UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INNOVATIVE DESIGNS, INC.
(Name of small business issuer in its charter)
Delaware737503-0465528
State or jurisdiction Primary Standard IRS Employer
of incorporation Industrial Identification
or organization Classification Code Number) Number
223 North Main Street, Suite 1
Pittsburgh, Pennsylvania 15215
(412) 784-8580
(Address and telephone number of principal executive offices)
223 North Main Street, Suite 1
Pittsburgh, Pennsylvania 15215
(412) 784-8580
(Address of principal place of business or intended principal place of business:
Global Corporate Services, Inc.
709 Woodside Avenue
Wilmington, Delaware 19809
(800) 219-9359
(Name, address and telephone number of agent for service)
(All Communications to)
Brenda Lee Hamilton, Esquire
Hamilton, Lehrer & Dargan, P.A.
2 East Camino Real, Suite 202
Boca Raton, Florida 33432
Telephone 561-416-8956
Facsimile 561-416-2855
Approximate date of proposed sale to the public: From time to time after this
Registration becomes effective.
If any of the Securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434 check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------
Proposed Proposed
Title of each Amount maximum offering maximum Amount of
class of securities to be price per share aggregate registration
to be registered registered of common stock offering price fee
--------------------------------------------------------------------------------
Common Stock 1,515,075 $2.10 $3,181,657.50 $292.71
--------------------------------------------------------------------------------
(1) The offering price per share for the Selling Shareholders was estimated
solely for the purpose of calculating the registration fee pursuant to Rule 457
of Regulation C.
(2) Selling Shareholders hold all of the shares that we are registering. The
Selling Shareholders will be required to sell their shares at $2.10 per share
until our shares are quoted on the OTC Bulletin Board and thereafter at
prevailing market prices or privately negotiated prices. We will not receive
proceeds from the sale of shares from the Selling Shareholders.
(3) This Registration Statement shall also cover any additional shares of Common
Stock which become issuable by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected, without the receipt of
consideration which results in an increase in the number of outstanding shares
of common stock.
We hereby amend this registration statement on such date or dates as may be
necessary to delay its effective date until we file a further amendment which
specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until
the registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
PROSPECTUS COVER PAGE
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED MARCH 10, 2003.
INNOVATIVE DESIGNS, INC.
Our current shareholders are offering 1,515,075 shares of our common stock. The
Selling Shareholders will be required to sell their shares at $2.10 per share
until our common stock is quoted on the OTC Bulletin Board, and thereafter at
prevailing market prices or privately negotiated prices. We will not receive
proceeds from the sale of the shares from the Selling Shareholders. We will pay
all expenses of registering the securities.
Prior to this offering, there has been no market for our common stock. Our
common stock is not listed on any market or securities exchange, and we have not
applied for listing or quotation on any public market.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY
PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS"
BEGINNING ON PAGE 6.
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 information in this prospectus is not complete and may be changed. Our
Selling Shareholders may not sell these securities until this Registration
Statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to sell these securities in any state where the offer or sale is not
permitted.
The date of this preliminary prospectus is March 10, 2003.
Offering Information
Price to Underwriting Estimated Proceeds to
Public Commissions(2) Expenses(1) Company(2)
-------------------------------------------------------------------------
Per Share $2.10 N/A N/A N/A
-------------------------------------------------------------------------
Total $0.0 $0.0 $0.0 $0.0
-------------------------------------------------------------------------
(1) Does not include offering costs, including filing, legal, and accounting
estimated at $36,992.71. We have agreed to pay all the costs of this offering.
Selling Shareholders will pay no offering expenses.
(2) We will not receive proceeds from the sale of the shares by the Selling
Shareholders.
The date of this preliminary prospectus is March 10, 2003.
1
Inside Front and Outside Back Cover Page
Dealer Prospectus Delivery Obligation
Until 90 days after the date of this prospectus, or until ________, 2003, all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealer's obligation to deliver a prospectus when acting as
underwriters and with respect to their sold allotments or subscriptions.
2
TABLE OF CONTENTS
Description Page
PART I - INFORMATION REQUIRED IN PROSPECTUS
ITEM 1. Front of Registration Statement and Outside Front Cover of
Prospectus...........................................................1
ITEM 2. Inside Front and Outside Back Cover Pages of prospectus..............2
ITEM 3. Summary Information..................................................4
RISK FACTORS.........................................................6
Our limited operating history and our history of losses
makes it difficult for you to evaluate our current and
future business and prospects and future financial
results...........................................................6
If we are unable to obtain additional financing, we will
be unable to proceed with our plan of operations; even if
we obtain additional debt or equity financing, your
equity interest in our common stock will be diluted...............6
If RMF Global, Inc. violates the terms of its agreement
with Ko-Myung Kim or we violate our agreement with RMF
Global, Inc., we may have no Eliotex by which to
manufacture our products and we will have to terminate
our business, and you will lose your entire investment............6
Because we have no agreements with the third party
manufacturers that will manufacture our products, we
may be unable to effectively distribute our products
or distribute them at all, which would adversely affect
our reputation and materially reduce our revenues.................7
If our products are found to cause injury, have defects,
or fail to meet industry standards, we will incur
substantial litigation, judgment, product liability,
and product recall costs, which will increase our losses
and negatively affect our brand name reputation and
product sales.....................................................7
The use of our products is subject to seasonality
fluctuations which may cause fluctuating financial
results and a reduction of our revenues during certain
periods, which would negatively affect our potential
profitability and the value of your investment in our
common stock......................................................7
Because we offer only six products and our competitors
have a variety of products, we may not obtain consumer
acceptance of our products, which may adversely affect
our ability to generate revenues..................................7
We face trademark protection risks that may negatively
affect our brand name reputation, revenues and potential
profitability.....................................................8
We are subject to regulation in the United States and in
foreign jurisdictions, which increases our costs of
doing business and may lead to delays, fines or
restrictions on our business......................................8
We have not established the Innovative Design brand name
or the "idigear" label, and Eliotex has little, if any,
name recognition, which may prevent us from generating
revenues and reduce the value of your investment..................8
If we lose the services of our Chief Executive Officer,
Joseph Riccelli, our operations may be adversely affected
or we may be unable to continue our operations....................8
Our management has significant control over matters
requiring a shareholder vote, which will prevent our
minority shareholders from influencing our activities.............9
Our operations are subject to possible conflicts of
interest which may result in our officers and directors
favoring their own business interests over ours, which
may have a negative effect on our revenues and potential
profitability.....................................................9
Our management devotes only limited time to our business
and may continue to do so in future, which may negatively
affect our revenues and potential profitability...................9
We may not meet the National Association of Security
Dealers exchange listing requirements which may lead to
increased investment risk and inability to sell your shares......10
There is not and there may never be a public market for
shares of our common stock, which may make it difficult
for investors to sell their shares...............................10
Because our common stock is a penny stock for which there
is and may never be a market, any investment in our common
stock is a high-risk investment and is subject to restrictions
on marketability; you may be unable to sell your shares..........10
ITEM 4. Use of Proceeds.....................................................10
ITEM 5. Determination of Offering Price.....................................10
ITEM 6. Dilution............................................................11
ITEM 7. Selling Shareholders................................................11
ITEM 8. Plan of Distribution................................................14
ITEM 9. Legal Proceedings...................................................16
ITEM 10. Directors, Executive Officers, Promoters and Control Persons........16
ITEM 11. Security Ownership of Certain Beneficial Owners.....................18
ITEM 12. Description of Securities...........................................20
ITEM 13. Interest of Named Experts and Counsel...............................20
ITEM 14. Disclosure of Commission Position on Indemnification................21
ITEM 15. Organization Within Last Five Years.................................21
ITEM 16. Description of Business.............................................22
ITEM 17. Management's Discussion and Analysis or Plan of Operation...........35
ITEM 18. Description of Property.............................................42
ITEM 19. Certain Relationships and Related Transactions......................43
ITEM 20. Market for Common Equity and Related Stockholder Matters............44
ITEM 21. Executive Compensation..............................................46
ITEM 22. Financial Statements................................................46
ITEM 23. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure.................................55
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers...........................55
ITEM 25. Other Expenses of Issuance and Distribution.........................56
ITEM 26. Recent Sales of Unregistered Securities.............................56
ITEM 27. Exhibits............................................................77
ITEM 28. Undertakings........................................................77
3
ITEM 3. SUMMARY INFORMATION AND RISK FACTORS
PROSPECTUS SUMMARY
This prospectus contains statements about our future business operations that
involve risks and uncertainties. Our actual results could differ significantly
from our anticipated future operations, as a result of many factors, including
those identified under the "Risk Factors" section of this prospectus beginning
on page 6. The prospectus summary contains a summary of all material terms of
the prospectus. You should carefully read all information in the prospectus,
including the Financial Statements and their explanatory notes, under the
Financial Statements section beginning on page 46, prior to making an
investment decision.
HOW WE ARE ORGANIZED
We were incorporated in the State of Delaware on June 25, 2002 to market
products for the recreation industry. We are authorized to issue 500,000,000
shares of common stock, of which 15,553,875 shares are issued and outstanding.
We are authorized to issue 100,000,000 shares of preferred stock, of which no
shares are issued and outstanding.
WHERE YOU CAN FIND US
Our principal executive offices are located at 223 North Main Street, Suite 1,
Pittsburgh, Pennsylvania 15215. Our telephone number is (412)799-0350.
ABOUT OUR BUSINESS
We are a development stage company with limited operations and no revenues. We
have sustained losses since our inception. We were formed to sell products for
the recreation industry that are made from "Eliotex," a thin, lightweight
material that has buoyancy and thermal resistant characteristics. We are
dependent upon our license agreement with RMF Global, Inc., which is owned by
our Chief Executive Officer, Joseph Riccelli, that granted us an exclusive
sublicense to manufacture and market products developed by RMF Global, Inc. and
to develop our own products containing Eliotex.
Over the next twelve months we plan to expand our operations by hiring in-house
sales staff, having manufacturer representatives sell our products to retail
chain stores, including sporting goods retailers, conducting an online marketing
campaign, and further develop our website that offers our products.
THE OFFERING:
This offering is comprised entirely of shares of our common stock held by our
Selling Shareholders. Our Selling Shareholders are offering 1,515,075 shares of
our common stock.
Although we have agreed to pay all offering expenses, we will not receive any
proceeds from the sale of the shares by the Selling Shareholders. We anticipate
offering expenses of approximately $36,992.71.
The Selling Shareholders will be required to sell their shares at $2.10 per
share until our shares are quoted on the OTC Bulletin Board, and thereafter at
prevailing market prices or privately negotiated prices.
4
OUR FINANCIAL SUMMARY:
Because this is only a financial summary, it does not contain all the financial
information that may be important to you. Therefore, you should also carefully
read all the information in this prospectus, including the Financial Statements
and their explanatory notes before making an investment decision.
----------------------------------- -----------------------------------
BALANCE SHEET
AS OF
OCTOBER 31, 2002
----------------------------------- -----------------------------------
ASSETS
----------------------------------- -----------------------------------
Cash $115,280
----------------------------------- -----------------------------------
Inventory $ 16,727
----------------------------------- -----------------------------------
Deposits $ 77,000
----------------------------------- -----------------------------------
Total Current Assets $209,007
----------------------------------- -----------------------------------
Property and Equipment,
Net of $214 accumulated
Depreciation $ 17,542
----------------------------------- -----------------------------------
Total Assets $226,549
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
LIABILITIES AND STOCKHOLDERS'
EQUITY
AS OF
OCTOBER 31, 2002
----------------------------------- -----------------------------------
LIABILITIES
----------------------------------- -----------------------------------
Current Liabilities
Accounts payable $ 7,705
----------------------------------- -----------------------------------
STOCKHOLDERS' EQUITY
AS OF OCTOBER 31, 2002
----------------------------------- -----------------------------------
Common Stock, .0001 par,
100,000,000 shares authorized,
14,878,750 shares issued and
outstanding $ 1,488
Additional paid in capital $795,417
Deficit accumulated
during the development stage ($578,061)
----------------------------------- -----------------------------------
Total Stockholders Equity $218,844
----------------------------------- -----------------------------------
Total liabilities and
Stockholders Equity $226,549
----------------------------------- -----------------------------------
STATEMENT OF EXPENSES
INCEPTION OF JUNE 25, 2002
THROUGH OCTOBER 31, 2002
----------------------------------- -----------------------------------
Administrative expenses
----------------------------------- -----------------------------------
Paid in cash $ 98,817
----------------------------------- -----------------------------------
Paid in stock $479,030
----------------------------------- -----------------------------------
Depreciation $ 214
----------------------------------- -----------------------------------
Net loss ($578,061)
----------------------------------- -----------------------------------
5
RISK FACTORS
You should carefully consider the risks described below before deciding whether
to invest in shares of our common stock. Any investment in our common stock
involves a high degree of risk and you should be prepared to lose your entire
investment. If we do not successfully address any of the risks described below,
there could be a material adverse effect on our financial condition, operating
results and business. As a result of the occurrence of any of these risks, you
may lose part or all of your investment. We cannot assure you that we will
successfully address these risks.
Our limited operating history and our history of losses makes it difficult for
you to evaluate our current and future business and prospects and future
financial results.
We are a recently formed development stage company with a limited operating
history upon which you may evaluate our business. From our inception to October
31, 2002, we had net losses of $578,061. As a result, for the foreseeable future
you will be unable to evaluate our current business and future financial
performance. Because our costs will increase over the next twelve months, our
losses will increase in the foreseeable future. These factors make it difficult
for you to evaluate our current and future business and prospects as well as our
future financial results.
If we are unable to obtain additional financing. we will be unable to proceed
with our plan of operations; even if we obtain additional debt or equity
financing, your equity interest in our common stock will be diluted.
We currently have insufficient capital to meet $376,200 that we need for our
plan of operations. If we are unable to obtain loans from our Chief Executive
Officer, or obtain debt or equity financing when needed on favorable terms, we
will be unable to complete our plan of operations and you will lose your entire
investment. Even if we are able to obtain financing through a debt or equity
offering, such an offering would dilute shareholders' interests when we issue
additional shares of our common stock or other securities.
If RMF Global, Inc. violates the terms of its agreement with Ko-Myung Kim or we
violate our agreement with RMF Global, Inc., we may have no Eliotex by which to
manufacture our products and we will have to terminate our business, and you
will lose your entire investment.
Because the owner/manufacturer of the Eliotex material, Mr. Ko-Myung Kim, is
located in Korea, it will be difficult for our affiliate/licensor, RMF Global,
Inc., to pursue legal action for breaches of RMF Global, Inc.'s agreement with
Ko-Myung Kim, including any breaches that may cause disruptions, slowdowns, or
termination in the importation of Eliotex to us. Material breaches of our
agreement with our affiliate/licensor, RMF Global, Inc., may result in RMF
Global, Inc. terminating their sublicense agreement with us and not supplying us
with Eliotex. For instance, under our sublicense agreement with RMF Global,
Inc., we are required to pay RMF Global, Inc. a total of $1,250,000, including
payments of $400,000 in November 2003, November 2004 and November 2005. We are
required to make these sublicense payments whether or not we sell any of our
products. If we are unable to obtain the Eliotex material that we use to make
our products, or if there are delays in obtaining the Eliotex product, our
business, reputation and revenues will be adversely affected or we may be unable
to continue making our products or continue our operations, in which case you
will lose your entire investment.
6
Because we have no agreements with the third party manufacturers that will
manufacture our products, we may be unable to effectively distribute our
products or distribute them at all, which would adversely affect our reputation
and materially reduce our revenues.
We do not own or operate any manufacturing facilities. We do not have agreements
with the third party manufacturers of our finished products which are
manufactured solely on a per order basis. If we lose the services of our third
party manufacturers, we may be unable to secure the services of replacement
manufacturers. In addition, because we do not have agreements with these
manufacturers, they could refuse to manufacture some or all of our products,
reduce the number of products that they manufacture or change the terms and
prices under which they normally manufacture our products. The occurrence of any
such conditions will have a materially negative effect upon our reputation and
our ability to distribute our products, which will cause a material reduction in
our revenues.
If our products are found to cause injury, have defects, or fail to meet
industry standards, we will incur substantial litigation, judgment, product
liability, and product recall costs, which will increase our losses and
negatively affect our brand name reputation and product sales.
Because our sleeping bag and stadium pillow products are intended for outdoor
use, including severe and extreme cold weather conditions, and our floating
swimwear product is designed to be used by children and the handicapped in
swimming pools and other water environments, we may be subject to liability for
any accidents or injury that may occur in connection with the use of these
products or due to claims of defective design, integrity or durability of the
products. We do not currently maintain liability insurance coverage for such
claims. If we are unable to obtain such insurance, product liability claims
could adversely affect our brand name reputation, revenues and ultimately lead
to losses. In addition, product defects could result in product recalls and
warranty claims. A product recall could delay or halt production of our products
until we are able to remedy the product defects. The occurrence of any claims,
judgments, or product recalls, will negatively affect our brand name image and
product sales, as well as lead to additional costs.
The use of our products is subject to seasonality fluctuations which may cause
fluctuating financial results and a reduction of our revenues during certain
periods, which would negatively affect our potential profitability and the value
of your investment in our common stock.
There is less of a demand for our sleeping bag and stadium pillow products
during the warmer months and for our floating swimwear product during the colder
months. In addition, demand for all of our products may be negatively affected
by particularized weather conditions, such as the lack of cold or snowy weather.
Accordingly, our financial results will fluctuate from quarter to quarter and
may be difficult to predict. These fluctuations may cause our revenues to be
insufficient to meet our advertising, marketing and other expenses during such
periods which will negatively affect our ability to implement our plan of
operations, lead to losses, and decrease the value of your investment.
Because we offer only six products and our competitors have a variety of
products, we may not obtain consumer acceptance of our products, which may
adversely affect our ability to generate revenues.
We currently distribute and market only 6 products, while our competitors offer
hundreds of different products that we do not offer. We have two sleeping bag
models with essentially the same insulation, shell fabric and linings, while
other companies, such as North Face, Inc., offer at least 20 models of sleeping
bags for mountaineering and backpacking with differing insulations, shell
fabrics and linings. Additionally, we have only one floatable swimming wear
product, while other companies have similar products with many different models
and designs. Our windshirts, jackets and ball caps are available in only one
style and a limited number of colors. Moreover, although our stadium pillow
products have multiple uses, they are not available in different models or
differing insulations, shell fabrics or linings. Our competitors offer hundreds
of different products that we do not offer. Because our limited product line may
not appeal to a variety of consumer preferences, we may be unable to generate
consumer interest in our products, which will limit our ability to develop
consumer acceptance of our products and adversely affect our potential revenues.
7
We face trademark protection risks that may negatively affect our brand name
reputation, revenues and potential profitability.
Even though we have applied for protection of our idigear name that we use on
our products, the United States Patent and Trademark Office may never approve of
the idigear name. We have not applied for protection of the Innovative Designs
name and we do not intend to apply for protection of that name. Development of
our brand name reputation depends on our ability to develop and protect our
idigear and Innovative Designs, Inc. names. Our use of the Innovative Designs
name, as well as our use of the idigear name, may violate the proprietary rights
of others which may subject us to damage awards or judgments prohibiting the use
of our name. In addition, our failure to apply for trademark protection of
Innovative Designs name may cause our competitors to adopt company names,
products or service names similar to ours. There is no assurance that any of our
rights in any of our intellectual property will be enforceable, even if
registered, against any prior users of similar intellectual property. In
addition, if we fail to provide adequate proprietary protection, our names, our
brand name reputation, revenues, and potential profitability may be negatively
affected.
We are subject to regulation in the United States and in foreign jurisdictions,
which increases our costs of doing business and may lead to delays, fines or
restrictions on our business.
The importation of our stadium pillow, ball cap and jacket products from a
foreign based manufacturer, PT. Lidya & Natalia located in Sidoarjo, Indonesia,
subjects us to a 9% importation duty by the United States Customs Service. Our
shipment of raw materials to our manufacturers will subject us to United States
Department of Transportation regulations. Because our sub-manufacturers
manufacture our completed products, we and our sub-manufacturers will be subject
to the regulations of the United States Department of Labor's Occupational
Safety and Health Administration. United States and foreign regulations may
subject us to increased regulation costs, and possibly fines or restrictions on
conducting our business.
We have not established the Innovative Design brand name or the "idigear" label,
and Eliotex has little, if any, name recognition, which may prevent us from
generating revenues and reduce the value of your investment.
Because we are a new company with new products and we have not conducted
advertising, there is little or no recognition of our Innovative Design brand
name or "idigear" label. In addition, all of our products are made from Eliotex
which has little name recognition. As a result, consumers may not purchase our
products and we may be unable to generate sufficient revenues to meet our
expenses or meet our business plan objectives, which will reduce the value of
your investment.
If we lose the services of our Chief Executive Officer, Joseph Riccelli, our
operations may be adversely affected or we may be unable to continue our
operations.
The success of our business is dependent upon our Chief Executive Officer,
Joseph Riccelli. Because Mr. Riccelli is essential to our operations, you must
rely on his management decisions. Although we plan to obtain "key man" life
insurance on Mr. Riccelli by approximately April 2004, to date we have not
entered into any agreement with Mr. Riccelli that would prevent him from leaving
our company, nor have we obtained any "key man" life insurance on Mr. Riccelli.
There is no assurance that we would be able to hire and retain another Chief
Executive Officer to replace Mr. Riccelli. As a result, the loss of Mr.
Riccelli's services would have a materially adverse affect upon our operations,
including our being unable to continue our operations.
8
Our management has significant control over matters requiring a shareholder
vote, which will prevent our minority shareholders from influencing our
activities.
Our President/Director, Frank Riccelli, and our Chief Executive Officer/Chairman
of the Board, Joseph Riccelli, own approximately 2,050,000 shares and 10,500,000
shares, or 13.18% and 67.51% of our outstanding common stock, respectively. As
such, Messrs. Frank Riccelli and Joseph Riccelli together own 80.69% of our
common stock and control the outcome of all matters submitted to a vote by the
holders of our common stock, including the election of our directors, amendments
to our certificate of incorporation and approval of significant corporate
transactions. Additionally, Messrs. Frank Riccelli and Joseph Riccelli could
delay, deter or prevent a change in our control that might be beneficial to our
other stockholders. As a result of our management's control over these corporate
matters, our minority shareholders will have little or no influence regarding
these matters.
Our operations are subject to possible conflicts of interest which may result in
our officers and directors favoring their own business interests over ours,
which may have a negative effect on our revenues and potential profitability.
Our officers are related to one another and are involved in other business
activities upon which we are dependent and from which they will obtain
substantial financial benefits, as follows:
o Our Chief Executive Officer and Chairman of the Board, Joseph Riccelli, is
the owner of RMF Global, Inc., our sublicensor, upon which our entire
business is wholly dependent;
o Our sublicense agreement with RMF Global, Inc. requires us to pay a total
of $1,250,000 for the grant of a license to sell RMF Global, Inc.'s three
products and other products we develop using Eliotex and because Joseph
Riccelli, our Chief Executive, is the owner of RMF Global, Inc., he will
personally benefit from our payment of these license payments to RMF
Global, Inc.;
o We lease warehouse space that is owned by our President, Frank Riccelli, at
a rate of $2,600 per month;
o We lease our executive offices from Riccelli Properties, which is solely
owned by our Chief Executive Officer, Joseph Riccelli, for which we pay
$700 per month. RMF Global, Inc. shares our executive offices rent-free;
and
o Our officers, directors and key consultants have the following family
relationships: (a) Joseph Riccelli, our Chief Executive Officer/Chairman of
the Board, is the brother of Frank Riccelli, our President/Director; and
(b) Joseph A. Riccelli, our Vice President, is the son of our Chief
Executive Officer, Joseph Riccelli.
