As filed with the Securities and Exchange Commission September 5, 2001 File No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
WOODLAND HATCHERY, INC.
(Exact name of registrant as specified in its charter)
| Nevada |
(State or Other Jurisdiction of Incorporation or Organization)
(IRS Employer Identification No.)
1442 Lower River Road,Woodland, UT 84036
(Address and telephone number of registrant's principal offices)
Cody Winterton
1442 Lower River Road
Woodland, UT 84036
(801) 367-7197
(Name, address and telephone number of agent for service)
Copies to:
Cletha A. Walstrand, Esq.
Lehman Walstrand & Associates
8 East Broadway, Suite 620
Salt Lake City, UT 84111-2204
(801) 532-7858
(801) 363-1715 fax
Approximate date of commencement of proposed sale to the public: As soon as practicable after the Registration Statement 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, check the following box: [ ]
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 delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of each class Amount to be Proposed offering Proposed maximum Amount of
of securities to registered price per share aggregate offering registration
be registered price fee
Common Stock 500,000 shares $0.20 per share $100,000 $25.00
The number of shares to be registered is estimated solely for the purpose of calculating the registration fee.
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Subject to completion _____________, 2001
PROSPECTUS
$75,000 Minimum / $100,000 Maximum
WOODLAND HATCHERY, INC.
COMMON STOCK
This is Woodland's initial public offering. We are offering a minimum of 375,000 shares and a maximum of 500,000 shares of common stock. The public offering price is $0.20 per share. No public market currently exists for our shares. We are a development stage company without any history of profitable operations.
See "Risk Factors" beginning on page 2 for certain information you should consider before you purchase the shares.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The shares are offered on a "minimum/maximum, best efforts" basis directly through our officer and director. No commission or other compensation related to the sale of the shares will be paid to our officer or director. The proceeds of the offering will be placed and held in an escrow account at Far West Bank, 885 North Main Street, Springville, UT 84663, until a minimum of $75,000 in cash has been received as proceeds from sale of shares. If we do not receive the minimum proceeds within 90 days from the date of this prospectus, unless extended by us for up to an additional 30 days, your investment will be promptly returned to you without interest and without any deductions. This offering will expire 30 days after the minimum offering is raised. We may terminate this offering prior to the expiration date.
| Price to Public | Commissions | Proceeds to Company |
| $0.20 | $-0- | $0.20 |
| $75,000 | $-0- | $75,000 |
| $100,000 | $-0- | $100,000 |
The date of this Prospectus is September 5, 2001
PROSPECTUS SUMMARY
About our company
We were formed as a Nevada corporation on May 5, 1997 as Kafco Corp. On April 11, 2001 we changed our name to Woodland Hatchery, Inc. We are in the business of developing a fish hatchery to provide fish for private fly-fishing enterprises and the wholesale and retail sales of organic fish. We intend to focus our business primarily in the state of Utah.
We will be competing with approximately 17 licensed fish sale operations in Utah. Fish sale operations in Idaho may become competitors if they comply with the Utah health regulation for importation of live fish.
We have commenced only limited operations and are considered a development stage company. As of July 31, 2001 we realized a net loss of $7,601 and have not yet established profitable operations. These factors raise substantial doubts about our ability to continue as a going concern. We need to raise at least the minimum offering amount from this offering so we can continue operations and implement our business plan for the next twelve months. We believe that with the minimum net offering proceeds amount of $55,000, we can purchase the necessary equipment and inventory and cover our startup costs over the next year.
Upon completion of this offering, our current shareholders will own 96.7% of the stock if the minimum is raised and 95.6% of the stock if the maximum is raised. This means that our current shareholders will be able to elect directors and control the future course of Woodland.
Our principal executive offices are located at 1442 Lower River Road, Woodland, UT 84036. Our telephone number is (801) 367-7197.
About our offering
We are offering a minimum of 375,000 and a maximum of 500,000 shares. Upon completion of the offering, we will have 11,520,000 shares outstanding if we sell the maximum number of shares. We will use the proceeds from the offering to pay existing debt, purchase equipment, and implement our business plan.
RISK FACTORS
Investing in our stock is very risky and you should be able to bear a complete loss of your investment. Please read the following risk factors closely.
Woodland is a new business and investment in our company is risky.We have no meaningful operating history so it will be difficult for you to evaluate an investment in our stock. For the period ended July 31, 2001, we have had no revenue and a net loss of $7,601. We cannot assure that we will ever be profitable. Since we have not proven the essential elements of profitable operations, you will be furnishing venture capital to us and will bear the risk of complete loss of your investment in the event we are not successful.
If we do not raise money through this offering, it is unlikely we can continue operations. As of July 31, 2001, Woodland had a working capital deficit of $9,760 and current liabilities of $23,005. We are devoting substantially all of our present efforts to establishing a new business and need the proceeds from this offering to continue implement our business plan. We have not generated any revenue. If we cannot raise money through this offering, we will have to seek other sources of financing or we will be forced to curtail or terminate our business. There is no assurance that additional sources of financing will be available at all or at a reasonable cost. These factors raise substantial doubt about our ability to continue as a going concern.
If our equipment and startup costs exceed our estimates, it may impact our ability to continue operations.We believe we have accurately estimated our needs for the next twelve months based on receiving both the minimum and maximum amount of the offering. It is possible that we may need to purchase additional equipment or that our startup costs will be higher than estimated. If this happens, it may impact our ability to generate revenue and we would need to seek additional funding.
Our operations may be severely impacted if our fish contract any disease.Whirling disease has been a problem in areas of Utah. Whirling disease is a parasitic infection which attacks juvenile trout and salmon. All species of trout and salmon may be susceptible to whirling disease. Other members of the trout and salmon family, such as mountain whitefish are also at risk. Rainbow trout and cutthroat trout appear to be more susceptible than other trout species. Brown trout become infected with the parasite, but they appear to have an immunity to the infection and have not been as greatly impacted as rainbow trout. Myxobolus cerebralis is a metazoan parasite that penetrates the head and spinal cartilage of fingerling trout where it multiplies very rapidly, putting pressure on the organ of equilibrium. This causes the fish to swim erratically (whirl), and have difficulty feeding and avoiding predators. In severe infections, the disease can cause high rates of mortality in young-of-the-year fish. Those that survive until the cartilage hardens to bone can live a normal life span, but are marred by skeletal deformities. Fish can, however reproduce without passing on the parasite to their offspring. Routine inspections for the presence of the parasite have been conducted in Utah since 1988. Currently, one state hatchery is positive and 12 private facilities have been tested positive at various times. The state enforces an annual hatchery inspection program and stocking or transport of infected fish is not allowed. Should our fish contract the disease our operations would be severely impacted.
