UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
(Amendment No. 2)
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
TALLY-HO VENTURES, INC.
(Name of small business issuer in its charter)
Delaware 7812 43-1988542
(State or jurisdication of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
518 Oak Street #2, Glendale, California, 91204, 818-550-7886
(Address and telephone number of principal executive offices)
518 Oak Street #2, Glendale, California, 91204
(Address of principal place of business or intended principal place of business)
SAMUEL WIERDLOW, INC.
3422 Old Capitol Trail #584, Wilmington, Delaware, 19808, 302-777-1642
(Name, address and telephone number of agent for service)
Approximate date of proposed sale to the public
As soon as practicable after this registration statement becomes effective
________________________________________________________________________________
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
________________________________________________________________________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offfering. [ ]
________________________________________________________________________________
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offfering. [ ]
________________________________________________________________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
________________________________________________________________________________
1
CALCULATION OF REGISTRATION FEE
____________________ ____________________ ____________________ ____________________ ____________________
Title of each Dollar Proposed Proposed
class of securities amount to maximum offering maximum aggregate Amount of
to be registered be registered price per unit offering price registration fee
____________________ ____________________ ____________________ ____________________ ____________________
Common Stock $0.01 $250,000.00 $20.23
____________________ ____________________ ____________________ ____________________ ____________________
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
TALLY-HO VENTURES, INC.
is offering
25,000,000 shares of its Common Stock
We are offering these securities for $0.01 cash per share.
These are common shares with a par value of $0.001 per share
Please be advised that there is no public market for our stock. No national
securities exchanges list these shares being offerred, and the Nasdaq Stock
Market does not list these shares being offerred either.
Important Note: Investing in our company, Tally-Ho Ventures, Inc.,
involves a great deal of risk, for many different reasons. Please see a
list of the risk factors involved in investing in our company,
beginning on page 5 of this prospectus.
The Commissioner of Corporations of the State of California does not recommend
or endorse the purchase of these securities.
These securities are being offered in the state of California pursuant to
Section 25102(f) of the California Corporations Code, which states, among other
things, that we may not accomplish the offer or sale of these securities by the
publication of any advertisement.
Additionally, prospective California subscribers to this offering should be
aware that under Section 25102(f) of the California Corporations Code, each
subscriber must represent that the subscriber is purchasing for the subscriber's
own account (or a trust account if the subscriber is a trustee) and not with a
view to or for sale in connection with any distribution of the security. To that
end, California subscribers will have to complete an investor questionnaire in
which they must represent that, among other things, they are purchasing for
their own account and not with a view to or for sale in connection with any
distribution of the securities being offered in this offering.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
We are offering these shares on a direct participation basis, which means we
have no underwriting agreements at all. This offering will end 90 days from the
effective date of this registration statement. There are no minimum purchase
requirements; if you choose to purchase shares, you may purchase as few as only
one share if you wish. You, the prospective investor, should note that we have
no plans to put the funds from this offering in any escrow, trust, or similar
account. And there is no minimum amount of securities which must be sold in the
offering before we receive any proceeds.
Since we are offering 25,000,000 shares, the total amount of the offering is
$250,000.00. There are no underwriting discounts or commissions; there are no
underwriters involved with this offering at all, and we are not paying any
commissions at all as part of this offering. All proceeds from the sale of
shares in this offering will go to the registrant, Tally-Ho Ventures, Inc., and
will not go to any other person(s).
___________________ _______________________ __________________________ __________________________
Price to the Public for Underwriting Discounts and Proceeds to the Registrant
Securities Commissions
___________________ _______________________ __________________________ __________________________
Per Share $0.01 0 $0.01
___________________ _______________________ __________________________ __________________________
Total Amount of the $250,000.00 0 $250,000.00
Offering
___________________ _______________________ __________________________ __________________________
2
Inside Front and Outside Back Cover Pages of Prospectus.
TABLE OF CONTENTS
Summary Information............................................................4
Risk Factors...................................................................5
Use of Proceeds...............................................................10
Determination of Offering Price...............................................14
Dilution......................................................................15
Plan of Distribution..........................................................15
Material Terms of Subscription Agreement......................................15
Legal Proceedings............................................................ 16
Directors, Executive Officers, Promoters and Control Persons..................16
Security Ownership of Certain Beneficial Owners and Management................18
Description of Securities.....................................................19
Interest of Named Experts and Counsel.........................................19
Disclosure of Commission Position of Indemnification for
Securities Act Liabilities.................................................20
Organization Within Last Five Years...........................................20
Description of Business.......................................................21
Management's Discussion and Analysis or Plan of Operation.....................31
Description of Property.......................................................34
Certain Relationships and Related Transaction.................................34
Market for Common Equity and Related Stockholder Matters......................35
Executive Compensation........................................................35
Financial Statements........................................................ F-1
Indemnification of Directors and Officers.....................................36
Other Expenses of Issuance and Distribution...................................36
Recent Sales of Unregistered Securities.......................................36
Exhibits......................................................................37
Signatures................................................................... 38
Summary Information and Risk Factors
SUMMARY INFORMATION
Our company, Tally-Ho Ventures, Inc., is a start-up entertainment company. Our
ultimate goal is to produce both a) television programs for distribution via
broadcast, cable or satellite television channels, as well as b) films for
distribution to movie theatres or directly to video outlets.
3
Our plan begins with maintaining the website we have already started,
www.tallyhoventures.com, and continually updating it with entertaining material,
including comedic essays and other written prose. Our website will also make
available for viewing most of the film and video projects that we do, including
our first project, a short film parody which we have just finished shooting and
intend to complete shortly, entitled "The G! True Tinseltown Tale: Dude, Where's
My Car?", which spoofs the television series "The E! True Hollywood Story" as
well as the 2000 film "Dude, Where's My Car?". We wish to maintain this website
as free to the public, solely as demonstrations of the kind of artistic work of
which we are capable. We hope in time that this website will in and of itself
gain us exposure in the entertainment industry and lead to professional
production opportunities.
Our marketing plan is multi-pronged. For example, once this first film is
complete, we shall upload it onto our website and make it available for viewing
by the public for free. The film will also be submitted to other websites which
make similar short films available for viewing. We shall also try a new form of
marketing scheme: make VHS and DVD copies of the film and send them directly to
the very people and entities in the entertainment industry we are parodying. We
think this is a clever way to get our filmed parodies recognized in the
entertainment industry. For example, in our first short film parody, we do
send-ups of, inter alia, the television series "The E! True Hollywood Story" and
the film "Dude, Where's My Car?" We want to send copies of the film to
executives at both the television program offices as well as the film production
offices, hope that these executives have good senses of humor and either pass
along or make copies of the tapes for others in the entertainment industry to
see. We hope in this way to gain exposure for our products, leading eventually
to our goal of getting a budget to produce a television show or film.
Other parts of our marketing plan include submitting our work unsolicited to
certain channels - including HBO, Showtime, Independent Film Channel and
Sundance Channel - which regularly air short films by lesser-known suppliers, as
well as submission of our work for inclusion in various film festivals.
We can continue to operate without the additional funding provided by this
offering. Current operations will not be halted if this offering is
unsuccessful. We believe that with the website and its initial content already
in place and our first short film nearly complete, our business plan and
operations can continue and will not be placed in jeopardy if this offering is
not successful. Further, our two Board members, Tal Kapelner and Cheney Shapiro,
have verbally committed to personally maintaining, if necessary, the financial
resources for Tally-Ho to meet its administrative responsibilities over the
coming year, in order that our marketing plan as described above can be pursued,
although neither member of our management has reached any binding or written
agreement with Tally-Ho to do so. Selling all $250,000 worth of stock in this
offering, however, will not only allow us to keep up our administrative
responsibilities over the next year, including applying for a priced quotation
on the OTC Pink Sheets, it will also allow us to frequently update our website
and increase operations considerably, including producing 1 television pilot and
between 10 and 15 short and super-short films over the next year, which would
present to us a larger number of opportunities to try and market our
entertainment products. The fewer number of shares of stock we sell, the more
limited our future operations will be. Selling fewer than $12,700 worth of stock
in this offering, which is about 5.1% of our offering amount, will require Mr.
Kapelner and Ms. Shapiro to personally loan the Company funds in order for our
administrative responsibilities for the next year to be met, including the
application for a listing on the OTC Pink Sheets later this year. We may also
try to obtain a loan from a benefactor or a lending institution, or conduct a
future money raise, such as a private placement offering, although none of these
are currently planned.
4
We have never had a profit, are in poor financial condition and we anticipate no
profits for the first few years, as we build our brand name and recognition
factor among members of the entertainment industry by making a continuous stream
of short films and other entertainment products and marketing them as described
above. And competition in this industry, particularly in the low-budget,
independent film production niche of the industry, is extremely intense. Major
film studios such as Warner Bros. and Sony Corp's Columbia-Tri Star dominate the
industry; "mini-major" film studios such as Miramax and New Line Cinema compete
fiercely to produce and/or distribute low- and mid-budgeted films; smaller
independent production companies such as Shooting Gallery Films, Vivendi
Universal's October Films, Lion's Gate Films and Regent Entertainment are
well-established and use their recognition and track record as leverage to
compete favorably for financing and other resources used to make films; and
there are literally hundreds of web-based producers of films - with varied
levels of quality - virtually all of which compete for recognition, attention
and, ultimately, financing for future productions, in this crowded marketplace.
The mailing address of our principal executive offices is: 518 Oak St. #2,
Glendale, CA 91204. The telephone number of our principal executive offices is:
(818) 550-7886.
The following table sets forth summary financial data derived from our financial
statements. The data should be read in conjunction with the financial
statements, related notes and other financial information included in this
prospectus.
Operating Statement Data for the Period November 21, 2002 (Inception)
through December 31, 2002 (Audited)
Income Statement Data:
Revenues: $ 0
Expenses: 64,276
__________
Net Loss from Operations: (64,276)
Balance Sheet Data as at December 31, 2002 (Audited)
Total Assets: $ 2,450
Total Liabilities: 2,524
__________
Total Stockholders' Deficit: (74)
RISK FACTORS
You should carefully consider the following risk factors and all other
information in this prospectus before investing in our common stock. Investing
in our company involves a high degree of risk. Any of the following risks makes
this offering speculative or risky, and could adversely affect our business,
financial condition and results of our operations and could result in a complete
loss of your investment. Though we have tried to outline the risks and
uncertainties that we may face, there may be other risks or uncertainties as
well.
People In The Entertainment Industry To Whom We Send Our Products Could Not Like
Them. As we wrap up post-production on our first entertainment product - a
short film parody entitled "The G! True Tinseltown Tale: Dude, Where's My Car?"
- - we plan to send it to the subjects of the parody as a clever way of getting
our products seen. We hope the people in the entertainment industry to whom we
send this tape will like the short film parody, but they may very well not, and
be really angry with us, and possibly even get their lawyers to write "cease and
desist" notices to us, and threaten us with copyright infringement, or even
defamation, lawsuits if we were to release it. And if the people in the
entertainment industry who we are spoofing and to whom we are sending copies of
the tapes don't like our parody of them, they definitely will not bootleg copy
it and distribute it to their friends in the entertainment industry like we
hoped. This will have a strongly negative effect on our marketing plan by making
it nearly impossible for us to get our products seen by the necessary people in
the entertainment industry and could therefore prolong or even stop altogether
any hope of receiving funding for any future project. Also, we may be forced to
hire lawyers to protect us from lawsuits. It will have a strong chilling effect
on any future parody projects we may wish to do. It will certainly have a
negative effect on the website, because our main attraction - filmed parodies -
will not be allowed to be shown, and we will be left only with comedic writings
and other material.
5
There Are Many Ways Our Marketing Plan Could Go Wrong Even if the people in the
entertainment industry who are the subjects of our parodies and to whom we send
the tapes like our work, they may just sit on the tapes and not make bootleg
copies of it. This is very possible. There is no guarantee that just because
someone in the entertainment industry to whom we send a copy of our tape likes
what we sent them, that that automatically means they make copies of the tape or
distribute it in any way on our behalf. They could just do nothing, in which
case we would have some increased recognition in the entertainment industry, but
probably not nearly the amount we would need to make our business plan work. We
need a lot of people in the entertainment industry to see our work, in order to
have the best possible chance of being offerred funding for future projects
And even if the people in the entertainment industry to whom we send the tapes
like our products, and distribute them to others, we may get greater
recognition, but nothing concrete may come of it; in other words, we may get no
one who is willing to give us any funding for future projects, let alone offer
us contracts to produce any television pilots or specials, or any short or
feature-length films or any internet-based films. In order to keep us going in
the long run, we are going to need a contract to produce such products as
television shows or films, and it is entirely possible, even likely given the
nature of the entertainment industry as one where entertainment product supply
far outstrips demand, that a lot of recognition in the industry may produce no
such contracts.
We mention that one way to market our products is to submit them unsolicited to
those entities which typically air comedic parody short films and other similar
products from less well-known suppliers. We really have no idea whether any of
these outlets - including HBO, Showtime, Cinemax, The Movie Channel, IFC and
Sundance Channel - would at all be receptive to our unsolicited product. We
don't know for sure if anyone at any of these outlets would even look at what we
sent them, let alone air it. If none of these outlets airs our work, then that
means a large part of our marketing plan is shut down, making us more reliant on
other parts of our marketing plan.
Finally, many film festivals, which often include competitions of the films they
exhibit, often are overwhelmed with film submissions, and simply do not have
enough slots for all the films which are submitted for consideration. Therefore,
it is a competitive process just to get one's film accepted as an entrant in one
of these film festivals, and there is no guarantee any film festival - whether
it is a large and famous one like Sundance Film Festival in Park City, Utah or
Toronto International Film Festival in Toronto, Ontario, or even a small and
niche one like Giggleshorts Comedy Festival - will want to accept any of our
filmed products for exhibition. If no film festival accepts any of our work,
that means a large part of our marketing plan is shut down, and it also means
much fewer people seeing our products, making it much tougher for us to get the
exposure our products need in order for us to get a paid gig from a film and/or
television distribution company or television network to produce a TV show or
film.