Our officers/directors may face conflicts in selecting between our business
objectives and their own. We have not formulated a policy for the resolution of
such conflicts. Future transactions or arrangements between or among our
officers, directors and shareholders, and companies they control, may result in
conflicts of interest, which may cause such conflicts to be resolved in favor of
businesses affiliated with our officers or directors, which would have an
adverse affect on our revenues and our potential profitability.
Our management devotes only limited time to our business and may continue to do
so in future, which may negatively affect our revenues and potential
profitability.
Although our Chief Executive Officer, Joseph Riccelli, spends approximately 40
hours per week to implement our plan of operations, our President, Frank
Riccelli, owns a car dealership and now dedicates only approximately 30 hours
per week to our business and operations. In addition, our Chief Financial
Officer, Anthony Fonzi, is employed full time elsewhere as a Certified Public
Accountant and spends only approximately 10 hours per week as our Chief
Financial Officer. Messrs. Fonzi and Frank Riccelli may continue to spend
limited time on our business in the future. The limited amount of time
management currently devotes to our business activities as well as in the future
may be inadequate to implement our plan of operations and develop revenues. As a
result, our revenues and potential profitability may be adversely affected.
9
We may not meet the National Association of Security Dealers exchange listing
requirements which may lead to increased investment risk and inability to sell
your shares.
If this Registration Statement is approved by the Securities and Exchange
Commission, we plan to apply to have our common stock quoted on the OTC Bulletin
Board; however, the National Association of Security Dealers has proposed to the
Securities and Exchange Commission that the OTC Bulletin Board be phased out to
be replaced with an exchange. If this occurs, we may not meet the new exchange
listing requirements. Should the Bulletin Board Exchange be implemented and we
fail to meet the new exchange requirements, you will lose your entire
investment.
There is not and there may never be a public market for shares of our common
stock, which may make it difficult for investors to sell their shares.
Although we plan to apply to have our common stock quoted on the OTC Bulletin
Board, if this Registration Statement is approved by the Securities and Exchange
Commission, there currently is no public market for the shares. Moreover, even
if our shares of common stock are admitted for quotation on the OTC Bulletin
Board, an active public market may not develop or be sustained. Therefore,
investors may not be able to find purchasers for the shares of our common stock.
Should there develop a significant market for our shares, the market price for
those shares may be significantly affected by such factors as our financial
results and introduction of new products and services.
Because our common stock is a penny stock for which there is and may never be a
market, any investment in our common stock is a high-risk investment and is
subject to restrictions on marketability; you may be unable to sell your shares.
Broker-dealer practices in connection with transactions in 'penny stocks' are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks, like shares of our common stock, generally are equity
securities with a price of less than $5.00, other than securities registered on
certain national securities exchanges or quoted on NASDAQ. The penny stock rules
require a broker-dealer, prior to transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer must also provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market, and monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, broker-dealers who sell these securities to persons other than
established customers and 'accredited investors' must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. Consequently,
these requirements may have the effect of reducing the level of trading
activity, if any, in the secondary market for a security subject to the penny
stock rules, and investors in our common stock may find it difficult to sell
their shares.
ITEM 4. USE OF PROCEEDS
Not Applicable. We will not receive any proceeds from the sale of the shares
being offered by the Selling Shareholders.
ITEM 5. DETERMINATION OF OFFERING PRICE
The Selling Shareholders will be required to sell their shares at a price of
$2.10 per share until our shares are quoted on the OTC Bulletin Board and
thereafter at prevailing market prices or privately negotiated prices. Our
management has determined the offering price for the Selling Shareholders'
shares. The offering price has been arbitrarily determined and does not bear any
relationship to our assets, results of operations, or book value, or to any
other generally accepted criteria of valuation. Prior to this offering, there
has been no market for our common shares.
10
ITEM 6. DILUTION
Not Applicable. We are not offering any shares in this Registration Statement.
All shares are being offered by the Selling Shareholders.
ITEM 7. SELLING SHAREHOLDERS
The following table sets forth information concerning the Selling Shareholders
including:
o the number of shares owned by each Selling Shareholder prior to this
offering;
o the total number of shares that are to be offered for each Selling
Shareholder;
o and the total number of shares and the percentage of common stock that will
be owned by each Selling Shareholder upon completion of the offering.
The Selling Shareholders named below are offering the securities which we are
registering. The table assumes that all of the securities will be sold in this
offering. However, any or all of the securities listed below may be retained by
any of the Selling Shareholders, and therefore, no accurate forecast can be made
as to the number of securities that will be held by the Selling Shareholders
upon termination of this offering. We believe that the Selling Shareholders
listed in the table have sole voting and investment powers with respect to the
securities indicated. We will not receive any proceeds from the sale of the
securities by the Selling Shareholders. None of the Selling Shareholders are
broker-dealers or affiliates of broker-dealers.
Percentage
Beneficial Amount Owned
Relationship Owned Prior Amount to before/after
Name with Issuer to Offering be Offered offering
------------------------------- -------------- ----------- ---------- ------------
Agostino, Dr. Leonard n/a 1,000 1,000 <1/0
Auman, Benjamin T. n/a 1,250 1,250 <1/0
Balsamico, John G. n/a 3,000 3,000 <1/0
Bengel, David S. n/a 1,000 1,000 <1/0
Benner, Barbara P. n/a 2,500 2,500 <1/0
Berger, Martin S. n/a 10,000 10,000 <1/0
Biggs, D. Lisa n/a 5,000 5,000 <1/0
Bittner, Donald J. n/a 3,000 3,000 <1/0
Bonaroti, John E. n/a 1,000 1,000 <1/0
Borg, Leo n/a 500 500 <1/0
Borg, Michael Seth n/a 500 500 <1/0
Brenenborg, Janet n/a 500 500 <1/0
Brenenborg, William n/a 500 500 <1/0
Brodsky, Hillary n/a 2,500 2,500 <1/0
Brundnok, Marianne n/a 500 500 <1/0
Bushey, Craig J. n/a 2,000 2,000 <1/0
Bushey, Debra L. & Donald J. n/a 1,000 1,000 <1/0
Campalong, Renee n/a 500 500 <1/0
C. Dillow & Company, Inc.(1) Consultant 500,000 500,000 3.2/0
Cerniglia, Anthony(2) Son of Director 2,500 250 <1/<1
Cerniglia, Dominic Director 70,500 7,050 <1/<1
Colinear, Joel S. n/a 2,500 2,500 <1/0
Cooney, James M. n/a 5,000 5,000 <1/0
Costa, Frank J. n/a 12,500 12,500 <1/0
Cunningham, Gary M. n/a 500 500 <1/0
Dake, Bonnie L. n/a 12,500 12,500 <1/0
Davis, Gary G. n/a 2,500 2,500 <1/0
Delestine, George E. n/a 5,000 5,000 <1/0
11
Digirolamo, William n/a 5,000 5,000 <1/0
Dishington, Lucy n/a 500 500 <1/0
Doperak, Robert M. & Jeanne M. n/a 500 500 <1/0
Douglas, Barry Consultant 4,000 4,000 <1/0
Elinoff, Howard n/a 500 500 <1/0
Fanelli, Frank J. & Mary n/a 1,000 1,000 <1/0
Fanto, Mike n/a 5,000 5,000 <1/0
Faye, Gary E. n/a 1,000 1,000 <1/0
Fijalkovic, Craig M. n/a 1,250 1,250 <1/0
Fonzi, Anthony Director/CFO 20,000 2,000 <1/<1
Frederick, G. Joseph n/a 500 500 <1/0
Frederick, Kelly D. n/a 500 500 <1/0
Gallagher, Joseph Stephen n/a 5,000 5,000 <1/0
Gibellino, Gary J. n/a 500 500 <1/0
Gravina, Thomas J. n/a 1000 1,000 <1/0
Griffith, Michelle S. Consultant/Vice 40,000 40,000 <1/0
President of
Sales/Marketing
Hager, Lisa A. n/a 500 500 <1/0
Hamilton, Lehrer & Dargan, PA(3) Law Firm 250,000 250,000 1.6/0
Hardy, Joseph A. III n/a 10,000 10,000 <1/0
Harvey, Douglas J. n/a 750 750 <1/0
Harvey, James R. & Barbara F. n/a 1,000 1,000 <1/0
Harvey, Janet Corrinne n/a 750 750 <1/0
Harvey, Leslie n/a 500 500 <1/0
Hellman, Leslie M. n/a 500 500 <1/0
Hermanowski, Eugene A. n/a 18,000 18,000 <1/0
Jerpe, Eric D. n/a 6,000 6,000 <1/0
Jeswilkowski, Charles E. n/a 1,500 1,500 <1/0
Kaplan, Naum M. n/a 5,000 5,000 <1/0
Kardos, John M. n/a 500 500 <1/0
Keith, Victoria L. n/a 500 500 <1/0
Kirkwood, John n/a 3,000 3,000 <1/0
Kolocouris, Dean Director 29,000 2,900 <1/<1
Konetes, Vivi n/a 250 250 <1/0
Korbe, Robert Consultant 5,000 5,000 <1/0
Laibe, Rebecca A. n/a 5,300 5,300 <1/0
Leone, Peter n/a 5,000 5,000 <1/0
Markulin, Jayson T. n/a 3,500 3,500 <1/0
Maurizio, William n/a 10,000 10,000 <1/0
Maurizio, William Jr. n/a 1,000 1,000 <1/0
Mazurek, Edward K. n/a 10,000 10,000 <1/0
McDonald, Richard E. n/a 1,250 1,250 <1/0
McGuirk, Gary F. n/a 5,000 5,000 <1/0
Mehalick, David Consultant 150,000 150,000 <1/0
Mellon, Sophie A. n/a 7,500 7,500 <1/0
Mengine, Charles Consultant 2,500 2,500 <1/0
Miller, Tom n/a 10,000 10,000 <1/0
Mills, Glen R. n/a 5,000 5,000 <1/0
Monsour, Geoffrey B.(4) Brother of Director 5,000 1,000 <1/<1
Monsour, Robert D. Director 50,000 5,000 <1/<1
Morante, Vincent J. & Anna M. n/a 2,000 2,000 <1/0
Murphy, Bernadette n/a 1,250 1,250 <1/0
Neiman, Esther n/a 2,500 2,500 <1/0
Olesko, William R. n/a 750 750 <1/0
Oliastro, Gary W. n/a 500 500 <1/0
Peitz, Francis C. n/a 10,000 10,000 <1/0
Picciani, Richard n/a 1,000 1,000 <1/0
Pietrzak, Daniel J. n/a 12,000 12,000 <1/0
Pishko, John n/a 500 500 <1/0
12
Pope, Donald n/a 2,500 2,500 <1/0
Pukach, Jennifer n/a 2,000 2,000 <1/0
Pursel Jr., Arthur C. n/a 1,000 1,000 <1/0
Quinlisk, Kevin M. & Marcene M. n/a 1,500 1,500 <1/0
Ray, Mark n/a 500 500 <1/0
Raybuck, William T. n/a 3,250 3,250 <1/0
Riccelli, Agatina(5) Mother of CEO 2,000 2,000 <1/0
/Consultant
Riccelli, Frank Director, President 2,050,000 50,000 13.2/12.9
Riccelli Trust, Gino M.(6) Son of CEO/Consultant 750,000 10,000 4.8/ 4.8
Riccelli, Joseph Chairman of Board/CEO 10,500,000 100,000 67.5/66.9
Riccelli Trust, Joseph A.(7) Son of CEO/ 750,000 10,000 4.8/ 4.8
Consultant/Vice
President
Rice, James B. n/a 2,000 2,000 <1/0
Roebuck, Alexandera E. n/a 500 500 <1/0
Sambuchino, Kevin n/a 15,000 15,000 <1/0
Scampone, Elvira n/a 1,000 1,000 <1/0
Scampone, John A. n/a 1,625 1,625 <1/0
Schmolke, Carl A. n/a 2,500 2,500 <1/0
Sell, Walter H. Jr. n/a 1,000 1,000 <1/0
Sheppard, Ronald J. n/a 6,800 6,800 <1/0
Shiring, Angela B. n/a 500 500 <1/0
Shondeck, David J. n/a 1,000 1,000 <1/0
Shondeck, Judith A. n/a 2,000 2,000 <1/0
Shook, H. Michael n/a 2,500 2,500 <1/0
Shumaker, Kimberly A. n/a 6,000 6,000 <1/0
Simeone, Frank P. & Doreen n/a 2,000 2,000 <1/0
Singer, Paul M. n/a 5,000 5,000 <1/0
Sloboba, Steven R. n/a 3,000 3,000 <1/0
Spagnolo, John A. n/a 1,500 1,500 <1/0
Taylor, Michael C. & Luci A. n/a 4,000 4,000 <1/0
Thomas, James T. n/a 2,500 2,500 <1/0
Thomas, Todd J. n/a 150 150 <1/0
Tidwell, Donna n/a 500 500 <1/0
Tucker, Mike & Lisa n/a 7,500 7,500 <1/0
Van Der Kallen, Justinus Petrus n/a 1,500 1,500 <1/0
Vidovic, Keith n/a 3,000 3,000 <1/0
Virgi, William L. n/a 5,000 5,000 <1/0
Vitale, Reno n/a 5,000 5,000 <1/0
Walters, George J. & Valerie n/a 1,000 1,000 <1/0
Wasuchno, John A. n/a 500 500 <1/0
Waters, Chuck n/a 10,000 10,000 <1/0
Weiss, Michael n/a 250 250 <1/0
Williams, Carol n/a 20,000 20,000 <1/0
Wist, Michael D. n/a 500 500 <1/0
Yarnell, Angela n/a 500 500 <1/0
Yenchik, Carol A. n/a 2,500 2,500 <1/0
Zahuranic, Michael R. & Kristy L. n/a 2,500 2,500 <1/0
---------- --------- ---------
Total 15,553,875 1,515,075 100%
========== ========= =========
--------
(1) C. Dillow & Company, Inc. is owned 100% by Chad Dillow.
(2) Anthony Cerniglia is the son of our Director, Dominic Cerniglia. Anthony
Cerniglia is of majority age and does not live in the same household as his
father, Dominic Cerniglia.
(3) The sole shareholder of Hamilton, Lehrer & Dargan, P.A. is Brenda Lee
Hamilton.
13
(4) Mr. Geoffrey B.Monsour is the brother of our Director, Mr. Robert D.
Monsour. Geoffrey B. Monsour is of majority age and does not live in the same
household as his brother, Robert D. Monsour.
(5) Agatina Riccelli is the mother of our Chief Executive Officer, Joseph
Riccelli. Agatina Riccelli does not live in the same household as her son,
Joseph Riccelli.
(6) Gino M. Riccelli is the son of our Chief Executive Officer, Joseph Riccelli.
Gino M. Riccelli is of majority age and does not live in the same household as
his father, Joseph Riccelli. The sole beneficial owner of the Gino M. Riccelli
Trust is that Trust. Joseph Riccelli, our Chief Executive Officer, as the
trustee of this trust, has the sole decision making authority over that trust,
including voting powers over the stock held in that trust.
(7) Joseph A. Riccelli, our Consultant/Vice President, is the son of our Chief
Executive Officer, Joseph Riccelli. Joseph A. Riccelli is of majority age and
does not live in the same household as his father, Joseph Riccelli. The sole
beneficial owner of the Joseph A. Riccelli Trust is that Trust. Joseph Riccelli,
our Chief Executive Officer, as the trustee of this trust, has the sole decision
making authority over that trust, including voting powers over the stock held
in that trust.
We intend to seek qualification for sale of the securities in those states where
the securities will be offered. That qualification is necessary to resell the
securities in the public market. The securities can only be offered if they are
qualified for sale or are exempt from qualification in the states in which the
Selling Shareholders or proposed purchasers reside. There is no assurance that
the states in which we seek qualification will approve of the security resales.
ITEM 8. PLAN OF DISTRIBUTION
Our Selling Shareholders are offering 1,515,075 shares of our common stock. Our
Selling Shareholders are required to sell their shares at a price of $2.10 per
share until our shares are quoted on the OTC Bulletin Board and thereafter at
prevailing market prices or privately negotiated prices. We will pay all costs
of registering the securities. We will not receive proceeds from the sale of the
shares by the Selling Shareholders.
The securities offered by this prospectus will be sold by the Selling
Shareholders or by those to whom such shares are transferred. We will file a
post-effective amendment to this Registration Statement to identify transferees
to whom the Selling Shareholders transfer their securities. We are not aware of
any underwriting arrangements that have been entered into by the Selling
Shareholders. The distribution of the securities by the Selling Shareholders may
be affected in one or more transactions that may take place in the OTC market,
including broker's transactions, privately negotiated transactions or through
sales to one or more dealers acting as principals in the resale of these
securities.
The Selling Shareholders and any of their pledges, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are then traded or in private transactions at a price of $2.10 per share
until our shares are quoted on the OTC Bulletin Board and thereafter at
prevailing market prices or privately negotiated prices. Selling Shareholders
may use any one or more of the following methods to sell their shares:
o Ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
o Block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block of shares as
principal to facilitate the transaction;
o Purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o An exchange distribution in accordance with the rules of the applicable
exchange;
o Privately negotiated transactions;
o A combination of any such methods of sale; and
o Any other method permitted pursuant to applicable law.
Any of the Selling Shareholders, acting alone or in concert with one another,
may be considered statutory underwriters under the Securities Act of 1933, as
amended, if they are directly or indirectly conducting an illegal distribution
of the securities on our behalf. For instance, an illegal distribution may occur
if any of the Selling Shareholders were to provide us with cash proceeds from
their sales of the securities. If any of the Selling Shareholders are determined
to be underwriters, they may be liable for securities violations in connection
with any material misrepresentations or omissions made in this prospectus.
14
We intend to seek qualification for sale of the securities in those states where
the securities will be offered. That qualification is necessary to resell the
securities in the public market. The securities may only be resold if the
securities are qualified for sale or are exempt from qualification in the states
in which the Selling Shareholders or proposed purchasers reside. There is no
assurance that the states in which we seek qualification will approve of the
security resales.
In addition, the Selling Shareholders and any brokers and dealers through whom
sales of the securities are made may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, and the commissions or discounts and
other compensation paid to such persons may be regarded as underwriters'
compensation.
The Selling Shareholders may pledge all or a portion of their securities as
collateral for margin accounts or in loan transactions, and the securities may
be resold pursuant to the terms of such pledges, accounts or loan transactions.
Upon default by such Selling Shareholders, the pledgee in such loan transaction
would have the same rights of sale as the Selling Shareholders under this
prospectus. The Selling Shareholders may also enter into exchange traded listed
option transactions, which require the delivery of the securities listed under
this prospectus. The Selling Shareholders may also transfer securities owned in
other ways not involving market makers or established trading markets, including
directly by gift, distribution, or other transfer without consideration, and
upon any such transfer the transferee would have the same rights of sale as such
Selling Shareholders under this prospectus.
In addition to the above, each of the Selling Shareholders and any other person
participating in a distribution will be affected by the applicable provisions of
the Securities Exchange Act of 1934, including, without limitation, Regulation
M, which may limit the timing of purchases and sales of any of the securities by
the Selling Shareholders or any such other person.
There can be no assurances that the Selling Shareholders will sell any or all of
the securities. In order to comply with state securities laws, if applicable,
the securities will be sold in jurisdictions only through registered or licensed
brokers or dealers. In various states, the securities may not be sold unless
these securities have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied with.
Under applicable rules and regulations of the Securities Exchange Act of 1934,
as amended, any person engaged in a distribution of the securities may not
simultaneously engage in market-making activities in these securities for a
period of one (1) or five (5) business days prior to the commencement of such
distribution.
The price of the shares in this registration statement has been arbitrarily
determined by our management. Should our shares become traded on the OTC
Bulletin Board or the proposed Bulletin Board Exchange, the shares that we are
registering will be sold by the holders at prevailing market prices.
All of the foregoing may affect the marketability of the securities. Pursuant to
the various agreements we have with the Selling Shareholders, we will pay all
the fees and expenses incident to the registration of the securities, other than
the Selling Shareholders' pro rata share of underwriting discounts and
commissions, if any, which will to be paid by the Selling Shareholders.
Should any substantial change occur regarding the status or other matters
concerning the Selling Shareholders, we will file a Rule 424(b) prospectus
disclosing such matters.
15
ITEM 9. LEGAL PROCEEDINGS
We are not aware of any pending or threatened legal proceedings in which we are
involved.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
DIRECTORS AND EXECUTIVE OFFICERS
Our executive officers are elected annually by our Board of Directors. A
majority vote of the directors who are in office is required to fill vacancies
on the Board. Each director shall be elected for the term of one (1) year and
until his successor is elected and qualified, or until his earlier resignation
or removal. The directors named above will serve until the next annual meeting
of our shareholders which is held within sixty (60) days of our fiscal year end,
or until a successor is elected and accepted the position.
None of our Directors hold Directorships in any Securities and Exchange
Commission reporting Companies. Our directors and executive officers are as
follows:
Name Age Position Term
-----------------------------------------------------------------------------
Frank Riccelli 43 President/Director 1 year
Joseph Riccelli 52 Chief Executive Officer/Chairman 1 year
Dean P. Kolocouris 31 Director 1 year
Robert D. Monsour 49 Director 1 year
Dominic Cerniglia 69 Director 1 year
Anthony Fonzi 55 Chief Financial Officer/Director 1 year
Joseph A. Riccelli 22 Vice President Not Applicable
Family Relationships.
Frank Riccelli, our President and Director, and Joseph Riccelli, our Chief
Executive Officer and Chairman of the Board, are brothers. Joseph A. Riccelli,
our Vice President, is the son of our Chief Executive Officer, Joseph Riccelli.
Frank Riccelli has been our President and a Director since our inception in June
2002. From April 1989 to present, Frank Riccelli has been the owner and
president of Exceptional Motor Cars, a car dealership located in Glenshaw,
Pennsylvania. Additionally, since March 1981 to present, Frank Riccelli has been
the owner of Pittsburgh Foreign Domestic, a car dealership located in Glenshaw,
Pennsylvania. Frank Riccelli attended the Community College of Allegheny County
from 1979 to 1981.
Joseph Riccelli has been our Chief Executive Officer and Chairman of the Board
since our inception in June 2002. From February 1999 to present, Joseph Riccelli
has been the President, Owner and Chief Executive Officer of RMF Global, Inc.,
our licensor/Eliotex distributor located in Pittsburgh, Pennsylvania. From March
1984 to November 1998, Joseph Riccelli was the owner of Pittsburgh Foreign and
Domestic, a sole proprietor car dealership located in Glenshaw, Pennsylvania.
Joseph Riccelli attended Point Park College located in Pittsburgh, Pennsylvania
from 1971 to 1972.
