U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MVD, INC.,
(Exact name of registrant as specified in its charter)
Delaware 7372 94-3357128
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
215 North Federal Highway, Suite 6H, Boca Raton, Florida 33432
(Address of registrant's principal executive offices) (Zip Code)
(561) 347-9938
(Registrant's Telephone Number, Including Area Code)
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================
Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price aggregate registration
to be registered registered per share offering price fee
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 2,500,000 $0.25 $625,000.00 $132.00
-----------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value 1,000,000 $0.25 $250,000.00 $132.00
=================================================================================================================
Total Registration Fee $264.00
</TABLE>
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
1
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Preliminary Prospectus
MVD, Inc., a Delaware corporation
3,500,000 Shares of $.001 Par Value Common Stock
This prospectus relates to 3,500,000 shares of common stock, $.001 par value, of
MVD, Inc., a Delaware corporation. We are offering for sale 1,000,000 shares of
our $.001 par value common stock on a "best efforts" basis pursuant to this
Registration Statement on Form SB-2. 2,500,000 of the shares being offered
pursuant to this Registration Statement on Form SB-2 are issued and outstanding
shares of our $.001 par value common stock, acquired by the selling security
holders in private placement transactions which were exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933.
The purchase price for each share of our $.001 par value common stock being
offered pursuant to this Registration Statement on Form SB-2 is $0.25 per share.
There is no minimum level of shares of our $.001 par value common stock which
must be sold and the initial funds received by us will not be placed in an
escrow account. This is our initial public offering and no public market
currently exists for shares of our $.001 par value common stock.
The selling security holders may from time to time sell the shares on the OTC
Bulletin Board, on any other national securities exchange or automated quotation
system on which our common stock may be listed or traded, in negotiated
transactions or otherwise, at prices then prevailing or related to the then
current market price or at negotiated prices.
We will realize $250,000.00 from the sale of 1,000,000 shares of our $.001 par
value common stock, and will use those funds to pay for the costs of the
offering, to fund marketing of our products, and for working capital. We will
receive no part of the proceeds of the 2,500,000 shares of our $.001 par value
common stock being offered by the selling security holders. All expenses of
registration incurred in connection with this offering will be paid by us, but
all selling and other expenses incurred by the selling security holders will be
paid by the selling security holders.
The selling security holders and any broker-dealers participating in the
distribution of the shares of our $.001 par value common stock may be deemed to
be "underwriters" within the meaning of the 1933 Act, and any commissions or
discounts given to any such broker-dealer may be regarded as underwriting
commissions or discounts under the 1933 Act.
The shares of our $.001 par value common stock being offered pursuant to this
Registration Statement on Form SB-2 have not been registered for sale by us or
the selling security holders under the securities laws of any state as of the
date of this prospectus. Brokers or dealers effecting transactions in the shares
of our $.001 par value common stock should confirm the registration thereof
under the securities laws of the states in which transactions occur or the
existence of any exemption from registration.
See "Risk Factors" on pages 5 to 7 for factors to be considered before investing
in the shares of our $.001 par value common stock.
These securities have not been approved or disapproved by
the securities and exchange commission or any state
securities commission nor has the securities and exchange
commission or any state securities commission passed upon
the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
The date of this prospectus is May 31, 2000
Subject to completion.
2
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Prospectus Summary ...............................................................................................4
Risk Factors......................................................................................................4
We Are a New Company with Losses Since Inception and Losses Are
Anticipated for the Foreseeable Future.................................................................5
Our Officers and Directors Are Engaged in Other Activities That Could
Have Conflicts of Interest With Us.....................................................................5
We Are in a Very Competitive Industry........................................................................5
We Currently Have Limited Sources of Revenue.................................................................6
Our Officers, Directors and Principal Security Holders Own Approximately
66% of Our Outstanding Shares of Common Stock. .......................................................6
We Anticipate That We Will Need to Raise Additional Capital to Complete Our Development......................6
Use of Proceeds...................................................................................................6
Determination of Offering Price...................................................................................7
Dilution..........................................................................................................7
Selling Security Holder...........................................................................................8
Plan of Distribution..............................................................................................9
Legal Proceedings.................................................................................................10
Directors, Executive Officers, Promoters and Control Persons......................................................10
Security Ownership of Certain Beneficial Owners and Management....................................................11
Description of Securities.........................................................................................12
Interest of Named Experts and Counsel.............................................................................12
Disclosure of Commission Position on Indemnification for Securities Act Liabilities...............................12
Organization Within Last Five Years...............................................................................12
Description of Business...........................................................................................12
Management' Discussion and Analysis of Financial Condition and Results of Operations..............................15
Description of Property...........................................................................................16
Certain Relationships and Related Transactions....................................................................16
Market for Common Equity and Related Stockholder Matters..........................................................16
Executive Compensation - Renumeration of Directors and Officers...................................................17
Financial Statements..............................................................................................18
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..............................18
Legal Matters.....................................................................................................18
Experts...........................................................................................................18
Additional Information............................................................................................18
Indemnification of Directors and Officers.........................................................................19
Other Expenses of Issuance and Distribution.......................................................................19
Recent Sales of Unregistered Securities...........................................................................19
Exhibits..........................................................................................................20
Undertakings......................................................................................................20
Signatures ....................................................................................................22
Power of Attorney.................................................................................................23
</TABLE>
3
<PAGE>
Prospectus Summary.
Our Business: Our principal business address is 215 North
Federal Highway, Suite 6H, Boca Raton, Florida,
33432; telephone number (561) 347-9938.
We are a provider of digital entertainment
products and services. Our principal business
activities include the following:
o the distribution and sale of digital
entertainment products developed and
manufactured by third parties, and
o the development of digital-related services.
We intend to develop and maintain a website
serving initially as a corporate presence for
us and as a marketing tool for our digital
entertainment products. We anticipate that our
website will be expanded in the future to be a
digital marketplace community for businesses
and consumers. We anticipate that our website
will also allow users to interact with other
digital users, obtain advice, products and
services from vendors as well as purchase our
digital entertainment products.
Our State of Organization: We were incorporated pursuant to the
provisions of the General Corporation Law of
Delaware on March 14, 2000.
Number of Shares We are offering for sale 1,000,000 shares of
Being Offered: our $.001 par value common stock on a "best
efforts" basis pursuant to this Form SB-2.
2,500,000 of the shares being offered pursuant
to this Registration Statement on Form SB-2
are issued and outstanding shares of our $.001
par value common stock, acquired by the
selling security holders in private placement
transactions which were exempt from the
registration and prospectus delivery
requirements of the Securities Act of 1933.
Number of Shares Subsequent to the sale of 1,000,000 shares of
Outstanding our $.001 par value common stock pursuant to
After the Offering: this Form SB-2, 3,500,000 shares of our $.001
par value common stock will be issued and
outstanding. No other securities are issued
and outstanding.
Estimated use of We will realize $250,000.00 from the sale of
proceeds: 1,000,000 shares of our $.001 par value common
stock, and will use those funds to pay for the
costs of the offering, to fund marketing of
our products, and for working capital. We will
not receive any of the proceeds from the sale
of those shares being offered by the selling
security holders.
RISK FACTORS
In addition to the other information specified in this prospectus, the following
risk factors should be considered carefully in evaluating our business and us
before purchasing any of the shares of our $.001 par value common stock offered
hereby. A purchase of the shares of our $.001 par value common stock offered
hereby is speculative in nature and involves a high degree of risk. No purchase
of the shares of our $.001 par value common stock should be made by any person
who is not in a position to lose the entire amount of such investment.
THIS PROSPECTUS SPECIFIES FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE RESULTS
DISCUSSED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THOSE SPECIFIED IN THE FOLLOWING RISK FACTORS AND ELSEWHERE IN THIS
PROSPECTUS.
4
<PAGE>
PROSPECTIVE PURCHASERS OF SHARES MUST BE PREPARED FOR THE POSSIBLE LOSS OF THEIR
ENTIRE INVESTMENTS IN US. THE ORDER IN WHICH THE FOLLOWING RISK FACTORS ARE
PRESENTED IS ARBITRARY, AND PROSPECTIVE PURCHASERS OF SHARES SHOULD NOT
CONCLUDE, BECAUSE OF THE ORDER OF PRESENTATION OF THE FOLLOWING RISK FACTORS,
THAT ONE RISK FACTOR IS MORE SIGNIFICANT THAN THE OTHER RISK FACTORS.
