UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/A
AMENDMENT NO. 1
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
COMMISSION FILE NUMBER: 0-32061
THE IMAGEMAKERS PHOTOGRAPHY, INC.
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(Exact name of registrant as specified in its charter)
NEVADA 88-0392307
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(State of jurisdiction (I.R.S. Employer
of Incorporation) Identification No.)
3855 Diablo Drive, Suite 7, Las Vegas, Nevada 89118
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(Address of principal executive offices) (Zip Code)
(702) 733-0918
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(Registrants telephone number, including area code)
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is sought to be registered
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Common Shares; $0.001 par value OTC Electronic Bulletin Board
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
TABLE OF CONTENTS
PART I....................................................................... 3
ITEM 1 DESCRIPTION OF BUSINESS............................................. 3
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION........... 14
ITEM 3 DESCRIPTION OF PROPERTY............................................. 16
ITEM 4 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...... 16
ITEM 5 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS........ 17
ITEM 6 EXECUTIVE COMPENSATION.............................................. 18
ITEM 7 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................... 19
ITEM 8 DESCRIPTION OF SECURITIES........................................... 19
PART II...................................................................... 23
ITEM 1 MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND
OTHER RELATED SHAREHOLDER MATTERS................................... 23
ITEM 2 LEGAL PROCEEDINGS................................................... 24
ITEM 3 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS....................... 24
ITEM 4 RECENT SALES OF UNREGISTERED SECURITIES............................. 24
ITEM 5 INDEMNIFICATION OF DIRECTORS AND OFFICERS........................... 24
PART F/S..................................................................... 27
ITEM 1 INDEX TO FINANCIAL STATEMENTS....................................... 27
PART III..................................................................... 44
ITEM 1 INDEX TO EXHIBITS................................................... 44
SIGNATURES................................................................... 45
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
The Company was incorporated under the laws of the State of Nevada on April 14,
1998. The Company can best be described as a fully digital, state of the art
fashion portrait studio in the business of doing total makeovers including;
wardrobe changes accompanied by a twenty-shot photo session, followed by instant
viewing and printing of the purchased portraits.
All images produced by the Company have the advantage of being captured in the
digital form. This method enables the Company to circumvent any scanning of the
original, thus maintaining high quality, along with the ability to do any
photographic manipulating inside the computer such as removing flaws, softening
or removing wrinkles and adjusting colors and lighting. Further, the software
allows them to make major changes in their customer's appearance on the photo,
such as adding a bust-line or removing a double chin.
The condition of the industry today is such that it presents an enormous
opportunity for a portrait studio to ignite the public's fascination with a
futuristic method of capturing, enhancing and processing the photographic
images. Because the Company's largest competitor has to use its off premises
photo processing laboratory, the Company's studio would be virtually
uncontested.
FORWARD LOOKING STATEMENTS
Certain information detailed within this registration statement is based on
forward-looking statements. Generally, the words; "anticipates," "believes,"
"expects," "intends" and similar expressions identify such forward-looking
statements. Forward-looking statements involve risks and uncertainties. The
Company's actual results could differ materially from the results discussed in
the forward-looking statements. Forward-looking statements are current only as
of the date of this registration statement.
All parties and individuals reviewing this registration statement and
considering the Company as an investment should be aware of the financial risk
involved with investing in a development stage company. When deciding whether to
invest or not, careful review of the risk factors detailed in Item 1 of this
document and consideration of forward-looking statements contained in this
registration statement should be adhered to.
The Company has a limited operating history and revenues and must be considered
in the early development stages of embarking upon a new venture. Prospective
investors should be aware of the difficulties encountered by such new
enterprises, as the Company faces all the risks inherent in any new business,
including competition, the absence both of a long-term operating history and
profitability and the need for additional working capital. The likelihood of the
success of the Company must be considered in light of the problems and expenses
that are frequently encountered in connection with the operation of a new
business and the competitive environment in which the Company will be operating.
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RISK FACTORS
The Company is in the development stage and the market it intends to compete
within is new and emerging. There are several competitors within the marketplace
that have significantly greater financial and management resources than that of
the Company. The following section describes some of the risk factors specific
to the Company. Individuals should carefully consider the following risk
factors, in addition to the other information presented in this registration
statement, when evaluating the Company's business. Any of the following risks
could seriously harm the business and/or prevent the furtherance of the
business.
RISK FACTORS RELATING TO THE IMAGEMAKERS PHOTOGRAPHY, INC.
A. LIMITED OPERATING HISTORY TO EVALUATE.
The Company was incorporated under the laws of the State of Nevada on April 14,
1998. The Company can best be described as a fully digital, state of the art
fashion portrait studio in the business of doing total makeovers, including
wardrobe changes, accompanied by a twenty-shot photo session, followed by
instant viewing and printing of the purchased portraits. The Company has a
limited operating history and revenues and must be considered in the early
development stages of embarking upon a new venture. Prospective investors should
be aware of the difficulties encountered by such new enterprises, as the Company
faces all the risks inherent in any new business, including competition, the
absence both of a long-term operating history and profitability and the need for
additional working capital. The likelihood of the success of the Company must be
considered in light of the problems and expenses that are frequently encountered
in connection with the operation of a new business and the competitive
environment in which the Company will be operating.
B. NEED FOR ADDITIONAL WORKING CAPITAL - CONTINUATION OF GOING CONCERN NOT
ASSURED.
As of September 30, 2000, the Company had negative working capital of $(183,826)
and faces the need for substantial additional working capital in the near
future. The Company will be required to seek sources of financing. No assurance
can be given that the Company will have other financing available, if required;
or if available, will be available on terms and conditions satisfactory to
management.
The Company has prepared audited financial statements as of June 30, 2000 and
compiled financial statements as of September 30, 2000, reporting The Company's
ability to establish itself as a going concern is dependent upon the Company
obtaining sufficient financing to continue its development activities. There is
no assurance that the Company will achieve profitable operations in the future.
The Company could be required to secure additional financing to implement
further development plans. There is no assurance that such financing will be
available to the Company, or if available, will be available on terms and
conditions satisfactory to management.
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C. THE PROGRESS AND OVERALL SUCCESS OF THE COMPANY IS SUBSTANCIALLY DEPENDENT
UPON THE ABILITIES OF THE CURRENT OFFCIERS AND DIRECTORS OF THE COMPANY.
The Company's performance and operating results are substantially dependent on
the continued service and performance of its two officers and directors. The
Company intends to hire additional technical, sales and other personnel as they
move forward with their business model, though competition for such personnel is
intense. There can be no assurance that the Company can retain its key technical
employees or that be able to attract or retain highly qualified technical and
managerial personnel in the future. The loss of the services of any of the
Company's key employees or the inability to attract and retain the necessary
technical, sales and other personnel would likely limit the chances for success
and have a negative effect upon the Company's business, financial condition,
operating results and cash flows. In addition, the concentrated ownership the
officers and directors have over the Company, which will not be significantly
affected and may have a material adverse effect on future business progress.
Furthermore, the current officers and directors are involved with other
employment other than that of the Company, which may take time from developing
the business of the Company and effect the overall success.
D. COMPETITION.
Companies that compete in the Company's market locally are GLAMOUR SHOTS and
NU-IMAGE PHOTOGRAPHY. Each of these companies mentioned charge competitive
prices, but do not offer same day service or even custom enhancement of features
that a customer may not be pleased with on the photo, that could be corrected,
before the photo is released to the customer in its final form.
The key factor that has resulted in GLAMOUR SHOTS present competitive position
in this industry is that they were the first to offer video proofing. That is,
photos are taken on film as a video image and simultaneously captured by a video
camera, thus allowing the customer to see on a monitor what their photos will
look like. Unfortunately, the video-proofed photo selected looks very different
when it is returned to the customer almost a week later in its final developed
form.
GLAMOUR SHOTS, who represents 97% of the Company's competition, is limited from
technologically advancing beyond video proofing due to the existence of their
parent corporation, which is a photo-processing lab. In all comparisons, the
Company's products provide more features and have superior performance than do
the competitive products. In most cases, the number of differences is
substantial. A complete technological comparison cannot be done since GLAMOUR
SHOTS still uses the outdated analogue system of photo proofing. Photo
processing is still conducted by using the old "dark-room" method.
The Company's products have gone digital. There is no film or processing. The
digital camera feeds into the computer that feeds into the printer. Once in the
computer, the image is viewed and changes may be made on the screen based upon
what the customer wants. The integral part of this business for GLAMOUR SHOTS is
the film, which can be damaged/destroyed in shipping, over-exposed, color
distorted, and/or, (and it happens often), one roll of film already shot can
actually be filmed right over by a photographer that may not be concentrating at
the time and two days of product sales are voided, unless customers can be
talked-into coming back and put through that experience again, which often takes
four to five hours (at GLAMOUR SHOTS).
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Even then, once a customer actually gets their photo at GLAMOUR SHOTS, they can
still refuse to pay for it because it looks so different from what they thought
they had selected off of the video image. Or, because they had time to think
about how much money they spent a week ago on this and have decided that they
want their money back. At this point, GLAMOUR SHOTS is left with wasted
processing time and a wasted product, not to mention wasted time of the
employees inside the local store whose time (hours) was spent preparing the
customer for this photo session.
The integral part of this business for the Company is the computer, which
advances technologically almost daily. Once a photo is saved in our system, it
won't be damaged, lost, or destroyed. The color can be changed at the click of a
button. No development, therefore no overexposure. Best yet, no waste. No photos
will be produced unless the customer chooses to purchase them after the photo
shoot. The produced photo will look exactly like what the customer just saw on
the computer screen. The customer will not have to wait a week to get their
photos back. If the Company prints a photo, the customer must pay for it. No
refunds are necessary. The customer made the selection and any changes thereto
and THE CUSTOMER IS ALWAYS RIGHT.