Dean P. Kolocouris has been one of our Directors since our inception in June
2002. From December 1996 to present, Mr. Kolocouris has been a Loan Officer and
Assistant Vice President at Eastern Savings Bank located in Pittsburgh,
Pennsylvania. In June, 1993, Mr. Kolocouris received a Bachelors Degree in
Finance from Duquesne University located in Pittsburgh, Pennsylvania.
16
Robert D. Monsour has been one of our Directors since our inception in June
2002. From July 1984 to November 1997, Mr. Monsour was the owner and founder of
his own law firm, Robert D. Monsour, Esq., P.C., located in Pittsburgh,
Pennsylvania. From November 1997 to present, Mr. Monsour has been the
Administrator of RGM Medical Management, a medical management firm headquartered
in Pittsburgh, Pennsylvania. Mr. Monsour received the following degrees from the
University of Pittsburgh located in Pittsburgh, Pennsylvania: (a) Juris Doctor
Degree in May 1983; (b) completed the course of study for a Masters Degree in
International Affairs at the Graduate School of Public & International Affairs
in May 1983, with the exception of a required Masters Thesis; and (c) Bachelor
of Arts Degree in Political Science in May 1978.
Dominick Cerniglia has been one of our Directors since our inception in June
2002. Mr. Cerniglia has been a licensed insurance agent in Pennsylvania since
December 1959. From August 1996 to present, Mr. Cerniglia has been the owner and
president of D. Cerniglia Insurance, a Pennsylvania licensed insurance firm
located in Pittsburgh, Pennsylvania.
Anthony Fonzi has been one of our Directors and our Chief Financial Officer
since our inception in June 2002. Mr. Fonzi spends approximately 10 hours a week
as our Chief Financial Officer. From June 1995 to present, Mr. Fonzi has been a
Tax Director at D. Cerniglia and Associates, a Certified Public Accounting firm
located in Monroeville, Pennsylvania. As Tax Director, Mr. Fonzi is responsible
for all tax functions on behalf of D. Cerniglia and Associates. In May 1985, Mr.
Fonzi received a Masters Degree in Taxation from Robert Morris College located
in Pittsburgh, Pennsylvania. In May 1970, Mr. Fonzi received a Bachelors Degree
in Accounting from Robert Morris College.
Joseph A. Riccelli, Jr. has been our Vice President since November of 2002. As
Vice President, Mr. Joseph A. Riccelli is responsible for assisting our Chief
Executive Officer, on a full-time basis, in overseeing our daily operations and
our distribution center. From June 2002 to October 2002, Joseph A. Riccelli was
our outside consultant to assist in overseeing our daily operations. Mr.
Riccelli has no other employment experience. Joseph A. Riccelli has been
attending the University of Pittsburgh since September 2001 and is majoring in
Business Administration.
SIGNIFICANT EMPLOYEES
We have the following additional significant employees:
Michelle Griffith, 35, has been our full-time Vice President of Sales and
Marketing since December of 2002. From October 2002 to November 2002, Ms.
Griffith was our Marketing Director. From June 1986 to November 2001, Ms.
Griffith was a professional ski and racing athlete, and in addition, Ms.
Griffith participated in the Equestrian Grand Prix Show Jumping competition on
the United States circuit. From 1990 to 2000, Ms. Griffith was a ski instructor
certified level 2 racing coach instructing juniors and adults. From June 1989 to
September 2002, Ms. Griffith was self-employed as a sports promotional and
marketing agent on behalf of professional athletes and resorts to initiate and
contract sporting events and athletic appearances. From September 1986 to
December 1989, Ms. Griffith attended the University of Pittsburgh with a major
in Political Science.
Dave Shondeck, 36, has been our Director of Product Development Research since
January 2003. Mr. Shondeck works as our Director of Product Development Research
for approximately 30 hours per week. From June 2002 to December 2003, Mr.
Shondeck was our consultant to assist in formulating our business plan. From
June 2000 to November 2003, Mr. Shondeck was employed as a Marketing and
Financial Consultant by Fonzi and Associates, an accounting and financial
services firm located in Pittsburgh, Pennsylvania. From May 1996 to February
2001, Mr. Shondeck was employed as a Sales and Marketing Product Manager with Dt
Technologies, Inc., a manufacturing technology firm located in Pittsburgh,
Pennsylvania. In May 1987, Mr. Shondeck obtained a BSBA Degree in accounting
from Duquesne University located in Pittsburgh, Pennsylvania.
17
LEGAL PROCEEDINGS
None of our officers, directors, or persons nominated for such position,
significant employees, or promoters have been involved in legal proceedings that
would be material to an evaluation of their ability or integrity, including:
o involvement in any bankruptcy;
o conviction in a criminal proceeding;
o being the subject of a pending criminal proceeding;
o being the subject of any order or judgment, decree permanently or
temporarily enjoining, barring, suspending or otherwise limiting their
involvement in any type of business, securities or banking activities; and
o being found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or vacated.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth the ownership, as of the date of this
Registration Statement, of our common stock (a) by each person known by us to be
the beneficial owner of more than five percent (5%) of our outstanding common
stock, and (b) by each of our directors, by all executive officers and our
directors as a group.
To the best of our knowledge, all persons named have sole voting and investment
power with respect to such shares, except as otherwise noted. There are not any
pending or anticipated arrangements that may cause a change in our control.
Security Ownership of Beneficial Owners:
Title of Class Name & Address Amount Nature Percent
-------------- --------------------------------- ---------- ------ -------
Common Stock Joseph Riccelli 10,500,000 Direct 67.51
Chief Executive Officer/
Chairman of the Board of Directors
142 Loire Valley Drive
Pittsburgh, PA 15209
Common Stock Frank Riccelli 2,050,000 Direct 13.18
President and Director
152 Wedgewood Drive
Gibsonia, PA 15044
Common Stock Gino M. Riccelli Trust 750,000 Direct 4.82
221 N. Main Street
Apartment 1
Pittsburgh, PA 15215
Common Stock Joseph A. Riccelli Trust 750,000 Direct 4.82
Vice President
223 N. Main Street
Apartment 6
Pittsburgh, PA 15215
---------- -------
Total 14,050,000 90.33
========== =======
18
Security Ownership of Management:
Title of Class Name & Address Amount Nature Percent
-------------- --------------------------------- ---------- ------ -------
Common Stock Joseph Riccelli 10,500,000 Direct 67.51
Chief Executive Officer/
Chairman of the Board of Directors
142 Loire Valley Drive
Pittsburgh, PA 15209
Common Stock Frank Riccelli 2,050,000 Direct 13.18
President and Director
152 Wedgewood Drive
Gibsonia, PA 15044
Common Stock Robert D. Monsour 50,000 Direct 0.32
Director
6131 Saltzburg Road
Murrysville, PA 15668
Common Stock Dean P. Kolocouris 29,000 Direct 0.19
Director
120 Timberglen Drive
Imperial, PA 15126
Common Stock Dominic Cerniglia 70,500 Direct 0.45
Director
100 Oxford Drive
Apt. 116
Monroeville, PA 15146
Common Stock Anthony Fonzi 20,000 Direct 0.01
Director/Chief Financial Officer
2912 Bryer-Ridge Ct.
Export, PA 15632
Common Stock Joseph A. Riccelli Trust 750,000 Direct 4.82
Vice President
223 N. Main Street
Apartment 6
Pittsburgh, PA 15215
---------- -------
Total 13,469,500 86.48
========== =======
19
ITEM 12. DESCRIPTION OF SECURITIES
The following description is a summary of the material terms of the provisions
of our Articles of Incorporation and Bylaws and is qualified in its entirety.
The Articles of Incorporation and Bylaws have been filed as exhibits to the
Registration Statement of which this prospectus is a part.
COMMON STOCK
GENERAL
We are authorized to issue 500,000,000 shares of common stock, par value $0.0001
per share. As of the date of this Registration Statement, there were 15,553,875
shares of our common stock issued and outstanding held by 133 shareholders of
record. All shares of common stock outstanding are validly issued, fully paid
and non-assessable.
We are authorized to issue 100,000,000 shares of preferred stock with a par
value of $0.0001 per share. As of the date of this Registration Statement, there
are no preferred shares issued and outstanding.
VOTING RIGHTS:
Each share of our common stock entitles the holder to one (1) vote, either in
person or by proxy, at meetings of shareholders. The shareholders are not
permitted to vote their shares cumulatively. Accordingly, the holders of common
stock holding, in the aggregate, more than fifty percent (50%) of the total
voting rights can elect all of our directors and, in such event, the holders of
the remaining minority shares will not be able to elect any such directors. The
vote of the holders of a majority of the issued and outstanding shares of common
stock entitled to vote thereon is sufficient to authorize, affirm, ratify, or
consent to such act or action, except as otherwise provided by law.
DIVIDEND POLICY:
Holders of common stock are entitled to receive ratably such dividends, if any,
as may be declared by the Board of Directors out of funds legally available. We
have not paid any dividends since our inception and presently anticipate that
all earnings, if any, will be retained for development of our business. Any
future disposition of dividends will be at the discretion of our Board of
Directors and will depend upon, among other things, our future earnings,
operating and financial condition, capital requirements, and other factors.
MISCELLANEOUS RIGHTS AND PROVISIONS:
Holders of our common stock have no preemptive rights. Upon our liquidation,
dissolution or winding up, the holders of our common stock will be entitled to
share ratably in the net assets legally available for distribution to
shareholders after the payment of all of our debts and other liabilities. All
outstanding shares of our common stock are, and the common stock to be
outstanding upon completion of this offering will be, fully paid and assessable.
There are not any provisions in our Articles of Incorporation or Bylaws that
would prevent or delay change in our control.
ITEM 13. INTEREST OF NAMED EXPERTS AND COUNSEL
Our Financial Statements for the period ending October 31, 2002 have been
included in this prospectus in reliance upon Malone and Bailey, PLLC, Certified
Public Accountants, as experts in accounting and auditing.
Hamilton, Lehrer & Dargan, P.A. has rendered legal services and assisted in the
preparation of this Form SB-2 Registration Statement. Members of the firm own
250,000 shares of our common stock which are being registered on this
registration statement.
20
ITEM 14. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
LIABILITIES
Our Articles of Incorporation and Bylaws, subject to the provisions of Delaware
Corporation Law, contain provisions which allow us to indemnify any person
against liabilities and other expenses incurred as the result of defending or
administering any pending or anticipated legal issue in connection with service
to us if it is determined that person acted in good faith and in a manner which
he reasonably believed was in the best interest of the corporation. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to our directors, officers and controlling persons, we have been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable.
ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS
Our officers and directors may encounter conflicts of interests between our
business objectives and their own interests. We have not formulated a policy for
the resolution of such conflicts. Future transactions or arrangements between or
among our officers, directors and shareholders, and businesses they control, may
result in conflicts of interest which may be resolved in favor of businesses
that our officers or directors are affiliated with, which may have an adverse
affect on our revenues
Our officers and directors have the following conflicts of interests:
o Our Chief Executive Officer and Chairman of the Board, Joseph Riccelli, is
the owner of RMF Global, Inc., our sublicensor, upon which our entire
business is wholly dependent;
o Our sublicense agreement with RMF Global, Inc. requires us to pay a total
of $1,250,000 for the grant of a license to sell RMF Global, Inc.'s three
products and other products we develop using Eliotex and because Joseph
Riccelli, our Chief Executive, is the owner of RMF Global, Inc., he will
personally benefit from our payment of these license payments to RMF
Global, Inc.;
o We lease warehouse space that is owned by our President, Frank Riccelli, at
a rate of $2,600 per month;
o We lease our executive offices from Riccelli Properties, which is solely
owned by our Chief Executive Officer, Joseph Riccelli, for which we pay
$700 per month. RMF Global, Inc. shares our executive offices rent-free;
o Our officers, directors and key consultants have the following family
relationships: (a) Joseph Riccelli, our Chief Executive Officer/Chairman of
the Board, is the brother of Frank Riccelli, our President/Director; and
(b) Joseph A. Riccelli, our Vice President, is the son of our Chief
Executive Officer, Joseph Riccelli.
Agreement Between us and RMF Global, Inc.
On November 25, 2002, we entered into an agreement with RMF Global, Inc. The
agreement provides that:
o RMF Global, Inc. grants an exclusive license to us to manufacture and
market RMF's three products made from Eliotex and grants us a license to
develop our own products using Eliotex;
o RMF Global, Inc. assures us of an adequate and timely supply of Eliotex to
meet our manufacturing activities;
o RMF Global, Inc. will offer Eliotex to us at a price equal to the lowest
price it charges any other RMF Global, Inc. customer;
o RMF Global, Inc. will transfer all of its rights, title and interest in all
promotional materials, advertisements, marketing strategies, and the like
for which it has contracted to us, and we will have the unfettered right to
use the same in any manner we see fit;
o We must pay $1,250,000 to RMF Global, Inc., as follows: (i) $50,000 down
payment which has been paid; and (ii) annual payments of $400,000 due in
November 2003, 2004, and 2005; and
o The agreement is for a term of ten years and we shall have the option to
renew the agreement for four subsequent terms of ten years each.
Other than the above transactions, we have not entered into any material
transactions with any director, executive officer, and nominee for director,
beneficial owner of five percent (5%) or more of our common stock, or family
members of such persons where the amount of the transaction or chain of
transactions exceeds $60,000. We are not a subsidiary of any company.
21
ITEM 16. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
We are a development stage company with no revenues. We were incorporated in the
State of Delaware on June 25, 2002 to market recreational products that are made
from Eliotex, a material with buoyancy and thermal resistant properties. Since
our formation, we have devoted our efforts to:
o Formulating and developing our business plan;
o Raising capital through a private placement of our common stock;
o Developing our marketing plan;
o Developing our web site;
o Negotiating and completing our sublicense agreement with RMF Global, Inc.;
and
o Completing the development, design, and prototypes of our products.
RMF Global, Inc. was incorporated on April 1, 1999 in the State of Pennsylvania
and is owned and controlled solely by our Chief Executive Officer, Joseph
Riccelli. On March 2, 2003, RMF Global, Inc. entered into a written license
agreement with Ko-Myung Kim for the exclusive distribution rights to Eliotex in
the United States, Canada, Mexico, India, the United Kingdom and Turkey.
Ko-Myung Kim owns the patent to the process to make the Eliotex material. On
November 25, 2002, we entered into a written sublicense agreement with RMF
Global, Inc. for the exclusive rights to distribute three products made from
Eliotex which RMF Global, Inc. developed and to use Eliotex in products that we
develop. We currently plan to market six products containing Eliotex, three of
which were developed by RMF Global, Inc. All of our products bear our label
"idigear".
We have never been the subject of any bankruptcy or receivership action. We have
had no material reclassification, merger, consolidation, or purchase or sale of
a significant amount of assets outside the ordinary course of business.
We have no plans to seek a merger, acquisition or business reorganization or to
otherwise enter into a business combination with another entity.
PRINCIPAL PRODUCTS AND SERVICES
We offer the following three Eliotex products which were developed by RMF
Global, Inc.:
o Floating Swimwear Product under our product name "Swimeez". Our swimwear is
designed to be a swim aid. The interior lining of our swimwear product is
made from Eliotex, which enhances floatability. This product comes in a
boys and girls design in children's sizes from 5 to 12 years old, and adult
sizes of Small, Medium and Large. We offer 7 colors for the girls' Swimeez:
yellow, green, fuchsia, daisies, floral blue, floral green, and cherries.
We offer 3 colors for the boys' Swimeez: neon lime, navy, and gray.
o Sleeping Bag Products. Our sleeping bag products, available in both
rectangular and mummy styles, are water resistant, windproof and weigh less
than 2 pounds each. The Eliotex insulation enables our sleeping bags to
have a temperature rating of 15 degrees to 20 degrees Fahrenheit. We offer
our sleeping bag product in black and camouflage colors.
o Stadium Pillow. The use of Eliotex in this product provides protection from
weather conditions such as rain and cold. By altering the configuration of
the folds and zippers, the product can be used as a:
o Stadium seat cushion or pillow;
o Thermal rain parka with a zip-out hood;
o Sleeping Bag;
o Flotation Raft; and
o Double Comforter.
22
We use Eliotex to provide protection from harsh weather conditions in the
following products which we developed:
o Windshirts. Our windshirts are available in only one style and in five
colors: grey, navy, red, black, khaki.
o Jackets. Our jackets are available in only one style and in 5 colors: grey,
navy, red, black, khaki.
o Ball Caps Our ball caps are available in only one style and 1 color, navy
blue.
MATERIAL AGREEMENTS
Agreement between RMF Global, Inc. and Ko-Myung Kim
On March 2, 2003, RMF Global, Inc., our sublicensor, entered into an Exclusive
Agency, Distribution and Marketing Agreement with Ko-Myung Kim, a citizen of
Korea, whereby Ko-Myung Kim granted RMF Global, Inc. the exclusive, unlimited,
irrevocable right and license, with the right to grant sublicenses to third
parties, to purchase, use, develop, commercialize, market, have marketed, sell
and have sold, manufacture and have manufactured products related to or
utilizing Eliotex whether present or future for all countries in the world other
than Korea and Japan. From approximately June 2002 to the date of execution of
this March 2, 2003 written agreement, RMF Global, Inc. and Ko-Myung Kim had a
verbal agreement whereby RMF Global, Inc. purchased Eliotex on an as needed
basis.
Under the terms of the agreement Ko-Myung Kim agrees to promptly deliver to RMF
Global, Inc. within twenty-eight (28) days of receiving an order from RMF
Global, Inc., all Eliotex ordered by RMF Global, Inc.. Under the terms of the
agreement, RMF Global, Inc. is required to pay $.60 USD per meter for all
Eliotex ordered from Ko-Myung Kim and the this price remains $.60 USD per meter
for a period of ten (10) years from the date of execution of this agreement. The
agreement further provide that after this ten year period, this price shall be
adjusted for subsequent ten (10) year terms at a price increase of no more than
twelve percent (12%) per ten (10) year term. The price paid by RMF Global, Inc.
for Eliotex shall remain the same for each ten (10) year term. RMF Global, Inc.
shall order Eliotex from Ko-Myung Kim from time to time as needed and shall not
be required to purchase any minimum amount of Eliotex during the term of this
agreement and RMF Global, Inc. is not required to make any minimum annual
payment to Ko-Myung Kim. However, should RMF Global, Inc. place an order, any
quantity ordered must be a minimum of 55,000 meters of Eliotex. On all Sub
licensee Payments received by RMF Global, Inc. from third party Sub licensees,
RMF Global, Inc. shall not pay any fees to Ko-Myung Kim. The Agreement shall be
in full legal force and effect for an initial term of ten (10) years from the
date of its execution. RMF Global, Inc. shall have the option to renew this
Agreement for up to four (4) successive terms of five (5) years each by giving
Notice to Ko-Myung Kim of its intention to so renew not less than ninety (90)
days prior to the expiration of the then-current term.
Our Agreement with our Affiliated Entity, RMF Global, Inc.
On November 25, 2002, we entered into an agreement with RMF Global, Inc., which
is owned and controlled solely by our Chief Executive Officer, Joseph Riccelli.
The terms of this agreement include that RMF Global, Inc.: (a) grants us an
exclusive sublicense to manufacture and market RMF's three product lines, which
are bathing suits, sleeping bags, and stadium pillows; (b) is required to
provide us with Eliotex to adequately and timely meet our needs; and (c) will
sell Eliotex to us at a price equal to the lowest price it charges any of its
other customers. In addition, the agreement requires that Joseph A. Riccelli,
our Vice President, oversee raw material ordering, receiving and warehousing,
sub-manufacturing, warehousing, shipping and delivery of our products. The
agreement is for a term of ten years and we shall have the option to renew the
agreement for four subsequent terms of ten years each.
23
Under the agreement, we must pay RMF Global, Inc. $1,250,000 for the grant of
the sublicense, consisting of a $50,000 down payment which we have already paid
and annual payments of $400,000 payable in November 2003, 2004, and 2005.
Additionally, we must use our best efforts to manufacture our products in
accordance with high standards of quality and are required to promptly make full
payment to RMF Global, Inc. for all Eliotex that we purchase from them.
Our Agreement with C. Dillow & Company, Inc.
On February 12, 2003 we entered into a written agreement with C. Dillow &
Company, Inc. Under the terms of the agreement, we issued C. Dillow & Company,
Inc., 500,000 shares of our common stock in exchange for C. Dillow & Company,
Inc.'s services which are to be rendered to us for a six month period after we
provide written notification to the Consultant that services are to commence, as
follows:
(a) Assist us in developing, creating and providing factual information and in
developing and implementing a strong market awareness for our business
operations;
(b) Prepare a comprehensive analytical report that highlights our industry,
opportunities, trends and potential;
(c) Develop and create a public relations campaign for our business;
(d) Aid, advise and assist us in establishing a means of securing local and
nationwide media interest and coverage; and
(e) Aid, consult, prepare and deliver "due diligence" packages requested by and
furnished to registered broker/dealers and/or other institutional and/or fund
managers as requested by us.
OUR PRODUCT MARKETS
Swimeez Product
Our Swimeez product is intended for use by the following groups that are our
target markets for these products:
o Toddlers and children from the ages of 3 to 12 who are learning to swim;
o Handicapped persons; and
o Adults learning to swim.
Sleeping Bags
Our sleeping bag products are intended for use by the following groups that are
our target markets for these products:
o Outdoor enthusiasts, such as hikers, climbers, mountain bikers and
kayakers;
o Campers;
o Boy Scouts and Girl Scouts;
o Motorcyclists; and
o Hunters and Fishermen.
Stadium Pillows
Our stadium pillow products are intended for use by the following groups that
are our target markets for these products:
o Colleges;
o Child/Amateur sport organizations; and
o Hunting/Fishing enthusiasts.
Windshirts
Our windshirt products are intended for use by the following consumer groups
that are our target markets for these products:
o Golf club pro shops;
o Golf tournament organizers;
o Corporate promotional organizations; and
o Sporting organizations and teams.
24
Jackets
Our jacket products are intended for use by the following consumer groups that
are our target markets for these products:
o Colleges;
o Sporting teams; and
o Corporations.
Ball Caps
Our ball cap products are intended for use by the following consumer groups tha
are our target markets for these products:
o Golf club pro shops;
o Golf tournament organizers;
o Corporate promotional organizations;
o Sporting organizations and teams.
o Colleges;
o Sporting teams; and
o Corporations.
DISTRIBUTION
We sell both wholesale and retail products on our website. Our website, which is
located at www.idigear.com, is operational at this time and contains information
on our products, technical information on Eliotex insulation, e-commerce
capabilities with "shopping cart", wholesaler information and order forms,
company contact information, and links to retailers that carry our products. We
have obtained the services of BA Web Productions, our website marketing
consultant, that assists us in designing and continually developing our website.
Our website features a "wholesaler only" area, allowing our wholesalers access
to information, ordering, and recalls. The web site is hosted by Nidhog Hosting.
The secure payment gateway provider for our online e-commerce is SkipJack
Financial Services.
The following retailers purchase our products at wholesale prices which they
plan to sell at their retail prices:
o Website retailers, Gear-guru.net and Woodlandsoutdoorworld.com sells our
sleeping bag and windshirt products. These website retailers generally sell
outdoor, sporting and military products.
o Woodlands Outdoor World, a retail store, located in Farmington,
Pennsylvania, sells our sleeping bag and our windshirt products.
o Nemacolin Woodlands Resort and Spa's retail store located in Farmington,
Pennsylvania, sells our windshirt product.