Information specified in this Prospectus contains "forward looking statements"
which can be identified by the use of forward-looking terminology such as
"believes", "could", "possibly", "probably", "anticipates", "estimates",
"projects", "expects", "may", "will", or "should" or the negative thereof or
other variations thereon or comparable terminology. Such statements are subject
to certain risks, uncertainties and assumptions. No assurances can be given that
the future results anticipated by the forward looking statements will be
achieved. The following matters constitute cautionary statements identifying
important factors with respect to such forward-looking statements, including
certain risks and uncertainties, that could cause actual results to vary
materially from the future results covered in such forward-looking statements.
Among the key factors that have a direct bearing on our results of operations
are the effects of various governmental regulations, the fluctuation of our
direct costs and the costs and effectiveness of our operating strategy. Other
factors could also cause actual results to vary materially from the future
results covered in such forward-looking statements.
We Are a New Company with Losses Since Inception and Losses Are Anticipated for
the Foreseeable Future. We were incorporated in March 2000, and we began
operations immediately thereafter. As of March 31, 2000, our losses are
approximately $6,500. We are currently the non-exclusive distributor in the
United States of digital cameras and MP3 audio players developed and
manufactured by Joinford (H.K.) Ltd. We have not yet generated any revenues,
although we anticipate generating revenues in our current fiscal year. Our
prospects must be considered speculative, considering the risks, expenses, and
difficulties frequently encountered in the establishment of a new business,
specifically the risks inherent in the development of digital products. There
can be no assurance that unanticipated technical or other problems will not
occur which would result in material delays in future product and service
commercialization or that our efforts will result in successful product and
service commercialization. There can be no assurance that we will be able to
achieve profitable operations.
Our Officers and Directors Are Engaged in Other Activities That Could Have
Conflicts of Interest With Us. The persons serving as our officers and directors
have existing responsibilities and, in the future, may have additional
responsibilities, to provide management and services to other entities in
addition to us. As a result, conflicts of interest between us and the other
activities of those persons may occur from time to time, in that those persons
shall have conflicts of interest in allocating time, services, and functions
between the other business ventures in which those persons may be or become
involved and, also, our affairs. Christopher A. Cota currently serves as
managing member of Cota LLC, a Delaware limited liability company.
We Are in a Very Competitive Industry. Competition in the digital entertainment
products industry, generally, is intense. We compete directly with other
companies and businesses that have developed and are in the process of
developing technologies and products which will be competitive with our
products. There can be no assurance that other technologies or products which
are functionally equivalent or similar to our technologies and products have not
been developed or are not in development. We expect that companies or businesses
which may have developed or are developing such technologies and products as
well as other companies and businesses which have the expertise which would
encourage them to develop and market products directly competitive with those
developed and marketed by us. Many of these competitors have greater financial
and other resources, and more experience in research and development, than us.
There can be no assurance that competitors have not or will not succeed in
developing technologies and products that are more effective than any which have
been or are being developed by us or which would render our products obsolete
and noncompetitive. Most of our competitors have substantially greater
experience, financial and technical resources and production, marketing and
development capabilities than we do. If we begin commercial sales of our
products, we will also be competing with respect to manufacturing efficiency and
sales and marketing capabilities. To the extent that customers exhibit loyalty
to the supplier that first supplies them with a particular service or
technology, our competitors may have an advantage over us with respect to
services and technologies first developed by such competitors. As a result of
their size
5
<PAGE>
and breadth of their service offerings, certain of these competitors have been
and will be able to establish managed accounts by which they seek to gain a
disproportionate share of users for their services and technologies. Such
managed accounts present significant competitive barriers to us. There can be no
assurance that competitors have not or will not succeed in developing
technologies and services that are more effective than any which have been or
are being developed by us or which would render our products obsolete and
noncompetitive.
We Currently Have Limited Sources of Revenue. We are currently engaged primarily
in marketing the digital products developed and manufactured by Joinford (H.K.)
Ltd. In order to fund our marketing activities, we are attempting to raise
additional funds. We have not yet generated any revenues, although we anticipate
generating revenues in our current fiscal year.
Our Officers, Directors and Principal Security Holders Own Approximately 66% of
Our Outstanding Shares of Common Stock. Our directors, officers and principal
(greater than 5%) security holders, taken as a group, together with their
affiliates, beneficially own, in the aggregate, approximately 66% of our
outstanding shares of $.001 par value common stock. Certain principal security
holders are our directors or executive officers. As a result of such ownership,
these security holders may be able to exert significant influence, or even
control, matters requiring approval by our security holders, including the
election of directors. In addition, certain provisions of Delaware law could
have the effect of making it more difficult or more expensive for a third party
to acquire, or of discouraging a third party from attempting to acquire, control
of us.
We Anticipate That We Will Need to Raise Additional Capital to Complete Our
Development. To complete development of our products and services, we anticipate
that we may be required to raise additional funds. We believe that we may be
able to acquire additional financing at commercially reasonable rates; however,
there can be no assurance that we will be able to obtain additional financing at
commercially reasonable rates, or at all. We anticipate that we will expend in
the future, substantial funds on the marketing and promotion of our products and
services. Our failure to obtain additional financing would significantly limit
or eliminate our ability to fund our sales and marketing activities, which would
have a material adverse effect on our ability to continue our operation and
compete with other providers.
We anticipate that we may seek additional funding through public or private
sales of our securities, including equity securities, or through commercial or
private financing arrangements. However, adequate funds, whether through
financial markets or collaborative or other arrangements with corporate partners
or from other sources, may not be available when needed or on terms acceptable
to us. In the event that we are not able to obtain additional funding on a
timely basis, we may be required to scale back any proposed operations or
eliminate certain or all of our marketing programs or to license third parties
to commercialize products or technologies that we would otherwise seek to
develop, manufacture or market ourselves, any of which could have a material
adverse effect on our results of operations.
Use of Proceeds
We will realize $250,000.00 from the sale of 1,000,000 shares of our $.001 par
value common stock, and will use those funds to pay for the costs of the
offering, to fund marketing of our products, and for working capital. Our
management has significant and absolute discretion to adjust the application and
allocation of proceeds of the offering in order to adjust and respond to various
circumstances and opportunities. As a result of the foregoing, our success will
be affected by the discretion and judgment of our management with respect to the
application and allocation of the proceeds of the offering.
6
<PAGE>
The following table outlines the anticipated use of proceeds, assuming that we
will sell the maximum offering amount of $250,000.00 or a minimum offering
amount of $50,000.00:
<TABLE>
<CAPTION>
====================================================================================
Estimated Use Maximum Percentage Minimum Percentage
Amount of Proceeds Amount of Proceeds
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Marketing $125,000.00 50.0% $20,000.00 40.0%
------------------------------------------------------------------------------------
Working Capital $100,000.00 40.0% $19,000.00 38.0%
------------------------------------------------------------------------------------
Legal and Accounting Fees $20,000.00 8.0% $10,000.00 20.0%
------------------------------------------------------------------------------------
Offering Expenses $5,000.00 2.0% $1,000.00 2.0%
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Total $250,000.00 100% $50,000.00 100%
====================================================================================
</TABLE>
Working capital, general corporate purposes, and legal and accounting reflect
funds allocated to pay for daily expenditures incurred in our business,
operations and general and administrative overhead for the twelve-month period
following the closing of this offering. We believe that offering expenses, which
include legal, accounting, miscellaneous, compliance and offering expenses and
printing costs will be in an amount equal to approximately 2% of the gross
proceeds received from the offer and sale of the shares of our $.001 par value
common stock being offered pursuant to this Registration Statement on Form SB-2.
We will not receive any proceeds from the sale of shares of our $.001 par value
common stock being offered by the selling security holders.