Weather and other uncontrollable factors could adversely impact our operation. Although loss of electrical power is not a risk to our operation because we have free flowing water and do not use pumps, other factors could impact our operations. Weather could be a factor that impacts us. If the water levels dropped dramatically and we do not have the volume of water we traditionally have had available, it could effect our operation. Also, if we have an extremely cold winter, our operations may be impacted. Because the water is naturally flowing at higher speeds, ice is not an issue under normal winter conditions. Floods or other uncontrollable factors may adversely affect our operations. Water contamination could also be an issue although we are not aware of any type of facilities or threats that could potentially cause contamination located up stream from our hatchery.
We operate in a very competitive business environment that could adversely affect our ability to obtain and maintain clients. The majority of our competitors have greater financial and other resources than we do. Our competitors may also have a history of successful operations and an established reputation within the industry. Some of our competitors may be prepared to accept less favorable payment terms than us when negotiating or renewing contracts. Our inability to be competitive in obtaining and maintaining clients would have a material adverse effect on our revenues and results of operations.
We depend entirely on our executive officer to implement our business and losing his services would adversely affect our business. Woodland is in the development stage and requires the services of our executive officer to become established. We have no employment agreement with our executive officer. If we lost the services of our executive officer, it is questionable we would be able to find a replacement and our business would be adversely affected.
It is likely our stock will become subject to the Penny Stock rules which impose significant restrictions on the Broker-Dealers and may affect the resale of our stock.A penny stock is generally a stock that
- is not listed on a national securities exchange or Nasdaq,
- is listed in "pink sheets" or on the NASD OTC Bulletin Board,
- has a price per share of less than $5.00 and
- is issued by a company with net tangible assets less than $5 million.
The penny stock trading rules impose additional duties and responsibilities upon broker-dealers and salespersons effecting purchase and sale transactions in common stock and other equity securities, including
- determination of the purchaser's investment suitability,
- delivery of certain information and disclosures to the purchaser, and
- receipt of a specific purchase agreement from the purchaser prior to effecting the purchase transaction.
Many broker-dealers will not effect transactions in penny stocks, except on an unsolicited basis, in order to avoid compliance with the penny stock trading rules. In the event our common stock becomes subject to the penny stock trading rules,
- such rules may materially limit or restrict the ability to resell our common stock, and
- the liquidity typically associated with other publicly traded equity securities may not exist.
Shares of stock that are eligible for sale by our stockholders may decrease the price of our stock. Upon completion of the offering, we will have 11,520,000 shares outstanding, including 500,000 shares that are freely tradable and 11,020,000 shares that are restricted shares but may be sold under Rule 144. If the holders sell substantial amounts of our stock, then the market price of our stock could decrease.
FORWARD-LOOKING STATEMENTS
You should carefully consider the risk factors set forth above, as well as the other information contained in this prospectus. This prospectus contains forward-looking statements regarding events, conditions, and financial trends that may affect our plan of operation, business strategy, operating results, and financial position. You are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results may differ materially from those included within the forward-looking statements as a result of various factors. Cautionary statements in the risk factors section and elsewhere in this prospectus identify important risks and uncertainties affecting our future, which could cause actual results to differ materially from the forward-looking statements made in this prospectus.
DILUTION AND COMPARATIVE DATA
As of July 31, 2001, we had a net tangible book value, which is the total tangible assets less total liabilities, of $11,234, or approximately $0.001 per share. The following table shows the dilution to your investment without taking into account any changes in our net tangible book value after July 31, 2001, except the sale of the minimum and maximum number of shares offered.
| Assuming MinimumShares Sold | Assuming MaximumShares Sold | |
| Shares Outstanding | 11,395,000 | 11,520,000 |
| Public offering proceeds at $0.05 per share | $75,000 | $100,000 |
| Net offering proceeds after expenses | $55,000 | $80,000 |
| Net tangible book value before offering Per share | $11,234 |
$0.001
$0.001
The following table summarizes the comparative ownership and capital contributions of existing common stock shareholders and investors in this offering as of July 31, 2001:
| Shares Owned |
Number %
Amount %
Per Share
Minimum Offering
Maximum Offering
11,020,000 95.6
$16,000 13.8
$0.001
Minimum Offering
Maximum Offering
500,000 4.4
$100,000 86.2
$0.20
The numbers used for Present Shareholders assumes that none of the present shareholders purchase additional shares in this offering.
The above table illustrates that as an investor in this offering, you will pay a price per share that substantially exceeds the price per share paid by current shareholders and that you will contribute a high percentage of the total amount to fund Woodland, but will only own a small percentage of our shares. Investors will have contributed $75,000 if the minimum is raised and $100,000 if the maximum offering is raised, compared to $16,000 contributed by current shareholders. Further, if the minimum is raised, investors will only own 3.3% of the total shares and if the maximum is raised, investors will only own 4.4% of the total shares.
USE OF PROCEEDS
The net proceeds to be realized by us from this offering, after deducting estimated offering related expenses of approximately $20,000 is $55,000 if the minimum and $80,000 if the maximum number of shares is sold.
The following table sets forth our estimate of the use of proceeds from the sale of the minimum and the maximum amount of shares offered. Since the dollar amounts shown in the table are estimates only, actual use of proceeds may vary from the estimates shown.
| Description | Assuming Sale of Minimum Offering |
The working capital reserve may be used for general corporate purposes to operate, manage and maintain the current and proposed operations including professional fees, expenses and other administrative costs.
Costs associated with being a public company, including compliance and audits of our financial statements will be paid from working capital and revenues generated from our operations.
If less than the maximum offering is received, we will apply the proceeds according to the priorities outlined above.
Pending expenditures of the proceeds of this offering, we may make temporary investments in short-term, investment grade, interest-bearing securities, money market accounts, insured certificates of deposit and/or in insured banking accounts.
DETERMINATION OF OFFERING PRICE
The offering price of the shares was arbitrarily determined by our management. The offering price bears no relationship to our assets, book value, net worth or other economic or recognized criteria of value. In no event should the offering price be regarded as an indicator of any future market price of our securities. In determining the offering price, we considered such factors as the prospects for our products, our management's previous experience, our historical and anticipated results of operations and our present financial resources.
DESCRIPTION OF BUSINESS
General
We were formed as a Nevada corporation on May 5, 1997 as Kafco Corp. On April 11, 2001 we changed our name to Woodland Hatchery, Inc. We are in the business of developing a fish hatchery to provide fish for private fly-fishing enterprises and the wholesale and retail sales of organic fish. We intend to focus our business primarily in the state of Utah.
Our business
Our hatchery is located in Woodland, Utah, a location approximately twenty minutes east of Park City in the Upper Provo River Valley. The address is 1442 Lower River Road, Woodland, Utah. It is our intent to provide rainbow and brown trout for private fly-fishing enterprises and also to provide organically grown fish for wholesale and retail customers.