We have no verbal or written agreement with these retailers and we have no
intention of entering into any such agreement. These retailers purchase our
products from us strictly on a purchase order basis.
In November 2002, we entered into a verbal agreement with Havel-Giarusso and
Associates, a manufacturer representative located in Big Lake, Minnesota, to be
the manufacturer representative of our products. Manufacturer Representatives
are independent sales representatives that sell lines of apparel from different
manufacturer to retailers for distribution to consumers. Established apparel
representatives have lists of distributors, retailers and buying groups who they
service regularly. We verbally agreed to pay Havel-Giarusso and Associates a 2%
to 10% commission on wholesale product sales to retailers depending upon the
size of the order. This agreement may be terminated at will by either party to
the agreement. We have no intention of entering into a written agreement with
Havel-Giarusso and Associates. Havel-Giarusso and Associates has the following
manufacturer representatives representing our product line to retailers in each
of the following locations:
o Parker, Colorado;
o Peace Dale, Rhode Island;
o Nashville, Indiana;
o Bike Lake, Minnesota;
o Olathe, Kansas;
o Minooka, Illinois;
o Wakeman, Ohio;
o Tannersville, Pennsylvania;
o Pittsburgh, Pennsylvania;
o Detroit Lakes, Minnesota; and
o Gansevoort, New York.
Each manufacturer representative covers the state in which they are located.
25
We plan to distribute our products to the following:
Sleeping Bag Products
We plan to distribute our sleeping bag products through sporting goods catalogs,
sporting shows and trade shows, and retail outlets and chains.
Swimeez Products
We plan to distribute our Swimeez products through sporting goods catalogs, and
retail outlets and chains.
Stadium Pillow Products
We plan to distribute our Stadium Pillow products through sporting goods
catalogs, sporting shows, retail outlets and chains.
Windshirts, Jackets, Ball Caps
We plan to distribute our windshirts, jackets, and ball caps through various
wholesalers and retail outlets and chains.
MARKETING
Our planned marketing program will consist of the following:
---------------------------- ---------------------------------------------------
Marketing component Description
---------------------------- ---------------------------------------------------
Website Development We plan to contract with marketing consultants to:
and Internet Marketing (a) increase visitation to our website; (b) link
with other established websites; (c) issue press
releases to on-line publications; (d) conduct
banner advertising; and (e) develop arrangements
with online retailers that purchase our products
on a wholesale basis.
---------------------------- ---------------------------------------------------
Sales Representatives We plan to hire 3 sales representatives to: (a)
sell our merchandise to retail chain stores; (b)
attend and network trade shows to establish
industry related contacts; (c) initiate
relationships with local and national recreational
organizations; and (d) provide support to our
manufacturer representatives.
---------------------------- ---------------------------------------------------
Contract with manufacturer We plan to locate 5 manufacturer representatives
representatives that will attempt to sell our apparel to retailers.
---------------------------- ---------------------------------------------------
Public relations campaign We plan to contract with marketing consultants to
develop and distribute press releases regarding
company status, product innovations, and other
notable events and developments.
---------------------------- ---------------------------------------------------
Design and develop We plan to contract with marketing consultants to
literature, displays and develop brochures, point-of-sale displays, mailers
media materials and literature and sales tools for our sales
representatives and manufacturer representatives.
---------------------------- ---------------------------------------------------
Establish wholesale We plan to develop relationships or distribution
relationships with retail points for our products with retail chain outlets
chain outlets and mass and mass merchandisers.
merchandisers to sell
our products
---------------------------- ---------------------------------------------------
Develop trade show booth We plan to contract with marketing consultants to
and attend trade shows design and develop a portable display booth and
product materials to be used in sporting goods and
outdoor apparel trade shows.
---------------------------- ---------------------------------------------------
Our method, time period, and cost for accomplishing these marketing plans is
detailed in our Plan of Operations Section at pages 35-42.
26
DELIVERY OF PRODUCTS
We plan to ship our wholesale product orders in packages consisting of 6
products per package of the same style, size, and color. We plan to ship
wholesale product orders by United Parcel Service or trucking companies. Retail
orders from our website will be shipped United Parcel Service Ground or Federal
Express overnight. The costs of shipping our finished goods is paid by our
customers. We have not instituted any formal arrangements or agreements with
United Parcel Service, Federal Express or trucking companies, and we do not
intend to do so.
LABELS AND OUR LABELING
Our "idigear" label is sewn on all of our products.
SOURCES AND AVAILABILITY OF RAW MATERIALS
Eliotex will be used in all our finished goods and will be purchased from our
affiliate/licensor, RMF Global, Inc.
Raw Materials to be Provided for our Floating Swimwear Products:
o Eliotex
Eliotex will be used to create the buoyancy quality of our floating
swimwear product.
o Lycra
We will purchase Lycra from Yasha Fabrics which is located in Los Angeles,
California. Lycra is an elastic polyurethane fiber or fabric used
especially for close-fitting sports clothing and will be used for the outer
shell and inside lining of our floating swimwear product.
o Zippers
We will purchase zippers from Barbie International Corporation which is
located in New York, New York.
The delivery time involved for these raw materials from the date of order to
date of delivery is less than two weeks.
Raw Materials to be provided for our Sleeping Bags and Stadium Pillow Products:
o Eliotex
Eliotex will be used in our sleeping bags, Swimeez and stadium pillow
products as insulation and to provide buoyancy to these products.
o Rip Stop Nylon
We will purchase Rip Stop Nylon from Robert Textile Company located in New
York, New York. Rip Stop Nylon is a manufactured fiber that is strong and
is resistant to both abrasion and damage from many chemicals. Rip Stop
Nylon fabric is non-absorbent, durable, fast drying, resistant to moths and
other insects, water, perspiration and standard dry cleaning agents. The
Rip Stop Nylon fabric also contains an added nylon cross weaves to prevent
tearing of the material. Rip Stop Nylon is commonly used in women's
hosiery, knitted or woven lingerie, socks and sweaters, rugs and carpets,
sleeping bags, duffle bags, racquet strings, and fishing lines. Rip Stop
Nylon is used in our sleeping bags and stadium pillow products as the
exterior shell.
o Nylon polyester tricot
We will purchase nylon tricot from Roberts Textile Company or Fab
Industries, both of which are located in New York, New York. Nylon tricot
is made from very fine or single yarns, providing a suede-like texture.
Nylon tricot is typically used for underwear, sportswear, bathing suits and
gloves. Nylon tricot is used in our sleeping bags as the inside lining.
27
o Compression sacks
We will purchase compression sacks form Equinox located in Williamsport,
Pennsylvania. Compression sacks are small Rip Stop Nylon bags,
approximately 12 inches by 8 inches. They are separate from our sleeping
bag and are used to compress our sleeping bag when not in use. Rip Stop
Nylon is the sole component of the compression sacks.
Raw Materials to be provided for our Jackets, Windshirts, and Ball Caps
o Eliotex
Eliotex will be used to provide insulation in our jackets, windshirts, and
ball caps.
o Polyester peached microfiber
We will purchase polyester peached microfiber which is a type of grade
microfiber from Roberts Textile Company located in New York, New York. It
is durable and water repellent treated for our jackets, windshirts, and
ball caps.
o Rib knit
We will purchase rib knit for our jackets, windshirts and ball caps from
Green Mountain located in Knitter, Vermont. Rib knit is a mix of cotton
and Lycra and is elastic and is used for the trip around the collars,
waistbands and cuffs.
The delivery time involved for our raw materials from the date of order to the
date of delivery is less than one week for all stocked materials. Non-stocked
materials or special orders may take up to two weeks for delivery.
The only "raw product" we store on a continual basis is "Eliotex" which we store
in our warehouse. Our warehouse space is sufficient for our storage of Eliotex.
For the other raw materials that are below 1000 piece goods, we have the
materials shipped directly to the sub-manufacturer. For production runs in
excess of 1000 piece goods, we arrange for the raw materials to be shipped to
our warehouse facility, which is sufficient for that use; thereafter, we
distribute to the sub-manufacturer the quantity needed for each production run
and we store the remaining quantity. Payment typically will be due on an average
of 30 to 60 days after receipt of the raw materials by our sub-manufacturer or
our warehouse facility. Our Indonesia based manufacturer, PT. Lidya & Natalia,
has sole discretion in the sourcing and ordering of raw materials for their
production runs, the costs of which we reimburse them for.
MANUFACTURING
Swimeez Products
Our completed Swimeez swim suit products are sub-manufactured by R & M Apparel
located in Gallitzen, Pennsylvania.
Sleeping Bag Products
Our completed sleeping bag products are sub-manufactured by Equinox located in
Williamsport, Pennsylvania.
Stadium Pillow, Ballcap, and Jacket Products
Our completed Stadium Pillow, ballcap, and jacket products are sub-manufactured
by PT. Lidya & Natalia located in Sidoarjo, Indonesia. Because the predominant
function of the Stadium Pillows is a sleeping bag, they are imported as sleeping
bags. Indonesia does not impose quotas that limit the time period or quantity of
items which can be imported. The United States Customs Service imposes a 9%
importation duty for Indonesia based good imported into the United States.
Windshirts
Our completed windshirt products are sub-manufactured by CMT Contractors
located in Butler, Pennsylvania.
28
We have no verbal or written agreements or long term agreements with any of our
sub-manufacturers, and we do not plan to obtain such agreements. Our
sub-manufacturers manufacture our products on a per order basis.
FULFILLMENT PROCESS
The fulfillment process involved in completing wholesale orders for non stocked
swimsuit, sleeping bag, windshirts, jackets, and ball cap products is described
below:
------- ------------------------------------------------------------------------
Day Action
------- ------------------------------------------------------------------------
1 o We receive a purchase order for a certain number of items from a
wholesale purchaser by hand delivery, fax, courier, or mail, with an
authorized signature of the purchaser. We do not accept telephone
orders.
o We contact a raw material supplier to send a certain number of yards
of raw materials to our sub-manufacturers. Raw materials are ordered
according to need.
o We contact our sub-manufacturers with the details of the order,
including the number of units to be produced according to design or
model, size, or color.
o We complete and forward a purchase order to the manufacturer. The
manufacturer approves or disapproves a purchase order.
o If the purchase order is approved, the manufacturer responds with a
final cost, production schedule and date the goods will be delivered
to us.
------- ------------------------------------------------------------------------
10 o Our sub-manufacturers ship finished goods to us.
------- ------------------------------------------------------------------------
14 o We receive finished goods, and facilitate turn-around for shipment
to the sporting goods store. Goods received in distribution center
where they are packaged in Master Packs, hang tags attached, and
UPC/UCC codes labels applied to items for distribution to retailer.
------- ------------------------------------------------------------------------
The basis for the above time estimates has been derived from our RMF Global,
Inc.'s prior experience with these sub-manufacturers.
The fulfillment process involved in completing wholesale orders for our Stadium
Pillow products is described below:
------- ------------------------------------------------------------------------
Day Action
------- ------------------------------------------------------------------------
1 o We receive an order for a certain number of items from a wholesale
purchase by hand delivery, fax, courier, or mail with an authorized
signature of the purchaser.
o We contact our sub-manufacturers with the details of the order,
including the number of units to be produced according to color
combinations. The sub-manufacturers then procure the raw materials.
------- ------------------------------------------------------------------------
7 o Our sub-manufacturers receive raw materials from suppliers and begin
production.
------- ------------------------------------------------------------------------
25 - 30 o Within 25-30 days, our sub-manufacturers ship finished goods to us,
pending no international freight or shipping issues.
------- ------------------------------------------------------------------------
56 - 61 o We receive finished goods, and facilitate shipment to the buyer.
------- ------------------------------------------------------------------------
The basis for the above time estimates has been derived from our RMF Global,
Inc.'s prior experience with these sub-manufacturers.
29
INVENTORY
Any inventory we maintain will be stored at our warehousing facility. Our
warehouse facility has the capacity to hold 250,000 finished products in
inventory and raw materials or Eliotex. The amount of raw materials or Eliotex
we store at our warehousing facility is dependent upon the size of production
runs at any one time and cannot be estimated with any certainty.
COMPETITIVE BUSINESS CONDITIONS AND OUR PLACE IN THE MARKET
The markets for our products are increasingly competitive. Our competitors have
substantially longer operating histories, greater name recognition, larger
customer bases and greater financial and technical resources than us. Because we
are financially and operationally smaller than our competitors, we will
encounter difficulties in capturing market share. Our competitors are able to
conduct extensive marketing campaigns and create more attractive pricing of
their target markets than we are. In addition, we do not have an established
brand name or reputation while our competitors have significantly greater brand
recognition, customer bases, operating histories, and financial and other
resources.
Some of our biggest competitors in the floating swimwear market are:
o www.floatingswimwear.com;
o www.maui.net/-welck; and
o www.hotshop.at/enlisch/swimc.
o Welck-em Floats located in Lahaina, Hawaii;
o Aqua Leisure Industries located in Avon, Massachusetts; and
o Swim Coach websites located in the United Kingdom.
Some of our biggest competitors in the sleeping bag market are:
o North Face located in San Leandro, California or www.thenorthface.com;
o Slumberjack located in Saint Louis, Missouri or www.slumberback.com;
o Sierra Designs located in Emeryville, California;
o Kelly Pack, Inc. located in Boulder, Colorado; and
o Marmot Mountain, Ltd. located in Santa Rosa, California.
Some of our biggest competitors in our stadium pillow market are:
o North Face located in San Leandro, California or www.thenorthface.com;
o Slumberjack located in Saint Louis, Missouri or www.slumberback.com;
o Sierra Designs located in Emeryville, California;
o Kelly Pack, Inc. located in Boulder, Colorado; and
o Marmot Mountain, Ltd. located in Santa Rosa, California.
Some of our biggest competitors in our windshirts market are:
o www.zerorestriction.com;
o www.innerharborshirts.com; and
o www.cutterbuckapparel.com.
Some of our biggest competitors in our jacket and ball cap markets are:
o www.zerorestriction.com;
o cutterbuckapparel.com; and
o North Face located in San Leandro, California or www.thenorthface.com.
OUR PLAN TO COMPETE
We plan to compete in the following ways:
A. Emphasize the Advantages of our Products
Sleeping Bag Products
We plan to emphasize the following characteristics of our sleeping bag products:
o inherent buoyancy of Eliotex;
o low weight;
o compactness;
o water repellency;
o thermal insulation properties which makes a thinner, more compact, and
warmer sleeping bag than some of our competitors; and
o having these multiple advantages.
30
Swimeez Products
We plan to emphasize the following characteristics of our swimeez swimsuit
product:
o inherent buoyancy of Eliotex which is sewn into our swimsuit and results
in a less obtrusive swimming experience while still retaining buoyancy in
comparison to some of our competitors; and
o low weight.
Stadium Pillow Products
We plan to emphasize the following advantages of our Stadium Pillow product:
o Our Stadium Pillow product has multiple uses by acting as a stadium seat
cushion or pillow, thermal rain parka, sleeping bag, flotation raft and
double comforter; and
o Our Stadium Pillow product has the advantages of low weight, compactness,
water repellency, and thermal insulation properties.
Windshirts, Ball Caps and Jackets
We plan to emphasize the following advantages of our windshirt, ball caps and
jacket products:
o low weight;
o compactness;
o water repellency;
o thermal insulation properties which makes a thinner, more compact product
than some of our competitors; and
o having these multiple advantages.
The basis for our above product claims is derived from the Vartest Lab Results,
a fiber/yarn, fabric and apparel testing firm, located in New York, New York
that RMF Global, Inc. retained and paid $5,275 to conduct testing of the Eliotex
material. The March 1999 Vartest Lab Results appear below under our "Research
and Development" Section.
B. Utilize our web site to promote, market, and sell our products to consumers.
C. Utilize Professional Sales Representatives and Manufacturer Representatives
to sell our products to established retailers, especially sporting goods
retailers.
D. Utilize sporting goods tradeshows to promote and market our products to
potential distributors and consumers. To date, we have only attended one trade
show, the Shot Show, a sporting/hunting/outdoor apparel show which occurred from
February 13, 2003 to February 16, 2003 in Orlando, Florida.
E. Utilize product endorsements from professional athletes and sports figures to
bolster awareness and image of our products. To date, we have neither negotiated
nor obtained such endorsements. We have not established any criteria for
obtaining such endorsements.
DISADVANTAGES
Our products have the following disadvantages in comparison to the products of
our competitors:
o Lack of a broad range of product designs or styles; lack of product line
depth
Our competitors have many more products than we do that are available in
various inner and outer materials, insulations, as well as designs, styles,
and colors. In contrast, we only have 6 products, with limited designs,
styles, and colors. We have only two sleeping bag models with essentially
the same insulation, shell fabric and linings and in only two colors, while
other companies such as North Face, Inc. offer at least 20 models of
sleeping bags for mountaineering and backpacking with differing
insulations, shell fabrics and linings. Additionally, we have only one
floatable swimming wear product, while other companies have similar
products with many different models and designs. Our windshirts, jackets
and ball caps are available in only one style and a limited number of
colors. Moreover, although our stadium pillow products have multiple uses,
they are not available in different models or differing insulations, shell
fabrics or linings. Because our competitors offer hundreds of different
products that we do not offer, our limited product line may not appeal to a
variety of consumer preferences.
31
o Preference for less insulated sleeping bag
Because our sleeping bags are developed for use in cold conditions, outdoor
enthusiasts in warmer climates may prefer a less insulated sleeping bag
offered by our competitors.
o Lack of brand name recognition or of the properties of Eliotex and its
advantages.
We, as well as our products, have little brand name recognition compared to
our competitors. Our Stadium Pillow products, as new products, will
especially encounter difficulties in establishing product recognition.
Also, although our products have insulation properties, the material "down"
has a widespread and established reputation as being the superior
insulation in the market, while the properties and advantages of Eliotex
has little public recognition.
There can be no assurance that we will be able to compete in the sale of our
products, which could have a negative impact upon our business.
CUSTOMER DEPENDENCY
We currently have two retailers from which we have purchase orders: Nemacolin
Woodlands Resort and Spa and Woodlands Outdoor Spa. We do not expect our
business to be dependent on one or a few customers or retailers; however, there
is no assurance that we will not become so dependent.
INTELLECTUAL PROPERTY
On March 4, 2003, we applied for trademark protection for our name "idigear"
with the United States Patent and Trademark Office. We have not received
approval or any disposition regarding this trademark application and there is no
assurance that we will ever receive trademark approval for our idigear name.
On July 4, 2000, the United States Patent and Trademark Office granted a United
States Patent, Patent Number 6,083,999, titled "Process for the Preparation of a
Super Lightweight Foamed Sheet". The inventor of the patent is identified in the
Patent as Hung Seob Moon of the Republic of Korea and the assignee of the patent
is identified as Elio Davide Cattan.
The patent states that it is the "object of the present invention to eliminate
the above mentioned drawbacks [bulkiness and being cumbersome in practical use]
by providing a foamed expanded super lightweight sheet having superior buoyancy
and cold and heat resistance properties...Another object of the present
invention is to provide a thin and super lightweight lining for garments and
sports articles and other related equipment which are cumbersome and bulky,
while yet combining both buoyancy and thermal resistance properties."
We do not have the actual patent described above; rather, we have been granted a
sublicense for the exclusive marketing and distribution rights for use of
Eliotex in sleeping bags, swimsuits, and stadium pillows and the rights to
purchase Eliotex for the manufacture of other apparel and accessory items
containing Eliotex.
We have not applied for trademark protection for our name, Innovative Designs,
Inc. with the United States Patent and Trademark Office. There can be no
assurance that our use of the name Innovative Designs, Inc. or idigear will not
violate the proprietary rights of others. If our use of the Innovative Designs,
Inc. or idigear name is challenged, our use of the name could be prohibited. Our
competitors may adopt product or service names similar to ours, which would
impede our ability to build brand identity and otherwise negatively affect our
brand name reputation. Should we be unable to protect our trade names, our
business, results of operations, and financial condition will be negatively
affected.
32
Future Production Costs
Because we use our sub-manufacturing services, we will not have any future
production costs.
Future Equipment Costs
Because we plan to use sub-manufacturers for our products, we will not require
any equipment for manufacturing and we do expect to incur any material costs
affiliated with purchase of plant and significant equipment. We do not currently
have any plant or significant equipment to sell.
RESEARCH AND DEVELOPMENT
We have spent no funds on research and development of our products. In March of
1999, our affiliate, RMF Global, Inc., hired and paid $5,275 to Vartest
Laboratories, Inc. to perform testing of the Eliotex material. Other than the
testing, performed by Vartest Laboratories, Inc, RMF Global, Inc. has spent no
funds on research and development.
The Vartest Laboratories test results establish the buoyancy and insulation
qualities of Eliotex. The results are as follows:
------------------------------ -------------------------------------------
Issue Test Result
------------------------------ -------------------------------------------
Fabric weight 0.042 oz./yd2 Low
------------------------------ -------------------------------------------
Fabric Thickness 0.021 inches Thin
------------------------------ -------------------------------------------
Thermal Retention Clo value: 2.0 Good
------------------------------ -------------------------------------------
Air permeability (protection 0.01 cubic feet of air/min/ft2 Low
from wind) of material (Good)
------------------------------ -------------------------------------------
Moisture permeability 5 grams/sq. meter/24 hrs Low
(protection from water) (Good)
------------------------------ -------------------------------------------
GOVERNMENTAL APPROVAL REQUIREMENTS
Although we are not aware of the need for any government approval of our
principal products, we may be subject to such approvals in the future.
EFFECT OF EXISTING GOVERNMENTAL REGULATIONS
The product suppliers and manufacturers of our products, to the extent that they
are involved in the manufacturing, processing, formulating, packaging, labeling
and advertising of the products, may be subject to regulations by the Federal
Trade Commission and Environmental Protection Agency. These agencies may bring
injunctive action to terminate the sale of such products, impose civil
penalties, criminal prosecutions, product seizures, and voluntary recalls.
Should we or our suppliers become subject to any such orders or actions, our
brand name reputation and that of our suppliers and products will be adversely
affected and our business would be negatively affected.
We are required to pay a 9% importation duty upon our completed Stadium Pillow,
ballcap, and jacket products which are sub-manufactured by PT. Lidya & Natalia
located in Sidoarjo, Indonesia. We are not required to pay an importation duty
regarding our purchase of Eliotex from Mr. Ko-Myung Kim, a citizen of Korea.
We are not aware of any governmental regulations that will affect the Internet
aspects of our business. However, due to increasing usage of the Internet, a
number of laws and regulations may be adopted relating to the Internet covering
user privacy, pricing, and characteristics and quality of products and services.
Furthermore, the growth and development of Internet commerce may prompt more
stringent consumer protection laws imposing additional burdens on those
companies conducting business over the Internet. The adoption of any additional
laws or regulations may decrease the growth of the Internet, which, in turn,
could decrease the demand for Internet services and increase the cost of doing
business on the Internet. These factors may have an adverse affect on our
business, results of operations, and financial condition.
33
Moreover, the interpretation of sales tax, libel, and personal privacy laws
applied to Internet commerce is uncertain and unresolved. We may be required to
qualify to do business as a foreign corporation in each such state or foreign
country. Our failure to qualify as a foreign corporation in a jurisdiction where
we are required to do so could subject us to taxes and penalties. Any such
existing or new legislation or regulation, including state sales tax, or the
application of laws or regulations from jurisdictions whose laws do not
currently apply to our business, could have a material adverse affect on our
business, results of operations and financial condition.