Determination of Offering Price
Factors Used to Determine Share Price. The offering price of the 1,000,000
Shares being offered on a "best efforts" basis has been determined primarily by
our capital requirements and has no relationship to any established criteria of
value, such as book value or earnings per share. Additionally, because we have
no significant operating history and have not generated any revenues to date,
the price of the shares of our $.001 par value common stock is not based on past
earnings, nor is the price of the shares of our $.001 par value common stock
indicative of current market value for the assets owned by us. No valuation or
appraisal has been prepared for our business and potential business expansion.
Dilution
We will not be a reporting company until the effective date of the Registration
Statement on this Form SB-2. We are selling 1,000,000 Shares being registered
hereby on a "best efforts" basis. We were initially capitalized by the sale of
our $.001 par value common stock. The following table sets forth the number of
shares of $.001 par value common stock purchased from us, the total
consideration paid and the price per share. The table assumes all of the shares
of $.001 par value common stock will be sold.
<TABLE>
<CAPTION>
=============================================================================================================
Shares Issued Total Consideration Price
------------- ------------------- Per Share
---------
Number Percent Amount Percent
------ ------- ------ -------
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Founding Shareholders 2,500,000 Shares 71.43% $2,500.00 0.99% $0.001
-------------------------------------------------------------------------------------------------------------
Purchasers of Shares(3) 1,000,000 Shares 28.57% $250,000.00 99.01% $0.25
-------------------------------------------------------------------------------------------------------------
Total 3,500,000 Shares 100% $252,500.00 100%
=============================================================================================================
</TABLE>
7
<PAGE>
The following table sets forth the difference between the offering price of the
shares of our $.001 par value common stock being offered by us, the net tangible
book value per share, and the net tangible book value per share after giving
effect to the offering by us, assuming that all of the shares of our $.001 par
value common stock offered by us are sold. Net tangible book value per share
represents the amount of total tangible assets less total liabilities divided by
the number of shares outstanding as of March 31, 2000.
================================================================================
Offering Price $0.25 per share
--------------------------------------------------------------------------------
Net tangible book value at 03/31/00 $0.00 per share
--------------------------------------------------------------------------------
Net tangible book value after giving effect to the offering $0.00 per share
--------------------------------------------------------------------------------
Per Share Dilution to New Investors $0.00 per share
--------------------------------------------------------------------------------
Percent Dilution to New Investors 28.5%
================================================================================
The 2,500,000 shares being offered for sale by the selling security holders are
outstanding shares of our common stock and, therefore, do not contribute to
dilution.
Selling Security Holders
The following table sets forth the number of shares which may be offered for
sale from time to time by the selling security holders. The shares offered for
sale constitute all of the shares known to us to be beneficially owned by the
selling security holders. None of the selling security holders has held any
position or office with us, except as specified in the following table. Other
than the relationships described below, none of the selling security holders had
or have any material relationship with us.
<TABLE>
<CAPTION>
==================================================================================================================
Name of Selling Security Holder Shares of $.001 Par Value Common Stock
------------------------------------------------------------------------------------------------------------------
<S> <C>
Christopher A. Cota, President, Treasurer and a director 925,000
------------------------------------------------------------------------------------------------------------------
Thomas E. Stepp 333,334
------------------------------------------------------------------------------------------------------------------
Richard Reincke 166,666
------------------------------------------------------------------------------------------------------------------
Michael Muellerleile 125,000
------------------------------------------------------------------------------------------------------------------
Ryan A. Neely, Secretary and a director 50,000
------------------------------------------------------------------------------------------------------------------
Antonio Cota, Jr. 50,000
------------------------------------------------------------------------------------------------------------------
Daniel Moore 50,000
------------------------------------------------------------------------------------------------------------------
Hal Pappano 50,000
------------------------------------------------------------------------------------------------------------------
Bill McElroy 50,000
------------------------------------------------------------------------------------------------------------------
Deanna Stith 50,000
------------------------------------------------------------------------------------------------------------------
Richard Barrera 50,000
------------------------------------------------------------------------------------------------------------------
Tina Cota 50,000
------------------------------------------------------------------------------------------------------------------
John Muellerleile 50,000
------------------------------------------------------------------------------------------------------------------
Sean Connelly 50,000
------------------------------------------------------------------------------------------------------------------
Kiriaki Rudolph 50,000
------------------------------------------------------------------------------------------------------------------
Ruffo Espinosa 50,000
------------------------------------------------------------------------------------------------------------------
Warren Nass 50,000
------------------------------------------------------------------------------------------------------------------
Sharareh Frouzesh 50,000
------------------------------------------------------------------------------------------------------------------
Christopher Watson 50,000
------------------------------------------------------------------------------------------------------------------
Scott Ness 50,000
------------------------------------------------------------------------------------------------------------------
Antonio Torrellio 50,000
------------------------------------------------------------------------------------------------------------------
Richard Eagleston 50,000
------------------------------------------------------------------------------------------------------------------
Scott Sherman 50,000
==================================================================================================================
</TABLE>
Pursuant to the agreements by which certain of the selling security holders
acquired their shares of our $.001 par value common stock, we agreed to use our
best efforts to file a registration statement for the resale of such shares and
to use our
8
<PAGE>
best efforts to cause such registration statement to be declared effective.
Pursuant to those agreements, we will pay all expenses in connection with the
registration and sale of the Shares, except any selling commissions or discounts
allocable to sales of such shares, fees and disbursements of counsel and other
representatives of the selling security holders, and any stock transfer taxes
payable by reason of any such sale.
Plan of Distribution
We are offering for sale 1,000,000 shares of our $.001 par value common stock on
a "best efforts" basis pursuant to this Registration Statement on Form SB-2. The
selling security holders may from time to time sell all or a portion of the
shares of our $.001 par value common stock in the over-the-counter market, or on
any other national securities exchange on which shares of our $.001 par value
common stock is or becomes listed or traded, in negotiated transactions or
otherwise, at prices then prevailing or related to the then current market price
or at negotiated prices. The shares of our $.001 par value common stock offered
pursuant to this Registration Statement on Form SB-2 will not be sold in an
underwritten public offering.
We anticipate that Christopher A. Cota will participate in the offer and sale of
our shares of $.001 par value common stock in reliance on the exemption from the
broker/dealer licensing requirements of Rule 3a4-1 promulgated pursuant to the
Securities Exchange Act of 1934. Mr. Cota is not subject to a statutory
disqualification, as that term is defined in Section 3(a)39 of the Securities
Exchange Act of 1934 and Mr. Cota will not be compensated in connection with his
participation by the payment of commissions or other remuneration based either
directly or indirectly on transactions in securities. Mr. Cota is not and has
not been a broker or an associated person of a broker or dealer within the
preceding 12 months. Mr. Cota primarily performs substantial duties for us other
than the offer and sale of our securities. Mr. Cota has not participated in
selling an offering of securities for any issuer during the last 12 months other
than in reliance on paragraph (a)4(i) or (a)4(iii) of Rule 3a4-1 promulgated
pursuant to the Securities Exchange Act of 1934, except that for securities
issued pursuant to rule 415 under the Securities Act of 1933.
The selling security holders and any broker-dealers participating in the
distributions of the shares may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933 and any profit on the
sale of shares by the selling security holders and any commissions or discounts
given to any such broker-dealer may be deemed to be underwriting commissions or
discounts pursuant to the Securities Act of 1933. The shares may also be sold
pursuant to Rule 144 under the Securities Act of 1933 beginning one year after
the shares were issued.
We have filed the Registration Statement, of which this prospectus forms a part,
with respect to the sale of the shares of our $.001 par value common stock.
There can be no assurance that we will sell any or all of the shares of our
$.001 par value common stock offered pursuant to this Registration Statement on
Form SB-2. We will pay all of the expenses incident to the offering and sale of
the shares of our $.001 par value common stock, other than commissions,
discounts and fees of underwriters, dealers or agents.
Under the Securities Exchange Act of 1934 and the regulations thereunder, any
person engaged in a distribution of the shares of our $.001 par value common
stock offered by this prospectus may not simultaneously engage in market making
activities with respect to our common stock during the applicable "cooling off"
periods prior to the commencement of such distribution. In addition, and without
limiting the foregoing, the selling security holders will be subject to
applicable provisions of the Securities Exchange Act of 1934 and the rules and
regulations thereunder, including, which provisions may limit the timing of
purchases and sales of common stock by the selling security holders.
