Registration
No. 333-__________
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_________________
FORM
S-1
REGISTRATION
STATEMENT UNDER
THE
SECURITIES ACT OF 1933
MULTIPLAYER
ONLINE DRAGON INC.
(Name of small business issuer in
its charter)
Nevada
|
7370
|
(State
or Other Jurisdiction of Organization)
|
(Primary
Standard Industrial Classification
Code)
|
_________________
12F
World Trade Centre
|
Business
Filings Incorporated
|
No.
25 Tongxing Street
|
6100
Neil Road, Suite 500
|
Zhongshan
District, Dalian
|
Reno,
Nevada 89511
|
People’s
Republic of China 116001
|
(800)
550-6724
|
(86)
411-3966-9257
|
|
(Address
and telephone number of
|
(Name,
address and telephone
|
registrant
=
s
executive office)
|
number
of agent for service)
|
_________________
Copies
to:
The
Law Office of Conrad C. Lysiak, P.S.
601
West First Avenue, Suite 903
Spokane,
Washington 99201
(509)
624-1475
APPROXIMATE
DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
If any of
the securities being registered on the Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the
following box:
[X]
If this
Form is filed to register additional common stock for an offering under Rule
462(b) of 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 under Rule 462(c) of 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 under Rule 462(d) of 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.
[ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of
A
large
accelerated filer,
@
A
accelerated
filer
@
and
A
smaller
reporting company
@
in Rule
12b-2 of the Exchange Act. (Check one):
|
Large
Accelerated Filer
|
[ ]
|
Accelerated
Filer
|
[ ]
|
|
Non-accelerated
Filer
|
[ ]
|
Smaller
Reporting Company
|
[X]
|
|
(Do
not check if a smaller reporting
company)
|
CALCULATION
OF REGISTRATION FEE
Securities
to be
|
Amount
To Be
|
Offering
Price
|
Aggregate
|
Registration
Fee
|
Registered
|
Registered
|
Per
Share
|
Offering
Price
|
[1]
|
|
|
|
|
|
Common
Stock:
|
2,000,000
|
$
|
0.05
|
$
|
100,000
|
$
|
5.58
|
[1]
|
Estimated
solely for purposes of calculating the registration fee under Rule
457.
|
REGISTRANT
HEREBY AMENDS THIS REGISTRATION STATEMENT ON DATES AS MAY BE NECESSARY TO DELAY
ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, OR
UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON DATES AS THE
COMMISSION, ACTING UNDER SAID SECTION 8(a), MAY DETERMINE.
-2-
Prospectus
MULTIPLAYER
ONLINE DRAGON INC.
Shares
of Common Stock
1,000,000
Minimum - 2,000,000 Maximum
Before
this offering, there has been no public market for the common stock. In the
event that we sell at least the minimum number of shares in this offering, of
which there is no assurance, we intend to have the shares of common stock quoted
on the Bulletin Board operated by the Financial Regulatory Authority. There is,
however, no assurance that the shares will ever be quoted on the Bulletin
Board.
We are
offering up to a total of 2,000,000 shares of common stock in a direct public
offering, without any involvement of underwriters or broker/dealers, 1,000,000
shares minimum, 2,000,000 shares maximum. The offering price is $0.05 per
share. In the event that 1,000,000 shares are not sold within 270
days, all money received by us will be promptly, returned to you with interest
and without deduction of any kind. The SEC staff generally
defines
A
promptly
@
as a period
of up to three days. We will return your funds to you in the form a
cashier
=
s check sent
Federal Express on the 271
st
day. If at least 1,000,000 shares are sold within 270 days, all money
received by us will be retained by us and there will be no refund. Funds will be
held in a separate account at HSBC Hong Kong 1, Queen
=
s Road
Central, Hong Kong, SAR, China. Its telephone number is +852 2822
1111. Sold securities are deemed securities which have been paid for
with collected funds prior to expiration of 270 days. Collected funds are deemed
funds that have been paid by the drawee bank. The foregoing account is not an
escrow, trust or similar account. It is merely a separate interest
bearing savings account under our control where we have segregated your funds.
There is no escrow, trust or similar account in which your subscription will be
deposited. It will only be deposited in a separate bank account under our name.
Only our officers and directors will have access to the account. You will not
have the right to withdraw your funds during the offering. You will only receive
your funds back if we do not raise the minimum amount of the offering within 270
days. As a result, if we are sued for any reason and a judgment is rendered
against us, your subscription could be seized in a garnishment proceeding. If we
file a voluntary bankruptcy petition or our creditors file an involuntary
bankruptcy petition, our assets will be seized by the bankruptcy trustee,
including your subscription, and used to pay our creditors. If that happens, you
will lose your investment, even if we fail to raise the minimum amount in this
offering. As a result, you may lose your entire investment not
withstanding the purported minimum offering provisions because the funds are not
held in an escrow account and are potentially subject to creditor
claims.
There are
no arrangements to place the funds in an escrow, trust, or similar
account.
Our common stock will be sold on our
behalf by Yuchun Bai, one of our officers and directors. Mr. Bai will not
receive any commissions or proceeds from the offering for selling shares on our
behalf.
Investing
in our common stock involves risks. See
A
Risk
Factors
@
starting at
page 7.
-3-
|
|
Offering
Price
|
|
Expenses
|
|
Proceeds
to Us
|
|
|
|
|
|
|
|
Per
Share - Minimum
|
$
|
0.05
|
$
|
0.04
|
$
|
0.01
|
Per
Share - Maximum
|
$
|
0.05
|
$
|
0.03
|
$
|
0.02
|
Minimum
|
$
|
50,000
|
$
|
40,000
|
$
|
10,000
|
Maximum
|
$
|
100,000
|
$
|
40,000
|
$
|
60,000
|
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.
The
date of this prospectus is _______________________.
-4-
TABLE
OF CONTENTS
|
Page
No.
|
|
|
Summary
of Prospectus
|
6
|
|
|
Risk
Factors
|
7
|
|
|
Use
of Proceeds
|
12
|
|
|
Determination
of Offering Price
|
13
|
|
|
Dilution
of the Price You Pay for Your Shares
|
13
|
|
|
Plan
of Distribution; Terms of the Offering
|
16
|
|
|
Management
=
s
Discussion and Analysis of Financial Condition and Results of
Operations
|
19
|
|
|
Business
|
22
|
|
|
Management
|
28
|
|
|
Executive
Compensation
|
29
|
|
|
Principal
Stockholders
|
31
|
|
|
Description
of Securities
|
32
|
|
|
Certain
Transactions
|
33
|
|
|
Litigation
|
34
|
|
|
Experts
|
34
|
|
|
Legal
Matters
|
34
|
|
|
Financial
Statements
|
34
|
-5-
SUMMARY
OF OUR OFFERING
Our
business
We were
incorporated under the laws of the state of Nevada as MULTIPLAYER ONLINE DRAGON
INC., on July 3, 2008. We have just started our operations. We are engaged in
the business of designing, hosting, and marketing collaborative internet search
communications systems.
Our
principal executive offices are located at 12F, World Trade Centre, No. 25
Tongxing Street, Zhongshan District,Dalian, China 116001. This is our mailing
address as well. Our telephone number is +86 411 3966 9257. Our fiscal year end
is March 31.
The
offering
Following
is a brief summary of this offering:
Securities
being offered
|
2,000,000
shares of common stock
|
Offering
price per share
|
$0.05
|
Net
proceeds to us
|
100,000
|
Number
of shares outstanding before the offering
|
10,000,000
|
Number
of shares outstanding after the offering if all of the shares are
sold
|
12,000,000
|
The
following financial information summarizes the more complete historical
financial information at the end of this prospectus.
|
|
As
of March 31, 2009
|
|
|
(Audited)
|
Balance
Sheet
|
|
|
Total
Assets
|
$
|
9,862
|
Total
Liabilities
|
$
|
8,400
|
Stockholders
Equity
|
$
|
1,462
|
|
|
|
|
|
Period
from July 3, 2008
|
|
|
(date
of inception) to
|
|
|
March
31, 2009
|
|
|
(Audited)
|
Income
Statement
|
|
|
Revenue
|
$
|
0
|
Total
Expenses
|
$
|
8,538
|
Net
Loss
|
$
|
(8,538)
|
-6-
RISK
FACTORS
Please
consider the following risk factors before deciding to invest in our common
stock. All material risk factors have been addressed.
Risks
associated with MULTIPLAYER ONLINE DRAGON INC.:
1.
Our auditor has issued a going
concern opinion.
Our
auditors have issued a going concern opinion. This means that there is
substantial doubt that we can continue as an ongoing business for the next
twelve months.
2.
We lack an operating history and
have losses which we expect to continue into the future. As a result, we may
have to suspend or cease operations.
We were
incorporated on July 3, 2008 and we have not started our proposed business
operations or realized any revenues. We have no operating history upon which an
evaluation of our future success or failure can be made. Our net loss since
inception is $8,538. To achieve and maintain profitability and
positive cash flow we are dependent upon:
* our
ability to generate revenues
* our
ability to generate a profit.
Based
upon current plans, we expect to incur operating losses in future periods. This
will happen because there are expenses associated with translating documents. As
a result, we may not generate revenues in the future. Failure to generate
revenues will cause us to suspend or cease operations.
3.
Because our management does not have
technical training or experience in building and managing collaborative search
engines, we will have to hire qualified personnel. If we can
=
t locate qualified personnel, we may
have to suspend or cease operations which will result in the loss of your
investment.
Because
our management is inexperienced in developing and writing software for
collaborative search engines, we will have to hire qualified persons to do so.
Our management has no direct training or experience in these areas and as a
result may not be fully aware of many of the specific requirements related to
working within the industry. Management
=
s decisions
and choices may not take into account standard software and marketing techniques
that competing corporations commonly use. Consequently our operations, earnings
and ultimate financial success could suffer irreparable harm due to
management
=
s lack of
experience in this industry. As a result we may have to suspend or cease
operations which will result in the loss of your investment.
4.
Because we are small and do not have
much capital, we may have to limit our operational and marketing activity which
may result in a loss of your investment.
Because
we are small and do not have much capital, we must limit our activities. As such
we will not be able to compete with large entities that operate and market
collaborative search software. In that event we are unable to attract customers
to our product, we will not generate revenues or profits. It that occurs, you
will lose your investment.
-7-
5.
Because Mr. Deng and Mr. Bai have
other outside business activities, they will only be devoting 10% of their time,
or four hours per week to ours to our operations and as a result, our operations
may be sporadic which may result in periodic interruptions or suspensions of our
activities.
Because
Mr. Deng and Mr. Bai, our directors, have other outside business activities,
they will only be devoting 10% of their time, or four hours each per week to our
operations. As a result, our operations may be sporadic and occur at times which
are convenient to Mr. Deng and Mr. Bai. As a result, our operations may be
periodically interrupted or suspended.
6.
We operate in a highly competitive
industry and we cannot guarantee you that we will ever achieve any level of
success in competing for clients with other collaborative search
sites.
The
Internet search industry is very competitive. We are part of that industry. We
are at a competitive disadvantage in attracting clients due to our very small
size and limited scope of our product. In addition, there is not a significant
barrier to entry by competitors. Our competitors are larger and more diversified
than we are and have greater financial resources. We cannot predict the degree
of success, if any, with which we will meet competition in the
future.
7.
We do not own any
patents, trademarks or copyrights covering our product.
Even
though we are currently applying for a patent, we do not own any patents,
trademarks or copyrights. Our collaborative search engine design needs various
suppliers of components and web hosting services in order to function. Patent
law in the USA was recently changed by Congress and we are consulting with
patent lawyers on what protection if any our design can be afforded under the
revised law. If we infringe on any patents, trademarks or copyrights, we will be
liable for damages and may be enjoined from conducting our proposed business.
Further, because we have no patent or copyright covering our product, someone
could use the information and compete with us and we will have no recourse
against him.
8.
We may need additional
capital which we may not be able to obtain on acceptable terms. Any inability to
raise additional capital when needed could adversely affect our ability to
grow
.
Our
future capital requirements depend on a number of factors, including our ability
to grow, our net sales, and the management of our business. If we are to
substantially grow, it is likely we will need to raise additional capital,
possibly through the issuance of long-term or short-term indebtedness or the
issuance of equity securities in private or transactions. If we raise additional
capital through the issuance of debt, this will result in increased interest
expense. If we raise additional funds through the issuance of equity or
convertible debt securities, the percentage ownership of our existing
shareholders will be reduced and those shareholders will experience dilution. In
addition, new securities may contain certain rights, preferences or privileges
that are senior to those of our common stock. We cannot assure you that
acceptable financing can be obtained on suitable terms, if at all.
-8-
9.
Our future success is dependent on
Internet technology developments, our ability to adapt to these and other
technological changes and to meet evolving industry
standards.
Our
ability to execute our strategy of operation over the Internet and generating
the related expected revenues is dependent on the development and maintenance of
Internet technology as well as our ability to adapt our solutions to changes in
Internet technology. We may encounter difficulties responding to
these and other technological changes that could delay our operations and
services. Our future success will, to a significant extent, depend on our
ability to enhance our search engine and satisfy an expanded range of customer
needs, and achieve market acceptance. We may not have sufficient resources to
make the necessary investments to develop and implement the technological
advances required to maintain a competitive position.
10.
We face competition from other
Internet companies, including web search providers, Internet advertising
companies and destination web sites that may also bundle their services with
Internet access.
