may
recommend adoption of one or more such programs in the future. Corporate
Development and Innovation has no employment contract or compensatory plan or
arrangement with any executive officer of Corporate Development and Innovation.
The director currently does not receive any cash compensation from Corporate
Development and Innovation for his service as a member of the board of
directors. There is no compensation committee, and no compensation policies have
been adopted. See "Certain Relationships and Related Transactions."
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Corporate Development and Innovation Inc.
(A Development Stage Company)
Index
Independent Auditor Report F-1
Balance Sheet F-2
Statement of Operations F-3
Statement of Cash Flows F-4
Statement of Stockholders Equity F-5
Notes to the Financial Statements F-6
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Elliott Tulk Pryce Anderson E/T/P/A
Chartered Accountants
Independent Auditor's Report
----------------------------
To the Board of Directors
Corporate Development and Innovation Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Corporate Development and
Innovation Inc. (A Development Stage Company) as of September 30, 2000 and the
related statements of operations, stockholders' equity and cash flows for the
period from August 17, 2000 (Date of Inception) to September 30, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with U.S. 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 aforementioned financial statements present fairly, in all
material respects, the financial position of Corporate Development and
Innovation Inc. (A Development Stage Company), as of September 30, 2000, and the
results of its operations and its cash flows for the period from August 17, 2000
(Date of Inception) to September 30, 2000, in conformity with U.S. generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has not generated any revenues or conducted any
operations since inception. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also discussed in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Elliott Tulk Pryce Anderson
CHARTERED ACCOUNTANTS
Vancouver, Canada
October 26, 2000
F-1
11th floor Tel: 604-714-3600 A Partnership of Incorporated
1050 West Pender St. Fax: 604-714-3669 Professionals
Vancouver, BC Robin A.W. Elliott, FCA
Canada V6E 3S7 Barrie C. Anderson, CA
Don M. Prest, CA
Keith Elliott, CA
Lisa M. Humer, CA
<PAGE>
<TABLE>
<CAPTION>
Corporate Development and Innovation Inc.
(A Development Stage Company)
Balance Sheet
(expressed in U.S. dollars)
September 30,
2000
$
Assets
<S> <C>
License (Notes 3 and 4) -
====================================================================================
Liabilities and Stockholder's Equity
Liabilities -
------------------------------------------------------------------------------------
Stockholder's Equity
Common Stock, 100,000,000 common shares authorized with a par
value of $0.0001; 7,500,000 common shares issued and outstanding 750
Additional Paid in Capital 74,250
------------------------------------------------------------------------------------
75,000
------------------------------------------------------------------------------------
Preferred Stock, 20,000,000 preferred shares authorized with a par
value of $0.0001; none issued -
------------------------------------------------------------------------------------
Deficit Accumulated During the Development Stage (75,000)
------------------------------------------------------------------------------------
-
------------------------------------------------------------------------------------
-
====================================================================================
</TABLE>
Contingent Liability (Note 1)
Commitment (Note 3)
F-2
<PAGE>
Corporate Development and Innovation Inc.
(A Development Stage Company)
Statement of Operations
(expressed in U.S. dollars)
From August 17, 2000
(Date of Inception)
to September 30, 2000
Revenue -
-----------------------------------------------------------
Expenses
Legal and organizational 40,000
License written-off 35,000
-----------------------------------------------------------
75,000
-----------------------------------------------------------
Net Loss (75,000)
===========================================================
Loss per share (0.01)
===========================================================
Weighted Average Shares Outstanding 7,500,000
===========================================================
F-3
<PAGE>
Corporate Development and Innovation Inc.
(A Development Stage Company)
Statement of Cash Flows
(expressed in U.S. dollars)
From August 17, 2000
(Date of Inception)
to September 30, 2000
$
Cash Flows to Operating Activities
Net loss (75,000)
Non-cash items
Legal and organizational expenses 40,000
License written-off 35,000
--------------------------------------------------------------------------------
Net Cash Used by Operating Activities -
--------------------------------------------------------------------------------
Change in cash -
Cash - beginning of period -
--------------------------------------------------------------------------------
Cash - end of period -
================================================================================
Non-Cash Financing Activities
A total of 4,000,000 shares were issued
to the sole director at a fair market
value of $0.01 per share for legal and
organizational expenses paid 40,000
A total of 3,500,000 shares were issued
at a fair market value of $0.01 per
share for the acquisition of a License
to the sole director
(Note 3) 35,000
--------------------------------------------------------------------------------
75,000
================================================================================
Supplemental Disclosures
Interest paid -
Income tax paid -
F-4
<PAGE>
<TABLE>
<CAPTION>
Corporate Development and Innovation Inc.