We have advised the selling security holders that, during such time as they may
be engaged in a distribution of any of the shares we are registering by this
Registration Statement, they are required to comply with Regulation M
promulgated under the Securities Exchange Act of 1934. In general, Regulation M
precludes any selling security holder, any affiliated purchasers and any
broker-dealer or other person who participates in such distribution from bidding
for or purchasing, or attempting to induce any person to bid for or purchase,
any security which is the subject of the distribution until the entire
distribution is complete. Regulation M defines a "distribution" as an offering
of securities that is distinguished from ordinary trading activities by the
magnitude of the offering and the presence of special selling efforts and
selling methods. Regulation M also defines a "distribution participant" as an
underwriter, prospective underwriter, broker, dealer, or other
9
<PAGE>
person who has agreed to participate or who is participating in a distribution.
Regulation M prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security, except
as specifically permitted by Rule 104 of Regulation M. These stabilizing
transactions may cause the price of the common stock to be higher than it would
otherwise be in the absence of these transactions. We have advised the selling
security holders that stabilizing transactions permitted by Regulation M allow
bids to purchase our common stock so long as the stabilizing bids do not exceed
a specified maximum, and that Regulation M specifically prohibits stabilizing
that is the result of fraudulent, manipulative, or deceptive practices. Selling
security holders and distribution participants will be required to consult with
their own legal counsel to ensure compliance with Regulation M.
Legal Proceedings
There are no legal actions pending against us nor are any such legal actions
contemplated.
Directors, Executive Officers, Promoters and Control Persons.
Executive Officers and Directors. We are dependent on the efforts and abilities
of certain of our senior management. The interruption of the services of key
management could have a material adverse effect on our operations, profits and
future development, if suitable replacements are not promptly obtained. We
anticipate that we will enter into employment agreements with each of our key
executives; however, no assurance can be given that each executive will remain
with us during or after the term of his or her employment agreement. In
addition, our success depends, in part, upon our ability to attract and retain
other talented personnel. Although we believe that our relations with our
personnel are good and that we will continue to be successful in attracting and
retaining qualified personnel, there can be no assurance that we will be able to
continue to do so. Our officers and directors will hold office until their
resignation or removal.
Our directors and principal executive officers are as specified on the following
table:
===========================================================================
Name Age Position
---------------------------------------------------------------------------
Christopher A. Cota 34 President, Treasurer and a Director
---------------------------------------------------------------------------
Ryan A. Neely 28 Secretary and a Director
===========================================================================
Christopher A. Cota. Mr. Cota is our President, Treasurer and a director. Mr.
Cota will manage all aspects of our operations including negotiating agreements
with product manufacturers and suppliers as well as marketing and sales of our
products. From 1998 to 2000, Mr. Cota has been the managing member of Cota LLC,
a Delaware limited liability company and the exclusive representative in North
America, Central America and South America for Varitronix (Malaysia) SDN. BHD, a
Malaysia corporation and manufacturer of liquid crystal displays (LCDs). From
1995 to 1998, Mr. Cota worked as an OEM Sales Manager for VL Electronics, Inc.,
a Delaware corporation. From 1989 until 1994, Mr. Cota worked as a sales
executive and consultant to product development for various manufacturing
companies in Asia. Mr. Cota has not been a director of any other reporting
company.
Ryan A. Neely. Mr. Neely is our Secretary and a director. Prior to joining the
company, Mr. Neely worked as a sales account manager for UR Labs, Inc., which
was recently acquired by Symantec Corporation. Prior to joining URLabs, Mr.
Neely was the co-founder of Filtering Associates, a manufacturer representative
for several Internet content-control companies. From 1996 to 1998, Mr. Neely
worked for Log-On Data Corp., Inc., a California corporation, as a Regional
Sales Manager where he was responsible for all enterprise sales. Mr. Neely is
also the President, Secretary and a director of JPAL, Inc., a Nevada
corporation. Mr. Neely has not been a director of any other reporting company.
There is no family relationship between any of our officers or directors. There
are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining any of our officers or directors from engaging in or continuing any
conduct, practice or employment in connection with the purchase or sale of
securities, or convicting such person of any felony or misdemeanor
10
<PAGE>
involving a security, or any aspect of the securities business or of theft or of
any felony, nor are any of the officers or directors of any corporation or
entity affiliated with us so enjoined.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of May 31, 2000 by (i) each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, (ii) each of our directors and named executive officers, and
(iii) all of our directors and executive officers as a group.
<TABLE>
<CAPTION>
Title of Class Name and Address of Beneficial Amount and Nature of Percent of Class
Owner Beneficial Owner
---------------------- --------------------------------- ---------------------------------- ----------------
<S> <C> <C> <C>
$.001 Par Value Common Thomas E. Stepp, Jr., 1301 333,334 shares 13.33%
Stock Dove Street, Suite 460,
Newport Beach, CA 92660
$.001 Par Value Common Richard Reincke, 1301 Dove 166,666 shares 6.67%
Stock Street, Suite 460, Newport
Beach, CA 92660
$.001 Par Value Common Michael Muellerleile, 1301 125,000 shares 5.0%
Stock Dove Street, Suite 460,
Newport Beach, CA 92660
$.001 Par Value Common Christopher A. Cota, 215 North 975,000 shares(1) President, 39.0%
Stock Federal Highway, Suite 6H, Treasurer, Director
Boca Raton, Florida 33432
$.001 Par Value Common Ryan A. Neely, 215 North 50,000 shares, Secretary, Director 2.0%
Stock Federal Highway, Suite 6H,
Boca Raton, Florida 33432
$.001 Par Value Common All directors and named executive 41.0%
Stock officers as a group
</TABLE>
(1), Mr. Cota is the beneficial owner of 50,000 shares of $.001 par value common
stock through his wife Kiriaki Rudolph.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.
Changes in Control. Our management is not aware of any arrangements which may
result in "changes in control" as that term is defined by the provisions of Item
403(c) of Regulation S-B.
11
<PAGE>
Description of Securities
We are authorized to issue 50,000,000 shares of common stock, $.001 par value,
each share of common stock having equal rights and preferences, including voting
privileges. We are authorized to issue 5,000,000 shares of preferred stock,
$.001 par value. As of March 31, 2000, 2,500,000 shares of our common stock were
issued and outstanding.
Our shares of $.001 par value common stock constitute equity interests in us any
entitling each shareholder to a pro rata share of cash distributions made to
shareholders, including dividend payments. The holders of our common stock are
entitled to one vote for each share of record on all matters to be voted on by
shareholders. There is no cumulative voting with respect to the election of our
directors or any other matter, with the result that the holders of more than 50%
of the shares voted for the election of those directors can elect all of the
Directors. The holders of our common stock are entitled to receive dividends
when, as and if declared by our Board of Directors from funds legally available
therefor; provided, however, that cash dividends are at the sole discretion of
our Board of Directors. In the event of our liquidation, dissolution or winding
up, the holders of common stock are entitled to share ratably in all assets
remaining available for distribution to them after payment of our liabilities
and after provision has been made for each class of stock, if any, having
preference in relation to our common stock. Holders of shares of our common
stock have no conversion, preemptive or other subscription rights, and there are
no redemption provisions applicable to our common stock.
Dividend Policy. We have never declared or paid a cash dividend on our capital
stock and do not expect to pay cash dividends on our common stock in the
foreseeable future. We currently intend to retain our earnings, if any, for use
in our business. Any dividends declared in the future will be at the discretion
of our Board of Directors and subject to any restrictions that may be imposed by
our lenders.
Interest of Named Experts and Counsel.
No "expert", as that term is defined pursuant to Regulation Section 228.509(a)
of Regulation S-B, or the company's "counsel", as that term is defined pursuant
to Regulation Section 228.509(b) of Regulation S-B, was hired on a contingent
basis, or will receive a direct or indirect interest in the company, or was a
promoter, underwriter, voting trustee, director, officer, or employee of the
company, at any time prior to the filing of this Registration Statement.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, INDEMNIFICATION FOR
LIABILITIES ARISING PURSUANT TO THE SECURITIES ACT OF 1933 IS CONTRARY TO PUBLIC
POLICY AND, THEREFORE, UNENFORCEABLE.