We Are A Start Up Company. We expect to encounter risks and difficulties
frequently faced by start up companies in new and rapidly changing markets. If
you invest in our shares you must consider the risks and difficulties frequently
encountered by new businesses, such as:
o The need to establish our brand name awareness;
o The need for sufficient funds;
o The dependence on our website;
o The need to manage changing and expanding operations;
o The need to effectively compete in the entertainment industry;
o The need to establish ourselves as an important contender in the
evolving film industry.
Although we feel we have substantial understanding of what products people might
enjoy, based on our years of experience and expertise, we may have a limited
insight into other trends that may affect our business. We can't be certain that
we will be successful or that we will successfully address these risks. If we
fail to do so, our products will be poorly received by our intended public,
causing our name to be quickly associated with bad products and making it much
more unlikely that our plan to be given a producing opportunity will come to
fruition.
6
We Have No History of Operations. Our operations have consisted mainly of
producing one short film parody, creating our web site and developing our
business model and otherwise organizing our operations. We incorporated in
Delaware on November 21, 2002. We are a new business, and the failure rate for
new businesses has been high. To be profitable we must develop, promote, and
market our services, so they are accepted on a broad, commercial basis, and this
will take years. In the meantime, potential investors should be aware that our
income statements are likely to show a large amount of expenses and nearly no
revenues.
We Have No Recent Profits From Operations, are in a Poor Financial Condition and
We Will Likely Not Be Profitable Soon. Although we have completed all
photography on our first film, this film has not been sold, and will likely
never be sold. In fact, we have not sold a single thing since we began
operations, and so have no profits, recent or otherwise, and will likely not
have any profits for the next few years, and no revenues for the next 1-3 years,
even with a large infusion of debt or equity funding, as we continue to produce
entertainment products without likelihood that any will be sold. Since
inception, we have accumulated a deficit of $65,400 - $1,146 paid in cash and
$64,200 paid in stock - and we will incur significant losses in the future, as
we devote time and money to development, promotions, marketing, and establishing
our marketing staff.
We May Not Have Sufficient Funds and This May Lead to More-Diluted Stock. Future
events, including the problems, delays, unexpected expenses and other
difficulties frequently encountered by movie production companies may lead to
cost increases that could make the net proceeds of this offering insufficient to
fund our proposed operations. Current operations may continue if this offering
is not successful; however, future planned operations over the next year will be
quite limited if this offering is not successful. We may require additional
financing. This may not be available on a timely basis, in sufficient amounts or
on acceptable terms. This financing may also dilute existing shareholders'
equity. Any debt financing or other financing of securities senior to common
stock will likely include financial and other covenants that will restrict our
flexibility. If we need to obtain additional financing, there's no assurance
that financing will be available.
Our Business, the Entertainment Industry, Typically Has Far More Supply of
Product Than Demand. Although now with the internet there are literally almost
an inifinite number of ways one may show one's entertainment products to the
public, there are still, nevertheless, only a very few ways to show one's
entertainment product to the public in exchange for money. There's broadcast
network programming, which includes NBC, CBS, ABC, FOX, WB and UPN, and several
basic cable "network" channels which have original entertainment programming,
including USA Network, Comedy Central, Lifetime, E! Entertainment Television,
the PAX network, ABC Family, and MTV Networks. There's also a limited amount of
original programming funded by premium pay cable outlets, including HBO,
Showtime, Cinemax and Encore! But there are not many other venues for exhibiting
one's work for money, and this huge amount of supply, combined with relatively
few outlets for the supply, creates a "bottleneck" effect for entertainment
products, where there is a great deal of competition among suppliers of
entertainment content, such as Tally-Ho, and outlets which air them, such as
broadcast, basic cable and premium cable channels. This will make it more
difficult for us to exhibit our work for money and thereby make any revenues.
7
There is No Market For Our Common Equity Securities, and We May Never Develop A
Market. Our common shares are not listed on any stock market or exchange, making
the selling and trading of our shares exceedingly difficult. Without a secondary
market, one is not easily able to sell or trade our shares after purchasing
them, and therefore may be stuck with their shares, rendering them rather
unliquid. We do plan to apply for a priced quotation on the OTC Pink Sheets, but
there is no guarantee that our application will be approved. And even if we are
accepted, quotation on the OTC Pink Sheets doesn't assure that a meaningful
market will be created and sustained. In fact, the OTC Pink Sheets are notorious
for having inconsistent or non-existent trading volumes on a day-to-day basis.
We Have Not Done A Feasibility Study. Our business and marketing plans are only
based on our own experience. We can't promise we have made a good judgment of
the workability of this project. By investing in Tally-Ho, you are risking your
investment on an experimental business and marketing plan which is more
difficult to adjudge of its merits because of a lack of a feasability study. The
lack of a feasibility study could then result in errors in judgment and planning
and cause the business to lose producing opportunities and force closure of
Tally-Ho.
Concentration of Share Ownership. Assuming that the maximum number of shares
have been sold, and on the basis of the number of shares of Common Stock that
will be outstanding upon the completion of this offering, the officers and
directors of Tally-Ho, as a group, will own or control approximately 60.2%
(percent) of the outstanding common stock. The officers and directors will be
able to control the Company and direct its affairs and business.
We Are Dependent On the Senior Management Team. Our management team is Tal
Kapelner, President and Chairman of the Board of Directors, Cheney Shapiro,
Vice-President, Secretary and a Director and Ariella Kapelner, Treasurer. If we
lost any of these key people it would hinder our progress a great deal, and it
should be noted that we have no employment agreements with any of our officers
or directors. This means that potentially, any of our officers and directors may
leave Tally-Ho without notice and possibly work for a competitor.
Because we operate in a competitive market, we are very dependent on being able
to attract qualified people to work with us. So, we must restrict hiring to key
executives and a small administrative staff and invest in marketing and other
activities wisely. Additionally, there is intense competition for the kind of
personnel we need. Our success depends on our ability to attract and hire such
personnel. We can't assure you that we will be able to attract and retain the
kind of staff and other personnel we need to be successful.
We Have No Plans To Pay Dividends. We do not expect to pay dividends now or in
the foreseeable future. We intend to use any future earnings for upkeep of our
website and more entertainment products, such as films. Should we decide to pay
dividends at any time in the future, there is no guarantee that they will be
paid on a timely basis. If in buying our stock you anticipate income from
dividends, you should not buy our stock.
8
We Have No History of Operations. Our operations have consisted mainly of
producing one short film parody, creating our web site and developing our
business model and otherwise organizing our operations. We incorporated in
Delaware on November 21, 2002. We are a new business, and the failure rate for
new businesses has been high. To be profitable we must develop, promote, and
market our services, so they are accepted on a broad, commercial basis, and this
will take years. In the meantime, potential investors should be aware that our
income statements are likely to show a large amount of expenses and nearly no
revenues.
We Have No Recent Profits From Operations, are in a Poor Financial Condition and
We Will Likely Not Be Profitable Soon. Although we have completed all
photography on our first film, this film has not been sold, and will likely
never be sold. In fact, we have not sold a single thing since we began
operations, and so have no profits, recent or otherwise, and will likely not
have any profits for the next few years, and no revenues for the next 1-3 years,
even with a large infusion of debt or equity funding, as we continue to produce
entertainment products without likelihood that any will be sold. Since
inception, we have accumulated a deficit of $65,400 - $1,146 paid in cash and
$64,200 paid in stock - and we will incur significant losses in the future, as
we devote time and money to development, promotions, marketing, and establishing
our marketing staff.
We May Not Have Sufficient Funds and This May Lead to More-Diluted Stock. Future
events, including the problems, delays, unexpected expenses and other
difficulties frequently encountered by movie production companies may lead to
cost increases that could make the net proceeds of this offering insufficient to
fund our proposed operations. Current operations may continue if this offering
is not successful; however, future planned operations over the next year will be
quite limited if this offering is not successful. We may require additional
financing. This may not be available on a timely basis, in sufficient amounts or
on acceptable terms. This financing may also dilute existing shareholders'
equity. Any debt financing or other financing of securities senior to common
stock will likely include financial and other covenants that will restrict our
flexibility. If we need to obtain additional financing, there's no assurance
that financing will be available.
Our Business, the Entertainment Industry, Typically Has Far More Supply of
Product Than Demand. Although now with the internet there are literally almost
an inifinite number of ways one may show one's entertainment products to the
public, there are still, nevertheless, only a very few ways to show one's
entertainment product to the public in exchange for money. There's broadcast
network programming, which includes NBC, CBS, ABC, FOX, WB and UPN, and several
basic cable "network" channels which have original entertainment programming,
including USA Network, Comedy Central, Lifetime, E! Entertainment Television,
the PAX network, ABC Family, and MTV Networks. There's also a limited amount of
original programming funded by premium pay cable outlets, including HBO,
Showtime, Cinemax and Encore! But there are not many other venues for exhibiting
one's work for money, and this huge amount of supply, combined with relatively
few outlets for the supply, creates a "bottleneck" effect for entertainment
products, where there is a great deal of competition among suppliers of
entertainment content, such as Tally-Ho, and outlets which air them, such as
broadcast, basic cable and premium cable channels. This will make it more
difficult for us to exhibit our work for money and thereby make any revenues.
9
There is No Market For Our Common Equity Securities, and We May Never Develop A
Market. Our common shares are not listed on any stock market or exchange, making
the selling and trading of our shares exceedingly difficult. Without a secondary
market, one is not easily able to sell or trade our shares after purchasing
them, and therefore may be stuck with their shares, rendering them rather
unliquid. We do plan to apply for a priced quotation on the OTC Pink Sheets, but
there is no guarantee that our application will be approved. And even if we are
accepted, quotation on the OTC Pink Sheets doesn't assure that a meaningful
market will be created and sustained. In fact, the OTC Pink Sheets are notorious
for having inconsistent or non-existent trading volumes on a day-to-day basis.
We Have Not Done A Feasibility Study. Our business and marketing plans are only
based on our own experience. We can't promise we have made a good judgment of
the workability of this project. By investing in Tally-Ho, you are risking your
investment on an experimental business and marketing plan which is more
difficult to adjudge of its merits because of a lack of a feasability study. The
lack of a feasibility study could then result in errors in judgment and planning
and cause the business to lose producing opportunities and force closure of
Tally-Ho.
Concentration of Share Ownership. Assuming that the maximum number of shares
have been sold, and on the basis of the number of shares of Common Stock that
will be outstanding upon the completion of this offering, the officers and
directors of Tally-Ho, as a group, will own or control approximately 60.2%
(percent) of the outstanding common stock. The officers and directors will be
able to control the Company and direct its affairs and business.
We Are Dependent On the Senior Management Team. Our management team is Tal
Kapelner, President and Chairman of the Board of Directors, Cheney Shapiro,
Vice-President, Secretary and a Director and Ariella Kapelner, Treasurer. If we
lost any of these key people it would hinder our progress a great deal, and it
should be noted that we have no employment agreements with any of our officers
or directors. This means that potentially, any of our officers and directors may
leave Tally-Ho without notice and possibly work for a competitor.
Because we operate in a competitive market, we are very dependent on being able
to attract qualified people to work with us. So, we must restrict hiring to key
executives and a small administrative staff and invest in marketing and other
activities wisely. Additionally, there is intense competition for the kind of
personnel we need. Our success depends on our ability to attract and hire such
personnel. We can't assure you that we will be able to attract and retain the
kind of staff and other personnel we need to be successful.
If a market does develop, the price could be very volatile. Also, an active
trading market for our common stock might not develop or be sustained. Factors
such as the ones discussed here in the Risk Factors section could have
significant impact on the market price of our stock. Even if a purchaser does
10
find a broker who will to do a transaction in our common stock, the combination
of brokerage commissions, state transfer taxes, if any, and other selling costs
may exceed the selling price.
We Have A Limitation Of Liability Against Our Directors. As permitted by
Delaware law, there are limits of liability of our directors for monetary
damages for breach of director's fiduciary duty except for liability in certain
instances. As a result you as a stockholder will have limited rights to recover
against directors for breach of fiduciary duty.
Forward Looking Statements Can't Be Relied Upon. The information and discussion
in this Prospectus contains both historical and forward-looking statements. The
forward-looking statements regarding our financial condition, operating results,
business prospects or any other aspect of our company, can be quite different
from our actual financial condition, operating results and business performance
in the end, once we have become operational.
We have tried to identify factors that would cause results to differ from our
expectations. The factors we have isolated are:
o bad economic conditions;
o intense competition;
o entry of new competitors with similar marketing plans;
o increased and more stringent federal, state and local government
regulation;
o under-funding;
o unexpected costs;
o price increases for supplies;
o inability to raise prices;
o failure to get more people to view our site;
o risk of litigation and administrative proceedings against our
Company and our employees;
o fluctuation of our operating results and financial condition;
o bad publicity and news coverage;
o unsuccessful marketing and sales plans;
o loss of key executives;
o inflation factors;
o failure to win a slot in a film festival;
o failure to get any of our work aired on a broadcast, satellite or
cable outlet.
11
Use of Proceeds
The net proceeds of the offering will be used as follows:
If all 25,000,000 shares in the offering are sold, gross proceeds will be
$250,000, used as follows:
All figures are approximate
Priority Number 1:
o Conducting Offering Pursuant to This Registration Statement
Repay loans from Management for costs (1) as follows:
- SEC and Blue Sky State Registration Fees: 300
- Copying and Printing Prospectus: 250
- Mailing and Couriering Prospectus: 1,500
-----
Sub-Total, priority #1 2,050
(1) The loans from Management, estimated to be a total of $2050, are being
made in order to cover the costs of registering the offering and
circulating the prospectus. The loans have a maturity date of 12 months
from the time of borrowing, and will carry no interest rate, although our
accountants have imputed interest at 8 percent and recording it as paid in
capital, for purposes of the financial statements. Repaying these loans
have been listed as "Priority Number 1" in every level of this section.