In
addition to Microsoft and Yahoo, we face competition from other web search
providers, including companies that are not yet known to us. We compete with
Internet advertising companies, particularly in the areas of pay-for-performance
and keyword-targeted Internet advertising. Also, we may compete with companies
that sell products and services online because these companies, like us, will be
trying to attract users to their web sites to search for information about
products and services. We will also be competing with destination web sites that
seek to increase their search-related traffic. These destination web sites may
include those operated by Internet access providers, such as cable and DSL
service providers. Because our targeted users will need to access our services
through Internet access providers, they have direct relationships with these
providers. If an access provider or a computer or computing device manufacturer
offers online services that compete with ours, the user may find it more
convenient to use the services of the access provider or manufacturer. In
addition, the access provider or manufacturer may make it hard to access our
services by not listing them in the access provider
=
s or
manufacturer
=
s own menu
of offerings. Also, because the access provider gathers information from the
user in connection with the establishment of a billing relationship, the access
provider may be more effective than we are in tailoring services and
advertisements to the specific tastes of the user. There has been a trend toward
industry consolidation among our competitors, and so smaller competitors today
may become larger competitors in the future. If our competitors are more
successful than we are in all areas of operation.
11.
We face competition from traditional
media companies, and we may not be included in the advertising budgets of large
advertisers, which could harm our operating results.
In
addition to Internet companies, we will face competition from companies that
offer traditional media advertising opportunities. Most large advertisers have
set advertising budgets, a small portion of which are allocated to Internet
advertising. We expect that large advertisers will continue to focus most of
their advertising efforts on traditional media. If we fail to convince customers
to spend a portion of their advertising budgets with us our operating results
would be harmed.
-9-
12.
Currency fluctuations and government
control of currency conversion may adversely affect our financial condition and
results of operations.
Our
reporting currency is the U.S. dollar and our operations in China will be paid
for in local currency as the functional currencies. We will receive
substantially all of our revenues in Chinese Renminbi (
A
RMB
@
), which
currently is not a freely convertible currency. A portion of these revenues must
be converted into other currencies to meet our foreign currency obligations
including, among others, legal and accounting fees, payment of dividends
declared, if any, in respect of our shares. Restrictions on currency exchange
may limit our ability to utilize our revenues effectively. We are also subject
to the effects of exchange rate fluctuations with respect to any of these
currencies. It is possible that the Chinese government could adopt a more
flexible currency policy, which could result in more significant fluctuation of
RMB against the U.S. dollar.
13.
Restrictions on currency
exchange may limit our ability to receive and use our revenues
effectively.
The
majority of our revenues will be settled in RMB and, any future restrictions on
currency exchanges may limit our ability to use revenue generated in RMB to fund
any future business activities outside China or to make dividend or other
payments in U.S. dollars. Although the Chinese government introduced regulations
in 1996 to allow greater convertibility of the RMB for current account
transactions, significant restrictions still remain, including primarily the
restriction that foreign-invested enterprises may only buy, sell or remit
foreign currencies after providing valid commercial documents, at those banks in
China authorized to conduct foreign exchange business. In addition, conversion
of RMB for capital account items, including direct investment and loans, is
subject to governmental approval in China, and companies are required to open
and maintain separate foreign exchange accounts for capital account items. We
cannot be certain that the Chinese regulatory authorities will not impose more
stringent restrictions on the convertibility of the RMB.
14.
Our business is largely
subject to the uncertain legal environment in China and your legal protection
could be limited.
The
Chinese legal system is a civil law system based on written statutes. Unlike
common law systems, it is a system in which precedents set in earlier legal
cases are not generally used. The overall effect of legislation enacted over the
past 20 years has been to enhance the protections afforded to foreign invested
enterprises in China. However, these laws, regulations and legal requirements
are relatively recent and are evolving rapidly, and their interpretation and
enforcement involve uncertainties. These uncertainties could limit the legal
protections available to foreign shareholders, such as the right of foreign
invested enterprises to hold licenses and permits such as requisite business
licenses. Because the majority of our assets may be located in the People
=
s Republic
of China (the
A
PRC
@
) it may be
extremely difficult to access those assets to satisfy an award entered against
us in United States court. Moreover, we have been advised that the PRC does not
have treaties with the United States providing for the reciprocal recognition
and enforcement of judgments of courts.
-10-
Risks
associated with this offering:
15.
Because we do not have
an escrow or trust account for your subscription, if we file for bankruptcy
protection or are forced into bankruptcy, or a creditor obtains a judgment
against us and attaches the subscription, or our officers and directors
misappropriate the funds for their own use, you will lose your
investment.
Your
funds will not be placed in an escrow or trust account. Accordingly,
if we file for bankruptcy protection or a petition for involuntary bankruptcy is
filed by creditors against us, your funds will become part of the bankruptcy
estate and administered according to the bankruptcy laws. If a
creditor sues us and obtains a judgment against us, the creditor could garnish
the bank account and take possession of the subscriptions. As such, it is
possible that a creditor could attach your subscription which could preclude or
delay the return of money to you. Further, officers and directors
will have the power to appropriate the money we raise. As such, they
could withdraw the funds without your knowledge for their own use. If
that happens, you will lose your investment and your funds will be used to pay
creditors.
16.
Because we have only two officers
and directors who are responsible for our managerial and organizational
structure, in the future, there may not be effective disclosure and accounting
controls to comply with applicable laws and regulations which could result in
fines, penalties and assessments against us.
We have
only two officers and two directors who are also our officers. They are
responsible for our managerial and organizational structure which will include
preparation of disclosure and accounting controls under the Sarbanes Oxley Act
of 2002. When these controls are implemented, they will be responsible for the
administration of the controls. Should they not have sufficient experience, they
may be incapable of creating and implementing the controls which may cause us to
be subject to sanctions and fines by the Securities Exchange Committee which
ultimately could cause us to lose money.
17.
Because there is no public trading
market for our common stock, you may not be able to resell your
stock
.
There is
currently no public trading market for our common stock. Therefore there is no
central place, such as stock exchange or electronic trading system to resell
your shares. If you do want to resell your shares, you will have to locate a
buyer and negotiate your own sale.
18.
Because we may issue additional
shares of common stock, your investment could be subject to substantial
dilution.
We
anticipate that any additional funding will be in the form of equity financing
from the sale of our common stock. In the future, if we do sell more common
stock, your investment could be subject to dilution. Dilution is the difference
between what you pay for your stock and the net tangible book value per share
immediately after the additional shares are sold by us.
-11-
19.
Because our securities are subject
to penny stock rules, you may have difficulty reselling your
shares
.
Our
shares as penny stocks are covered by section 15(g) of the Securities Exchange
Act of 1934 which imposes additional sales practice requirements on
broker/dealers who sell the Company
=
s securities
including the delivery of a standardized disclosure document; disclosure and
confirmation of quotation prices; disclosure of compensation the broker/dealer
receives; and, furnishing monthly account statements. For sales of our
securities, the broker/dealer must make a special suitability determination and
receive from its customer a written agreement prior to making a sale. The
imposition of the foregoing additional sales practices could adversely affect a
shareholder
=
s ability to
dispose of his stock.
USE
OF PROCEEDS
Our
offering is being made on a $50,000 minimum $100,000 maximum self-underwritten
basis. The table below sets forth the use of proceeds, if $50,000, $75,000, and
$100,000, is raised in this offering.
|
$50,000
|
$75,000
|
$100,000
|
|
|
|
|
|
|
|
Gross
proceeds
|
$
|
50,000
|
$
|
75,000
|
$
|
100,000
|
Offering
expenses
|
$
|
40,000
|
$
|
40,000
|
$
|
40,000
|
Net
proceeds
|
$
|
10,000
|
$
|
35,000
|
$
|
60,000
|
The net
proceeds will be used as follows:
Consulting
Services
|
$
|
500
|
$
|
5,000
|
$
|
5,000
|
Design
and Engineering
|
$
|
7,500
|
$
|
7,500
|
$
|
7,500
|
Market
Feasibility
|
$
|
0
|
$
|
10,500
|
$
|
10,500
|
Prototype
development
|
$
|
0
|
$
|
7,100
|
$
|
29,350
|
Foreign
Legal
|
$
|
1,000
|
$
|
3,000
|
$
|
3,000
|
Telephone
|
$
|
50
|
$
|
50
|
$
|
50
|
Stationary
|
$
|
100
|
$
|
100
|
$
|
100
|
Accounting
|
$
|
750
|
$
|
750
|
$
|
3,500
|
Office
Equipment
|
$
|
100
|
$
|
1,000
|
$
|
1,000
|
Offering
expenses consist of: (1) legal services, (2) accounting fees, (3) fees due the
transfer agent, (4) printing expenses, and (5) filing fees.
Consulting
Services consist of fees for technical consulting services for software and
hardware engineering and systems design. We are not going to spend any money or
implement our program until this offering is completed. We have not begun
production on or definitive design. Consulting fees will not be more than
$5,000. We have not selected or identified a consultant and will not do so until
we have completed this offering. Our consultant, in consultation with our
officers, will supervise and contract for our operations through independent
contractors. We will make as much progress in product and systems design as
proceeds from the offering allow.
-12-
We have allocated funds for telephone
service, stationary, accounting, acquisition of office equipment and office
supplies as needed.
We have
allocated variable amounts of money for product development because we do not
know how much will ultimately be needed.. Only if we determine we have a viable
product for an accessible market will we consider entering into active
operations.
No
proceeds from the offering will be paid to officers and directors.
DETERMINATION
OF OFFERING PRICE
The price
of the shares has been determined by our board of directors. We selected the
$0.05 price for the sale of our shares of common stock. Currently there is no
market for the shares and we wanted to give our shareholders the ability to sell
their shares for the price they paid us. If our shares are listed for trading on
the Bulletin Board, the price of the shares will be established by the
market.
The price
of the shares we are offering was arbitrarily determined in order for us to
raise up to a total of $100,000 in this offering. The offering price bears no
relationship whatsoever to our assets, earnings, book value or other criteria of
value. Among the factors considered were:
* our
lack of operating history
* the
proceeds to be raised by the offering
* the
amount of capital to be contributed by purchasers in this offering in proportion
to theamount of stock to be retained by our existing Stockholders, and our
relative cash requirements.
DILUTION
OF THE PRICE YOU PAY FOR YOUR SHARES
Dilution
represents the difference between the offering price and the net tangible book
value per share immediately after completion of this offering. Net tangible book
value is the amount that results from subtracting total liabilities and
intangible assets from total assets. Dilution arises mainly as a result of our
arbitrary determination of the offering price of the shares being offered.
Dilution of the value of the shares you purchase is also a result of the lower
book value of the shares held by our existing stockholders.
As of March 31, 2009, the net tangible
book value of our shares of common stock was $1,462 or approximately $0.0001 per
share based upon 10,000,000 shares outstanding.
If
2,000,000 Shares Are Sold:
Upon
completion of this offering, in the event all of the shares are sold, the net
tangible book value of the 12,000,000 shares to be outstanding will be $61,462
or approximately $0.0051 per share. The net tangible book value of the shares
held by our existing stockholders will be increased by $0.0050 per share without
any additional investment on their part. You will incur an immediate dilution
from $0.05 per share to $0.0051 per share.
-13-
After completion of this offering, if
2,000,000 shares are sold, you will own approximately 16.67% of the total number
of shares then outstanding for which you will have made a cash investment of
$100,000, or $0.05 per share. Our existing stockholders will own approximately
83.33% of the total number of shares then outstanding, for which they have made
contributions of cash totaling $10,000 or approximately $0.001 per
share.
If
1,500,000 Shares Are Sold:
Upon completion of this offering, in
the event 1,500,000 shares are sold, the net tangible book value of the
11,500,000 shares to be outstanding will be $36,462, or approximately $0.0032
per share. The net tangible book value of the shares held by our existing
stockholders will be increased by $0.0031 per share without any additional
investment on their part. You will incur an immediate dilution from $0.05 per
share to $0.0032 per share.
After completion of this offering, if
1,500,000 shares are sold, you will own approximately 13.04% of the total number
of shares then outstanding for which you will have made a cash investment of
$75,000, or $0.05 per share. Our existing stockholders will own approximately
86.96% of the total number of shares then outstanding, for which they have made
contributions of cash totaling $10,000 or approximately $0.001 per
share.
If
the 1,000,000 Shares Are Sold:
Upon completion of this offering, in
the event 1,000,000 shares are sold, the net tangible book value of the
11,000,000 shares to be outstanding will be $11,462, or approximately $0.0010
per share. The net tangible book value of the shares held by our existing
stockholders will be increased by $0.0009 per share without any additional
investment on their part. You will incur an immediate dilution from $0.05 per
share to $0.0010 per share.
After completion of this offering, if
1,000,000 shares are sold, you will own approximately 9.09% of the total number
of shares then outstanding for which you will have made a cash investment of
$50,000, or $0.05 per share. Our existing stockholders will own approximately
90.91% of the total number of shares then outstanding, for which they have made
contributions of cash totaling $10,000 or approximately $0.001 per
share.
The
following table compares the differences of your investment in our shares with
the investment of our existing stockholders.
