UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(Name of small business issuer in its charter)
5999 65-1023185
Florida (Primary Standard (I.R.S.
(State or Industrial Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation)
Washington Mutual Bank Tower (ste. 314)
2401 East Atlantic Boulevard
Pompano Beach, FL 33062
telephone (954) 782-5006
(Address and telephone number of principal executive offices)
Washington Mutual Bank Tower (ste. 314)
2401 East Atlantic Boulevard
Pompano Beach, FL 33062
(Address of principal place of business
or intended principal place of business)
COPY TO:
Don A. Paradiso, Esq. J. Dapray Muir , Esq.
Washington Mutual Bank Tower (ste. 314) Ruddy & Muir, LLP
2401 East Atlantic Boulevard 1717 K Street, NW (suite 600)
Pompano Beach, FL 33062 Washington, D.C. 20036
(954) 782-5006 (202) 835-0566
(Name, address, and telephone number
of agent for service)
Approximate date of proposed sale to the public: As soon as practicable
after the effective date of this Registration Statement and Prospectus.
CALCULATION OF REGISTRATION FEE
Title of Each Class Dollar Proposed Max- Proposed Maxi-
of Securities Being Amount to Be imum Offering mum Aggregate Amount of
Registered Registered Price Per Unit Offering Price Registration Fee
- -------------------------------------------------------------------------------------------------
Shares of
Common Stock 5,500,000 $.04 $220,000 $17.80
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 the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
CROSS REFERENCE SHEET
Showing the Location in Prospectus of Information Required by Items of Form
SB-2
Part I. Information Required in Prospectus
ITEM
NO. REQUIRED ITEM LOCATION OR CAPTION
--- ------------- -------------------
1. Front of Registration Statement and Front of Registration Statement and
Outside Front Cover of Prospectus Outside Front Cover of Prospectus
2. Inside Front and Outside Back Cover Inside Front Cover Page of Prospectus and
Pages of Prospectus Outside Front Cover Page of Prospectus
3. Summary Information and Risk Factors Prospectus Summary; Important Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Prospectus Summary-Determination of Offering Price;
Important Risk Factors
6. Dilution Dilution
7. Selling Security Holders Not applicable
8. Plan of Distribution The Offering, Plan of Distribution
9. Legal Proceedings Litigation
10. Directors, Executive Officers, Management
Promoters and Control Persons
11. Security Ownership of Certain Principal Stockholders
Beneficial Owners and Management
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Legal Opinions; Experts
14. Disclosure of Commission Position Management - Indemnification of Management
on Indemnification for Securities
Act Liabilities
15. Organization Within Last Five Years Management; Transactions with Affiliates
16. Description of Business Our Company's Proposed Business, Remuneration
17. Management's Discussion and Summary Financial Information -
Analysis or Plan of Operation Management's Plan of Operation
18. Description of Property Proposed Business of the Company
19. Certain Relationships and Related Management - Conflicts of Interest; Transactions
Transactions with Affiliates
20. Market for Common Stock and Prospectus Summary; Market for Company's Common
Related Stockholder Matters Stock; Shares Eligible for Future Sale
21. Executive Compensation Management - Remuneration
22. Financial Statements Financial Statements
23. Changes in and Disagreements with Not Applicable
Accountants on Accounting and
Financial Disclosure
PROSPECTUS
5,500,000 SHARES
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
Common Stock
Direct Casket Delivery and Distribution Corporation (sometimes referred
to as "we" or "us") is a new company organized to engage in the retail sale of
caskets. We are a development stage company and do not have any material assets
or operating business as of the present. To date, our activities have been
limited to analyzing business opportunities, and more recently analyzing the
casket market and identifying suppliers.
With this prospectus we are offering to sell a minimum of 1,750,000 and
a maximum of 5,500,000 shares of common stock. The minimum amount for which a
subscription will be accepted is $500.
AN INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE
SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. SEE "IMPORTANT
RISK FACTORS" BEGINNING ON PAGE 4.
PRICE AND PROCEEDS TO THE COMPANY
Public offering price (per share) $.04
total amount to be raised (minimum-maximum) $70,000--$220,000
Estimated offering expenses
per share (depending on number of shares sold) $.0143-$.0045
total $20,000
Net proceeds to the company
if all 5,500,000 shares are sold $200,000
if only minimum number are sold $ 50,000
Estimated offering expenses include legal, accounting, printing, and filing fees
incident to this offering. See "Use of Proceeds".
We are offering these shares through our president, Mr. Don Paradiso.
Subscriptions will be accepted only in those states where officers of a company
may sell securities without registration as an agent or broker-dealer. The
offering will commence on ..................... , 2003, and continue until
................., 2003 (a period of 120 days). Unless the minimum number of
shares (1,750,000) are sold before the end of such offering period, all monies
will be promptly returned to investors. In our discretion, we may extend the
offering for up to an additional 120 days, or until .......................... ,
2004. If we sell the minimum number of shares before the end of the offering,
the funds will be released to the company and we will commence business. Pending
sale of the minimum number of shares, all proceeds will be held in the attorney
trust account of Don Paradiso, the Company's president. We will not use an
underwriter or securities dealer, and will not pay commissions on sales of our
stock. Accordingly, there can be no assurance that we will be able to sell the
minimum number of shares.
Prior to this offering, there has been no public market for our
securities, and we cannot promise that a trading market will ever develop.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
2401 EAST ATLANTIC BOULEVARD, SUITE 314, POMPANO BEACH, FLORIDA 33062
TELEPHONE (954) 782-5006
This Prospectus is dated ............, 2003
1
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus. If given or made, such information or representations must not
be relied upon as having been authorized by the company. This prospectus does
not constitute an offer to sell or a solicitation of an offer to buy securities
in any jurisdiction in which such offer or solicitation would be unlawful. The
delivery of this prospectus shall not under any circumstances create any
implication that there has not been any change in the affairs of the company
since the date hereof; however, in the event there is any change in the affairs
of the company which management believes would be material to an investment
decision, a post-effective amendment will be filed. The company reserves the
right to reject any order, in whole or in part, for the purchase of any of the
shares offered hereby.
TABLE OF CONTENTS
SUMMARY 3
Direct Casket Delivery and
Distribution Corporation 3
The Offering 3
IMPORTANT RISK FACTORS 4
DILUTION 8
USE OF PROCEEDS 9
SUMMARY FINANCIAL INFORMATION 10
Management's Plan of Operation 10
OUR COMPANY'S PROPOSED BUSINESS 11
General 11
Marketing 11
Competition 12
Government Regulation 12
Offices and Other Facilities 12
Employees 12
THE OFFERING 13
Plan of Distribution 13
How to Subscribe 13
Deposit of Proceeds in Trust Account 13
CAPITALIZATION 14
MANAGEMENT 14
Officers and Directors 14
Election of Additional Directors 14
Conflicts of Interest 15
Compensation 16
Indemnification of Management 16
TRANSACTIONS WITH AFFILIATES 16
Initial Stock Transactions 16
Loans by Management 16
Legal Representation 16
No Finders' Commissions for Management 17
PRINCIPAL STOCKHOLDERS 17
DESCRIPTION OF SECURITIES 18
Common Stock 18
No Options or Warrants 18
Future Financing 18
Reports to Stockholders 19
Dividends 19
Stock Registration and Transfer 20
MARKET FOR THE COMPANY'S
COMMON STOCK 20
Sales of Shares Pursuant to Rule 144 20
LITIGATION 20
LEGAL OPINIONS 20
EXPERTS 21
ADDITIONAL INFORMATION 21
FINANCIAL STATEMENTS 22
APPENDIX
SUBSCRIPTION AGREEMENT A
Until 90 days after the date when the funds and securities are released
from the Don A. Paradiso Attorney Trust Account, all dealers effecting
transactions in the shares, whether or not participating in this distribution,
may be required to deliver a prospectus. This is in addition to the obligation
of dealers to deliver a prospectus when acting as underwriters to their unsold
allotments or subscriptions.
2
SUMMARY
This summary highlights some of the information contained in this
prospectus, and may not reflect information which would be important to you. To
understand this offering fully, you should read the entire prospectus carefully,
including the section entitled "Important Risk Factors" and the financial
statements.
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
Direct Casket has been organized to sell caskets at retail. We are a
development stage company and do not have any business as of the present. Since
incorporation in 2000, our activities have been limited to the evaluation of
various business opportunities, and preparation of a registration statement and
prospectus for this public offering.
We maintain our office at 2401 East Atlantic Boulevard, Suite 314,
Pompano Beach, Florida 33602. Our telephone number is (954) 782-5006.
THE OFFERING
Securities Offered 5,500,000 shares of common stock
Offering Price $.04 per share.
Minimum Purchase Amount The minimum amount for which a subscription
will be accepted is $500.
Offering Period 120 days, but we may extend such period for
up to 120 additional days
Minimum/Maximum Offering This offering requires us
to sell 1,750,000 shares minimum and
5,500,000 shares maximum. If
1,750,000 shares are not sold during
the offering period, all funds will
be returned to investors. If more
than 1,750,000 shares are sold, we
will proceed with our program
notwithstanding fewer than 5,500,000
shares are sold.
3
Common Stock Now Outstanding 15,000,000 shares are presently outstanding
Common Stock to Be Outstanding Minimum: 16,750,000 shares
After the Offering Maximum: 20,500,000 shares
Escrow of Funds Pending Sale of The funds received in the offering
Minimum Number of Shares will be deposited in the Don A.
Paradiso Attorney Trust Account
until the minimum number of shares
have been sold. If the minimum number of
shares have not been subscribed for
within 120 days of the date of this
prospectus, all proceeds of the
offering will be promptly returned to
investors. We may extend the offering
for up to 120 days in our discretion.
Important Risk Factors Investment in the shares offered by
this prospectus are highly
speculative and involve a high
degree of risk. Shares should be
purchased only by persons who can
afford to lose their entire
investment. See "Important Risk
Factors" for special risks
concerning Direct Casket and
"Dilution" for information
concerning dilution of the book
value of the shares sold in this
offering.