The Company's products perform in virtually all situations. The ability to
capture images with full capability to manipulate, correct, store and print
these images in unique to IMAGEMAKERS, and the Company's research indicates that
its performance is superior to anything else on the market today.
E. LACK OF CASH DIVIDENDS.
The Company has not paid any cash dividends on its Common Shares to date, and
there are no plans for paying cash dividends in the foreseeable future. Initial
earnings that the Company may realize, if any, will be retained to finance the
growth of the Company. Any future dividends, of which there can be no assurance,
will be directly dependent upon earnings of the Company, its financial
requirements and other factors.
F. PRODUCT LIABILITY.
The Company presently does not maintain any product liability insurance and will
not secure such insurance until the Company deems it necessary. Ultimately, such
coverage may be a requirement under certain agreements. As a result of the
Company's limited operations to date, no threatened or actual claims have been
made upon the Company for product liability.
G. SHARES SUBJECT TO RULE 144.
On September 30, 2000, the Company had 1,800,000 Common Shares issued and
outstanding that have not been registered with the Commission or any State
securities agency and which are currently restricted pursuant to Rule 144
promulgated by the Commission under the 1933 Act. Rule 144 provides, in essence,
that a person holding restricted securities for two years from the date the
securities were purchased from the issuer, or an affiliate of the issuer and
fully paid, may sell limited quantities of the securities to the public without
registration, provided there shall be certain public information with respect to
the issuer. Pursuant to Rule 144, securities held by non-affiliates for more
than one year may generally be sold without reference to the current public
information or broker transaction requirements, or the volume limitations. None
of the current outstanding restricted shares are available for resale pursuant
to Rule 144.
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The sale of some or all of the currently restricted Common Shares could have a
material negative impact upon the market price of the Common Shares if a market
for the Common Shares should develop in the future.
H. OTHER NON PUBLIC SALES OF SECURITIES.
As part of the Company's plan to raise additional working capital, the Company
may make a limited number of offers and sales of its Common Shares to qualified
investors in transactions that are exempt from registration under the 1933 Act.
Other offers and sales of Common Shares may be at prices per share that are
higher or lower than the price of the Common Shares or the exercise price per
share for the Warrants in this registration statement. There can be no assurance
the Company will not make other offers of its securities at different prices,
when, in the Company's discretion, such prices are deemed by the Company to be
reasonable under the circumstances.
I. NO ASSURANCE OF LIQUIDITY.
There is currently no public market for the Common Shares or any other
securities of the Company, and there can be no assurance that a trading market
will develop in the future.
BUSINESS STRATEGY
The Company's business strategy is to implement the use of a digital system that
will:
1. Enable the Company to print images instantly on a variety of mediums
such as photographic quality paper or canvas for our larger portraits.
2. Allow the Company to produce photographs without any negative film.
3. Instantly create a high quality video proof, so closed eyes and missed
shots are a thing of the past.
4. Save the cost of negative developing, proofing, film, lab prints and
the labor involved in ordering and tracking, not to mention
eliminating costly mistakes.
5. Virtually end all refunds, as the customer is able to view, correct,
purchase and leave with their portraits in hand.
6. Give the customer a high quality image comparable to those found in
magazines such as "VOGUE" or "GENTLEMAN'S QUARTERLY".
7. Be on the cutting-edge of this technology and limited only by their
imagination as far as expanding their products.
These combined capabilities provide endless reasons and uses for their product.
The housewife can have a day of feeling like a star and looking the best she's
ever looked. Young men or women aspiring to model can begin working on their
required portfolios. Graduates can come in for their special senior portraits.
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Business men and women can get needed photos for their business cards. Even
Internet users can have their photographs taken and then purchase them on a
CD-ROM which will enable the image to be sent anywhere in the world in seconds.
THE COMPANY'S PRODUCTS SHALL HAVE ADVANTAGES THAT ARE LIMITLESS.
The Company's Products
The Company will originally offer two products:
1. The PHOTO-SESSION, which includes the make-over/hair-styling a
wardrobe selection.
2. The PORTRAITS, which can include enhanced prints on photographic paper
as well as on other media.
PRODUCT IDENTIFICATION
From the onset of business, the Company's primary product will be total
makeovers along with the printed photographs on photographic paper as well as
CD-ROM's. However, the Company plans to quickly develop and market additional
products such as talking photo greeting cards and other exciting products
developed in the digital format.
MARKET ENVIRONMENT
The marketplace has been expanding rapidly and forecasts predict continued
growth into the next decade. In fact, according to research conducted by R.
Keith Schwer for the Center of Business and Economic Research at the University
of Nevada - Las Vegas, (UNLV), statewide unemployment rates averaged 3.7%,
(compared to the national average of 4.7%). Such low rates have not been
experienced since the 1970's.
This strong employment picture is only enhanced by minimal price increases.
Regardless of the minimal price increases, the state's primary tax revenue
sources, gaming revenue and taxable sales posted gains during November 1997.
Retail activity in Clark County has increased by approximately 5.73% over the
previous year: $1,365,501 in November 1997 compared to $1,291,545 in November
1996.
According to Arizona State University's "Blue Chip Job Growth Update," not only
did Nevada lead the nation in job growth in 1997: 6.16% above 1996; but LAS
VEGAS is projected to lead the nation in job growth over the next five-year
period, with the Phoenix, Arizona area soon to follow. This job growth is
brought about by the new construction of several casinos, which haven't even
been completed yet. According to the president of Caesar's Palace, William
Hornbuckle, for every $1 million spent, fifteen (15) local jobs are created.
Tourism aside, the creation of these jobs means that there will be stronger
buying power in our local market alone.
Just a decade ago, the conventional wisdom in Las Vegas was that people were
here to gamble, not shop. That is not the case today. Sales at the Forum Shops
Retail Center in Caesar's Palace averaged $1200 - $1400 per square foot, leading
the nation in sales. The Fashion Show Mall's sales exceeded $500 per square foot
in 1996 and averaged almost $750 per square foot in 1997. Sales exceeding $400
(annually) per square foot are considered phenomenal by industry standards. Even
though the Las Vegas market is slowly shifting to higher end, both tourists and
locals combined are responding favorably to the slowly changing pricing
strategies.
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According to major real estate brokers in Las Vegas, the smart money is going
South of Tropicana (in Las Vegas, that is). (Land that sold for $2.85 per square
foot in 1987 now sells for over $27.00 per square foot). Research has proven
that most of the sales that our primary competitor enjoys in the fashion
photography market come from Green Valley/Henderson area.
Strategically thinking, we know that our competitor's prime season is the
Oct-Nov-Dec holiday season. However, they are still limited in their ordering
deadlines prior to Christmas. They cannot produce a gift portrait for a customer
on Christmas Eve. IMAGEMAKERS can produce these products while the customer
waits. If a customer wants a full-length digitally enhanced portrait on canvas a
week before Christmas, the competition can't produce it, but IMAGEMAKERS can,
while the consumer waits.
Considering the holiday season, the Company believes that late fall will be an
ideal time to start business. There is no other company in Las Vegas or the
Nevada area that provides digitally enhanced fashion photography portraits
available immediately after the photos are taken, along with a professional
makeover, wardrobe selection/change and photo shoot. The Company believes that
by opening in the late fall, they will have the momentum needed to have an
excellent holiday season and via careful advertising, will make their presence
known.
PRICING AND PROFITABILITY
The prices charged by the competition start at $40.00 for one 8x10 and are
reduced as more portraits are purchased, with a session price of $39.95. The
competition's average sale is approximately $180.00. The Company intends to
price its products at or below the competition. However, the Company will do so
in a much more comprehensive and equitable manner.
Although this may appear to be somewhat status quo pricing, don't be fooled. In
this skyrocketing market, The Company intends to base their pricing on a profit
margin. Even taking into consideration the budget that is slightly enhanced to
accommodate unforeseen emergencies, the Company's pricing will CONSERVATIVELY
allow a 20%-30% profit overall. Comparing the Company's prices to the
competition without taking into consideration that the product comparison would
be that of comparing an apple to an apple seed. Although the Company must be
mindful of the competitor's prices, their target is not to publicly portray any
kind of price war (even though we are almost eye-to-eye in pricing); rather, by
comparing product, pricing becomes a secondary issue when met with the vastly
superior product and unparalleled customer service.
DISTRIBUTION / OPTIMIZING STORE LOCATION
The Company's product shall be distributed via direct sales. The customer will
purchase all items directly from the store. Future plans, however, may include
indirect sales of other items as promotions are developed with other related
businesses such as modeling, casting and production agencies and/or pageant
programs.
The Company believes that the Fashion Show Mall the Galleria Mall would be ideal
locations for their first stores since; (i) the tourist traffic that will shop
at the Fashion Show has not even been approached yet and tourists always want to
try new things that they cannot experience at home; and (ii) Henderson is
presently the fastest growing city in the country and is the location of the
Galleria Mall.
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According to figures provided by Forest City, over 300,000 people live within a
10-minute drive of the malls and Interstate 95, Las Vegas' primary east-west
artery that is a quarter of a mile from the Galleria Mall, providing easy access
throughout the area.
Phoenix, Arizona will be the Company's next move, as their competitor had
problems related to leasing in that area and have reduced their four stores to
one, located in one of the older malls in that area. The Company is discussing
leasing with Westcor Partners to lease space in Metro Center, also referred to
as the Marketplace of the West. Metro Center contains 1.3 million square feet
and is home to the highest producing Sears store west of the Mississippi. Other
anchors are Dillards, Macy's and Robinsons/May Co., not to mention the 30 screen
Harkins Theater. Sales per square foot vary, but the average is $350 annually.