-14-
Existing
Stockholders if all of the Shares are Sold:
Price
per share
|
$
|
0.001
|
Net
tangible book value per share before offering
|
$
|
0.0001
|
Potential
gain to existing shareholders
|
$
|
0.0050
|
Net
tangible book value per share after offering
|
$
|
0.0051
|
Increase
to present stockholders in net tangible book value per
share
|
|
|
after
offering
|
$
|
0.0050
|
Capital
contributions
|
$
|
10,000
|
Number
of shares outstanding before the offering
|
|
10,000,000
|
Number
of shares after offering assuming the sale of the maximum
|
|
|
number
of shares
|
|
12,000,000
|
Percentage
of ownership after offering
|
|
83.33%
|
Purchasers
of Shares in this Offering if 2,000,000 Shares Sold
Price
per share
|
$
|
0.05
|
Dilution
per share
|
$
|
0.0449
|
Capital
contributions
|
$
|
100,000
|
Number
of shares after offering held by public investors
|
|
2,000,000
|
Percentage
of capital contributions by existing shareholders
|
|
9.09%
|
Percentage
of capital contributions by new investors
|
|
90.91%
|
Percentage
of ownership after offering
|
|
16.67%
|
Purchasers
of Shares in this Offering if 1,500,000 Shares Sold
Price
per share
|
$
|
0.05
|
Dilution
per share
|
$
|
0.0468
|
Capital
contributions
|
$
|
75,000
|
Number
of shares after offering held by public investors
|
|
1,500,000
|
Percentage
of capital contributions by existing shareholders
|
|
11.76%
|
Percentage
of capital contributions by new investors
|
|
88.24%
|
Percentage
of ownership after offering
|
|
13.04%
|
Purchasers
of Shares in this Offering if 1,000,000 Shares Sold
Price
per share
|
$
|
0.05
|
Dilution
per share
|
$
|
0.0490
|
Capital
contributions
|
$
|
50,000
|
Number
of shares after offering held by public investors
|
|
1,000,000
|
Percentage
of capital contributions by existing shareholders
|
|
16.67%
|
Percentage
of capital contributions by new investors
|
|
83.33%
|
Percentage
of ownership after offering
|
|
9.09%
|
-15-
PLAN
OF DISTRIBUTION; TERMS OF THE OFFERING
We are
offering 2,000,000 shares of common stock on a self-underwritten basis,
1,000,000 shares minimum, 2,000,000 shares maximum. The offering price is $0.05
per share. Funds from this offering will be placed in a separate bank account at
HSBC Hong Kong 1 Queen
=
s Road
Central, Hong Kong SAR, China. Its telephone number is +852 2822 1111. The funds
will be maintained in the separate bank until we receive a minimum of $50,000 at
which time we will remove those funds and use them as set forth in the Use of
Proceeds section of this prospectus. This account is not an escrow, trust or
similar account. It is merely a separate interest bearing savings
account under our control where we have segregated your funds. Your
subscription will only be deposited in a separate bank account under our name.
As a result, if we are sued for any reason and a judgment is rendered against
us, your subscription could be seized in a garnishment proceeding and you could
lose your investment. Further, if we file a voluntary bankruptcy
petition or our creditors file an involuntary bankruptcy petition, our assets
will be seized by the bankruptcy trustee, including your subscription, and used
to pay our creditors. If that happens, you will lose your investment, even if we
fail to raise the minimum amount in this offering. As a result,
there is no assurance that your funds will be returned to you if the minimum
offering is not reached. Any funds received by us thereafter will immediately
used by us.
If we do
not receive the minimum amount of $50,000 within 270 days of the effective date
of our registration statement, all funds will be promptly returned to you with
interest and without a deduction of any kind. The SEC staff generally
defines
A
promptly
@
as a period
of up to three days. We will return your funds to you in the form a cashier
=
s check sent
Federal Express on the 271
st
day. During the 270 day period, no funds will be returned to you. You
will only receive a refund of your subscription if we do not raise a minimum of
$50,000 within the 270 day period referred to above. There are no finders
involved in our distribution. Officers, directors, affiliates or anyone involved
in marketing the shares will not be allowed to purchase shares in the offering.
You will not have the right to withdraw your funds during the offering. You will
only have the right to have your funds returned if we do not raise the minimum
amount of the offering or there would be a change in the material terms of the
offering. The following are material terms that would allow you to be entitled
to a refund of your money:
* extension
of the offering period beyond 270 days;
* change
in the offering price;
* change
in the minimum sales requirement;
* change
to allow sales to affiliates in order to meet the minimum sales
requirement;
*
|
change
in the amount of proceeds necessary to release the proceeds held in the
separate bank account
|
We will
sell the shares in this offering through Mr. Yuchun Bai, one of our officers and
directors. He will receive no commission from the sale of any shares.
He will not register as a broker/dealer under section 15 of the Securities
Exchange Act of 1934 in reliance upon Rule 3a4-1. Rule 3a4-1 sets forth those
conditions under which a person associated with an issuer may participate in the
offering of the issuer
=
s securities
and not be deemed to be a broker/dealer. The conditions are that:
1. The
person is not statutorily disqualified, as that term is defined in Section
3(a)(39) of the Act, at the time of his participation; and,
-16-
2. The
person is not compensated in connection with his participation by the payment of
commissions or other remuneration based either directly or indirectly on
transactions in securities;
3. The
person is not at the time of their participation, an associated person of a
broker/dealer; and,
4. The
person meets the conditions of Paragraph (a)(4)(ii) of Rule 3a4-1 of the
Exchange Act, in that he (A) primarily performs, or is intended primarily to
perform at the end of the offering, substantial duties for or on behalf of the
issuer otherwise than in connection with transactions in securities; and (B) is
not a broker or dealer, or an associated person of a broker or dealer, within
the preceding twelve (12) months; and (C) do not participate in selling and
offering of securities for any issuer more than once every twelve (12) months
other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
Mr. Bai
is not statutorily disqualified, is not being compensated, and is not associated
with a broker/dealer. He is and will continue to be one of two officers and
directors at the end of the offering and has not been during the last twelve
months and is currently not a broker/dealer or associated with a
broker/dealer. He will not participate in selling and offering
securities for any issuer more than once every twelve months.
Only
after our registration statement is declared effective by the SEC, do we intend
to advertise, through tombstones, and hold investment meetings. We will not
utilize the Internet to advertise our offering. Mr. Bai will also distribute the
prospectus to potential investors at the meetings, to business associates and to
his friends and relatives who are interested in us and a possible investment in
the offering. No shares purchased in this offering will be subject to any kind
of lock-up agreement.
Management
and affiliates thereof will not purchase shares in this offering to reach the
minimum.
We intend
to sell our shares outside the United States.
Section
15(g) of the Exchange Act - Penny Stock Disclosure
Our
shares are
A
penny
stocks
@
covered by section 15(g) of the Securities Exchange Act of 1934, as amended, and
Rules 15g-1 through 15g-6 promulgated thereunder. They imposes additional sales
practice requirements on broker/dealers who sell such securities to persons
other than established customers and accredited investors (generally
institutions with assets in excess of $1,000,000 or individuals with net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouses). For transactions covered by the Rule, the broker/dealer
must make a special suitability determination for the purchase and have received
the purchaser
=
s written
agreement to the transaction prior to the sale. Consequently, the Rule may
affect the ability of broker/dealers to sell our securities and also may affect
your ability to resell your shares.
Section
15(g) also imposes additional sales practice requirements on broker/dealers who
sell penny securities. These rules require a one page summary of certain
essential items. The items include the risk of investing in penny stocks in both
public offerings and secondary marketing; terms important to in understanding of
the function of the penny stock market, such as
A
bid
@
and
A
offer
@
quotes, a
dealers
A
spread
@
and
broker/dealer compensation; the broker/dealer compensation, the broker/dealers
duties to its customers, including the disclosures required by any other penny
stock disclosure rules,
-17-
the
customers rights and remedies in causes of fraud in penny stock transactions;
and, the FINRA
=
s toll free
telephone number and the central number of the North American Administrators
Association, for information on the disciplinary history of broker/dealers and
their associated persons. While Section 15g and Rules 15g-1 through 15g-6 apply
to broker/dealers, they do not apply to us.
Rule
15g-1 exempts a number of specific transactions from the scope of the penny
stock rules.
Rule
15g-2 declares unlawful broker/dealer transactions in penny stocks unless the
broker/dealer has first provided to the customer a standardized disclosure
document.
Rule
15g-3 provides that it is unlawful for a broker/dealer to engage in a penny
stock transaction unless the broker/dealer first discloses and subsequently
confirms to the customer current quotation prices or similar market information
concerning the penny stock in question.
Rule
15g-4 prohibits broker/dealers from completing penny stock transactions for a
customer unless the broker/dealer first discloses to the customer the amount of
compensation or other remuneration received as a result of the penny stock
transaction.
Rule
15g-5 requires that a broker/dealer executing a penny stock transaction, other
than one exempt under Rule 15g-1, disclose to its customer, at the time of or
prior to the transaction, information about the sales persons
compensation.
Rule
15g-6 requires broker/dealers selling penny stocks to provide their customers
with monthly account statements.
Again,
the foregoing rules apply to broker/dealers. They do not apply to us in any
manner whatsoever. Again, the application of the penny stock rules may affect
your ability to resell your shares. The application of the penny stock rules may
affect your ability to resell your shares because many brokers are unwilling to
buy, sell or trade penny stocks as a result of the additional sales practices
imposed upon them which are described in this section.
Regulation
M
We are
subject to Regulation M of the Securities Exchange Act of 1934. Regulation M
governs activities of underwriters, issuers, selling security holders, and
others in connection with offerings of securities. Regulation M prohibits
distribution participants and their affiliated purchasers from bidding for
purchasing or attempting to induce any person to bid for or purchase the
securities being distributed.
Offering Period and Expiration
Date
This
offering will start on the date that this registration statement is declared
effective by the SEC and continue for a period of 270 days, or unless the
offering is completed or otherwise terminated by us.
We
will not accept any money until this registration statement is declared
effective by the SEC.
-18-
Procedures for
Subscribing
We
will not accept any money until this registration statement is declared
effective by the SEC. Once the registration statement is declared effective by
the SEC, if you decide to subscribe for any shares in this offering, you
must
1.
execute and deliver a subscription agreement, a copy of which is included with
the prospectus.
2.
deliver a check or certified funds to us for acceptance or
rejection.
All
checks for subscriptions must be made payable to
A
MULTIPLAYER
ONLINE DRAGON INC.
@
Right
to Reject Subscriptions
We have
the right to accept or reject subscriptions in whole or in part, for any reason
or for no reason. All monies from rejected subscriptions will be returned
immediately by us to the subscriber, without interest or deductions.
Subscriptions for securities will be accepted or rejected within 48 hours after
we receive them.
MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
We are a
start-up corporation and have not yet generated or realized any revenues from
our business operations. Our auditors have issued a going concern opinion. This
means that there is substantial doubt that we can continue as an on-going
business for the next twelve months unless we obtain additional capital to pay
our bills. This is because we have not generated any revenues and no revenues
are anticipated until we begin operations. There is no assurance we will ever
reach this point.
We are
not going to buy or sell any plant or significant equipment during the next
twelve months. We believe we can satisfy our cash requirements during the next
12 months. We do not expect to purchase or sell plant or significant equipment.
Further we do not expect significant changes in the number of
employees.
Results
of Operations
On March
1, 2009, we sold 10,000,000 restricted shares of common stock to Yang Kun Deng,
our president and a member of the board of directors and raised
$10,000.
Since
inception we have retained an auditor and attorney in connection with this
public offering. Further, we have started to map architecture and
review contracting and staffing needs
We have
no revenues. Our expenses were primarily accounting and auditing
fees.
-19-
Plan
of Operations
Our
specific goal is to begin developmental components of our business plan
including developing our website, developing software, designing and
implementing and marketing the collaborative search engine. We intend to
accomplish the foregoing through the following milestones:
1.
|
Overall
system design, incorporating hardware, software, connectivity functions,
operating system and user
interface.
|
2.
|
Complete
the software programming to run the search engine. Design the functional
prototype. Management expects to have this done by October 2009. We plan
to put this bid out to its subcontractor programmers in China. Begin
online beta testing. Completion date is estimated by December 2009.
Finalize any changes in the design and public launch. Completion date is
estimated by February 2010.
|
3.
|
Our
marketing program will include our website promotion and personal selling.
Our president, Mr. Deng, will do personal selling initially. He will be
responsible for all phases of our operations. We have budgeted between
$500 and $5,000 for marketing. Marketing will commence as soon as our beta
testing is completed.
|
4.
|
Within
6 months from the initiation of our marketing program, we believe that we
will begin generating fees from the sale of advertising on our
system.
|
In
summary, we should be generating fees from the sale of advertising within 15
months from the date of this prospectus.
Limited
Operating History; Need for Additional Capital
There is
no historical financial information about us upon which to base an evaluation of
our performance. We have not generated any revenues from operations. We cannot
guarantee we will be successful in our business operations. Our business is
subject to risks inherent in the establishment of a new business enterprise,
including limited capital resources and possible cost overruns due to price and
cost increases in services.
To become
profitable and competitive, we have to be able to attract customers and generate
revenues. We have no assurance that future financing will be available to us on
acceptable terms. If financing is not available on satisfactory terms, we may be
unable to continue, develop or expand our operations. Equity financing could
result in additional dilution to existing shareholders.
Liquidity
and Capital Resources
As of the
date of this prospectus, we have not generated any revenues. We are currently in
the start-up stage of our operations.
To meet
our initial need for cash we sold 10,000,000 restricted shares of common stock
to Yuan Kun Deng, our president and a member of the board of directors, in
consideration of $10,000.
-20-
At the
present time, we have not made any arrangements to raise additional cash other
than this offering. If we need additional cash and can
=
t raise it
we will either have to suspend operations until we do raise the cash, or cease
operations entirely. Other than as described in this paragraph, we have no other
financing plans.
As of
March 31, 2009 our total assets were $9,862 comprised only of cash and our total
liabilities were $8,400.
-21-
BUSINESS
General
We were
incorporated in the State of Nevada on July 3, 2008. We maintain our statutory
registered agent
=
s office at
The Corporation Trust Company of Nevada, 6100 Neil Road, Suite 500, Reno, Nevada
89511 and our business office is located at 12F, World Trade Centre, No. 25
Tongxing Street, Zhongshan District, Dalian, China 116001. This is our mailing
address as well. Our telephone number is 011-86-130-798-88886. This
is Mr. Deng
=
s
office. We use this space on a rent free basis.
We have
no revenues, have achieved losses since inception, have no operations, have been
issued a going concern opinion and rely upon the sale of our securities and
loans from our officers and directors to fund operations.