Use of Proceeds A portion of the funds from this
offering will be used to reimburse
the promoters for the expenses
incident to the offering (estimated
at $20,000), and the remainder will
be applied to working capital,
including salaries, marketing,
office expenses, and inventory. If
only the minimum number of shares
are sold, we anticipate having
approximately $50,000 available for
initiating our business.
Offering Self Underwritten The shares are being offered directly
by the company through its officers.
There is no underwriter, and no
commissions will be paid.
Policy with Respect to Debt To the extent the costs of
establishing our business exceeds
our working capital, we will seek
to borrow monies from banks or others.
IMPORTANT RISK FACTORS
Our business is subject to numerous risk factors, including the
following:
4
THE COMPANY IS IN A DEVELOPMENT STAGE AND HAS YET TO COMMENCE BUSINESS
Our company was incorporated in July 2000, and we have had no
operations to date. We face all the risks associated with a new
business, and an investment in Direct Casket should be considered an
extremely high risk investment. Risks associated with a new business
include the inability to access capital markets, lack of experience on
which to draw for estimating costs and revenues, lack of tested and
established procedures, difficulties in attracting experienced
personnel, and difficulties in and lead time required for establishing
a start-up company as a recognized source for its product. As of the
date of this prospectus, we have not yet acquired any inventory or made
any sales.
THE COMPANY HAS NO CAPITAL, AND WE MAY BE OBLIGED TO SEEK ADDITIONAL FUNDS
As of the date of this prospectus, Direct Casket has only limited cash
resources. In July it received $30,000 from its founders for stock, but
$7,500 has been expended on offering costs and we will incur
substantial additional costs incident to the offering. If only the
minimum number of shares are sold, it is anticipated that only
approximately $50,000 would be available for business start-up. In that
event, the company's operations could be limited for lack of capital,
and we could be obliged to seek additional financing. We cannot give
any assurance that such funds would be available if needed, or that
they would be available on terms acceptable to us.
OUR COMPANY HAS HAD NO EARNINGS OR DIVIDENDS,
AND NO ASSURANCES CAN BE MADE AS TO THE FUTURE
Our company was only recently organized and has no earnings; nor has it
paid any dividends. It is intended that for the intermediate future,
income will be reinvested in the company rather than distributed to
stockholders as dividends. There can be no assurance that Direct Casket
will ever generate income or pay dividends.
WE DO NOT YET HAVE A STORE LOCATION
Our business plan currently calls for marketing caskets through a
dedicated retail outlet, but we do not presently own or lease a store.
We will have to make such arrangements before we can implement our
business plan.
IF A PUBLIC MARKET FOR THE COMPANY'S SHARES DOES NOT DEVELOP,
YOU MAY BE UNABLE TO RESELL YOUR SHARES
There is no present market for Direct Casket's stock and investors will
not in any event be able to sell their shares until after the minimum
number of shares are sold and the proceeds are released to the company.
After issuance of our shares, the development of an active trading
market for Direct Casket's stock will depend on the interest of
broker-dealers in making a market in its shares.
5
OFFERING PRICE WAS ARBITRARILY DETERMINED AND SHARES
MAY TRADE AT PRICES LOWER THAN OFFERING PRICE
The offering price of $.04 per Share has been arbitrarily determined by
Direct Casket, and bears no relationship to its assets, earnings, book
value, or other objective standard of value. Among the factors
considered were belief in the company's business plan and its potential
for generating revenues, the company's lack of operating history, the
financial requirements of the company, the proceeds to be raised by the
offering, and current market conditions for securities of new
companies. The offering price may not reflect the market price of our
shares after the offering, and shares may not be able to be sold except
at a price less than the offering price.
YOUR INVESTMENT WILL BE SUBSTANTIALLY DILUTED
If all 5,500,000 shares being offered by the company are sold,
investors will own approximately 26.8% of Direct Casket' outstanding
stock, for which they will have paid $220,000. Following such
investment, Direct Casket's net tangible book value will be
approximately $210,000 or approximately $.01 per share, reflecting a
dilution for investors of approximately $.03 per share, or 75%. If only
the minimum number of shares are sold, investors will own 10.4% of
Direct Casket's stock, for which they will have paid $70,000. If such
minimum number of shares are sold, our net tangible book value would be
approximately $60,000 or approximately $.0036 per share, resulting in
dilution of $.0364 per share (91%) for investors. See "Dilution",
below.
USING BORROWED FUNDS FOR BUSINESS GROWTH WOULD INCREASE RISK
Especially if less than all 5,500,000 shares are sold, we will seek to
borrow monies from banks or other lenders, and to purchase inventory on
terms. If we utilize borrowed funds, the company would become subject
to increased risks. Investors should be aware that the use of borrowed
monies could result in substantial interest expense and the company's
assets being mortgaged and possibly foreclosed.
MANAGEMENT LACKS EXPERIENCE IN RETAIL SALES
Our management has no experience in operating a retail business, and
there can be no assurance that we will be successful in establishing
profitable operations.
MANAGEMENT WILL INITIALLY DEVOTE ONLY LIMITED TIME TO THE COMPANY
Under his contract with the company, Mr. Paradiso will commence full
time employment at such time as the minimum number of shares are
subscribed for. Until the minimum number of shares have been subscribed
for, the company's president anticipates devoting only five to 20 hours
per week to its affairs.
MANAGEMENT MAY HAVE CONFLICTS WITH RESPECT TO THEIR TIME
While Mr. Paradiso has agreed to work full-time for the company
following sale of the minimum number of shares, he will continue to
have outside business interests and may become involved in new business
activities, such as directorships or promotion of new companies, which
may distract from time spent on Direct Casket's affairs.
RELIANCE ON PRESIDENT; NO KEY MAN INSURANCE
Direct Casket presently has only one employee, our president Don
Paradiso, and we will be substantially dependent on him for
6
the implementation of our business plan. If we were to lose his
services on account of resignation, illness, or otherwise, we would be
without management. This will be the case even after we employ sales
staff and administrative staff, and will remain the case until we are
able to employ additional management level employees. Our success also
depends on our ability to hire and retain sales and administrative
personnel, and any problems with identifying and hiring qualified
persons on acceptable terms would adversely affect our business. The
company does not have any insurance on Mr. Paradiso.
OTHER CONFLICTS OF INTEREST COULD AFFECT MANAGEMENT IN THE PERFORMANCE OF
THEIR DUTIES
The company's officers and directors are not currently involved in
other retail companies, but may become so in the future, including
involvement as organizers, officers, and directors.
MANAGEMENT MAY CONTINUE TO CONTROL THE COMPANY
Our president and vice president presently own all of Direct Casket's
outstanding stock, and unless more than the minimum number of the
shares offered hereby are sold, they will continue to own 90% of its
outstanding stock and will be able to elect all the company's directors
should they so choose. If all 5,500,000 shares offered by the company
are sold, they would still own more than 73% of the company' shares.
NO ACCESS TO INVESTORS' FUNDS WHILE THEY ARE HELD IN ATTORNEY'S TRUST ACCOUNT
The proceeds of this offering will be placed in the Don A. Paradiso
Attorney Trust Account until the minimum number of shares (1,750,000)
have been sold. If we fail to sell the minimum number of shares within
the offering period, investors' funds will be refunded, but investors
will not have access to their funds while they are held in such trust
account and will not receive interest on such funds if they are
returned.
NO ASSURANCE MINIMUM NUMBER OF SHARES WILL BE SOLD, IN WHICH EVENT
INVESTORS WILL HAVE LOST ALTERNATIVE INVESTMENT OPPORTUNITIES
We will have four to eight months in which to sell the minimum number
of shares, without which we cannot commence our business. There is no
underwriter or commitment by any other person to purchase all or any
portion of the shares offered hereby, and consequently there is no
assurance that the minimum number of shares will be sold. Should we
fail to sell the minimum number of shares, investors' monies will be
returned, but they will have lost the use of their monies during the
offering period.
THERE IS SIGNIFICANT COMPETITION FOR THE SALE OF CASKETS
Funeral homes sell caskets as an integral part of their business, and
we will be competing with such establishments in the sale of our
product. We will also be competing with a smaller number of retail
outlets which sell caskets. Many funeral homes have significantly
greater financial resources and sales experience than Direct Casket.
WE HAVE CONDUCTED ONLY LIMITED MARKET RESEARCH,
WHICH MAY AFFECT THE CREDIBILITY OF OUR BUSINESS PLAN
We have conducted only limited market research. While we have talked to
a number of people and smaller funeral homes in Florida, we have not
conducted a scientific study, nor have we engaged a professional firm
to conduct market research.
7
FUTURE SALES OF ANY SELLING STOCKHOLDER'S SHARES NOT SOLD
IN THIS OFFERING MAY ADVERSELY AFFECT MARKET PRICE
The 15,000,000 shares of Direct Casket's common stock presently
outstanding are "restricted securities" as that term is defined under
the Securities Act of 1933. Such securities may be sold pursuant to a
subsequent registration statement or in compliance with Rule 144 under
that act. Rule 144 provides, in essence, that a person may sell
restricted securities, after holding them for at least one year, in
unsolicited brokerage transactions or in transactions with a market
maker. See "Market for the Company's Stock", below. Investors should be
aware that sales under Rule 144 or pursuant to a registration statement
filed under the Act could have a depressive effect on the market price
of Direct Casket's securities in any market which may develop for such
shares.
PENNY STOCK REGULATIONS MAY ADVERSELY AFFECT ABILITY TO SELL SHARES
Broker-dealer practices in connection with transactions in "penny
stocks" are regulated by certain penny stock rules adopted by the
Securities and Exchange Commission. Penny stocks generally are equity
securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on
NASDAQ, provided that current price and volume information with respect
to transactions in such securities is provided by such exchange). The
rules require a broker-dealer, prior to a transaction in a penny stock
not exempt from the rules, to deliver a standardized risk disclosure
document prepared by the Commission that provides information about
penny stocks and the nature and level of risks in the penny stock
market. The broker-dealer also must provide the customer with current
bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and monthly
account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules require that
prior to a transaction in a penny stock not otherwise exempt from such
rules the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive
the purchaser's written agreement to the transaction. These
requirements may have the effect of reducing the level of trading
activity in stocks that are subject to the penny stock rules. To the
extent our stock is subject to such rules, investors may find it more
difficult to sell their shares.