We are leasing ground and water rights from Seth Winterton, father of Cody Winterton, our president, on which we have constructed our hatchery and will initiate our operations. Our lease payments are $1,200 per year. The lease allows us unrestricted use of approximately one acre of land through which the hatchery waterways run. We are also granted unrestricted access rights to the property. The lease is for an initial period of twenty years as of June 2001 and is renewable annually after expiration unless either party gives notice to terminate the lease. All improvements to the land will belong to the owner of the property upon termination of the lease. We have selected the Woodland, Utah site because rainbow trout requires large amounts of high quality water with a minimum dissolved oxygen concentration of 5 mg/L. The selected site is ideal for a fish hatchery because of the quality natural water, volume and temperature of the water.
We have chosen to raise trout species including German brown and Kamaloop rainbow trout. These species were chosen based on our environment including water temperature, seasons and water flows.
Trout production facilities usually consist of indoor rearing facilities and outdoor raceways and ponds. The rearing facilities are usually used for producing trout from the fertilized eggs to fingerlings. Trout farmers who have brood stock can produce their own fertilized eggs or purchase them from commercial trout egg producers. After trout eggs are fertilized, they are placed in a flow through incubator and not disturbed until the eye spot appears in the eggs. After hatching, the sac fry are raised in shallow troughs and they contain a large yolk sac, which provides nutrition for three to six weeks. When most of the yolk sac is absorbed, they begin to swim to the water surface to begin feeding. It is at this time that the fry are fed an artificial starter diet. They are moved to production raceways and ponds when they reach the fingerling stage which is about 3 inches. As trout grow they are fed various sizes of food with specific protein percentages.
We have completed construction of the hatchery which consists of two concrete raceways with free flowing water, including two small incubators. A flowing stream has been diverted to run through the raceways to simulate a natural stream or river bed. Total cost for construction was $16,500. The concrete design of the raceways aids in the quality of the fish hatchery making the walls and floors easy to clean. At times water may be diverted away from the raceways to allow them to sun dry and kill diseases that may potentially exist.
With proceeds from this offering, we will purchase 2,000 pounds of six inch trout, eight ounces per fish. The trout will consist of 1,000 pounds of German Browns purchased from The Wyoming Trout Ranch and 1,000 pounds of Kamaloop Rainbow Trout purchased from Black Canyon Trout Farm in Idaho. By starting with six inch trout we will have an advance start to meet our commitment to have fish ready to sell in the summer of 2002.
In 2002 we will have an earlier start on the growing season and will be able to purchase smaller fingerling trout, three inches, of each species at a much lower price. The amount in pounds of fingerlings purchased to meet out commitments will be based upon water temperatures we record during the fall and winter of 2001. In addition to purchasing fingerling trout, we will breed our own. Twenty or so of the largest and strongest of each species will be kept for breeding. These brood fish will provide the eggs for the 2003 season. We do not anticipate having to purchase fish thereafter. We intend to stock sufficient fingerlings to have 17,000 pounds of six inch marketable trout ready to sell in 2003.
Our ongoing costs will consist of fish food and maintenance of the facilities. After fish are placed in the raceways, a minimum labor is required. The hatchery operates on its own, similar to a natural flowing river. The flowing water keeps the raceways clean and the fish healthy. Our main responsibility is to feed the fish on a daily basis. We may in the future add automatic fish feeders should our operation increase significantly. The fish are fed according to exact calculations taking into account, water temperatures and desired size. Roughly, it takes one pound of fish food to produce one pound of fish. One pound of fish food costs approximately $.40 and we estimate overhead costs, including depreciation, to be approximately $.60 per pound. We estimate total cost to raise a fish to marketable size to be $1.00 per pound. The current market price of trout is between $1.50 to $3.00 per pound. We anticipate fish food costs to be $200 per month until March of 2002 when we purchase new fingerlings at which time our costs will increase. As new brood stock is hatched our fish food costs will increase as well. We intend to produce approximately 17,000 pounds of fish over a two year period and have reserved $5,000 from the proceeds of this offering to cover food costs. Future fish food costs will be supported from ongoing sales of fish.
We have contracted to sell the initial 2,000 pounds of fish purchased this year to Winterton Ranches in July 2002. At the time of sale, the fish will have increased in size to approximately 14 to 18 inches and have doubled in weight. Winterton Ranches will use the fish to stock ponds already existing on their property. We currently lease our property from Winterton Ranches who has adjoining property with ours. Winterton Ranches has an existing fish permit from the State of Utah which will allow us to transfer fish to their facilities without restriction.
Our goal is to increase our fish production to 30,000 pounds in 2004 and at that time to further expand the hatchery facilities.
Fish Purchase Agreement
Winterton Ranches, an entity controlled by Seth Winterton who is our president's father, has entered into a purchase agreement with us on July 1, 2001. The agreement states that Winterton Ranches will purchase trout from us at the then market price as follows:
2,000 pounds at or about July 1, 2002
4,000 pounds at or about July 1, 2003
4,000 pounds at or about July 1, 2004
Trout Industry
The total value of all US trout sales increased from $65 million in 1994 to $77 million in 1999. In terms of overall sales in 1999, food size fish accounted for 84%, stockers 7%, fingerlings 2% and eggs 6%. We intend to start as a small trout producer, increasing to a medium trout producer. In 1991, gross sales from small trout producers averaged $20,000 and medium trout producers averaged $108,000. Total annual output for small trout producers averaged 6,900 pounds and medium producers averaged 61,000 pounds. We intend to initially produce 30,000 pounds per year with the intent to increase production to 60,000 pounds per year.
Food-size trout are grown commercial for food and usually range from 3/4 to one pound and over 12 inches in length. At the national level, food size trout sold from a low of $1.01 per pound to a high of $3.39 per pound in 1999. Stocker trout had a low price of $2.13 per pound to a high of $2.54 per pound in 1997. Our research indicates we can produce fish for an average of $1.00 per pound. Fish food is about $0.40 per pound and miscellaneous costs runs about $0.60 per pound. The $0.40 per pound fish food price is an average of fish food prices for the last five years. Generally it takes one pound of fish food to produce one pound of fish. Fish food is purchased locally in Salt Lake City. It takes approximately nine months to raise a fish to marketable size. The basic cost of the fish will be higher in the first two years because we will purchase fish from outside sources. At such time we have our own brood stock and can hatch our own eggs, our costs price will then be determined primarily on the amount and cost of food.
The growth rate of fish is influenced by the water temperatures and amount of food the fish are fed. It is impossible to determine the exact time it will take us to produce a one pound fish which is the desired size for our target markets. However, we know the minimum time will be six months and the maximum time will be twelve months. The colder the water, the slower the fish grow. We estimate it will take approximately nine months for our fish to reach the desired size. The variable that we do not have on record is the water temperature between the months of November to February for our water source.