Our goal
is to create, host and launch a collaborative Internet search
engine. The Internet is a world-wide medium of interconnected
electronic and/or computer networks. Individuals and companies have recently
recognized that the communication capabilities of the Internet provide a medium
for not only the promotion and communication of ideas and concepts, but also for
the presentation and sale of information, goods and services.
We do not
intend to engage in a merger or acquisition. Further we do not intend to enter
into a business combination, change of control or similar
transaction.
Collaborative
Search Engine Description
A
collaborative search engine uses inputs from other users to assist people to
find resources on the Internet. Management believes it performs some unique
functions that are not currently available on other search engine. The search
engine will have a software code contained within in a host
platform. The code may be centralized or spread over a network,
depending on the design finally chosen. The search engine will be
designed as a device to include:
*
|
Advanced
Search Functionality
B
enables users to construct more complex queries, for example by using
Boolean logic or restricting results to languages, countries or web
sites.
|
*
|
Spell
Checker
B
suggests alternate search terms when a search appears to contain
misspellings or typing errors.
|
*
|
Web
Page Translation
B
automatically translates web pages published in French, German, Italian,
Portuguese and Spanish into English, or vice
versa.
|
*
|
Stock
Quotes
B
Provides links to stock and mutual fund
information.
|
*
|
Street
Maps
B
provides links to street maps and
directions.
|
*
|
Calculator
B
solves math problems involving basic arithmetic, complicated math or
physical constants and converts between units of
measure.
|
-22-
*
|
Definitions
B
provides definitions for words or phrases based on content we have
indexed.
|
*
|
PhoneBook
B
provides U.S. street addresses and phone numbers for U.S. businesses and
residences.
|
*
|
Search
by Number
B
enables people to conduct quick searches by entering FedEx, UPS and USPS
package tracking numbers, vehicle ID numbers, product codes, telephone
area codes, patent numbers, FAA airplane registration numbers and FCC
equipment ID numbers.
|
*
|
Travel
Information
B
enables people to check the status of U.S. airline flights and see delays
and weather conditions at U.S.
airports.
|
*
|
Cached
Links
B
provides snapshots of web pages taken when the pages were indexed,
enabling web users to view web pages that are no longer
available.
|
We intend
to sell space for advertising on the search engine website. The fee
for the space will be determined as soon as the search engine is
activated. Based upon demand, we will adjust our prices
accordingly.
Development
The
search engine and flowcharts of the software programming were designed in Dalian
China. We intend to write code for the search engine in Asia where
the cost is less than in the United States or China. We believe there are a
number of software companies who are capable of producing the code for the
search engine.
Distribution
We intend
to distribute the search engine on our website over the Internet.
Intellectual
Property
We intend
to rely on a combination of patent, trademark, copyright and trade secret laws
in the U.S. and other jurisdictions as well as confidentiality procedures and
contractual provisions to protect our proprietary technology. We also intend to
enter into confidentiality and invention assignment agreements with our future
employees and consultants and confidentiality agreements with other third
parties, and we intend to rigorously control access to proprietary
technology.
Circumstances
outside our control could pose a threat to our intellectual property rights. For
example, effective intellectual property protection may not be available in
every country in which our products and services are distributed. Also, the
efforts we have taken to protect our proprietary rights may not be sufficient or
effective. Any significant impairment of our intellectual property rights could
harm our business or our ability to compete. Also, protecting our intellectual
property rights is costly and time consuming. Any increase in the unauthorized
use of our intellectual property could make it more expensive to do business and
harm our operating results.
-23-
Companies in the Internet, technology
and media industries own large numbers of patents, copyrights and trademarks and
frequently enter into litigation based on allegations of infringement or other
violations of intellectual property rights. Also, we will be faced increasing
competition and the possibility of intellectual property claims. Our
technologies may not be able to withstand any third-party claims or rights
against their use.
Government
Regulation
We are
subject to a number of foreign and domestic laws that affect companies
conducting business on the Internet. In addition, because of the increasing
popularity of the Internet and the growth of online services, laws relating to
user privacy, freedom of expression, content, advertising, information security
and intellectual property rights are being debated and considered for adoption
by many countries throughout the world.
In the
U.S., laws relating to the liability of providers of online services for
activities of their users are currently being tested by a number of claims,
which include actions for defamation, libel, invasion of privacy and other data
protection claims, tort, unlawful activity, copyright or trademark infringement,
or other theories based on the nature and content of the materials searched and
the ads posted or the content generated by users. In addition, several other
federal laws could have an impact on our business. For example, the Digital
Millennium Copyright Act has provisions that limit, but do not eliminate, our
liability for listing or linking to third-party web sites that include materials
that infringe copyrights or other rights, so long as we comply with the
statutory requirements of this act. The Children
=
s Online
Protection Act and the Children
=
s Online
Privacy Protection Act restrict the distribution of materials considered harmful
to children and impose additional restrictions on the ability of online services
to collect information from minors. In addition, the Protection of Children from
Sexual Predators Act of 1998 requires online service providers to report
evidence of violations of federal child pornography laws under certain
circumstances.
In
addition, the application of existing laws regulating or requiring licenses for
certain businesses of our advertisers, including, for example, distribution of
pharmaceuticals, adult content, financial services, alcohol or firearms, can be
unclear. Existing or new legislation could expose us to substantial liability
and restrict our ability to deliver services to our users.
We are
also subject to international laws associated with data protection in Europe and
elsewhere and the interpretation and application of data protection laws is
still uncertain and in flux. In addition, because our services are accessible
worldwide, foreign jurisdictions may claim that we are required to comply with
their laws.
Website
We intend
to hire a designer to develop our website. We believe the cost will be between
$500 and $5,000 depending on the sophistication thereof. We have not
selected a designer as of the date hereof and will not do so until we complete
this public offering.
-24-
We intend
to sell advertising on our website and process orders by credit card payments
thereon. To ensure the security of transactions occurring over the
Internet, U.S. federal regulations require that any computer software used
within the United States contain a 128-bit encoding encryption, while any
computer software exported to a foreign country contain a 40-bit encoding
encryption. There is uncertainty as to whether the 128-bit encoding encryption
required by the U.S. is sufficient security for transactions occurring over the
Internet. Accordingly, there is a danger that any financial (credit card)
transaction via the Internet will not be a secure transaction. Accordingly,
risks such as the loss of data or loss of service on the Internet from technical
failure or criminal acts are now being considered in the system specifications
and in the security precautions in the development of the website. There is no
assurance that such security precautions will be successful.
Other
than investigating potential technologies in support of our business purpose, we
have had no material business operations since inception July 3, 2008. At
present, we have yet to acquire or develop the necessary technology assets in
support of our business purpose to become an Internet-based
business.
Revenues
We will
generate all of our revenues from advertising. Our potential
advertisers will be able terminate their contracts with us at any time.
Advertisers will not continue to do business with us if their investment in
advertising with us does not generate sales leads, and ultimately customers, or
if we do not deliver their advertisements in an appropriate and effective
manner. If we are unable to remain competitive and provide value to our
advertisers, they may stop placing ads with us, which would negatively affect
our revenues and business.
Convenient
Search Experience
Current
Internet search technology gives rise to many erroneous and irrelevant results,
much resources and efforts have been spent to refine the user experience. Our
system will use user inputs in real time to increase search power. Additionally,
the advertising sold on search sites have a very low (less than .01%) click
through rate and low conversion rate after the advertising link is clicked
(commonly estimated at 1-3%). Additional knowledge factors aimed at increasing
relevance of search results will also increase value for advertisers to reach
their intended audience.
Customer
Service
We intend
to provide a customer service department via email where users can resolve
questions about the use of our search engine.
Downloading
the system
The user
will be able to download the system and install it as an add-on to Internet
browser software. There are several types of browsers, and several versions of
each type. This may require additional coding for each specific type and
version.
-25-
Competition
We will
face formidable competition in every aspect of our business, and particularly
from other companies that seek to connect people with information on the web and
provide them with relevant advertising.
We will also face competition from
other web search providers, including companies that are not yet known to us. We
compete with Internet advertising companies, particularly in the areas of
pay-for-performance and keyword-targeted Internet advertising. We may compete
with companies that sell products and services online because these companies,
like us, are trying to attract users to their web sites to search for
information about products and services. In addition to Internet companies, we
face competition from companies that offer traditional media advertising
opportunities.
We will compete to attract and retain
relationships with users, advertisers and web sites. The bases on which we
compete differ among the groups.
*
|
Users.
We will compete
to attract and retain users of our search and communication products and
services. Most of the services we will offer to users are free, so we do
not compete on price. Instead, we compete in this area on the basis of the
relevance and usefulness of our search results and the features,
availability and ease of use of our products and
services.
|
*
|
Advertisers.
We will
compete to attract and retain advertisers. We will compete in this area
principally on the basis of the return on investment realized by
advertisers using our AdWords program. We will also compete based on the
quality of customer service and
features.
|
*
|
Web sites.
We compete
to attract and retain web sites.
|
We
believe that we will be able compete favorably on the factors described above.
However, our industry is evolving rapidly and is becoming increasingly
competitive.
Marketing
We intend
to market our search engine on our website, advertising and through
traditional sources such as magazines, newspapers and flyers/mailers in the
United States, provided we have available advertising dollars. We may
utilize inbound links that connect directly to our website from other sites.
Potential customers can simply click on these links to become connected to our
website from community and affinity sites.
Insurance
We do not
maintain any insurance and do not intend to maintain insurance in the
future. Because we do not have any insurance, if we are made a party
of a products liability action, we may not have sufficient funds to defend the
litigation. If that occurs a judgment could be rendered against us
which could cause us to cease operations.
-26-
Government
Regulation
We are
not currently subject to direct federal, state or local regulation other than
regulations applicable to businesses generally or directly applicable to
electronic commerce or electronic devices generally. However, the Internet is
increasingly popular. As a result, it is possible that a number of laws and
regulations may be adopted with respect to the Internet. These laws may cover
issues such as user privacy, freedom of expression, pricing, content and quality
of products and services, taxation, advertising, intellectual property rights
and information security. Furthermore, the growth of electronic commerce may
prompt calls for more stringent consumer protection laws. Several states have
proposed legislation to limit the uses of personal user information gathered
online or require online services to establish privacy policies. The Federal
Trade Commission has also initiated action against at least one online service
regarding the manner in which personal information is collected from users and
provided to third parties. We will not provide personal information regarding
our users to third parties. However, the adoption of such consumer protection
laws could create uncertainty in Web usage and reduce the demand for our
products.
We are
not certain how business may be affected by the application of existing laws
governing issues such as property ownership, copyrights, encryption and other
intellectual property issues, and import and export matters. The vast majority
of such laws were adopted prior to the advent of the Internet. As a result, they
do not contemplate or address the unique issues of the Internet and related
technologies. Changes in laws intended to address such issues could create
uncertainty in the Internet market place. Such uncertainty could reduce demand
for services or increase the cost of doing business as a result of litigation
costs or increased service delivery costs. In addition, because our services are
available over the Internet in multiple states and foreign countries, other
jurisdictions may claim that we are required to qualify to do business in each
such state or foreign country. We are qualified to do business only in Nevada.
Our failure to qualify in a jurisdiction where it is required to do so could
subject it to taxes and penalties. It could also hamper our ability to enforce
contracts in such jurisdictions. The application of laws or regulations from
jurisdictions whose laws currently apply to our business could have a material
adverse affect on our business, results of operations and financial
condition.
Other
than the foregoing, no governmental approval is needed for the release of our
search engine.
Employees;
Identification of Certain Significant Employees
We are a
development stage company and currently have no employees, other than our
officers and directors. We intend to hire additional employees on an
as needed basis.
Offices
12F,
World Trade Centre, No. 25 Tongxing Street, Zhongshan District, Dalian, China
116001. This is our mailing address as well. Our telephone number is
011-86-130-798-88886. This is Mr. Deng
=
s
office. We use this space on a rent free basis.
-27-
MANAGEMENT
The
names, addresses, ages and positions of our present officers and directors are
set forth below:
Name
and Address
|
Age
|
Position(s)
|
Yuan
Kun Deng
|
55
|
president,
principal executive officer, principal
|
12F
World Trade Centre
|
|
financial
officer, principal accounting officer,
|
No.
25 Tongxing Street
|
|
and
a member of the board of directors
|
Zhongshan
District, Dalian
|
|
|
Peoples
Republic of China 116001
|
|
|
|
|
|
Yuchun
Bai
|
31
|
secretary,
treasurer, and a member of the board
|
#123
Xian Ren Dong Zheng Ma Dao
|
|
of
directors
|
Kou
Cun Da Ma Tun, Zhuang He Shi,
|
|
|
Liao
Ning, China
|
|
|
The
persons named above have held their offices/positions since inception of our
company and are expected to hold their offices/positions until the next annual
meeting of our stockholders.
Background
of our officers and directors
Yuan
Kun Deng, President, Principal Executive Officer, Principal Financial Officer,
Principal Accounting Officer and a member of the Board of Directors
Since
July 3, 2008, our inception, Yuan Kun Deng has been our president, principal
executive officer, principal financial officer, principal accounting officer and
a member of the board of directors. Since October 23, 2007, Mr. Deng has been
president, principal executive officer, secretary, treasurer, principal
financial officer, principal accounting officer, and sole member of the board of
directors of Earth Dragon Resources Inc. a Nevada exploration stage corporation
engaged in the search for mineral deposits or reserves. Earth Dragon Resources
Inc. is listed for trading on the Bulletin Board operated by the Financial
Industry Regulatory Authority (FINRA) under the symbol EARH. Since
January 1983, Mr. Deng has been managing investments in real estate, securities,
restaurants, agriculture, marine horticulture and retail outlets for himself and
unrelated third parties. Since January 1983, Mr. Deng has been
managing investments in real estate, securities, restaurants, agriculture,
marine horticulture and retail outlets for himself and unrelated third
parties
Yuchun
Bai, Secretary, Treasurer and a member of the Board of Directors
Since
October 23, 2007, our inception, Yuchun Bai has been our secretary, treasurer
and a member of the board of directors. Since March 2004, Mr. Bai has
been self employed as an independent computer hardware and software consultant,
installing and maintaining network systems.