WE DO NOT HAVE AN AUDIT COMMITTEE OR FINANCIAL EXPERT ON OUR BOARD
We do not have an audit committee or financial expert on our board of
directors. At such time as our assets and operations suggest that such
expertise is appropriate, we will establish an audit committee and
consider inclusion of a financial expert, but in the meantime,
investors will be dependent on Mr. Paradiso's experience as a lawyer
with experience in financial affairs.
DILUTION
Our net tangible book value as of July 31, 2003, was $8,441 or
approximately $.0006 per share. Net tangible book value represents the company's
total tangible assets less total liabilities. In the event all the shares
described herein are sold, net tangible book value would be (without adjustment
for transactions subsequent to July 31, 2003 other than sale of the shares and
related costs) $208,441 or approximately $.010 per share. This would result in
an increase in net tangible book value of $.0094 per share for our existing
stockholders, and dilution of approximately $.03 per share (75%) for the
investors. If only the minimum number were sold, our net tangible book value
would be $58,441 or approximately $.0035 per share, resulting in dilution of
$.0365 per share (91%) for investors.
The following table illustrates this per share dilution:
1,750,000 5,500,000
SHARES SOLD SHARES SOLD
----------- -----------
Public offering price per share $ .04 $.04
Net tangible book value per share before offering .0006 .0006
Net tangible book value per share after offering .0035 .010
Increase per share attributable to this offering .0029 .0094
Dilution to investors $ .0365 $.030
8
The following table summarizes the number of shares purchased by the
investors, the consideration paid and the average price per share paid by Direct
Casket's existing stockholders as of July 31, 2003, and by the investors
purchasing shares in this offering (before deducting offering expenses):
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- -------------
Existing stockholders 15,000,000 $30,000 $.002
Investors (minimum) 1,750,000 10.4% $70,000 70.0% $.04
Investors (maximum) 5,500,000 26.8% $220,000 88.0% $.04
USE OF PROCEEDS
If all 5,500,000 shares being offered by the company are sold, the
gross proceeds to the company will be $220,000; if only the minimum number of
shares (1,750,000) are sold, the gross proceeds of the offering will be $70,000.
The purpose of the company's offering is to raise funds with which to commence
business as a retail seller of caskets.
As described elsewhere in this prospectus, all proceeds will be held in
an attorney's trust account until the minimum number of shares are sold. After
the minimum number of shares are sold, the net proceeds of the offering will be
released to the company. Such funds will be used first to pay or reimburse
management for the expenses of the offering, including legal and accounting
fees, filing fees, and printing. Such costs, which are expected to amount to
approximately $20,000, will be advanced by the company's president, Don
Paradiso, who will be repaid, without interest, at such time as the minimum
number of shares are sold. Mr. Paradiso, has agreed to advance such additional
funds as may be required for the offering, which funds will also be repaid when
and only if the minimum number of shares are sold.
The following table indicates our present intentions with respect to
use of funds received by Direct Casket incident to this offering:
1,750,000 5,500,000
SHARES SOLD SHARES SOLD
----------- -----------
Offering expenses $ 20,000 $ 20,000
Office equipment 2,000 5,000
Printing, signs, advertising, etc. 1,000 5,000
Rent 12,000 12,000
Employee compensation (3 mos.) 12,000 12,000
Inventory 5,000 25,000
Working capital 18,000 141,000
---------- ---------
$ 70,000 $ 220,000
We believe that there will be sufficient funds available to achieve our
objectives, but there can be no assurance that additional monies will not be
required, nor can there be any assurance that, if required, such funds will be
available on acceptable terms.
The foregoing are estimates only; actual expenditures of the proceeds
of the offering will be based on the business judgment of our board of
9
directors. Actual expenditures may vary from these estimates depending on, among
other things, the need for additional personnel and the amount of salaries
required for such purpose, the number and size of offices we may determine are
necessary and the amount of rent we may be required to pay, and numerous other
factors.
SUMMARY FINANCIAL INFORMATION
The following is a summary of Direct Casket's financial information and
is qualified in its entirety by the unaudited financial statements appearing
herein.
Balance Sheet Data July 31, 2003 AS ADJUSTED(1)
--------------------------------
(UNAUDITED) MINIMUM MAXIMUM
----------- ------- -------
Total assets $ 27,100 $ 77,100(2) $227,100(2)
Total liabilities $ 18,659 $ 18,659 $ 18,659
Stockholders' equity $ 8,441 $ 58,441(2) $208,441(2)
Shares outstanding 15,000,000 16,750,000 20,500,000
From Inception
to July 31, 2003
Income (Loss) Data: (UNAUDITED)
-----------
Total revenues $ -0-
Total expenditures $ 22,262
Net loss $ (22,262)
<FN>
(1) Based on the company's assets (unaudited) as of July 31, 2003,
adjusted for sale of the shares being offered by the company.
(2) Net of $20,000 of estimated offering expenses.
</FN>
MANAGEMENT'S PLAN OF OPERATION
This prospectus contains forward-looking statements within the meaning
of Federal securities law. Such statements include any statement other than a
recitation of historical fact, including statements introduced by words such as
"may", "expect", "anticipate", "estimate", "believe", "intend", "seek", or
similar words, and may address expected results of operations or financial
condition, or other "forward-looking" information. Such statements are based on
our expectations, but in considering such statements, you should keep in mind
the risk factors and other cautionary statements in this prospectus. Although we
believe the expectations reflected in such forward-looking statements are based
on reasonable assumptions, there are numerous factors such as general economic
conditions, changes in interest rates, and competition that could cause actual
results to differ materially from such statements.
As of the date of this prospectus, Direct Casket has no significant
cash resources, and we have not engaged in any business activities which provide
cash flow. When the company has sold the minimum number of shares (1,750,000),
such proceeds will be released to the company. The proceeds from subsequent
sales of the shares offered by the company will be deposited directly in Direct
Casket's account.
Our initial efforts will focus on selling caskets at retail in
southeast Florida. Our initial store will be in the Fort Lauderdale area, after
which, if and when cash flow permits, we would seek to open stores in other
locations in Florida. If experience warrants and financing is available, we
would contemplate opening operations in California and perhaps other states. No
decisions have yet been made as to expansion into other states; such decisions
will be based on population and age statistics, accessability for management,
and other factors. As of the date of this registration statement, Direct Casket
has no significant cash resources, and we have not engaged in any business
activities which provide cash flow.
10
Commencing June 1, 2003, Mr. Paradiso will be entitled to a salary of
$104,000 per year. No salary will actually be paid until Direct Casket's working
capital amounts to $200,000. Salary earned before this time will be accrued and
paid when the board of directors believes Direct Casket's cash position
warrants. Mr. Paradiso will continue to work out of his own office for the
foreseeable future, utilizing his own office equipment without cost to the
company. No officer or director of the company has received any cash
remuneration to date.
It is anticipated that expenses for the first three months will include
$12,000 for wages, $12,000 for rent, and, depending on the number of shares
sold, from $5,000 to $25,000 for inventory, $2,000 for training, and $1,000 to
$5,000 for printing and advertising. When we have leased a store, we intend to
hire a store manager and sales clerk. As revenues permit, we will employ
additional employees for sales, bookkeeping, and clerical functions. We will
stock caskets from one or more manufacturers, but the amount of inventory we
will carry will be limited in light of the fact that many manufacturers can
provide overnight delivery to Florida.
We have only minimal funds and capital resources, and we do not have
any commitments for loans or lines of credit. In the future, we will seek
financing from a bank with which to finance our inventory, and will seek such
other financing as may be available for working capital. There can be no
assurance that such financing will be available, or available on terms
acceptable to management.
We believe that the proceeds from sale of the minimum number of shares
will be sufficient to inaugurate our business plan, but there can be no
assurance that additional monies will not be required, nor can there be any
assurance that, if they are required, such finds will be available. Direct
Casket's financial capacity will be limited, which will limit the amount of
advertising it can obtain, the number of stores it can open, and the amount of
inventory it can maintain. No in depth consideration has been given to any
particular source of financing, but management does hope to effect a public
equity offering sometime in the future after operations commence.
We believe our program will become operational within two months of
release of funds from the Don A. Paradiso Attorney Trust Account. As soon as the
minimum number of shares have been subscribed for, we will seek to employ
additional employees for sales, bookkeeping, and clerical functions. If only the
minimum number of shares are sold, we estimate hiring two employees (a clerk and
a salesman); if all the shares offered by Direct Casket were sold, we would
employ several additional employees and expand operations into one or more other
states. It is not expected that we will require any equipment other
than normal office equipment (including a PC computer), for which we have
budgeted $2,000.
To the extent we sell more than the minimum number of shares, we will
have additional funds with which to additional personnel (an additional officer,
one or two additional bookkeepers, and an additional salesman), and to acquire
additional inventory.
We also expect to be able to obtain credit terms from our suppliers
which will reduce the amount of working capital tied up in inventory.
OUR COMPANY'S PROPOSED BUSINESS
GENERAL
Direct Casket is a development stage company which intends to engage in
the retail sale of caskets. Originally intending to go into the entertainment
business, we were incorporated under the laws of Florida as "Capstan
Entertainment Corporation" in July 2000, and changed our name to "Electric
Entertainment Enterprises Company" in February 2002. In June 2003, the company
determined to pursue its present line of business, and changed its name to
Direct Casket Delivery and Distribution Corporation. As Capstan Entertainment
Company, the company produced a series of short movies which appeared on its
Internet web site. Except for these, our activities to date have been limited to
analyzing business opportunities, and more recently analyzing the casket market
and identifying suppliers. We do not have any business as of the present.
11
Direct Casket will seek to provide a comfortable retail environment for
persons seeking to purchase a casket or related items. We contemplate a
dignified reception room with comfortable furniture in which customers can
discuss their needs and consider their options, and an attractive showroom with
samples of each product. Management will seek to ensure a relaxed but
professional atmosphere. It is envisioned that salespersons will be salaried and
will not receive commissions.