Next, the Company will approach the Denver, Colorado market. The Company intends
to locate in a mall that has not been completed and is intended to be a
higher-end mall. At this point, the Company's reputation will be established and
they can target a higher market with products like Images-On-Canvas and other
new items. Since store sales per square foot cannot be derived yet from this
mall, an average taken of the general Denver area of enclosed mall sales
averages from $250 to $400 per square foot annually.
PRODUCT LIFE CYCLES
The life cycle for the Company's products is endless, as photographs last
forever. But, since we, as humans, are constantly changing and growing, the
Company will be given more opportunity to memorialize these changes for their
customers. As we change, so do our needs. The Company's products will keep in
touch with those needs. The Company fully intends to develop future products
such as the "Talking Photo Greeting Card." Imagine receiving from your loved-one
a disc that when played in your computer or DVD player, lets you view twenty
alluring portraits of our customer while you hear their voice telling you how
much they love you. This is a great gift from a serviceman's wife to her husband
overseas. Or, why not make your favorite image your new computer screen-saver?
Overall, the Company concludes that their products will continue to be viable in
the marketplace during the next century and that the Company's' future planning
and product related activities will insure a strong market presence.
COST
In comparison to other companies, The Company's products are produced quickly
and economically in the store by eliminating negative film and any lab
processing of film, proofs or paper.
Comparative analysis shows these figures to be a fraction of the Company's
competitors. This is due to the fact that they must pay for the negative film
and the following waste-factors associated with such:
1. The labor to load, unload and package the film.
2. The shipping cost to and from the lab for the negatives to be
developed and proofed.
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3. The labor involved in placing orders to the lab and all mistakes
associated with such.
4. The cost of the final prints and the shipping back to the store.
5. The high cost of lab retouching, if required.
The Company has information about the competition that tells them that they must
pay their lab the amount of $2.65 per 8x10 print, with no price reduction for
quantity. Comparably, our 8x10 print cost is equal; however, we have eliminated
all other lab, labor and shipping costs in the print production. The mere
existence of our business shall serve to increase profit and eliminate certain
overhead costs that our competitor must depend on.
PROPRIETARY TECHNOLOGY
All photographs in any form, as well as all software developed, to be used by
the Company for their products will be copyrighted.
PRODUCT SELECTION CRITERIA
Because marketing is a large expense and because it is where much of the
Company's effort is applied, focus on the consumer is a very important
criterion. The idea is to keep the consumer forever by continually offering them
a valuable product, thereby diminishing the costs of reaching and appealing to
them. Wise product selection is therefore critical to the Company's success.
THE COMPANY'S FUTURE PRODUCTS
In the next two years it is estimated that there will be a variety of products
distributed by the Company, such AS IMAGEMAKERS' Talking Greeting Cards,
Images-On-Canvas and Images-On-A-Disc (for use as computer screensaver(s). The
market potential for these products in a retail arena can be in excess of
$100,000. This translates into a market share of 1% of the overall market.
Management is regularly examining roles that new products will play in the
growth of the Company. In order to promote the speed and effectiveness of the
Company's future new product development efforts, management is committed to
making every effort to stay in touch with all of the technical developments and
to make whatever changes necessary. Further, the Company will utilize full time
software consulting experts to help keep them on the cutting edge of technology.
THE COMPANY'S MARKETING STRATEGY
The Company's marketing strategy is to enhance, promote and support the fact
that their products are the most exciting, highest quality and technologically
advanced available to the public, while giving a level of customer service far
exceeding all expectations.
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SALES STRATEGY
The Company's product should be treated as an exciting experience followed by a
permanent record of this experience to enjoy forever. As such, the target market
segments to focus on are females ages 16 to 45, as this product will be of the
greatest appeal to this group. Because of the special market characteristics
(mostly female), our sales strategy includes television and radio commercials
targeting the female audience, direct mail programs and promotions with local
modeling agencies, pageants and salons.
The following describes the Company's market position, pricing and product
margin structures. The Company plans to review these every quarter in order to
ensure that potential profits are not being lost.
POSITIONING
The customers will see the Company's product as fresh and exciting. Its unique
advantages of instant retouching and printing can be exploited to arrive at a
winning position in the consumer's mind. In terms of market segmentation
advantages, they can use their unique process of retouching to attract female
clients who are not as confident with their appearance to arrive at a winning
position. The Company can reposition their competitors by forcing them to become
a discount studio, as this will be their only way of survival. The resulting
selling basis for the Company product is that they become the standard in the
industry.
PRICING
The prices for the Company's products are determined first and foremost by
comparisons to the competition and secondly for profitability. It is important
to know that competitive pricing is essential to the market profile. Compared to
the competition, the Company's prices are structured to give more value and
confidence to the customers than our competition. The Company believes that
their customers will pay an average of $150 per portrait package because such
averages have been achieved by our competition.
ADVERTISING AND PROMOTION
The Company recognizes that the key to success at this time requires extensive
promotion. This must be done aggressively on a wide scale. To accomplish their
sales goals, they require an extremely capable advertising agency and public
relations firm. The Company plans to advertise on television shows such as
"Oprah" and the daytime soaps. With the assistance of CENTURY ADVERTISING, a
comprehensive advertising and promotion plan will be drafted.
PUBLIC RELATIONS
The Company's publicity efforts are intended to accomplish the following:
1. Position the Company at the leading edge in providing fashion
portraits.
2. Increase the Company's reputation and name brand recognition among
managers, buyers and customers in prospective companies, industries
and markets.
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THE CORPORATE MISSION
By the year 2002, the Company will be a highly visible company with two stores
in the Las Vegas, Nevada area, at least one store in Phoenix, Arizona and
another in Denver, Colorado, known as the hottest portrait studios in the
industry. We will continue aggressively attacking the local marketplace and
begin to market the IMAGEMAKERS stores as a franchise nationwide and prepare for
our movement to the Midwest and east coast to cities like Chicago, Illinois,
Harrisburg, Pennsylvania, Virginia Beach, Virginia and Fort Lauderdale, Florida.
The Company's stores will provide the most innovative, highest quality
photography that gives the customer a great value for their money. Furthermore,
by performing professional, quality makeovers with exciting high-energy
photo-shoots, the customers will have an experience they will never forget. The
Company believes that their first responsibility is to the customer. They will
strive to have the highest quality customer service possible.
The Company will strive to; (i) treat their customers with the highest respect
and pampering, truly creating an experience to tell their friends about; (ii)
follow the philosophy with staff that hard work can and should be fun as well as
profitable; and (iii) earn the reputation as the most exciting and favorite
photo studio available to the general public. Through a long-term commitment to
this mission, they will be known as the Company that does a public service by
making people beautiful. The Company's customers will see IMAGEMAKERS as
offering an exciting new service coupled with the highest quality photographs at
a reasonable price. The Company will strive for our employees to see IMAGEMAKERS
as a fun and lucrative place to work.
THE INDUSTRY
MARKET DEFINITION
The fashion photography market is growing at a rapid rate. The market for these
products was estimated at $1.5 million in 1996. This represents more than a 25%
growth over 1995. According to market research and industry sources, the overall
fashion photography market for the portrait photography industry is projected to
sustain similar growth through 2002.
Demographically, the area of greatest growth in this market is in the area of
Green Valley, possibly since Green Valley lies in the City of Henderson, which
is growing at a rapid pace. In fact, based upon internal research conducted for
GLAMOUR SHOTS IN 1996, 20% of their local customer base was attributed to Green
Valley (Henderson), compared to 10% in 1995. Further, statistics received from
the Nevada Development Authority project growth in the Henderson-Green Valley
area to surpass 15% in the year 2000.
Besides the local customer market in Las Vegas, Nevada, the Company intends to
capitalize on the tourist market, which, after all, is expected to bring over 30
million people -- (second only to Orlando, Florida), to Las Vegas, Nevada.
Securing a location on the strip is projected as a profitable strategy, since
both strip malls, The Forum Shops and The Fashion Show Mall, generate almost an
$850 per-square-foot sales average based upon store size. Additionally, this is
a market that has never been approached by the fashion photography industry.
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Since the Company's product is young and technologically advanced, they want to
place their next two stores in cities of comparable definition. One selected
location is Phoenix, Arizona, which now claims a higher population than Los
Angeles, California. The other destination for the Company is Denver, Colorado,
which prides itself as the vacation place of many affluent visitors and home to
a population that has not yet even received their first retail flourish. Many
businesses from the east coast, as well as Europe, are flocking to these three
cities: Las Vegas, Nevada, Phoenix, Arizona and Denver, Colorado because the
cities are new and thriving, and have vast expanses of area which has yet to be
developed. Ironically, although these cities are young and the home to the new
"mover-and-shaker" crowd, each city has a very good influx of big money, whether
it be from gamblers, high-powered businesses or entertainers and political
personalities.
CUSTOMER PROFILE
The Company's target market includes females of all ages. The most typical
customer for our product is between the ages of 16 and 45 years of age that
would use our products for several reasons including gifts and business.
According to William Hornbuckle, President of Caesar's Palace Las Vegas, (during
a recent speech given at the Las Vegas Trends 2000 forum), 900 visitors of
Caesar's casino/hotel were polled and asked why they visit Las Vegas. Ninety
five percent (95%) of these people polled said, "To escape," -- that is, to
spend time away from their mundane routine. Although tourists usually only
comprise 25% of non-strip located retail stores' business, IMAGEMAKERS will
provide that escape for tourists, as well as locals. Our potential to actually
target tourists is unlimited, especially since it gives wives of conventioneers
something fun and exciting to do other than shopping and gambling; or it gives
the female entrepreneur visiting on business the perfect escape.
Primarily, however, the Company's customer would be from the Las Vegas, Nevada
area. We will target various markets such as teens possibly interested in
modeling who may wish to put together a portfolio, or the Realtor(R) who needs a
professional, (enhanced) photo for his/her business card. The student taking
their senior photos will want to be pampered, too; and the wife of an enlisted
Air Force serviceman may want to "get away from it all" and will stop in to get
a makeover and photos to send to her husband, stationed thousands of miles away.
