UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT
PURSUANT TO SECTION 14A
of the
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrantþ
Filed by a Party other than the Registrant¨
Check the appropriate box:
¨
Preliminary Proxy Statement
¨
Confidential, for Use of the Commission Only [as permitted by Rule 14a-6(e)(2)]
þ
Definitive Proxy Statement
¨
Definitive Additional Materials
¨
Soliciting Material Pursuant to Section 240.14a-12
SONA DEVELOPMENT CORP.
(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
¨
No fee required.
þ
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:Common Stock
2) Aggregate number of securities to which transaction applies:36,190,085
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):$0.36 (the average of the high and low price onJanuary 5, 2007)
4) Proposed maximum aggregate value of transaction: $13,028,431
5) Total fee paid:$2,605.69
þ
Fee paid previously with preliminary materials.
¨
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration No.:
3) Filing Party:
4) Date Filed:
SONA DEVELOPMENT CORP.
2610-1066 West Hastings Street,
Vancouver, British Columbia V6E 3X2 Canada
Telephone (604) 602-1717
January 18, 2007
Dear Stockholder:
Sona Development Corp. cordially invites you to attend a Special Meeting of Stockholders to be held at 10:00 a.m., Pacific Time, on Friday the 9th of February, 2007, at 2610-1066 West Hastings Street, Vancouver, British Columbia, Canada. Please find enclosed a notice of the meeting, a proxy statement describing the business to be transacted at the meeting, and a proxy form for use in voting at the meeting.
Business matters to be acted upon at the meeting are described in detail in the accompanying notice and proxy statement. In addition, we will report on our progress and provide an opportunity for questions of general interest to our stockholders.
Thank you.
Sincerely,
/s/ Nora Coccaro
Nora Coccaro, Chief Executive Officer and Director
SONA DEVELOPMENT CORP.
NOTICE OF THE SPECIAL MEETING OF STOCKHOLDERS
Notice is hereby given from Sona Development Corp., (the “Corporation”) that a Special Meeting of Stockholders (the “Special Meeting”) will be held at 10:00 a.m., Pacific Time, on Friday the 9th of February, 2007, at 2610-1066 West Hastings Street, Vancouver, British Columbia, Canada. At the Special Meeting, stockholders will vote on the following matters:
| (1) | a proposal to amend the Corporation’s Articles of Incorporation to change the name of the Corporation to “Sibling Entertainment Group Holdings, Inc.”; |
| (2) | a proposal to acquire 100% of the ownership of the subsidiaries of Sibling Entertainment Group, Inc, pursuant to the Agreement of Acquisition and Plan of Reorganization dated June 28, 2006 as amended on December 15, 2006; and |
| (3) | a proposal to elect four directors, each to serve until the next annual stockholders’ meeting or until his or her respective successor has been duly elected or appointed. |
Information regarding the above matters is set forth in the proxy statement that accompanies this notice.
The board of directors of the Corporation has fixed the close of business on January 9, 2007, as the record date for determining stockholders entitled to notice of and to vote at the Special Meeting. A complete list of the stockholders entitled to notice of and to vote at the Special Meeting will be maintained at the Corporation’s principal executive offices during ordinary business hours for a period of ten days prior to the Special Meeting. The list will be open to the examination of any stockholder for any purpose germane to the Special Meeting during this time. The stockholders list will also be produced at the time and place of the Special Meeting and will be open during the whole time thereof.
By Order of the Board of Directors,
/s/ Nora Coccaro
Nora Coccaro, Chief Executive Officer and Director
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE MARK, SIGN, DATE, AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE PROVIDED. IF YOU DO ATTEND THE MEETING, YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY.
NON-U.S.STOCKHOLDERS, PLEASE RETURN YOUR EXECUTED PROXY BY FAX TO INTERWEST TRANSFER, ATTN: GAYLE TERRY, AT (801) 277-3147. MS. TERRY’S PHONE NUMBER IS (801) 272-9294.
IF YOU HOLD YOUR SHARES IN “STREET-NAME,” PLEASE NOTE THAT ONLY YOUR BROKERAGE FIRM OR BANK CAN SIGN A PROXY ON YOUR BEHALF, AND ONLY UPON RECEIPT OF YOUR SPECIFIC INSTRUCTIONS. WE URGE YOU TO CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT TODAY, AND INSTRUCT THEM TO EXECUTE A PROXY IN FAVOR OF THE MATTERS PRESENTED IN THE PROXY STATEMENT.