COMPLIANCE WITH ENVIRONMENTAL LAWS
We currently have no costs associated with compliance with environmental
regulations. Because we do not manufacture our products, but rather they are
manufactured by our sub-manufacturers, we do not anticipate any costs associated
with environmental compliance. Moreover, the delivery and distribution of our
products will not involve substantial discharge of environmental pollutants.
However, there can be no assurance that we will not incur such costs in the
future.
REVENUE SOURCES
We estimate that all of our revenues will be from the sale of our products. We
will sell our products at prices above our original cost to produce our
products. Prices for some of our products will be lower than similar products of
our competitors, while others will be higher. We expect our product prices to be
lower than network marketing companies, but higher compared with retail
establishments that directly manufacture their own products.
PRICING
Products that are sold directly by our website will be priced according to our
Manufacturer Suggested Retail Prices. Our wholesale clients will purchase our
products at our wholesale prices. We recommend that our retailer clients sell
our products at the Manufacturer Suggested Retail Prices that we provide to them
which are the same prices for products on our website; however, they are not
required to do so and may price our products for retail sale at their
discretion.
EMPLOYEES
We currently have only 1 full-time employee, our Chief Executive Officer, Joseph
Riccelli.
CONSULTANTS
In addition, we utilize the following full-time consultants:
o Michelle Griffith, who is Vice President Sales and Marketing also our
marketing and sales consultant; and
o Joseph A. Riccelli, our Vice President, who is our Chief Executive
Officer's son.
We have no collective bargaining or employment agreements.
REPORTS AND OTHER INFORMATION TO SHAREHOLDERS
We are not now subject to the information and reporting requirements of the
Securities Exchange Act of 1934. We have filed this Form SB-2 Registration
Statement with the Securities and Exchange Commission. If the Securities and
Exchange Commission declares this Registration Statement effective, we will
become subject to the information and reporting requirements of the Securities
Exchange Act of 1934 and we will file periodic reports, proxy statements, and
other information with the Securities and Exchange Commission. Until this
Registration Statement is declared effective, if ever, we are not required nor
do we have plans to voluntarily deliver an annual report to our shareholders.
The following documents may be inspected, without charge, and copies may be
obtained at prescribed rates, at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549: (a) this Registration Statement and
exhibits thereto; and (b) periodic reports, and other information, should we
become subject to the information and reporting requirements of the Securities
Exchange Act of 1934. The public may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The Registration
Statement and other information filed with the SEC are also available at the
website maintained by the SEC at http://www.sec.gov.
34
ITEM 17. PLAN OF OPERATIONS
The discussion contained in this prospectus contains "forward-looking
statements" that involve risk and uncertainties. These statements may be
identified by the use of terminology such as "believes," "expects," "may,"
"will," "should," or "anticipates," or expressing this terminology negatively or
similar expressions or by discussions of strategy. The cautionary statements
made in this prospectus should be read as being applicable to all related
forward-looking statements wherever they appear in this prospectus. Our actual
results could differ materially from those discussed in this prospectus.
Important factors that could cause or contribute to such differences include
those discussed under the caption entitled "Risk Factors," as well as those
discussed elsewhere in this prospectus.
We had offering costs of $36,992.71 which consist of legal services, edgarizing,
and accounting fees which were paid from our operating account.
We cannot continue to satisfy our current cash requirements for a period of
twelve (12) months through our existing capital. We anticipate total estimated
capital expenditures of approximately $31,350 per month or an aggregate of
$376,200 over the next twelve (12) months, in the following areas:
o Hire approximately 2 additional consultants and 2 employees;
o Update and develop our web site and develop our online marketing campaign;
o Contract with manufacturer representatives to sell our products;
o Design and develop literature, displays, and media and advertising
materials;
o Develop and maintain public relations campaigns;
o Develop trade show booths;
o Attend trade shows;
o Develop and initiate online marketing campaign;
o Establish relationships with retail chain outlets and mass merchandisers;
and
o Warehouse lease payment.
Our current cash of $167,864 as of February 28, 2003 will satisfy our cash
requirements for only approximately five months.
Accordingly, we will be unable to fund our expenses for our entire one year plan
of operations through our existing assets or cash. Although our Chief Executive
Officer plans to loan us funds to meet our expenses, we have no verbal or
written agreement with him that obligates him to loan us these funds. If our
Chief Executive Officer is unable or unwilling to make these loans to us that we
need to implement our plan of operations, we will need additional financing
through traditional bank financing or a debt or equity offering; however,
because we are a development stage company with no operating history and a poor
financial condition, we may be unsuccessful in obtaining such financing or the
amount of the financing may be minimal and therefore inadequate to implement our
plan of operations. In addition, if we only have nominal funds by which to
conduct our operations, we may have to curtail advertising or be unable to
conduct any advertising, both of which will negatively impact development of our
brand name and reputation. We have no alternative plan of operations. In the
event that we do not receive financing, our financing is inadequate, or if we do
not adequately implement an alternative plan of operations that enables us to
conduct operations without having received adequate financing, we may have to
liquidate our business and undertake any or all of the following actions:
o Sell or dispose of our assets, if any;
o Pay our liabilities in order of priority, if we have available cash to pay
such liabilities;
o If any cash remains after we satisfy amounts due to our creditors,
distribute any remaining cash to our shareholders in an amount equal to the
net market value of our net assets;
35
o File a Certificate of Dissolution with the State of Delaware to dissolve
our corporation and close our business;
o Make the appropriate filings with the Securities and Exchange Commission so
that we will no longer be required to file periodic and other required
reports with the Securities and Exchange Commission, if, in fact, we are a
reporting company at that time; and
o Make the appropriate filings with the National Association of Security
Dealers to affect a delisting of our common stock, if, in fact, our common
stock is trading on the OTC Bulletin Board at that time.
Based upon our current assets, however, we will not have the ability to
distribute any cash to our shareholders.
If we have any liabilities that we are unable to satisfy and we qualify for
protection under the U.S. Bankruptcy Code, we may voluntarily file for
reorganization under Chapter 11 or liquidation under Chapter 7. Our creditors
may also file a Chapter 7 or Chapter 11 bankruptcy action against us. If our
creditors or we file for Chapter 7 or Chapter 11 bankruptcy, our creditors will
take priority over our shareholders. If we fail to file for bankruptcy under
Chapter 7 or Chapter 11 and we have creditors, such creditors may institute
proceedings against us seeking forfeiture of our assets, if any.
We do not know and cannot determine which, if any, of these actions we will be
forced to take. If any of these foregoing events occur, you could lose your
entire investment in our shares.
OUR PLAN OF OPERATIONS TO DATE
We have accomplished the following in our plan of operations from our inception
of June 2002 to date:
RAISED CAPITAL
From June 2002 to January 21, 2003, we raised $668,125 for our operations
through the sale of our common stock.
REVIEWING PROFESSIONAL MARKETING ORGANIZATIONS
From June 2002 to December 2002, our Chief Executive Officer, Joseph Riccelli,
interviewed and considered approximately 10 professional marketing organizations
for marketing, sales distribution, product endorsements and promotion of our
products. In October 2002, we retained MCM Communications, Inc., a marketing and
advertising firm, located in Pittsburgh, Pennsylvania, to provide us with
marketing and advertising services. To date, this firm has developed and
designed our initial web site, product literature, and the graphic design of
"Point of Sale" displays. MCM Communications' services to us were on a one time
project basis and we have no further agreement with that firm.
COMPLETION OF DESIGN, PROTOTYPE AND TESTING PHASE OF NEW PRODUCTS
In December 2002, we completed the design, prototype and testing phase of our
Stadium Pillow product. Additionally, in November 2002, we completed the design
of our windshirt and arranged for the manufacture of the product by CMT
Contractors of Butler, Pennsylvania. In December 2002, we delivered our
windshirt containing Eliotex to one retailer, Nemacolin Woodlands Resort and Spa
located in Farmington, Pennsylvania, which is currently selling our windshirts.
LEASED WAREHOUSING SPACE
In October, 2002, we arranged for the lease of warehouse space for our
inventory, Eliotex, and other raw materials storage at 124 Cherry Street, Etna,
Pennsylvania from Frank Riccelli, our President/Director. The warehouse space is
being utilized for our inventory/raw material storage, sales offices,
conference/ presentation room, sample/ source area, distribution center and
product aquatic testing area.
36
WEBSITE DEVELOPMENT, POINT OF SALE DISPLAY, WEBSITE DESIGN AND
ADVERTISING/PRODUCT LITERATURE LAYOUT
In October 2002, we obtained the services of a website marketing consultant, BA
Web Productions, located in Pittsburgh, Pennsylvania, to assist with marketing
our website. Our website became operational on November 10, 2002. This firm will
assist us in creating web presentations of our products. We have the ability to
take credit card orders of our products. In October 2002, we retained the
services of MCM Communications, Inc. located in Pittsburgh, Pennsylvania, to
create our point of sale display, text for website, product information, and
marketing literature, all of which have been completed.
RETAILERS
In November 2002, the website retailers, Gear-guru.net and
Woodlandsoutdoorworld.com, began ordering our sleeping bag and windshirt
products on a wholesale basis for retail sale. Woodlands Outdoor World, a retail
store, located in Farmington, Pennsylvania, began carrying our sleeping bag
product and our windshirt products and Nemacolin Woodlands Resort and Spa's
retail store located in Farmington, Pennsylvania, began carrying our windshirt
product in its retail store.
CONTRACT WITH MANUFACTURER REPRESENTATIVE GROUP
In November of 2002 we entered into a verbal agreement with a manufacturer
representative group, Havel-Giarusso and Associates, located in Big Lake,
Minnesota to sell our products to outdoor retail chains. This manufacturer
representative group has relationships with outdoor retailers located in various
states.
OUR FUTURE PLAN OF OPERATIONS
Our Plan of Operations over the next twelve (12) months, from March 2003 to
March 2004 will consist of the following:
March 2003 - July 2003
Utilize Consultants for Management and Operations
From March 2003 through July 2003, we intend to utilize outside web design,
marketing, and public relations firms on a part-time, as needed basis, including
BA Web Productions and MCM Communications mentioned above. We estimate the cost
for these consultants will be approximately $50,000.
March 2003 - March 2004
Hire In House Hourly Employees for Shipping, Receiving, Customer Service, Data
Entry and Invoicing.
We will hire up to 3 part time and 3 full time employees which we plan to
compensate on an hourly basis to perform shipping, receiving, customer service,
data entry and invoicing services. The number of employees that we hire will be
dependent upon the number of product orders we receive. Initially, we plan to
hire 2 part time employees, one of which will be responsible for our shipping
and receiving and another which will be responsible for customer service, data
entry and invoicing. Because the number of employees is contingent upon our
product orders, we may not hire more than our initial 2 employees. We will pay
these hourly employees $7 per hour. We plan to hire the first 2 additional
employees sometime during approximately March or April 2003.
March 2003 - August 2003
Increase the Utility of our Web Site
Although our website is operational, we intend to continually improve the
utility and design of our website. We plan to continually improve the following
features of our website:
o Simple navigational menu;
o Testimonials and third party product reviews;
o Product information and pictures/graphics; and
o Links to pertinent/affiliated websites.
37
We estimate that the cost of web site layout modification, and continuing
development, will be $20,000, including approximately $75.00 per month for web
site hosting and payment provider fees.
March 2003 - March 2004
Develop and Initiate Online Marketing Campaign
We will utilize marketing professionals to focus on increasing our website's
page rank, which is the numerical location or position of our web site among
search engine results. We have employed on a "per project basis", BA Web
Productions, to update, expand, and develop our web site. This ongoing campaign
will start with search engine optimization strategies, and continue with banner
advertisements and reciprocal linking campaigns with established web sites with
complementary or relevant products and/or services to the company's products.
Our online marketing campaigns will entail the following:
o Reciprocal linking with well-established websites with related content
and/or complementary products;
o Issuance of press releases about our products to targeted on-line
publications; and
o Strategic placement of banner advertisements on websites.
The estimated cost of this online marketing campaign is $500 per month or $6,000
per year, including travel expenses and lodging, business lunches/dinners, and
telephone charges.
April 2003 - July 2003
Hire Sales People
From April 2003 through July 2003, we will advertise in trade journals to
recruit sales representatives. Our Chief Executive Officer and Vice President of
Marketing will conduct the pre-qualification and personal interviews of
candidates. In addition, we may utilize placement agencies for assistance in
fulfilling our personnel needs. The estimated cost for the classified
advertisements and/or placement agency fees is $1,200. We plan to hire 3 such
sales representatives by July 2003 at a base starting salary of approximately
$30,000 with no commissions. These sales representatives will market our
products to and service retail chain stores, facilitate trade shows, initiate
and nurture relationships with relevant local and national organizations, and
provide support to manufacturer representatives of our products.
We plan on hiring sales representatives during the months of April 2003 through
July 2003. We estimate total costs of $2,500 for locating 3 sales
representatives.
April 2003 - August 2003
Initially Contract with five (5) Manufacturer Representatives
Our Vice President of Sales and Marketing will interview and contact additional
established apparel representatives from manufacturer representative
organizations. Compensation to these manufacture representatives will be on a
commission basis only. We do not anticipate any expenses associated with this
activity.
March 2003 - March 2004
Design and Development of Literature, Displays, and Media Materials
We will develop literature, point-of-sale and media materials in our attempt to
integrate our products into large retail store outlets. We will utilize
marketing consultants to develop and implement professional photography and
graphics, brochures, point-of-sale displays, mailers and literature, which we
plan to use as trade show exhibits, and sales tools for our sales
representatives and manufacturer representatives. We have already hired MCM
Communications, Inc that began these projects in October 2002. We estimate that
our total expenditure in this area will be $60,000.
38
April 2003 - March 2004
Develop and Initiate Print Advertising
Throughout our plan of operations and as a congruent part of our overall
marketing strategy, we intend to initiate our targeted print advertising
campaign in specific newspapers, magazines, and trade journals. We plan on
beginning an advertising campaign with "Teaser Ads," advertisements stating
product and company information but not specific ads on one particular product,
in outdoor publications and magazines along with trade show brochures.
Additionally we will utilize ad space in chain store news and inserted flyers.
We will utilize marketing/ advertising agencies to assist in the design,
development, printing, and distribution of these advertising campaigns, along
with our Executive Officer and Vice President of Sales and Marketing. The total
estimated cost for our print advertisements is $30,000.
April 2003 - March 2004
Develop and Maintain Public Relations Campaigns
Starting in April 2003 and continuing throughout our Plan of Operations, we
intend to utilize marketing consultants to develop advertisements and press
releases for apparel and outdoor gear magazines and trade journals. The press
releases and advertisements will discuss issues such as company status, product
innovations, and other notable events and developments. The estimated cost is
$3,000 for consultant services, advertisements, press release submission via PR
Newswire, software and administrative expenses.
March 2003 - August 2003
Develop Trade Show Booth
We will utilize marketing consultants to design and develop our portable display
booth to be used in participating in sporting goods and outdoor apparel specific
trade shows. The show booth development includes a modular wall design, display
pedestals and tables, carpeting, and company signage. We estimate the cost of
the booth to be $5,000.
March 2003 to September 2003
Attend Trade Shows
We will utilize marketing consultants to assist our Chief Executive Officer,
Vice President of Sales and Marketing, and our sales representatives to attend
and/or participate in various sporting goods trade shows, apparel trade shows,
and outdoor shows, including:
o Outdoor Retailer Summer Market, August 14-17, 2003, Salt Lake City, UT
o MAGIC Textile and Apparel, August 26-29, 2003, Las Vegas, Nevada
o Action Sports Retailer Trade Expo, September 5-7, 2003, San Diego, CA
The total estimated cost of attending all of these shows is $6,500 per show for
travel and food.
March 2003 - March 2004
Establish Wholesale Relationships with Retail Chain Outlets and Mass
Merchandisers to Carry Our Products and Product Promotion
We plan to develop wholesale relationships or distribution points for our
products. Throughout our plan of operations, we plan to implement sales
campaigns to established retailers with the goal of establishing wholesale
relationships. Our Chief Executive Officer and Vice President of Sales and
Marketing will initiate these campaigns.
Our sales campaigns will be an ongoing process and will consist of our sales
representatives accomplishing the following:
o Lead Generation - Accomplished through cold calling, follow-up contacts
from tradeshows and mailers, and networking with outdoor gear and apparel
industry associations;
39
o Personal Presentations to Executives and Purchasing Departments of Targeted
Retailers - Through these sales presentations we will attempt to convince
the retailer to purchase our products at wholesale prices for resale in
their store or chain of stores. The orientation of the presentation will be
an introduction of the innovative and technologically advanced aspects of
our products, as well as the advantages of our products over some of our
competitors. For example, we will highlight the lightweight, compactness,
thermal insulation, and buoyancy features of Eliotex used in our products.
These personal presentations will occur at on-location prospect facilities
of our products to executives and purchasing departments and will include a
product display and a video demonstration of the products in use;
o Order Acquisition and Management - Once the retailer places an order for
products, the sales representative is responsible for managing the order
fulfillment process, forwarding the Purchase Order to Distribution Manager
who will then arrange the shipping specifics, as well as coordinating the
physical merchandising of our products on the shelves of the client stores.
By maintaining this hands-on approach, we will attempt to continue
successful relationships with our distributors; and
o Relationship Management - The sales representative is also responsible for
maintaining an ongoing relationship with acquired distributors. Our Vice
President of Sales and Marketing will enforce a regimented account
management program. This program is to include periodic telephone contacts,
once per month, and personal visits, once per six months minimum, with the
distributor.
March 2003 to March 2004
Sub-Manufacturing, Raw Materials Procurement and Fulfillment Process
We will conduct our sub-manufacturing, raw materials procurement and fulfillment
process as detailed in our Description of Business at page 22.
March 2003 to March 2004
Product Design and Development
We plan to expand our sleeping bag and floating swimwear products and research
and develop other apparel and accessory items containing "Eliotex". We plan to
continually evaluate trends, monitor the needs and desires of consumers by
conducting customer purchase follow-up, ongoing market research, and maintaining
open channels of communication with our distributor retailers and manufacturer
representatives. We plan to consult with our sub-manufacturers and raw material
suppliers regarding the development and use of new materials and the enhancement
of our product designs. In addition, we will continually evaluate our product
lines for proper positioning in the marketplace, by:
o Consulting with experts in the textiles and design engineering; and
o Consulting with third-party apparel designers and outdoor equipment experts.
The steps involved in our prospective design and development are:
o Product conception and design by our Chief Executive Officer, Vice
Presidents, and/or third party designers;
o Patterns made from design concept;
o Pattern cut and distributed to contracted sub-manufacturer;
o Sample manufactured - The manufacturer constructs one or a few of the
sample garments by combining and sewing the appropriate materials as
specified in the design presentation;
o Sample testing - We plan to forward the sample garment to Vartest
Laboratories, Inc. for testing regarding weight, water repellency, and
thermal insulation properties or other aspects depending on the type of
product being tested and product functions. In addition, our Officers and
Directors will be asked to use the prototype products to provide feedback
to the designer of the product and possible product improvements; and
o Final manufacturing plans submitted to manufacturer for production sample.
40
Based on previous product development experience, we expect that our product
development cycle, from initial design to product introduction will take three
to twelve months, depending upon the complexity of the design and associated
testing. Based on our previously established relationships with garment
manufacturers, we estimate new product design and development costs at roughly
$5,000 per new item. We estimate that we will develop no more than two new
products during our Plan of Operations from March 2003 to March 2004.
Although we are not currently developing products that will contain Eliotex for
use in the military and airline industries, we may do so in the future. Because
Eliotex has insulation and water repellent properties, it potentially has
widespread application to products that may be used by the military and airline
industries, such as additional sleeping bag products or flotation devices. We
anticipate that we will not begin to develop such products until we have
effectively penetrated the sporting goods market or established sufficient
market share that enables us to allocate resources for this type of industry
specific application development and material testing procedures, which we do
not anticipate until we complete our plan of operations over the next 12 months
as detailed above.
SUMMARY OF COSTS AFFILIATED WITH OUR PLAN OF OPERATIONS
Based on the above Plan of Operations, we will have total estimated costs of
$376,200, composed of the following:
--------------------------------------------------------------- ---------------
PLAN OF OPERATIONS TASK ESTIMATED COST
--------------------------------------------------------------- ---------------
Utilize Consultants for Management and Operations $50,000
--------------------------------------------------------------- ---------------
Increase the Utility of our Web Site $20,000
--------------------------------------------------------------- ---------------
Finding and Hiring Sales persons $2,500
--------------------------------------------------------------- ---------------
Travel expenses affiliated with contracting with $500
manufacturing representatives
--------------------------------------------------------------- ---------------
Design and development of literature and media materials $60,000
--------------------------------------------------------------- ---------------
Develop and maintain public relations campaigns $3,000
--------------------------------------------------------------- ---------------
Develop trade booth for trade shows $5,000
--------------------------------------------------------------- ---------------
Attending trade shows $6,500
--------------------------------------------------------------- ---------------
Hiring of professionals for our online marketing campaign $19,500
--------------------------------------------------------------- ---------------
Establishing sales campaigns, relationships, and $18,000
agreements with retailers and affiliate marketers
which will include travel expenses, lodging, business
lunches, dinners and telephone charges
--------------------------------------------------------------- ---------------
Print advertising $30,000
--------------------------------------------------------------- ---------------
Product design and development $10,000
--------------------------------------------------------------- ---------------
Warehouse Lease $31,200
--------------------------------------------------------------- ---------------
Salaries $120,000*
--------------------------------------------------------------- ---------------
Total Costs $376,200
--------------------------------------------------------------- ---------------
41
*Estimated salaries consist of: (a) $40,000 annual salary to Joseph A. Riccelli,
our Vice President; (b) $55,000 annual salary to Michelle Griffith, our
Marketing Director; and (c) $25,000 annual salary to Dave Shondeck, our Director
of Product Development Research. Does not include commission costs paid to
manufacturer representatives based on total purchase order amount which cannot
be determined at this time. Does not include hourly salaried wages, the specific
amount of which can not be determined at this time.
SOURCE OF FUNDS TO FUND OUR PLAN OF OPERATIONS
We plan to fund our total costs of $376,200 through the following:
o Our existing cash of $167,864, as of February 28, 2003, which is from our
sale of our common stock
o Possible revenue generated from our sale of products
o If necessary, loans from our Chief Executive Officer; our Chief Executive
Officer is under no obligation to provide us with such loans.
Our plan of operations is dependent upon our ability to generate revenues to
fund our operations; however, our revenues may be insufficient to provide
adequate funding. If our revenues are insufficient, Joseph Riccelli, our Chief
Executive Officer, has informed us that he will loan us sufficient funds to fund
our Plan of Operations. However, we have no specific arrangement or agreement
for Mr. Riccelli to provide us with such loans and he is under no obligation to
do so. Accordingly, we may have to seek financing through traditional bank
financing. However, because we are a development stage company with a poor
financial condition, financial institutions may not provide us with financing,
in which case we may have to curtail or cease our operations and you may lose
your entire investment.