Organization Within Last Five Years
Transactions with Promoters. Christopher A. Cota was issued 875,000 shares of
our $.001 par value common stock in exchange for his services as incorporator.
Description of Business
Our Background. MVD, Inc. was incorporated pursuant to the laws of the State of
Delaware on March 14, 2000.
Our Business. We are a provider of digital entertainment products and services.
Our principal business activities include the distribution and sale of digital
entertainment products developed and manufactured by third parties, and the
development of digital-related services. We have developed a website which
serves initially as a corporate presence for us and as a marketing tool for our
digital entertainment products. We anticipate that our website will be expanded
in the future to be a digital marketplace community for businesses and
consumers. We anticipate that our website will also allow users to interact with
other digital users, obtain advice, products and services from vendors as well
as purchase our digital entertainment products.
12
<PAGE>
Digital Entertainment Products. We believe that our initial product line of
digital entertainment products will consist of digital cameras, and MP3 players.
As our operations grow and revenues increase, we intend to expand our product
line to include additional digital entertainment products such as digital toys
and games as well as online digital data storage facilities.
Digital Cameras. Our initial product offering will include "entry level" digital
cameras that are inexpensive and user friendly. Digital cameras do not use film
to develop photographs, but rather the pictures are captured and saved as
digital data on disks. The digital data is then developed on a personal computer
and printed via a laser printer. We believe that our digital camera possesses
all of the features and functionality of the entry-level digital cameras
manufactured by such companies as Eastman Kodak and Canon.
MP3 Players. Our initial product line will also include portable MP3 players.
MP3 players play music which has been digitally compressed in a format known as
Moving Pictures Experts Group (MPEG) Layer 3, commonly referred to as MP3.
Moving Pictures Experts Group in an International Standards Organization (ISO)
standard for compressing and storing video, audio, and animation in digital
form. MP3 players contain no moveable parts and are very lightweight yet
extremely durable. Our MP3 players are designed with a simple personal computer
interface and stereo quality sound.
Future Products. We anticipate that our future products will include additional
digital products such as toys and game accessories and a free online digital
data storage facility that will generate revenue via banner advertising.
Our Website. Our website has initially been developed as a corporate presence
for us and used for marketing of our digital entertainment products. We
anticipate that our website will be expanded in the future to be a digital
marketplace community for businesses and consumers. We anticipate that our
website will also provide advice and information to businesses and consumers in
a community based format as well as offer users free online digital data
storage.
Internet Advertising. The Internet is emerging as an attractive method for
advertisers, due to the growth in the number of Internet users, the amount of
time Internet users spend on the Internet, the increase in electronic commerce,
the interactive nature of the Internet, the Internet's global reach, the ability
to reach targeted audiences and a variety of other factors. Many of the largest
advertisers in traditional media, including consumer products companies,
automobile manufacturers and others, have increased their use of Internet
advertising. We believe that Internet advertising will become an increasing
component of larger companies' total advertising budgets. We believe that the
leading Internet providers will benefit from the increasing number of Internet
users, as advertisers may advertise on websites that can demonstrate significant
use and provide advertising programs, allowing them to target specific
demographic groups. We believe that significant revenues can be generated from
online advertising, initially from small business service providers and product
vendors and, as use of our website increases, from advertisers, such as consumer
products companies.
Our Target Markets and Marketing Strategy. We believe that our primary target
market will consist of original equipment manufacturers of consumer electronic
products that desire to promote the sale of their existing products (i.e.,
printers, computers, telephones) by bundling a complementary product, such as
our digital camera or MP3 player, with their own product. We believe that many
manufacturers of computer hardware will desire to bundle our entry-level digital
entertainment products as a promotion for their own products. As an added
incentive, the logo of the computer hardware manufacturer can be added to our
products to increase the specialization of the promotion.
We intend to target large manufacturers of non-electronic consumer products who
desire to purchase our products for use as specialty promotional products or
gifts. We believe that the newness and uniqueness of digital entertainment
products will entice companies that desire to promote their company name and
brand to purchase our products.
We also intend to target retail consumer electronic distributors, such as Best
Buy, Circuit City, and Radio Shack. We also believe that discount retail
consumer electronic distributors, such as Wal-Mart, Target and K-Mart, are
potential customers as these retail distributors offer a variety of entry-level
digital entertainment products.
We will market and promote our website on the Internet. Our marketing strategy
is to promote our services and products and attract businesses to our website.
Our marketing initiatives include:
13
<PAGE>
o utilizing direct response print advertisements placed primarily in small
business, entrepreneurial, and financially-oriented magazines and special
interest magazines;
o links to industry focused websites;
o advertising by television, radio, banners, affiliated marketing and direct
mail; (iv) presence at industry tradeshows; and,
o entering into relationships with other website providers to increase our
access to Internet business consumers.
Pricing Strategy. Our competitors provide digital cameras that are priced from
as low as $50 to as high as $2,500. We believe that approximately eighty percent
(80%) of digital cameras are priced between $200 and $900, with a median price
of $450. We intend to offer our digital cameras with a price of less than $300
yet with many of the features that are available in our competitors' higher
priced products.
We believe that the prices for portable MP3 players generally vary from $120 to
$800. The majority of portable MP3 players are priced from $100 to $200. Our
strategy is to offer our MP3 players at prices below our competitors' equivalent
products.
Growth Strategy. Our objective is to become a dominant provider of low cost
digital entertainment products and services. Our strategy is to continue
providing clients with exceptional personal service and low cost digital
entertainment products. Key elements of our strategy include:
o negotiate distribution agreements third party manufacturers for digital
entertainment products and services;
o continue and expand our website;
o increase the number of Internet users to our website;
o increase our relationships with businesses;
o increase our relationships with third party providers of digital products
and services;
o provide additional services for businesses and consumers; and
o pursue advantageous relationships.
Our Supplier. We are currently engaged primarily in marketing the digital
products developed and manufactured by Joinford (H.K.) Ltd. We anticipate that
we will develop relationships with additional suppliers so that we will have
alternative suppliers in the event that Joinford (H.K.) Ltd. is unable to supply
a sufficient amount of products to meet our anticipated customer's requirements.
We also plan to enter arrangements with other suppliers to diversify our product
offerings.
Our Competition. The digital entertainment products industry is new, rapidly
evolving and has become significantly competitive. Current and new competitors
may be able to establish products at a relatively low cost and relatively
quickly. We compete directly with other companies and businesses that have
developed and are in the process of developing technologies and products which
will be competitive with the products developed and offered by us. There can be
no assurance that other technologies or products which are functionally
equivalent or similar to our technologies and products have not been developed
or are not in development. We expect that companies or businesses which may have
developed or are developing such technologies and products as well as other
companies and businesses which have the expertise which would encourage them to
develop and market products directly competitive with those developed and
marketed by us. Many of these competitors have greater financial and other
resources, and more experience in research and development, than us.
Our Research and Development. We believe that we will expand the types of
products we offer by introducing new products and technologies. New product
ideas are derived from a number of sources, including in-house research and
development, our executives, staff, and consultants and outside parties. In
advance of introducing new products and technologies, local counsel and other
representatives retained by us investigate product design matters as they relate
to regulatory compliance and other issues. Our products are then redesigned to
accommodate both the regulatory and marketing requirements of the particular
market. There can be no assurance as to the final form of any new regulations or
that an appropriate regulatory authority will not seek to impose additional
regulations, possibly prohibiting, or placing other restrictions on, the sale of
such products, or the impact, if any, of any such regulations.
14
<PAGE>
Government Regulation. Our business is subject to Federal Trade Commission
("FTC") regulation and other federal and state laws relating to the promotion,
advertising, labeling and packaging of our products. We believe that we are in
compliance with all laws, rules and regulations material to our operations and
have obtained, or are in the process of obtaining, all licenses, tariffs and
approvals necessary for the conduct of our business. There can be no assurance,
however, that we will be able to obtain required licenses or approvals in the
future or that the FTC or state regulatory authorities will not require us to
comply with more stringent regulatory requirements. Conformance of our
operations with new statutes and regulations could require us to alter methods
of operation, at costs which could be material, or otherwise limit the types of
services offered by us.