TABLE OF CONTENTS
iii SONA DEVELOPMENT CORP. PROXY STATEMENT FOR THE SPECIAL MEETING OF STOCKHOLDERS INTRODUCTION This proxy statement is furnished by Sona Development, Corp., in connection with the solicitation of proxies for use at the Special Meeting of Stockholders to be held on Friday the 9th of February, 2007, at 10:00 a.m., Pacific Time, at 2610-1066 West Hastings Street, Vancouver, British Columbia, Canada, and at any and all adjournments thereof. This proxy statement is first being mailed to stockholders on or about January 18, 2007. Sona Development Corp.‘s board of directors has proposed three matters and has solicited the proxy form attached hereto. Unless we indicate otherwise or unless the context requires otherwise, all references in this proxy statement to “we,” “us,” “our,” or the “Corporation” are to Sona Development Corp., all references to “Sibling” are to Sibling Entertainment Group, Inc., all references to the “Sibling Subsidiaries” are to Sibling’s subsidiaries, all references to the “Special Meeting” are to the Special Meeting of Stockholders to be held on Friday the 9th of February, 2007, and all references to the “Agreement” mean the Agreement of Acquisition and Plan of Reorganization dated June dated as of June 28, 2006, and the amendment to the Agreement, dated as of December 12, 2006. QUESTIONS AND ANSWERS Q. Why did I receive this proxy statement? A. You received this proxy statement as notice of the Special Meeting pertaining to the following: changing the Corporation’s name to “Sibling Entertainment Group Holdings, Inc.”; approving the Agreement of Acquisition and Plan of Reorganization dated June 28, 2006, as amended on December 12, 2006, to acquire 100% of the Sibling Subsidiaries; and electing four directors, each to serve until the next annual stockholders’ meeting or until his or her respective successor has been duly elected or appointed. Q. Why does the Corporation wish to change its name to “Sibling Entertainment Group Holdings, Inc.”? The Corporation proposes an amendment to our articles of incorporation to change our name to reflect the Corporation’s business focus in connection with the proposed acquisition of the Sibling Subsidiaries. Why does the Corporation wish to acquire the Sibling Subsidiaries? The Corporation has been searching for a business to acquire. We believe that the Sibling Subsidiaries will make a suitable acquisition. Why does the Corporation wish to elect four additional directors? Pursuant to the Agreement, the Corporation is obliged to nominate, and the stockholders are presented with the opportunity to elect, four new directors to the Corporation’s board of directors. When do you expect the amendment to become effective? If approved at the Special Meeting, the proposed amendment to our articles of incorporation will be effective upon filing with the Texas Secretary of State. The Corporation expects to file the amendment with the Texas Secretary of State as soon as practical after the Special Meeting. When do you expect the acquisition to be consummated? The Agreement will close and the acquisition will be consummated immediately following the Special Meeting, in the event that both the Agreement is approved and the four directors are elected. When will the new directors, if elected, be added to the board? The additional directors, if elected, will be added to the Corporation’s board of directors immediately following the Special Meeting subject to stockholder approval of the Agreement. What happens if additional matters are presented at the Special Meeting? No other business will be acted upon at the Special Meeting What do I need to do now? Vote, either in person or by proxy. What is a proxy? A proxy is your legal designation of another person to vote the stock you own. That other person is considered your proxy. If you designate someone as your proxy in a written document, that document also is called a proxy. The Corporation has designated Nora Coccaro, our chief executive officer and a director, to act as proxy for the Special Meeting. Who may vote at the Special Meeting? You may vote your common stock if the Corporation’s records show that you owned your shares as of the close of business on January 9, 2007 (the “Record Date”). You may cast one vote for each share of common stock held by you on all matters presented. As of the Record Date, there were 11,976,705 shares of common stock issued and outstanding. What is the voting requirement to approve the proposals? For each of the proposals, a simple majority of the quorum of outstanding shares of common stock must vote in favor for the proposal to be approved. Abstentions have the same effect as votes against the proposals. What is the quorum requirement for the Special Meeting? A majority of the Corporation’s outstanding shares as of the record date must be present at the meeting in order to hold the meeting and conduct business. This is called a quorum. Your shares will be counted for purposes of determining if there is a quorum if you (i) are present and vote in person at the meeting, or (ii) have properly submitted a proxy card. How does the board of directors recommend that I vote? The board of directors recommends that you vote "FOR" each of the proposals How can I vote my shares in person at the Special Meeting? If your shares are registered directly in your name with the Corporation’s transfer agent, Interwest Transfer, you are considered the “stockholder of record” with respect to those shares the proxy materials and proxy card are being sent directly to you. As the stockholder of record, you have the right to vote in person at the meeting. If you choose to do so, you can bring the enclosed proxy card or vote using the ballot provided at the meeting. However, even if you plan to attend the Special Meeting, the board recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the Special Meeting. How can I vote my shares without attending the Special Meeting? Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct your vote without attending the Special Meeting by completing and mailing your proxy card or voting instruction card in the enclosed pre-paid envelope. Please refer to the enclosed materials for details. What happens if I do not give specific voting instructions? If you hold shares as a record holder, and you sign and return a proxy card without giving specific voting instructions, your shares will be voted as recommended by our board of directors. If you do not return a proxy and do not vote at the Special Meeting in person, your shares will not be voted.(1) (2) (3) A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute “broker non-votes.” Generally, broker non-votes occur when a beneficial owner fails to give voting instructions with respect to “non-routine” matters. In tabulating the voting result for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote on that proposal. Therefore, although broker non-votes are counted for purposes of determining a quorum, broker non-votes will not otherwise affect the outcome of any matter being voted on at the meeting. Q. A. Q. A. Q. A. Some of the Corporation’s stockholders hold their shares in street name through a stockbroker, bank, or other nominee rather than directly in their own name. In that case, you are considered the “beneficial owner” of shares held in street name, and the proxy materials are being forwarded to you together with a voting instruction card. Because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the meeting unless you obtain a “legal proxy” from the broker, trustee, or nominee that holds your shares, giving you the right to vote those shares at the meeting. If you wish to attend the Special Meeting and vote in person, you will need to contact your broker, trustee, or nominee to obtain a legal proxy. Q. A. Q. A.