Priority Number 2:
o Other Administrative Duties and Functions
- Transfer Agent Fees; Share Certificates: 600
- Accounting Fees, through 2003: 3,000
- Bank Account Fee, through 2003: 150
- Legal Fees, for quarterly reports through 2003: 1,500
- EDGARizing, for quarterly reports through 2003: 800
- Misc. Office and Computer Supplies/Phone/Fax: 3,600
- Reserve Account: 5,000
-----
Sub-Total, priority #2 14,650
Priority Number 3:
o Marketing Expenses
- Continued Web Hosting and Design, through 2003: 5,000
- Making VHS/DVD Copies of Our Work: 900
- Mailing VHS/DVD Copies of Our Work: 1,400
-----
Sub-Total, priority #3 7,300
Priority Number 4:
o Entertainment Products
- 1 television pilot, in 2003: 100,000
- 7 short films, in 2003: 91,000
- 7 super-short films, in 2003: 35,000
------
Sub-Total, priority #4 226,000
Total, all priorities 250,000
If we sell only 12,500,000 shares in the offering, which is 50% of the maximum,
we will get $125,000 gross proceeds and use the money as follows:
all figures are approximate
Priority Number 1:
o Conducting Offering Pursuant to This Registration Statement
Repay loans from Management for costs as follows:
- SEC and Blue Sky State Registration Fees: 300
- Copying and Printing Prospectus: 250
- Mailing and Couriering Prospectus: 1,500
-----
Sub-Total, priority #1 2,050
12
Priority Number 2:
o Other Administrative Duties and Functions
- Transfer Agent Fees; Share Certificates: 600
- Accounting Fees, through 2003: 3,000
- Bank Account Fees, through 2003: 150
- Legal Fees, for quarterly reports through 2003: 1,500
- EDGARizing, for quarterly reports through 2003: 800
- Misc. Office and Computer Supplies/Phone/Fax: 3,600
- Reserve Account: 6,000
-----
Sub-Total, priority #2 15,650
Priority Number 3:
o Marketing Expenses
- Continued Web Hosting and Design, through 2003 : 5,000
- Making VHS/DVD Copies of Our Work: 900
- Mailing VHS/DVD Copies of Our Work: 1,400
-----
Sub-Total, priority #3 7,300
Priority Number 4:
o Entertainment Products
- 5 short films (in 2003): 65,000
- 7 super-short films, in 2003: 35,000
------
Sub-Total, priority #4 100,000
Total, all priorities 125,000
If we sell only 6,250,000 shares in the offering, which is 25% of the maximum,
we will get $62,500 gross proceeds and use the money as follows:
all figures are approximate
Priority Number 1:
o Conducting Offering Pursuant to This Registration Statement
Repay loans from Management for costs as follows:
- SEC and Blue Sky State Registration Fees: 300
- Copying and Printing Prospectus: 250
- Mailing and Couriering Prospectus: 1,500
------
Sub-Total, priority #1 2,050
Priority Number 2:
o Other Administrative Duties and Functions
- Transfer Agent Fees; Share Certificates: 600
- Accounting Fees, through 2003: 3,000
- Bank Account Fees, through 2003: 150
- Legal Fees, for quarterly reports through 2003: 1,500
- EDGARizing, for quarterly reports through 2003: 800
- Misc. Office and Computer Supplies/Phone/Fax: 3,600
- Reserve Account: 3,300
-----
Sub-Total, priority #2 12,950
13
Priority Number 3:
o Marketing Expenses
- Continued Web Hosting and Design, through 2003: 5,000
- Making VHS/DVD Copies of Our Work: 600
- Mailing VHS/DVD Copies of Our Work: 900
-----
Sub-Total, priority #3 6,500
Priority Number 4:
o Entertainment Products
- 2 short films, in 2003: 26,000
- 3 super-short films, in 2003: 15,000
------
Sub-Total, priority #4 41,000
Total, all priorities 62,500
If we sell only 2,500,000 shares in the offering, which is 10% of the maximum,
we will get $25,000 gross proceeds and use the money as follows:
All figures are approximate
Priority Number 1:
o Conducting Offering Pursuant to This Registration Statement
Repay loans from Management for costs as follows:
- Blue Sky State Registration Fees: 300
- Copying and Printing Prospectus: 250
- Mailing and Couriering Prospectus: 1,500
------
Sub-Total, priority #1 2,050
Priority Number 2:
o Other Administrative Duties and Functions
- Transfer Agent Fees; Share Certificates: 600
- Accounting Fees, through 2003: 3,000
- Bank Account Fees, through 2003: 150
- Legal Fees, for quarterly reports through 2003: 1,500
- EDGARizing, for quarterly reports through 2003: 800
- Misc. Office and Computer Supplies/Phone/Fax: 3,600
- Reserve Account: 2,700
-----
Sub-Total, priority #2 12,350
Priority Number 3:
o Marketing Expenses
- Continued Web Hosting and Design, through 2003: 5,000
- Making VHS/DVD Copies of Our Work: 200
- Mailing VHS/DVD Copies of Our Work: 400
-----
Sub-Total, priority #3 5,600
Priority Number 4:
o Entertainment Products
- 1 super-short film, in 2003: 5,000
-----
Sub-Total, priority #4 5,000
Total, all priorities 25,000
14
If we sell only 1,270,000 shares in the offering, which is 5.1% of the maximum,
we will get $12,700 gross proceeds and use the moneyas follows:
All figures are approximate
Priority Number 1:
o Conducting Offering Pursuant to This Registration Statement
Repay loans from Management for costs as follows:
- SEC and Blue Sky State Registration Fees: 300
- Copying and Printing Prospectus: 250
- Mailing and Couriering Prospectus: 1,500
-----
Sub-Total, priority #1 2,050
Priority Number 2:
o Other Administrative Duties and Functions
- Transfer Agent Fees; Share Certificates: 600
- Accounting Fees, through 2003: 3,000
- Bank Account Fees, through 2003: 150
- Legal Fees, for quarterly reports through 2003: 1,500
- EDGARizing, for quarterly reports through 2003: 800
- Misc. Office and Computer Supplies/Phone/Fax: 3,600
-----
Sub-Total, priority #2 10,650
Total, all priorities 12,700
Below this level of only $12,700 worth of shares sold in this offering,
Management will be required to honor their unwritten commitment to personally
loan Tally-Ho funds in order for our administrative responsibilities for the
next year to be met, including the application for a listing on the OTC Pink
Sheets later this year. We may also try to obtain a loan from a benefactor or a
lending institution, or conduct a future money raise, such as a private
placement offering, although none of these are currently planned. Please see
Risk Factors, above.
Determination of Offering Price.
Our offering price was set arbitrarily by our management, and the price chosen
has no bearing on our assets, book value, revenues, prospects or other
established criteria of valuation. Please see Risk Factors, above. Despite the
offering price being arbitrary, there were certain nebulous and subjective
factors that were considered by management in determining the offering price,
and these factors were
a) the fact that Tally-Ho is just over six months old, with no real operating
history, except for one short film which has completed shooting and is
currently in post-production;
b) the fact that we have not had profits nor revenues, and expect no revenues
for the near future and no profits for the foreseeable future;
c) the fact that our business is extremely risky and speculative;
d) the fact that we do not have experience running a reporting company;
e) the fact that at $0.01 per share, the public would be buying our shares at
ten times the price that the officers and directors of Tally-Ho paid when
they bought our shares at Tally-Ho's inception;
f) our attempt to set a price that could offset the risks involved in a
potential investor's mind; and
g) our attempt to start small, not risk more investors' money than we have to,
and then, if we begin meeting the goals in our business plan, to do future
money raises as needed and set the price higher.
15
Dilution.
The price per share paid by the officers and directors of Tally-Ho was $0.001
per share, which is equivalent to the par value of the shares. They got their
shares at Tally-Ho's inception.
The price per share we are asking the public to pay in this offering is $0.01
per share, which is ten times what the officers and directors paid for their
shares.
The net tangible book value per share before the distribution is $0.000.
Assuming all shares in the offering are sold, the net tangible book value per
share after the distribution will be $0.003.
Assuming all shares in the offering are sold, the amount of the increase in such
net tangible book value per share attributable to the cash payments made by
purchasers of the shares being offered is $0.003, which is 100%.
Assuming all shares in the offering are sold, the amount of the immediate
dilution from the public offering price which will be absorbed by such
purchasers is 70%.
Plan of Distribution.
Our plan of distribution is to offer for sale 25,000,000 shares of our common
stock for cash at a price of $0.01 per share and/or in exchange for services
rendered at the same value of $0.01 per share. It is impossible to predict how
our arrangement to allow for the purchase of shares in exchange for services
rendered will affect the amount of proceeds that may be raised in our offering,
although we believe it will not affect it greatly. No amount of debt held by
Tally-Ho may be cancelled for shares in this offering. We have registered the
shares for sale to provide us with freely tradeable securities. We will receive
any net proceeds from the sale of these shares and we will use the proceeds at
our discretion. Please see Use of Proceeds, above. If we fail to raise the
maximum offering, we will keep whatever funds are raised in order to offset the
costs of this offering.
We do not intend to allow any of our officers or directors to purchase shares in
this offering.
We will use our subscription agreement, the material terms of which can be found
in the section below, to determine each purchaser's qualifications to invest.
Each potential investor will be required to complete a subscription agreement,
because the purchase of our stock involves substantial risks, which will outline
his or her financial status and capabilities for purchasing a high risk
investment.
We will not be using any broker-dealers or underwriters in the selling of shares
in this offering, and will not pay any commissions to anyone, including members
of management, in connection with this offering. Members of management - Tal
Kapelner, Cheney Shapiro and Ariella Kapelner - will attempt to sell the
25,000,000 shares being offerred on a direct participation basis.
The offering will have a termination period of 90 days from the effective date
and may be extended for an additional 90 days if we choose to do so.
Material Terms of Subscription Agreement
The material terms of our subscription agreement are:
Our subscription agreement shall confirm that the prospective investor has read
and understood all the contents of the prospectus, and in particular, the risk
factors delineated in it.
Our subscription agreement also requires the prospective investor to confirm, if
true, that he or she has not been promised, guaranteed or warranteed by Tally-Ho
nor any of its control people, any expected profit or gain as a result of the
investment.
Legal Proceedings
We are not a party to any pending legal proceeding, nor are we aware of any
proceeding contemplated by any governmental authority.
Directors, Executive Officers, Promoters and Control Persons.
The following are the names and ages of all directors and executive officers,
their positions and offices, and brief descriptions of their business experience
during the past five years:
Name Age Position(s) Held Business Experience During
With the Company Past Five Years
Tal Kapelner 28 President and From 1997-1998, served as a
Chairman of the writers' assistant and
Board of Directors assistant to an Executive
Producer on "Unhappily Ever
After", a television sitcom
produced by Touchstone
Television, a division of
Disney Enterprises, and
airing on the WB network.
His duties included proof-
reading scripts and non-
creative rewriting of
scripts, recording various
editing notes during the
show's tapings, and
performing a variety of
office assistant functions
for an executive producer
of the show.
From 1998-2000 was self-
employed as a technical
writer and creative writer
of screenplays and
teleplays. Was hired to
write business plans for
companies in various
fields. Was never hired or
paid for any creative
writing during this time.
From 2000-present,
President of a California
subchapter S corporation
named "Tally-Ho Ventures,
Inc.", which is not
associated with our company.
His duties include
preparing business plans
for companies in various
fields.
16
Cheney Shapiro 20 Vice-President, From 1998 - 2000, served as
Secretary and a personal and business
a Director assistant to a celebrity -
primarily film actress;
being a household name
being withheld - and her
family. Her duties included
governess, which entails
being a nanny to three kids,
running errands,
housesitting, and helping
to run the household; also
provided administrative
support for celebrity's
acting career.
From 2000 - 2001, was a
personal and business
assistant to a celebrity -
primarily television
actress; name being
withheld. Her duties
included bookkeeping and
various office assistant
functions, and household
duties.
From 2001 - 2002, employed
as executive assistant to
the Chairman of David Morse
and Associates, an
insurance adjustment firm
based in Glendale,
California. Duties included
maintaining the external
and internal PR of the
Chairman, event and meeting
planning, scheduling of
company activities, some
marketing for the company
and various office assistant
functions.
From 2002 - present,
President of Fly-By
Enterprises, Inc., a
California corporation. Her
duties include seeking and
performing project-based
administrative work to
people in the business
community. Her
administrative assistant
projects include overseeing
organizational projects and
database overhauls.
Ariella Kapelner 56 Treasurer Founded the nonprofit
corporation Living &
Education, Inc. in 1998,
under which she has
produced educational
materials and seminars. The
materials are now being
sold all over the world.
In 2001 served as president
of Investment Research, Inc.
She has matched investors'
interests with young
companies looking for
funding.
In 2001-2003 served as
executive director of the
Federal Commission on
Educational Rights, Inc.
Ms. Kapelner has educated
parents on their rights as
parents in the educational
system.
The following are all the directors of Tally-Ho, their terms of office and
periods in which they served, and identification of any other directorships held
in reporting companies, with names of those companies:
Director's Name Term of Office as Director and Other Directorships Held in
Period During Which Served Reporting Companies
Tal Kapelner 6 months None
Served November 21, 2002 - present
Cheney Shapiro 6 months None
Served November 21, 2002 - present
Ariella Kapelner, treasurer, is the mother of president and Chairman of the
Board, Tal Kapelner.
Security Ownership of Certain Beneficial Owners and Management.
We have 43,150,000 shares of common stock outstanding at $0.001 par value.
75,000,000 shares of common stock are authorized.