In addition, possibly send one of the IMAGEMAKERS "TALKING PHOTO GREETING
CARDS." Anyone who needs to look good for a certain picture or who wants to look
good for themselves or someone else will be interested in stopping in to see
what IMAGEMAKERS has to offer -- men and women alike.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following Management's Discussion and Analysis of Operations contains
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth under "Risk
Factors" and elsewhere in this registration statement. The following should be
read in conjunction with our audited Consolidated Financial Statements included
within this registration statement.
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PLAN OF OPERATION
The Company can best be described as a fully digital, state of the art fashion
portrait studio in the business of doing total makeovers including; wardrobe
changes accompanied by a twenty-shot photo session, followed by instant viewing
and printing of the purchased portraits.
Management is regularly examining roles that new products will play in the
growth of the Company. In order to promote the speed and effectiveness of the
Company's future new product development efforts, management is committed to
making every effort to stay in touch with all of the technical developments and
to make whatever changes necessary. Further, the Company will utilize full time
software consulting experts to help keep them on the cutting edge of technology.
All images produced by the Company have the advantage of being captured in the
digital form. This method enables the Company to circumvent any scanning of the
original, thus maintaining high quality along with the ability to do any
photographic manipulating inside the computer such as removing flaws, softening
or removing wrinkles and adjusting colors and lighting. Further, the software
allows them to make major changes in their customer's appearance on the photo
such as adding a bust-line or removing a double chin.
The condition of the industry today is such that it presents an enormous
opportunity for a portrait studio to ignite the public's fascination with a
futuristic method of capturing, enhancing and processing the photographic
images. Because the Company's largest competitor has to use its off premises
photo processing laboratory, the Company's studio would be virtually
uncontested.
ANALYSIS OF FINANCIAL CONDITION
As of September 30, 2000, the Company had negative working capital of $(183,826)
and faces the need for substantial additional working capital in the near
future. The Company will be required to seek sources of financing. No assurance
can be given that the Company will have other financing available, if required;
or if available, will be available on terms and conditions satisfactory to
management.
The Company has prepared audited financial statements as of June 30, 2000 and
compiled financial statements as of September 30, 2000, reporting The Company's
ability to establish itself as a going concern is dependent upon the Company
obtaining sufficient financing to continue its development activities. There is
no assurance that the Company will achieve profitable operations in the future.
The Company could be required to secure additional financing to implement
further development plans. There is no assurance that such financing will be
available to the Company, or if available, will be available on terms and
conditions satisfactory to management.
As part of the Company's plan to raise additional working capital, the Company
may make a limited number of offers and sales of its Common Shares to qualified
investors in transactions that are exempt from registration under the 1933 Act.
Other offers and sales of Common Shares may be at prices per share that are
higher or lower than the price of the Common Shares in this registration
statement. There can be no assurance the Company will not make other offers of
its securities at different prices, when, in the Company's discretion, such
prices are deemed by the Company to be reasonable under the circumstances.
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ITEM 3. DESCRIPTION OF PROPERTY.
The Imagemakers Photography, Inc. does not have any property and at this time
has no agreements to acquire any property. The Company currently leases their
corporate offices and retail operations located at 3855 Diablo Drive, Suite 7,
Las Vegas, Nevada 89118. The lease expires on June 30, 2002, at a monthly rate
of $800.00. The Company was not required to make a security deposit.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
At June 30, 2000, the Company had 3,032,861 Common Shares issued and
outstanding. The following tabulates the holdings of Common Shares of the
Company by each person who holds of record or is known by management of the
Company to own beneficially more than 5% of the Common Shares and, in addition,
by all directors and officers of the Company, individually and as a group:
NUMBER OF PERCENT
NAME AND ADDRESS SHARES OF CLASS
---------------- ------ --------
Mr. Mark Patko (1)(2) 1,800,000 59.35%
975 Camelia
Henderson, Nevada 89015
Ms. Mary P. Costa (1)(2) 1,800,000 59.35%
975 Camelia
Henderson, Nevada 89015
Hane Development, Inc. 328,572 10.83%
3rd Floor Macmillan House
96 Kenington High Street
London, W8 4SG
United Kingdom
Orton & Company 257,144 8.48%
50 West 300 South, #1130
Salt Lake City, Utah 84101
David D. Westfere 257,144 8.48%
105 East Ellis Drive
Tempe, Arizona 85282
Diamond Equities, Inc. 200,000 6.59%
2205 West Grant Street
Phoenix, Arizona 85009
--------- -----
All officers/directors as a group (two) 1,800,000 59.35%
----------
(1) Mr. Mark Patko is the holder of record of 900,000 Common Shares of the
Company. Mr. Patko is the husband of Mary P. Costa. Mr. Patko is therefore
deemed to share the beneficial ownership 900,000 Common Shares of the
Company owned by Mary P. Costa. For purposes of this table, 1,800,000
Common Shares are deemed beneficially owned by Mr. Mark Patko.
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(2) Ms. Mary P. Costa is the holder of record of 900,000 Common Shares of the
Company. Ms. Costa is the wife of Mark Patko. Ms. Costa is therefore deemed
to share the beneficial ownership of 900,000 Common Shares of the Company
owned by Mark Patko. For purposes of this table, 1,800,000 Common Shares
are deemed beneficially owned by Ms. Mary P. Costa.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The following table sets forth the names and ages of the members of the
Company's Board of Directors, executive officers, and the position with the
Company held by each:
NAME AGE POSITION
---- --- --------
Mark Patko 38 Chairman of the Board, Chief
Executive Officer and President
Mary P. Costa 36 Director, Vice President, Secretary
and Treasurer
Each director is elected to hold office until the next annual meeting of
shareholders and until his successor has been elected and qualified. Officers
are elected annually by the Board of Directors and hold office until successors
are duly elected and qualified. The following is a brief account of business
experience of each director and executive officer of the Company.
MARK PATKO. Mr. Patko has been the Chairman of the Board, Chief Executive
Officer and President since the Company was founded. Mr. Patko has been
developing the concepts for the Company since May 1996. Mr. Patko was an owner
manager of a Glamour Shots store in Las Vegas, Nevada from October 1992 through
May 1996. During his tenure at Glamour Shots, Mr. Patko won awards from the
Boulevard Mall for 1994 Sales Leader; an award from Glamour Shots corporate
office for Most Improved Store and was also recognized by Glamour Shots
corporate office for managing one of the top ranking stores in the United
States. Mr. Patko attended El Camino College and received an undergraduate
degree in Business Management. Mr. Patko was a founding partner of Five Star
Attorney Service in Torrance, California, which has closed due to the degree of
legal information available on the Internet.
Mr. Patko has been working intermittently in the photography industry for over
twenty years. Originally from Chicago, Mr. Patko worked there in film processing
and development. After moving to the west coast, Mr. Patko began his own
business sideline as an independent photographer in the Los Angeles area and
became acquainted with Peter Gowland, a celebrated photographer in the field of
fashion portrait photography. Mr. Patko re-entered the photography field as an
employee of Glamour Shots, a nationally known glamour photography chain. After
experiencing a change in Glamour Shots direction, Mr. Patko has researched the
digital photography market enough to find that there are few companies
comfortable enough with the computerized technological advancements that could
eventually severely handicap companies like Glamour Shots. Mr. Patko found that
with his photographic knowledge coupled with his interest in computers and the
development of certain digital processes, the fashion photography business can
be extremely profitable when approached from a digital standpoint that basically
omits the photo processing procedure and allows for high resolution prints
productively at a fraction of the price immediately after the photos are taken.
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MARY P. COSTA. Ms. Costa has been a Director, Vice President, Secretary and
Treasurer since the Company was founded. Ms. Costa has been the Property Manager
of College Park Realty Co. located in North Las Vegas, Nevada since November
1995. Ms. Costa was a Property Manager for Equity Group located in Las Vegas,
Nevada from May 1993 through October 1995. Ms. Costa was a Property Manager for
Ribeiro Corporation from 1991 through April 1993. Prior to becoming involved in
property management, Ms. Costa was involved in the newspaper business as a
reporter for ten years. Ms. Costa received her undergraduate degree in English
and Journalism. Ms. Costa attended the Temple University School of Law and
Western University. Ms. Costa has been a member of the Los Angeles Trial
Lawyers' Association, now known as the Consumer Attorney's Association of Los
Angeles. Ms. Costa is a member of the Institute of Real Estate Management and
holds a real estate license in the state of Nevada. Ms. Costa filed for
bankruptcy under Chapter 7 in August 1995 and was dismissed in December, 1995.
The bankruptcy was personal and non-business related. Ms. Costa is the wife of
Mr. Mark Patko.
Ms. Costa is familiar with businesses that can survive in today's retail market.
Currently, as a commercial property manager, Ms. Costa reviews and projects
sales for many nationwide store chains as well as large anchor tenants, and how
such sales relate to the profitability of the various shopping centers she now
manages. Through her husband, Mark Patko's involvement in Glamour Shots, Ms.
Costa became interested in the fashion photography industry and the areas of
growth that could ensue for such a business. In addition, through discussion
with various statewide and out-of-state brokers of major shopping malls, has
learned that probably due to lack of knowledge about the technical advances, no
photography tenants have attempted a changeover to digital photography, which
most mall managers agree will be a very interesting move to a very profitable
business.
ITEM 6. EXECUTIVE COMPENSATION.
The Company does not presently provide group medical or life insurance for its
employees, although the Board of Directors may recommend such plans be adopted
in the future.