ITEM 18. DESCRIPTION OF PROPERTY
Since May 2002, we have maintained our executive offices of 1500 square feet at
223 North Main Street, Suite 1, Pittsburgh, Pennsylvania 15215. We share our
office space with RMF Global, Inc. which is owned by Joseph Riccelli, our Chief
Executive Officer. We pay monthly rent of $700.00 to Riccelli Properties, a
property management firm owned by our Chief Executive Officer, Joseph Riccelli.
RMF Global, Inc. occupies these offices rent-free from Riccelli Properties.
Neither we nor RMF Global, Inc. have any verbal or written agreement regarding
these offices.
In October 2002, we arranged for the lease of warehouse space for our inventory
and raw materials at 124 Cherry Street, Etna, Pennsylvania. This facility
encompasses 13,000 square feet of storage space on the first floor and 2,000
square feet of our sales department offices located on the second floor. We have
entered into a verbal agreement with the owner of the building, Frank Riccelli,
who is also our President, and we pay $2,600 per month for the space. This
facility is composed of: (a) warehouse and storage areas including four (4)
shipping bays and a distribution area consisting of square footage to store in
upward of 250,000 finished goods products; and(b) four (4) offices, one (1)
conference room, with presentation area and sample display and (2) bathrooms
totaling approximately 2,000 square feet located on the second floor. The
building in which our offices are located is owned by our President, Frank
Riccelli, and is subject to a $120,000 mortgage. We have a verbal agreement with
our President, Frank Riccelli, to pay $2,600 per month for the space on a month
to month basis.
We do not own any property nor do we have any plans to own any property in the
future. We do not intend to develop properties. We are not subject to
competitive conditions for property and currently have no property to insure. We
have no policy with respect to investments in real estate or interests in real
estate and no policy with respect to investments in real estate mortgages.
Further, we have no policy with respect to investments in securities of or
interests in persons primarily engaged in real estate activities.
42
ITEM 19. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our officers and directors may encounter conflicts of interests between our
business objectives and their own interests. We have not formulated a policy for
the resolution of such conflicts. Future transactions or arrangements between or
among our officers, directors and shareholders, and businesses they control, may
result in conflicts of interest, and the conflicts may be resolved in favor of
businesses that our officers or directors are affiliated, which may have an
adverse affect on our revenues.
Our officers and directors have the following conflicts of interests:
o Our Chief Executive Officer and Chairman of the Board, Joseph Riccelli,
is the owner of RMF Global, Inc., our sublicensor, upon which our entire
business is wholly dependent;
o Our sublicense agreement with RMF Global, Inc. requires us to pay a total
of $1,250,000 for the grant of a license to sell RMF Global, Inc.'s three
products and other products we develop using Eliotex and because Joseph
Riccelli, our Chief Executive, is the owner of RMF Global, Inc., he will
personally benefit from our payment of these license payments to RMF
Global, Inc.;
o We lease warehouse space that is owned by our President, Frank Riccelli,
at a rate of $2,600 per month;
o We lease our executive offices from Riccelli Properties, which is solely
owned by our Chief Executive Officer, Joseph Riccelli, for which we pay
$700 per month. RMF Global, Inc. shares our executive offices rent-free;
and
o Our officers, directors and key consultants have the following family
relationships: (a) Joseph Riccelli, our Chief Executive Officer/Chairman
of the Board, is the brother of Frank Riccelli, our President/Director; and
(b) Joseph A. Riccelli, Vice President, is the son of our Chief Executive
Officer, Joseph Riccelli.
Agreement Between us and RMF Global, Inc.
On November 25, 2002, we entered into a written agreement with RMF Global, Inc.
The agreement provides that:
o RMF Global, Inc. grants an exclusive license to us to manufacture and
market RMF's three products made from Eliotex and grants us a license to
develop our own products using Eliotex;
o RMF Global, Inc. assures us of an adequate and timely supply of Eliotex to
meet our product orders;
o RMF Global, Inc. will offer Eliotex to us at a price equal to the lowest
price it charges any other RMF Global, Inc. customer;
o RMF Global, Inc. will transfer all of its rights, title and interest in all
promotional materials, advertisements, marketing strategies, and the like
for which it has contracted to us, and we will have the unfettered right
to use the same in any manner we see fit; and
o We must pay $1,250,000 to RMF Global, Inc., as follows: (i) $50,000 down
payment which has been paid; and (ii) annual payments of $400,000 due in
November 2003, 2004, and 2005.
Other than the above transactions, we have not entered into any material
transactions with any director, executive officer, and nominee for director,
beneficial owner of five percent (5%) or more of our common stock, or family
members of such persons where the amount of the transaction or chain of
transactions exceeds $60,000. We are not a subsidiary of any company.
43
ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for our common stock. Management
has not discussed market making with any market maker or broker-dealer. No
market exists for our securities and there is no assurance that a regular
trading market will develop, or if developed will be sustained. A shareholder in
all likelihood, therefore, will not be able to resell his or her securities
should he or she desire to do so when eligible for public resale. Furthermore,
it is unlikely that a lending institution will accept our securities as pledged
collateral for loans unless a regular trading market develops. Currently, we
have no plans, proposals, arrangements, or understandings with any person with
regard to the development of a trading market in any of our securities; however,
if this Registration Statement is approved by the Securities and Exchange
Commission, we plan to apply to have our common stock quoted on the OTC Bulletin
Board.
We have no shares of our preferred stock outstanding.
There are 2,834,375 shares of our common stock held by non-affiliates and
12,719,500 shares of our common stock held by affiliates that Rule 144 of the
Securities Act of 1933, defines as restricted securities.
SHARES ELIGIBLE FOR FUTURE SALE
Once this Registration Statement is declared effective, the 1,515,075 shares of
common stock being offered by our Selling Shareholders will be freely tradable
without restrictions under the Securities Act of 1933, except for any shares
held by our "affiliates," which will be restricted by the resale limitations of
Rule 144 under the Securities Act of 1933.
In general, under Rule 144 as currently in effect, any of our affiliates and any
person or persons whose sales are aggregated who has beneficially owned his or
her restricted shares for at least one (1) year, may be entitled to sell in the
open market within any three (3) month period a number of shares of common stock
that does not exceed the greater of (i) one percent (1%) of the then outstanding
shares of our common stock, or (ii) the average weekly trading volume in the
common stock during the four calendar weeks preceding such sale. Sales under
Rule 144 are also affected by limitations on manner of sale, notice
requirements, and availability of current public information about us.
Non-affiliates who have held their restricted shares for one year may be
entitled to sell their shares under Rule 144 without regard to any of the above
limitations, provided they have not been affiliates for the three (3) months
preceding such sale.
Further, Rule 144A as currently in effect, in general, permits unlimited resales
of restricted securities of any issuer provided that the purchaser is an
institution that owns and invests on a discretionary basis at least $100 million
in securities or is a registered broker-dealer that owns and invests $10 million
in securities. Rule 144A allows our existing stockholders to sell their shares
of common stock to such institutions and registered broker-dealers without
regard to any volume or other restrictions. Unlike under Rule 144, restricted
securities sold under Rule 144A to non-affiliates do not lose their status as
restricted securities.
As a result of the provisions of Rule 144, all of the restricted securities
could be available for sale in a public market, if developed, beginning ninety
(90) days after the date of this prospectus. The availability for sale of
substantial amounts of common stock under Rule 144 could adversely affect
prevailing market prices for our securities.
Options.
We have no shares of our common equity that are subject to outstanding options
to purchase.
44
Penny Stock Considerations.
Our shares are "penny stocks" as that term is generally defined in the
Securities Exchange Act of 1934 as equity securities with a price of less than
$5.00. Our shares may be subject to rules that impose sales practice and
disclosure requirements on broker-dealers who engage in certain transactions
involving a penny stock.
Under the penny stock regulations, a broker-dealer selling a penny stock to
anyone other than an established customer or "accredited investor" must make a
special suitability determination regarding the purchaser and must receive the
purchaser's written consent to the transaction prior to the sale, unless the
broker-dealer is otherwise exempt. Generally, an individual with a net worth in
excess of $1,000,000 or annual income exceeding $200,000 individually or
$300,000 together with his or her spouse is considered an accredited investor.
In addition, under the penny stock regulations the broker-dealer is required to:
o Deliver, prior to any transaction involving a penny stock, a disclosure
schedule prepared by the Securities and Exchange Commission relating to the
penny stock market, unless the broker-dealer or the transaction is
otherwise exempt;
o Disclose commissions payable to the broker-dealer and its registered
representatives and current bid and offer quotations for the securities;
o Send monthly statements disclosing recent price information pertaining to
the penny stock held in a customer's account, the account's value and
information regarding the limited market in penny stocks;
o Make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement
to the transaction, prior to conducting any penny stock transaction in the
customer's account.
Because of these regulations, broker-dealers may encounter difficulties in their
attempt to sell shares of our common stock, which may affect the ability of
Selling Shareholders or other holders to sell their shares in the secondary
market and have the effect of reducing the level of trading activity in the
secondary market. These additional sales practice and disclosure requirements
could impede the sale of our securities if our securities become publicly
traded. In addition, the liquidity for our securities may be adversely affected,
with a corresponding decrease in the price of our securities. Our shares may
someday be subject to such penny stock rules and our shareholders will, in all
likelihood, find it difficult to sell their securities.
Holders.
As of the date of this Registration Statement, we had 133 holders of record of
our common stock. We have one class of common stock outstanding.
Dividends.
We have not declared any cash dividends on our common stock since our inception
and do not anticipate paying such dividends in the foreseeable future. We plan
to retain any future earnings for use in our business. Any decisions as to
future payment of dividends will depend on our earnings and financial position
and such other factors as the Board of Directors deems relevant.
45
ITEM 21. EXECUTIVE COMPENSATION
The following Executive Compensation Chart highlights the terms of compensation
for our Executives.
Summary Compensation Chart
Annual Compensation Long-Term Compensation
Salary Bonus Other Restricted Stock Options L/TIP All
Name & Position Year ($) ($) ($) Awards ($) ($) Other
------------------ ---- ------ ----- ----- ---------------- ------- ----- -----
Frank Riccelli 2002 0 0 0 2,050,000 0 0 0
Joseph Riccelli 2002 0 0 0 10,500,000 0 0 0
Joseph A. Riccelli 2002 0 0 0 750,000 0 0 0
Because our executive officers and directors both have other employment, they
can work without cash compensation for at least the next twelve (12) months.
22. FINANCIAL STATEMENTS
INNOVATIVE DESIGNS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
As of October 31, 2002
46
INDEPENDENT AUDITORS REPORT
To the Board of Directors
Innovative Designs, Inc.
(A Development Stage Company)
Sharpsburg, Pennsylvania
We have audited the accompanying balance sheet of Innovative Designs, Inc. as of
October 31, 2002, and the related statements of expenses, stockholders' equity,
and cash flows for the period from June 25, 2002 (Inception) through October 31,
2002. These financial statements are the responsibility of Innovative Designs'
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Innovative Designs, Inc., as of
October 31, 2002, and the results of its operations and its cash flows for the
period described in conformity with accounting principles generally accepted in
the United States of America.
MALONE & BAILEY, PLLC
www.malone-bailey.com
Houston, Texas
January 21, 2003
47
INNOVATIVE DESIGNS, INC.
(A Development Stage Company)
BALANCE SHEET
As of October 31, 2002
ASSETS
Current Assets
Cash $ 115,280
Inventory 16,727
Deposits 77,000
---------
Total current assets 209,007
Property & equipment, net of $214 accumulated depreciation 17,542
---------
Total Assets $ 226,549
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Accounts payable $ 7,705
---------
Commitments
STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par, 100,000,000 shares
authorized, no shares issued and outstanding
Common stock, $.0001 par, 500,000,000 shares
authorized, 14,878,750 shares issued and outstanding 1,488
Additional paid in capital 795,417
Deficit accumulated during the development stage (578,061)
---------
Total Stockholders' Equity 218,844
---------
Total Liabilities and Stockholders' Equity $ 226,549
=========
See accompanying summary of accounting policies
and notes to financial statements.
48
INNOVATIVE DESIGNS, INC.
(A Development Stage Company)
STATEMENT OF EXPENSES
For the Period from June 25, 2002 (Inception)
Through October 31, 2002
Administrative expenses
- paid in cash $ 98,817
- paid in stock 479,030
Depreciation 214
---------
Net loss $(578,061)
=========
See accompanying summary of accounting policies
and notes to financial statements.
49
INNOVATIVE DESIGNS, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from June 25, 2002 (Inception)
Through October 31, 2002
Deficit
Accumulated
During
Common Stock Development
Shares Amount Stage Totals
---------- -------- ------------ ---------
Shares issued to founders
in June 2002 at par $.0001 14,050,000 $ 1,405 $ 1,405
Shares issued for cash in
- June 2002 for $.75 per share 20,500 15,375 15,375
- July 2002 for $1 per share 31,000 31,000 31,000
- August 2002 for $1 per share 26,000 26,000 26,000
- August 2002 for $2 per share 49,000 98,000 98,000
- September 2002 for $2 per share 48,500 97,000 97,000
- October 2002 for $2 per share 25,250 50,500 50,500
Shares issued for services in
- June 2002 valued at
$.75 per share 623,500 467,625 467,625
- August 2002 valued at
$2.00 per share 5,000 10,000 10,000
Net loss $ (578,061) (578,061)
---------- -------- ------------ ---------
Balances, October 31, 2002 14,878,750 796,905 $ (578,061) $ 218,844
========== ============ =========
Less: par value ( 1,488)
--------
Paid in capital $795,417
========
See accompanying summary of accounting policies
and notes to financial statements.
50
INNOVATIVE DESIGNS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Period from June 25, 2002 (Inception)
Through October 31, 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net deficit accumulated during the
development stage $(578,061)
Adjustments to reconcile net deficit
to cash used by operating activities:
Stock issued to founders 1,405
Stock issued for services 477,625
Depreciation 214
Changes in:
Inventory ( 16,727)
Deposits ( 77,000)
Accounts payable 7,705
---------
NET CASH USED BY OPERATING ACTIVITIES (184,839)
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property & equipment ( 17,756)
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of stock 317,875
---------
NET CHANGE IN CASH 115,280
Cash balance, beginning
---------
Cash balance, ending $ 115,280
=========
See accompanying summary of accounting policies
and notes to financial statements.
51
INNOVATIVE DESIGNS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business. Innovative Designs, Inc., was incorporated in Delaware on
June 25, 2002 to provide unique products such as recreational sleeping bags and
floating swimwear for outdoor recreation enjoyment.
Fiscal Year End. Innovative Designs' fiscal year ends on October 31.
Use of Estimates. In preparing financial statements, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities in
the balance sheet and revenue and expenses in the income statement. Actual
results could differ from those estimates.
Cash and Cash Equivalents. For purposes of the statements of cash flows,
Innovative Designs considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Revenue recognition. Innovative Designs has no policy because it has no
revenues.
Inventory. Inventory consists of raw fabric used in the construction of sleeping
bags and swimsuits. Inventory is stated at the lower of cost or market on a
first-in, first-out (FIFO) basis.
Property and equipment is valued at cost. The costs of additions and betterments
are capitalized and maintenance and repairs are charged to expense as incurred.
Gains and losses on dispositions of equipment are reflected in operations.
Depreciation is provided principally on the straight-line method over the
estimated useful lives of the assets, which are generally from five to seven
years.
Impairment of Long-Lived Assets. Innovative Designs reviews the carrying value
of its long-lived assets annually or whenever events or changes in circumstances
indicate that the historical cost-carrying value of an asset may no longer be
appropriate. Innovative Designs assesses recoverability of the carrying value of
the asset by estimating the future net cash flows expected to result from the
asset, including eventual disposition. If the future net cash flows are less
than the carrying value of the asset, an impairment loss is recorded equal to
the difference between the asset's carrying value and fair value.
Income taxes. Innovative Designs recognizes deferred tax assets and liabilities
based on differences between the financial reporting and tax bases of assets and
liabilities using the enacted tax rates and laws that are expected to be in
effect when the differences are expected to be recovered. Innovative Designs
provides a valuation allowance for deferred tax assets for which it does not
consider realization of such assets to be more likely than not.
Innovative Designs accounts for non-cash stock-based compensation issued to
non-employees in accordance with the provisions of SFAS No. 123 and EITF No.
96-18, Accounting for Equity Investments That Are Issued to Non-Employees for
Acquiring, or in Conjunction with Selling Goods or Services. Common stock issued
to non-employees and consultants is based upon the value of the services
received or the quoted market price, whichever value is more readily
determinable.
Recently issued accounting pronouncements. Innovative Designs does not expect
the adoption of recently issued accounting pronouncements to have a significant
impact on their results of operations, financial position or cash flow.
52
NOTE 2 - DEPOSITS
In August, September, and October, Innovative Designs made a total of $77,000 in
deposits for an order of raw fabric used in the construction of sleeping bags
and swimsuits. They had not received the fabric as of January 21, 2003.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment are summarized by major classifications as follows:
Equipment 7 yr. $ 5,431
Furniture & fixtures 7 yr. 4,653
Leasehold improvements 5 yr. 7,672
-------
17,756
Less accumulated depreciation (214)
-------
$17,542
=======
Depreciation expense for the year ended October 31, 2002 was $214. $3,000 of the
equipment and $2,875 of the furniture and fixtures were purchased from a company
owned by one of the founding shareholders and have been recorded at the original
cost of the founding shareholder's company.
NOTE 4 - COMMON STOCK
In June 2002, four founders were issued a total of 14,050,000 shares of
Innovative Designs common stock valued at par or $1,405.
In June 2002, Innovative Designs sold 20,500 shares of common stock for $.75 per
share or $15,375.
In June 2002, Innovative Designs issued 623,500 shares of common stock for
services valued at $.75 per share or $467,625.
In July 2002, Innovative Designs sold 31,000 shares of common stock for $1 per
share or $31,000.
In August 2002, Innovative Designs sold 26,000 shares of common stock for $1 per
share or $26,000.
In August 2002, Innovative Designs sold 49,000 shares of common stock for $2 per
share or $98,000.
In August 2002, Innovative Designs issued 5,000 shares of common stock for
services valued at $2 per share or $10,000.
In September 2002, Innovative Designs sold 48,500 shares of common stock for $2
per share or $97,000.
In October 2002, Innovative Designs sold 25,250 shares of common stock for $2
per share or $50,500.
53
NOTE 5 - INCOME TAXES
Deferred tax assets $ 33,000
Less: valuation allowance (33,000)
--------
Net deferred taxes $ 0
========
Innovative Designs has a net operating loss of approximately $97,000 at October
31, 2002 which can be carried forward 20 years.
NOTE 6 - COMMITMENTS
Innovative Designs currently maintains two offices. One is in the office of the
CEO and largest shareholder, pursuant to an oral agreement for $700 per month on
a month-to-month basis. The other is in the office of the president, pursuant to
an oral agreement on a month-to-month basis for $2,600 per month. For the period
ended October 31, 2002, rent expense on the office and storage area totaled
$7,300.
NOTE 7 - CONCENTRATIONS
Innovative Designs has cash deposits in a financial institution in excess of the
amount insured by the Federal Depository Insurance Corporation.
NOTE 8 - SUBSEQUENT EVENTS
On November 25, 2002, Innovative Designs entered into a license agreement with a
company owned by the majority shareholder of Innovative Designs. The agreement
is for 10 years, and gives Innovative Designs the exclusive right to manufacture
and market Eliotex, a fabric used in recreational products. Innovative Designs
will have the option to renew the agreement for four subsequent terms of ten
years each. Innovative Designs has agreed to pay $1,250,000 over three years,
$50,000 was due upon signing and was paid in November 2002, $400,000 is due on
the anniversary date of the agreement for each of the next three years.
Innovative Designs has discounted the payments due under the agreement using a
discount rate of 30 percent. The discounted value of the note payments in
addition to the $50,000 already paid total $618,144, which will represent the
initial fair value of the license agreement as an asset on the books of
Innovative Designs to be recorded on November 25, 2002, the date of the
acquisition.
In November 2002, December 2002, and January 2003, Innovative Designs sold
175,125 shares of common stock for $2 per share or $350,250.
54
ITEM 23. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Indemnification of Directors and Officers
The Seventh Article of our Certificate of Incorporation provides, among other
things, that we shall to the fullest extent permitted by Section 145 of the
Delaware Corporation law provide indemnification of our officers and directors
and our bylaws provide that we indemnify our directors to the fullest extent
permitted by law.
Section 145 of the General Corporation Law of Delaware empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise.
Depending on the character of the proceeding, a corporation may indemnify
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding if the person indemnified acted in good faith
and in a manner the person reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful. If the person indemnified is not wholly successful in such action,
suit or proceeding, but is successful, on the merits or otherwise, in one or
more but less than all claims, issues or matters in such proceeding, such person
may be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with each successfully resolved
claim, issue or matter. In the case of an action or suit by or in the right of
the corporation, no indemnification may be made in respect to any claim, issue
or matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that despite the adjudication of liability but in the view of all the
circumstances of the case such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper. Section 145
provides that to the extent a present or former director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to above or in the defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith.
With regard to the foregoing provisions, or otherwise, we have been advised that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by us of expenses incurred or
paid by a director, officer or controlling person of the Corporation 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, we will, unless in the opinion of our counsel the matter has been
settled by a controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by us is against
public policy as expressed in the Securities Act of 1933, as amended, and will
be governed by the final adjudication of such case.
55
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table is an itemization of all expenses, without consideration to
future contingencies, incurred or expected to be incurred by us connection with
the issuance and distribution of the securities being offered by this
prospectus. Items marked with an asterisk (*) represent estimated expenses. We
have agreed to pay all the costs and expenses of this offering. Selling
Shareholders will pay no offering expenses.
ITEM EXPENSE
---------------------------- ----------
SEC Registration Fee $ 292.71
Legal Fees and Expenses $30,000.00
Accounting Fees and Expenses $ 4,000.00
Miscellaneous* $ 2,700.00
============================ ==========
Total* $36,992.71
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On June 26, 2002, we issued 2,000,000 shares of our common stock to our
President, Frank Riccelli, in payment for services rendered to us as our
President. The shares issued to Frank Riccelli were valued at a price of $0.0001
per share, or an aggregate price of $200. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Frank Riccelli, our Officer and Director,
represented to us that he was an accredited investor, was acquiring the shares
for investment purposes and had access to all relevant information pertaining to
us.
On June 26, 2002, we issued 125,000 shares of our common stock to our
consultant, David Mehalick, in payment for services rendered to us as our
business consultant. The shares issued to Dave Mehalick were valued at a price
of $0.75 per share, or an aggregate price of $93,750. We relied upon Section
4(2) of the Act for the sale. We believed that Section 4(2) was available
because the sale did not involve a public offering. David Mehalick had a
pre-existing relationship with Joseph Riccelli, our Officer and Director. David
Mehalick represented to us that he was an accredited investor, was acquiring the
shares for investment purposes and had access to all relevant information
pertaining to us.
On June 26, 2002, we issued 20,000 shares of our common stock to our Chief
Financial Officer and Director, Anthony Fonzi, in payment for services rendered
to us as our Chief Financial Officer. The shares issued to Anthony Fonzi were
valued at a price of $0.75 per share, or an aggregate price of $15,000. We
believed that Section 4(2) was available because the sale did not involve a
public offering. Anthony Fonzi, our Chief Financial Officer and Director,
represented to us that he was an accredited investor, was acquiring the shares
for investment purposes and had access to all relevant information pertaining to
us.