We anticipate being able to offer caskets at significant discounts from
prices charged by funeral homes. In the past, funeral homes have not had
competition in the sale of caskets, and management believes that they have
applied significant mark-ups. Management believes it can provide caskets at
substantially less than the usual 300% mark-up over manufacturers's prices.
We intend to offer numerous models, including adult, youth, and infant
models in wood, steel, heavy gage steel, and copper. We will maintain a number
of models in stock for immediate sale; but a large inventory is not deemed
necessary because of the availability of overnight shipping from a number of
manufacturers. We intend to offer the products of a number of manufacturers,
including Casket Royale in New Hampshire, which offers training, sales tools,
and marketing aids to its dealers, as well as overnight shipping to Florida and
to most other parts of the continental United States. While casket dealers in
Europe typically sell a variety of items related to funerals, we plan to focus,
at least initially, on highly discounted caskets. In the future we may market
related items.
COMPETITION
Our principal competitors will be funeral homes, almost all of which
offer caskets as part of their services. We intend to offer a full range of
designs and materials, and to compete on the basis of price. There are presently
two retail stores in Broward County which sell caskets, the nearest being
approximately three miles from Fort Lauderdale. No assurance can be given that
we will be able to compete successfully with these entities.
MARKETING
Notwithstanding the increasing popularity of cremation, we believe that
most persons cremated are cremated in a casket, or a casket is purchased or
rented by the family for viewing. Nevertheless, increased use of cremation and
increased competition will be adverse factors with which we will have to
contend.
In addition to advertising, we will seek to engage in educational
programs to make the public aware that caskets can be obtained at significant
discounts from the prices charged by funeral homes. In the future, we may
establish a website with a view to making sales directly to consumers over the
Internet, but we do not believe Internet sales are a significant factor at
present, because of the nature of the market, people's desire to see a product
with which they are not commonly familiar, and because of the high cost of
shipping.
We do not presently intend to finance sales of caskets, except to the
extent credit cards may be accepted.
GOVERNMENT REGULATION
Neither our business nor our merchandise is presently subject to
government regulation in Florida, and we are not aware of any probable
regulations. We will of course need an operating license from the city.
OFFICES AND OTHER FACILITIES
At the present time we do not have any property. Our offices are
presently co-located in Suite 314, Washington Mutual Bank Tower, 2401 East
Atlantic Boulevard, Pompano Beach, Florida, which space is currently provided
without cost as an accomodation by Mr. Paradiso.
12
At such time as the minimum number of shares are subscribed for, we
intend to enter into a lease for appropriate retail space in Fort Lauderdale. We
intend to lease approximately 1,000 to 1,500 square feet from an unrelated
party, for which we can expect to pay approximately $9-$11 per square foot at
prevailing 2003 rates in Fort Lauderdale (the vacancy rate for retail space in
Broward County is presently approximately 30% ). Mr. Paradiso will continue to
work out of his own office for the foreseeable future. We do not presently
intend to purchase any commercial property. We expect to have negotiated a lease
and commence operations within 60 days of sale of the minimum number of shares,
but we have not yet identified an appropriate location.
EMPLOYEES
We presently have only one employee, our president. At such time as the
minimum number of shares have been subscribed for, we intend to employ
additional employees for sales, bookkeeping, and clerical functions. Mr.
Paradiso may devote a part of his time to other business undertakings.
THE OFFERING
By this prospectus, we are offering 5,500,000 shares of Direct Casket's
common stock at $.04 per share. The minimum investment which will be accepted
from any one investor is $500. If we do not sell 1,750,000 shares within 120
days from the date of this prospectus, we will cancel the offering and all funds
will be returned to the investors, without deduction. In our discretion, we may
extend the offering for an additional 120 days.
PLAN OF DISTRIBUTION
The shares are being sold directly by the company through its
president, Mr. Paradiso, who will distribute prospectuses to acquaintances,
friends, and business associates. We estimate approximately 100 prospectuses
will be distributed in such manner. We have not retained the services of a
broker-dealer, and do not expect to pay compensation to any person in connection
with the offer and sale of the shares. None of the company's officers or
directors are associated with a broker-dealer, and will not be compensated for
their services, except insofar as they receive a regular salary after the
minimum number of Shares have been subscribed for.
Our company's officers and directors have no plans to purchase shares
in this offering.
SUBSCRIPTIONS WILL NOT BE ACCEPTED FROM RESIDENTS OF STATES IN WHICH
SECURITIES MAY NOT BE SOLD BY OFFICERS OF THE ISSUER WITHOUT REGISTRATION AS AN
AGENT OR BROKER-DEALER.
No commissions or fees of any kind will be paid for introducing the
company to investors.
HOW TO SUBSCRIBE
If you wish to invest in our company, you should fill out a
Subscription Agreement in the form attached to this Prospectus (Appendix A) and
send it with a check or money order payable to "DON A. PARADISO ATTORNEY TRUST
ACCOUNT" to:
LAW OFFICES OF DON PARADISO
2401 EAST ATLANTIC BOULEVARD, POMPANO BEACH, FLORIDA 33062
If you have any questions, please call Mr. Paradiso at (954) 782-5006.
DEPOSIT OF OFFERING PROCEEDS IN ATTORNEY'S TRUST ACCOUNT
All proceeds received from this offering will be placed in the Don A.
Paradiso Attorney Trust Account until the minimum number of shares (1,750,000)
have been subscribed for. Thereafter, all subscription monies will be deposited
directly in the company's account. If the minimum number of shares are not
subscribed for within 120 days of the date of this prospectus (240 days if the
offering is extended), all funds will be returned to the subscribers.
13
Certificates for shares subscribed for in this offering will not be
issued until the minimum number of shares have been subscribed for and the
proceeds released from the trust account. Until issued, no investor will have
the right to vote any of the shares subscribed for, and such shares may not be
sold or otherwise transferred.
Once the company's funds are released, Direct Casket may use the
proceeds for such purposes as management deems appropriate consistent with this
prospectus.
CAPITALIZATION
The following table sets forth the capitalization of the company as of
July 31, 2003, and as adjusted to give effect to the sale of shares offered by
the company.
JULY 31, 2003 AS ADJUSTED FOR SALE OF
(UNAUDITED) 1,750,000 SHARES 5,500,000 SHARES
----------------- ---------------- ----------------
Stockholders' equity
Common stock, $.001 par value;
120,000,000 shares authorized;
15,000,000 issued and outstanding $ 15,000 $ 16,750 $ 20,500
Additional paid-in capital $ 15,703 $ 63,953 (1) $ 210,203(1)
(Deficit) accumulated during the
development stage $ (22,262) $(22,262) $ (22,262)
Total stockholders' equity $ 8,441 $ 58,441 (1) $ 208,441(1)
<FN>
(1) After deduction of $20,000 of estimated offering expenses.
</FN>
MANAGEMENT
OFFICERS AND DIRECTORS
Direct Casket' officers and sole director are as follows:
NAME AGE POSITION
---- --- --------
Don A. Paradiso 45 President, Treasurer
and Secretary, Director
Christian Chiari 29 Vice President; Director
Don Paradiso has been our president and a director since the company's
inception, and may be considered its founder or "promoter". In addition to his
other activities, he is a practicing attorney in Pompano Beach, where he has
specialized in commercial litigation, lending and workouts, and securities law
issues, as well as mergers, acquisitions, and corporate governance matters since
1994. He is a member of the bar of New York, as well as Florida. From 1992 until
1994, Mr. Paradiso served as Counsel to the National Workers Compensation
Insurance Assigned Risk Pools in Boca Raton, Florida. From 1989 until 1992, he
was General Counsel of Globe Security Systems, a security guard company based in
Boca Raton, Florida which operated nationwide. From 1987 until 1989, Mr.
Paradiso served as Regional Counsel for Commercial Litigation for Xerox
14
Corporation in Stamford, Connecticut. From 1982 until 1987, he served as a
Special Assistant United States Attorney for the Eastern District of New York in
Brooklyn, New York. In this capacity, he litigated civil cases involving loans
by various governmental agencies including the U.S. Small Business
Administration and the Economic Development Agency, and tax claims for the
Internal Revenue Service. In 1994, he opened his own law office in West Palm
Beach, Florida. Mr. Paradiso is counsel to several corporations which trade on
the NASDAQ stock exchange. He has a Bachelor of Arts degree in Political Science
from Wake Forest University in Winston-Salem, North Carolina, and a Juris Doctor
degree from Pepperdine University in Malibu, California. In 1995, Mr. Paradiso
was obliged to file for personal bankruptcy, from which he was discharged in
1995.
Christian T. Chiari has been an officer of the company since inception
and is one of the founders and principle driving forces behind the company's
business plan. Mr. Chiari is a graduate of Admiral Farragut Academy and holds a
Bachelor of Science degree in economics from Clark University in Massachusetts
earned in 1997. Mr. Chiari is the president of American Millennium Investment
Corp., a financial services and consulting firm located in Ft. Lauderdale,
Florida, with which he has been employed since June, 1997. While Mr. Chiari will
not be a full time employee of the company, he will oversee the design and
implementation of our retail stores, and will be heavily involved in opening our
first store.
All such directors serve for a one year term, and thereafter until the
next meeting of stockholders at which directors are elected.
Neither Mr. Paradiso nor Mr. Chiari has been involved in any bankruptcy
petition filed by or against any business or which he was a general partner or
executive officer at the time of the bankruptcy or within two years prior, nor
has either Mr. Paradiso or Mr. Chiari been convicted of any offense (not
including minor traffic violations) and neither is presently the subject of any
pending criminal proceeding. Neither such person has been the subject of any
court order, judgment , or decree enjoining or otherwise limiting his
involvement in any type of business, securities, or banking activities, and
neither has been found by any court in any civil action, by the Securities and
Exchange Commission, or by the Commodities Futures Trading Commission to have
violated any federal or state securities or commodities law.
Neither Mr. Paradiso nor Mr. Chiari has organized a retail company in
the past, nor has any member of management any experience in the funeral
industry.