The officers and directors will be retained under employment contracts
containing adequate compensation and benefits to insure the proper growth and
development of the Company. The Company will have all employment agreements will
be approved by the Board of Directors. In addition, the Company may provide, at
the discretion and approval of the Board of Directors, incentives to these key
individuals in the form of stock options to purchase Common Shares of the
Company.
No officer of the Company receives any additional compensation for his services
as a director. However, directors are entitled to be reimbursed for reasonable
and necessary out-of-pocket expenses incurred by them in connection with
meetings of the Board of Directors or other matters of Company business.
The Board of Directors of the Company approved the Stock Option Plan of The
Imagemakers Photography, Inc. on April 14, 1998. The purpose of the Plan and of
granting options to specified employees is to further the growth, development
and financial success of the Company and its subsidiaries by providing
additional incentives to certain key employees holding responsible positions by
assisting them to acquire Common Shares and to benefit directly from the
Company's growth, development and financial success. To date, the Company has
not issued any options to these key employees.
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On April 14, 1998, the Company issued 900,000 Common Shares, par value $0.001
per share, to Mark Patko in consideration for services as Chairman of the Board,
Chief Executive Officer and President of the Company. In addition, the Company
received $17,500.00 in cash. The average cost per share to Mark Patko was
therefore $0.0194444 per share.
On April 14, 1998, the Company issued 900,000 Common Shares, par value $0.001
per share, to Mary P. Costa in consideration for services as Director, Vice
President, Secretary and Treasurer of the Company. In addition, the Company
received $17,500.00 in cash. The average cost per share to Mary P. Costa was
therefore $0.00194444 per share
On April 14, 1998, the Company authorized the issuance of 900,000 Common Shares,
par value $0.001 per share, pursuant to Regulation D, Rule 504 of the Securities
& Exchange Act of 1933, as amended, to 6 non-affiliated investors at a price of
$0.019444 per share. The average cost per share to these investors was therefore
$0.019444 per share.
On June 27, 1999, the Company authorized the issuance of 332,861 Common Shares,
par value $0.001 per share, pursuant to Regulation D, Rule 504 of the Securities
& Exchange Act of 1933, as amended, to various non-affiliated investors. The
Company issued 200,000 shares to Diamond Equities, Inc. in exchange for a line
of credit of $100,000 and 132,861 shares to Hane Development, Inc. in exchange
for a line of credit of $60,000.00 and for a cash consideration of $1,074.00.
ITEM 8. DESCRIPTION OF SECURITIES.
COMMON SHARES
The Company's Articles of Incorporation authorize the issuance of up to
20,000,000 Common Shares, par value $0.001 per share. Each holder of record of
Common Shares is entitled to one vote for each share held on all matters
properly submitted to the shareholders for their vote. Cumulative voting is not
authorized by the Articles of Incorporation.
Holders of outstanding Common Shares are entitled to those dividends declared by
the Board of Directors out of legally available funds, and, in the event of
liquidation, dissolution or winding up of the affairs of the Company, holders
are entitled to receive ratably the net assets of the Company available to the
shareholders. Holders of outstanding Common Shares have no preemptive,
conversion or redemptive rights. All of the issued and outstanding Common Shares
are, and all un-issued Common Shares, when offered and sold will be, duly
authorized, validly issued, fully paid and non-assessable. To the extent that
additional Common Shares of the Company are issued, the relative interests of
the then existing shareholders may be diluted.
DIVIDEND POLICY
Holders of Common Shares are entitled to dividends in the discretion at the
Board of Directors and payment thereof will depend upon, among other things, the
Company's earnings, its capital requirements and its overall financial
condition. The Company has not paid any cash dividends on its Common Shares
since inception and intends to follow a policy of retaining any earnings to
finance the development and growth of its business. Accordingly, it does not
anticipate the payment of cash dividends in the foreseeable future.
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MARKET FOR COMMON SHARES
There is currently no public market for the Common Shares of the Company, and
there can be no assurance that a trading market will develop in the future.
Further, the outstanding Common Shares are restricted securities as that term is
defined in Rule 144 under the 1933 Act, and can not be resold without
registration under the 1933 Act or an exemption from registration.
PREFERRED SHARES
The Company's Articles of Incorporation, as amended, authorize the issuance of
up to 2,500,000 Class "A" Preferred Shares, par value $0.001 per share and
2,500,000 Class "B" Preferred Shares, par value $0.001 per share. The Company
may fix designations, preferences, powers, dividend rights, conversion rights,
voting rights, terms of redemption's and liquidating preferences. Any or all of
these may be greater than the rights of the Common Shares. None of the Preferred
Shares are outstanding, and the Company has not entered into any obligations to
issue any such shares, except as set forth in this Memorandum.
The Company has no outstanding Preferred Shares.
PREFERRED DIVIDENDS
Holders of outstanding Series "A" 12% Cumulative Convertible Preferred Shares
are entitled to receive on a quarterly basis, when, as declared by the Board of
Directors of the Company, out of funds legally available therefore, cumulative
cash dividends at the rate of 12% per annum of the stated value of $3.00 per
share, or $0.36 per share per annum, and no more. Dividends on the Series "A"
Cumulative Convertible Preferred Shares will be paid quarterly on the 15th day
of January, April, July and October each year. Each dividend will be payable to
holders of record as they appear on the stock records of the Company on the
record date of the dividend.
No cash dividends may be declared or paid or set for payment on any class of
stock ranking as to dividends junior to the Preferred Shares unless full annual
dividends have been paid or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereby set apart for such payment.
PREFERRED CONVERSION
The holders of the Preferred Shares are entitled at any time beginning six
months following the close of this offering, subject to prior redemption, to
convert the Preferred Shares into the Company's Common Shares (par value $0.001
per share), at a rate of one Common Shares for each one Preferred Share,
provided that the average bid price of the Common Shares is at least $3.00 per
share for the twenty trading days prior to such conversion date. The conversion
ratio is subject to adjustment as set forth below. The Company is not required
to issue fractional Common Shares upon conversion of the Preferred Shares and,
in lieu thereof, will pay a cash adjustment based upon the market price of the
Common Shares on the last business day prior to the date of conversion. In the
case of Preferred Shares called for redemption, conversion rights will expire at
the close of business the tenth business day prior to the redemption date.
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PREFERRED CALL FEATURE
The Preferred Shares are callable by the Company at any time that the average
bid price of the Common Shares is at least $4.50 per share for the twenty
trading days prior to such call. The holders of the Preferred Shares will be
required to surrender and deliver, duly endorsed, the certificate or
certificates representing the number of Preferred Shares being called by the
Company at its office or to the transfer agent at their offices.
PREFERRED LIQUIDATION
Upon dissolution, liquidation or winding up of the Company, the holders of the
Preferred Shares shall be entitled to receive and to be paid out of the assets
of the Company available for distribution to its stockholders, before any
payment or distribution shall be made on the Common Shares or any class of stock
ranking junior to the Preferred Shares upon liquidation, 100% of the stated
value amount per share, plus a sum equal to all unpaid dividends thereon to the
date of final distribution.
Neither the sale of all or substantially all of the property or business of the
Company, nor the merger or consolidation of the Company into or with any other
corporation or the merger or consolidation of any other corporation into or with
the Company shall be deemed to be a dissolution, liquidation or winding up,
voluntary or involuntary. After the payment to the holders of Preferred Shares
or the full liquidation preference provided above, the holders of Preferred
Shares as such shall have no right to claim to any of the remaining assets of
the Company. In the event the assets of the Company available for distribution
to holders of Preferred Shares upon any dissolution, liquidation or winding up
of the Company, whether voluntary or involuntary, shall be insufficient to pay
in full all amounts which such holders are entitled, no distribution shall be
made on account of any Preferred Shares unless proportionate distribution
amounts shall be paid on account of the Preferred Shares ratably, in proportion
to the full distribution amounts for which holders of all such shares are
respectively entitled upon such dissolution, liquidation or winding up.
MARKET FOR PREFERRED SHARES
There is currently no public market for the Preferred Shares of the Company, and
there can be no assurance that a trading market will develop in the future.
Further, the outstanding Common Shares are restricted securities as that term is
defined in Rule 144 under the 1933 Act, and can not be resold without
registration under the 1933 Act or an exemption from registration.
STOCK OPTIONS
The Board of Directors of the Company approved the Stock Option Plan of The
Imagemakers Photography, Inc. on April 14, 1998. The purpose of the Plan and of
granting options to specified employees is to further the growth, development
and financial success of the Company and its subsidiaries by providing
additional incentives to certain key employees holding responsible positions by
assisting them to acquire Common Shares and to benefit directly from the
Company's growth, development and financial success. To date, the Company has
not issued any options to these key employees.
The Company has no outstanding stock options to purchase common stock of the
Company.
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WARRANTS
The Board of Directors of the Company approved the issuance of 120,000 Class "A"
Redeemable Common Stock Purchase Warrants at an exercise price of $2.50 per
Common Share of the Company for a period of five years from the date of this
Private Placement Memorandum.
The Board of Directors of the Company approved the issuance of 120,000 Class "B"
Redeemable Common Stock Purchase Warrants at an exercise price of $3.00 per
Common Share of the Company for a period of five years from the date of this
Private Placement Memorandum.
Each Warrant is redeemable by the Company at a redemption price of $.01 per
Warrant at any time after nine months from the date of this Private Placement
Memorandum on thirty days' prior written notice, (i) if the average closing bid
price of the Units equals or exceeds $8.50 for any twenty consecutive trading
days ending within ten days prior to the notice of redemption or (ii) upon the
prior written consent of an Underwriter completing an initial public offering of
the Company's Securities.
The Company has no outstanding warrants to purchase common stock of the Company.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Shares will be performed by the
Company until such time as there are enough stockholders to require outside
services.
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PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND OTHER
RELATED SHAREHOLDER MATTERS.