| If you hold your shares through a broker, bank, or other nominee and you do not provide instructions on how to vote, your broker or other nominee may have authority to vote your shares on your behalf on matters to be considered at the Special Meeting. |
| Q. | How can I change my vote after I return my proxy card? |
| A. | You may revoke your proxy and change your vote at any time before the final vote at the meeting. You may do this by signing a new proxy card with a later date or by attending the meeting and voting in person. However, your attendance at the meeting will not automatically revoke your proxy unless you vote at the meeting or specifically request in writing that your prior proxy be revoked. |
| Q. | Does Texas have dissenters' rights of appraisal? |
| A. | Stockholders of Texas domestic corporations have no rights of dissent and appraisal under Texas Business Corporations Act in connection with the proposals. |
| Q. | Is my vote confidential? |
| A. | Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within the Corporation or to third parties, except: (i) as necessary to meet applicable legal requirements, (ii) to allow for the tabulation of votes and certification of the vote, and (iii) to facilitate a successful proxy solicitation. Occasionally, stockholders provide written comments on their proxy card, which may be forwarded to the Corporation’s management. |
| Q. | Where can I find the voting results of the Special Meeting? |
| A. | The preliminary voting results will be announced at the meeting. The final voting results will be tallied by our transfer agent and published on Form 8-K and Form 10-QSB. |
| Q. | Why do you need stockholder approval for the proposals? |
| A. | We are obligated to seek stockholder approval for each of the proposals pursuant to Texas Business Corporations Act. |
| Q. | Are the approvals of the proposals contingent upon one another? |
| A. | The three proposals are contingent upon one another. No proposal will be approved without the concurrent approval of the other two proposals. Proposal 1 and Proposal 3 are required under the terms of the Agreement. |
| Q. | Who pays for the cost of this proxy solicitation |
| A. | The Corporation will pay the costs of the solicitation of proxies (under $10,000). The Corporation may also reimburse brokerage firms and other persons representing beneficial owners of shares for expenses incurred in forwarding the voting materials to their customers who are beneficial owners and obtaining their voting instructions. In addition to soliciting proxies by mail, the Corporation’s board members, officers and employees may solicit proxies on the Corporation’s behalf, without additional compensation, personally or by telephone. |
| Q. | How can I obtain a copy of the Corporation's 10-KSB? |
| A. | A copy of the Corporation’s 2005 year end report on Form 10-KSB may be obtained at no charge by sending a written request to the Corporation’s corporate address. The Form 10-KSB is also available on the Securities and Exchange Commission’s website atwww.sec.gov. |
| Q. | Whom can I contact with questions? |
| A. | If you have any questions about any of the actions to be taken by the Corporation, please contact the Corporation’s chief executive officer, Nora Coccaro, at (604) 838-9797. |
SUMMARY TERM SHEET FOR PROPOSAL 2
This summary highlights selected information from this proxy statement regarding the acquisition and may not contain all of the information that is important to you. To understand the acquisition fully, and for a more complete description of the legal terms of the acquisition, you should carefully read this entire proxy statement, including the Agreement of Acquisition and Plan of Reorganization, dated as of June 28, 2006, attached hereto as Exhibit 1, and the amendment to the Agreement, dated as of December 12, 2006, attached hereto as Exhibit 2. We have included page references in this summary to direct you to the appropriate place in this proxy statement for a more complete description of the topics presented.
CONTACT INFORMATION
Sona Development Corp.
2610-1066 West Hastings Street,
Vancouver, British Columbia V6E 3X2 Canada
Telephone (604) 838-9797
Attn: Nora Coccaro
Sibling Entertainment Group, Inc.
511 West 25th Street, Suite 503
New York, New York 10001
Telephone (212) 414-9600
Attn: Mitchell Maxwell
BUSINESS CONDUCTED
Sona Development Corp. (page 22)
The Corporation was incorporated under the laws of the State of Texas on December 28, 1988. On November 27, 2002, the Corporation changed its name to “Sona Development Corp.” as part of a corporate restructuring designed to make the Corporation more attractive to prospective business opportunities. Management has since been searching for a suitable business opportunity to become part of the Corporation by acquisition or combination.
Subsidiaries of Sibling Entertainment Group, Inc. (page 28)
Sibling was incorporated under the laws of the State of New York in 1995. Sibling, through its subsidiaries, is engaged in the finance, development and production of entertainment projects including plays and musicals for the live stage, independent feature films, and other entertainment projects, as well as the management of entertainment based real estate properties. Sibling’s strategy includes the coordination of synergetic elements between its subsidiaries to provide optimal development for each project or property. Each subsidiary actively pursues to identify, select, finance, develop and produce one or more unique project or property correlating with the primary activity of that subsidiary.
Sibling is actively engaged in several new theatrical properties including the development of a new musical licensed from and in association with the Red Hat Society, Inc. (a private Nevada Corporation operating internationally with over 1.5 million members). Sibling has also formed a film fund organized to finance two or three independent films. Sibling’s theatrical management and theatrical real estate business is engaged in representing outside clients as well as managing theatrical projects and properties.
Sibling’s audit expressed doubt as to Sibling’s ability to continue as a going concern as a result of continuing net losses resulting in an accumulated deficit of $1,898,886 at June 30, 2006.
THE ACQUISITION (page 20)
On May 11, 2006, the Corporation announced that it had executed a letter of intent to acquire 100% of Sibling Entertainment Group, Inc., as a wholly owned subsidiary. Following further negotiations over the terms of the acquisition, the Corporation and Sibling entered into an Agreement of Acquisition and Plan of Reorganization dated June 28, 2006, as amended on December 12, 2006, that provided for the acquisition of the Sibling Subsidiaries, effectively acquiring Sibling, since essentially all of Sibling’s operations are conducted through the Sibling Subsidiaries.
Proposal 2 asks the Corporation’s stockholders to consider the prospective acquisition of the Sibling Subsidiaries pursuant to the terms and conditions of the Agreement.
We have issued no securities in connection with the intended acquisition.
Agreement of Acquisition and Plan of Reorganization (page 20)
Upon the terms and subject to the conditions of the Agreement, dated June 28, 2006, as amended December 12, 2006, the Corporation will issue up to 36,190,085 shares of common stock for all the issued and outstanding shares of the Sibling Subsidiaries on the closing date. The Corporation will further grant 22,865,324 purchase warrants with terms ranging from 3 to 5 years at exercise prices ranging from $0.275 a share to $1.00 per share.
Under the reorganization, the Corporation will acquire each of Sibling’s four wholly owned subsidiaries: Sibling Theatricals, Inc., Sibling Pictures, Inc., Sibling Music Corp., and Sibling Properties, Inc. The Sibling Subsidiaries own and/or control each of Sibling’s respective divisions and operations of live-stage theatrical operations, independent feature films, music, and theatrical real estate.
Closing of the Agreement (page 20)
If the acquisition of the Sibling Subsidiaries is approved by our stockholders, the closing of the Agreement shall take place on February 9, 2007, at the offices of the Corporation, following the Special Meeting.