(A Development Stage Company)
Statement of Stockholders Equity
(expressed in U.S. dollars)
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Total Stage
# $ $ $
<S> <C> <C> <C> <C> <C>
Balance - August 17, 2000 (Date of Inception) - - - - -
Stock issued for legal and organizational
expenses at a fair market value of $0.01 per
share 4,000,000 400 39,600 40,000 -
Stock issued for the acquisition of a license
at a fair market value of $0.01 per share 3,500,000 350 34,650 35,000 -
Net loss for the period - - - - (75,000)
---------------------------------------------------------------------------------------------------------------------
Balance - September 30, 2000 7,500,000 750 74,250 75,000 (75,000)
=====================================================================================================================
</TABLE>
F-5
<PAGE>
Corporate Development and Innovation Inc.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
1. Development Stage Company
Corporate Development and Innovation Inc. herein (the was incorporated in
the State of Washington, U.S.A. on August 17, 2000. The Company acquired a
license to market and distribute vitamins, minerals, nutritional
supplements, and other health and fitness products in Illinois less the
counties of Jo Davies, Stevenson, Winnebago, Rock Island, Henry, Will,
Kankakee, Iroquois, and Vermillion, in which the grantor of the license
offers these products for sale from various suppliers on their Web Site.
The Company is in the development stage. In a development stage company,
management devotes most of its activities in developing a market for its
products. Planned principal activities have not yet begun. The ability of
the Company to emerge from the development stage with respect to any
planned principal business activity is dependent upon its successful
efforts to raise additional equity financing and/or attain profitable
operations. There is no guarantee that the Company will be able to raise
any equity financing or sell any of its products at a profit. There is
substantial doubt regarding the Company's ability to continue as a going
concern.
The Company will offer 7,000,000 shares at $0.01 per share to raise $70,000
pursuant to an SB-2 Registration Statement to be filed with the Securities
and Exchange Commission.
2. Summary of Significant Accounting Policies
(a) Year end
The Company fiscal year end is September 30.
(b) License
The cost to acquire the License was capitalized. The cost will be
amortized on a straight-line basis over twelve months.
The carrying value of the License is evaluated in each reporting
period to determine if there were events or circumstances which would
indicate a possible inability to recover the carrying amount. Such
evaluation is based on various analyses including assessing the
Company's ability to bring the commercial applications to market,
related profitability projections and undiscounted cash flows relating
to each application which necessarily involves significant management
judgment.
(c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of
three months or less at the time of the issuance to be cash
equivalents.
(d) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the periods. Actual results could differ from
those estimates.
F-6
<PAGE>
2. Summary of Significant Accounting Policies (continued)
(e) Revenue Recognition
The Company will receive from the Grantor of the license, commissions
of one-half of all the profit on all sales made through the GrantorWeb
Site. The commission revenue will be recognized in the period the
sales have occurred. The Company will report the commission revenue on
a net basis as the Company is acting as an Agent for the Grantor and
does not assume any risks or rewards of the ownership of the products.
This policy is prospective in nature as the Company has not yet
generated any revenue.
3. License
The Company's only asset is a license to market vitamins, minerals,
nutritional supplements and other health and fitness products through the
Grantor's Web Site. The Company desires to market these products to medical
practitioners, alternative health professionals, martial arts studios and
instructors, sports and fitness trainers, other health and fitness
practitioners, school and other fund raising programs and other similar
types of customers in Illinois less the counties of Jo Davies, Stevenson,
Winnebago, Rock Island, Henry, Will, Kankakee, Iroquois, and Vermillion.
The license was acquired on August 17, 2000 for a term of three years. The
Company must pay an annual fee of $500 for maintenance of the Grantor's Web
Site commencing on the anniversary date. The Grantor of the license retains
50% of the profits.
The Company issued 3,500,000 shares to the sole director with a fair market
value of $0.01 per share for a total consideration of $35,000.