MARKET PRICE
There is no trading market for the Company's Common Stock at the present time
and there has been no trading market to date. There is no assurance that a
trading market will ever develop or, if such a market does develop, that it will
continue.
If and when the Company's securities are traded, the securities may likely be
deemed a "penny stock". The Securities and Exchange Commission had adopted Rule
15g-9 which establishes the definition of a "penny stock," for purposes relevant
to the Company, as any equity security that has a market price of less than
$5.00 per share or with an exercise price of less than $5.00 per share, subject
to certain exceptions. For any transaction involving a penny stock, unless
exempt, the rules require: (i) that a broker or dealer approve a person's
account for transactions in penny stocks and (ii) the broker or dealer receive
from the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be purchased. In order to approve a
person's account for transactions in penny stocks, the broker or dealer must:
(i) obtain financial information and investment experience and objectives of the
person and (ii) make a reasonable determination that the transactions in penny
stocks are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stocks in both public offerings and
in secondary trading, and about commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. The Company plans to have its securities traded
in the over-the-counter ("OTC") market. The OTC market differs from national and
regional stock exchanges in that it (1) is not cited in a single location but
operates through communication of bids, offers and confirmations between
broker-dealers and (2) securities admitted to quotation are offered by one or
more broker-dealers rather than the "specialist" common to stock exchanges. The
Company may apply for listing on the NASD OTC Bulletin Board or may offer its
securities in what are commonly referred to as the "pink sheets" of the National
Quotation Bureau. No assurance can be given by the Company that any of the above
events will occur.
DIVIDENDS
The Company has not paid any dividends to date and has no plans to do so in the
immediate future.
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ITEM 2. LEGAL PROCEEDINGS.
The Company is not a party to any legal proceedings. None of the Company's
property is subject to any material pending or threatened legal proceeding.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On April 14, 1998, the Company was incorporated under the laws of the State of
Nevada. The Company issued 1,800,000 Common Shares to the founders for
consideration of $35,000.00. The average cost per share to the founders was
$0.019444 per share.
The date, title and amount of unregistered securities sold/issued by The
Imagemakers Photography, Inc. are as follows:
1. Date: May 8, 1998 Number of Shares 900,000
Total Offering Price: $0.019444 per share
Total Proceeds: $17,500.00
Principal Underwriter: None
Total Commissions: None
Net Proceeds: $17,500.00
Commissions Paid: None
Purchasers: 6 non-affiliated private investors.
Exemption From Registration: The statutory exemption, which the Company
relied on was Regulation D, Rule 504 of the
United States Securities Act of 1933, as
amended.
On July 27, 1999, the Company issued 200,000 shares to Diamond Equities, Inc. in
exchange for a line of credit of $100,000.00 and 132,861 shares to Hane
Development, Inc. in exchange for a line of credit of $60,000.00 and a cash
consideration of $1,074.00. The Company did not pay any commissions for these
transactions. In addition, the Company did not utilize the services of an
underwriter to complete these transactions. The statutory exemption, which the
Company relied on was Regulation D, Rule 504 of the United States Securities Act
of 1933, as amended.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
NEVADA STATUTES
Section 78.751 of Nevada law authorizes a Nevada corporation to indemnify its
officers and directors against claims or liabilities arising out of such
person's conduct as officers and directors if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the Company.
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The Articles of Incorporation provide for indemnification of the directors and
officers of the Company. In addition, Article IX of the By-Laws of the Company
provide for indemnification of the directors, officers, employees or agents of
the Company.
In general, these provisions provide for indemnification in instances when such
persons acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the Company. Insofar as indemnification for
liabilities arising under the 1933 Act may be permitted to directors, officers
and controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Commission,
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable.
Nevada's "Combination with Interested Stockholders Statute" and "Control Share
Acquisition Statute" may have the effect of delaying or making it more difficult
to effect a change in control of the Company.
The Combination with Interested Stockholders Statute prevents an "interested
stockholder" and an applicable Nevada corporation from entering into a
"combination," unless certain conditions are met. A combination means any merger
or consolidation with an "interested stockholder," or any sale, lease, exchange,
mortgage, pledge, transfer or other disposition, in one transaction or a series
of transactions with an "interested stockholder" having: (i) an aggregate market
value equal to 5% or more of the aggregate market value of the assets of a
corporation; (ii) an aggregate market value equal to 5% or more of the aggregate
market value of all outstanding shares of a corporation; or (iii) representing
10% or more of the earning power or net income of the corporation. An
"interested stockholder" means the beneficial owner of 10% or more of the voting
shares of a corporation, or an affiliate or associate thereof. A corporation may
not engage in a "combination" within three years after the interested
stockholder acquires his shares unless the combination or purchase is approved
by the Board of Directors before the interested stockholder acquired such
shares. If approval is not obtained, after the expiration of the three-year
period, the business combination may be consummated with the approval of the
Board of Directors or a majority of the voting power held by disinterested
stockholders, or if the consideration to be paid by the interested stockholder
is at least equal to the highest of: (i) the highest price per share paid by the
interested stockholder within the three years immediately preceding the date of
the announcement of the combination or in the transaction in which he became an
interested stockholder, whichever is higher; or (ii) the market value per common
share on the date of announcement of the combination or the date the interested
stockholder acquired the shares, whichever is higher.
Nevada's Control Share Acquisition Statute prohibits an acquirer, under certain
circumstances, from voting shares of a target corporation's stock after crossing
certain threshold ownership percentages, unless the acquirer obtains the
approval of the target corporation's stockholders. The Control Share Acquisition
Statue specifies three thresholds; one-fifth or more but less than one-third or
more but less than a majority, and a majority or more, of the voting power of
the corporation in the election of directors. Once an acquirer crosses on of the
above thresholds, those shares acquired in such offer or acquisition and those
shares acquired within the preceding ninety days become Control Shares and such
Control Shares are deprived of the right to vote until disinterested
stockholders restore the right. The Control Share Acquisition Statue also
provides that in the event Control Shares are accorded full voting rights and
the acquiring person has acquired a majority or more of all voting power, all
other stockholders who do not vote in favor of authorizing voting rights to the
Control Shares are entitled to demand payment for the fair value of their
shares.
25
<PAGE>
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING
THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE
SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC
POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
CHANGES IN CONTROL
The Company is not aware of any arrangement, including the pledge by any person
of securities of the Company, which may at a subsequent date result in a change
in control of the Company.
EMPLOYEES
As of the date of this Registration Statement, the Company had five employees,
including its President and Secretary. Management believes that it will expand
its work force over the next twelve (12) months.
26
<PAGE>
PART F/S
ITEM 1 INDEX TO FINANCIAL STATEMENTS
The following compiled financial statements of the company were prepared by
Ovist & Howard, Inc., Certified Public Accountants, a Professional Services
Corporation, 7 Commerce Center Drive, Suite A, Henderson, Nevada 89014. The
statements include an Independent Auditor's Report, Balance Sheet as of
September 30, 2000, Statement of Operations for the period of January 1, 2000
through September 30, 2000, Statement of Cash Flows for the period of January 1,
2000 through September 30, 2000, Shareholders' Equity period from January 1,
2000 through September 30, 2000 and Notes to the Financial Statements.
INDEX TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2000
INDEPENDENT AUDITORS' REPORT.......................................... 28
BALANCE SHEET.......................................................... 29
STATEMENT OF OPERATIONS................................................ 30
STATEMENT OF STOCKHOLDERS' EQUITY...................................... 31
STATEMENT OF CASH FLOW................................................ 32
NOTES TO FINANCIAL STATEMENTS.......................................... 33
The following audited financial statements of the company were prepared by Ovist
& Howard, Inc., Certified Public Accountants, a Professional Services
Corporation, 7 Commerce Center Drive, Suite A, Henderson, Nevada 89014. The
statements include an Independent Auditor's Report, Balance Sheet as of June 30,
2000, Statement of Operations for the period of January 1, 2000 through June 30,
2000, Statement of Cash Flows for the period of January 1, 2000 through June 30,
2000, Shareholders' Equity period from January 1, 2000 through June 30, 2000 and
Notes to the Financial Statements.
INDEX TO FINANCIAL STATEMENTS - JUNE 30, 2000
INDEPENDENT AUDITORS' REPORT........................................... 36
BALANCE SHEET.......................................................... 37
STATEMENT OF OPERATIONS................................................ 38
STATEMENT OF STOCKHOLDERS' EQUITY...................................... 39
STATEMENT OF CASH FLOW................................................. 40
NOTES TO FINANCIAL STATEMENTS.......................................... 41
27
<PAGE>
OVIST & HOWARD, INC.
Certified Public Accountants
A Professional Services Corporation
7 Commerce Center Drive
Suite A
Henderson, Nevada 89014
Tel: (702) 456-1300
Fax: (702) 456-6155
To the Board of Directors
The Imagemakers Photography, Inc.
Las Vegas, Nevada
We have compiled the accompanying balance sheet of The Imagemakers Photography,
Inc. as of September 30, 2000 and the related statements of income and retained
earnings and cash flows for the nine months ended September 30, 2000, in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
/s/ Ovist & Howard
Certified Public Accountants
December 20, 2000
Henderson, Nevada
28
<PAGE>
THE IMAGEMAKERS PHOTOGRAPHY, INC.