Employees. As of May 26, 2000, we have two (2) employees. We anticipate that we
will hire employees provide such services as marketing and sales. From
time-to-time, we anticipate that we will use the services of independent
contractors and consultants to support product research and development,
marketing and sales and business development. We believe our future success
depends in large part upon the continued service of our key technical and senior
management personnel and our ability to attract and retain highly qualified
technical and managerial personnel.
Facilities. Our executive, administrative and operating offices are located at
215 North Federal Highway, Suite 6H, Boca Raton, Florida 33432 and are provided
to us, at no charge, by Christopher A. Cota.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
The following information specifies forward-looking statements of our
management. Forward-looking statements are statements that estimate the
happening of future events and are not based on historical fact. Forward-looking
statements may be identified by the use of forward-looking terminology such as
"may", "will", "could", "expect", "estimate", "anticipate", "probable",
"possible", "should", "continue", or similar terms, variations of those terms or
the negative of those terms. Actual results may differ materially from those
contemplated by the forward-looking statements.
Liquidity and Capital Resources. We have cash of $950.00 as of March 31, 2000.
Results of Operations. We have not yet realized any revenue from operations. Our
expenses of approximately $6,500 consist of start-up costs from formation
through March 31, 2000.
Our Plan of Operation for the Next Twelve Months. Our success is materially
dependent upon our ability to satisfy additional financing requirements. We are
reviewing our options to raise substantial equity capital. We anticipate that we
will begin to realize positive gross revenue in or around September 2000. We
have begun marketing our products to potential customers and, assuming that we
can price our products competitively, we believe that we will have purchase
orders for our digital products in the near future. Our supplier has assured us
that it can deliver a sufficient number of digital products to meet our
customers' anticipated requirements. However, our supplier is under no
commitment to provide products to us.
In the opinion of management, available funds will satisfy our working capital
requirements through August 2000. Our President and director, Christopher A.
Cota, has paid our expenses since our inception and we anticipate that Mr. Cota
will continue to pay our expenses in the event that we do not generate revenues
or obtain additional working capital through the sale of common stock or other
securities. In order to satisfy our requisite budget, management has held and
continues to conduct negotiations with various investors. We anticipate that
these negotiations will result in additional investment income for us. However,
no assurances can be given that such proceeds will satisfy our working capital
needs for the period estimated, or; that we can obtain additional working
capital through the sale of common stock or other securities, the issuance of
indebtedness or otherwise or on terms acceptable to us. Further, no assurances
can be given that any such equity financing will not result in a further
substantial dilution to the existing shareholders or will be on terms
satisfactory to us.
Our forecast for the period for which our financial resources will be adequate
to support our operations involves risks and uncertainties and actual results
could fail as a result of a number of factors. We anticipate that we will need
to raise
15
<PAGE>
additional capital to develop, promote and conduct our operations. Such
additional capital may be raised through public or private financing as well as
borrowings and other sources.
There can be no assurance that additional funding will be available under
favorable terms, if at all. If adequate funds are not available, we believe that
our officers and directors will contribute funds to pay for our expenses. In the
alternative, we may be required to obtain funds through entering into
arrangements with collaborative partners or others that may require us to
relinquish rights to certain products and services that we would not otherwise
relinquish.
Description of Property
Property held by the Company. As of the date specified in the following table,
we held the following property:
================================================================================
Property March 31, 2000
--------------------------------------------------------------------------------
Cash $950.00
--------------------------------------------------------------------------------
Property and Equipment $0.00
================================================================================
Our Facilities. At this time, we occupy facilities provided by Christopher A.
Cota, our President and a director. The office space is located at 215 North
Federal Highway, Suite 6H, Boca Raton, Florida 33432.
Certain Relationships and Related Transactions
Conflicts Related to Other Business Activities. The persons serving as our
officers and directors have existing responsibilities and, in the future, may
have additional responsibilities, to provide management and services to other
entities in addition to us. As a result, conflicts of interest between us and
the other activities of those persons may occur from time to time.
We will attempt to resolve any such conflicts of interest in favor of the
company. Our officers and directors are accountable to us and our shareholders
as fiduciaries, which requires that such officers and directors exercise good
faith and integrity in handling our affairs. A shareholder may be able to
institute legal action on our behalf or on behalf of that shareholder and all
other similarly situated shareholders to recover damages or for other relief in
cases of the resolution of conflicts in any manner prejudicial to us.
Related Party Transactions. There have been no related party transactions,
except for the following:
Christopher A. Cota, our President, Treasurer and director, has provided $10,000
to us and currently provides office space to us at no charge.
Market for Common Equity and Related Stockholder Matters
Reports to Security Holders. Our securities are not listed for trading on any
exchange or quotation service and, as such, we are not required to comply with
the timely disclosure policies of any exchange or quotation service. The
requirements to which we would be subject if our securities were so listed
typically include the timely disclosure of a material change or fact with
respect to our affairs and the making of required filings. Although we are not
required to deliver an annual report to security holders, we intend to provide
an annual report to our security holders, which will include audited financial
statements.
We will become a reporting company with the Securities and Exchange Commission
on the effective date of this Registration Statement and, when we become a
reporting company with the SEC, the public may read and copy any materials filed
with the SEC at the SEC's Public Reference Room at 450 Fifth Street N.W.,
Washington, D.C. 20549. The public may also obtain information on the operation
of the Public Reference Room by calling the Securities and Exchange Commission
at 1-800-SEC-0330. The Securities and Exchange Commission maintains an Internet
site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the Securities and
16
<PAGE>
Exchange Commission. The address of that site is http://www.sec.gov. We
currently maintain our own Internet address at www.mvdinc.com.
There have been no cash dividends declared on our common stock. Dividends are
declared at the sole discretion of our Board of Directors.
Penny Stock Regulation. The Securities and Exchange Commission has adopted rules
that regulate broker-dealer practices in connection with transactions in "penny
stocks". Penny stocks are generally equity securities with a price of less than
$5.00 (other than securities registered on certain national securities exchanges
or quoted on the Nasdaq system, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system). The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from those rules, deliver a
standardized risk disclosure document prepared by the Securities and
Exchange Commission, which contains the following:
o a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading;
o a description of the broker's or dealer's duties to the customer and of the
rights and remedies available to the customer with respect to violation to
such duties or other requirements of Securities' laws;
o a brief, clear, narrative description of a dealer market, including "bid"
and "ask" prices for penny stocks and significance of the spread between
the "bid" and "ask" price;
o a toll-free telephone number for inquiries on disciplinary actions;
o definitions of significant terms in the disclosure document or in the
conduct of trading in penny stocks; and
o such other information and is in such form (including language, type, size
and format), as the Commission shall require by rule or regulation.
Prior to effecting any transaction in penny stock, the broker-dealer also must
provide the customer the following:
o the bid and offer quotations for the penny stock;
o the compensation of the broker-dealer and its salesperson in the
transaction;
o the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market
for such stock; and
o month account statements showing the market value of each penny stock held
in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
If any of our securities become subject to the penny stock rules, holders of
those securities may have difficulty selling those securities.
Executive Compensation - Remuneration of Directors and Officers.
Any compensation received by our officers, directors, and management personnel
will be determined from time to time by our Board of Directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf.
Summary Compensation Table. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to the Company payable to
our Chief Executive Officer and our other executive officers whose total annual
salary and bonus is anticipated to exceed $50,000 during the year ending
December 31, 2000. Our Board of Directors may adopt an incentive stock option
plan for our executive officers which would result in additional compensation.
17
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================
Name and Principal Position Year Annual Bonus ($) Other Annual All Other
Salary ($) Compensation ($) Compensation
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Christopher A. Cota, President,
Treasurer, Director 2000 None None None None
-------------------------------------------------------------------------------------------------------------------
Ryan A. Neely, Secretary,
Director 2000 None None None None
===================================================================================================================
</TABLE>
Compensation of Directors. Our directors who are also employees receive no extra
compensation for their service on our Board of Directors.
Compensation of Officers. As of March 31, 2000, our officers have received no
compensation for their services provided to us.