Conditions Precedent to the Agreement (page 20)
The closing of the Agreement depends on the satisfaction or waiver of a number of conditions, including:
• our stockholder approval of the Agreement;• Sibling’s stockholder approval of the Agreement;
• the receipt and provision of closing documentation and securities on the closing date;
• our stockholder approval of Proposal 1 to change our name and Proposal 3 to elect individuals to our board of directors; and• the resignation of Nora Coccaro, our sole officer and director, on the closing of the Agreement.
Representations and Warranties within the Agreement (page 21)
The Corporation and Sibling represent and warrant a number of conditions within the Agreement, including the following:
• all of the parties have the requisite authority to execute the Agreement;
• no parties have any legal conflicts;
• the parties are in compliance with their Commission filings; and
• the Corporation and Sibling will go about their business in an ordinary fashion until the closing of the Agreement.
Interests of Our Executive Officer and Directors in the Agreement (page 21)
Our sole executive officer and director, Nora Coccaro, owns 239,500 shares of the Corporation but will receive no additional shares on the close of the transactions and therefore has a similar interest to her fellow stockholders.
Change of Control (page 21)
Following the closing of the Agreement, our present stockholders’ shares of common stock will be diluted by the issuance of up to 36,190,085 shares of common stock and the grant of 22,865,324 purchase warrants, which issuance and grant will constitute a change of control in ownership. If all of the warrants are executed, the acquisition will result in a dilution of approximately 83% to existing stockholders. Additionally, the closing of the Agreement will cause the election of new directors and the appointment of new officers to manage the Corporation, which additions will constitute a change in control of management.
The Consideration Offered to Stockholders (page 21)
There is no consideration being offered to stockholders.
The Reasons for Engaging in the Agreement (page 21)
We are intent on obtaining stockholder approval to acquire the Sibling Subsidiaries for the purpose of creating stockholder value.
The Vote Required for Approval Of the Agreement (page 21)
Assuming a quorum is present approval of Proposal 2 requires the affirmative vote of a majority of the stockholders at the Special Meeting. The sole director of the Corporation holds 239,500 shares of common stock, or approximately 2% of our issued and outstanding shares, and plans to vote “for” Proposal 2.
Material Differences in the Rights of Security Holders as a Result of the Agreement (page 21)
There will be no material differences in the rights of security holders as a result of the acquisition.
Accounting Treatment of the Agreement (page 21)
The acquisition will be accounted for as a reverse acquisition or recapitalization of the Corporation, in accordance with U.S. generally accepted accounting principles.
The Federal Income Tax Consequences of the Agreement (page 22)
Our stockholders will not recognize a gain or loss as a result of the acquisition.
Neither the Corporation nor Sibling will recognize any gain or loss as a result of the acquisition, which will be deemed by the parties to be tax free.
REGULATORY APPROVALS (page 22)
No material federal or state regulatory requirements must be complied with or approvals obtained in connection with this transaction.
REPORTS, OPINIONS, APPRAISALS (page 22)
The Board of Directors of the Corporation has received no reports, opinions, or appraisals with regard to the transaction.
PAST CONTRACTS, TRANSACTIONS OR NEGOTIATIONS (page 22)
Idea One, Inc.
On May 20, 2004, the Corporation entered into a non-binding letter of intent, as amended, to acquire Idea One, Inc., (“Idea One”), a privately owned company involved in the development of alternative energy products through its 83% owned subsidiary, Advanced Technology Upgrading, Ltd. Pursuant to the letter of intent, as amended, the Corporation loaned Idea One a total of $550,000, with $45,642 of accrued interest, through five convertible promissory notes, which, as per the letter of intent, converted into 1,489,106 shares of Idea One, on May 1, 2006, in full satisfaction of the debt owed by Idea One. Since Idea One was unable to satisfy certain conditions of the letter of intent the Corporation has abandoned any efforts to acquire Idea One.
Sibling Pictures, Inc.
On June 17, 2005 Sibling entered into a share exchange agreement with Sibling Pictures, Inc. (“Pictures”), and all of the stockholders of Pictures to acquire all of the issued and outstanding shares of Pictures in exchange for 10,785,000, shares of Sibling’s common stock on a basis of 60,000 Sibling shares for each share of Pictures. Sibling’s acquisition of Sibling Pictures, Inc. also included the subsidiaries, Sibling Pictures Fund, LLC, Reel Love on Film LLC and Reel Love Productions, Inc.
PRO FORMA FINANCIAL DATA
The following is a summary of unaudited, pro forma, consolidated, financial data as of September 30, 2006 and for the periods ended September 30, 2006 and December 31, 2005 for the Corporation and Sibling. This summary of pro forma financial data is based on pro forma financial data attached hereto as Exhibit FE. . For accounting purposes, the acquisition has been treated as an acquisition of the Corporation by Sibling Entertainment Group, Inc (SEGI) and as a recapitalization of SEGI. The pro forma balance sheet is presented as if the acquisition of the Sibling Subsidiaries (which is effectively the acquisition of Sibling itself) by the Corporation had occurred on September 30, 2006 and the pro forma statement of operations data is presented as if the acquisition of the Sibling Subsidiaries by the Corporation had occurred on January 1, 2005. The pro forma financial data is presented for informational purposes and is not necessarily indicative of either the future results of operations or the results of operations that would have occurred if the acquisition had been consummated on any date. You should read the following pro forma financial data along with other financial information contained elsewhere in this proxy statement.
SONA DEVELOPMENT CORP. AND SUBSIDIARIES
Combined Pro Forma Balance Sheet (Unaudited)
Sona Development Corp. Sibling Entertainment Group, Inc.