On June 26, 2002, we issued 50,000 shares of our common stock to our Board of
Director member, Robert D. Monsour, in payment for services rendered to us as
our Board of Director member. The shares issued to Robert D. Monsour were valued
at a price of $0.75 per share, or an aggregate price of $37,500. We believed
that Section 4(2) was available because the sale did not involve a public
offering. Robert D. Monsour, our Director, represented to us that he was an
accredited investor, was acquiring the shares for investment purposes and had
access to all relevant information pertaining to us.
56
On June 26, 2002, we issued 50,000 shares of our common stock to our President,
Frank Riccelli, in payment for services rendered to us as our President. The
shares issued to Frank Riccelli were valued at a price of $0.0001 per share, or
an aggregate price of $5. We believed that Section 4(2) was available because
the sale did not involve a public offering. Frank Riccelli, our President
represented to us that he was an accredited investor, was acquiring the shares
for investment purposes and had access to all relevant information pertaining to
us.
On June 26, 2002, we issued 25,000 shares of our common stock to our Board of
Director member, Dean Kolocouris, in payment for services rendered to us as our
Board of Director member. The shares issued to Dean Kolocouris were valued at a
price of $0.75 per share, or an aggregate price of $18,750. We believed that
Section 4(2) was available because the sale did not involve a public offering.
Dean Kolocouris, our Director, represented to us that he was an accredited
investor, was acquiring the shares for investment purposes and had access to all
relevant information pertaining to us.
On June 26, 2002, we issued 70,000 shares of our common stock to our Board of
Director member, Dominic Cerniglia, in payment for services rendered to us as
our Board of Director member. The shares issued to Dominic Cerniglia were valued
at a price of $0.75 per share, or an aggregate price of $52,500. We believed
that Section 4(2) was available because the sale did not involve a public
offering. Dominic Cerniglia, our Director, represented to us that he was an
accredited investor, was acquiring the shares for investment purposes and had
access to all relevant information pertaining to us.
On June 26, 2002, we issued 750,000 shares of our common stock to our Vice
President, Joseph A. Riccelli, in payment for services rendered to us as our
Vice President. The shares issued to Joseph A. Riccelli were valued at a price
of $0.0001 per share, or an aggregate price of $75. We believed that Section
4(2) was available because the sale did not involve a public offering. Mr.
Joseph A. Riccelli, our Vice-President, represented to us that he was an
accredited investor, was acquiring the shares for investment purposes and had
access to all relevant information pertaining to us.
On June 26, 2002, we issued 750,000 shares of our common stock to our
consultant, Gino M. Riccelli, in payment for services rendered to us as our
technology business consultant. The shares issued to Gino M. Riccelli were
valued at a price of $0.0001 per share, or an aggregate price of $75. We
believed that Section 4(2) was available because the sale did not involve a
public offering. Gino M. Riccelli had a pre-existing relationship with Joseph
Riccelli, our Officer and Director, represented to us that the he was an
accredited investor, was acquiring the shares for investment purposes and had
access to all relevant information pertaining to us.
On June 26, 2002, we issued 250,000 shares of our common stock to legal counsel,
Hamilton, Lehrer, & Dargan, PA, in payment for legal services rendered to us.
The shares issued to Hamilton, Lehrer & Dargan, PA were valued at a price of
$0.75 per share, or an aggregate price of $187,500. We believed that Section
4(2) was available because the sale did not involve a public offering. Hamilton,
Lehrer & Dargan, P.A. had a pre-existing relationship with us as our attorneys
and represented to us that they are accredited investors, were acquiring the
shares for investment purposes and had access to all relevant information
pertaining to us.
On June 26, 2002, we issued 40,000 shares of our common stock to our consultant,
Michelle S. Griffith, in payment for services as our business consultant
regarding marketing and sales services. The shares issued to Michelle S.
Griffith were valued at a price of $0.75 per share, or an aggregate price of
$30,000. We believed that Section 4(2) was available because the sale did not
involve a public offering. Michelle S. Griffith had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Michelle S. Griffith represented
to us that she was an accredited investors, were acquiring the shares for
investment purposes and had access to all relevant information pertaining to us.
57
On June 26, 2002, we issued 4,000 shares of our common stock to our consultant,
Barry Douglas, in payment for services as our business consultant regarding
strategic planning in the area of related industries for our products. The
shares issued to Barry Douglas were valued at a price of $0.75 per share, or an
aggregate price of $3,000. We believed that Section 4(2) was available because
the sale did not involve a public offering. Barry Douglas had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Barry Douglas
represented to us that he was an accredited investor, was acquiring the shares
for investment purposes and had access to all relevant information pertaining to
us.
On June 26, 2002, we issued 2,500 shares of our common stock to our consultant,
Charles Mengine, in payment for services as our business consultant regarding
product warehousing guidance and establishment. The shares issued to Charles
Mengine were valued at a price of $0.75 per share, or an aggregate price of
$1,875. We believed that Section 4(2) was available because the sale did not
involve a public offering. Charles Mengine had a pre-existing relationship with
Joseph Riccelli, our Officer and Director. Charles Mengine represented to us
that he was an accredited investor, was acquiring the shares for investment
purposes and had access to all relevant information pertaining to us.
On June 26, 2002, we issued 2,000 shares of our common stock to our consultant,
Agatina Riccelli, in payment for services as our pattern design consultant. The
shares issued to Agatina Riccelli were valued at a price of $0.75 per share, or
an aggregate price of $1,500. Agatina Riccelli is the mother of our Chief
Executive Office and President. We believed that Section 4(2) was available
because the sale did not involve a public offering. Agatina Riccelli had a
pre-existing relationship with Joseph Riccelli, our Officer and Director.
Agatina Riccelli represented to us that she was an accredited investor, was
acquiring the shares for investment purposes and had access to all relevant
information pertaining to us.
On June 26, 2002, we issued 10,500,000 shares of our common stock to our Chief
Executive Officer, Joseph Riccelli, in payment for services rendered to us as
our Chief Executive Officer. The shares issued to Joseph Riccelli were valued at
a price of $0.0001 per share, or an aggregate price of $1,050. We believed that
Section 4(2) was available because the sale did not involve a public offering.
Joseph Riccelli, as our Chief Executive Officer, had a pre-existing relationship
with us and he represented to us that he was an accredited investor, was
acquiring the shares for investment purposes and he had access to all relevant
information pertaining to us.
On June 26, 2002, we issued 10,000 shares of our common stock to our consultant,
Francis C. Peitz, in payment for services of telecommunications installation and
maintenance. The shares issued to Francis C. Peitz were valued at a price of
$0.75 per share, or an aggregate price of $7,500. We believed that Section 4(2)
was available because the sale did not involve a public offering. Francis Peitz
had a pre-existing relationship with Joseph Riccelli, our Officer and Director.
Francis Peitz represented to us that he was an accredited investor, was
acquiring the shares for investment purposes and had access to all relevant
information pertaining to us.
On June 26, 2002, we issued 5,000 shares of our common stock to our consultant,
Robert Korbe, in payment for services rendered to us as our business consultant
regarding product warehousing and establishment. The shares issued to Robert
Korbe were valued at a price of $2.00 per share, or an aggregate price of
$10,000. We believed that Section 4(2) was available because the sale did not
involve a public offering. Robert Korbe had a pre-existing relationship with
Joseph Riccelli, our Officer and Director. Robert Korbe represented to us that
he was an accredited investor, was acquiring the shares for investment purposes
and had access to all relevant information pertaining to us.
58
On June 25, 2002, we sold 3,000 shares of our common stock to Keith Vidovic, for
a price of $.75 per share or $2,250. We relied upon Section 4(2) of the Act for
the sale. We believed that Section 4(2) was available because the sale did not
involve a public offering. Keith Vidovic had a pre-existing relationship with
Joseph Riccelli, our Officer and Director. Keith Vidovic represented to us that
he was an accredited investor, was purchasing the shares for investment purposes
and had access to all relevant information pertaining to us.
On June 25, 2002, we sold 7,500 shares of our common stock to Mike and Lisa
Tucker, for a price of $.75 per share or $5,625. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Mike and Lisa Tucker had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Mike and Lisa
Tucker represented to us that they were accredited investors, were purchasing
the shares for investment purposes and had access to all relevant information
pertaining to us.
On June 25, 2002, we sold 10,000 shares of our common stock to Edward K.
Mazurek, for a price of $.75 per share or $7,500. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Mr. Mazurek had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Mr. Mazurek
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On July 10, 2002, we sold 1,000 shares of our common stock to Frank J. and Mary
Fanelli, for a price of $1.00 per share or $1,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Frank J. and Mary Fanelli had a
pre-existing relationship with Joseph Riccelli, our Officer and Director. Frank
J. and Mary Fanelli represented to us that they were accredited investors, were
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On July 10, 2002, we sold 4,000 shares of our common stock to Michael C. and
Luci A. Taylor, for a price of $1.00 per share or $4,000. We relied upon Section
4(2) of the Act for the sale. We believed that Section 4(2) was available
because the sale did not involve a public offering. Michael C. and Luci A.
Taylor had a pre-existing relationship with Joseph Riccelli, our Officer and
Director. Michael C. and Luci A. Taylor represented to us that they were
accredited investors, were purchasing the shares for investment purposes and had
access to all relevant information pertaining to us.
On July 11, 2002, we sold 1,000 shares of our common stock to Debra L. and
Donald J. Bushey, for a price of $1.00 per share or $1,000. We relied upon
Section 4(2) of the Act for the sale. We believed that Section 4(2) was
available because the sale did not involve a public offering. Debra L. and
Donald J. Bushey had a pre-existing relationship with Joseph Riccelli, our
Officer and Director. Debra L. and Donald J. Bushey represented to us that they
were accredited investors, were purchasing the shares for investment purposes
and had access to all relevant information pertaining to us.
On July 12, 2002, we sold 2,500 shares of our common stock to Michael R. and
Kristy L. Zahuranic, for a price of $1.00 per share or $2,500. We relied upon
Section 4(2) of the Act for the sale. We believed that Section 4(2) was
available because the sale did not involve a public offering. Michael R. and
Kristy L. Zahuranic had a pre-existing relationship with Joseph Riccelli, our
Officer and Director. Michael R. and Kristy L. Zahuranic represented to us that
they were accredited investors, were purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
59
On July 12, 2002, we sold 6,000 shares of our common stock to Kimberly A.
Shumaker, for a price of $1.00 per share or $6,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Kimberly A. Shumaker had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Kimberly A.
Shumaker represented to us that she was an accredited investor, was purchasing
the shares for investment purposes and had access to all relevant information
pertaining to us.
On July 13, 2002, we sold 1,500 shares of our common stock to Kevin M. and
Marcene M. Quinlisk, for a price of $1.00 per share or $1,500. We relied upon
Section 4(2) of the Act for the sale. We believed that Section 4(2) was
available because the sale did not involve a public offering. Kevin M. and
Marcene M. Quinlisk had a pre-existing relationship with Joseph Riccelli, our
Officer and Director. Kevin M. and Marcene M. Quinlisk represented to us that
they were accredited investors, were purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On July 13, 2002, we sold 1,000 shares of our common stock to George J. and
Valerie Walters, for a price of $1.00 per share or $1,000. We relied upon
Section 4(2) of the Act for the sale. We believed that Section 4(2) was
available because the sale did not involve a public offering. George J. and
Valerie Walters had a pre-existing relationship with Joseph Riccelli, our
Officer and Director. George J. and Valerie Walters represented to us that they
were accredited investors, were purchasing the shares for investment purposes
and had access to all relevant information pertaining to us.
On July 14, 2002, we sold 750 shares of our common stock to Janet Corrinne
Harvey, for a price of $1.00 per share or $750. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Janet Corrinne Harvey had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Janet Corrinne
Harvey represented to us that she was an accredited investor, was purchasing the
shares for investment purposes and had access to all relevant information
pertaining to us.
On July 14, 2002, we sold 750 shares of our common stock to Douglas J. Harvey,
for a price of $1.00 per share or $750. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Douglas J. Harvey had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Douglas J. Harvey represented to
us that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On July 15, 2002, we sold 5,000 shares of our common stock to Reno Vitale, for a
price of $1.00 per share or $5,000. We relied upon Section 4(2) of the Act for
the sale. We believed that Section 4(2) was available because the sale did not
involve a public offering. Reno Vitale had a pre-existing relationship with
Joseph Riccelli, our Officer and Director. Reno Vitale represented to us that he
was an accredited investor, was purchasing the shares for investment purposes
and had access to all relevant information pertaining to us.
On July 15, 2002, we sold 5,000 shares of our common stock to William
Digirolamo, for a price of $1.00 per share or $5,000. We relied upon Section
4(2) of the Act for the sale. We believed that Section 4(2) was available
because the sale did not involve a public offering. William Digirolamo had a
pre-existing relationship with Joseph Riccelli, our Officer and Director.
William Digirolamo represented to us that he was an accredited investor, was
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
60
On July 15, 2002, we sold 500 shares of our common stock to Mark Ray, for a
price of $1.00 per share or $500. We relied upon Section 4(2) of the Act for the
sale. We believed that Section 4(2) was available because the sale did not
involve a public offering. Mark Ray had a pre-existing relationship with Joseph
Riccelli, our Officer and Director. Mark Ray represented to us that he was an
accredited investor, was purchasing the shares for investment purposes and had
access to all relevant information pertaining to us.
On July 15, 2002, we sold 500 shares of our common stock to Leslie Harvey, for a
price of $1.00 per share or $500. We relied upon Section 4(2) of the Act for the
sale. We believed that Section 4(2) was available because the sale did not
involve a public offering. Leslie Harvey had a pre-existing relationship with
Joseph Riccelli, our Officer and Director. Leslie Harvey represented to us that
she was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On July 15, 2002, we sold 1,000 shares of our common stock to James R. and
Barbara F. Harvey, for a price of $1.00 per share or $1,000. We believed that
Section 4(2) was available because the sale did not involve a public offering.
James R. and Barbara F. Harvey had a pre-existing relationship with Joseph
Riccelli, our Officer and Director. James R. and Barbara F. Harvey represented
to us that they were accredited investors, were purchasing the shares for
investment purposes and had access to all relevant information pertaining to us.
On July 16, 2002, we sold 500 shares of our common stock to Robert M. and Jeanne
M. Doperak, for a price of $1.00 per share or $500. We believed that Section
4(2) was available because the sale did not involve a public offering. Robert M.
and Jeanne M. Doperak had a pre-existing relationship with Joseph Riccelli, our
Officer and Director. Robert M. and Jeanne M. Doperak represented to us that
they were accredited investors, were purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On August 1, 2002, we sold 10,000 shares of our common stock to Tom Miller, for
a price of $1.00 per share or $10,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Tom Miller had a pre-existing relationship with
Joseph Riccelli, our Officer and Director. Tom Miller represented to us that he
was an accredited investor, was purchasing the shares for investment purposes
and had access to all relevant information pertaining to us.
On August 1, 2002, we sold 5,000 shares of our common stock to Joseph Stephen
Gallagher, for a price of $1.00 per share or $5,000. We believed that Section
4(2) was available because the sale did not involve a public offering. Joseph
Stephen Gallagher had a pre-existing relationship with Joseph Riccelli, our
Officer and Director. Joseph Stephen Gallagher represented to us that he was an
accredited investor, was purchasing the shares for investment purposes and had
access to all relevant information pertaining to us.
On August 1, 2002, we sold 5,000 shares of our common stock to George E.
Delestine, for a price of $1.00 per share or $5,000. We believed that Section
4(2) was available because the sale did not involve a public offering. George E.
Delestine had a pre-existing relationship with Joseph Riccelli, our Officer and
Director. George E. Delestine represented to us that he was an accredited
investor, was purchasing the shares for investment purposes and had access to
all relevant information pertaining to us.
61
On August 7, 2002, we sold 2,000 shares of our common stock to Frank P. and
Doreen Simeone, for a price of $2.00 per share or $4,000. We believed that
Section 4(2) was available because the sale did not involve a public offering.
Frank P. and Doreen Simeone had a pre-existing relationship with Joseph
Riccelli, our Officer and Director. Frank P. and Doreen Simeone represented to
us that they were accredited investors, were purchasing the shares for
investment purposes and had access to all relevant information pertaining to us.
On August 11, 2002, we sold 1,000 shares of our common stock to David S. Bengel,
for a price of $1.00 per share or $1,000. We believed that Section 4(2) was
available because the sale did not involve a public offering. David S. Bengel
had a pre-existing relationship with Joseph Riccelli, our Officer and Director.
David S. Bengel represented to us that he was an accredited investor, was
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On August 12, 2002, we sold 2,000 shares of our common stock to Craig J. Bushey,
for a price of $1.00 per share or $2,000. We believed that Section 4(2) was
available because the sale did not involve a public offering. Craig J. Bushey
had a pre-existing relationship with Joseph Riccelli, our Officer and Director.
Craig J. Bushey represented to us that he was an accredited investor, was
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On August 14, 2002, we sold 20,000 shares of our common stock to Carol Williams,
for a price of $2.00 per share or $40,000. We believed that Section 4(2) was
available because the sale did not involve a public offering. Carol Williams had
a pre-existing relationship with Joseph Riccelli, our Officer and Director.
Carol Williams represented to us that she was an accredited investor, was
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On August 14, 2002, we sold 18,000 shares of our common stock to Eugene A.
Hermanowski, for a price of $2.00 per share or $36,000. We believed that Section
4(2) was available because the sale did not involve a public offering. Eugene A.
Hermanowski had a pre-existing relationship with Joseph Riccelli, our Officer
and Director. Eugene A. Hermanowski represented to us that he was an accredited
investor, was purchasing the shares for investment purposes and had access to
all relevant information pertaining to us.
On August 26, 2002, we sold 3,000 shares of our common stock to Donald J.
Bittner, for a price of $1.00 per share or $3,000. We believed that Section 4(2)
was available because the sale did not involve a public offering. Donald J.
Bittner had a pre-existing relationship with Joseph Riccelli, our Officer and
Director. Donald J. Bittner represented to us that he was an accredited
investor, was purchasing the shares for investment purposes and had access to
all relevant information pertaining to us.
On August 27, 2002, we sold 2,500 shares of our common stock to Joel S.
Colinear, for a price of $2.00 per share or $5,000. We believed that Section
4(2) was available because the sale did not involve a public offering. Joel S.
Colinear had a pre-existing relationship with Joseph Riccelli, our Officer and
Director. Joel S. Colinear represented to us that he was an accredited investor,
was purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On August 28, 2002, we sold 2,000 shares of our common stock to James B. Rice,
for a price of $2.00 per share or $4,000. We believed that Section 4(2) was
available because the sale did not involve a public offering. James B. Rice had
a pre-existing relationship with Joseph Riccelli, our Officer and Director.
James B. Rice represented to us that he was an accredited investor, was
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
62
On August 28, 2002, we sold 3,500 shares of our common stock to Jayson T.
Markulin, for a price of $2.00 per share or $7,000. We believed that Section
4(2) was available because the sale did not involve a public offering. Jayson T.
Markulin had a pre-existing relationship with Joseph Riccelli, our Officer and
Director. Jayson T. Markulin represented to us that he was an accredited
investor, was purchasing the shares for investment purposes and had access to
all relevant information pertaining to us.
On August 29, 2002, we sold 500 shares of our common stock to Dominic Cerniglia,
our Director, for a price of $2.00 per share or $1,000. We believed that Section
4(2) was available because the sale did not involve a public offering. Dominic
Cerniglia had a pre-existing relationship with Joseph Riccelli, our Officer and
Director. Dominic Cerniglia represented to us that he was an accredited
investor, was purchasing the shares for investment purposes and had access to
all relevant information pertaining to us.
On August 29, 2002, we sold 500 shares of our common stock to Angela B. Shiring,
for a price of $2.00 per share or $1,000. We believed that Section 4(2) was
available because the sale did not involve a public offering. Angela B. Shiring
had a pre-existing relationship with Joseph Riccelli, our Officer and Director.
Angela B. Shiring represented to us that she was an accredited investor, was
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On August 31, 2002, we sold 500 shares of our common stock to Esther Neiman, for
a price of $2.00 per share or $1,000. We believed that Section 4(2) was
available because the sale did not involve a public offering. Esther Neiman had
a pre-existing relationship with Joseph Riccelli, our Officer and Director.
Esther Neiman represented to us that she was an accredited investor, was
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On September 2, 2002, we sold 15,000 shares of our common stock to Kevin
Sambuchino, for a price of $2.00 per share or $30,000. We believed that Section
4(2) was available because the sale did not involve a public offering. Kevin
Sambuchino had a pre-existing relationship with Joseph Riccelli, our Officer and
Director. Kevin Sambuchino represented to us that he was an accredited investor,
was purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On September 2, 2002, we sold 4,000 shares of our common stock to Dean
Kolocouris, our Director, for a price of $2.00 per share or $8,000. We believed
that Section 4(2) was available because the sale did not involve a public
offering. Dean Kolocouris had a pre-existing relationship with Joseph Riccelli,
our Officer and Director. Dean Kolocouris represented to us that he was an
accredited investor, was purchasing the shares for investment purposes and had
access to all relevant information pertaining to us.
On September 3, 2002, we sold 12,000 shares of our common stock to Daniel J.
Pietrzak, for a price of $2.00 per share or $24,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Daniel J. Pietrzak had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Daniel J. Pietrzak
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
63
On September 3, 2002, we sold 2,500 shares of our common stock to Donald Pope,
for a price of $2.00 per share or $5,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Donald Pope had a pre-existing relationship with
Joseph Riccelli, our Officer and Director. Donald Pope represented to us that he
was an accredited investor, was purchasing the shares for investment purposes
and had access to all relevant information pertaining to us.
On September 3, 2002, we sold 500 shares of our common stock to Gary J.
Gibellino, for a price of $2.00 per share or $1,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Gary J. Gibellino had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Gibellino
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On September 4, 2002, we sold 3,250 shares of our common stock to William T.
Raybuck, for a price of $2.00 per share or $6,500. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. William T. Raybuck had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. William T. Raybuck
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On September 12, 2002, we sold 1,000 shares of our common stock to William
Maurizio, for a price of $2.00 per share or $2,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. William Maurizio had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. William Maurizio
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On September 13, 2002, we sold 500 shares of our common stock to William
Maurizio Jr., for a price of $2.00 per share or $1,000. We relied upon Section
4(2) of the Act for the sale. We believed that Section 4(2) was available
because the sale did not involve a public offering. William Maurizio Jr. had a
pre-existing relationship with Joseph Riccelli, our Officer and Director.
William Maurizio Jr. represented to us that he was an accredited investor, was
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On September 16, 2002, we sold 2,000 shares of our common stock to Vincent J.
and Anna M. Morante, for a price of $2.00 per share or $4,000. We relied upon
Section 4(2) of the Act for the sale. We believed that Section 4(2) was
available because the sale did not involve a public offering. Vincent J. and
Anna M. Morante had a pre-existing relationship with Joseph Riccelli, our
Officer and Director. Vincent J. and Anna M. Morante represented to us that they
were accredited investors, were purchasing the shares for investment purposes
and had access to all relevant information pertaining to us.
On September 19, 2002, we sold 3,000 shares of our common stock to Steven R.