During
the past five years, Messrs. Deng and Bai have not been the subject of the
following events:
-28-
1. Any
bankruptcy petition filed by or against any business of which Messrs. Deng and
Bai were a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time.
2. Any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding.
3. An
order, judgment, or decree, not subsequently reversed, suspended or vacated, or
any court of competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting Messrs. Deng
=
s and
Bai
=
s
involvement in any type of business, securities or banking
activities.
4. Found
by a court of competent jurisdiction (in a civil action), the Securities and
Exchange Commission or the Commodity Future Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not been
reversed, suspended or vacated.
Conflicts
of Interest
We believe Messrs Deng and Bai are not
subject to conflicts of interest. No policy has been
implemented or will be implemented to address conflicts of
interest.
EXECUTIVE
COMPENSATION
The
following table sets forth information with respect to compensation paid by us
to our officers from inception on July 3, 2008 through March 31,
2009.
Summary
Compensation Table
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|
|
|
|
|
|
|
Change
in
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
Value
&
|
|
|
|
|
|
|
|
|
|
Nonqual-
|
|
|
|
|
|
|
|
|
Non-Equity
|
ified
|
|
|
|
|
|
|
|
|
Incentive
|
Deferred
|
All
|
|
|
|
|
|
|
|
Plan
|
Compen-
|
Other
|
|
|
|
|
|
Stock
|
Option
|
Compen-
|
sation
|
Compen-
|
|
Name
and Principal
|
|
Salary
|
Bonus
|
Awards
|
Awards
|
sation
|
Earnings
|
sation
|
Totals
|
Position
[1]
|
Year
|
($)
|
($)
|
($)
|
($)
|
(S)
|
($)
|
($)
|
($)
|
Yuan
Kun Deng
|
2009
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
President,
CEO
|
2008
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
&
CFO
|
2007
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
|
|
|
|
|
|
|
|
|
Yuchun
Bai
|
2009
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Secretary
& Treasurer
|
2008
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
2007
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
As of the
date hereof, we have not entered into employment contracts with our officers and
do not intend to enter into any employment contracts until such time as it
profitable to do so.
-29-
The
following table sets forth information with respect to compensation paid by us
to our directors during the 2009 completed fiscal year. Our fiscal year end is
March 31.
Director
Compensation Table
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
|
|
|
|
Change
in
|
|
|
|
|
|
|
|
Pension
|
|
|
|
Fees
|
|
|
|
Value
and
|
|
|
|
Earned
|
|
|
Non-Equity
|
Nonqualified
|
All
|
|
|
or
|
|
|
Incentive
|
Deferred
|
Other
|
|
|
Paid
in
|
Stock
|
Option
|
Plan
|
Compensation
|
Compen-
|
|
|
Cash
|
Awards
|
Awards
|
Compensation
|
Earnings
|
sation
|
Total
|
Name
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
Yuan
Kun Deng
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Yuchun
Bai
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
All compensation received by our
officers and directors has been disclosed.
There are
no stock option, retirement, pension, or profit sharing plans for the benefit of
our officers and directors.
We have
no plans to pay any salaries to anyone until sufficient financing is
available.
Long-Term
Incentive Plan Awards
We do not
have any long-term incentive plans that provide compensation intended to serve
as incentive for performance.
Compensation
of Directors
Our
directors do not receive any compensation for serving as a member of the board
of directors.
Indemnification
Under our
Bylaws, we may indemnify an officer or director who is made a party to any
proceeding, including a lawsuit, because of his position, if he acted in good
faith and in a manner he reasonably believed to be in our best interest. We may
advance expenses incurred in defending a proceeding. To the extent that the
officer or director is successful on the merits in a proceeding as to which he
is to be indemnified, we must indemnify him against all expenses incurred,
including attorney
=
s fees. With
respect to a derivative action, indemnity may be made only for expenses actually
and reasonably incurred in defending the proceeding, and if the officer or
director is judged liable, only by a court order. The indemnification is
intended to be to the fullest extent permitted by the laws of the State of
Nevada.
-30-
Regarding
indemnification for liabilities arising under the Securities Act of 1933, which
may be permitted to directors or officers under Nevada law, we are informed
that, in the opinion of the Securities and Exchange Commission, indemnification
is against public policy, as expressed in the Act and is, therefore,
unenforceable.
PRINCIPAL
STOCKHOLDERS
The
following table sets forth, as of the date of this prospectus, the total number
of shares owned beneficially by our directors, officers and key employee,
individually and as a group, and the present owners of 5% or more of our total
outstanding shares. The table also reflects what their ownership will be
assuming completion of the sale of all shares in this offering. The stockholders
listed below have direct ownership of their shares.
|
|
|
Percentage
of
|
|
|
Number
of Shares
|
Ownership
|
|
Number
of
|
After
Offering
|
After
the Offering
|
Name
and Address
|
Shares
Before
|
Assuming
all of the
|
Assuming
all of the
|
Beneficial
Ownership
|
The
Offering
|
Shares
are Sold
|
Shares
are Sold
|
Yuan
Kun Deng
|
10,000,000
|
10,000,000
|
83.33%
|
12F
World Trade Centre
|
|
|
|
No.
25 Tongxing Street
|
|
|
|
Zhongshan
District, Dalian
|
|
|
|
Peoples
Republic of China 116001
|
|
|
|
|
|
|
|
Yuchun
Bai
|
0
|
0
|
0.00%
|
12F
World Trade Centre
|
|
|
|
No.
25 Tongxing Street
|
|
|
|
Zhongshan
District, Dalian
|
|
|
|
Peoples
Republic of China 116001
|
|
|
|
|
|
|
|
All
officers and directors as a group
|
10,000,000
|
10,000,000
|
83.33%
|
(2
persons)
|
|
|
|
Future
Sales by Existing Stockholders
10,000,000
shares of common stock were issued to Yuan Kun Deng our sole officer and
director on March 1, 2009. The 10,000,000 shares are restricted securities, as
defined in Rule 144 of the Rules and Regulations of the SEC promulgated under
the Securities Act. Under Rule 144, the restricted shares can be publicly sold
commencing six months after their acquisition provided we are not a
A
shell
company
@
as defined
in Rule 405 of the Securities Act of 1933. A shell company is defined
as a company that has no or nominal operations and has no or nominal assets or
its only asset is cash. The SEC has determined in Release No. 33-8869
that it was never its intention to capture a
A
startup
company
@
or in other
words a company with a limited operation history in the definition of a shell
company. We believe we are not a shell company since we are in the
startup phase of operations. However, the Financial Industry
Regulatory Authority (FINRA), which owns and operates the Bulletin
-31-
Board,
makes an independent examination and decision regarding shell company
status. FINRA has been notorious in determining that startup
companies are shell companies and has refused to allow its member firms (SEC
registered broker/dealers) to disseminate quotations for companies that do not
acknowledge they are shell companies, even though as a matter of law, they may
not in fact be shell companies. If we want our shares to be traded on
the Bulletin Board, we may have to represent to FINRA that we are a shell
company in order to allow quotations to be disseminated by FINRA
members.
Shares
purchased in this offering, which will be immediately resalable, and sales of
all of our other shares after applicable restrictions expire, could have a
depressive effect on the market price, if any, of our common stock and the
shares we are offering.
A total of 10,000,000 shares of our
stock are currently owned by Yuan Kun Deng, one of our officers and
directors. He will likely sell a portion of his stock if the
market price goes above $0.05. If he does sell his stock into the market, the
sales may cause the market price of the stock to drop. He will only
be able to sell his shares into a market, should it develop, if we are not a
shell company.
DESCRIPTION
OF SECURITIES
Common
Stock
Our
authorized capital stock consists of 75,000,000 shares of common stock, par
value $0.0001 per share. The holders of our common stock:
*
|
have
equal ratable rights to dividends from funds legally available if and when
declared by our board of directors;
|
*
|
are
entitled to share ratably in all of our assets available for distribution
to holders of common stock upon liquidation, dissolution or winding up of
our affairs;
|
*
|
do
not have preemptive, subscription or conversion rights and there are no
redemption or sinking fund provisions or rights;
and
|
*
|
are
entitled to one non-cumulative vote per share on all matters on which
stockholders may vote.
|
Non-cumulative
Voting
Holders
of shares of our common stock do not have cumulative voting rights, which means
that the holders of more than 50% of the outstanding shares, voting for the
election of directors, can elect all of the directors to be elected, if they so
choose, and, in that event, the holders of the remaining shares will not be able
to elect any of our directors. After this offering is completed, our present
stockholders will own approximately 83.33% of our outstanding
shares.
Cash
Dividends
As of the
date of this prospectus, we have not paid any cash dividends to stockholders.
The declaration of any future cash dividend will be at the discretion of our
board of directors and will depend upon our earnings, if any, our capital
requirements and financial position, our general economic conditions, and other
pertinent conditions. It is our present intention not to pay any cash dividends
in the foreseeable future, but rather to reinvest earnings, if any, in our
business operations.
-32-
Anti-Takeover
Provisions
There are
no Nevada anti-takeover provisions that may have the affect of delaying or
preventing a change in control. 78.378 through 78.3793 of the Nevada Revised
Statutes relates to control share acquisitions that may delay to make more
difficult acquisitions or changes in our control, however, they only apply when
we have 200 or more stockholders of record, at least 100 of whom have addresses
in the state of Nevada appearing on our stock ledger and we do business in this
state directly or through an affiliated corporation. Neither of the foregoing
events seems likely will occur. Currently, we have no Nevada shareholders and
since this offering will not be made in the state of Nevada, no shares will be
sold to Nevada residents. Further, we do not do business in Nevada directly or
through an affiliate corporation and we do not intend to do business in the
state of Nevada in the future. Accordingly, there are no anti-takeover
provisions that have the affect of delaying or preventing a change in our
control.
Reports
After we
complete this offering, we will not be required to furnish you with an annual
report. Further, we will not voluntarily send you an annual report. We will be
required to file reports with the SEC under section 15(d) of the Securities Act.
The reports will be filed electronically. The reports we will be required to
file are Forms 10-K, 10-Q, and 8-K. You may read copies of any materials we file
with the SEC at the SECs Public Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains an Internet site that will contain copies of the reports we file
electronically. The address for the Internet site is www.sec.gov.
Stock
Transfer Agent
Our stock
transfer agent for our securities will be Island Stock Transfer, 100 Second
Avenue S., Suite 104N, St. Petersburg, Florida 33701. Their telephone
number is (727) 289-0010.
CERTAIN
TRANSACTIONS
On March
1, 2009, we issued 10,000,000 shares of restricted common stock to Yuan Kun
Deng, our president in consideration of $10,000.00
From
inception to March 31, 2009, Yuan Kun Deng, our president, advanced $600 for our
operations. The advances are not evidenced by any written
documentation. Mr. Deng has agreed to accept repayment when we have
sufficient funds to do so. The advances by Mr. Deng are interest
free.
We use
approximately 10 square feet of office space at Mr. Deng
=
s office for
our office on a rent free basis.
Messrs.
Deng and Bai are our only promoters. They have not received and will not receive
anything of value from us, directly or indirectly in their capacity as
promoters.
-33-
LITIGATION
We are
not a party to any pending litigation and none is contemplated or
threatened.
EXPERTS
Our
financial statements for the period from inception to March 31, 2009, included
in this prospectus, have been audited by Michael T. Studer CPA P.C., Independent
Registered Public Accounting Firm, 18 East Sunrise Highway, Suite 311, Freeport,
New York 11520 as set forth in its report included in this prospectus. Its
report is given upon its authority as experts in accounting and
auditing.
LEGAL
MATTERS
The Law
Office of Conrad C. Lysiak, P.S., 601 West First Avenue, Suite 903, Spokane,
Washington 99201, telephone (509) 624-1475 has passed on the legality of the
shares of common stock being sold in this offering.
FINANCIAL
STATEMENTS
Our
fiscal year end is March 31. We will file audited financial statements with the
SEC. The financial statements will be audited by Michael T. Studer
CPA P.C., Independent Registered Public Accounting Firm, 18 East Sunrise
Highway, Suite 311, Freeport, New York 11520.
Our
financial statements from inception to March 31, 2009 (audited), immediately
follow:
-34-
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders of
Multiplayer
Online Dragon Inc.
I have
audited the accompanying balance sheet of Multiplayer Online Dragon Inc. (the
“Company”) as of March 31, 2009 and the related statements of operations,
stockholder’s equity, and cash flows for the period July 3, 2008 (inception) to
March 31, 2009. These financial statements are the responsibility of the
Company’s management. My responsibility is to express an opinion on these
financial statements based on my audit.
I
conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. I believe
that my audit provides a reasonable basis for my opinion.
In my
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Multiplayer Online Dragon Inc. as
of March 31, 2009 and the results of their operations and cash flows for the
period July 3, 2008 (inception) to March 31, 2009 in conformity with accounting
principles generally accepted in the United States.