BALANCE SHEET
(Not Audited)
For the Period Ended September 30, 2000
ASSETS
CURRENT ASSETS:
Cash $ 174
Deposits 1,800
---------
TOTAL CURRENT ASSETS $ 1,974
OTHER ASSETS:
Leasehold Improvements $ 10,092
Furniture & Fixtures 9,307
Equipment 9,813
Photography Equipment 71,575
---------
TOTAL $ 100,787
---------
Less: Allowance for Depreciation 25,530
---------
TOTAL OTHER ASSETS $ 75,257
---------
TOTAL ASSETS $ 77,231
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 811
Accrued Expenses 46,127
Current Portion of Long-Term Debt 138,862
---------
TOTAL CURRENT LIABILITIES $ 185,800
LONG-TERM LIABILITIES -- LESS CURRENT PORTION (NOTE 4) 69,637
---------
TOTAL LIABILITIES $ 255,437
STOCKHOLDERS' EQUITY:
Common Stock, $0.001 par value, Authorized
20,000,000 shares; Issued and outstanding;
at June 30, 2000, 3,032,861 shares $ 3,032
Additional paid-in capital 50,542
Accumulated Deficit (231,780)
---------
TOTAL STOCKHOLDERS' EQUITY $(178,206)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 77,231
=========
See accompanying accountants' report and notes to financial statements
29
<PAGE>
THE IMAGEMAKERS PHOTOGRAPHY, INC.
STATEMENT OF OPERATIONS
(Not Audited)
For the Period Ended September 30, 2000
JULY 1, 2000 JANUARY 1, 2000
THROUGH THROUGH
SEPTEMBER 30, SEPTEMBER 30,
2000 2000
-------- --------
INCOME:
Revenue $ 2,762 $ 40,027
Other Income -0- 34
-------- --------
TOTAL REVENUE $ 2,762 $ 40,061
COST OF REVENUES EARNED (603) 23,113
-------- --------
GROSS PROFIT 3,365 16,948
OPERATING EXPENSES:
Accounting $-0- $ 480
Bank Charges 417 1,330
Dues & Subscriptions -0- 68
Marketing & Promotion 649 795
Office Expense 167 826
Repairs & Maintenance 39 34,157
Rent 1,600 21,320
Depreciation 4,877 14,631
Telephone & Utilities 1,420 3,609
Licenses & Fees -0- 563
Tax Expense -0- 4,125
Legal Fees -0- 4,250
Equipment Lease 140 391
Insurance -0- 820
Other Expenses 692 1,942
-------- --------
TOTAL OPERATING EXPENSES 10,001 89,307
-------- --------
LOSS FROM OPERATIONS (6,636) (72,359)
======== ========
OTHER INCOME (EXPENSE):
Interest Income 2 6
Interest Expense (2,836) (8,954)
-------- --------
NET INCOME (LOSS) $ (9,470) $(81,307)
======== ========
See accompanying accountants' report and notes to financial statements
30
<PAGE>
THE IMAGEMAKERS PHOTOGRAPHY, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
(Not Audited)
For the Period Ended September 30, 2000
<TABLE>
<CAPTION>
TRANSACTION NUMBER OF COMMON ADDITIONAL ACCUMULATED TOTAL
AND DATE COMMON SHARES STOCK PAID IN CAPITAL DEFICIT EQUITY
-------- ------------- ----- --------------- ------- ------
<S> <C> <C> <C> <C> <C>
April 14, 1998
Common Shares for Cash
and Services as Chairman
of the Board, Chief Executive
Officer and President
At $0.0019444 Per Share 900,000 $ 900 $16,600 0 $ 17,500
April 14, 1998
Common Shares for Cash
and Services at Vice President,
Secretary and Treasurer
At $0.0019444 Per Share 900,000 900 16,600 0 $ 35,000
April 14, 1998
Common Shares for Cash
at $0.019444 Per Share 900,000 900 16,600 0 $ 52,500
June 27, 1999
Common Shares for
Loan Guarantees 332,861 332 742 0 $ 53,574
Deficit Accumulated During
The Development Stage $(150,473) $ (96,899)
Net Loss Current Year $ (81,307) $(178,206)
--------- ------ ------- --------- ---------
BALANCE AT 9/30/00 3,032,861 $3,032 $50,542 $(231,780) $(178,206)
========= ====== ======= ========= =========
</TABLE>
See accompanying accountants' report and notes to financial statements
31
<PAGE>
THE IMAGEMAKERS PHOTOGRAPHY, INC.
STATEMENT OF CASH FLOWS
(Not Audited)
For the Period Ended September 30, 2000
JULY 1, 2000 JANUARY 1, 2000
THROUGH THROUGH
SEPTEMBER 30, SEPTEMBER 30,
2000 2000
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss During Period $(9,470) $(81,307)
Items Not Affecting Cash Flow:
Depreciation 4,877 14,631
Increase - (Decrease) in Liabilities 3,166 27,951
(Increase) - Decrease in Deposits 0 1,250
------- --------
Net Cash Flow From Operations $(1,427) $(37,475)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from Long-Term Debt 0 $ 36,848
Contribution of Capital 0 60
------- --------
Net Cash Flow From Financing Activities 0 $ 36,908
CASH FLOW FROM INVESTING ACTIVITIES:
Equipment Purchased 0 $ (2,523)
------- --------
Net Increase (Decrease) in Cash $(1,427) $ (3,090)
Cash At Beginning of Period -- January 1, 2000 1,601 3,264
------- --------
CASH AT END OF PERIOD -- SEPTEMBER 30, 2000 $ 174 $ 174
======= ========
See accompanying accountants' report and notes to financial statements
32
<PAGE>
THE IMAGEMAKERS PHOTOGRAPHY, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
COMPANY'S ACTIVITIES AND OPERATING CYCLE -- The Company was incorporated April
14, 1998, under the laws of the State of Nevada. The Company operates a
state-of-the-art fashion portrait studio, specializing in digitally enhanced
fashion photography portraits, which include complete makeovers, wardrobe
changes and photo sessions.
CASH EQUIVALENTS -- For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS AND ACCRUALS -- The carrying amounts of
cash, short-term investments and accruals approximate fair value of the short
maturity of those instruments and accruals.
USE OF ESTIMATES -- Management uses estimates and assumptions inn preparing
financial statements. Those estimates and assumptions effect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities and reported revenues and expenses. It is at least reasonably
possible that the significant estimates used will change within the next year.
COMPREHENSIVE INCOME -- In June, 1997, the Financial Accounting Standard Rule
(the "FASB") issued Statement Financial Accounting Standards ("SFAS") No. 130,
"REPORTING COMPREHENSIVE INCOME," effective for fiscal years beginning after
December 15, 1997. SAFS No. 130 establishes standards for reporting and display
of comprehensive income and its components in a full set of general-purpose
financial statements. Comprehensive income is defined in Statements of Financial
Accounting Concepts No. 6, "ELEMENTS OF FINANCIAL STATEMENTS," as "the change in
equity (net assets) of a business enterprise during a period from transactions
and other events and circumstances from non-owner sources. It includes all
changes in equity during a period except those resulting from investments by
owners and distributions to owners." The Company adopted SFAS No. 130 in the
current year. There were no changes in equity during the period. As such,
comprehensive income for the six months ended June 30, 2000 is equal to the
amount shown on the Statement of income as net income.
NOTE 2 - PROPERTY AND EQUIPMENT:
PROPERTY AND EQUIPMENT -- Property and equipment are stated at cost.
Expenditures and maintenance and repairs are charged against operations.
Renewals and betterments that materially extend the life of the assets are
capitalized.
Depreciation is computed for financial statement purposes under the
straight-line method. The depreciation for the period ended September 30, 2000
is $14,631. Leasehold improvements were amortized over a useful life of 7 years.
Furniture and fixtures, equipment and photography equipment were amortized over
a useful life of 5 years.
NOTE 3 - GOING CONCERN:
The Company's financial statements are prepared using the 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. Without realization of additional capital, it would be unlikely for
the Company to continue as a going concern. It is management's plan to seek
additional equity capital through sale of its securities through private
placements.
33
<PAGE>
THE IMAGEMAKERS PHOTOGRAPHY, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
NOTE 4 - NOTES PAYABLE AND LONG-TERM DEBT:
INTEREST RATE BALANCE
------------- -------
Note payable to Diamond Equities, Inc.,
a shareholder, secured by equipment.
Payment of $2,000.00 per quarter. 8% $ 100,000
Note payable to Hane Development, Inc.,
a shareholder, secured by equipment.
Payment of $1,880 per month. 8% 57,243
Note payable to shareholder, non-interest
bearing. Unsecured. 51,256
---------
Total $ 208,499
Less: Current Portion (138,862)
---------
Total Long-Term Debt $ 69,637
=========
Maturities of debt are as follows:
2001 $144,171
2002 13,072
Thereafter 51,256
--------
Total $208,499
========
Based on the borrowing rates currently available to the Company for bank loans
with similar terms and average maturities, the fair value of long-term debt
approximates the carrying value.
NOTE 5 - RELATED PARTY TRANSACTIONS:
Included in notes payable for the nine months ended September 30, 2000 are notes
to the officers and shareholders of the Company totaling $208,499.
NOTE 6 - INTERIM FINANCIAL STATEMENTS:
The financial statements presented reflect only results of operations for the
nine months ended September 30, 2000 and are not necessarily representative of
operations for a full year.
NOTE 7 - INCOME TAXES:
The following schedule summarizes the net operating loss carry-forward future
benefits and the dates they are scheduled to expire:
NET OPERATING YEAR OF
LOSS CARRYOVER EXPIRATION
-------------- ----------
$ (39,098) 2018
(111,375) 2019
(81,307) 2020
---------
Total $(231,780)
=========
34
<PAGE>
OVIST & HOWARD, INC.
Certified Public Accountants
A Professional Services Corporation
7 Commerce Center Drive
Suite A
Henderson, Nevada 89014
Tel: (702) 456-1300
Fax: (702) 456-6155
November 7, 2000
Board of Directors
The Imagemakers Photography, Inc.
Las Vegas, Nevada
We have audited the accompanying balance sheet of The Imagemakers Photography,
Inc. as of June 30, 2000 and the related statements of operations, stockholders'
equity and cash flows for the six months ended June 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 audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an 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, these financial statements referred to above present fairly, in
all material respects, the financial position of The Imagemakers Photography,
Inc. as of June 30, 2000 and the results of its operations and its cash flows
for the six months ended June 30, 2000, in conformity with generally accepted
accounting principles.