Employment Contracts. We anticipate that we will enter into employment contracts
with Christopher A. Cota and Ryan A. Neely.
Financial Statements
[Financial Statements inserted here on copy filed on EDGAR.]
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
In May 2000, our Board of Directors appointed Lesley, Thomas, Schwarz and
Postma, Inc., independent accountants, to audit our financials statements from
March 14, 2000 (inception) through March 31, 2000.
There have been no disagreements with our accountants since our formation
required to be disclosed pursuant to Item 304 of Regulation S-B.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered hereby has
been passed upon by Stepp & Beauchamp LLP, located in Newport Beach, California.
EXPERTS
Our financial statements for the period ended March 31, 2000 appearing in this
prospectus which is part of a Registration Statement have been audited by
Lesley, Thomas, Schwarz and Postma, Inc. and are included in reliance upon such
reports given upon the authority of Lesley, Thomas, Schwarz and Postma, Inc. as
experts in accounting and auditing.
ADDITIONAL INFORMATION
We have filed a Registration Statement on Form SB-2 with the Commission pursuant
to the Securities Act of 1933 Act with respect to the shares of our $.001 common
stock offered hereby. This prospectus does not contain all of the information
set forth in the Registration Statement on Form SB-2 and the exhibits and
schedules to the Registration Statement on Form SB-2. For further information
with respect to the company and the shares of our $.001 par value common stock
offered hereby, reference is made to the Registration Statement on Form SB-2 and
the exhibits and schedules filed as a part of the Registration Statement on Form
SB-2. Statements contained in this prospectus concerning the contents of any
contract or any other document referred to are not necessarily complete, and
reference is made in each instance to the copy of such contract or document
filed as an exhibit to the Registration Statement on Form SB-2. Each such
statement is qualified in all respects by such reference to such exhibit.
18
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers
Article Seven of our Certificate of Incorporation provides, among other things,
that our directors shall not be personally liable to us or our shareholders for
monetary damages for breach of fiduciary duty as a director, except for
liability
o for any breach of such director's duty of loyalty to the company or our
security holders;
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o liability for unlawful payments of dividends or unlawful stock purchase or
redemption by the corporation; or
o for any transaction from which such director derived any improper personal
benefit.
Accordingly, our directors may have no liability to our shareholders for any
mistakes or errors of judgment or for any act of omission, unless such act or
omission involves intentional misconduct, fraud, or a knowing violation of law
or results in unlawful distributions to our shareholders.
Indemnification Agreements. We anticipate that we will enter into
indemnification agreements with each of our executive officers pursuant to which
we will agree to indemnify each such person for all expenses and liabilities,
including criminal monetary judgments, penalties and fines, incurred by such
person in connection with any criminal or civil action brought or threatened
against such person by reason of such person being or having been our officer or
director or employee. In order to be entitled to indemnification by us, such
person must have acted in good faith and in a manner such person believed to be
in our best interests and, with respect to criminal actions, such person must
have had no reasonable cause to believe his or her conduct was unlawful.
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, INDEMNIFICATION FOR
LIABILITIES ARISING PURSUANT TO THE SECURITIES ACT OF 1933 IS CONTRARY TO PUBLIC
POLICY AND, THEREFORE, UNENFORCEABLE.
Other Expenses of Issuance and Distribution
We will pay all expenses in connection with the registration and sale of the
shares of our $.001 par value common stock. The estimated expenses of issuance
and distribution are set forth below.
================================================================================
Registration Fees Approximately $264.00
--------------------------------------------------------------------------------
Transfer Agent Fees Approximately $500.00
--------------------------------------------------------------------------------
Costs of Printing and Engraving Approximately $500.00
--------------------------------------------------------------------------------
Legal Fees Approximately $10,000.00
--------------------------------------------------------------------------------
Accounting Fees Approximately $2,500.00
================================================================================
Recent Sales of Unregistered Securities
There have been no sales of unregistered securities within the last three (3)
years which would be required to be disclosed pursuant to Item 701 of Regulation
S-B, except for the following:
On or about May 8, 2000, we authorized the issuance of 1,000,000 shares of our
$.001 par value common stock for $.001 per share. The shares were issued in
reliance upon the exemption from the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended ("Act"), which exemption
is specified by the provisions of Section 4(2) of the Act and Rule 506 of
Regulation D promulgated pursuant to that Act by the Securities and Exchange
Commission. The net proceeds to us were $1,000.
On or about March 17, 2000, we authorized the issuance of 1,500,000 shares of
our $.001 par value common stock to Christopher A. Cota, Thomas E. Stepp, Jr.,
Richard Reincke and Michael Muellerleile, in reliance on the exemption
19
<PAGE>
specified by the provisions of Section 4(2) of the Securities Act of 1933, as
amended. The shares were issued in exchange for services provided to the
company, which were valued at $1,500.
Exhibits
Copies of the following documents are filed with this Registration
Statement, Form SB-2, as exhibits:
Exhibit No.
-----------
1. Underwriting Agreement (not applicable)
3.1 Certificate of Incorporation
(Charter Document)
3.2 Bylaws
5. Opinion Re: Legality
8. Opinion Re: Tax Matters (not applicable)
11. Statement Re: Computation of Per Share Earnings*
15. Letter on unaudited interim financial information (not applicable)
23.1 Consent of Auditors
23.2 Consent of Counsel**
24. Power of Attorney is included on the Signature Page of the
Registration Statement
27. Financial Data Schedule
* Included in Financial Statements
** Included in Exhibit 5
Undertakings
A. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
B. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
20
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) (Section 230.424(b) of Regulation S-B)
if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement; and
(iii) To include any additional or changed material information with
respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
21
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the city of Boca
Raton, Florida, on May 31, 2000.
MVD, Inc.,
a Delaware corporation
By: /s/ Christopher A. Cota
-------------------------------
Christopher A. Cota
Its: President, Treasurer and Director
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed on this 31st day of May, 2000, the following
persons in the capacities and on the dates stated:
/s/ Ryan A. Neely May 31, 2000
---------------------------------
Ryan A. Neely
Secretary, Director
22
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints and hereby
authorizes Christopher A. Cota with the full power of substitution, as
attorney-in-fact, to sign in such person's behalf, individually and in each
capacity stated below, and to file any amendments, including post-effective
amendments to this Registration Statement.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
MVD, INC.
/s/ Christopher A. Cota May 31, 2000
----------------------------------
Christopher A. Cota
President, Treasurer and Director
/s/ Ryan A. Neely May 31, 2000
----------------------------------
Ryan A. Neely
Secretary, Director
23
<PAGE>
MVD, INC.
(A Development Stage Company)
REPORT AND FINANCIAL STATEMENTS
MARCH 31, 2000
AND THE PERIOD MARCH 14, 2000 (INCEPTION)
THROUGH MARCH 31, 2000
<PAGE>
MVD, INC.
MARCH 31, 2000
TABLE OF CONTENTS
Pages
Independent Auditors' Report 1
Audited Financial Statements:
Balance Sheet 2
Statement of Operations 3
Statement of Stockholders' Deficit 4
Statement of Cash Flows 5
Notes to Financial Statements 6 - 9
<PAGE>
May 22, 2000
Independent Auditors' Report
To the Board of Directors and stockholders of MVD, Inc.
We have audited the accompanying balance sheet of MVD, Inc. (a development
stage company) as of March 31, 2000, and the related statements of operations,
stockholders' deficit, and cash flows for the period March 14, 2000 (inception)
through March 31, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of MVD, Inc. at March 31, 2000,
and the results of its operations and its cash flows for the period March 14,
2000 (inception) through March 31, 2000 in conformity with generally accepted
accounting principles.
/s/ Lesley, Thomas, Schwarz & Postma, Inc.
A Professional Accountancy Corporation
Newport Beach, California
1
<PAGE>
MVD, INC.