(A Development Stage Company) (A Development Stage Company)
For the Nine For the Nine Pro Forma
Months Ending Months Ending Adjustments
September 30, September 30, Increase Pro Forma
2006 2006 (Decrease) Combined
------------------- -------------------- --------------------------------------
------------------- -------------------- ---------------- -------------------
ASSETS
CURRENT ASSETS
Cash 152 150,742 150,894
Due from related parties 128,701 128,701
Advances and prepaids 23,685 23,685
Loans receivable - related party 132,800 132,800
Other receivables 20,658 20,658
------------------- -------------------- -------------------
------------------- -------------------- -------------------
TOTAL CURRENT ASSETS 152 456,586 456,738
FIXED ASSETS
Computer equipment, net of accumulated depreciation 5,368 5,368
------------------- -------------------- -------------------
TOTAL FIXED ASSETS 5,368 5,368
------------------- -------------------- -------------------
OTHER ASSETS
Goodwill 2,779,624 2,779,624
Deposits 309,920 309,920
Recoupable advances 48,333 48,333
Production development costs 474,491 474,491
Investment in related companies 105,183 105,183
Other investments 1 88,350 88,351
Options purchased 63,000 63,000
------------------- -------------------- -------------------
TOTAL OTHER ASSETS 3,868,901 3,868,901
------------------- -------------------- -------------------
TOTAL ASSETS 153 4,330,855 4,331,008
=================== ==================== ===================
The accompanying notes are an integral part of the financial statements.
SONA DEVELOPMENT CORP. AND SUBSIDIARIES
Combined Pro Forma Balance Sheet (Unaudited)
Sona Development Corp. ("Sona") Sibling Entertainment Group, Inc. ("Sibling")
(A Development Stage Company) (A Development Stage Company)
For the Nine For the Nine Pro Forma
Months Ending Months Ending Adjustments
September 30, September 30, Increase Pro Forma
2006 2006 (Decrease) Combined
------------------- -------------------- ----------------- -------------------
------------------- -------------------- ----------------- -------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 21,190 280,576 301,766
Accrued expenses 40,350 40,350
Income taxes payable 3,409 3,409
Due to related parties 157,306 157,306
Short term loans payable 50,000 50,000
------------------- -------------------- -------------------
TOTAL CURRENT LIABILITIES 374,335 374,335
------------------- -------------------- -------------------
LONG-TERM LIABILITIES
Loan payable - related party 5,000 5,000
Long term convertible debentures, 610,055 610,055
net of debt discount ------------------- -------------------- -------------------
TOTAL LIABILITIES 178,496 989,390 1,167,886
=================== ==================== ===================
EQUITY
Sona Common stock $0.0001 par value;
100,000,000 authorized shares;
41,272,251 shares and
outstanding 1,197 (a) 2,930 4,127
Sibling Common stock $0.0001 par
value; 100,000,000 authorized shares;
29,2929,296 shares issued and
outstanding 29,296 (a) (29,296) -
Additional paid in capital - warrants 170,729 (b) 498,577 669,306
(b)(c)
Additional paid in capital 2,860,905 5,987,140 (d) (3,400,584) 5,447,461
Accumulated deficit (248,300) (248,300)
Deficit accumulated during (b)(c)
development stage (3,040,445) (2,597,400) (d) 2,928,373 (2,709,472)
------------------- -------------------- -------------------
TOTAL EQUITY (178,343) 3,341,465 3,163,122
=================== ==================== ===================
=================== ==================== ===================
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 153 4,330,855 4,331,008
=================== ==================== ===================
The accompanying notes are an integral part of the financial statements.
SONA DEVELOPMENT CORP. AND SUBSIDIARIES
Combined Pro Forma Statements of Operations (Unaudited)
Sona Development Corp. Sibling Entertainment Group, Inc.
(A Development Stage Company) (A Development Stage Company)
For the Nine For the Nine Pro Forma
Months Ending Months Ending Adjustments
September 30, September 30, Increase Pro Forma
2006 2006 (Decrease) Combined
------------------- ------------------- ---------------- ---------------
------------------- ------------------- ---------------- ---------------
REVENUES
Revenue - related companies
Consulting fee income - related company 79,298 79,298
Executive producer fees - related company - -
------------------- ------------------- ---------------
TOTAL REVENUES 79,298 79,298
EXPENSES
General and administrative :
Professional fees 527,459 527,459
Management fees - related company 19,600 19,600
Other 427,826 703,134 (d) (427,826) 703,134
PRODUCTION EXPENSES 375,028 375,028
------------------- ------------------- ---------------- ---------------
OPERATING LOSS (427,826) (1,545,923) 427,826 (1,545,923)
Other Income (Expense) - - -
Interest Income (Expense) - (3,651) (3,651)
Impairment of investment - related company - (233,621) (233,621)
Equity loss on investment - related company - (2,702) (2,702)
Write down of promissory notes (50,000) - (d) 50,000 -
------------------- ------------------- ---------------- ---------------
NET LOSS BEFORE INCOME TAXES (477,826) (1,785,897) 477,826 (1,785,897)
TAXES - 4,595 4,595
------------------- ------------------- ---------------- ---------------
NET LOSS (477,826) (1,790,492) 477,826 (1,790,492)
=================== =================== ================ ===============
The accompanying notes are an integral part of the financial statements.
SONA DEVELOPMENT CORP. AND SUBSIDIARIES
Combined Pro Forma Statements of Operations (Unaudited)
Sona Development Corp. Sibling Entertainment Group, Inc.
(A Development Stage Company) (A Development Stage Company)
For the Twelve For the Twelve Pro Forma
Months Ending Months Ending Adjustments
December 31, December 31, Increase Pro Forma
2005 2005 (Decrease) Combined
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REVENUES
Revenue - related companies
Consulting fee income - related company - 90,375 90,375
Executive producer fees - related company - 50,000 50,000
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TOTAL REVENUES - 140,375 140,375
EXPENSES
General and administrative :
Professional fees - 219,709 (d) 498,577 718,286
Management fees - related company - 184,296 184,296
Other 182,256 201,825 (d) (182,256) 201,825
PRODUCTION EXPENSES - 34,661 34,661
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OPERATING LOSS (182,256) (500,116) (316,321) (998,693)
Other Income (Expense) - - -
Interest Income (Expense) - 800 800
Impairment of investment - related company - - -
Equity loss on investment - related company - - -
Write down of promissory notes (225,000) - (d) 225,000 -
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NET LOSS BEFORE INCOME TAXES (407,256) (499,316) (91,321) (997,893)
TAXES - 4,595 4,595
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NET LOSS (407,256) (503,911) (91,321) (1,002,488)
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The accompanying notes are an integral part of the financial statements.