/s/ Ovist & Howard
Certified Public Accountants
35
<PAGE>
THE IMAGEMAKERS PHOTOGRAPHY, INC.
BALANCE SHEET
(Audited)
For the Period Ended June 30, 2000
ASSETS
CURRENT ASSETS:
Cash $ 1,601
Deposits
1,800
---------
TOTAL CURRENT ASSETS $ 3,401
OTHER ASSETS:
Leasehold Improvements $ 10,092
Furniture & Fixtures 9,307
Equipment 9,813
Photography Equipment 71,575
---------
TOTAL $ 100,787
---------
Less: Allowance for Depreciation 20,653
---------
TOTAL OTHER ASSETS $ 80,134
---------
TOTAL ASSETS $ 83,535
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 811
Accrued Expenses 44,359
Current Portion of Long-Term Debt 133,859
---------
TOTAL CURRENT LIABILITIES $ 179,029
Long-Term Liabilities -- Less Current Portion (Note 4) 73,242
---------
TOTAL LIABILITIES $ 252,271
STOCKHOLDERS' EQUITY:
Common Stock, $0.001 par value, Authorized
20,000,000 shares; Issued and outstanding;
at June 30, 2000, 3,032,861 shares $ 3,032
Additional paid-in capital 50,542
Accumulated Deficit (222,310)
TOTAL STOCKHOLDERS' EQUITY $(168,736)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 83,353
=========
See accompanying accountants' report and notes to financial statements
36
<PAGE>
THE IMAGEMAKERS PHOTOGRAPHY, INC.
STATEMENT OF OPERATIONS
(Audited)
JANUARY 1, 2000
THROUGH
JUNE 30, 2000
-------------
INCOME:
Revenue $ 37,264
Other Income 34
--------
TOTAL REVENUE $ 37,298
COST OF REVENUES EARNED 23,715
--------
GROSS PROFIT 13,583
OPERATING EXPENSES:
Accounting $ 480
Bank Charges 913
Dues & Subscriptions 68
Marketing & Promotion 146
Office Expense 659
Repairs & Maintenance 34,118
Rent 19,720
Depreciation 9,754
Telephone & Utilities 2,190
Licenses & Fees 563
Tax Expense 4,125
Legal Fees 4,250
Equipment Lease 251
Insurance 820
Other Expenses 1,249
--------
TOTAL OPERATING EXPENSES 79,306
--------
LOSS FROM OPERATIONS (65,723)
========
OTHER INCOME (EXPENSE):
Interest Income 4
Interest Expense (6,118)
--------
NET INCOME (LOSS) $(71,837)
========
See accompanying accountants' report and notes to financial statements
37
<PAGE>
THE IMAGEMAKERS PHOTOGRAPHY, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
(Audited)
For the Period Ended June 30, 2000
<TABLE>
<CAPTION>
TRANSACTION NUMBER OF COMMON ADDITIONAL ACCUMULATED TOTAL
AND DATE COMMON SHARES STOCK PAID IN CAPITAL DEFICIT EQUITY
-------- ------------- ----- --------------- ------- ------
<S> <C> <C> <C> <C> <C>
April 14, 1998
Common Shares for Cash
and Services as Chairman
of the Board, Chief Executive
Officer and President
At $0.0019444 Per Share 900,000 $ 900 $16,600 -0- $ 17,500
April 14, 1998
Common Shares for Cash
and Services at Vice President,
Secretary and Treasurer
At $0.0019444 Per Share 900,000 900 16,600 -0- $ 35,000
April 14, 1998
Common Shares for Cash
at $0.019444 Per Share 900,000 900 16,600 -0- $ 52,500
June 27, 1999
Common Shares for
Loan Guarantees 332,861 332 742 -0- $ 53,574
Deficit Accumulated During
The Development Stage $ (150,473) $ (96,899)
Net Loss Current Period $ (71,837) $(168,736)
----------- ------ ------- ---------- ---------
BALANCE AT 6/30/00 3,032,861 $3,032 $50,542 $ (222,310) $(168,736)
=========== ====== ======= ========== =========
</TABLE>
See accompanying accountants' report and notes to financial statements
38
<PAGE>
THE IMAGEMAKERS PHOTOGRAPHY, INC.
STATEMENT OF CASH FLOWS
(Audited)
For the Period Ended June 30, 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss During Period $(71,837)
Items Not Affecting Cash Flow:
Depreciation 9,754
Increase - (Decrease) in Liabilities 24,785
(Increase) - Decrease in Deposits 1,250
--------
NET CASH FLOW FROM OPERATIONS $(36,048)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from Long-Term Debt $ 36,848
Contribution of Capital 60
--------
NET CASH FLOW FROM FINANCING ACTIVITIES $ 36,908
CASH FLOW FROM INVESTING ACTIVITIES:
Equipment Purchased $ (2,523)
Net Increase (Decrease) In Cash $ (1,663)
Cash At Beginning of Period -- January 1, 2000 3,264
--------
CASH AT END OF PERIOD -- JUNE 30, 2000 $ 1,601
========
See accompanying accountants' report and notes to financial statements
39
<PAGE>
THE IMAGEMAKERS PHOTOGRAPHY, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
COMPANY'S ACTIVITIES AND OPERATING CYCLE -- The Company was incorporated April
14, 1998, under the laws of the State of Nevada. The Company operates a
state-of-the-art fashion portrait studio, specializing in digitally enhanced
fashion photography portraits, which include complete makeovers, wardrobe
changes and photo sessions.
CASH EQUIVALENTS -- For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS AND ACCRUALS -- The carrying amounts of
cash, short-term investments and accruals approximate fair value of the short
maturity of those instruments and accruals.
USE OF ESTIMATES -- Management uses estimates and assumptions inn preparing
financial statements. Those estimates and assumptions effect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities and reported revenues and expenses. It is at least reasonably
possible that the significant estimates used will change within the next year.
COMPREHENSIVE INCOME -- In June, 1997, the Financial Accounting Standard Rule
(the "FASB") issued Statement Financial Accounting Standards ("SFAS") No. 130,
"REPORTING COMPREHENSIVE INCOME," effective for fiscal years beginning after
December 15, 1997. SAFS No. 130 establishes standards for reporting and display
of comprehensive income and its components in a full set of general-purpose
financial statements. Comprehensive income is defined in Statements of Financial
Accounting Concepts No. 6, "ELEMENTS OF FINANCIAL STATEMENTS," as "the change in
equity (net assets) of a business enterprise during a period from transactions
and other events and circumstances from non-owner sources. It includes all
changes in equity during a period except those resulting from investments by
owners and distributions to owners." The Company adopted SFAS No. 130 in the
current year. There were no changes in equity during the period. As such,
comprehensive income for the six months ended June 30, 2000 is equal to the
amount shown on the Statement of income as net income.
NOTE 2 - PROPERTY AND EQUIPMENT:
PROPERTY AND EQUIPMENT -- Property and equipment are stated at cost.
Expenditures and maintenance and repairs are charged against operations.
Renewals and betterments that materially extend the life of the assets are
capitalized.
Depreciation is computed for financial statement purposes under the
straight-line method. The depreciation for the period ended June 30, 2000 is
$9,754. Leasehold improvements were amortized over a useful life of 7 years.
Furniture and fixtures, equipment and photography equipment were amortized over
a useful life of 5 years.
NOTE 3 - GOING CONCERN:
The Company's financial statements are prepared using the 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. Without realization of additional capital, it would be unlikely for
the Company to continue as a going concern. It is management's plan to seek
additional equity capital through sale of its securities through private
placements.
40
<PAGE>
THE IMAGEMAKERS PHOTOGRAPHY, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
NOTE 4 - NOTES PAYABLE AND LONG-TERM DEBT:
INTEREST RATE BALANCE
------------- -------
Note payable to Diamond Equities, Inc.,
a shareholder, secured by equipment.
Payment of $2,000.00 per quarter. 8% $100,000
Note payable to Hane Development, Inc.,
a shareholder, secured by equipment.
Payment of $1,880 per month. 8% 57,243
Note payable to shareholder, non-interest
bearing. Unsecured. 49,858
--------
Total $207,101
Less: Current Portion (133,859)
--------
Total Long-Term Debt $ 73,242
========
Maturities of debt are as follows:
2001 $144,171
2002 13,072
Thereafter 49,858
--------
Total $207,101
========
Based on the borrowing rates currently available to the Company for bank loans
with similar terms and average maturities, the fair value of long-term debt
approximates the carrying value.
NOTE 5 - RELATED PARTY TRANSACTIONS:
Included in notes payable for the six months ended June 30, 2000 are notes to
the officers and shareholders of the Company totaling $207,101.
NOTE 6 - INTERIM FINANCIAL STATEMENTS:
The financial statements presented reflect only results of operations for the
six months ended June 30, 2000 and are not necessarily representative of
operations for a full year.
NOTE 7 - INCOME TAXES:
The following schedule summarizes the net operating loss carry-forward future
benefits and the dates they are scheduled to expire:
NET OPERATING YEAR OF
LOSS CARRYOVER EXPIRATION
----------
$ (39,098) 2018
(111,375) 2019
(71,837) 2020
---------
Total $(222,310)
=========
41
<PAGE>
PART III
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
3.1* CERTIFICATE OF INCORPORATION
3.2* BY LAWS
10.1* STOCK OPTION PLAN
----------
* Previously filed
42
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Company has duly caused this Amended Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
THE IMAGEMAKERS PHOTOGRAPHGY, INC.
Date: January 11, 2001
By /s/ Mark Patko
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Mark Patko
President and Director
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