The
accompanying financial statements referred to above have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company’s present financial situation raises
substantial doubt about its ability to continue as a going concern. Management’s
plans in regard to this matter are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
|
/s/ MICHAEL T. STUDER,
CPA, P.C.
|
|
Michael
T. Studer, CPA, P.C.
|
Freeport,
New York
June 4,
2009
F-1
-35-
Multiplayer
Online Dragon, Inc.
|
|
|
(A
Development Stage Company)
|
|
|
Balance
Sheet
|
|
|
(Expressed
in US Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
Current
Assets
|
|
|
|
Cash
|
$
|
9,862
|
Total
Assets
|
$
|
9,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDER'S EQUITY
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable and accrued liabilities
|
$
|
7,800
|
|
Due
to related party
|
|
600
|
Total
current liabilities
|
|
8,400
|
Stockholder's
Equity
|
|
|
|
Common
stock, $0.0001 par value
|
|
|
|
|
Authorized:
75,000,000 shares
|
|
|
|
|
Issued
and outstanding:
|
|
|
|
|
|
10,000,000
common shares
|
|
1,000
|
|
Additional
paid-in capital
|
|
9,000
|
|
Deficit
accumulated during
|
|
|
|
|
the
development stage
|
|
(8,538)
|
Total
stockholder's equity
|
|
1,462
|
Total
Liabilities and Stockholder's Equity
|
$
|
9,862
|
|
|
|
|
|
|
|
|
|
|
|
|
See
notes to financial statements.
|
|
|
F-2
-36-
Multiplayer
Online Dragon, Inc.
|
|
|
(A
Development Stage Company)
|
|
|
Statement
of Operations
|
|
|
(Expressed
in US Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
from
|
|
|
inception,
July 3,
|
|
|
2008
to March 31,
|
|
|
2009
|
|
|
|
Revenue
|
|
|
|
Revenue
|
$
|
-
|
Total
Revenue
|
|
-
|
|
|
|
Expenses
|
|
|
|
General
and administrative
|
|
8,538
|
Total
Costs and Expenses
|
|
8,538
|
Net
Loss
|
$
|
(8,538)
|
|
|
|
Net
Loss per share
|
|
|
|
Basic
and diluted
|
$
|
(0.00)
|
|
|
|
|
|
|
Number
of common shares used to
|
|
|
compute
loss per share
|
|
|
|
Basic
and Diluted
|
|
10,000,000
|
|
|
|
|
|
|
See
notes to financial statements.
|
|
|
F-3
-37-
Multiplayer
Online Dragon, Inc.
|
(A
Development Stage Company)
|
Statement
of Stockholder's Equity
|
For
the period July 3, 2008 (inception) to March 31, 2009
|
(Expressed
in US Dollars)
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
Common
Stock, $0.0001
|
|
Additional
|
|
During
the
|
|
Total
|
|
Par
Value
|
|
Paid-in
|
|
Development
|
|
Stockholder’s
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Stage
|
|
Equity
|
Balance,
July 3, 2008 (Date of Inception)
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
Shares
sold at $0.001 per share
|
|
|
|
|
|
|
|
|
|
|
on
March 1, 2008
|
10,000,000
|
|
1,000
|
|
9,000
|
|
-
|
|
10,000
|
Net
loss for the period July 3, 2008 (Inception)
|
|
|
|
|
|
|
|
|
|
|
to
March 31, 2009
|
-
|
|
-
|
|
-
|
|
(8,538)
|
|
(8,538)
|
Balance,
March 31, 2009
|
10,000,000
|
$
|
1,000
|
$
|
9,000
|
$
|
(8,538)
|
$
|
1,462
|
|
|
|
|
|
|
|
|
|
|
See
notes to financial statements.
|
|
|
|
|
|
|
|
|
|
F-4
-38-
Multiplayer
Online Dragon, Inc.
|
|
|
(A
Development Stage Company)
|
|
|
Statement
of Cash Flows
|
|
|
(Expressed
in US Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
from
|
|
|
inception,
July 3,
|
|
|
2008
to March
|
|
|
31,
2009
|
|
|
|
Cash
Flows from Operating Activities
|
|
|
|
Net
income (loss)
|
$
|
(8,538)
|
|
Changes
in operating assets and liabilities
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
7,800
|
Net
cash provided by (used for) operating activities
|
|
(738)
|
Cash
Flows from Financing Activities
|
|
|
|
Loans
from related party
|
|
600
|
|
Proceeds
from sales of common stock
|
|
10,000
|
Net
cash provided by (used for) financing activities
|
|
10,600
|
Increase
(decrease) in cash
|
|
9,862
|
|
|
|
Cash,
beginning of period
|
|
-
|
|
|
|
Cash,
end of period
|
$
|
9,862
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Interest
paid
|
$
|
-
|
|
Income
taxes paid
|
$
|
-
|
|
|
|
|
|
|
See
notes to financial statements.
|
|
|
F-5
-39-
MULTIPLAYER
ONLINE DRAGON, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES TO
FINANCIAL STATEMENTS
March 31,
2009
(Expressed
in US Dollars)
1. OPERATIONS
Organization
The
Company was incorporated in the State of Nevada, on July 3, 2008. The principal
activity of the Company is designing, hosting, and marketing collaborative
internet search communications systems. The Company is considered a development
stage company as defined in SFAS No.7. The Company has its executive
office in The People’s Republic of China and another in Vancouver,
Canada.
Going Concern
The
accompanying financial statements have been prepared on a going concern basis,
which assumes the Company will continue to realize its assets and discharge its
liabilities in the normal course of business. At March 31, 2009, the Company had
cash of $9,862 and working capital and stockholder’s equity of $1,462. Further,
the Company has incurred a net loss of $8,538 for the period from July 3, 2008
(inception) to March 31, 2009. These factors raise substantial doubt
regarding the Company’s ability to continue as a going concern. These financial
statements do not include any adjustments to the recoverability and
classification of recorded asset amounts and classification of liabilities that
might be necessary should the Company be unable to continue as a going
concern.
Management
plans to raise additional capital in a public offering of shares of its common
stock (see note 6). However, there is no assurance that it will be successful in
accomplishing this objective.
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
The
financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States of
America.
a) Cash
Cash
consists of cash on deposit with a high quality major financial
institution.
b) Use
of Estimates and Assumptions
The
preparation of financial statements in conformity with United States 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 could differ from those estimates.
F-6
-40-
MULTIPLAYER
ONLINE DRAGON, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES TO
FINANCIAL STATEMENTS
March 31,
2009
(Expressed
in US Dollars)
c) Financial
Instruments
The
carrying values of the Company’s financial instruments, consisting of cash,
accounts payable and accrued liabilities, and due to related party, approximate
their fair value because of the short maturity of these instruments. The
Company’s operations are outside the United States and some of its assets and
liabilities have exposure to market risks from changes in foreign currency
rates. The Company’s financial risk is the risk that arises from fluctuations in
foreign exchange rates and the degree of volatility of these rates. Currently,
the Company does not use derivative instruments to reduce its exposure to
foreign currency risk.
d) Income
Taxes
The
Company uses the asset and liability method of accounting for income taxes in
accordance with SFAS No. 109 – “Accounting for Income Taxes”. This
standard requires the use of an asset and liability approach for financial
accounting and reporting on income taxes. If it is more likely than
not that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized.
e) Foreign
Currency Translation
The
Company’s reporting and functional currency is the U.S.
dollar. Canadian dollar transactions are translated at the exchange
rate prevailing at the time of the transaction. Canadian dollar monetary assets
and liabilities are translated at period-end exchange rates and exchange gains
and losses are reflected in operations.
f) Basic
and Diluted Net Loss Per Share
The
Company reports basic loss per share in accordance with SFAS No. 128 – “Earnings
Per Share”. Basic loss per share is computed using the weighted
average number of shares of common stock outstanding during the
period. Diluted loss per share is computed using the weighted average
number of shares of common stock and potentially dilutive securities outstanding
during the period. The Company has no stock option plan and has
not issued any warrants or other potentially dilutive securities.
3. DUE
TO RELATED PARTY
At March
31, 2009, the Company is indebted to the President of the Company for cash
advances of $600. The amount is unsecured, non-interest bearing and has no
specific terms of repayment.
4. COMMON
STOCK
On March
1, 2009, the Company sold 10,000,000 shares of common stock to its president and
director at a price of $0.001 per share for cash proceeds of
$10,000.
F-7
-41-
MULTIPLAYER
ONLINE DRAGON, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES TO
FINANCIAL STATEMENTS
March 31,
2009
(Expressed
in US Dollars)
The
Company has no stock option plan and has not issued any warrants or other
potentially dilutive securities.
5. INCOME
TAXES
Potential
benefits of income tax losses are not recognized in the accounts until
realization is more likely than not. At March 31, 2009, the Company has a net
operating loss carryforward of $8,538, which expires in
2029. Pursuant to SFAS No. 109 the Company is required to compute tax
asset benefits for net operating losses carried forward. Potential benefit of
net operating losses have not been recognized in these financial statements
because the Company cannot be assured it is more likely than not it will utilize
the net operating losses carried forward in future years. At March 31, 2009, the
valuation allowance established against the deferred tax assets was
$2,988.
The components of the net deferred tax
asset at March 31, 2009 are as follows:
Net
operating loss carryforward
|
$
|
2,988
|
Valuation
allowance
|
|
(2,988)
|
Net
deferred tax asset
|
$
|
-
|
For the
period July 3, 2008 (inception) to March 31, 2009, a reconciliation of the
United States statutory tax rate to the effective tax rate follows:
Statutory tax
rate
|
35%
|
Increase
in valuation allowance
|
(35%)
|
Effective
tax rate
|
0%
|
6. SUBSEQUENT
EVENTS
On April
17, 2009, the Company resolved to undertake the preparation and filing of a
registration statement with the United States Securities and Exchange Commission
(the “SEC”) to conduct a public offering. The offering is planned to
be to 2,000,000 shares of its common stock at a price of $0.05 per share, or
$100,000 total. The offering is planned to be on a “best efforts, all or none”
basis with respect to the first 1,000,000 shares ($50,000) and on a “best
efforts” basis with respect to the remaining 1,000,000 shares
($50,000).
On April
24, 2009, the Company executed a retainer agreement with a law firm to prepare
and file a Form S-1 registration statement in connection with its planned public
offering. The agreement provides for a $15,000 payment to the law firm upon
execution of the agreement (which was paid in April 2009) and a $10,000 payment
when the Form S-1 registration statement is declared effective by the
SEC.
F-8
-42-
Until
________________, 2009, ninety days after the date of this prospectus, all
dealers effecting transactions in our registered securities, whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
-43-
PART
II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM
13. OTHER EXPENSES OF ISSUANCE AND
DISTRIBUTION.
The
estimated expenses of the offering (assuming all shares are sold), all of which
are to be paid by the registrant, are as follows:
SEC
Registration Fee
|
$
|
5.58
|
Printing
Expenses
|
|
200.00
|
Accounting
Fees and Expenses
|
|
14,094.42
|
Legal
Fees and Expenses
|
|
25,000.00
|
Blue
Sky Fees/Expenses
|
|
500.00
|
Transfer
Agent Fees
|
|
200.00
|
TOTAL
|
$
|
40,000.00
|
ITEM
14. INDEMNIFICATION OF DIRECTORS AND
OFFICERS.
The only
statute, charter provision, bylaw, contract, or other arrangement under which
any controlling person, director or officer of the registrant is insured or
indemnified in any manner against any liability which he may incur in his
capacity as such, is as follows:
1. Article
IX of our Bylaws filed as Exhibit 3.2 to this registration
statement.
2. Nevada
Revised Statutes, Chapter 78.
The
general effect of the foregoing is to indemnify a control person, officer or
director from liability, thereby making the company responsible for any expenses
or damages incurred by such control person, officer or director in any action
brought against them based on their conduct in such capacity, provided they did
not engage in fraud or criminal activity.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 (the
A
Act
@
) may be
permitted to directors, officers, and controlling persons against liability
under the Act, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
ITEM
15.
RECENT SALES OF UNREGISTERED
SECURITIES.
During
the past three years, the registrant has sold the following securities which
were not registered under the Securities Act of 1933, as amended.
Name
and Address
|
Date
|
Shares
|
Consideration
|
Yuan
Kun Deng
|
March
31, 2009
|
10,000,000
|
Cash
of $10,000.00
|
12F
World Trade Centre
|
|
|
|
No.
25 Tongxing Street
|
|
|
|
Zhongshan
District, Dalian
|
|
|
|
Peoples
Republic of China 116001
|
|
|
|
-44-
We issued the foregoing restricted
shares of common stock to Mr. Deng pursuant to Regulation S of the Securities
Act of 1933. The sale of the shares to Mr. Deng took place outside the United
States of America and Mr. Deng is a non-US person as defined in Regulation S.
Further, no commissions were paid to anyone in connection with the sale of the
shares and general solicitation was not made to anyone.
ITEM
16. EXHIBITS.
The
following Exhibits are filed as part of this Registration Statement, pursuant to
Item 601 of Regulation S-K. All Exhibits have been previously filed unless
otherwise noted.
Exhibit
No.
|
Document
Description
|
3.1
|
Articles
of Incorporation.
|
3.2
|
Bylaws.
|
4.1
|
Specimen
Stock Certificate.
|
5.1
|
Opinion
of The Law Office of Conrad C. Lysiak, P.S. regarding the legality of the
securities being registered.
|
23.1
|
Consent
of Michael Studer CPA P.C., Independent Registered Public Accounting
Firm.
|
23.2
|
Consent
of The Law Office of Conrad C. Lysiak, P.S.
|
99.1
|
Subscription
Agreement.
|
ITEM
17. UNDERTAKINGS.
A.
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
to:
|
|
(a)
|
include
any prospectus required by Section 10(a)(3) of the Securities
Act;
|
|
(b)
|
reflect
in the prospectus any facts or events arising after the effective date of
this registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in this registration statement.