The following information is for any person, including any group of two or more
persons acting as a partnership, syndicate or other similar group, who is known
to us to be the beneficial owner of more than five percent of any class of our
voting securities:
Title of Class Name and Address of Beneficial Owner Amount and Nature Percent
of Beneficial Owner of Class
Common Tal Kapelner 20,000,000 shares(1) 46.3
Stock c/o Tally-Ho Ventures, Inc. President and
518 Oak Street #2 Chairman of the
Board of Directors
Common Cheney Shapiro 20,000,000 shares(2) 46.3
Stock c/o Tally-Ho Ventures, Inc. Vice-President,
518 Oak Street #2 Secretary and a
Director
(1) Tal Kapelner owns 20,000,000 shares of Tally-Ho, no part of which are
options, warrants, or via any other rights, and he has no rights to
acquire beneficial ownership of any other shares, whether through option,
warrant, conversion privilege or any other right, within sixty days.
(2) Cheney Shapiro owns 20,000,000 shares of Tally-Ho, no part of which are
options, warrants, or via any other rights, and she has no rights to
acquire beneficial ownership of any other shares, whether through option,
warrant, conversion privilege or any other right, within sixty days.
17
We only have one class of equity securities, and that is our Common Stock, and
we have no parents or subsidiaries. For our Common Stock, we present the
following information regarding the security ownership of our management, as of
December 31, 2002:
Title of Class Name and Address of Beneficial Owner Amount and Nature Percent
of Beneficial Owner of Class
Common Tal Kapelner 20,000,000 shares(1) 46.3
Stock c/o Tally-Ho Ventures, Inc. President and
518 Oak Street #2 Chairman of the
Board of Directors
Common Cheney Shapiro 20,000,000 shares(2) 46.3
Stock c/o Tally-Ho Ventures, Inc. Vice-President,
518 Oak Street #2 Secretary and a
Director
Common Ariella Kapelner 1,000,000 shares(3) 2.3
Stock c/o Tally-Ho Ventures, Inc. Treasurer
518 Oak Street #2
Common All Directors and Executive 41,000,000 shares(4) 95.0
Stock Officers as a Group.
c/o Tally-Ho Ventures, Inc
518 Oak Street #2
(1) Tal Kapelner owns 20,000,000 shares of Tally-Ho, no part of which are
options, warrants, or via any other rights, and he has no rights to
acquire beneficial ownership of any other shares, whether through option,
warrant, conversion prvilege or any other right, within sixty days.
(2) Cheney Shapiro owns 20,000,000 shares of Tally-Ho, no part of which are
options, warrants, or via any other rights, and she has no rights to
acquire beneficial ownership of any other shares, whether through option,
warrant, conversion privilege or any other right, within sixty days.
(3) Ariella Kapelner owns 1,000,000 shares of Tally-Hoy, no part of which
are options, warrants, or via any other rights, and she has no rights to
acquire beneficial ownership of any other shares, whether through option,
warrant, conversion privilege or any other right, within sixty days.
(4) All Directors and Executive Officers as a Group own 41,000,000 shares of
Tally-Ho, no part of which are options, warrants, or via any other
rights, and they have no rights to acquire beneficial ownership of any
other shares, whether through option, warrant, conversion privilege or any
other right, within sixty days.
Description of Securities.
Dividend Rights - Holders of record of shares of Common Stock are entitled to
receive dividends when and if declared by the Board of Directors out of funds of
Tally-Ho legally available therefore.
Voting Rights - Holders of shares of Common Stock are entitled to one vote for
each share held of record on all matters submitted to a vote of the
stockholders, including the election of directors. Shares of Common Stock do not
have cumulative voting rights, which means that the holders of the majority of
the share votes eligible to vote and voting for the election of the Board of
Directors can elect all members of the Board of Directors.
Preemption Rights - Holders of our common stock have no preemptive or conversion
rights or other rights to subscribe for or to purchase any stock, obligations or
other securities of Tally-Ho.
18
Liquidation Rights - In the case of liquidation, dissolution or winding up of
Tally-Ho Ventures, Inc., the holders of shares of our Common Stock will be
entitled to share ratably in the net assets of Tally-Ho legally available for
distribution to shareholders after payment of all our liabilities and any
preferred stock then outstanding, although none is currently outstanding.
Other Material Rights - There are no redemption or sinking fund provisions
applicable to our Common Stock. The rights, preferences and privileges of
holders of our Common Stock are subject to the rights of the holders of shares
of any series of preferred stock that we may designate and issue in the future,
although our Certificate of Incorporation does not currently authorize any
preferred stock at all.
Interest of Named Experts and Counsel.
Our counsel which has provided us the legality opinion regarding the securities
being registered is Valerie L. Hanna.
The accountants who have audited our financial statements are Malone and Bailey,
PLLC. The accountants' report is given upon their authority as experts in
accounting and auditing.
Disclosure of Commission Position of Indemnification for Securities Act
Liabilities.
Section 145 of the Delaware General Corporation law makes provision for the
indemnification of officers and directors under certain circumstances from
liabilities, including reimbursement for expenses incurred, arising under the
Securities Act. Section 145 of the Delaware General Corporation law empowers a
corporation to indemnify its directors and officers and to purchase insurance
with respect to liability arising out of their capacity or status as directors
and officers, provided that this provision shall not eliminate or limit the
liability of a director:
a) for any breach of the director's duty of loyalty to the corporation
or its stockholders;
b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
c) arising under Section 174 of the Delaware General Corporation law;
or
d) for any transaction from which the director derived an improper
personal benefit.
The Delaware General Corporation law provides further that the indemnification
permitted thereunder shall not be deemed exclusive of any other rights to which
the directors and officers may be entitled under the corporation's bylaws, any
agreement, a vote of stockholders or otherwise.
However, currently, Tally-Ho Ventures, Inc. has no charter provisions, by laws,
contracts or other arrangements that insures or indemnifies directors, officers
or controlling persons of Tally-Ho against liability under the Securities
Act.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
We provide the undertaking that in the event that a claim for indemnification
against such liabilities (other than the payment by Tally-Ho of expenses
incurred or paid by a director, officer or controlling person of Tally-Ho in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
Item 15. Organization Within Last Five Years.
The Company does not have any parents.
The names of our three promoters are Tal Kapelner, Cheney Shapiro and Ariella
Kapelner, who are the three founders of our company.
Tal Kapelner received from 41,050,000 shares of common stock from Tally-Ho,
valued at the par value of $0.001 per share, which he received in exchange for
our business plan, valued at $41,050. Nothing else of any value was given to us
by Mr. Kapelner or received by Mr. Kapelner from us.
The business plan acquired by us from Mr. Kapelner was acquired for 41,050,000
shares of our common stock, with the price per share set at par value, $0.001,
making the total amount paid by us for the business plan $41,050. The principle
followed in determining the amount of the business plan was an approximation
based on Tally-Ho's and Tal Kapelner's experience seeing similar transactions
occur for others. This determination regarding the amount of the business plan
was made by Tal Kapelner, President and Chairman of our company, and son of
Ariella Kapelner, the Treasurer of our company. The cost of the business plan to
Tal Kapelner was negligible, practically zero.
21,050,000 of Mr. Kapelner's initial 41,050,000 shares were cancelled by
Tally-Ho, who then re-issued 20,000,000 shares to Cheney Shapiro in connection
with her services as a founder, a director, and our Vice-President and
Secretary. Nothing else of any value was given to us by Ms. Shapiro or received
by Ms. Shapiro from us.
1,000,000 shares of our common stock which originally came from Tal Kapelner's
41,050,000 shares, was cancelled and re-issued to Ariella Kapelner in connection
with her services as a founder and our Treasurer. Nothing else of value was
given to us by Ms. Kapelner or received by Ms. Kapelner from us.
19
Description of Business.
Business Development.
Tally-Ho Ventures, Inc., a Delaware corporation, was incorporated on November
21, 2002.
Before we incorporated, we had the idea of setting up a website which had
entertaining, generally comedic material on it, including comedic essays and
free-form prose "musings", as well as video and film parodies of varying
lengths, though generally no more than 15-20 minutes each at the most.
Our purpose in having this website is to have people in the entertainment
industry see what kind of work we are capable of, and then give us paid work as
producers of television and film projects.
We then decided that we should start up a corporation as the vehicle by which to
operate this venture, and have the corporation be a television and film
production company, where eventually, after our work would hopefully become
recognized by those people in the entertainment industry who are able to make
the decision to fund a film or television project, we would be given a budget by
a television network or film studio to produce television "pilots", and other
television programs and specials, as well as short- and feature-length films,
for theatrical release or release directly to vide outlets.
We incorporated on November 21, 2002 in the state of Delaware, and since that
time have set up the website described above, located at
www.tallyhoventures.com, as well as begun very rudimentary promotion of the
website, such as submitting our web address to ten or so of the more popular web
search engines and web directories, including Google, HotBot, Lycos, Netscape
Search as well as DMOZ, which provides search results to many search engines
such as Alta Vista and AOL Search.
We have also worked with the Screen Actors Guild actors' union ("SAG") to make
sure our production company complied with all SAG rules for working with
professional acting talent, and to that end we have signed the Experimental Film
Agreement with the Screen Actors Guild. Please see copy of executed Agreement,
attached as an Exhibit. The Screen Actors Guild is a nationwide professional
actors guild union, affiliated with the AFL-CIO, whose members work primarily in
television and film. Other actors unions have its members working primarily on
stage or through other media. SAG views its primary responsibilities as the
maintenance of competitive wages and safe working conditions for its actor
members, although it does not aid its members in the gaining of employment. By
signing the Experimental Film Agreement with SAG, we agreed to limit our right
to exhibit our first film, "The G! True Tinseltown Tale: Dude, Where's My Car?",
to film festivals and directly to members of the entertainment industry. We
agreed to contact SAG, and pay each of the professional actors we hired an
additional sum of money, approximately $200 for each of the five professional
actors we hired, if our film will be exhibited outside of the above venues.
Finally, we have recently completed final photography on our first short film
parody, entitled "The G! True Tinseltown Tale: Dude, Where's My Car?" a parody
of both the television series "The E! True Hollywood Story" and the 2000 film
"Dude, Where's My Car?" released by Twentieth Century Fox. The film is now near
completion of post-production, with most editing and graphics completed, and
awaiting narration and music before being marketed and distributed. Please see
Business of Issuer below for more detail on our distribution and marketing
methods.
Our plan for future operations is as follows:
Phase I (over the next 3 years):
- Further develop our website www.tallyhoventures.com and
use it as a marketing tool by continually creating
entertaining content available for free to the public.
- Attempt to drive up traffic for the website through, e.g.,
targeted web advertising.
- As funds allow, produce short and feature-length films,
television pilots and web-exclusive video skits and
vignettes.
- Distribute web-exclusive video skits and vignettes via our
website and other relevant websites as examples of our
work.
- In order to generate interest in our work and have our
products purchased for distribution, submit our short and
feature-length films to film festivals and markets, as
well as to appropriate television channels, and also
distribute these films via our website and other relevant
websites, and finally, send out copies of our films to
members of the entertainment industry who might be
interested in the content.
- Attempt to show and/or submit our television pilots to
executives at the appropriate television channels for the
purpose of having our television programs air on their
channels; or, in the alternative, generate interest in our
television pilots by distributing them over our website,
as well as circulating them among members of the
entertainment industry.
Phase II (3-10 years from now):
- As funding is available, significantly expand operations
to include regular, consistent production of television
programs, short and feature-length films and music videos.
- Maintain and update website entertainment content.
- Move towards normal, industry-standard marketing and
advertising channels for our products, and larger-budget
productions.
Phase III (10+ years from now):
- Consider business combinations with other entertainment
companies, especially TV and film production companies;
or, in the alternative, consider either remaining an
independent television and film production company or
reviewing the feasability of significantly expanding
operations even further.
Business of Issuer.
Principal products or services and their markets. We are a development-stage
company in the business of producing entertainment products, principally short
films, web-exclusive videos vignettes and skits, and "pilot" (one full-episode
test) television programs. We also are currently engaged in producing
entertaining written material - such as comedic essays and free-form prose - and
posting these and our other products to our website www.tallyhoventures.com.
The short film we have produced so far and the short films we intend to produce
in the future are produced as follows. First, we start with an idea. This idea
typically comes from one of our three founders, Tal Kapelner, Cheney Shapiro or
Ariella Kapelner, and it usually consists of no more than a simple idea for a
plot or storyline or interesting concept or even just a clever line of dialogue
that a story can be built around. To describe it most simply, an idea is the
completion of a "what if" scenario. Ideas are a byproduct of inspiration, the
occurrences of which are very difficult to predict.
Once an idea is hatched by one of our three founders, either that founder or,
more typically, Tal Kapelner alone, will begin to write a short screenplay,
which is a script written for the screen, encompassing that idea. This process
can take up to several months. During this time, a director and one or more
"producers" are decided upon for the production. Producers are those individuals
who manage and oversee the co-ordination of all of the elements to making a
film, including actors, writers, directors, propmen, wardrobe personnel, etc.,
as well as co-ordinate with any legal and other professional personnel to handle
any and all regulatory, accounting or union paperwork and other issues regarding
the making of the film. Because of our short resources, and because they enjoy
doing it and we believe they are good at it, typically Cheney Shapiro and Tal
Kapelner are our two producers for all of our projects, and Tal Kapelner is our
director.
Once the script is written, the producers go to work in creating a budget and a
time line for production, based upon what the script calls for. For example, a
10-page script that has all the action take place in one room of a standard home
would be cheaper and faster to produce than a 40-page script which calls for car
chases. In the case of our first short film, with a 22-page script, which
translates to approximately 22 minutes of running time, a budget of $4,000 and a
production schedule of 4 months was considered reasonable.
Once the budget and production schedule are decided upon, financing is sought.
Financing films, both short films and features, is a difficult process, and it
becomes more difficult the larger the budget. This is for several reasons.