Typical hatchery operating costs include construction costs for buildings, electrification, troughs and tanks, flow through egg incubators, automatic feeders, aerators and plumbing. Also included in the costs is the initial purchase of fingerling species and shipping costs. We are able to significantly reduce our start up costs because of the way in which we constructed our hatchery. Our hatchery is outdoors and the concrete raceways simulate a segment of a natural stream bed. Because the hatchery is in line with an existing waterway, we have eliminated the need for pumps, pumping, electrification, aeration and a building. Our constructions costs totaled $16,500. We believe we can purchase fish and adequately run the facility if we raise the minimum offering. If we raise the maximum offering, we will purchase additional fish to raise and resell.
We may encounter risk of loss of fish, primarily due to disease and predators. On a national average from 1995 to 1998, 71-84% of fish loss was due to disease and another 12-34% was due to predators.
Generating revenue
We intend to generate revenues by selling our fish to fly-fish operations and to wholesale and retail customers. We will sell to private fly-fishing enterprises at a range of $2.50 to $3.00 per pound. We will also sell stockfish to private individuals such as family and commercial ponds in Utah. When we reach higher levels of production, we will sell our excess capacity to the lower paying fish processing plants. Processing plants are located in Idaho and California. The revenue from selling to processing plants will be between $1.50 to $2.00 per pound.
Our potential revenue is based on the amount of fish we can raise and the market we sell to. We prefer to sell to private facilities because they pay premium prices for the fish. We currently have the capacity to raise 30,000 pounds of fish annually. As we develop our facilities and markets, we intend to increase this capacity by adding more cement raceways. We have sufficient water volumes to support additional raceways. We believe we can sell all the fish we produce to our target markets. Processing plants pay the least but purchase high volumes of fish, making it possible for us to sell our excess capacity.
Winterton Ranches has agreed to purchase a minimum of 10,000 pounds of fish in the first three years to stock their facility.
Marketing and advertising
We intend to brand the Woodland name associated with quality fish that will be made available to existing fly fishing facilities. We will also list our facility with the State of Utah who provides a list of facilities to people seeking to purchase fish for private stocking of fish. This method will comprise most of the marketing relating to transporting fish off our facility since there is a demand for certified State fish.
We will also place ads in local outdoor magazines and publications.
Competition
In 1998, Utah was shown to have 17 licensed fish sale operations. Sales are shown at $1,511,000. Idaho is the greatest competition to Utah sales. In 1998, Idaho accounted for 39% of the dollar value of fish sales at a national level.
Competition is limited in the area. Of the area six hatcheries queried, all are selling all of the fish they are able to produce. There is a shortage of fish in Utah, proven by the fact that we were unable to contract the purchase of 5,000 pounds of fingerlings this year and instead could only contract the purchase of 2,000 pounds of the larger six-inch fish.
We have chosen to raise two specific types of fish that are extremely popular in Utah for sport fishing, the German Brown and the Kamaloop Rainbow. There are only two other facilities selling the German Brown species in Utah and one facility is dependent on the other for fingerlings. The Kamaloop Rainbow, known for its ability to grow quickly and its overall strength, is very popular among fly-fishermen and is raised by several facilities in the area.
Our main competition will come from Wyoming Trout Ranch, Black Canyon in Idaho, Gary Stringham in Utah, Trout Lodge in Washington, Mt. View Trout Ranch in Utah, and Spring Lake in Utah. Though there are other facilities in Utah, the hatcheries identified hold current permits with the state of Utah for transporting fish.
We believe we can be competitive because of the demand for fish in Utah, our location, and our limited overhead costs. Specifically, we have free flowing water without a need to pump water, thus reducing our costs and eliminating risks from electrical power failure.
Governmental Regulation
Live fish sales are strictly regulated in the state of Utah who is concerned about the spread of whirling disease. Utah requires two types of permits. The first allows us to receive fish into our facility and raise them. The second permit allows us to transport fish away from our facility to another property. We have been issued the first permit. The second permit, that allows us to transport fish away from our facility is more complex and will be filed for in 2003. This permit requires that 60 randomly chosen live fish be transported to the state laboratory where they conduct several tests, checking for disease that would be harmful to other facilities. We do not anticipate any problems in obtaining the permit.
Should our operations reach 50,000 pounds, we will then have to obtain permits from the Environmental Protection Agency for our hatchery. At the current time, we are not subject to any EPA regulations and do not anticipate reaching production of 50,000 pounds in the near future. We are not aware of any other governmental regulation with which we must comply in order to operate our hatchery.
Employees
Cody Winterton, our officer and director is our only employee. We do not intend on hiring additional personnel unless our operations grow to a point where we require help. Mr. Winterton will devote the necessary time to ensure our operations are implemented which is estimated to be approximately 20 hours per week. We do not have a formal employment agreement with Mr. Winterton and he has agreed to not take any salary until our operations are profitable.
Facilities
Our hatchery is located at 1544 Lower River Road, Woodland, Utah 84036. Our hatchery is on approximately one acre of leased property and consists of two concrete raceways within a tributary course of the Provo River. We have a small storage facility that houses fish food and miscellaneous tools and equipment. We also run our operations from this location. Cody Winterton, our president provides our office space free of charge to us. At such time as our operations expand significantly we will consider leasing professional office space.
Legal proceedings
Our company is not a party to any bankruptcy, receivership or other legal proceeding, and to the best of our knowledge, no such proceedings by or against Woodland have been threatened.
PLAN OF OPERATION
Should we receive the minimum offering of $75,000, we will realize net proceeds of $55,000. This amount will enable us to pay off our existing debt, purchase necessary fish inventory, and provide us with sufficient working capital to continue operations for a period of twelve months. Should we receive the maximum amount of the offering, we will realize net proceeds of $80,000. This amount will enable us to increase our fish inventory and expand our marketing and advertising. We anticipate that with the maximum offering amount, we can continue our operations for a period of twelve months.
Upon receipt of the proceeds of this offering, we will purchase the fish inventory and commence our hatchery operations. We will initiate our marketing and advertising plan by placing yellow page ads, outdoor publication ads and listing with the State of Utah.
We believe we have accurately estimated our needs for the next twelve months based on receiving both the minimum and maximum amount of the offering. It is possible that we may need to purchase additional equipment or that our startup costs will be higher than estimated. If this happens, it may impact our ability to generate revenue and we would need to seek additional funding.
If we are unable to raise the offering amount, it will be necessary for us to find additional funding in order to implement our operating plan. In this event, we may seek additional financing in the form of loans or sales of our stock and there is no assurance that we will be able to obtain financing on favorable terms or at all or that we will find qualified purchasers for the sale of any stock.
MANAGEMENT
Our business will be managed by our officer and director.
| Name | Age | Position | Since |
| Cody Winterton | 26 | President, Secretary, Treasurer and Director | Jan. 25, 2001 |
The following is a brief biography of our officer and director.