(a development stage company)
BALANCE SHEET
MARCH 31, 2000
ASSETS
Cash and cash equivalents (Note 1) $ 950
Stock subscription receivable (Note 2) 50
Prepaid expenses (Note 3) 10,000
--------
Total assets $ 11,000
========
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
Accrued expenses $ 4,938
Advance from stockholder (Note 3) 10,000
--------
14,938
--------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' DEFICIT(Note 5)
Preferred stock
$0.001 par value
5,000,000 shares authorized
No shares issued and outstanding --
Common stock
$0.001 par value
50,000,000 shares authorized
2,500,000 shares issued and outstanding 2,500
Accumulated deficit (6,438)
--------
Total stockholders' deficit (3,938)
--------
Total liabilities and stockholders' deficit $ 11,000
========
See the accompanying notes to these financial statements
2
<PAGE>
MVD, INC.
(a development stage company)
STATEMENT OF OPERATIONS
PERIOD MARCH 14, 2000 (INCEPTION) THROUGH MARCH 31, 2000
INCOME $ 0
-------
EXPENSES
Legal 4,167
Postage 23
Licenses and registrations 689
Office supplies 59
Consulting fees 1,500
-------
Total expenses 6,438
-------
LOSS BEFORE INCOME TAXES (6,438)
PROVISION FOR INCOME TAXES (Note 7) 0
-------
NET LOSS $(6,438)
=======
BASIC LOSS PER SHARE $ (.003)
=======
DILUTIVE LOSS PER SHARE $ (.003)
=======
See the accompanying notes to these financial statements
3
<PAGE>
MVD, INC.
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
PERIOD MARCH 14, 2000 (INCEPTION) THROUGH MARCH 31, 2000
<TABLE>
<CAPTION>
Common Stock Preferred Stock
------------------------ ------------------------ Total
Accumulated Stockholders'
Shares Amount Shares Amount Deficit Deficit
--------- --------- --------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, March 14, 2000 0 $ 0 0 $ 0 $ 0 $ 0
ISSUANCE OF COMMON STOCK 2,500,000 2,500 0 0 0 2,500
NET LOSS 0 0 0 0 (6,438) (6,438)
--------- --------- --------- --------- --------- ---------
BALANCE, March 31, 2000 2,500,000 $ 2,500 0 $ 0 $ (6,438) $ (3,938)
========= ========= ========= ========= ========= =========
</TABLE>
See the accompanying notes to these financial statements
4
<PAGE>
MVD, INC.
(a development stage company)
STATEMENT OF CASH FLOWS
PERIOD MARCH 14, 2000 (INCEPTION) THROUGH MARCH 31, 2000
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (6,438)
--------
Adjustments to reconcile net loss to net cash used in operating activities
Changes in operating assets and liabilities
Increase in prepaid expenses (10,000)
Increase in accrued expenses 4,938
--------
Total adjustments (5,062)
--------
Net cash used in operating activities (11,500)
--------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from the issuance of common stock 2,500
Stock subscription receivable (50)
Advance from stockholder 10,000
--------
Net cash provided by financing activities 12,450
--------
NET INCREASE IN CASH AND CASH EQUIVALENTS 950
CASH AND CASH EQUIVALENTS, beginning of period 0
--------
CASH AND CASH EQUIVALENTS, end of period $ 950
========
</TABLE>
See the accompanying notes to these financial statements
5
<PAGE>
MVD, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Business - MVD, Inc. (the "Company") doing
business in Florida as MVDIGITAL, Inc. provides digital entertainment products
and services. The Company's primary focus is the distribution and sale of
digital entertainment products developed and manufactured by third parties and
the development of digital related services.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results may differ from those estimates.
Cash and Cash Equivalents - For purposes of the balance sheet and 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.
Income Taxes - The Company accounts for income taxes in accordance with the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", which requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method, deferred
tax assets and liabilities are determined based on the difference between the
financial statement and the tax basis of assets and liabilities using enacted
rates in effect for the periods in which the differences are expected to
reverse. Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized.
Start-up Activities - The Company has adopted the provisions of Statement
of Position 98-5, "reporting Costs of Start-up Activities" ("SOP 98-5"). SOP
98-5 requires that the costs of start-up activities, including organization
costs, be expensed as incurred.
6
<PAGE>
NOTE 2 - STOCK SUBSCRIPTION RECEIVABLE
Stock subscription receivable consists of an amount subscribed to by an
individual in accordance with the Company's Private Placement Memorandum
Offering dated March 17, 2000.
NOTE 3 - ADVANCES FROM STOCKHOLDER
On March 14, 2000, the principal stockholder and officer of the Company
advanced the Company $10,000 to be applied for initial expenses of the Company.
This advance is non-interest bearing, due on demand, and is to be repaid as cash
becomes available.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The Company is expected to lease certain office space and facilities under
a non-cancellable operating lease. The lease generally provides for the lessee
to pay taxes, maintenance, insurance and certain other operating costs of the
leased property.
There was no rent expense for the period ended March 31, 2000.
NOTE 5 - COMPANY SECURITIES
Description of Capital Stock - The authorized capital stock of the Company
consists of 50,000,000 shares of $.001 par value common stock of which 2,500,000
are issued and outstanding as of March 31, 2000 and 5,000,000 shares of $.001
par value preferred stock of which no such shares are issued and outstanding as
of March 31, 2000. Holders of shares of the Company's common stock are entitled
to receive dividends when and as declared by the Board of Directors of the
Company. All the shares of common stock have equal voting rights and are
nonassessable. Each share of common stock is entitled to share ratably in any
assets available for distribution to holders of the Company's equity securities
upon liquidation of the Company.
Dividend Policy - Any payment of dividends will be at the sole and absolute
discretion of the Company's Board of Directors and will depend upon earnings,
financial condition, capital requirements, amount of indebtedness, contractual
restrictions with respect to payment of dividends, and other factors. Any such
dividends may be paid in cash, property or shares of the Company's capital
stock. The Company has not paid any dividends since its formation, and it is not
probable that any dividends on the Company's common stock will be declared at
any time in the foreseeable future. There can be no assurance that any dividends
on the Company's common stock will be paid in the future.
7
<PAGE>
NOTE 5 - COMPANY'S SECURITIES (CONTINUED)
Dilution - The following table sets forth the number of shares of $.001 par
value common stock purchased from the Company, the total consideration paid and
the price per share.
<TABLE>
<CAPTION>
Shares Issued Total Consideration
---------------------- ---------------------
Price Per
Number Percent Amount Percent Share
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Founding stockholders 1,500,000 60% $ 1,500 60% $.001
Purchasers of offered shares 1,000,000 40% 1,000 40% .001
--------- --------- --------- ---------
Total 2,500,000 100% $ 2,500 100%
========= ========= ========= =========
</TABLE>
NOTE 6 - RELATED PARTY TRANSACTIONS
During the period from inception through March 31, 2000, the Company
entered into consulting agreements relating to the initial start-up of the
Company. Total fees are $1,500 at March 31, 2000 with each consultant receiving
a percentage of ownership in the form of common stock.
NOTE 7 - INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109 ("SFAS 109"). This statement mandates the liability
method of accounting for deferred income taxes and permits the recognition of
deferred tax assets subject to an ongoing assessment of realizability.
Deferred income taxes are provided for timing differences in the
recognition of certain income and expense items for tax and financial statement
purposes. The tax effect of the temporary differences giving rise to the
Company's deferred tax assets and liabilities as of March 31, 2000 are as
follows:
Amount
------
Net operating loss benefit $ 966
Valuation allowance (966)
-----
$ --
=====
8
<PAGE>
NOTE 8 - LIQUIDITY
Due to the Company being in the development stage, various risks must be
considered carefully. These risks include, but are not necessarily limited to,
(i) there can be no assurance that the Company's current products and services
will achieve a significant degree of market acceptance, and that acceptance, if
achieved, will be sustained for any period sufficient to permit the Company to
recover associated costs; (ii) there can be no assurance that the Company will
be able to adequately protect its trade secrets and proprietary information;
(iii) the Company's officers and directors may be subject to various conflicts
of interest; (iv) the Company's results of operations may vary from period to
period as a result of a variety of factors; (v) the market for the Company's
products and services is characterized by continuous development, production and
introduction of new products and services; and, (vi) the Company's business is
significantly competitive.
NOTE 9 - SUBSEQUENT EVENT
In April 2000, the Company received and deposited the amount due from the
common stock subscription as of March 31, 2000.
9