First, there are simply not that many individuals and entities worldwide who can
put up the amount of money typically needed to finance an average-budget feature
film, currently about $30 million. Second, recouping money from a film is a long
process, as there is typically a gap of 1-3 years between the time the money is
paid to finance the film, and the theatrical release of the film. And if the
theatrical release did not recoup all of the financiers' money, then the
financiers will have to wait to recoup their money until more money is brought
in from overseas markets; ancillary markets, which are non-theatrical markets
such as military and airplane exhibitions; sales of video and DVD copies of the
film; and cable television and broadcast network exhibitions. Finally, often
times films don't recoup the money that is spent on them ever, making financing
films extremely risky. And financing short films is typically more difficult
than financing feature films, because although short films are much cheaper to
produce - they cost usually less than $100,000 - there are much fewer
opportunities to exhibit them, and therefore fewer ways by which to recoup the
investment.
In our case, financing $4,000 for our first short film was not difficult because
Tal Kapelner financed it himself.
With the money, budget, schedule and script in place, the producers meet to more
carefully plan out the pre-production process. "Pre-production" refers to the
time period when the film is being made but nothing has been shot yet. During
this period for our "G! Dude?" project, Tal Kapelner served as liaison with the
Screen Actors Guild and worked with them to sign the Experimental Film
Agreement. He produced the $500 deposit SAG requested and filled out all the
paperwork. He also retained a payroll company to properly process the payrolls
of the actor employees hired for the shoot, and procured workers' compensation
insurance from the State Insurance Compensation Fund, to cover the actor
employees on the set in case of injury.
We have made a conscious decision to not sign with other talent unions,
including the directors guild, writers guild or the International Alliance of
Theatrical Stage Employees (IATSE), which is the union for most crewmember
positions, as that would severely limit the non-acting talent we would be able
to hire, increase our costs by forcing us to hire all non-actors as employees
rather than independent contractors, and force us to adhere to many rules
regarding workplace environment which are geared towards larger productions and
would unnecesarily increase the costs of our modestly-budgeted projects.
Concurrently with working with the actors union and ensuring that all legal and
union regulatory compliance is made, casting is completed. For example,
producers Tal Kapelner and Cheney Shapiro cast our "G! Dude?" film. They decided
to cast Tal Kapelner to play the part of Ashton Kutcher and Cheney Shapiro to
play the part of Shera Friendly. They decided to cast other professional actors
to play the other four on-camera roles, and posted a "breakdown", or
description, of each role being cast, on an online service called
breakdownservices.com. This online service is a service where actors can log on
and view all of the roles available at that time in a wide variety of media,
including television, film, commercials and industrial or instructional media.
Over the two weeks following the posintg of our breakdowns for our "G! Dude?"
project, we received over 500 e-mailed and mailed submissions from actors all
over the country, principally from Los Angeles. Each submission carried with it
a photo of the actor and a resume. Mr. Kapelner and Ms. Shapiro pored over all
of the submissions and selected approximately 3-5 actors to audition for each of
the four roles offerred. After the auditions, one actor for each of the four
roles was chosen, and each of the respective actors' agent or manager was
contacted and told that his or her client has been given the role. The total
cost of the actors' services was approximately $1,200 total, which included
mandatory contributions to the SAG/Producers Pension and Health Fund and all
employer taxes.
Concurrently with casting the film, wardrobe and props are purchased by the
producers, any film equipment necessary is rented and crewmembers are hired to
perform certain technical tasks in the shooting of the film. For example, in "G!
Dude?", the producers first hired a cameraman who could serve as the director of
photography (DP) and could provide his own camera, sound and lighting equipment.
Brian Solari was hired as the DP and the cameraman for the shoot. He was
recommended to the producers by Eric Sherman, an acquiantance who is himself an
accomplished director. Because Mr. Solari also had expertise in the area, the
producers were able to save money by using him as his own lighting technician as
well. Mr. Solari requested that a script supervisor be hired for the shoot, and
Krista Bean was hired as script supervisor, responsible for keeping careful
notes of how the shooting of the film progressed vis-a-vis the script, and
thereby providing valuable data for the editor during the post-production
process. Two production assistants, roughly equivalent to "gophers", were hired,
and a friend of the producers volunteered her services as make-up artist. The
total cost of hiring crewmembers and renting equipment for the shoot was
approximately $1,000. Tally-Ho owns none of its own equipment and will have to
rent equipment for each of its shoots. Tally-Ho locates its crewmembers quite
easily by simply typing into a Google search the name of the technical position
required, along with the word "hire", and then browsing the results.
www.mandy.com and www.mediaresourcecontacts.com are also two common sources of
non-union non-actor talent.
Securing shoot locations is also important. Tally-Ho neither owns nor leases any
studio space for the purpose of shooting films. In the "G! Dude?" production,
the producers were able to secure the house and grounds of a business associate
in Los Angeles for the shooting of most of the scenes in our film, while the DP
allowed us to use the dance studio of one of his former clients, located in La
Canada Flintridge, just north of Los Angeles, as the location of the remainder
of the scenes.
Once all of the above arrangements have been made in pre-production, the
shooting of the film begins. The scenes, as written in the script, are shot. In
our first short film, we shot the film on digital video, which requires no film
nor analog videotape, and is, for this and other reasons, cheaper than both film
and analog video. "G! Dude?" took two days to shoot. Expenses, such as food for
the cast and crew and transportation to and from the location sites, were
incurred during this period.
After the shooting of the film, the post-production process begins. An editor is
chosen, the images recorded during the shoot are catalogued and the director and
editor, along with the producer occassionally, sit in an editing bay and piece
the footage together. It is during post-production that any additional sound
effects, narration, music or visual effects are added. Tally-Ho neither owns nor
leases any of its editing space or equipment. Brian Solari, our DP, who also has
his own editing bay and equipment, was chosen to also edit the film, and Tal
Kapelner, as director and producer, and Cheney Shapiro, as producer, joined with
Mr. Solari in the post-production process. We are currently in this
post-production process with our first short film, the "G! Dude?" project.
Also during the post-production period, clean-up paperwork is done on the
production, including bookkeeping, SAG recordkeeping, tax and payroll
recordkeeping, etc. Tal Kapelner, as executive producer, performed all these
functions.
Finally, after the film is finished, as determined typically by the director and
producers, copies of the film are made in whatever media is determined to be
suitable and distributed as we describe below.
The cost of our "G! Dude?" project is more than we anticipated. The final budget
will be approximately $7,000, whereas we had budgeted $4,000 initially. In the
future, other short films will likely be more expensive, as our first short film
was made especially cheap by the fact that our script called for mostly home
interview scenes. We anticipate most of our short films to cost approximately
$13,000, and most of our super-short films, those under 10 minutes in length, to
cost approximately $5,000.
The process for making our web-exclusive vignettes is the same as described
above for making short films; however, the method of distribution is much
simpler: We only upload the finished products up to our website for viewing
exclusively on the web. This "web-exclusive" method of distribution also allows
us to sign a cheaper contract with SAG. The Internet-only contract with SAG
dramatically reduces our SAG-related paperwork and allows us to forego paying
any security deposit to SAG.
Given bandwidth considerations and our opinion that attention spans are shorter
among web surfers than among those watching conventional video, we anticipate
most of our web-exclusive products to fall in the super-short films category of
under 10 minutes and therefore cost approximately $5,000 each.
Our "pilot" television programs are produced in the same manner as our short
films above; however, we are obliged to sign a more expensive contract with SAG,
which requires minimum weekly salaries for actors of over $3,000 per actor and
enough paperwork to force us to hire a full-time producer just to handle actors'
payroll and paperwork issues.
Additionally, our TV pilots will have to use more than one camera to capture the
simultaneous action; three is standard for a TV show. A studio set will have to
be rented, and more wardrobe will be required. For these reasons, we have
budgeted our first TV pilot at $100,000 and anticipate future TV pilots to be
budgeted similarly.
Finally, our entertaining written material, including free-form prose, etc., is
written primarily by Tal Kapelner for no fee. Mr. Kapelner is not under contract
with Tally-Ho to produce a certain quantity or quality of work, and makes
contributions when inspiration strikes and his schedule allows. Mr. Kapelner's
material is sent to our web designer, Steve Aguilera of GraphicPark.net, and is
uploaded onto our website at a rate of $75 per hour, which translates to
approximately $10 per written entertainment product we produce.
The market for our products is principally members of the entertainment
industry, particularly those in charge of programming and finances. We
ultimately are seeking professional production opportunities in television and
film, and in order for us to be retained for such producing services we seek, we
must make our work recognizable among members of the entertainment industry who
are in the position to offer us such professional producing opportunities.
20
A lesser market for our products would be the public at large. We feel that if
we got the attention of enough people, regardless of whether they worked in the
entertainment industry or not, there would be enough positive word of mouth
about our work to generate the kind of producing opportunities described above.
The short- and long-term overall financial plan. We have used no-interest loans
from members of our management for our initial administrative costs, including
accountant's fees, as well as the initial development of our website and the
production of our first major entertainment product, a short film parody. We are
hoping that we are able to sell enough shares in this offering to allow us to a)
maintain our administrative responsibilities, b) maintain and periodically
update our website, and c) continue to market our products and d) make more
products, over the next 12 months. Please see Management's Discussion and
Analysis or Plan of Operation below. If we do not sell enough shares to do this,
Management will be required to meet its commitment and personally loan Tally-Ho
funds in order for our administrative responsibilities for the next year to be
met, including the application for a listing on the OTC Pink Sheets later this
year. We may also try to obtain a loan from a benefactor or a lending
institution, or conduct a future money raise, such as a private placement
offering, although none of these are currently planned. Within three years, we
hope to be offered a budget from a film and/or television distribution company
or television network to produce a film or television program.
We intend to initially apply for a priced quotation on the OTC Pink Sheets
within the coming year.
Distribution and marketing. The first way we intend to market and distribute our
entertainment products is to post most of them on our website,
www.tallyhoventures.com, and make them available for viewing for free to the
public. Initially, we will not have any resources - except word of mouth - to
actively advertise the website, and so we anticipate very little traffic
initially for our website. However, our website is up and operating properly
already, and GraphicPark.net, the website design and marketing firm we are
using, has already submitted our URL - http://www.tallyhoventures.com - to more
than ten popular search engines and web directories, including Google, HotBot,
Lycos, Netscape Search as well as DMOZ, which provides search results to many
search engines such as Alta Vista and AOL Search. This will allow the general
public to become aware of our site through web searches they conduct on their
own into the areas with which our website deals, and we anticipate that some
growth in site traffic will occur through this means.
Although our website will have available for viewing most of our products for
free, and therefore not be income-producing, our plan nevertheless calls for us
to concentrate on increasing website traffic. We view site traffic as a way to
increase the positive word of mouth about our products, thus hopefully getting
the attention of executives of a film and/or television distribution company or
television network, who might offer us a professional production opportunity,
such as producing a television pilot or special, or short or feature-length
film, and it is the steady producing of television shows and films which is our
ultimate goal. For that reason, our busines plan also calls for future funds -
funds we receive after this offering is completed - to be used to advertise on
other websites which might have a demographic that would appreciate our work,
including off-beat political "me-zines", which are individualized web sites
featuring a definite personality such as andrewsullivan.com, or other off-beat
humor websites such as bobanddavid.com or atomfilms.com.
The second way we intend to market and distribute our products is to distribute
recordings of our films via VHS tape and/or DVD to members of the entertainment
community. For example, Management's first entertainment product is a short film
entitled: "The G! True Tinseltown Tale: Dude, Where's My Car?" This short film
is a parody of both the television series "The E! True Hollywood Story" as well
as the 2000 film "Dude, Where's My Car?" released by Twentieth Century Fox. All
photography of the short film was completed in January of 2003 and is now near
completion of post-production. As mentioned above, we intend to market this
product after post-production is completed by uploading it onto the
tallyhoventures.com website. However, we will also send VHS and/or DVD copies of
the film to the subjects that were parodied in the film as a way of enhancing
recognition of the film.
21
This second marketing and distribution method also dovetails with our first
marketing and distribution method, the website, because at the end of the tape
containing the parody, the audience watching the parody will be directed to our
website for more free entertainment products. Future filmed parodies produced by
Management will likely be distributed in a similar fashion.
Although unusual, this marketing maneuver of distributing tapes to members of
the entertainment community as a way of increasing exposure for one's work is
not without precedent. The president of our company, Tal Kapelner, recalls when
he was a writers' assistant and assistant to an executive producer on a network
television sitcom in 1997-1998. During that time, VHS recordings containing
bootleg copies, which are copies produced without the express permission of its
authors of a 10-minute video cartoon produced as a "video Christmas Card" were
circulating throughout the entertainment industry. Tal Kapelner himself was
shown a bootleg copy of this 10-minute video Christmas card in the offices of
one of the producers of the television sitcom he was working on at the time. He
recalls that it wasn't long after that time that the creators of this video
Christmas card - who had done no prior work in the entertainment industry - were
offered their own show on Comedy Central, a basic cable television channel
jointly owned by AOL Time Warner and Viacom. The show was entitled "South Park".
According to Indiana University Southeast's newspaper "The Horizon" and
internet-based South Park chronicler Scott Hemmings, the story of how the
television show "South Park" came about begins with the producers Matt Stone and
Trey Parker, who met while attending college in Colorado. They worked together
in making film shorts for school, one of which was a short film about 4
foul-mouthed boys trying to kill Frosty the Snowman. The video was sent
unsolicited to an executive at News Corp's 20th Century Fox, who enjoyed it and
offered Parker and Stone $2000 to make a video Christmas card. Stone and Parker
took the idea from the "Frosty" skit they had done and improved the animation a
little. The finished product turned out to be the 10-minute video Christmas
card, entitled "The Spirit of Christmas", wherein the 4 foul-mouthed boys were
involved in a fight between Santa Claus and Jesus. They gave it to the Fox
executive, who enjoyed it so much that he sent it out to his friends, who then
sent it to others, and so on until actor George Clooney got a hold of a copy. He
watched it and liked it so much he sent out between 300 and 700 copies -
accounts vary as to the exact number - to many people he knew, many of them in
the entertainment industry. This distribution is widely credited as responsible
for Messrs. Parker and Stone having been offered a deal to produce the sit-com
cartoon "South Park".