Cody Winterton, President and Director.Mr. Winterton began studies in 1996 at Brigham Young University and graduated in 2001 with a major in Political Science and a minor in Business Management. While attending BYU, Mr. Winterton worked at the Utah Valley Regional Medical Center as a Phlebotomist and Psychiatric Technician from 1997 until 2000. Since 1997 he has also worked for the Springville Ambulance Service as a volunteer Intermediate Emergency Medical Technician. During that same period, he assisted his father, Seth Winterton, in developing and maintain a Fly Fishing business utilizing the existing Winterton Ranch facilities. Mr. Winterton participated in the purchase of over 3,000 pounds of fish in the past three years. Mr. Winterton worked in marketing for Realxchange, an internet company that built a platform on online real estate transactions during the summer of 2000.
COMPENSATION
Our executive officers has not received any salary or compensation. Woodland does not have an employment contract with its executive officer and have agreed that no salaries would be paid until such time we have profitable operations.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Seth Winterton holds the lease on our hatchery property and is the owner of Winterton Ranches who has agreed to purchase our fish for the first three years of operation. Seth Winterton is the father of Cody Winterton, our president.
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of our common stock as of the date of this prospectus, and as adjusted to reflect the sale of 375,000 shares should we sell the minimum amount and 500,000 should we sell maximum number of shares.
The table includes:
each person known to us to be the beneficial owner of more than five percent of the outstanding shares
each director of Woodland
each named executive officer of Woodland
| Name & Address | # of Shares Beneficially Owned | % Before Offering | % After Minimum | % After Maximum |
Cody Winterton (1) |
1491 East 450 South
Springville, UT 84663
(1 person)
(1) Officer and/or director.
DESCRIPTION OF THE SECURITIES
Common Stock
We are authorized to issue up to 50,000,000 shares of common stock with a par value of $.001. As of the date of this prospectus, there are 11,020,000 shares of common stock issued and outstanding.
The holders of common stock are entitled to one vote per share on each matter submitted to a vote of stockholders. In the event of liquidation, holders of common stock are entitled to share ratably in the distribution of assets remaining after payment of liabilities, if any. Holders of common stock have no cumulative voting rights, and, accordingly, the holders of a majority of the outstanding shares have the ability to elect all of the directors. Holders of common stock have no preemptive or other rights to subscribe for shares. Holders of common stock are entitled to such dividends as may be declared by the board of directors out of funds legally available therefor. The outstanding common stock is, and the common stock to be outstanding upon completion of this offering will be, validly issued, fully paid and non-assessable.
We anticipate that we will retain all of our future earnings, if any, for use in the operation and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future.
Stock Option Plan
In 1997, we adopted a stock option plan that reserved 750,000 shares for distribution under the terms of the plan. To date, we have not granted any options pursuant to the 1997 stock option plan.
Transfer Agent
Interwest Transfer Company, Inc., 1981 East 4800 South, Salt Lake City, Utah 84124, is our transfer agent.
SHARES AVAILABLE FOR FUTURE SALE
As of the date of this prospectus, there are 11,020,000 shares of our common stock issued and outstanding. Upon the effectiveness of this registration statement, 375,000 shares will be freely tradable if the minimum is sold and 500,000 shares will be freely tradeable if the maximum number of shares is sold. The remaining 11,020,000 shares of common stock will be subject to the resale provisions of Rule 144. Sales of shares of common stock in the public markets may have an adverse effect on prevailing market prices for the common stock.
Rule 144 governs resale of "restricted securities" for the account of any person, other than an issuer, and restricted and unrestricted securities for the account of an "affiliate of the issuer. Restricted securities generally include any securities acquired directly or indirectly from an issuer or its affiliates which were not issued or sold in connection with a public offering registered under the Securities Act. An affiliate of the issuer is any person who directly or indirectly controls, is controlled by, or is under common control with the issuer. Affiliates of the company may include its directors, executive officers, and person directly or indirectly owning 10% or more of the outstanding common stock. Under Rule 144 unregistered resales of restricted common stock cannot be made until it has been held for one year from the later of its acquisition from the company or an affiliate of the company. Thereafter, shares of common stock may be resold without registration subject to Rule 144's volume limitation, aggregation, broker transaction, notice filing requirements, and requirements concerning publicly available information about the company ("Applicable Requirements"). Resales by the company's affiliates of restricted and unrestricted common stock are subject to the Applicable Requirements. The volume limitations provide that a person (or persons who must aggregate their sales) cannot, within any three-month period, sell more that the greater of one percent of the then outstanding shares, or the average weekly reported trading volume during the four calendar weeks preceding each such sale. A non-affiliate may resell restricted common stock which has been held for two years free of the Applicable Requirements.
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
We have 27 shareholders. Currently, there is no public trading market for our securities and there can be no assurance that any market will develop. If a market develops for our securities, it will likely be limited, sporadic and highly volatile. Currently, we do not plan to have our shares listed nor do we have any agreements with any market makers. At some time in the future, a market maker may make application for listing our shares.
Presently, we are privately owned. This is our initial public offering. Most initial public offerings are underwritten by a registered broker-dealer firm or an underwriting group. These underwriters generally will act as market makers in the stock of a company they underwrite to help insure a public market for the stock. This offering is to be sold by our officers and directors. We have no commitment from any brokers to sell shares in this offering. As a result, we will not have the typical broker public market interest normally generated with an initial public offering. Lack of a market for shares of our stock could adversely affect a shareholder in the event a shareholder desires to sell his shares. The company does anticipate a market maker filing for listing on the Over the Counter Bulletin Board should the offering succeed.
Currently the Shares are subject to Rule 15g-1 through Rule 15g-9, which provides, generally, that for as long as the bid price for the Shares is less than $5.00, they will be considered low priced securities under rules promulgated under the Exchange Act. Under these rules, broker-dealers participating in transactions in low priced securities must first deliver a risk disclosure document which describes the risks associated with such stocks, the broker-dealer's duties, the customer's rights and remedies, and certain market and other information, and make a suitability determination approving the customer for low priced stock transactions based on the customer's financial situation, investment experience and objectives. Broker-dealers must also disclose these restrictions in writing to the customer and obtain specific written consent of the customer, and provide monthly account statements to the customer. Under certain circumstances, the purchaser may enjoy the right to rescind the transaction within a certain period of time. Consequently, so long as the common stock is a designated security under the Rule, the ability of broker-dealers to effect certain trades may be affected adversely, thereby impeding the development of a meaningful market in the common stock. The likely effect of these restrictions will be a decrease in the willingness of broker-dealers to make a market in the stock, decreased liquidity of the stock and increased transaction costs for sales and purchases of the stock as compared to other securities.