Notwithstanding the foregoing, any increase or decrease in the 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) under
the Securities Act if, in the aggregate, the changes in volume and price
represent no more than a 20% change in maximum aggregate offering price
set forth in the
A
Calculation
of Registration Fee
@
table
in the effective registration statement;
and
|
|
(c)
|
include
any additional or changed material information with respect to the plan of
distribution.
|
-45-
|
(2)
|
That,
for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and 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.
|
|
(4)
|
To
provide to the underwriters at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names
as required by the underwriter to permit prompt delivery to each
purchaser.
|
|
(5)
|
For
purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared
effective.
|
|
(6)
|
For
the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus 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.
|
|
(7)
|
For
the purpose of determining liability under the Securities Act to any
purchaser:
|
|
|
Each
prospectus filed pursuant to Rule 424(b) under the Securities Act as part
of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses
filed in reliance on Rule 430A (
'
'
230.430A
of this chapter), shall be deemed to be part of and included in the
registration statement as of the date it is first used after
effectiveness.
Provided
however,
that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to
such first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such date of
first use.
|
|
(8)
|
For
the purpose of determining liability of the registrant under the
Securities Act to any purchaser in the initial distribution of
securities:
|
|
The
undersigned registrant undertakes that in a primary offering of securities
of the undersigned registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by
means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell
such securities to such purchaser:
|
-46-
|
(a)
|
Any
preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424 of this
chapter;
|
|
(b)
|
Any
free writing prospectus relating to the offering prepared by or on behalf
of the undersigned registrant or used or referred to by the undersigned
registrant;
|
|
(c)
|
The
portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant;
and
|
|
(d)
|
Any
other communication that is an offer in the offering made by the
undersigned registrant to the
purchaser.
|
B.
|
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the
small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officer or controlling person of
the small business issuer 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 small business issuer
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
|
C.
|
To
provide to the underwriter at the closing specified in the Underwriting
Agreement certificates in such denominations and registered in such names
as required by the underwriter to permit prompt delivery to each
purchaser.
|
D.
|
The
undersigned Registrant hereby undertakes
that:
|
|
(1)
|
For
purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared
effective.
|
|
(2)
|
For
the purpose of determining any liability under the Securities Act of 1933,
each post-effective amendment that contains a form of prospectus 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.
|
-47-
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing of this Form S-1 Registration Statement and has duly caused to this Form
S-1 Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Dalian, China, on this 10
th
day of
June, 2009.
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MULTIPLAYER
ONLINE DRAGON, INC.
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BY:
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YUAN KUN
DENG
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Yuan
Kun Deng
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President,
Principal Accounting Officer, Principal Executive Officer,
Principal Financial Officer and a member of the Board of
Directors
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KNOW ALL
MEN BY THESE PRESENT, that each person whose signature appears below constitutes
and appoints Yuan Kun Deng as true and lawful attorney-in-fact and agent, with
full power of substitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all amendment (including post-effective
amendments) to this registration statement, and to file the same, therewith,
with the Securities and Exchange Commission, and to make any and all state
securities law or blue sky filings, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in about the premises, as fully to all intents
and purposes as he might or could do in person, hereby ratifying the confirming
all that said attorney-in-fact and agent, or any substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this Form S-1 Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
Signature
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Title
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Date
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YUAN KUN
DENG
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President,
Principal Accounting Officer,
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June
10, 2009
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Yuan
Kun Deng
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Principal
Executive Officer, Principal Financial Officer and a member of the Board
of Directors
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YUCHUN
BAI
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Secretary,
Treasurer and a member of the
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June
10, 2009
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Yuchun
Bai
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Board
of Directors
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-48-
EXHIBIT
INDEX
Exhibit
No.
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Document
Description
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3.1
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Articles
of Incorporation.
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3.2
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Bylaws.
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4.1
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Specimen
Stock Certificate.
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5.1
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Opinion
of The Law Office of Conrad C. Lysiak, P.S. regarding the legality of the
securities being registered.
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23.1
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Consent
of Michael Studer CPA P.C., Independent Registered Public Accounting
Firm.
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23.2
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Consent
of The Law Office of Conrad C. Lysiak, P.S.
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99.1
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Subscription
Agreement.
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-49-
Exhibit 3.2
BYLAWS
OF
MULTIPLAYER ONLINE
DRAGON INC.
(the "Corporation")
ARTICLE I:
MEETINGS OF SHAREHOLDERS
Section 1 -
Annual
Meetings
The annual meeting of the
shareholders of the Corporation shall be held at the time fixed, from time to
time, by the Board of Directors.
Section 2 -
Special
Meetings
Special meetings of the
shareholders may be called by the Board of Directors or such person or persons
authorized by the Board of Directors.
Section 3 -
Place
of
Meetings
Meetings of shareholders
shall be held at the registered office of the Corporation, or at such other
places, within or without the State of Nevada as the Board of Directors may from
time to time fix.
Section 4 -
Notice of
Meetings
A notice convening an annual
or special meeting which specifies the place, day, and hour of the meeting, and
the general nature of the business of the meeting, must be faxed, personally
delivered or mailed postage prepaid to each shareholder of the Corporation
entitled to vote at the meeting at the address of the shareholder as it appears
on the stock transfer ledger of the Corporation, at least ten (10) days prior to
the meeting. Accidental omission to give notice of a meeting to, or the
non-receipt of notice of a meeting by, a shareholder will not invalidate the
proceedings at that meeting.
Section 5 -
Action
Without
a Meeting
Unless otherwise provided by
law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting, without prior notice and without a vote if written consents
are signed by shareholders representing a majority of the shares entitled to
vote at such a meeting, except however, if a different proportion of voting
power is required by law, the Articles of Incorporation or these Bylaws, than
that proportion of written consents is required. Such written consents
must be filed with the minutes of the proceedings of the shareholders of the
Corporation.
Section 6 -
Quorum
a)
No business, other than the election of the chairman or the adjournment of the
meeting, will be transacted at an annual or special meeting unless a quorum of
shareholders, entitled to attend and vote, is present at the commencement of the
meeting, but the quorum need not be present throughout the meeting.
b)
Except as otherwise provided in these Bylaws, a quorum is two persons present
and being, or representing by proxy, shareholders of the
Corporation.
c)
If within half an hour from the time appointed for an annual or special meeting
a quorum is not present, the meeting shall stand adjourned to a day, time and
place as determined by the chairman of the meeting.
Section 7 -
Voting
Subject to a special voting
rights or restrictions attached to a class of shares, each shareholder shall be
entitled to one vote for each share of stock in his or her own name on the books
of the corporation, whether represented in person or by proxy.
Section 8
-
Motions
No motion proposed at an
annual or special meeting need be seconded.
Section 9
-
Equality
of
Votes
In the case of an equality of
votes, the chairman of the meeting at which the vote takes place is not entitled
to have a casting vote in addition to the vote or votes to which he may be
entitled as a shareholder of proxyholder.
Section 10
- Dispute as
to
Entitlement
to Vote
In a dispute as to the
admission or rejection of a vote at an annual or special meeting, the decision
of the chairman made in good faith is conclusive.
Section
11
-
Proxy
a)
Each shareholder entitled to vote at an annual or special meeting may do so
either in person or by proxy. A form of proxy must be in writing under the
hand of the appointor or of his or her attorney duly authorized in writing, or,
if the appointor is a corporation, either under the seal of the corporation or
under the hand of a duly authorized officer or attorney. A proxyholder
need not be a shareholder of the Corporation.
b)
A form of proxy and the power of attorney or other authority, if any, under
which it is signed or a facsimiled copy thereof must be deposited at the
registered office of the Corporation or at such other place as is specified for
that purpose in the notice convening the meeting. In addition to any other
method of depositing proxies provided for in these Bylaws, the Directors
may from time to time by
resolution make regulations relating to the depositing of proxies at a place or
places and fixing the time or times for depositing the proxies not exceeding 48
hours (excluding Saturdays, Sundays and holidays) preceding the meeting or
adjourned meeting specified in the notice calling a meeting of
shareholders.
ARTICLE II: BOARD OF
DIRECTORS
Section 1 -
Number, Term, Election and
Qualifications
a)
The first Board of Directors of the Corporation, and all subsequent Boards of
the Corporation, shall consist of not less than one (1) and not more than nine
(9) directors. The number of Directors may be fixed and changed from time
to time by ordinary resolution of the shareholders of the
Corporation.
b)
The first Board of Directors shall hold office until the first annual meeting of
shareholders and until their successors have been duly elected and qualified or
until there is a decrease in the number of directors. Thereinafter,
Directors will be elected at the annual meeting of shareholders and shall hold
office until the annual meeting of the shareholders next succeeding his or her
election, or until his or her prior death, resignation or removal. Any
Director may resign at any time upon written notice of such resignation to the
Corporation.
c)
A casual vacancy occurring in the Board may be filled by the remaining
Directors.
d)
Between successive annual meetings, the Directors have the power to appoint one
or more additional Directors but not more than 1/2 of the number of Directors
fixed at the last shareholder meeting at which Directors were elected. A
Director so appointed holds office only until the next following annual meeting
of the Corporation, but is eligible for election at that meeting. So long
as he or she is an additional Director, the number of Directors will be
increased accordingly.
e)
A Director is not required to hold a share in the capital of the Corporation as
qualification for his or her office.
Section 2 -
Duties, Powers
and
Remuneration
a)
The Board of Directors shall be responsible for the control and management of
the business and affairs, property and interests of the Corporation, and may
exercise all powers of the Corporation including opening bank accounts, except
for those powers conferred upon or reserved for the shareholders or any other
persons as required under Nevada state law, the Corporation's Articles of
Incorporation or by these Bylaws.
b)
The remuneration of the Directors may from time to time be determined by the
Directors or, if the Directors decide, by the shareholders.
Section 3
-
Meetings
of
Directors
a)
The President of the Corporation shall preside as chairman at every meeting of
the Directors, or if the President is not present or is willing to act as
chairman, the Directors present shall choose one of their number to be chairman
of the meeting.
b)
The Directors may meet together for the dispatch of business, and adjourn and
otherwise regulate their meetings as they think fit. Questions arising at
a meeting must be decided by a majority of votes. In case of an equality
of votes the chairman does not have a second or casting vote. Meetings of
the Board held at regular intervals may be held at the place and time upon the
notice (if any) as the Board may by resolution from time to time
determine.
c)
A Director may participate in a meeting of the Board or of a committee of the
Directors using conference telephones or other communications facilities by
which all Directors participating in the meeting can hear each other and
provided that all such Directors agree to such participation. A Director
participating in a meeting in accordance with this Bylaw is deemed to be present
at the meeting and to have so agreed. Such Director will be counted in the
quorum and entitled to speak and vote at the meeting.
d)
A Director may, and the Secretary on request of a Director shall, call a meeting
of the Board. Reasonable notice of the meeting specifying the place, day and
hour of the meeting must be given by mail, postage prepaid, addressed to each of
the Directors and alternate Directors at his or her address as it appears on the
books of the Corporation or by leaving it at his or her usual business or
residential address or by telephone, facsimile or other method of transmitting
legibly recorded messages. It is not necessary to give notice of a meeting
of Directors to a Director immediately following a shareholder meeting at which
the Director has been elected, or is the meeting of Directors at which the
Director is appointed.
e)
A Director of the Corporation may file with the Secretary a document executed by
him waiving notice of a past, present or future meeting or meetings of the
Directors being, or required to have been, sent to him and may at any time
withdraw the waiver with respect to meetings held thereafter. After filing
such waiver with respect to future meetings and until the waiver is withdrawn no
notice of a meeting of Directors need be given to the Director. All
meetings of the Directors so held will be deemed not to be improperly called or
constituted by reason of notice not having been given to the
Director.
f)
The quorum necessary for the transaction of the business of the Directors may be
fixed by the Directors and if not so fixed is a majority of the Directors or, if
the number of Directors is fixed at one, is one Director.
g)
The continuing Directors may act notwithstanding a vacancy in their body but, if
and so long as their number is reduced below the number fixed pursuant to these
Bylaws as the necessary quorum of Directors, the continuing Directors may act
for the purpose of increasing the number of Directors to that number, or of
summoning a shareholder meeting of the Corporation, but for no other
purpose.
h)
All acts done by a meeting of the Directors, a committee of Directors, or a
person acting as a Director, will, notwithstanding that it be afterwards
discovered that there was some defect in the qualification, election or
appointment of the Directors, shareholders of the committee or person acting as
a Director, or that any of them were disqualified, be as valid as if the person
had been duly elected or appointed and was qualified to be a
Director.
i)
A resolution consented to in writing, whether by facsimile or other method of
transmitting legibly recorded messages, by all of the Directors is as valid as
if it had been passed at a meeting of the Directors duly called and held.
A resolution may be in two or more counterparts which together are deemed to
constitute one resolution in writing. A resolution must be filed with the
minutes of the proceedings of the directors and is effective on the date stated
on it or on the latest date stated on a counterpart.
j)
All Directors of the Corporation shall have equal voting power.
Section 4 -
Removal
One or more or all the
Directors of the Corporation may be removed with or without cause at any time by
a vote of two-thirds of the shareholders entitled to vote thereon, at a special
meeting of the shareholders called for that purpose.
Section
5
-
Committees
a)
The Directors may from time to time by resolution designate from among its
members one or more committees, and alternate members thereof, as they deem
desirable, each consisting of one or more members, with such powers and
authority (to the extent permitted by law and these Bylaws) as may be provided
in such resolution. Each such committee shall serve at the pleasure of the
Board of Directors and unless otherwise stated by law, the Certificate of
Incorporation of the Corporation or these Bylaws, shall be governed by the rules
and regulations stated herein regarding the Board of Directors.
b)
Each Committee shall keep regular minutes of its transactions, shall cause them
to be recorded in the books kept for that purpose, and shall report them to the
Board at such times as the Board may from time to time require. The Board
has the power at any time to revoke or override the authority given to or acts
done by any Committee.