We envision our film and video entertainment products, at least initially, to be
distributed in a similar "underground" fashion. We believe that sending our film
and video parodies to the subjects of the parodies themselves is a clever way to
have our products seen, and we hope that our products will be enjoyed by those
to whom we send them, and distributed in the same underground, "guerilla"
fashion as the original video Christmas card produced by Trey Parker and Matt
Stone, with bootleg copies of our products being made by those who view it,
eventually gaining greater recognition in the entertainment industry and perhaps
eventually funding for future entertainment products, including television
series and specials, short and feature-length films and internet-based films.
The third way in which we anticipate marketing and distributing our filmed
entertainment products is to simply submit DVD copies of our film and video
products to those satellite, cable and broadcast entities who air such products.
For example, a DVD copy of our first short film parody, "The G! True Tinseltown
Tale: Dude, Where's My Car?" may be submitted to HBO and/or Cinemax, both owned
by AOL Time Warner; Showtime and/or The Movie Channel, both owned by Viacom;
IFC, Independent Film Channel - owned jointly by Cablevision, General Electric
and MGM; and the Sundance channel, a joint venture between Viacom, PolyGram and
Robert Redford. All of these cable and satellite channels air short films
regularly and might be willing to at least look at unsolicited submissions to
see if they would like to air them, although we have no personal knowledge that
it is that easy. Please see Risk Factors, above. It is true, however, that
Alexandra Pelosi, the producer and director of the feature-length documentary
"Journeys With George" - a documentary featuring an intimate look at President
George W. Bush as he campaigned for President in the year 2000 - did nothing
more than submit her final edit of "Journeys With George" to HBO with a
handwritten note asking them to air it, and HBO executives watched it, liked it
and did, indeed, air it. We will try this plan and hope that something similar
to what transpired for "Journeys With George" occurs for one of our film
products, although it should be noted that Alexandra Pelosi is the daughter of a
high-ranking member of Congress, an advantage we do not share, and the subject
matter of Ms. Pelosi's documentary is likely of more interest to a wider
audience than any of our products will be.
22
The fourth manner by which we intend to market and distribute our film and video
products is by submitting them as entries in various film festivals and
competitions across the continent. The largest and most famous film festivals,
which often include competitions of the films they exhibit, in North America
include Sundance and Slamdance, both in Park City, Utah, Telluride in Telluride,
Colorado and the Toronto International Film Festival in Toronto, Ontario. Given
the asymmetric amount of supply of films to the slots allowed in these
festivals, we believe it is not realistic that our films will be shown at any of
these most famous film festivals, although we will certainly try to submit our
films as entrants into them, beginning with our first film parody "The G! True
Hollywood Story: Dude, Where's My Car?" which is currently in post-production.
More realistic, we feel, is successfully entering our films in smaller film
festivals, including Toronto Giggleshorts Comedy Film Festival and World of
Comedy International Film Festival, both held in Toronto, Ontario; Firstglance
Los Angeles Film Festival in Los Angeles; and the Anchorage Film Festival in
Anchorage, Alaska. Exhibiting any of our film products at film festivals
increases the exposure our work receives, increasing the chance that an
executive of a film and/or television distribution company or television network
might see our work, and then might help us achieve our goals by offering us a
profesional production opportunity, such as producing a television pilot or
special, or short or feature-length film.
The plan for growth. Ultimately, we plan for a network to approve of one of our
TV pilots and pay us money to produce more episodes of that concept. We also
plan ultimately for a movie studio executive to view one of our short films and
finance a future feature film. Once we begin to generate fees from the
production of films and sees profits being derived from the release of completed
films, which we believe may occur within the next 1-3 years, we are confident
that we will be able to meet our minimum operating requirements. We then
anticipate having funds available for the needs of our development, making it
possible to expand in both quality and quantity. Please see Management's
Discussion and Analysis or Plan of Operation below.
Competition. Initially, in order to make the business, marketing and
distribution plans we described above work, we need to have our entertainment
products competitive in three places: 1) at film festivals, 2) on the Internet,
and 3) within the actual offices of members of the entertainment community. And
business conditions in all three places are extremely competitive.
First, at film festivals, our work will be submitted to the various film
festivals across the continent, and then, prior to each festival, judged against
thousands of other short film submissions. If our work is selected by the
respective festival's judging panel, our work then is exhibited at the festival
along with one hundred or more other films, all presumably of similar quality.
These conditions combine to create a very poor business environment for our
work, in that the likelihood of being offered professional production
opportunities as a result solely of these exhibitions is small.
Second, on the Internet, there is an overwhelming supply of entertainment
products, including short- and feature-length films and videos, and entertaining
written material such as essays, screenplays, teleplays, columns, short stories,
etc., and most of the suppliers of these entertainment products are actively
trying to get their products seen by the broad public, and many want to be
offered paid jobs in the entertainment industry to write, direct, produce or act
in television, music videos and/or film projects, which is similar to our plan.
With the advent of the Internet, the amateur entertainment suppliers have
multiplied geometrically. There are literally thousands upon thousands of
websites such as ours which feature the creative and artistic work of one or
more people in the fields of film, video and creative writing. Websites which
make available entertainment products similar to ours include atomfilms.com,
kinemafilms.com, shockwave.com, pitch-prods.com, cyanpictures.com,
paperbarkfilms.com, and alldaybreakfast.ca. These websites containing
entertainment products similar to ours - and many thousands more - are virtually
all more established than we are, and carry more material than we do currently,
and are more well-known than our website is.
Getting one's product noticed on the Internet in this environment of
overwhelming supply is extremely difficult. And with only a website which so far
contains little content, and only one short film in post-production which cannot
be uploaded onto our site until it is finished, and almost no promotion of the
site, our competitive position in this industry is very weak currently.
23
The third area in which we need our products to be competitive initially is
within the actual work offices of the members of the entertainment community. As
we described above, our plan calls for sending copies of our products to the
very people and/or entities we make fun of in our parodies. This is because the
number of submissions - both solicited and unsolicited - which members of the
entertainment community receive is huge. Often agents, producers, studio heads
and others involved in programming in the entertainment industry will receive
hundreds of submissions every month, including script submissions, video
submissions and so on. Even with our unusual marketing and distribution method,
we face a daunting uphill battle to get our work noticed. And with our
relatively unknown status, our competitive position in this arena is, again,
very weak.
Our position is further weakened because price is not a method of competition in
this segment of the industry. Virtually no low-budget web-based supplier of
entertainment products charges for their products, making it impossible to
"undercut" the competition through price. And of course no supplier charges
members of the entertainment industry a fee when they send submissions because
suppliers are often desperate for members of the entertainment industry to view
their work. Quality of product is certainly a method of competition; however,
there, too, the sheer amount of entertainment products available make it close
to impossible to "rise above the rest" in terms of quality.
Another competitive method is "who you know", meaning that any personal and/or
business relationships cultivated with members of the entertainment community by
each supplier are utilized to get the respective supplier's work seen by those
members of the entertainment community. Here again, although our president and
Chairman worked for one season as a writers' assistant and assistant to the
executive producer on a sitcom which aired on the WB Network, and our
vice-president and secretary has worked as both a personal and business
assistant for several celebrities in the past, we nevertheless cannot say that
we are in a competitive advantage in this method of competition. Our "contacts"
in the entertainment industry do not go deep and wide, and while we certainly
will try to utilize whatever relationships with members of the entertainment
community we have to our advantage, we cannot say that we are in a necessarily
more competitive position in this method of competition than other suppliers,
many of whom are more closely associated with the entertainment industry.
Finally, if we were to be successful to the point where we would be asked to be
the production company of any kind of television programming or film of any
length, our competition would be significantly broadened to include some of the
largest and most well-established multi-national corporations in the world,
including Walt Disney Company, Sony Corp., Viacom, News Corp. and AOL Time
Warner. Please see Risk Factors above.
Dependence On a Few Major Customers. Although now with the Internet there are
literally almost an inifinite number of ways one may show one's entertainment
products to the public, there are still, nevertheless, only a very few ways to
show one's entertainment product to the public in exchange for money. There's
broadcast network programming, which includes NBC, CBS, ABC, FOX, WB and UPN,
and several basic cable "network" channels which have original entertainment
programming, including USA Network, Comedy Central, Lifetime, E! Entertainment
Television, the PAX network, ABC Family, and MTV Networks. There's also a
limited amount of original programming funded by premium pay cable outlets,
including HBO, Showtime, Cinemax and Encore! But there are not many other venues
for exhibiting one's work for money, and this huge amount of supply, combined
with relatively few customers for the supply, creates a "bottleneck" effect for
entertainment products, where there is a great deal of competition among
suppliers of entertainment content, such as Tally-Ho, and outlets which air
them, such as broadcast, basic cable and premium cable channels. Please see
Risk Factors above.
Right now we have no customers, and we anticipate no customers for the near
future. If our business plan was quite successful, then in the foreseeable
future we would likely be reliant on the very few customers delineated above for
all of our work.
24
Intellectual Property and Labor Agreements. Our success and ability to compete
will be dependent in part upon our ability to obtain and maintain protection for
our current and future literary properties, to defend our intellectual property
rights and to operate without infringing on the proprietary rights of others.
While we will attempt to rely, as needed, on a combination of copyrights and
trademarks to establish and protect our intellectual property rights - including
use of the U.S. Patent and Trademark Office's Form PA and the Writers Guild of
America's Intellectual Property Registry - we believe that factors such as the
technical and creative skills of our personnel are more essential to our success
and ability to compete. The Form PA, published by the U.S. Patent and Trademark
Office in Washington, D.C., allows the filer to register with the USPTO their
creative recorded work, such as a film and the underlying script for the film.
Although registration with the Copyright Office is not required to have a valid
copyright, registration does provide several benefits, including the
establishment of a public record and evidence of our claim as the valid
copyright owner of our films and their underlying scripts, the ability to file a
federal lawsuit against someone who uses our films or portions thereof without
our permission, and eligibility to receive statutory damages and attorneys' fees
in the event we file and win a copyright infringement lawsuit. The Writers'
Guild of America's Intellectual Property Registry service assists writers in
establishing the completion dates of intellectual property, providing a dated
record documenting a writer's claim of authorship. If necessary, a Registry
employee may produce the material as evidence if a legal or official Guild
action is initiated.
Despite use of the federal Form PA and the Writers Guild's Intellectual Property
Registry, there can be no assurance that any of our intellectual property rights
will provide competitive advantages or will not be challenged, invalidated or
circumvented by competitors. There can be no assurance that disputes will not
arise concerning the ownership of intellectual property. Furthermore, there can
be no assurance that intellectual properties will not become known or be
independently developed by competitors or that we will be able to maintain the
confidentiality of information relating to our literary properties.
Conversely, content on our website may bring us liability. Our website could
possibly face potential liability for negligence, copyright, patent, trademark,
defamation, indecency and other claims based on the nature and content of the
materials we post. Such claims have been brought and sometimes successfully
pressed against Internet content distributors. We could also be exposed to
liability with respect to unauthorized duplication of content or unauthorized
use of other parties' proprietary technology. Although we intend to obtain
general liability insurance, it may not cover potential claims of this type or
may not be adequate to protect us from all liability that may be imposed.
Therefore any imposition of liability could hurt our business. Please see Risk
Factors above.
The only labor contract we have currently is the Experimental Film Agreement
with the Screen Actors Guild, which is attached as an Exhibit. This contract
discusses the rules involved with hiring, paying and working with the actors we
use on our film and television shoots. We do not believe this agreement with SAG
will negatively affect our business, as it specifically stipulates that we have
the right as Producers to negotiate pay directly with the performers we wish to
hire, rather than be bound by SAG's normal minimum pay structure. There are,
however, other rules we are bound by because of this Agreement with SAG,
including actors' pension and health contributions, which we feel do increase
our costs somewhat. However, importantly, our Experimental Film Agreement with
SAG allows us to hire non-SAG actors as well, greatly broadening our ability to
search for the best and most cost-effective talent for our productions.
Existing or Probable Governmental Regulation There are the usual governmental
regulations on workplace environment and employee pay, benefits, taxes and
relations that other businesses face, as well as intellectual property
considerations, discussed above; however, we do not anticipate any other
governmental regulations to substantially effect our business.
Employees. The total number of employees we have, including full- and part-time,
is currently zero (0). We rely on the services of our President and Chairman,
Tal Kapelner, our Vice-President, Secretary and Director, Cheney Shapiro, and
our Treasurer, Ariella Kapelner, to devote as much time as they can to Tally-Ho
and its projects, and to spend time overseeing our administrative
responsibilities as well, but at this time we have no employees, not even our
three management personnel. Currently, Tal Kapelner devotes 20 hours per week to
Tally-Ho, Cheney Shapiro devotes 15 hours per week to Tally-Ho and Ariella
Kapelner devotes 5 hours per week, on average, to Tally-Ho. We anticipate that
our officers will continue to devote the same number of hours, on average, per
week to our company in the foreseeable future, although there will naturally be
a spike in the number of hours per week devoted by our management team whenever
we go into production on a short film, web-exclusive video skit or vignette or
television pilot. In the event we are successful in generating revenue and
making our company profitable, employment contracts will be offered to members
of our management personnel, and if in the mid-future, 1-3 years from now, we
are successful enough to have the resources for and need to hire additional
management or administrative or other personnel, we will do so.