PLAN OF DISTRIBUTION
We are offering a minimum of 375,000 shares and a maximum of 500,000 shares on a best efforts basis directly to the public through our officer and director. If we do not receive the minimum proceeds within 90 days from the date of this prospectus, unless extended by us for up to an additional 30 days, your investment will be promptly returned to you without interest and without any deductions. This offering will expire 30 days after the minimum offering is raised. We may terminate this offering prior to the expiration date.
In order to buy our shares, you must complete and execute the subscription agreement and make payment of the purchase price for each share purchased either in cash or by check payable to the order of Far West Bank, Woodland Hatchery, Inc. Escrow Account.
Until the minimum 375,000 shares are sold, all funds will be deposited in a non-interest bearing escrow account at Far West Bank, 885 North Main Street, Springville, Utah 84663, In the event that 375,000 shares are not sold during the 90 day selling period commencing on the date of this prospectus, all funds will be promptly returned to investors without deduction or interest. If 375,000 shares are sold, we may either continue the offering for the remainder of the selling period or close the offering at any time.
Solicitation for purchase of our shares will be made only by means of this prospectus and communications with our officer and director who is employed to perform substantial duties unrelated to the offering, who will not receive any commission or compensation for their efforts, and who are not associated with a broker or dealer.
Our officer and director will not register as a broker-dealer pursuant to Section 15 of the Securities Exchange Act of 1934, in reliance upon Rule 3a4-1, which sets forth those conditions under which a person associated with an issuer may participate in the offering of the issuer's securities and not be deemed to be a broker-dealer.
We have the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned immediately by us to the subscriber, without interest or deductions. Subscriptions for securities will be accepted or rejected within 48 hours after we receive them.
LEGAL MATTERS
The legality of the issuance of the shares offered hereby and certain other matters will be passed upon for Woodland by Lehman Walstrand & Associates, Salt Lake City, Utah.
EXPERTS
The financial statements of Woodland as of December 31, 2000, appearing in this prospectus and registration statement have been audited by Jones Simkins LLP, as set forth in their report appearing elsewhere herein, and are included in reliance upon such report given upon the authority of Jones Simkins, LLP as experts in accounting and auditing. The financial statements of Woodland as of July 31, 2001 were prepared by our management and are unaudited.
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ADDITIONAL INFORMATION
We have filed a Registration Statement on Form SB-2 under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the shares offered hereby. This Prospectus does not contain all of the information set forth in the Registration Statement and the exhibits and schedules thereto. For further information with respect to Woodland Hatchery, Inc. and the shares offered hereby, reference is made to the Registration Statement and the exhibits and schedules filed therewith. Statements contained in this Prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. A copy of the Registration Statement, and the exhibits and schedules thereto, may be inspected without charge at the public reference facilities maintained by the Securities and Exchange Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located at Seven World Trade Center, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and copies of all or any part of the Registration Statement may be obtained from the Commission upon payment of a prescribed fee. This information is also available from the Commission's Internet website, http://www.sec.gov.
Index to Financial Statements
WOODLAND HATCHERY, INC.
(A Development Stage Company)
Page
Report of Jones Simkins LLP 18
Balance Sheets 19
Statements of Operations 20
Statements of Stockholders' Equity 21
Statements of Cash Flows 22
Notes to Financial Statements 23
INDEPENDENT AUDITORS' REPORT
To the Stockholders' and
Board of Directors of
Woodland Hatchery, Inc.
We have audited the accompanying balance sheet of Woodland Hatchery, Inc. (a development stage company), as of December 31, 2000 and 1999 and the related statements of operations, stockholders' equity, and cash flows for the years then ended and the cumulative amounts since inception. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits 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 audits provide 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 Woodland Hatchery, Inc. (a development stage company), as of December 31, 2000 and 1999 and the results of its operations and its cash flows for the years then ended and the cumulative amounts since inception, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company's revenue generating activities are not in place and the Company has incurred a loss. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Jones Simpkins LLP
JONES SIMKINS LLP
Logan, Utah
February 27, 2001
| WOODLAND HATCHERY, INC. |
| (A Development Stage Company) |
| BALANCE SHEETS |
| July 31, | December 31, |
| 2001 | 2000 | 1999 | ||||
| ASSETS | (Unaudited) | (Audited) | (Audited) | |||
| Current assets: | ||||||
| Cash | $ | 5,545 | 2,929 | 3,114 | ||
| Deferred offering costs | 7,700 | - | - | |||
| 13,245 | - | 2,929 | - | 3,114 | ||
| Office equipment, net of accumulated | ||||||
| depreciation of $863, $648 and 408, respectively | 1,654 | 361 | 601 | |||
| Hatchery, net of accumulated depreciation of $0 | 13,795 | - | - | |||
| Total current assets | $ | 28,694 | 3,290 | 3,715 | ||
| Current liabilities: | ||||||
| Accounts payable | $ | 2,600 | - | - | ||
| Accrued expenses | 405 | - | - | |||
| Note payable | 20,000 | - | - | |||
| Total current liabilities | 23,005 | - | - | |||
| Commitments and contingencies | - | - | - | |||
| Stockholder's equity: | ||||||
| Preferred stock, $.001 par value, 5,000,000 shares | ||||||
| authorized, no shares issued and outstanding | - | - | - | |||
| Common stock, $.001 par value, 50,000,000 shares | ||||||
| authorized, 11,020,000, 1,020,000 and 1,020,000 shares | ||||||
| issued and outstanding | 11,020 | 1,020 | 1,020 | |||
| Additional paid-in capital | 4,980 | 4,980 | 4,980 | |||
| Deficit accumulated during the development stage | (10,311) | (2,710) | (2,285) | |||
| Total stockholder's equity | 5,689 | 3,290 | 3,715 | |||
| Total liabilities and stockholder's equity | $ | 28,694 | 3,290 | 3,715 |
| See accompanying notes to the financial statements. |
| WOODLAND HATCHERY, INC. |
| (A Development Stage Company) |
| STATEMENTS OF OPERATIONS |
| Seven Months Ended | Years Ended | Cumulative | ||||
| July 31, | December 31, | Amounts |
| 2001 | 2000 | 2000 | 1999 | Since | ||||||
| (Unaudited) | (Unaudited) | (Audited) | (Audited) | Inception | ||||||
| Revenues | $ | - | - | - | - | - | ||||
| General and administrative expenses | 7,601 | 325 | 425 | 442 | 10,311 | |||||