RISK FACTORS
Before deciding how to vote on the proposals described in this proxy statement, you should carefully consider the risks relating to the acquisition and to our post-closing operations as described below, together with the other information in this proxy statement. Our business, financial condition and results of operations could be adversely affected by any of the following risks, which could cause the trading price of our common stock to decline.
RISKS RELATING TO THE CORPORATION
AND THE ACQUISITION OF THE SIBLING SUBSIDIARIES
We have a history of significant operating losses and such losses may continue in the future.
Since our inception in 1988, our operations have resulted in a continuation of losses and an accumulated deficit which was $3,040,445 at September 30, 2006. During the nine month period ended September 30, 2006, we recorded a net loss of $477,826. The Corporation has never realized revenue from operations and we may never achieve profitability.
If we are unable to complete the acquisition, we will have no business operations and our stock price may decline.
If we do not complete the acquisition, we will be left with no business operations or prospects which may cause the market price of our stock to decline. Even if the acquisition is not approved by our stockholders, we will remain obligated to pay the costs related to the acquisition, including legal, accounting, and financial advisory fees.
The acquisition will result in dilution to our current stockholders which will decrease voting power and ownership percentages.
The issuance of shares of our capital stock in the acquisition will dilute the voting power and ownership percentage of our existing stockholders. We will issue up to a total 36,190,085 shares and grant 22,865,324 purchase warrants. If all of the warrants are executed, the acquisition will result in a dilution of approximately 83% to our existing stockholders.
Change of control of the Corporation.
The dilution referred to above, as a result of Proposal 2, will constitute a change of control since the Corporation’s current stockholders will retain approximately 25% on the closing of the Agreement which retention will decrease to 17% in the event that all purchase warrants are exercised. Additionally, Proposal 3 will cause the Corporation to elect new individuals to the Corporation’s board of directors.
We may not realize the anticipated benefits from the acquisition which could cause our stock price to decline.
We may not achieve the benefits we are seeking in the acquisition. Siblings Subsidiaries may not be successful in their respective entertainment industry efforts. As a result, our operations and financial results may be less rewarding than anticipated, which may cause the market price of our common stock to decline.
The acquisition of the Sibling Subsidiaries could decrease the value of your stock
Sibling is a development stage company with a limited history of realizing revenue and historical net losses, about which Sibling’s auditors have expressed a going concern opinion. Additionally, Sibling expects losses in the future and its current assets may be insufficient to conduct its minimum plan of operation over the next 12 months. Given these facts, the acquisition of the Sibling Subsidiaries could result in significant losses for the Corporation which could decrease the value of your stock.
RISKS RELATING TO THE CORPORATION AFTER THE ACQUISITION
We may not be successful in integrating the business operations of the Sibling Subsidiaries into the Corporation after the acquisition, which failure will stifle growth and hinder the realization of profit.
The acquisition involves the integration of companies that have previously operated independently. Successful integration of the operations the Sibling Subsidiaries with the Corporation will depend on our ability to consolidate operations and procedures and to integrate the management team of the Sibling Subsidiaries with our own. If we are unable to do so, we may not realize the anticipated potential benefits of the acquisition, our business development could be stifled, and results of operations may not produce a profit. Difficulties could include the loss of key employees, the disruption of the ongoing businesses of the Sibling Subsidiaries, and possible inconsistencies in standards, controls, procedures and policies.
The Corporation may be unable to manage the growth of our business which could negatively affect development, revenues, and fiscal independence.
The Corporation believes that if our post-acquisition growth plan is successful, our business has the potential to grow in size and complexity. If our management is unable to manage growth effectively, our business development may be slowed, our operating results may not show a profit, and we may not become financially independent from outside funding sources. Any new sustained growth would be expected to place a significant strain on our management systems and operational resources. We anticipate that new sustained growth, if any, will require us to recruit, hire and retain new managerial, finance and support personnel. We cannot be certain that we will be successful in recruiting, hiring or retaining such personnel. Our ability to compete effectively and to manage our future growth, if any, will depend on our ability to maintain and improve operational, financial, and management information systems on a timely basis and to expand, train, motivate and manage our work force. If we begin to grow, we cannot be certain that our personnel, systems, procedures, and controls will be adequate to support our operations.
RISKS RELATED TO THE BUSINESS OF SIBLING’S SUBSIDIAIRIES
Sibling has had losses which may continue.
Sibling has reported operating losses for the fiscal year ended June 30, 2006 through September 30, 2006. The accumulated deficit during the development stage at September 30, 2006 amounted to $2,597,400. From this it can be extrapolated that the Sibling Subsidiaries may not operate profitably in the future, and if they cannot, they may not be able to meet their working capital requirements, capital expenditure plans, anticipated production slate, or other cash needs. The Sibling Subsidiaries’ inability to meet those needs could stifle their business.
The loss of Mitchell Maxwell, Victoria Maxwell or James Cardwell, could negatively effect Siblings’ Operations.
Sibling’s operations depend, and will continue to depend, on the services provided by Mitchell Maxwell, Victoria Maxwell and James Cardwell. Virtually all of the significant decisions concerning the conduct of Sibling’s operations, including the properties and rights to be developed or acquired and the financing, production and distribution of any theatrical motion pictures, Broadway or Off-Broadway production, real estate acquisition, or other projects are, and are expected to continue to be, made by Mitchell Maxwell, Victoria Maxwell and James Cardwell. The loss of their services or a dispute among them could have a material adverse effect on the operations of the Sibling Subsidiaries.
Sibling’s operations are dependant on a limited number of changing projects.