Sloboba, for a price of $2.00 per share or $6,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Steven R. Sloboba had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Steven R. Sloboba
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
64
On September 20, 2002, we sold 500 shares of our common stock to John A.
Scampone, for a price of $2.00 per share or $1,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. John A. Scampone had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. John A. Scampone
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On September 20, 2002, we sold 500 shares of our common stock to Elvira
Scampone, for a price of $2.00 per share or $1,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Elvira Scampone had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Elvira Scampone
represented to us that she was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On September 26, 2002, we sold 2,500 shares of our common stock to Anthony
Cerniglia, for a price of $2.00 per share or $5,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Anthony Cerniglia had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Anthony Cerniglia
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On September 27, 2002, we sold 500 shares of our common stock to John A.
Scampone, for a price of $2.00 per share or $1,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. John A. Scampone had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. John A. Scampone
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On September 30, 2002, we sold 250 shares of our common stock to Vivi Konetes,
for a price of $2.00 per share or $500. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Vivi Konetes had a pre-existing relationship with
Joseph Riccelli, our Officer and Director. Vivi Konetes represented to us that
she was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On October 11, 2002, we sold 500 shares of our common stock to Donna Tidwell,
for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Donna Tidwell had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Donna Tidwell represented to us
that she was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On October 16, 2002, we sold 7,500 shares of our common stock to Sophie A.
Mellon, for a price of $2.00 per share or $15,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Sophie A. Mellon had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Sophie A. Mellon
represented to us that she was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
65
On October 17, 2002, we sold 1,250 shares of our common stock to Benjamin T.
Auman, for a price of $2.00 per share or $2,500. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Benjamin T. Auman had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Benjamin T. Auman
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On October 24, 2002, we sold 10,000 shares of our common stock to Chuck Waters,
for a price of $2.00 per share or $20,000. We relied upon Section 4(2) of the
Act for the sale. We believed that Section 4(2) was available because the sale
did not involve a public offering. Chuck Waters had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Chuck Waters represented to us
that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On October 28, 2002, we sold 500 shares of our common stock to Gary W. Oliastro,
for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Gary W. Oliastro had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Gary W. Oliastro represented to
us that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On October 29, 2002, we sold 5,000 shares of our common stock to Mike Fanto, for
a price of $2.00 per share or $10,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Mike Fanto had a pre-existing relationship with
Joseph Riccelli, our Officer and Director. Mike Fanto represented to us that he
was an accredited investor, was purchasing the shares for investment purposes
and had access to all relevant information pertaining to us.
On October 30, 2002, we sold 500 shares of our common stock to John A. Wasuchno,
for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. John A. Wasuchno had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. John A. Wasuchno represented to
us that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On November 1, 2002, we sold 2,500 shares of our common stock to Hillary
Brodsky, for a price of $2.00 per share or $5,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Hillary Brodsky had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Hillary Brodsky
represented to us that she was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 1, 2002, we sold 5,000 shares of our common stock to Gary F.
McGuirk, for a price of $2.00 per share or $10,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Gary F. McGuirk had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Gary F. McGuirk
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
66
On November 1, 2002, we sold 6,800 shares of our common stock to Ronald J.
Sheppard, for a price of $2.00 per share or $13,600. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Ronald J. Sheppard had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Ronald J. Sheppard
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 1, 2002, we sold 2,500 shares of our common stock to Gary G. Davis,
for a price of $2.00 per share or $5,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Gary G. Davis had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Gary G. Davis represented to us
that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On November 1, 2002, we sold 10,000 shares of our common stock to Joseph A.
Hardy III, for a price of $2.00 per share or $20,000. We relied upon Section
4(2) of the Act for the sale. We believed that Section 4(2) was available
because the sale did not involve a public offering. Joseph A. Hardy III had a
pre-existing relationship with Joseph Riccelli, our Officer and Director. Joseph
A. Hardy III represented to us that he was an accredited investor, was
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On November 2, 2002, we sold 1,250 shares of our common stock to Craig M.
Fijalkovic, for a price of $2.00 per share or $2,500. We relied upon Section
4(2) of the Act for the sale. We believed that Section 4(2) was available
because the sale did not involve a public offering. Craig M. Fijalkovic had a
pre-existing relationship with Joseph Riccelli, our Officer and Director. Craig
M. Fijalkovic represented to us that he was an accredited investor, was
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On November 3, 2002, we sold 2,500 shares of our common stock to Carl A.
Schmolke, for a price of $2.00 per share or $5,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Carl A. Schmolke had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Carl A. Schmolke
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 3, 2002, we sold 500 shares of our common stock to Lisa A. Hager,
for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Lisa A. Hager had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Lisa A. Hager represented to us
that she was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On November 4, 2002, we sold 2,500 shares of our common stock to James T.
Thomas, for a price of $2.00 per share or $5,000. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. James T. Thomas had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. James T. Thomas
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
67
On November 4, 2002, we sold 5,000 shares of our common stock to D. Lisa Biggs,
for a price of $2.00 per share or $10,000. We relied upon Section 4(2) of the
Act for the sale. We believed that Section 4(2) was available because the sale
did not involve a public offering. D. Lisa Biggs had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. D. Lisa Biggs represented to us
that she was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On November 4, 2002, we sold 5,000 shares of our common stock to James M.
Cooney, for a price of $2.00 per share or $10,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. James M. Cooney had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. James M. Cooney
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 4, 2002, we sold 150 shares of our common stock to Todd J. Thomas,
for a price of $2.00 per share or $300. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Todd J. Thomas had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Todd J. Thomas represented to us
that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On November 4, 2002, we sold 1,000 shares of our common stock to Arthur C.
Pursel Jr., for a price of $2.00 per share or $2,000. We relied upon Section
4(2) of the Act for the sale. We believed that Section 4(2) was available
because the sale did not involve a public offering. Arthur C. Pursel Jr. had a
pre-existing relationship with Joseph Riccelli, our Officer and Director. Arthur
C. Pursel Jr. represented to us that he was an accredited investor, was
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On November 4, 2002, we sold 5,000 shares of our common stock to Paul M. Singer,
for a price of $2.00 per share or $10,000. We relied upon Section 4(2) of the
Act for the sale. We believed that Section 4(2) was available because the sale
did not involve a public offering. Paul M. Singer had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Paul M. Singer
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 6, 2002, we sold 500 shares of our common stock to William
Brenenborg, for a price of $2.00 per share or $1,000. We relied upon Section
4(2) of the Act for the sale. We believed that Section 4(2) was available
because the sale did not involve a public offering. William Brenenborg had a
pre-existing relationship with Joseph Riccelli, our Officer and Director.
William Brenenborg represented to us that he was an accredited investor, was
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On November 6, 2002, we sold 5,000 shares of our common stock to Peter Leone,
for a price of $2.00 per share or $10,000. We relied upon Section 4(2) of the
Act for the sale. We believed that Section 4(2) was available because the sale
did not involve a public offering. Peter Leone had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Peter Leone represented to us
that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
68
On November 7, 2002, we sold 500 shares of our common stock to Gary M.
Cunningham, for a price of $2.00 per share or $1,000. We relied upon Section
4(2) of the Act for the sale. We believed that Section 4(2) was available
because the sale did not involve a public offering. Gary M. Cunningham had a
pre-existing relationship with Joseph Riccelli, our Officer and Director. Gary
M. Cunningham represented to us that he was an accredited investor, was
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On November 8, 2002, we sold 500 shares of our common stock to Janet Brenenborg,
for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Janet Brenenborg had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Janet Brenenborg represented to
us that she was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On November 8, 2002, we sold 1,000 shares of our common stock to Gary E. Faye,
for a price of $2.00 per share or $2,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Gary E. Faye had a pre-existing relationship with
Joseph Riccelli, our Officer and Director. Gary E. Faye represented to us that
he was an accredited investor, was purchasing the shares for investment purposes
and had access to all relevant information pertaining to us.
On November 12, 2002, we sold 2,000 shares of our common stock to Jennifer
Pukach, for a price of $2.00 per share or $4,000. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Jennifer Pukach had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Jennifer Pukach
represented to us that she was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 12, 2002, we sold 1,000 shares of our common stock to John E.
Bonaroti, for a price of $2.00 per share or $2,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. John E. Bonaroti had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. John E. Bonaroti
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 12, 2002, we sold 1,250 shares of our common stock to Richard E.
McDonald, for a price of $2.00 per share or $2,500. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Richard E. McDonald had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Richard E. McDonald
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 13, 2002, we sold 500 shares of our common stock to John Pishko, for
a price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act for
the sale. We believed that Section 4(2) was available because the sale did not
involve a public offering. John Pishko had a pre-existing relationship with
Joseph Riccelli, our Officer and Director. John Pishko represented to us that he
was an accredited investor, was purchasing the shares for investment purposes
and had access to all relevant information pertaining to us.
69
On November 13, 2002, we sold 500 shares of our common stock to G. Joseph
Frederick, for a price of $2.00 per share or $1,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. G. Joseph Frederick had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. G. Joseph Frederick
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 14, 2002, we sold 1,000 shares of our common stock to Dr. Leonard
Agostino, for a price of $2.00 per share or $2,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Dr. Leonard Agostino had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Dr. Leonard
Agostino represented to us that he was an accredited investor, was purchasing
the shares for investment purposes and had access to all relevant information
pertaining to us.
On November 14, 2002, we sold 2,500 shares of our common stock to H. Michael
Shook, for a price of $2.00 per share or $5,000. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. H. Michael Shook had a pre-existing
relationship with Joseph Riccelli, our Officer and Director H. Michael Shook
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 15, 2002, we sold 10,000 shares of our common stock to Martin S.
Berger, for a price of $2.00 per share or $20,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Martin S. Berger had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Martin S. Berger
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 15, 2002, we sold 1,500 shares of our common stock to Justinus
Petrus Van Der Kallen, for a price of $2.00 per share or $3,000. We relied upon
Section 4(2) of the Act for the sale. We believed that Section 4(2) was
available because the sale did not involve a public offering. Justinus Petrus
Van Der Kallen had a pre-existing relationship with Joseph Riccelli, our Officer
and Director. Justinus Petrus Van Der Kallen represented to us that she was an
accredited investor, was purchasing the shares for investment purposes and had
access to all relevant information pertaining to us.
On November 15, 2002, we sold 500 shares of our common stock to Kelly D.
Frederick, for a price of $2.00 per share or $1,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Kelly D. Frederick had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Kelly D. Frederick
represented to us that she was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 15, 2002, we sold 500 shares of our common stock to Angela Yarnell,
for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Angela Yarnell had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Angela Yarnell represented to us
that she was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
70
On November 16, 2002, we sold 750 shares of our common stock to William R.
Olesko, for a price of $2.00 per share or $1,500. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. William R. Olesko had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. William R. Olesko
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 17, 2002, we sold 1,500 shares of our common stock to John A.
Spagnolo, for a price of $2.00 per share or $3,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. John A. Spagnolo had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. John A. Spagnolo
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 17, 2002, we sold 2,000 shares of our common stock to Judith A.
Shondeck, for a price of $2.00 per share or $4,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Judith A. Shondeck had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Judith A. Shondeck
represented to us that she was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 17, 2002, we sold 1,000 shares of our common stock to David J.
Shondeck, for a price of $2.00 per share or $2,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. David J. Shondeck had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. David J. Shondeck
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 18, 2002, we sold 5,000 shares of our common stock to William L.
Virgi, for a price of $2.00 per share or $10,000. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. William L. Virgi had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. William L. Virgi
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 18, 2002, we sold 5,300 shares of our common stock to Rebecca A.
Laibe, for a price of $2.00 per share or $10,600. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Rebecca A. Laibe had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Rebecca A. Laibe
represented to us that she was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 18, 2002, we sold 1,250 shares of our common stock to Bernadette
Murphy, for a price of $2.00 per share or $2,500. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Bernadette Murphy had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Bernadette Murphy
represented to us that she was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
71
On November 18, 2002, we sold 500 shares of our common stock to Leo Borg, for a
price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act for
the sale. We believed that Section 4(2) was available because the sale did not
involve a public offering. Leo Borg had a pre-existing relationship with Joseph
Riccelli, our Officer and Director. Leo Borg represented to us that he was an
accredited investor, was purchasing the shares for investment purposes and had
access to all relevant information pertaining to us.
On November 18, 2002, we sold 500 shares of our common stock to Michael Seth
Borg, for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Michael Seth Borg had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Michael Seth Borg
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 18, 2002, we sold 500 shares of our common stock to John M. Kardos,
for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. John M. Kardos had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. John M. Kardos represented to us
that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On November 18, 2002, we sold 500 shares of our common stock to Thomas J.
Gravina, for a price of $2.00 per share or $1,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Thomas J. Gravina had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Thomas J. Gravina
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 18, 2002, we sold 1,000 shares of our common stock to Walter H. Sell
Jr., for a price of $2.00 per share or $2,000. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Walter H. Sell Jr. had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Walter H. Sell Jr.
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 21, 2002, we sold 500 shares of our common stock to Esther Neiman,
for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Esther Neiman had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Esther Neiman represented to us
that she was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On November 21, 2002, we sold 500 shares of our common stock to Marianne
Brudnok, for a price of $2.00 per share or $1,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Marianne Brudnok had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Marianne Brudnok
represented to us that she was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
72
On November 24, 2002, we sold 1,000 shares of our common stock to Richard
Picciani, for a price of $2.00 per share or $2,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Richard Picciani had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Richard Picciani
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 24, 2002, we sold 500 shares of our common stock to Michael D. Wist,
for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Michael D. Wist had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Michael D. Wist represented to
us that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On November 24, 2002, we sold 500 shares of our common stock to Elvira Scampone,
for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Elvira Scampone had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Elvira Scampone represented to
us that she was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On November 24, 2002, we sold 1,500 shares of our common stock to Charles E.
Jeswilkowski, for a price of $2.00 per share or $3,000. We relied upon Section
4(2) of the Act for the sale. We believed that Section 4(2) was available
because the sale did not involve a public offering. Charles E. Jeswilkowski had
a pre-existing relationship with Joseph Riccelli, our Officer and Director.
Charles E. Jeswilkowski represented to us that he was an accredited investor,
was purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On November 25, 2002, we sold 12,500 shares of our common stock to Frank J.
Costa, for a price of $2.00 per share or $25,000. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Frank J. Costa had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Frank J. Costa
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On November 25, 2002, we sold 500 shares of our common stock to Alexandra E.
Roebuck, for a price of $2.00 per share or $1,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Alexandra E. Roebuck had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Alexandra E.
Roebuck represented to us that she was an accredited investor, was purchasing
the shares for investment purposes and had access to all relevant information
pertaining to us.
On November 26, 2002, we sold 625 shares of our common stock to John A.
Scampone, for a price of $2.00 per share or $1,250. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. John A. Scampone had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. John A. Scampone
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
73
On December 2, 2002, we sold 500 shares of our common stock to William Maurizio
Jr., for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. William Maurizio Jr. had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. William Maurizio
Jr. represented to us that he was an accredited investor, was purchasing the
shares for investment purposes and had access to all relevant information
pertaining to us.
On December 2, 2002, we sold 9,000 shares of our common stock to William
Maurizio, for a price of $2.00 per share or $18,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. William Maurizio had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. William Maurizio
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On December 4, 2002, we sold 1,500 shares of our common stock to Esther Neiman
for a price of $2.00 per share or $3,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Esther Neiman had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Esther Neiman represented to us
that she was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On December 6, 2002, we sold 5,000 shares of our common stock to Geoffrey B.
Monsour, for a price of $2.00 per share or $10,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Geoffrey B. Monsour had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Geoffrey B. Monsour
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On December 6, 2002, we sold 500 shares of our common stock to Victoria L.
Keith, for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Victoria L. Keith had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Victoria L. Keith
represented to us that she was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On December 9, 2002, we sold 500 shares of our common stock to Howard Elinoff,
for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Howard Elinoff had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Howard Elinoff represented to us
that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On December 10, 2002, we sold 500 shares of our common stock to Renee Campalong,
for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Renee Campalong had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Renee Campalong represented to
us that she was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
74
On December 10, 2002, we sold 3,000 shares of our common stock to John G.
Balsamico, for a price of $2.00 per share or $6,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. John G. Balsamico had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. John G. Balsamico
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On December 11, 2002, we sold 2,500 shares of our common stock to Carol A.
Yenchik, for a price of $2.00 per share or $5,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Carol A. Yenchik had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Carol A. Yenchik
represented to us that she was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On December 13, 2002, we sold 3,000 shares of our common stock to John Kirkwood,
for a price of $2.00 per share or $6,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. John Kirkwood had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. John Kirkwood represented to us
that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On December 13, 2002, we sold 2,500 shares of our common stock to Barbara P.
Benner, for a price of $2.00 per share or $5,000. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Barbara P. Benner had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Barbara P. Benner
represented to us that she was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On December 13, 2002, we sold 500 shares of our common stock to Thomas J.
Gravina, for a price of $2.00 per share or $1,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Thomas J. Gravina had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Thomas J. Gravina
represented to us that he was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On December 16, 2002, we sold 5,000 shares of our common stock to Naum M.
Kaplan, for a price of $2.00 per share or an aggregate price of $10,000. We
relied upon Section 4(2) of the Act for the sale. We believed that Section 4(2)
was available because the sale did not involve a public offering. Naum M. Kaplan
had a pre-existing relationship with Joseph Riccelli, our Officer and Director.
Naum M. Kaplan represented to us that she was an accredited investor, was
purchasing the shares for investment purposes and had access to all relevant
information pertaining to us.
On December 16, 2002, we sold 500 shares of our common stock to Lucy Dishington,
for a price of $2.00 per share or $1,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Lucy Dishington had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Lucy Dishington represented to
us that she was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
75
On December 19, 2002, we sold 250 shares of our common stock to Michael Weiss,
for a price of $2.00 per share or $500. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Michael Weiss had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Michael Weiss represented to us
that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On December 20, 2002, we sold 2,500 shares of our common stock to Glen R. Mills,
for a price of $2.00 per share or $5,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Glen R. Mills had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Glen R. Mills represented to us
that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On December 21, 2002, we sold 500 shares of our common stock to Leslie M.
Hellman, for a price of $2.00 per share or $1,000. We relied upon Section 4(2)
of the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Leslie M. Hellman had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Leslie M. Hellman
represented to us that she was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On December 26, 2002, we sold 12,500 shares of our common stock to Bonnie L.
Dake, for a price of $2.00 per share or $25,000. We relied upon Section 4(2) of
the Act for the sale. We believed that Section 4(2) was available because the
sale did not involve a public offering. Bonnie L. Dake had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. Bonnie L. Dake
represented to us that she was an accredited investor, was purchasing the shares
for investment purposes and had access to all relevant information pertaining to
us.
On December 30, 2002, we sold 6,000 shares of our common stock to Eric D. Jerpe,
for a price of $2.00 per share or $12,000. We relied upon Section 4(2) of the
Act for the sale. We believed that Section 4(2) was available because the sale
did not involve a public offering. Eric D. Jerpe had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Eric D. Jerpe represented to us
that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On January 6, 2003, we sold 2,500 shares of our common stock to Glen R. Mills,
for a price of $2.00 per share or $5,000. We relied upon Section 4(2) of the Act
for the sale. We believed that Section 4(2) was available because the sale did
not involve a public offering. Glen R. Mills had a pre-existing relationship
with Joseph Riccelli, our Officer and Director. Glen R. Mills represented to us
that he was an accredited investor, was purchasing the shares for investment
purposes and had access to all relevant information pertaining to us.
On January 29, 2003, we issued 25,000 shares of our common stock to David
Mehalick, in payment for services rendered to us as our business consultant. The
shares issued to Dave Mehalick were valued at a price of $2.00 per share, or an
aggregate price of $50,000. We relied upon Section 4(2) of the Act for the sale.
We believed that Section 4(2) was available because the sale did not involve a
public offering. David Mehalick had a pre-existing relationship with Joseph
Riccelli, our Officer and Director. David Mehalick represented to us that he was
an accredited investor, was acquiring the shares for investment purposes and had
access to all relevant information pertaining to us.
76
On January 29, 2003, we issued 500,000 shares of our common stock to C. Dillow &
Company, Inc., in payment for services rendered to us. The shares issued to C.
Dillow & Company, Inc. were valued at a price of $2.00 per share, or an
aggregate price of $1,000,000. We relied upon Section 4(2) of the Act for the
sale. We believed that Section 4(2) was available because the sale did not
involve a public offering. C. Dillow & Company, Inc. had a pre-existing
relationship with Joseph Riccelli, our Officer and Director. C. Dillow &
Company, Inc. represented to us that he was an accredited investor, was
acquiring the shares for investment purposes and had access to all relevant
information pertaining to us.
None of the above issuances involved underwriters, underwriting discounts, or
commissions. We relied upon Sections 4(2) of the Securities Act of 1933, as
amended, and Rule 506 of Regulation D in offering these shares. We believed
these exemptions were available because:
o We are not a blank check company;
o Total sales did not exceed $1,000,000;
o We filed a Form D, Notice of Sales, with the Securities and Exchange
Commission;
o Sales were not made by general solicitation or advertising;
o All certificates had restrictive legends;
o Sales were made to persons with a pre-existing relationship to the company,
its officers and directors; and
o Sales were made to investors who were either accredited investors or who
represented that they were sophisticated enough to evaluate the risks of
the investment.
ITEM 27. EXHIBITS
3.1 Certificate of Incorporation
3.2 Bylaws
4 Specimen Stock Certificate
5 Opinion of Hamilton, Lehrer & Dargan, P.A.
10.1 Agreement between us and RMF Global, Inc.
10.2 Exclusive Agency, Distribution and Marketing Agreement between RMF
Global, Inc. and Mr. Ko-Myung Kim.
10.3 Agreement between us and C. Dillow & Company, Inc.
23 Consent of Malone & Bailey PLLC, Certified Public Accountants
23.2 Consent of Hamilton, Lehrer & Dargan P.A. contained in Exhibit 5
99 Test Results from Vartest Lab
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
a. Include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
b. Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(f) if, in the aggregate, the
changes in the volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
c. Include any additional or changed material information on the plan of
distribution.
2. That, for determining liability under the Securities Act of 1933, to treat
each post-effective amendment as a new Registration Statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
77
3. To file a post-effective amendment to remove from registration any of the
securities that remains unsold at the end of the offering.
4. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
5. In the event that a claim for indemnification against such liabilities,
other than the payment by the Registrant of expenses incurred and paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding, is asserted by such director, officer
or controlling person in connection with the securities being registered hereby,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of
Pittsburgh, Pennsylvania on March 10, 2003.
By:/s/ Joseph Riccelli
Joseph Riccelli, Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
By:/s/ Frank Riccelli Date: March 10, 2003
Frank Riccelli, Director
By:/s/ Joseph Riccelli Date: March 10, 2003
Joseph Riccelli, Chairman of the Board of Directors
By:/s/ Dean P. Kolocouris Date: March 10, 2003
Dean P. Kolocouris, Director
By:/s/ Robert D. Monsour Date: March 10, 2003
Robert D. Monsour, Director
By:/s/ Dominic Cerniglia Date: March 10, 2003
Dominic Cerniglia, Director
By:/s/ Anthony Fonzi Date: March 10, 2003
Anthony Fonzi, Chief Financial Officer/Director
78