ARTICLE III:
OFFICERS
Section 1 -
Number
, Qualification, Election and Term of
Office
a)
The Corporation's officers shall have such titles and duties as shall be stated
in these Bylaws or in a resolution of the Board of Directors which is not
inconsistent with these Bylaws. The officers of the Corporation shall
consist of a president, secretary, treasurer, and also may have one or more vice
presidents, assistant secretaries and assistant treasurers and such other
officers as the Board of Directors may from time to time deem advisable.
Any officer may hold two or more offices in the Corporation, and may or may not
also act as a Director.
b)
The officers of the Corporation shall be elected by the Board of Directors at
the regular annual meeting of the Board following the annual meeting of
shareholders.
c)
Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his or her election, and until his or her successor
shall have been duly elected and qualified, subject to earlier termination by
his or her death, resignation or removal.
S
e
ction
2
- Resignation
Any officer may resign at any
time by giving written notice of such resignation to the
Corporation.
Section
3
- Removal
Any officer appointed by the
Board of Directors may be removed by a majority vote of the Board, either with
or without cause, and a successor appointed by the Board at any time, and any
officer or assistant officer, if appointed by another officer, may likewise be
removed by such officer.
Se
ction
4 - Remuneration
The remuneration of the
Officers of the Corporation may from time to time be determined by the Directors
or, if the Directors decide, by the shareholders.
Section
5 -
Conflict of
Interest
Each officer of the
Corporation who holds another office or possesses property whereby, whether
directly or indirectly, duties or interests might be created in conflict with
his or her duties or interests as an officer of the Corporation shall, in
writing, disclose to the President the fact and the nature, character and extent
of the conflict and abstain from voting with respect to any resolution in which
the officer has a personal interest.
ARTICLE V: SHARES OF
STOCK
Section
1 -
Certificate of
Stock
a)
The shares of the Corporation shall be represented by certificates or shall be
uncertificated shares.
b)
Certificated shares of the Corporation shall be signed, either manually or by
facsimile, by officers or agents designated by the Corporation for such
purposes, and shall certify the number of shares owned by the shareholder in the
Corporation. Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent or transfer clerk, and by a registrar, then a
facsimile of the signatures of the officers or agents, the transfer agent or
transfer clerk or the registrar of the Corporation may be printed or
lithographed upon the certificate in lieu of the actual signatures. If the
Corporation uses facsimile signatures of its officers and agents on its stock
certificates, it cannot act as registrar of its own stock, but its transfer
agent and registrar
may be identical if the
institution acting in those dual capacities countersigns or otherwise
authenticates any stock certificates in both capacities. If any officer
who has signed or whose facsimile signature has been placed upon such
certificate, shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the date of its issue.
c)
If the Corporation issued uncertificated shares as provided for in these Bylaws,
within a reasonable time after the issuance or transfer of such uncertificated
shares, and at least annually thereafter, the Corporation shall send the
shareholder a written statement certifying the number of shares owned by such
shareholder in the Corporation.
d)
Except as otherwise provided by law, the rights and obligations of the holders
of uncertificated shares and the rights and obligations of the holders of
certificates representing shares of the same class and series shall be
identical.
e)
If a share certificate:
(i) is worn out or defaced, the
Directors shall, upon production to them of the certificate and upon such other
terms, if any, as they may think fit, order the certificate to be cancelled and
issue a new certificate;
(ii) is lost, stolen or destroyed,
then upon proof being given to the satisfaction of the Directors and upon and
indemnity, if any being given, as the Directors think adequate, the Directors
shall issue a new certificate; or
(iii) represents more than one share and the
registered owner surrenders it to the Corporation with a written request that
the Corporation issue in his or her name two or more certificates, each
representing a specified number of shares and in the aggregate representing the
same number of shares as the certificate so surrendered, the Corporation shall
cancel the certificate so surrendered and issue new certificates in accordance
with such request.
Section
2 -
Transfers of
Shares
a)
Transfers or registration of transfers of shares of the Corporation shall be
made on the stock transfer books of the Corporation by the registered holder
thereof, or by his or her attorney duly authorized by a written power of
attorney; and in the case of shares represented by certificates, only
after the surrender to the Corporation of the certificates representing such
shares with such shares properly endorsed, with such evidence of the
authenticity of such endorsement, transfer, authorization and other matters as
the Corporation may reasonably require, and the payment of all stock transfer
taxes due thereon.
b)
The Corporation shall be entitled to treat the holder of record of any share or
shares as the absolute owner thereof for all purposes and, accordingly, shall
not be bound to recognize any legal, equitable or other claim to, or interest
in, such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise expressly
provided by law.
Section
3
- Record Date
a)
The Directors may fix in advance a date, which must not be more than 60 days
permitted by the preceding the date of a meeting of shareholders or a class of
shareholders, or of the payment of a dividend or of the proposed taking of any
other proper action requiring the determination of shareholders as the record
date for the determination of the shareholders entitled to notice of, or to
attend and vote at, a meeting and an adjournment of the meeting, or entitled to
receive payment of a dividend or for any other proper purpose and, in such case,
notwithstanding anything in these Bylaws, only shareholders of records on the
date so fixed will be deemed to be the shareholders for the purposes of this
Bylaw.
b)
Where no record date is so fixed for the determination of shareholders as
provided in the preceding Bylaw, the date on which the notice is mailed or on
which the resolution declaring the dividend is adopted, as the case may be, is
the record date for such determination.
Section
4
- Fractional
Shares
Notwithstanding anything else
in these Bylaws, the Corporation, if the Directors so resolve, will not be
required to issue fractional shares in connection with an amalgamation,
consolidation, exchange or conversion. At the discretion of the Directors,
fractional interests in shares may be rounded to the nearest whole number, with
fractions of 1/2 being rounded to the next highest whole number, or may be
purchased for cancellation by the Corporation for such consideration as the
Directors determine. The Directors may determine the manner in which
fractional interests in shares are to be transferred and delivered to the
Corporation in exchange for consideration and a determination so made is binding
upon all shareholders of the Corporation. In case shareholders having
fractional interests in shares fail to deliver them to the Corporation in
accordance with a determination made by the Directors, the Corporation may
deposit with the Corporation's Registrar and Transfer Agent a sum sufficient to
pay the consideration payable by the Corporation for the fractional interests in
shares, such deposit to be set aside in trust for such shareholders. Such
setting aside is deemed to be payment to such shareholders for the fractional
interests in shares not so delivered which will thereupon not be considered as
outstanding and such shareholders will not be considered to be shareholders of
the Corporation with respect thereto and will have no right except to receive
payment of the money so set aside and deposited upon delivery of the
certificates for the shares held prior to the amalgamation, consolidation,
exchange or conversion which result in fractional interests in
shares.
ARTICLE VI:
DIVIDENDS
a)
Dividends may be declared and paid out of any funds available therefor, as
often, in such amounts, and at such time or times as the Board of Directors may
determine and shares may be issued pro rata and without consideration to the
Corporation's shareholders or to the shareholders of one or more classes or
series.
b)
Shares of one class or series may not be issued as a share dividend to
shareholders of another class or series unless such issuance is in accordance
with the Articles of Incorporation and:
(i)
a majority of the current shareholders of the class or series to be issued
approve the issue; or
(ii) there are no outstanding shares
of the class or series of shares that are authorized to be issued as a
dividend.
ARTICLE VII: BORROWING
POWERS
a)
The Directors may from time to time on behalf of the Corporation:
(i) borrow money in such manner
and amount, on such security, from such sources and upon such terms and
conditions as they think fit,
(ii)
issue bonds, debentures and other debt obligations either outright or as
security for liability or obligation of the Corporation or another person,
and
(iii) mortgage, charge, whether by way of
specific or floating charge, and give other security on the undertaking, or on
the whole or a part of the property and assets of the Corporation (both present
and future).
b)
A bond, debenture or other debt obligation of the Corporation may be issued at a
discount, premium or otherwise, and with a special privilege as to redemption,
surrender, drawing, allotment of or conversion into or exchange for shares or
other securities, attending and voting at shareholder meetings of the
Corporation, appointment of Directors or otherwise, and may by its terms be
assignable free from equities between the Corporation and the person to whom it
was issued or a subsequent holder thereof, all as the Directors may
determine.
ARTICLE VIII: FISCAL
YEAR
The fiscal year end of the
Corporation shall be fixed, and shall be subject to change, by the Board of
Directors from time to time, subject to applicable law.
ARTICLE IX:
CORPORATE SEAL
The corporate seal, if any,
shall be in such form as shall be prescribed and altered, from time to time, by
the Board of Directors. The use of a seal or stamp by the Corporation on
corporate documents is not necessary and the lack thereof shall not in any way
affect the legality of a corporate document.
ARTICLE X:
AMENDMENTS
Section
1
- By Shareholders
All Bylaws of the Corporation
shall be subject to alteration or repeal, and new Bylaws may be made by a
majority vote of the shareholders at any annual meeting or special meeting
called for that purpose.
Section
2
- By Directors
The Board of Directors shall
have the power to make, adopt, alter, amend and repeal, from time to time,
Bylaws of the Corporation.
ARTICLE XI: DISCLOSURE OF
INTEREST OF DIRECTORS
a)
A Director who is, in any way, directly or indirectly interested in an existing
or proposed contract or transaction with the Corporation or who holds an office
or possesses property whereby, directly or indirectly, a duty or interest might
be created to conflict with his or her duty or interest as a Director, shall
declare the nature and extent of his or her interest in such contract or
transaction or of the conflict with his or her duty and interest as a Director,
as the case may be.
b)
A Director shall not vote in respect of a contract or transaction with the
Corporation in which he is interested and if he does so his or her vote will not
be counted, but he will be counted in the quorum present at the meeting at which
the vote is taken. The foregoing prohibitions do not apply
to:
(i) a contract or transaction
relating to a loan to the Corporation, which a Director or a specified
corporation or a specified firm in which he has an interest has guaranteed or
joined in guaranteeing the repayment of the loan or part of the
loan;
(ii) a contract or transaction made or
to be made with or for the benefit of a holding corporation or a subsidiary
corporation of which a Director is a director or officer;
(iii) a contract by a Director to subscribe
for or underwrite shares or debentures to be issued by the Corporation or a
subsidiary of the Corporation, or a contract, arrangement or transaction in
which a Director is directly or indirectly interested if all the other Directors
are also directly or indirectly interested in the contract, arrangement or
transaction;
(iv) determining the remuneration of the
Directors;
(v) purchasing and maintaining
insurance to cover Directors against liability incurred by them as Directors;
or
(vi) the indemnification of a Director by
the Corporation.
c)
A Director may hold an office or place of profit with the Corporation (other
than the office of Auditor of the Corporation) in conjunction with his or her
office of Director for the period and on the terms (as to remuneration or
otherwise) as the Directors may determine. No Director or intended
Director will be disqualified by his or her office from contracting with the
Corporation either with regard to the tenure of any such other office or place
of profit, or as vendor, purchaser or otherwise, and, no contract or transaction
entered into by or on behalf of the Corporation in which a Director is
interested is liable to be voided by reason thereof.
d)
A Director or his or her firm may act in a professional capacity for the
Corporation (except as Auditor of the Corporation), and he or his or her firm is
entitled to remuneration for professional services as if he were not a
Director.
e)
A Director may be or become a director or other officer or employee of, or
otherwise interested in, a corporation or firm in which the Corporation may be
interested as a shareholder or otherwise, and the Director is not accountable to
the Corporation for remuneration or other benefits received by him as director,
officer or employee of, or from his or her interest in, the other corporation or
firm, unless the shareholders otherwise direct.
ARTICLE XII:
ANNUAL LIST OF OFFICERS, DIRECTORS AND REGISTERED AGENT
The
Corporation shall, within sixty days after the filing of its Articles of
Incorporation with the Secretary of State, and annually thereafter on or before
the last day of the month in which the anniversary date of incorporation occurs
each year, file with the Secretary of State a list of its president, secretary
and treasurer and all of its Directors, along with the post office box or street
address, either residence or business, and a designation of its resident agent
in the state of Nevada. Such list shall be certified by an officer of the
Corporation.
ARTICLE
XIII: INDEMNITY OF
DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS
a)
The Directors shall cause the Corporation to indemnify a Director or former
Director of the Corporation and the Directors may cause the Corporation to
indemnify a director or former director of a corporation of which the
Corporation is or was a shareholder and the heirs and personal representatives
of any such person against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, actually and reasonably incurred
by him or them including an amount paid to settle an action or satisfy a
judgment inactive criminal or administrative action or proceeding to which he is
or they are made a party by reason of his or her being or having been a Director
of the Corporation or a director of such corporation, including an action
brought by the Corporation or corporation. Each Director of the
Corporation on being elected or appointed is deemed to have contracted with the
Corporation on the terms of the foregoing indemnity.
b)
The Directors may cause the Corporation to indemnify an officer, employee or
agent of the Corporation or of a corporation of which the Corporation is or was
a shareholder (notwithstanding that he is also a Director), and his or her heirs
and personal representatives against all costs, charges and expenses incurred by
him or them and resulting from his or her acting as an officer, employee or
agent of the Corporation or corporation. In addition the Corporation shall
indemnify the Secretary or an Assistance Secretary of the Corporation (if he is
not a full time employee of the Corporation and notwithstanding that he is also
a Director), and his or her respective heirs and legal representatives against
all costs, charges and expenses incurred by him or them and arising out of the
functions assigned to the Secretary by the Corporation Act or these Articles and
each such Secretary and Assistant Secretary, on being appointed is deemed to
have contracted with the Corporation on the terms of the foregoing
indemnity.
c)
The Directors may cause the Corporation to purchase and maintain insurance for
the benefit of a person who is or was serving as a Director, officer, employee
or agent of the Corporation or as a director, officer, employee or agent of a
corporation of which the Corporation is or was a shareholder and his or her
heirs or personal representatives against a liability incurred by him as a
Director, officer, employee or agent.