The Corporation anticipates that, initially, the Sibling Subsidiaries will be dependent on a limited number of entertainment projects and theatres under management that will change from period to period, for a substantial percentage, of the Sibling Subsidiaries’ revenues. The change in projects from period to period will principally be due to the opportunities available from time to time to the Sibling Subsidiaries and to audience response to the entertainment product, both of which are unpredictable and subject to change. In addition, the loss of a major project in any period would have an adverse effect on the results of operations in that period.
The Sibling Subsidiaries must continue the development of new programs.
The Sibling Subsidiaries’ results of operations will largely depend on having adequate access to literary rights, plays, musicals, and film scripts that are capable of being produced or acquired and successfully marketed. Such accessibility is dependent upon numerous factors, including reputation and credibility in the creative community, relationship in the entertainment industry and financial and other resources. There can be no assurance that the Corporation or the Sibling Subsidiaries will have adequate access to sources of programs or that our efforts in developing or acquiring new programs will be successful. If the Sibling Subsidiaries are unable to successfully market new programs where they have funded development costs, they will be subject to realizing a loss on such projects.
The Sibling Subsidiaries face intense industry competition.
The live theatre and motion picture industries are intensely competitive and speculative. The Sibling Subsidiaries compete with the major theatrical producers, theatre owners, major motion picture studios and with numerous independent producers of both theatre and feature film production, many of which are producing an increasing number of theatrical productions and feature films. Most of the Sibling Subsidiaries’ principal competitors have greater financial, distribution, technical and creative resources and are better established in the industry. The Sibling Subsidiaries also compete for interest and acceptance of entertainment product by the public. Audience appeal depends upon a variety of changing factors that cannot be reliably predicted and over which the Sibling Subsidiaries have little if any control.
Nature of the Sibling Subsidiaries’ business is such that it often results in a risk of loss of investment capital.
The Sibling Subsidiaries’ primary business is the production and sub-licensing of rights to certain live theatrical properties and independent feature films. The development and production of independent feature films and live entertainment properties often results in a risk of loss of investment capital that is especially high in comparison with the prospects for any significant long-term profitability.
The Sibling Subsidiaries’ officers’ and directors’ other activities may conflict with the operations of the Sibling Subsidiaries.
From time to time certain of the directors and executive officers of the Sibling Subsidiaries may serve as directors or executive officers of other companies and, to the extent that such other companies may participate in the industries in which the Sibling Subsidiaries may participate, such directors may have a conflict of interest. In addition, the dependence of the Sibling Subsidiaries on directors and officers who devote time to other business interests may create conflicts of interest. The fiduciary obligations of an individual to other companies may conflict with the individual’s fiduciary obligations to the Sibling Subsidiaries and vice versa.
Directors and officers must exercise their judgment to resolve all conflicts of interest in a manner consistent with their fiduciary duties. In the event that a conflict of interest arises at a meeting of the directors, a director who has such a conflict will abstain from voting for or against approval of such situation and/or terms. In appropriate cases, the Corporation will establish a special committee of independent directors to review a matter in which any directors, or management, may have a conflict. The Corporation is not aware of the existence of any conflict of interest as described herein. To date the Sibling Subsidiaries have not been able to attract independent directors to serve on their respective board of directors.
The Sibling Subsidiaries face substantial capital requirements and financial risks as the operations require a substantial investment of capital.
The production, acquisition and distribution of motion pictures and live theatre productions require a significant amount of capital. A significant amount of time may elapse between expenditure of funds and the receipt of commercial revenues from or government contributions to the motion pictures or television programs. This time lapse requires the Sibling Subsidiaries to fund a significant portion of the capital requirements from other sources. The Sibling Subsidiaries’ business plan is completely dependent upon the ability to obtain the required financing. Without the capital to acquire and promote a new business activity that generates profitability and investor interest, future activities may need to be foregone.
The Sibling Subsidiaries may not be able to protect and defend against intellectual property claims.
The Sibling Subsidiaries’ ability to compete depends, in part, upon successful protection of intellectual property. The Sibling Subsidiaries do not have the financial resources to protect property rights to the same extent as major studios. The Sibling Subsidiaries attempt to protect proprietary and intellectual property rights to productions through available copyright and trademark laws and licensing and distribution arrangements with reputable international companies in specific territories and media for limited durations. Despite these precautions, existing copyright and trademark laws afford only limited practical protection in certain countries. The Sibling Subsidiaries also distribute products in other countries in which there is no copyright and trademark protection. As a result, it may be possible for unauthorized third parties to copy and distribute the Sibling Subsidiaries’ productions or certain portions or applications of intended productions, which could negatively affect operation and hinder revenue growth.
Litigation may also be necessary in the future to enforce intellectual property rights, to protect trade secrets, or to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Any such litigation could result in substantial costs and the diversion of resources and would decrease net income.
FORWARD-LOOKING STATEMENTS
This proxy statement contains forward-looking statements. These statements relate to future events, future financial performance or projected business results and involve known and unknown risks and uncertainties. Actual results may differ materially from those expressed or implied by these statements. In some cases, you can identify forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will” or other similar words. The following list identifies some of the factors that could cause actual results to differ from those expressed or implied from the forward-looking statements:
• our anticipated financial performance and business plan;
• the sufficiency of existing capital resources;
• our ability to raise additional capital to fund cash requirements for future operations;
• uncertainties related to the Corporation's future business prospects with the Sibling Subsidiaries;
• uncertainties related to the future business prospects of the Sibling Subsidiaries;
• the ability of the Corporation to generate revenues to fund future operations;
• the volatility of the stock market and;
• general economic conditions.
The Corporation’s and the Sibling Subsidiaries’ forward-looking statements are based on their respective management’s beliefs and assumptions extracted from information available to management at the time the statements are made. Management cautions you that assumptions, beliefs, expectations, intentions and projections about future events may, and often do, vary materially from actual results. Therefore, actual results may differ materially from those expressed or implied by the forward-looking statements.