With respect to our filmed entertainment products, those are worked on by
independent contractors who work on each shoot on a project basis. For example,
a director of photography and a script supervisor were retained for "The G! True
Tinseltown Tale: Dude, Where's My Car?" and then paid by the shoot day as
independent contractors. Currently the film is in post-production getting edited
by an editor who is paid by the hour and is also not an employee. The only
exception to this are the actors. Pursuant to the contract we signed with the
Screen Actors Guild, we are required to consider the actors we hire on each film
employees, even if they are hired for only one day. However, the typical length
of employment for actors on a short film shoot is 1-2 days, such as it was with
"The G! True Tinseltown Tale: Dude, Where's My Car?". This is typical of our
industry and we will likely continue to produce film entertainment products
without hiring employees, except for the actors on very short-term bases.
25
Reports to Security Holders.
We will not voluntarily send an annual report to security holders. However, upon
the effective date of this registration statement, we shall become subject to
the requirement to prepare a 10-KSB (annual report) every year, and once each
10-KSB has been prepared and approved by our counsel for filing with the SEC, we
will provide this report to any security holder who requests one, and these
reports will include audited financial statements.
We will also be required to file reports on Form 8-K relating to any material
information which is important for investors in our securities to know. We will
have a continuing reporting obligation under Section 15(d) of the Securities and
Exchange Act of 1934, once the registration statement becomes effective.
The public may read and copy any materials we file with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The address of that
site is http://www.sec.gov. Our Internet address is http://www.tallyhoventures.com.
Management's Discussion and Analysis or Plan of Operation.
We can continue to operate, albeit in a limited capacity, without the additional
funding provided by this offering. We believe that with the website and its
initial content already in place and our first short film nearly complete, our
business plan and operations can continue and will not be placed in jeopardy if
this offering is not successful. And Management has verbally committed to
personally maintaining, if necessary, the financial resources for us to meet our
administrative responsibilities over the coming year, in order that our
marketing plan can be pursued, although no member of management has a written or
binding agreement with Tally-Ho to that effect.
Regardless of members of our management's commitment to provide funds for
Tally-Ho to continue, however, we have never had any revenues and do not
anticipate any in the next 12 months; we have subsisted so far in loans from
Management. And in order to maintain our administrative responsibilities over
the next 12 months, and also apply for a priced quotation on the OTC Pink Sheets
in the coming year, without personal financial support from Management, we need
to sell at least $12,700 worth of our stock in this offering.
If we can sell at least 10% of the shares in this offering - $25,000 worth -
then we will be able to maintain our administrative responsibilities for the
next 12 months, apply for listing on the OTC Pink Sheets as planned in the next
12 months, and also produce enough new entertainment products in the next 12
months to keep our business plan viable, without personal financial support from
Management.
The amount of cash we currently have on hand, as of May 30, 2003, is $20. As of
the end of our last quarter, on March 30, 2003, we had $230 cash on hand. The
amount of cash we will need to operate our busines over the next 12 months is
$10,200. The amount of cash we have on hand is insufficient to satisfy our cash
requirements for any time period, even one month. Without an infusion of cash
from the offering, Tal Kapelner and Cheney Shapiro will have to continue to loan
us money to pay our expenses. For example, Mr. Kapelner and Ms. Shapiro have
already loaned us the $1,800 we needed to pay the accountants for our 2002
year-end audit, the $661 we needed to pay the EDGARizer its initial fee, and the
$252 we needed to pay the state of California its Blue Sky fee.
Over the next 12 months, we plan to produce a minimum of 1 television pilot, 7
super-short (under ten minutes long) films and 7 short films (10-40 minutes
long). Based upon our experience, we anticipate each of these products to have a
completion timeframe of 2-4 months each, from pre-production to post-production.
There are specific milestones - and steps to achieving each milestone - to our
business plan. Our first milestone was to establish our business. The specific
steps we took to accomplish this were a) incorporate our corporation; b)
establish our web site; c) establish our offices; d) open a bank account; e)
perfect our business plan. This first milestone was reached in approximately
three months, from November 2002 to January 2003 and cost us approximately
$1,000. Tal Kapelner and Cheney Shapiro loaned Tally-Ho the money needed to
complete this milestone.
The second milestone was to produce and market our first entertainment product:
a short film shot on digital video entitled "The G! True Tinseltown Tale: Dude,
Where's My Car?" The specific steps we took to accomplish this were a) write a
script; b) decide on a director and producers; c) develop a budget and
production schedule; d) finance the project; e) prepare paperwork for, and sign
with, actors union; f) sign with payroll company and prepare employer tax and
workers' compensation obligations; g) cast all roles; h) find and secure
locations for shooting; i) hire all needed crewmembers; j) purchase or otherwise
secure props, wardrobe and filmmaking equipment; k) rehearse the scenes with the
actors; l) prepare food and beverage service for locations and make other
preparations before shooting; m) shoot the scenes of the film as per the script;
n) complete final tax and union paperwork; and o) hire editor to catalogue all
of the footage shot. These steps have taken approximately 4 months to complete,
from November 2002 to February 2003, have cost approximately $4,000 and have
been financed by Tal Kapelner through loans. The specific steps we still are
taking to accomplish this milestone are p) have director, producers and editor
work together to cut the footage together into a final film, adding any visual
or sound effects, additional dialogue recording, narration, additional footage,
etc.; q) produce copies of the finished film in whichever media is deemed
suitable; and r) distribute and market the finished product through the various
methods discussed above in the section Business of Issuer. These last two steps
to completing this milestone have taken over three months so far, from March
2003 to present, and are likely to take an additional three months to complete.
The cost of these two additional steps is likely to be approximately $3,000 and
Tal Kapelner will be financing this money through loans.
The third milestone was to produce our second entertainment product: written
material for the Tally-Ho Ventures, Inc. website. The specific steps we took to
accomplish this were a) Tal Kapelner writing the material; b) our web designer
Steve Aguilera of GraphicPark.net uploading and formatting the material for our
web site. This third milestone was reached in approximately 2 weeks, in March of
2003, and did not cost any additional money.
The fourth milestone is to raise financial capital and prepare our share
structure so as to allow for listing later on a secondary market by issuing
freely-tradable securities. The specific steps we are taking to accomplish this
are a) retain counsel, auditor and EDGARizer professionals; b) prepare Form SB-2
and file with SEC; c) file registration statement with state of California
pursuant to qualification by coordination provision; d) have SEC review and
offer comments; e) revise SB-2 and re-file with SEC; f) have SEC re-review and
offer further comments; g) continue to revise until cleared for offering by SEC;
h) conduct offering in the state of California, retain transfer agent, issue
share certificates, etc. We have begun these steps in March of 2003 and will
likely be working on this milestone until at least August 2003 or later,
depending upon when we close this offering. Please see Plan of Distribution for
information on the length of the offering. This milestone has so far cost us
approximately $2,800 in EDGARizing and accounting fees, and state of California
registration fees, and that money was loaned to us by Tal Kapelner and Cheney
Shapiro. We anticipate that we will spend an additional approximately $2900 in
EDGARizing, transfer agent, mailing and printing fees associated with this
offering, and that money will be loaned to us by Tal Kapelner and Cheney
Shapiro.
Our fifth milestone is to prepare our next entertainment product: a
web-exclusive video vignette featuring two sets of teams, each with their own
car, attempting to garner the most number of parking tickets in one day in the
Greater Los Angeles Area. The specific steps we will need to take to accomplish
this milestone is a) complete a treatment and detailed outline of the vignette;
b) decide on a director and producers; c) develop a budget and production
schedule; d) finance the project; e) prepare paperwork for, and sign with,
actors union; f) sign with payroll company and prepare employer tax and workers'
compensation obligations; g) decide on who will participatein the vignette, cast
any roles as needed; h) hire all needed crewmembers; i) purchase or otherwise
secure props, wardrobe and filmmaking equipment; j) shoot the action of each of
the two teams as they wander around L.A. in search of parking enforcement
officers to ticket their cars; k) complete final tax and union paperwork; l)
hire editor to catalogue all of the footage shot; m) have director, producers
and editor work together to cut the footage together into a final vignette,
adding any visual or sound effects, additional dialogue recording, narration,
additional footage, etc.; and n) upload finished vignette to website. The
timeframe for completing this milestone depends upon how quickly we can achieve
financing; however, we anticipate starting this project in September 2003 and
uploading the finished product in November or December 2003. We project a cost
of $5,000 for this project from start to finish, and anticipate paying for this
project through the offering.
The sixth milestone in our business plan is to produce and market a television
show pilot episode, which we have designed to be a "behind-the-scenes"
reality-based television show which will feature edited footage of three writing
partners coming together at a table to write a comedy sketch of their choosing.
The first two-thirds of the show will contain this footage showing the writers
attempting to put funny material down on paper in the form of a five-minute
comedy skit. The final 5-10 minutes of the program will feature professional
actors actually performing the skit the writers just completed writing, as well
as bonus behind-the-scenes footage showing the actors first reading their lines
and rehearsing. The specific steps for completing this milestone will be a)
write a detailed treatment and outline of the action in the episode; b) decide
on a director and producers; c) develop a budget and production schedule; d)
finance the project; e) prepare paperwork for, and sign with, actors union; f)
sign with payroll company and prepare employer tax and workers' compensation
obligations; g) cast all roles; h) find and secure studio sets for shooting; i)
hire all needed crewmembers; j) purchase or otherwise secure props, wardrobe and
filmmaking equipment; k) prepare food and beverage service for the cast and crew
on set and make other preparations before shooting; m) shoot the documentary
footage of the three writers writing a skit together; n) shoot documentary
footage of actors receiving the material the writers just wrote, rehearsing and
then performing the skit; o) complete final tax and union paperwork; p) hire
editor to catalogue all of the footage shot; q) have director, producers and
editor work together to cut the footage together into a final film, adding any
visual or sound effects, additional dialogue recording, narration, additional
footage, etc.; r) produce copies of the finished film in whichever media is
deemed suitable; and s) distribute and market the finished product through the
various methods discussed above in the section Business of Issuer. The timeframe
for completing this milestone, depending upon availability of funds following
this offering, is expected to be five months from writing the treatment to
marketing and distributing the finished pilot. We anticipate working on this
project from November of 2003 to the end of March 2004, and spending $100,000 to
produce and market it, with the money coming from the proceeds of this offering.
The seventh milestone in our business plan is to apply for a priced quotation on
the Over-The-Counter Pink Sheets stock quotation service. The specific steps we
will need to take to complete this milestone are a) close our stock offering
pursuant to this registration statement; b) prepare due diligence paperwork to
supplement our 15c2-11 filing; c) submit our due diligence materials to the NASD
via a market maker; d) respond to any deficiencies in our application as pointed
out by the NASD; e) upon approval for an unpriced quotation by the NASD, have
market maker revise Form 211 to apply for a priced quotation on the
Over-The-Counter Pink Sheets; and f) work with market maker on setting an
opening price and discuss making market on the stock. The timeframe for
completing this milestone is expected to be three months, from September 2003 to
November 2003. There is no cost for applying for a priced quotation on the OTC
Pink Sheets stock quotation service. Related accounting costs, however, are
expected to be approximately $800 and are expected to be paid from the proceeds
of this offering.
In addition to the above-mentioned creative projects, we have many ideas in
development for our short and super short films, including a spoof of Viacom's
basic cable channel MTV, tentatively titled "20 Things You Won't See on MTV
(Like Dignity)"; a parody of the television series "Inside the Actor's Studio";
a parody of the Carl's Jr. fast-food restaurant commercials; and a dramatic
short film about the field of psychiatry's influence in the loss of individual
liberty and freedom in the U.S.
We have no purchases or sales of plant and/or significant equipment planned in
the next 12 months.
We do not anticipate any significant changes in the number of employees. We
currently have zero and anticipate having zero employees in the next 12 months.
We have chosen the accounting firm of Malone and Bailey, PLLC to audit our
company because of members of our management's personal knowledge of their good
work and reasonable fees, despite the fact that we are incorporated in Delaware
and located in California, and our auditors Malone and Bailey, PLLC are located
and licensed in Texas.
Description of Property.
We have our offices at 518 Oak Street #2 in Glendale, California. We do not own
this property - which is in good, working condition, in a modern apartment
building - but rather it is provided to us for free as a work space by our
president and Chairman, Tal Kapelner, who himself rents the apartment of which
we use a portion. It contains sufficient space and materiel for us to do our
administrative work for Tally-Ho; however, it is the opinion of our management
that this property is not adequately covered by insurance; specifically, there
is no renter's insurance for this apartment.
Currently, and for the foreseeable future, which we consider to be over the next
12 months, it is our policy to not engage in any investments in real estate or
interests in real estate, or any investments in real estate mortgages, or any
securities of or interests in persons primarily engaged in real estate activity;
however, we do not have in place specific, written limitations on the percentage
of assets which may be invested in any one investment, or type of investment.
This policy we have described may be changed without a vote of our security
holders. Currently, it is not our policy to acquire assets either primarily for
possible capital gain or primarily for income.
Certain Relationships and Related Transactions.
We do not have any parent companies.
We have no promoters.
Market for Common Equity and Related Stockholder Matters.
There is no public trading market where our common equity is traded.
There is zero common equity for Tally-Ho which is subject to outstanding
options or warrants to purchase, or securities convertible into our common
equity.
There is zero common equity which could be sold pursuant to Rule 144 under the
Securities Act or that we have agreed to register under the Securities Act for
sale by security holders.
There is zero common equity which is being or has been proposed to be publicly
offered by the Company, the offering of which could have a material effect on
the market price of our common equity.
We have only one authorized class of common equity, and that is our Common
Stock. There are seven holders of record of this class of common equity.
Executive Compensation
No officer or director of Tally-Ho has received any compensation from Tally-Ho
in any cash or non-cash form at any time since our inception.
27
INDEPENDENT AUDITORS REPORT
To the Board of Directors
Tally-Ho Ventures, Inc.