| Net loss before income taxes | (7,601) | (325) | (425) | (442) | (10,311) | |||||
| Provision for income taxes | - | - | - | - | - | |||||
| Net loss | $ | (7,601) | (325) | (425) | (442) | (10,311) | ||||
| Loss per common share - basic and diluted | $ | - | - | - | - | - | ||||
| Weighted average common shares - | ||||||||||
| basic and diluted | 9,314,000 | 1,020,000 | 1,020,000 | 1,020,000 | 2,152,000 | |||||
| See accompanying notes to the financial statements. |
| WOODLAND HATCHERY, INC. |
| (A Development Stage Company) |
| STATEMENTS OF STOCKHOLDERS' EQUITY |
| May 15, 1997 ( Date of Inception) to July 31, 2001 |
| Deficit | |||||||||||||
| Accumulated | |||||||||||||
| Additional | During the |
| Preferred Stock | Common Stock | Paid-in | Development |
| Shares | Amount | Shares | Amount | Capital | Stage | Total | |||||||
| Balance at May 15, 1997 | |||||||||||||
| (date of inception) | - | $ | - | - - | $ | - | $ | - | $ | - | $ | - - | |
| Issuance of common stock for cash | - | - | 1,006,000 | 1,006 | 1,494 | - | 2,500 | ||||||
| Net loss | - | - | - - | - | - | (975) | (975) | ||||||
| Balance at December 31, 1997 | - | - | 1,006,000 | 1,006 | 1,494 | (975) | 1,525 | ||||||
| Issuance of common stock for cash | - | - | 14,000 | 14 | 3,486 | - | 3,500 | ||||||
| Net loss | - | - | - - | - | - | (868) | (868) | ||||||
| Balance at December 31, 1998 | - | - | 1,020,000 | 1,020 | 4,980 | (1,843) | 4,157 | ||||||
| Net loss | - | - | - - | - | - | (442) | (442) | ||||||
| Balance at December 31, 1999 | - | - | 1,020,000 | 1,020 | 4,980 | (2,285) | 3,715 | ||||||
| Net loss | - | - | - - | - | - | (425) | (425) | ||||||
| Balance at December 31, 2000 | - | - | 1,020,000 | 1,020 | 4,980 | (2,710) | 3,290 | ||||||
| Issuance of common stock for cash | |||||||||||||
| (unaudited) | - | - | 10,000,000 | 10,000 | - | - | 10,000 | ||||||
| Net loss (unaudited) | - | - | - - | - | - | (7,601) | |||||||
| Balance at July 31, 2001 (unaudited) | - | $ | - | 11,020,000 | $ | 11,020 | $ | 4,980 | $ | (10,311) | $ | 5,689 |
See accompanying notes to the financial statements.
| WOODLAND HATCHERY, INC. |
| (A Development Stage Company) |
| STATEMENTS OF CASH FLOWS |
| Seven Months Ended | Years Ended | Cumulative | ||||
| July 31, | December 31, | Amounts |
| 2001 | 2000 | 2000 | 1999 | Since | ||||||
| (Unaudited) | (Unaudited) | (Audited) | (Audited) | Inception | ||||||
| Cash flows from operating activities: | ||||||||||
| Net loss | $ | (7,601) | (325) | (425) | (442) | (10,311) | ||||
| Adjustments to reconcile net loss | ||||||||||
| to net cash used in operating activities: | ||||||||||
| Depreciation expense | 215 | 140 | 240 | 257 | 863 | |||||
| Increase in: | ||||||||||
| Accounts payable | 2,600 | - | - | - | 2,600 | |||||
| Accrued expenses | 405 | - | - | - | 405 | |||||
| Net cash used in operating activities | (4,381) | (185) | (185) | (185) | (6,443) | |||||
| Cash flows from investing activities: | ||||||||||
| Purchase of hatchery and office equipment | (15,303) | - | - | - | (16,312) | |||||
| Net cash used in investing activities | (15,303) | - | - | - | (16,312) | |||||
| Cash flows from financing activities: | ||||||||||
| Proceeds from issuance of common stock | 10,000 | - | - | - | 16,000 | |||||
| Proceeds from note payable | 20,000 | - | - | - | 20,000 | |||||
| Deferred offering costs | (7,700) | - | - | - | (7,700) | |||||
| Net cash provided by financing activities | 22,300 | - | - | - | 28,300 | |||||
| Net increase (decrease) in cash | 2,616 | (185) | (185) | (185) | 5,545 | |||||
| Cash, beginning of period | 2,929 | 3,114 | 3,114 | 3,299 | - | |||||
| Cash, end of period | $ | 5,545 | 2,929 | 2,929 | 3,114 | 5,545 | ||||
| See accompanying notes to the financial statements. |
WOODLAND HATCHERY,INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 1999
Note 1 - Organization and Summary of Significant Accounting Policies
Organization
Woodland Hatchery, Inc. (the Company) was organized under the laws of the State of Nevada on May 15, 1997 (date of inception). From May 15, 1997 (date of inception) until December 31, 2000, the Company's activities consisted of seeking business ventures, which would allow for long-term growth. Subsequent to December 31, 2000, the Company initiated plans to begin operating a fish hatchery located in Woodland, Utah (see note 7). Further, the Company is considered a development stage company as defined in SFAS No. 7 and has not, thus far, commenced planned principal operations.
Unaudited Information
In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring items) necessary to present fairly the financial position, results of operations and ash flows of the Company as of July 31, 2001 and 2000 and for the seven months then ended.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.
Income Taxes
Deferred income taxes are provided in amounts sufficient to give effect to temporary differences between financial and tax reporting, principally related to net operating loss carryforwards.
Earnings Per Share
The computation of basic earnings per common share is based on the weighted average number of shares outstanding during the period.
WOODLAND HATCHERY,INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 1999
Note 1 - Organization and Summary of Significant Accounting Policies (continued)
Earnings Per Share (continued)
The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the common stock equivalents which would arise from the exercise of stock options and warrants outstanding using the treasury stock method and the average market price per share during the period. Common stock equivalents are not included in the diluted earnings per share calculation when their effect is antidilutive. The Company does not have any stock options or warrants outstanding at December 31, 2000 and 1999.
Concentration of Credit Risk
The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Office Equipment
Office equipment is carried at cost and is depreciated over the useful life of the related assets using accelerated methods. The estimated useful life of office equipment is 5 years.
WOODLAND HATCHERY,INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 1999
Note 2 - Going Concern
As of December 31, 2000, the Company's revenue generating activities are not in place, and the Company has incurred a loss for the year then ended. These factors raise substantial doubt about the Company's ability to continue as a going concern.
Management intends to seek additional funding through business ventures. There can be no assurance that such funds will be available to the Company, or available on terms acceptable to the Company.
Note 3 - Income Taxes
For the years ended December 31, 2000 and 1999 and the cumulative amounts since inception. The difference between income taxes at statutory rates and the amount presented in the financial statements is a result of the change in the valuation allowance on the Company's deferred tax asset.
Deferred tax assets at December 31, 2000 and 1999, consists of net operating loss carryforwards, which have been offset by a valuation allowance. The income tax effect of these carryforwards are immaterial and therefore, quantitative disclosures have been omitted.