Mr. Paradiso intends to devote between five and 20 hours a week to
Direct Casket's affairs until such time as it becomes operational, at which time
he intends to devote full time to the company.
ELECTION OF ADDITIONAL DIRECTORS
It is the present directors' intention to appoint at least one more
director after the minimum number of shares are sold, and they will seek to
include at least one independent member with a background in accounting or
finance. At our first annual meeting, stockholders will have the opportunity to
vote on members of the board of directors.
CONFLICTS OF INTEREST
In 2001, Mr. Paradiso and Mr. Chiari founded Royal Casket Distribution
Corporation, but that company was never activated and has been dissolved. No
member of management is currently affiliated or associated with any other
retailer of caskets.
Management may become involved with the promotion of companies in other
industries in the future. Investors in this company would not have any interest
in such other companies. A potential conflict of interest may occur in
allocating time and professional effort between this company and such other
companies. As a matter of company policy, no officer or director may invest in
any business in direct competition with the company, and present management has
so agreed.
15
COMPENSATION
No officer or director of the company has received any cash
remuneration to date. Commencing June 1, 2003, Mr. Paradiso is entitled to a
salary of $104,000 per year, but no salary will actually be paid until our
working capital amounts to $200,000. Salary earned before that time will be
accrued and paid when the board of directors believes Direct Casket's cash
position warrants. Under the company's agreement with Mr. Paradiso, his salary
will increase to $156,000 effective January 1, 2005, provided that the company
has $300,000 in working capital on hand and annual gross revenues of at least
$400,000. Thereafter, his salary will increase by 5 percent per year. He will
also be entitled to such bonuses and benefits as the board may determine.
No remuneration of any nature has been paid or accrued on account of
services rendered by a director in such capacity.
INDEMNIFICATION OF MANAGEMENT
Section 607.0850 of the Florida Business Corporation Law provides for
indemnification of the company's officers, directors, employees, and agents for
any losses or expenses incurred on account of their position with the company.
Complete disclosure of this statute is provided in Part II of the registration
statement filed with the Securities and Exchange Commission
Under Article VII of Direct Casket's bylaws, the company will indemnify
and hold harmless, to the fullest extent authorized by the Florida Business
Corporation Law, any director or officer of the company against all fines,
liabilities, costs, and expense arising out of such person's status as a
director, officer, agent, employee, or representative of the company.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, or persons controlling the company
pursuant to the foregoing provisions, we have been informed that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy and is unenforceable.
TRANSACTIONS WITH AFFILIATES
The following reflects certain transactions with management which have
occurred or which may occur in the future.
INITIAL STOCK TRANSACTIONS
Incident to Direct Casket's organization and initial financing,
7,500,000 shares of common stock were issued to Don Paradiso, our company's
president, for $15,000 ($.002 per share), and 7,500,000 shares were issued to
Christian Chiari, a director of our company, for $15,000 ($.002 per share). At
the time of such issuance, Direct Casket had no other stockholders.
LOANS BY MANAGEMENT
In connection with the offering, we will incur certain expenses,
including legal and accounting fees, printing fees, and state and federal filing
fees, estimated at $20,000. $7,500 of these expenses have been paid from the
company's treasury with funds received from the company's founders for stock.
Don Paradiso, the company's president, has agreed to lend such other monies as
may be required for the offering, to the extent such funds are not otherwise
available. Such loans will be repayable, without interest, at such time as the
minimum number of Shares have been subscribed for and the company's funds have
been released from the trust acount.
LEGAL REPRESENTATION
Mr. Paradiso provided the legal opinion with respect to the validity of
the Shares to be sold pursuant to this offering, including the Shares which may
be offered by him as selling stockholder. He will not receive compensation for
services of a legal nature other than his regular salary as president.
16
NO FINDERS' COMMISSIONS OR ESCROW FEES FOR MANAGEMENT
We will not pay commissions to officers or directors of the company in
connection with this offering. Mr. Paradiso will not charge a fee for holding
the company's funds in his trust account pending sale of the minimum number of
shares in this offering.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of Direct Casket's common stock as of the date of this
prospectus, and as adjusted to reflect the sale of the Shares offered hereby.
The table includes each person who is known by the company to own beneficially
more than 5% of the company's outstanding common stock; and each of the
company's officers and directors, as well as shares owned by all directors and
officers of the company as a group. A person is deemed to "beneficially own"
shares if he or she, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, (a) has or shares the right to vote or
direct the voting of any security, (b) has or shares the power to dispose or
direct the disposition of such security, or (c) creates or uses a trust, proxy,
power of attorney, pooling arrangement or any other contract, arrangement for
the purpose or with the effect of divesting such person of beneficial ownership
of a security or preventing the vesting of such beneficial ownership. More than
one person may be considered to beneficially own the same shares.
PERCENT OF CLASS OWNED
----------------------
AFTER OFFERING
NAME/ADDRESS SHARES OF --------------------
OF BENEFICIAL COMMON STOCK BEFORE MIN. MAX.
OWNER BENEFICIALLY OWNED OFFERING SOLD (1) SOLD(1)
Don A. Paradiso(2) 7,500,000 50% 45% 37%
2401 East Atlantic Blvd. (ste. 314)
Pompano Beach, FL 33062
Christian Chiari 7,500,000 50% 45% 37%
2865 NE 36th Street
Fort Lauderdale, FL 33308
All Officers and Directors
(2 persons) 15,000,000 100% 90% 73%
<FN>
(1) If the minimum number of shares are sold, there will be 16,750,000
shares outstanding; if all the shares are sold, there will be
20,500,000 shares outstanding.
(2) Mr. Paradiso is Direct Casket's founder and promoter.
</FN>
17
DESCRIPTION OF SECURITIES
COMMON STOCK
Direct Casket is authorized to issue 120,000,000 shares of common
stock, $.001 par value per share. 15,000,000 shares have been issued and are
outstanding as of the date of this prospectus. Each outstanding share is
entitled to one vote, either in person or by proxy, on all matters that may be
voted upon by the owners of such shares. Holders of the company's common stock
do not have cumulative voting rights, which means that the holders of more than
50% of outstanding shares voting for the election of directors can elect all of
the directors if they so choose. In that event, the holders of the remaining
shares would not be able to elect any directors.
Each share of Direct Casket's common stock is entitled to share equally
in dividends, if and when they should be declared by the company's Board of
Directors from funds legally available for such purpose. Each share is also
entitled to share equally in all of the assets of the company available for
distribution to holders of common stock upon liquidation, dissolution, or
winding up of the affairs of the company. Stockholders do not have preemptive,
subscription, or conversion rights, nor are there any redemption or sinking fund
provisions applicable to the shares.
All shares of common stock which are the subject of this offering, when
issued, will be fully paid for and non-assessable. No personal liability for
obligations of the company will attach to investors solely on account of their
ownership of Direct Casket's shares.
Our charter does not provide for preferred stock or any other class of
securities.
NO OPTIONS OR WARRANTS
There are not presently outstanding any options or warrants to
purchase, or securities convertible into, common or preferred stock of Direct
Casket.
FUTURE FINANCING
We presently believe that the proceeds from sale of the minimum number
of shares will be sufficient to inaugurate operations, but we anticipate that
operations may require additional financing, especially if less than all the
shares are sold. In that event, Direct Casket may issue additional securities,
incur debt, or procure other types of financing to augment its working capital.
Direct Casket has not entered into any agreements, plans or proposals for such
financing, and there can be no assurance that it would be successful in finding
financing on terms acceptable to the company.
REPORTS TO STOCKHOLDERS
We intend to furnish our stockholders, after the close of each fiscal
year, an annual report relating to the operations of the company and containing
audited financial statements examined and reported upon by a independent
certified public accountants. Direct Casket's fiscal year ends on December 31.
DIVIDENDS
We have not paid any dividends and do not have any present plans for
the payment of dividends. For the foreseeable future, it is anticipated that
earnings will be used for the company's growth, and will not be distributed as
dividends. There can be no assurance that Direct Casket will ever declare
dividends.
STOCK REGISTRATION AND TRANSFER
Olde Monmouth Stock Transfer Co., Inc., of Atlantic Highlands, New
Jersey, has agreed to serve as the company's stock transfer registrar and
transfer agent.
MARKET FOR THE COMPANY'S COMMON STOCK
There is no trading market for the company's stock, and none can
develop until after sale of the minimum number of shares and the shares are
released to the investors. There are currently only two holders of the company's
outstanding common stock, and such stockholders will continue to own more than
70% of the outstanding shares upon completion of the offering. There can be no
assurance that an active trading market will develop for the shares after their
issuance to investors. After the minimum number of shares have been subscribed
for, we will use our best efforts to find one or more broker-dealers willing to
act as market makers for the company's stock, but we cannot assure you we will
be successful in doing so.
18
SALES OF SHARES PURSUANT TO RULE 144
The 15,000,000 shares of Direct Casket's common stock presently
outstanding are "restricted securities" as that term is defined under the
Securities Act of 1933, but they may in the future be sold pursuant to a new
registration statement or in compliance with Rule 144 under that act. Rule 144
provides, in essence, that a person may sell restricted securities, after
holding them for at least one year, in unsolicited brokerage transactions or in
transactions with a market maker. See "Market for the Company's Stock", below.
The amount sold, including shares sold during the preceding three months, may
not exceed the greater of (i) 1% of the company' outstanding common stock and
(ii) the average weekly volume traded during the preceding four calendar weeks.
Adequate public information must be available with respect to the issuer in
order to qualify; such information is deemed available if the issuer satisfies
the reporting requirements of sections 13 or 15(d) of the Securities Exchange
Act of 1934 and Rule 15c2-11 thereunder. Sales of unrestricted shares by
affiliates of the company are also subject to such limitation on the number of
shares that may be sold. Persons who are not affiliates and have not been
affiliates in the preceding three months are permitted by Rule 144(k) to sell
restricted securities after two years. Investors should be aware that sales
under Rule 144 or pursuant to a registration statement filed under the
Securities Act could have a depressive effect on the market price of Direct
Casket's securities in any market which may develop for such shares.
LITIGATION
The company is not presently a party to any lawsuits or other legal
actions, nor to our knowledge are any such actions threatened.