PROPOSAL 1
APPROVAL OF AN AMENDMENT TO CHANGE THE CORPORATION’S NAME
The Corporation’s board of directors executed a written consent authorizing and recommending that stockholders approve a proposal to change the Corporation’s name from “Sona Development Corp.” to “Sibling Entertainment Group Holdings, Inc.” believing that the new name will promote public recognition of the Corporation and properly reflect our post-acquisition business focus. We are planning to shift our focus, as per Proposal 2, to the finance, development and production of entertainment projects including plays and musicals for the live stage, independent feature films, and other entertainment projects, as well as the management of entertainment based real estate properties. In adopting the new name, we believe that we will better represent our business focus within the entertainment industry.
The Corporation’s board of directors has approved an amendment to Article One of the Amended Articles of Incorporation to change the name of the Corporation from “Sona Development Corp.” to “Sibling Entertainment Group Holdings, Inc.” The directors also directed that the amendment be submitted for approval by the Corporation’s stockholders as required by Texas Business Corporation Act, Article 4.02. The full text of the proposed amendment to the first paragraph of Article One of the Amended Articles of Incorporation is as follows:
“ARTICLE ONE
The name of the corporation is Sibling Entertainment Group Holdings, Inc.”
If this proposal as well as Proposals 2 and 3 are approved by the stockholders at the Special Meeting, the Corporation will file an amendment to the Amended Articles of Incorporation for the purpose of effecting the name change. This amendment will become effective upon the filing of a Certificate of Amendment with the Secretary of State of Texas, which is expected to take place shortly after the Special Meeting.
Required Vote
Approval of this proposal requires affirmative vote of a majority of the votes cast at the meeting, assuming a quorum is present. Approval also requires the approval of Proposal 2 and Proposal 3. Broker non-votes are counted solely for the purpose of determining a quorum. Abstentions will have the same effect as a vote against this proposal.
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE PROPOSAL
TO CHANGE THE CORPORATION’S NAME FROM “SONA DEVELOPMENT CORP.” TO “SIBLING ENTERTAINMENT GROUP HOLDINGS, INC.”
PROPOSAL 2
APPROVAL OF THE AGREEMENT OF ACQUISITION AND PLAN OF REORGANIZATION
The Corporation’s board of directors executed a written consent authorizing and recommending that stockholders approve the execution of the Agreement of Acquisition and Plan of Reorganization, as amended. The approval of the Agreement will cause the Corporation to acquire the Sibling Subsidiaries. The acquisition of the Sibling Subsidiaries will focus the Corporation on financing, developing and producing entertainment projects including plays and musicals for the live stage, independent feature films, and other entertainment projects, as well as the management of entertainment based real estate properties.
If this proposal is approved by the stockholders at the Special Meeting, the Corporation will thereafter close the Agreement issuing up to 36,190,085 shares and granting 22,865,324 purchase warrants to Sibling, in exchange for Sibling transferring 100% of the share of the Sibling Subsidiaries to the Corporation. This action will effectively make the Sibling Subsidiaries wholly owned subsidiaries of the Corporation. The directors directed that the Agreement be submitted for approval by the Corporation’s stockholders as required by Texas Business Corporation Act, Article 5.02.
Required Vote
Approval of this proposal requires affirmative vote of a majority of the votes cast at the meeting, assuming a quorum is present. Approval also requires the approval of Proposal 1 and Proposal 3. Broker non-votes are counted solely for the purpose of determining a quorum. Abstentions will have the same effect as a vote against this proposal.
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVING
THE AGREEMENT OF ACQUISITION AND PLAN OF REORGANIZATION.
FURTHER INFORMATION REGARDING PROPOSAL 2
Proposal 2 concerns the Corporation’s acquisition of the 100% of the Sibling Subsidiaries pursuant to the Agreement of Acquisition and Plan of Reorganization, as amended.
THE ACQUISITION
On May 11, 2006, the Corporation announced that it had executed a letter of intent to acquire 100% of Sibling Entertainment Group, Inc., as a wholly owned subsidiary. Following further negotiations over the terms of the acquisition, the Corporation and Sibling entered into an Agreement of Acquisition and Plan of Reorganization dated June 28, 2006, as amended on December 12, 2006, that provided for the acquisition of the Sibling Subsidiaries, effectively acquiring Sibling since essentially all of Sibling’s operations are conducted through the Sibling Subsidiaries.
Proposal 2 asks the Corporation’s stockholders to consider the prospective acquisition of the Sibling Subsidiaries pursuant to the terms and conditions of the Agreement.
We have issued no securities in connection with the intended acquisition and related transactions.
Agreement of Acquisition and Plan of Reorganization
Upon the terms and subject to the conditions of the Agreement, dated June 28, 2006, as amended December 12, 2006, the Corporation will issue up to 36,190,085 shares of common stock for all the issued and outstanding shares of the Sibling Subsidiaries on the closing date. The Corporation will further grant 22,865,324 purchase warrants with terms ranging from 3 to 5 years at exercise prices ranging from $0.275 a share to $1.00 per share.
Under the reorganization, the Corporation will acquire each of Sibling’s four wholly owned subsidiaries: Sibling Theatricals, Inc., Sibling Pictures, Inc., Sibling Music Corp., and Sibling Properties, Inc. The Sibling Subsidiaries own and/or control each of Sibling’s respective divisions and operations of live-stage theatrical operations, music, independent feature films and theatrical real estate.
Closing of the Agreement
If the acquisition of the Sibling Subsidiaries is approved by our stockholders, the closing of the Agreement shall take place on February 9, 2007, at the offices of the Corporation, following the Special Meeting.
Conditions Precedent to the Agreement
The closing of the Agreement depends on the satisfaction or waiver of a number of conditions, including:
• our stockholder approval of the Agreement;• Sibling’s stockholder approval of the Agreement;
• the receipt and provision of closing documentation and securities on the closing date;
• our stockholder approval of Proposal 1 to change our name and Proposal 3 to elect individuals to our board of directors; and• the resignation of Nora Coccaro, our sole officer and director, on the closing of the Agreement.