The Company's net operating loss carryforwards of approximately $2,000, begin to expire in the year 2017. The amount of net operating loss carryforwards that can be used in any one year may be limited by significant changes in the ownership of the Company and by the applicable tax laws which are in effect at the time such carryforwards can be utilized.
Note 4 - Supplemental Cash Flow Information
No amounts were paid for interest or income taxes during the years ended December 31, 2000 and 1999 and since inception.
WOODLAND HATCHERY,INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 1999
Note 5 - Stock Plan
The Company has adopted a benefit plan (the Plan). The Plan provides for the granting of up to 750,000 shares of stock. Under the Plan, the Company may issue shares of the Company's common stock or grant options to acquire the Company's common stock from time to time to employees, directors, officers, consultants or advisors of the Company on the terms and conditions set forth in the Plan. In addition, at the discretion of the Board of Directors, stock may from time to time be granted under this Plan to other individuals, including consultants or advisors, who contribute to the success of the Company but are not employees of the Company.
As of December 31, 2000, no stock or stock options have been issued under this plan.
Note 6 - Recent Accounting Pronouncements
In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of SFAS No. 133" and in June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective date of FASB Statement No. 133." SFAS 138 and 133 establishes accounting and reporting standards for derivative instruments and requires recognition of all derivatives as assets or liabilities in the statement of financial position and measurement of those instruments at fair value. SFAS 133 is now effective for fiscal years beginning after June 15, 2000. The Company believes that the adoption of SFAS 138 and 133 will not have any material effect on the financial statements of the Company.
In June 2000, the FASB issued SFAS No. 139, "Rescission of FASB Statement No. 53 and amendments to FASB Statements No. 63, 89 and 12". The Company believes that the adoption of SFAS 139 will not have any material effect on the financial statements of the Company.
WOODLAND HATCHERY,INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 1999
Note 7 - Subsequent Event
On January 25, 2001, the Board of Directors approved the sale of 10,000,000 shares of common stock for $10,000 to an individual. The individual was also voted in as a director of the Company, giving him control of the Company.
Also on January 15, 2001, the Board of Directors approved the Corporation's name change from Kafco Corp. to Woodland Hatchery, Inc.
| ==================================== |
Until December 5, 2001, 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 dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
--------------------------------
TABLE OF CONTENTS
--------------------------------
Prospectus Summary 2
Risk Factors 2
Forward-Looking Statements 4
Dilution and Comparative Data 5
Use of Proceeds 6
Determination of Offering Price 6
Description of Business 7
Plan of Operation 11
Management 12
Compensation 12
Certain Relationships and Related Transactions 12
Principal Stockholders 13
Description of the Securities 13
Shares Available for Future Sale 14
Market for Common Stock 14
Plan of Distribution 15
Legal Matters 16
Experts 16
Additional Information 16
Index to Financial Statements 17
$75,000 Minimum
$100,000 Maximum
WOODLAND HATCHERY, INC.
375,000 Shares Minimum
500,000 Shares Maximum
Common Stock
$.001 Par Value
---------------------
PROSPECTUS
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our company's charter provides that, to the fullest extent that limitations on the liability of directors and officers are permitted by the Nevada Revised Statutes, no director or officer of the company shall have any liability to the company or its stockholders for monetary damages. The Nevada Revised Statutes provide that a corporation's charter may include a provision which restricts or limits the liability of its directors or officers to the corporation or its stockholders for money damages except: (1) to the extent that it is provided that the person actually received an improper benefit or profit in money, property or services, for the amount of the benefit or profit in money, property or services actually received, or (2) to the extent that a judgment or other final adjudication adverse to the person is entered in a proceeding based on a finding in the proceeding that the person's action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding. The company's charter and bylaws provide that the company shall indemnify and advance expenses to its currently acting and its former directors to the fullest extent permitted by the Nevada Revised Business Corporations Act and that the company shall indemnify and advance expenses to its officers to the same extent as its directors and to such further extent as is consistent with law.
The charter and bylaws provide that we will indemnify our directors and officers and may indemnify our employees or agents to the fullest extent permitted by law against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with DML. However, nothing in our charter or bylaws of the company protects or indemnifies a director, officer, employee or agent against any liability to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. To the extent that a director has been successful in defense of any proceeding, the Nevada Revised Statutes provide that he shall be indemnified against reasonable expenses incurred in connection therewith.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy and is, therefore, unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with this Registration Statement. We will pay all expenses of the offering. All of such expenses are estimates, other than the filing fees payable to the Securities and Exchange Commission.
| Securities and Exchange Commission Filing Fee | $ 25.00 |
| Printing Fees and Expenses | 500.00 |
| Legal Fees and Expenses | 15,000.00 |
| Accounting Fees and Expenses | 3,000.00 |
| Blue Sky Fees and Expenses | 500.00 |
| Trustee's and Registrar's Fees | 500.00 |
| Miscellaneous | 500.00 |
| TOTAL | $ 20,000.00 |
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On February 10, 2001, Woodland issued 10,000,000 to Cody Winterton, President and Director for $10,000. The securities were sold in a private transaction, without registration in reliance on the exemption provided by Section 4(2) of the Securities Act. The investors had pre-existing relationships with the Company and had access to all material information pertaining to the Company and its financial condition. No broker was involved and no commissions were paid in the transaction.
No other sales of unregistered securities have been made during the past three years.
ITEM 27. EXHIBITS.
Exhibits.
| SEC Ref. No. 3.1 3.1 3.2 5.1 10.1 10.2 10.3 10.4 23.1 23.2 99.1 99.2 | Title of Document Articles of Incorporation Amendment to Articles of Incorporation By-laws Legal Opinion included in Exhibit 23.1 Promissory Note 1997 Stock Option Plan Rental Agreement Purchase Agreement Consent of Lehman Walstrand & Associates Consent of Jones Simkins, LLP Subscription Agreement Escrow Agreement | Location Attached Attached Attached Attached Attached Attached Attached Attached Attached Attached Attached Attached |
ITEM 28. UNDERTAKINGS
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 provisions described in this Registration Statement or otherwise, we have been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the us of expenses incurred or paid by a director, officer or controlling persons of DML 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 its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and
(iii) Include any additional or changed material information on the plan of distribution.
(2) For determining liability under the Securities Act, 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.
(3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, Woodland Hatchery, Inc., certifies that it has reasonable ground to believe that it meets all of the requirements of filing on Form SB-2 and authorizes this Registration Statement to be signed on its behalf, in the City of Woodland, State of Utah, on September 5, 2001.
Woodland Hatchery, Inc.
Dated: September 5, 2001 By:/s/ Cody Winterton
Cody Winterton
President and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this registration statement or amendment has been signed below by the following persons in the capacities and on the dates indicated.
| /s/ Cody Winterton, President, Chief Financial Officer, Secretary and Director | Date: September 5, 2001 |