LEGAL OPINIONS
Don A. Paradiso. P.A., Pompano Beach, Florida, has rendered an opinion
that the Shares will be validly issued when issued in accordance with the
description in this prospectus.
EXPERTS
The financial statements included in this prospectus have been examined
by Webb & Company P.A., independent certified public accountants in Boynton
Beach, Florida, as stated in its opinion given upon the authority of that
company as experts in accounting and auditing.
19
ADDITIONAL INFORMATION
We have filed a registration statement with the Securities and Exchange
Commission on Form SB-2 under the Securities Act of 1933 with respect to the
Shares being offered by this prospectus. This prospectus does not contain all of
the information set forth in the registration statement, and descriptions of any
contract or other document filed as an exhibit to the registration statement is
qualified by reference to the contract or document as filed. The registration
statement and related exhibits may be inspected at the Commission's Public
Reference Room at 450 Fifth Street, NW, Washington, D.C. 20549. Reports filed
under the Securities Exchange Act of 1934 can also be inspected at such
reference facility. The public may obtain information on the operation of the
Public Reference Room by calling the Commission at 1-800-SEC-0330. The
Securities and Exchange Commission also maintains an Internet site (http://
www.sec.gov) that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the commission. We
may in the future be subject to the reporting requirements of the Securities
Exchange Act, but we are not currently a reporting company.
20
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
From July 6, 2000 (inception) through December 31, 2002
(audited) and from January 1, 2003 through July 31,
2003 (unaudited)
CONTENTS
PAGE 22 INDEPENDENT AUDITORS' REPORT
PAGE 23 BALANCE SHEETS AS OF DECEMBER 31, 2002 AND 2001
PAGE 24 STATEMENT OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2002
AND 2001 AND FOR THE PERIOD FROM JULY 6, 2000 (INCEPTION) TO
DECEMBER 31, 2002
PAGE 25 STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY FOR THE PERIOD
FROM JULY6, 2000 (INCEPTION) TO DECEMBER 31, 2002
PAGE 26 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31,2002 AND
2001 AND FOR THE PERIOD FROM JULY 6, 2000 (INCEPTION) TO DECEMBER
31, 2002
PAGES 27 NOTES TO FINANCIAL STATEMENTS
-21-
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
Direct Casket Delivery and Distribution Corporation
(A Development Stage Company)
We have audited the accompanying balance sheets of Direct Casket Delivery and
Distribution Corporation (a development stage company) as of December 31, 2002
and 2001, and the related statements of operations, changes in stockholders'
deficiency and cash flows for the two years then ended and from July 6, 2000
(inception) to December 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Direct Casket Delivery and
Distribution Corporation (a development stage company) as of December 31, 2002
and 2001 and the results of its operations and its cash flows for the two years
then ended and from July 6, 2000 (inception) to December 31, 2002 in conformity
with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 4 to the
financial statements, the Company is in the development stage with no assets or
operations. This raises substantial doubt about its ability to continue as a
going concern. Management's Plan in regards to these matters is also described
in Note 4. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
WEBB & COMPANY, P.A.
Boynton Beach, Florida
July 31, 2003
-22-
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
AS OF DECEMBER 31,
2002 2001
---------- ----------
ASSETS $ -- $ --
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
TOTAL LIABILITIES $ -- $--
STOCKHOLDERS' DEFICIENCY
Common stock, $0.001 par value,
120,000,000 shares authorized,
no shares issued and outstanding -- --
Additional paid in capital 544 385
Accumulated deficit during development stage (544) (385)
---------- ----------
Total Stockholders' Deficiency -- --
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ -- $--
========== ==========
See accompanying notes to financial statements.
-23-
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
For The
Period From
July 6, 2000
For The For The (Inception)
Year Ended Year Ended To
December December December
31, 2002 31, 2001 31, 2002
---------- ---------- -----------
OPERATING EXPENSES
General and administrative $ 159 $ 159 $ 544
----- ----- -----
Total Operating Expenses 159 159 544
----- ----- -----
LOSS FROM OPERATIONS (159) (159) (544)
Provision for Income Taxes -- -- --
----- ----- -----
NET LOSS $(159) $(159) $(544)
===== ===== =====
Net loss per share - basic and diluted $-- $-- $--
===== ===== =====
Weighted average number of shares
outstanding during the period -
basic and diluted -- -- --
===== ===== =====
See accompanying notes to financial statements.
-24-
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM JULY 6, 2000 (INCEPTION) TO DECEMBER 31, 2002
Accumulated
Deficit
Common Stock Additional During
Paid-In Development
Shares Amount Capital Stage Total
------ ------ ------- ----- -----
In-kind contribution - $ -- $ 226 $-- $ 226
Net loss for the period
from July 6, 2000 (inception)
to December 31, 2000 - -- -- (226) (226)
- ------------- ----- ----- -----
Balance, December 31, 2000 - -- 226 (226) --
In-kind contribution - -- 159 -- 159
Net loss - -- -- (159) (159)
- ------------- ----- ----- -----
Balance, December 31, 2001 - -- 385 (385) --
In-kind contribution - -- 159 -- 159
Net loss - -- -- (159) (159)
- ------------- ----- ----- -----
BALANCE, DECEMBER 31, 2002 - $ -- $ 544 $(544) $--
===== ============= ===== ===== =====
See accompanying notes to financial statements.
-25-
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
For The
Period From
July 6, 2000
For The For The (Inception)
Year Ended Year Ended To
December December December
31, 2002 31, 2002 31, 2002
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(159) $(159) $(544)
Adjustments to reconcile net loss
to net cash used in operating activities:
In-kind contribution 159 159 544
----- ----- -----
Net Cash Used In Operating Activities -- -- --
----- ----- -----
CASH FLOWS FROM INVESTING ACTIVITIES -- -- --
----- -----
CASH FLOWS FROM FINANCING ACTIVITIES -- -- --
----- -----
NET INCREASE IN CASH -- -- --
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD -- -- --
----- ----- -----
CASH AND CASH EQUIVALENTS AT END OF PERIOD $-- $-- $--
===== ===== =====
See accompanying notes to financial statements.
-26-
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
- ------ -----------------------------------------------------------
(A) ORGANIZATION
Direct Casket Delivery and Distribution Corporation (a
development stage company) (the "Company") was incorporated
under the laws of the State of Florida on July 6, 2000. The
Company plans to market caskets through dedicated retail
outlets.
Activities during the development stage include developing the
business plan and raising capital.
(B) USE OF ESTIMATES
In preparing financial statements in conformity with generally
accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and
revenues and expenses during the reported period. Actual
results could differ from those estimates.
(C) INCOME TAXES
The Company accounts for income taxes under the Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("Statement 109"). Under Statement 109, deferred tax
assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date. As of December
31, 2003, the Company has a net operating loss carry forward
of approximately $544 available to offset future taxable
income through 2003. The valuation allowance at December 31,
2002 was $130. The net change in the valuation allowance for
the year ended December 31, 2003 was an increase of $ 54.
(D) LOSS PER SHARE
Basic and diluted net loss per common share is computed based
upon the weighted average common shares outstanding as defined
by Financial Accounting Standards No. 128, "Earnings Per
Share." As of December 31, 2002 and 2001, there were no common
shares or common share equivalents outstanding.
-27-
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001
(E) BUSINESS SEGMENTS
The Company operates in one segment and therefore segment
information is not presented.
(F) NEW ACCOUNTING PRONOUNCEMENTS
In April 2003, the FASB issued SFAS No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging
Activities". SFAS 149 amends and clarifies financial
accounting and reporting for derivative instruments, including
certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging
activities under SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". The changes in SFAS No.
149 improve financial reporting by requiring that contracts
with comparable characteristics be accounted for similarly.
This statement is effective for contacts entered into or
modified after June 30, 2003 and all of its provisions should
be applied prospectively. The adoption of this pronouncement
will not have a material effect on the Company's financial
position or results of operations.
In May 2003, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS")
No. 150, "Accounting For Certain Financial Instruments with
Characteristics of both Liabilities and Equity". SFAS No. 150
changes the accounting for certain financial instruments with
characteristics of both liabilities and equity that, under
previous pronouncements, issuers could account for as equity.
The new accounting guidance contained in SFAS No. 150 requires
that those instruments be classified as liabilities in the
balance sheet.
SFAS No. 150 affects the issuer's accounting for three types
of freestanding financial instruments. One type is mandatorily
redeemable shares, which the issuing company is obligated to
buy back in exchange for cash or other assets. A second type
includes put options and forward purchase contracts, which
involves instruments that do or may require the issuer to buy
back some of its shares in exchange for cash or other assets.
The third type of instruments that are liabilities under this
Statement is obligations that can be settled with shares, the
monetary value of which is fixed, tied solely or predominantly
to a variable such as a market index, or varies inversely with
the value of the issuer's shares. SFAS No. 150 does not apply
to features embedded in a financial instrument that is not a
derivative in its entirety.
-28-
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001
Most of the provisions of SFAS No. 150 are consistent with the
existing definition of liabilities of FASB Concepts Statement
No. 6, "Elements of Financial Statements". The remaining
provisions of this statement are consistent with the FASB's
proposal to revise that definition to encompass certain
obligations that a reporting entity can or must settle by
issuing its own shares. This statement is effective for
financial instruments entered into or modified after May 31,
2003 and otherwise shall be effective at the beginning of the
first interim period beginning after June 15, 2003. The
adoption of this pronouncement will not have a material effect
on the Company's financial position or results of operations.
NOTE 2 STOCKHOLDERS' DEFICIENCY
IN-KIND CONTRIBUTION
During 2002 and 2001, the Incorporator of the Company paid
$159 and $159, respectively, of operating expenses on behalf
of the Company (See Note 3).
NOTE 3 RELATED PARTY TRANSACTIONS
The Incorporator of the Company paid $544 of operating
expenses on behalf of the Company from inception (See Note 2).
NOTE 4 GOING CONCERN
As reflected in the accompanying financial statements, the
Company is in the development stage with no assets or
operations. This raises substantial doubt about its ability to
continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the Company's
ability to raise additional capital and implement its business
plan. The financial statements do not include any adjustments
that might be necessary if the Company is unable to continue
as a going concern.