(A Development Stage Company)
Glendale, California
We have audited the accompanying balance sheet of Tally-Ho Ventures, Inc. as of
December 31, 2002, and the related statements of expenses, stockholders'
deficit, and cash flows for the period from November 21, 2002 (Inception)
through December 31, 2002. These financial statements are the responsibility of
Tally-Ho's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tally-Ho Ventures, Inc., as of
December 31, 2002, and the results of its operations and its cash flows for the
period described in conformity with accounting principles generally accepted in
the United States of America.
MALONE & BAILEY, PLLC
www.malone-bailey.com
Houston, Texas
March 30, 2003
F-1
TALLY-HO VENTURES, INC.
(A Development Stage Company)
BALANCE SHEET
As of December 31, 2002
ASSETS
Current Assets
Cash $ 2,450
========
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
Current Liabilities
Notes payable to shareholders $ 2,524
--------
Commitments
STOCKHOLDERS' DEFICIT
Common stock, $.001 par, 75,000,000 shares
authorized, 43,150,000 shares issued and outstanding 43,150
Paid in capital 21,052
Deficit accumulated during the development stage (64,276)
--------
Total Stockholders' Deficit (74)
--------
Total Liabilities and Stockholders' Deficit $ 2,450
========
See accompanying summary of accounting policies
and notes to financial statements.
F-2
TALLY-HO VENTURES, INC.
(A Development Stage Company)
STATEMENT OF EXPENSES
For the Period from November 21, 2002 (Inception)
Through December 31, 2002
Administrative expenses
- paid in cash $ 74
- paid in stock 64,200
- imputed interest 2
--------
Net loss $(64,276)
========
See accompanying summary of accounting policies
and notes to financial statements.
F-3
TALLY-HO VENTURES, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Period from November 21, 2002 (Inception)
Through December 31, 2002
Deficit
Accumulated
During
Common Stock Development
Shares Amount Stage Totals
----------- ----------- ----------- -----------
Shares issued to founder
in November 2002 at
par $.001 41,050,000 $ 41,050 $ 41,050
Shares issued for services
in November 2002 at
par $.001 2,100,000 2,100 2,100
Shares canceled (21,050,000)
Shares issued for services
In November 2002 at
par $.001 21,050,000 21,050 21,050
Imputed interest on notes
payable to shareholders 2 2
Net loss $ (64,276) (64,276)
----------- ----------- ----------- -----------
Balances, December 31, 2002 43,150,000 64,202 $ (64,276) $ (74)
=========== =========== =========== ===========
Less: par value 43,150
-----------
Paid in capital $ 21,052
===========
See accompanying summary of accounting policies
and notes to financial statements.
F-4
TALLY-HO VENTURES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Period from November 21, 2002 (Inception)
Through December 31, 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net deficit accumulated during the
development stage $ (64,276)
Adjustments to reconcile net deficit
to cash used in operating activities:
Stock issued to founder 41,050
Stock issued for services 23,150
Imputed interest on notes payable to shareholders 2
----------
NET CASH USED IN OPERATING ACTIVITIES (74)
----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable to shareholders 2,524
----------
NET CHANGE IN CASH 2,450
Cash balance, beginning
----------
Cash balance, ending $ 2,450
==========
Supplemental Disclosures:
Interest paid in cash $ 0
Income taxes paid in cash 0
See accompanying summary of accounting policies
and notes to financial statements.
F-5
TALLY-HO VENTURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business. Tally-Ho Ventures, Inc., was incorporated in Delaware on
November 21, 2002 to produce films and television programs.
Fiscal Year End. Tally-Ho's fiscal year ends on December 31.
Use of Estimates. In preparing financial statements, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities in
the balance sheet and revenue and expenses in the income statement. Actual
results could differ from those estimates.
Cash and Cash Equivalents. For purposes of the statement of cash flows, Tally-Ho
considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents. There were no cash equivalents as
of December 31, 2002.
Revenue Recognition. Tally-Ho recognizes revenue in accordance with Statement of
Accounting Position 00-2 "Accounting by Producers or Distributors of Films".
Revenue is recognized from a sale or licensing arrangement of a film when
persuasive evidence of a sale or licensing arrangement with a customer exists;
the film is complete and, in accordance with the terms of the arrangement, has
been delivered or is available for immediate and unconditional delivery; the
license period of the arrangement has begun and the customer begins its
exploitation, exhibition or sale; the arrangement fee is fixed or determinable;
and collection of the arrangement fee is reasonably assured. There were no
revenues as of December 31, 2002.
Income taxes. Tally-Ho recognizes deferred tax assets and liabilities based on
differences between the financial reporting and tax bases of assets and
liabilities using the enacted tax rates and laws that are expected to be in
effect when the differences are expected to be recovered. Tally-Ho provides a
valuation allowance for deferred tax assets for which it does not consider
realization of such assets to be more likely than not.
Recently issued accounting pronouncements. Tally-Ho does not expect the adoption
of recently issued accounting pronouncements to have a significant impact on
their results of operations, financial position or cash flow.
NOTE 2 - FUNDING COMMITMENT
Tally-Ho has had no revenues and currently attempting to raise capital. However,
current overhead and administrative costs are minimal. The founder and majority
shareholder has orally committed to fund ongoing operations.
NOTE 3 - NOTES PAYABLE TO SHAREHOLDERS
In November & December 2002, the majority shareholders loaned Tally-Ho $2,524.
The notes mature 12 months from issuance, bear no interest and have no
collateral. Interest expense is being imputed at 8 percent and is recorded as
paid in capital.
F-6
TALLY-HO VENTURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
In November 2002, Tally-Ho's founder was issued 41,050,000 shares of common
stock valued at par or $41,050.
In November 2002, Tally-Ho issued 2,100,000 shares of common stock valued at par
or $2,100 for services rendered.
In November 2002, the founder gifted 21,050,000 shares of common stock to four
individuals for services performed for Tally-Ho. The shares were accounted for
as canceled and reissued by Tally-Ho for services. The shares were valued at par
or $21,050 and have been expensed.
NOTE 5 - INCOME TAXES
Deferred tax assets $ 10
Less: valuation allowance (10)
----
Net deferred taxes $ 0
====
Tally-Ho has a net operating loss of approximately $75 at December 31, 2002
which expires in 2022.
NOTE 6 - COMMITMENTS
Tally-Ho's principal office is in the home of Tally-Ho's president pursuant to
an oral agreement on a rent-free month-to-month basis.
F-7
TALLY-HO VENTURES, INC.
(A Development Stage Company)
BALANCE SHEET
As of March 31, 2003
(Unaudited)
ASSETS
Current Assets
Cash $ 230
Loans to a related party 1,300
--------
$ 1,530
========
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
Current Liabilities
Notes payable to shareholders $ 2,676
--------
STOCKHOLDERS' DEFICIT
Common stock, $.001 par, 75,000,000 shares
authorized, 43,150,000 shares issued and outstanding 43,150
Additional paid in capital 21,104
Deficit accumulated during the development stage (65,400)
--------
Total Stockholders' Deficit (1,146)
--------
Total Liabilities & Stockholders' Deficit $ 1,530
========
F-8
TALLY-HO VENTURES, INC.
(A Development Stage Company)
STATEMENTS OF EXPENSES
For the Three Months ended March 31, 2003 and the Period
from November 21, 2002 (Inception) Through March 31, 2003
(Unaudited)
3 Months Inception
Ended Through
March 31, March 31,
2003 2003
--------- ---------
Administrative expenses
- paid in cash $ 1,072 $ 1,146
- paid in stock 64,200
- imputed interest 52 54
--------- ---------
Net loss $ (1,124) $ (65,400)
========= =========
Basic and diluted loss per
common share $ (.00)
Weighted average common
shares outstanding 43,150,000
F-9
TALLY-HO VENTURES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Three Months ended March 31, 2003 and the Period
from November 21, 2002 (Inception) Through March 31, 2003
(Unaudited)
3 Months Inception
Ended Through
March 31, March 31,
2003 2003
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net deficit accumulated during the
development stage $ (1,124) $ (65,400)
Adjustments to reconcile net loss
to cash used in operating activities:
Stock issued to founders 41,050
Stock issued for services 23,150
Imputed interest on notes payable
to shareholders 52 54
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES (1,072) (1,146)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds of loan to related party (1,300) (1,300)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable to shareholders 152 2,676
--------- ---------
NET CHANGE IN CASH (2,220) 230
Cash balance, beginning 2,450
--------- ---------
Cash balance, ending $ 230 $ 230
========= =========
F-10
TALLY-HO VENTURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Tally-Ho Ventures,
Inc. ("Tally-Ho") have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the
Securities and Exchange Commission ("SEC"), and should be read in conjunction
with the audited financial statements and notes thereto contained in Tally-Ho's
Registration Statement filed with the SEC on Form SB-2. In the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected herein. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for the full year. Notes to the financial statements
which would substantially duplicate the disclosures contained in the audited
financial statements for fiscal year 2002 as reported in the SB-2 have been
omitted.
NOTE 2 - LOANS FROM SHAREHOLDERS
In March 2003, Tally-Ho loaned $1,300 to a company controlled by a Tally-Ho
majority shareholder. The loan is short-term, bears no interest, and has no
collateral. The $1,300 was paid back to Tally-Ho in early April 2003.
F-11
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers.
There are no charter provisions, by-laws, contracts or other arrangements that
insures or indemnifies a controlling person, director or officer of Tally-Ho
which affects his or her liability in their capacity as controlling person,
director or officer.
However, Section 145 of the Delaware General Corporation law makes provision for
the indemnification of officers and directors under certain circumstances from
liabilities, including reimbursement for expenses incurred, arising under the
Securities Act. Section 145 of the Delaware General Corporation law empowers a
corporation to indemnify its directors and officers and to purchase insurance
with respect to liability arising out of their capacity or status as directors
and officers, provided that this provision shall not eliminate or limit the
liability of a director:
- for any breach of the director's duty of loyalty to the corporation
or its stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- arising under Section 174 of the Delaware General Corporation law;
or
- for any transaction from which the director derived an improper
personal benefit.
The Delaware General Corporation law provides further that the indemnification
permitted thereunder shall not be deemed exclusive of any other rights to which
the directors and officers may be entitled under the corporation's bylaws, any
agreement, a vote of stockholders or otherwise.
Other Expenses of Issuance and Distribution.
The following is an itemized statement of all expenses of the offering:
SEC Registration Fee: 20
EDGARizing Fees: 1,200*
State Blue Sky Registration Fees: 275*
Transfer Agent Fees and Certificate Printing: 600*
Copying and Printing Prospectus: 250*
Mailing and Couriering Prospectus: 1,500*
Accounting: 2,000*
----------
Total: 5,645*
* estimate
Recent Sales of Unregistered Securities.
On November 21, 2002, we sold 41,050,000 restricted shares of our Common Stock
to Tal Kapelner and/or assigns, in exchange for the business plan for Tally-Ho
Ventures, Inc. worth $41,050 - see Financial Statements - at a price of $0.001
per share. The section of the Securities Act under which we claim exemption from
registration is Section 4(2). The facts we relied upon to make the exemption
available include the fact that the shares were issued only to one person and
not as part of any public offering, but instead simply as exchange for business
plan provided.
Later on November 21, 2002, Tal Kapelner instructed our transfer agent to assign
20,000,000 of his 41,050,000 restricted shares to himself, 20,000,000 of his
shares to Cheney Shapiro, and 1,000,000 of his shares to Ariella Kapelner as
gifts made on the Company's behalf to the members of management. Based on the
fact that the shares were cancelled and re-issued by the issuer to members of
management, we relied on Section 4(2) of the Securities Act to provide exemption
from registration. Tal Kapelner also instructed the transfer agent to issue the
remaining 50,000 restricted shares to two individuals who are not part of
Tally-Ho - Anita M. Rodgers and Mac Duffy A. Dibley - which were gifts made on
Tally-Ho's behalf to two close associates of members of management who are
intimately familiar with our business and provided support to us by serving as
"sounding boards" on the development of the business plan. The section of the
Securities Act under which we claim exemption from registration for these
issuances is Section 4(2). The facts we relied upon to make the exemption
available include the fact that the shares were cancelled and then re-issued to
two people and not as part of any public offering, but instead simply as
exchange for services provided by two close associates of Tally-Ho.
Also on November 21, 2002, we sold 2,000,000 restricted shares of our Common
Stock to FMCOCO, Inc., a Colorado corporation, in exchange for $2,000 worth of
business consulting services rendered, at a price of $0.001 per share. The
section of the Securities Act under which we claim exemption from registration
is Section 4(2). The facts we relied upon to make the exemption available
include the fact that the shares were issued to one entity and not as part of
any public offering, but instead simply as exchange for business consulting
services rendered.
28
Exhibits.
Index of Exhibits
3.1 Certificate of Incorporation*
3.2 By-laws*
4.1 Instruments defining the rights of holders, incl.
indentures (included in Exhibit 3.2)
5.1 Opinion re: legality
10.1 Web design and maintenance contract*
10.2 Experimental Film Agreement with the Screen Actors Guild*
23.1 Consent of Independent Certified Public Accountants*
23.2 Consent of Counsel
* Incorporated by reference to our Registration Statement on Form SB-2 filed
April 18, 2003. File number 333-104631
29
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Glendale, State of California on June 30, 2003
TALLY-HO VENTURES, INC.
________________________________________________________________________________
By: /s/ Tal L. Kapelner President
________________________________________________________________________________
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
/s/ Tal L. Kapelner
________________________________________________________________________________
President and Chairman of the Board of Directors, Principal Executive
Officer, Principal Financial Officer, Principal Accounting Officer
June 30, 2003
________________________________________________________________________________
/s/ Cheney Shapiro Vice-President and Director
June 30, 2003
________________________________________________________________________________
/s/ Ariella Kapelner Treasurer
June 30, 2003
________________________________________________________________________________