The License has been written-off to operations as at September 30, 2000 due
to the lack of historical cash flow of Vitaminmineralherb.com. However, it
is the Company's intention to determine if it is economically feasible to
commercially exploit a business plan.
F-7
<PAGE>
PART II-INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Corporate Development and Innovation's Articles of Incorporation provide
that it must indemnify its directors and officers to the fullest extent
permitted under Washington law against all liabilities incurred by reason of the
fact that the person is or was a director or officer of Corporate Development
and Innovation or a fiduciary of an employee benefit plan, or is or was serving
at the request of Corporate Development and Innovation as a director or officer,
or fiduciary of an employee benefit plan, of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise.
The effect of these provisions is potentially to indemnify Corporate Development
and Innovation's directors and officers from all costs and expenses of liability
incurred by them in connection with any action, suit or proceeding in which they
are involved by reason of their affiliation with Corporate Development and
Innovation. Pursuant to Washington law, a corporation may indemnify a director,
provided that such indemnity shall not apply on account of: (a) acts or
omissions of the director finally adjudged to be intentional misconduct or a
knowing violation of law; (b) unlawful distributions; or (c) any transaction
with respect to which it was finally adjudged that such director personally
received a benefit in money, property, or services to which the director was not
legally entitled.
The bylaws of Corporate Development and Innovation provide that it will
indemnify its officers and directors for costs and expenses incurred in
connection with the defense of actions, suits, or proceedings against them on
account of their being or having been directors or officers of Corporate
Development and Innovation, absent a finding of negligence or misconduct in
office. Corporate Development and Innovation's Bylaws also permit it to maintain
insurance on behalf of its officers, directors, employees and agents against any
liability asserted against and incurred by that person whether or not Corporate
Development and Innovation has the power to indemnify such person against
liability for any of those acts.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The amounts set forth are estimates except for the SEC registration fee:
AMOUNT TO
BE PAID
----------
SEC registration fee . . . . . . . . . . . . . . . . $ 20
Printing and engraving expenses .. . . . . . . . . . 1,000
Attorneys' fees and expenses . . . . . . . . . . . . 40,000
Accountants' fees and expenses . . . . . . . . . . . 1,500
Transfer agent's and registrar's fees and expenses . 500
Miscellaneous .. . . . . . . . . . . . . . . . . . . 965
----------
Total .. . . . . . . . . . . . . . . . . . . . . . . $ 43,985
==========
The Registrant will bear all expenses shown above.
RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sales of
Corporate Development and Innovation's securities without registration since its
formation. No such sales involved the use of an underwriter and no commissions
were paid in connection with the sale of any securities.
On August 17, 2000, Corporate Development and Innovation issued 7,500,000
shares of common stock to Edwin Lao in compensation for the license of
Vitamineralherb.com rights. The issuance of the shares was exempt from
registration under Rule 506 of Regulation D, and sections 3(b) and 4(2) of the
Securities Act of 1933, as amended, due to Mr. Lao's status as the founder and
initial management of Corporate Development and Innovation, and his status as an
accredited investor, and the limited number of investors (one).
II - 1
<PAGE>
EXHIBITS
The following exhibits are filed as part of this Registration Statement:
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Stock Certificate
4.2 Stock Subscription Agreement
5.1 Opinion re: legality
10.1 License Agreement
10.2 Assignment of License Agreement
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (see Exhibit 5.1)
27.1 Financial Data Schedule
UNDERTAKINGS
The Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement; and
(iii)Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the Offering of the securities of the securities at that time to be
the initial bona fide Offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the Offering.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has 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
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II - 2
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Delta, British Columbia, Canada, on November 23,
2000.
Corporate Development and Innovation
By: /s/ EDWIN LAO
-----------------------------------
EDWIN LAO
PRESIDENT
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ EDWIN LAO
-------------------------- President, Secretary, Treasurer, November 23,2000
EDWIN LAO and Director
II - 3
<PAGE>
LIST OF EXHIBITS
The following exhibits are filed as part of this Registration Statement:
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Stock Certificate
4.2 Stock Subscription Agreement
5.1 Opinion re: legality
10.1 License Agreement
10.2 Assignment of License Agreement
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (see Exhibit 5.1)
27.1 Financial Data Schedule
<PAGE>