Management believes that actions presently being taken to
obtain additional funding and implement its strategic plans
provide the opportunity for the Company to continue as a going
concern.
-29-
NOTE 5 SUBSEQUENT EVENTS
(A) ISSUANCE OF COMMON STOCK
During July 2003, the Company issued 15,000,000 shares of
common stock for cash of $30,000 ($0.002 per share).
(B) EMPLOYMENT AGREEMENT
On June 1, 2003, the Company entered into a five-year
employment agreement with an individual to assume the position
of president. The agreement calls for an annual salary of
$104,000 through December 31, 2004 to be accrued and deferred
until the Company has working capital of at least $200,000,
increasing to $156,000 on January 1, 2005 provided that the
Company has working capital of at least $300,000 and annual
revenue of at least $400,000. The agreement calls for annual
increases of 5% after January 1, 2006 for the remaining tern
of the agreement.
-30-
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED FINANCIAL STATEMENTS
AS OF JULY 31, 2003 AND 2002
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE
CONDENSED BALANCE SHEETS AS OF JULY 31, 2003 AND 2002 (UNAUDITED) 32
CONDENSED STATEMENTS OF OPERATIONS FOR THE SEVEN MONTHS ENDED
JULY 31, 2003 AND 2002 AND FOR THE PERIOD FROM JULY 6, 2000
(INCEPTION) TO JULY 31, 2003 (UNAUDITED) 33
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE PERIOD FROM
JULY 6, 2000 (INCEPTION) TO JULY 31, 2003 (UNAUDITED) 34
CONDENSED STATEMENTS OF CASH FLOWS FOR THE SEVEN MONTHS ENDED JULY 31,
2003 AND 2002 AND FOR THE PERIOD FROM JULY 6, 2000 (INCEPTION) TO
JULY 31, 2003 (UNAUDITED) 35
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 36
-31-
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
AS OF JULY 31, 2003 AND 2002
(UNAUDITED)
ASSETS
2003 2002
-------- --------
CURRENT ASSETS
Cash $ 19,600 $ --
-------- --------
Total Current Assets 19,600 --
OTHER ASSETS
Prepaid offering costs 7,500 --
-------- --------
TOTAL ASSETS $ 27,100 $ --
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 18,659 $ --
-------- --------
TOTAL CURRENT LIABILITIES 18,659 --
-------- --------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 120,000,000 shares
authorized, 15,000,000 and -0- shares issued and
outstanding, respectively 15,000 --
Additional paid in capital 15,703 544
Accumulated deficit during development stage (22,262) (544)
-------- --------
Total Stockholders' Equity 8,441 --
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 27,100 $ --
======== ========
See accompanying notes to financial statements.
-32-
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
For The For The For The Period
Seven Months Seven Months From July 6, 2000
Ended Ended (Inception) To
July 31, 2003 July 31, 2002 July 31, 2003
------------- ------------- -------------
OPERATING EXPENSES
General and administrative $ 21,718 $ 159 $ 22,262
------------- ------------- -------------
Total Operating Expenses 21,718 159 22,262
------------- ------------- -------------
LOSS FROM OPERATIONS (21,718) (159) (22,262)
Provision for Income Taxes -- -- --
------------- ------------- -------------
NET LOSS $ (21,718) $ (159) $ (22,262)
============= ============= =============
Net loss per share - basic and diluted $ (0.01) $ -- $ (0.08)
============= ============= =============
Weighted average number of shares outstanding
during the period - basic and diluted 1,562,500 -- 272,727
============= ============= =============
See accompanying notes to financial statements.
-33-
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JULY 6, 2000 (INCEPTION) TO JULY 31, 2003
(UNAUDITED)
Common Stock Additional Accumulated Deficit
Paid-In During Development
Shares Amount Capital Stage Total
---------- ---------- ---------- ---------- ----------
In-kind contribution -- $ -- $ 226 $ -- $ 226
Net loss for the period from July 6,
2000 (inception) to December 31,
2000 -- -- -- (226) (226)
---------- ---------- ---------- ---------- ----------
Balance, December 31, 2000 -- -- 226 (226) --
In-kind contribution -- -- 159 -- 159
Net loss for the year 2001 -- -- -- (159) (159)
---------- ---------- ---------- ---------- ----------
Balance, December 31, 2001 -- -- 385 (385) --
In-kind contribution -- -- 159 -- 159
Net loss for the year 2002 -- -- -- (159) (159)
---------- ---------- ---------- ---------- ----------
Balance, December 31, 2002 -- $ -- $ 544 $ (544) $ --
In-kind contribution -- -- 159 -- 159
Stock issued for cash ($0.002 per share) 15,000,000 15,000 15,000 -- 30,000
Net loss for the seven months ended July 31, 2003 -- -- -- (21,718) (21,718)
---------- ---------- ---------- ---------- ----------
BALANCE, JULY 31, 2003 15,000,000 $ 15,000 $ 15,703 $ (22,262) $ 8,441
========== ========== ========== ========== ==========
See accompanying notes to financial statements.
-34-
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For The For The For The Period
Seven Months Seven Months From July 6, 2000
Ended Ended (Inception) To
July 31, 2003 July 31, 2002 July 31, 2003
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(21,718) $ (159) $(22,262)
Adjustments to reconcile net loss to
net cash used in operating activities:
In-kind contribution 159 159 703
Increase in prepaid offering costs (7,500) -- (7,500)
Increase in accounts payable and accrued expenses 18,659 -- 18,659
-------- -------- --------
Net Cash Used In Operating Activities (10,400) -- (10,400)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES -- -- --
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 30,000 -- 30,000
-------- -------- --------
Net Cash Provided By Financing Activities 30,000 -- 30,000
-------- -------- --------
NET INCREASE IN CASH 19,600 -- 19,600
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD -- -- --
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 19,600 $ -- $ 19,600
======== ======== ========
See accompanying notes to financial statements.
-35-
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JULY 31, 2003 (UNAUDITED)
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
and the rules and regulations of the Securities and Exchange Commission for
interim financial information. Accordingly, they do not include all the
information necessary for a comprehensive presentation of financial position and
results of operations.
It is management's opinion however, that all material adjustments (consisting of
normal recurring adjustments) have been made which are necessary for a fair
financial statements presentation. The results for the interim period are not
necessarily indicative of the results to be expected for the year.
NOTE 2 STOCKHOLDERS' EQUITY
During July 2003, the Company issued 15,000,000 shares of common stock for cash
of $30,000 ($0.002 per share).
-36-
APPENDIX A
SUBSCRIPTION AGREEMENT
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
2401 East Atlantic Boulevard
Pompano Beach, FL 33062
Gentlemen:
The undersigned ("Subscriber") hereby subscribes to purchase the number
of shares (the "Shares") of Direct Casket Delivery and Distribution Corporation,
a Florida corporation (the "Company") indicated on the Signature Page hereof, at
a price of $.04 per share.
1. PAYMENT. Accompanying this subscription is a check for the full
amount of the purchase price, as set forth below, payable to "DON A. PARADISO
ATTORNEY TRUST ACCOUNT".
2. INFORMATION. Subscriber hereby acknowledges receipt of the
Prospectus dated ..................... , 2003, and understands that an
investment in the Company involves a high degree of risk.
3. SUBSCRIBER'S REPRESENTATIONS. Subscriber hereby covenants,
represents and warrants to the Company as follows:
(a) Subscriber's residence is as set forth below.
(b) Subscriber understands that an investment in the Company involves a
high degree of risk, and is able to bear the economic risk of investment in the
Shares.
(c) Subscriber understands that the Company is a new venture, without
operating history, and that there can be no assurance that the Company will
realize any profits.
4. CONDITIONS. Subscriber understands that this subscription is subject
to acceptance by the Company, prior sale of the Shares and termination of the
offering.
5. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without regard to principles
of conflict of laws.
Direct Casket Delivery and Distribution Corporation
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
Number of Shares subscribed for: ____________
Check enclosed ($.04 PER SHARE): $ ____________
(SIGNATURE OF SUBSCRIBER) (PLEASE PRINT NAME; IF SIGNING FOR CORPORATION OR OTHER ENTITY,
PLEASE ALSO PRINT NAME OF ENTITY AND SIGNER)
(IF MORE THAN ONE OWNER, SIGNATURE (SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER)
OF OTHER OWNER)
Please check appropriate box: | Name of any adviser of professional who
[ ] Individually | assisted in making your investment decision:
[ ] Tenants in Common |
[ ] Joint Tenants with Right of Survivorship |
|
|
_____________________, 2003
(EXECUTION DATE)
Subscriber's residence address (PLEASE PRINT): Mailing address if different from
residence address (PLEASE PRINT):
(STREET) (STREET)
(CITY, STATE AND ZIP CODE) (CITY, STATE AND ZIP CODE)
TELEPHONE NO.: TELEPHONE NO.:
-------------------------- ----------------------
================================================================================
Accepted: DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION
Date: by
Don A. Paradiso, PRESIDENT
DIRECT CASKET DELIVERY AND DISTRIBUTION CORPORATION,
2401 East Atlantic Blvd., Pompano Beach, FL 33062
-37-
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 607.0850 of the Florida Business Organizations Article provides
for the indemnification of the company's officers, directors and corporate
employees and agents under the following circumstances:
(1) A corporation shall have power to indemnify any person who
was or is a party or is a party to any proceeding (other than an action
by or in the right of the corporation), by reason of the fact that he
or she is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against
liability incurred in connection with such proceeding, including any
appeal thereof, if he or she acted in good faith and in a manner he or
she reasonably believed to be in, or not opposed to, the best interests
of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he or she reasonably
believed to be in, or not opposed to, the best interests of the
corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
(2) A corporation shall have power to indemnify any person,
who was or is a party or is a party to any proceeding by or in the
right of the corporation to procure a judgment in its favor by reason
of the fact that the person is or was a director, officer, employee, or
agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise,
against expenses and amounts paid in settlement not exceeding, in the
judgment of the board of directors, the estimated expense of litigating
the proceeding to conclusion, actually and reasonably incurred in
connection with the defense or settlement of such proceeding, including
any appeal thereof. Such indemnification shall be authorized if the
person acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the
corporation, except that no indemnification shall be made under this
subsection in respect of any claim, issue ,or matter as to which such
person shall have been adjudged to be liable unless, and only to the
extent that, the court in which such proceeding was brought, or any
other court of competent jurisdiction, shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstance of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which such court shall deem proper.
(3) To the extent that a director, officer, employee, or agent
of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsection (1)
or subsection (2), or in defense of any claim, issue, or matter
therein, he or she shall be indemnified against expenses (including
attorney's fees) actually and reasonably incurred by him or her in
connection therewith.
(4) Any indemnification under subsection (1) or subsection
(2), unless pursuant to a determination by a court, shall be made by
the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee,
or agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in subsection (1) or
subsection (2). Such determination shall be made:
-38-
(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;
(b) If such a quorum is not obtainable or, even if obtainable,
by majority vote of a committee duly designated by the board of
directors (in which directors who are parties may participate)
consisting solely of two or more director not at the time parties to
the proceeding;
(c) By independent legal counsel:
1. Selected by the board of directors prescribed in
paragraph (a) or the committee prescribed in paragraph (b); or
2. If a quorum of the directors cannot be obtained
for paragraph (a) and the committee cannot be designated under
paragraph (b), selected by majority vote of the full board of directors
(in which directors who are parties may participate); or
(d) By the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such proceeding or,
if no such quorum is obtainable, by a majority vote of shareholders who
were not parties to such proceeding.
(5) Evaluation of the reasonableness of expenses and
authorization of indemnification shall be made in the same manner as
the determination that indemnification is permissible. However, if the
determination of permissibility is made by independent legal counsel,
persons specified by paragraph (4)(c) shall evaluate the reasonableness
of expenses and may authorize indemnification.
(6) Expenses incurred by an officer or director in defending a
civil or criminal proceeding may be paid by the corporation in advance
of the final disposition of such proceeding upon receipt of an
undertaking by or on behalf of such director to repay such amount if he
or she is ultimately found not to be entitled to indemnification by the
corporation pursuant to this section. Expenses incurred by other
employees and agents may be paid in advance upon such terms or
conditions that the board of directors deems appropriate.
(7) The indemnification and advancement of expenses provided
pursuant to this section are not exclusive, and a corporation may make
any other or further indemnification or advancement of expenses of any
of its directors, officers, employees, or agents, under any bylaw,
agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in his or her official capacity and as to
action in another capacity while holding such office. However,
indemnification or advancement of expenses shall not be made to or on
behalf of any director, officer, employee, or agent if a judgment or
other final adjudication establishes that his or her actions, or
omissions to act, where material to the cause of action so adjudicated
and constitute:
(a) A violation of criminal law, unless the director, officer,
employee, or agent had reasonable cause to believe his or her conduct
was lawful or had no reasonable cause to believe his or her conduct was
unlawful;
(b) A transaction from which the director, officer, employee,
or agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under which the
liability provisions of s. 607.0834 are applicable; or
(d) Willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or
in the right of a shareholder.
(8) Indemnification and advancement of expenses as provided in
this section shall continue as, unless otherwise provide when
authorized or ratified, to a person who has ceased to be a director,
officer, employee, or agent and shall enure to the benefit of the
heirs, executors, and administrators of such a person, unless otherwise
provided when authorized or ratified.
-39-
(9) Unless a corporation's articles of incorporation provide
otherwise, notwithstanding the failure of a corporation to provide
indemnification, and despite any contrary determination of the board or
the shareholders in the specific case, a director, officer, employee,
or agent of the corporation who is or was a party to a proceeding may
apply for indemnification or advancement of expenses, or both, to the
court conducting the proceeding, to the circuit court, or to another
court of competent jurisdiction. On receipt of an application, the
court, after giving any notice that it considers necessary, may order
indemnification and advancement of expenses, including expenses
incurred in seeking court-ordered indemnification or advancement of
expenses if it determines that:
(a) The director, officer, employee, or agent is entitled to
mandatory indemnification under subsection (3), in which case the court
shall also order the corporation to pay the director reasonable
expenses incurred in seeking court-ordered indemnification or
advancement of expenses;
(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the
exercise by the corporation of its power pursuant to subsection (7); or
(c) The director, officer, employee, or agent is fairly and
reasonably entitle to indemnification or advancement of expense, or
both, in view of all the relevant circumstances, regardless of whether
such person met the standard of conduct set forth in subsection (1),
subsection (2), or subsection (7).
(10) For purposes of this section, the term "corporation"
includes, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation of merger, so that any person who is or was a director,
officer, employee or agent of a constituent corporation, or is or was
serving at the request of a constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust, or other enterprise, is in the same position under this
section with respect to the resulting or surviving corporation as he or
she would have with respect to such constituent corporation if its
separate existence had continued.
(11) For purposes of this section:
(a) The term "other enterprises" includes employee benefit
plans; (b) The term "expenses" includes counsel fees, including those
for appeal;
(c) The term "liability" includes obligations to pay a
judgment, settlement, penalty, fine (including an excise tax assessed
with respect to any employee benefit plan), and expenses actually and
reasonably incurred with respect to a proceeding;
(d) The term "proceeding" includes any threatened, pending, or
completed action, suit, or other type of proceeding, whether civil,
criminal, administrative, or investigative and whether formal or
informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the corporation"
includes any service as a director, officer, employee, or agent of the
corporation that imposes duties on such persons, including duties
relating to an employee benefit plan and its participants or
beneficiaries; and
(g) The term "not opposed to the best interest of the
corporation" describes the actions of a person who acts in good faith
and in a manner he or she reasonably believes to be in the best
interests of the participants and beneficiaries of an employee benefit
plan.
(12) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against the person and
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incurred by him or her in any such capacity or arising out of his or
her status as such, whether or not the corporation would have the power
to indemnify such person against such liability under this section.
Article IV of the company's Articles of Incorporation provides
that "The directors shall be protected from personal liability to the fullest
extent permitted by applicable law."
Article VII of the company's By-laws provides for the
indemnification of the company's officers and directors as follows:
1. RIGHT TO INDEMNIFICATION. The corporation hereby
indemnifies each person (including the heirs, executors,
administrators, or estate of such person) who is or was a director or
officer of the corporation to the fullest extent permitted or
authorized by current or future legislation or judicial or
administrative decision against all fines, liabilities, costs and
expenses, including attorneys' fees, arising out of his or her status
as a director, officer, agent, employee or representative. The
foregoing right of indemnification shall not be exclusive of other
rights to which those seeking an indemnification may be entitled. The
Corporation may maintain insurance, at its expense, to protect itself
and all officers and directors against fines, liabilities, costs and
expenses, whether or not the Corporation would have the legal power to
indemnify them directly against such liability.
2. ADVANCES. Costs, charges and expenses (including attorneys'
fees) incurred by a person referred to in Section 1 of this Article in
defending a civil or criminal proceeding shall be paid by the
Corporation in advance of the final disposition thereof upon receipt of
an undertaking to repay all amounts advanced if it is ultimately
determined that the person is not entitled to be indemnified by the
Corporation as authorized by this Article, and upon satisfaction of
other conditions required by current or future legislation.
3. SAVINGS CLAUSE. If this Article or any portion of it is
invalidated on any ground by a court of competent jurisdiction, the
Corporation nevertheless indemnifies each person described in Section 1
of this Article to the fullest extent permitted by all portions of this
Article that have not been invalidated and to the fullest extent
permitted by law.
The registrant may, at its own expense, maintain insurance to protect
itself and any director, officer, employee or agent of the company against any
such expense, liability or loss, whether or not the company would have the power
to indemnify such person against such expense, liability or loss under the
Florida General Corporation Law.
ITEM 25. EXPENSES OF ISSUANCE AND DISTRIBUTION
The other expenses payable by the Registrant in connection with the
issuance and distribution of the securities being registered are estimated as
follows:
Legal Fees 12,500
Accounting Fees 2,500
Blue Sky Qualification Fees and Expenses 3,000
Miscellaneous 1,350
--------
TOTAL $20,000
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Securities of the registrant sold by it within the past three years
which were not registered under the Securities Act of 1933 appears below.
1. TO FOUNDERS. (a) In July 2003, the registrant issued 7,500,000
shares of its common stock to each of its two founders.
(b) There was no underwriter.
(c) Such shares were issued for cash in the total amount of $30,000.
(d) The above-described transaction was exempt from registration by
virtue of Section 4(2) of the Securities Act of 1933, in that it was a
transaction by an issuer not involving any public offering, there being only two
investors who had access to such information about the registrant as would be
contained in a registration statement.
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EXHIBITS
ITEM 27. EXHIBITS
3.1(a) Articles of Incorporation filed July 7, 2000
3.1(b) Articles of Amendment filed February 22, 2002
3.1(c) Articles of Amendment filed June 6, 2003
3.2 By-Laws
4.1 Specimen Certificate of Common Stock
5.0 Opinion of Counsel as to Legality
10.1 Employment agreement between Registrant and Don A. Paradiso dated
June 1, 2003
21.0 Statement as to Subsidiaries
23.1 Accountant's Consent to Use Opinion
23.2 Counsel's Consent to Use Opinion
ITEM 28. UNDERTAKINGS
The registrant undertakes as follows:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10 (a) (3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the Effective Date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement, including
(but not limited to) any addition or deletion of managing underwriter;
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(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be treated as a
new registration statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to any provisions contained in its Articles of
Incorporation, by-laws, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in Pompano Beach,
Florida., on August ... , 2003.
DIRECT CASKET DELIVERY AND
DISTRIBUTION CORPORATION
BY /S/ DON A. PARADISO
----------------------
Don A. Paradiso, 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/ DON A. PARADISO President (principal executive officer),
- ---------------------------- principal financial and accounting officer
Don A. Paradiso
August 29, 2003
/S/ CHRISTIAN CHIARI Director
- --------------------
Christian Chiari
August 29, 2003
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