As filed with the Securities and Exchange Commission on ______, 2008
Commission File No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
Registration Statement Under
THE SECURITIES ACT OF 1933
QUANTUM INFORMATION, INC.
-------------------------
(Exact name of registrant as specified in charter)
Nevada 7819 26-1749145
- --------------------------- ----------------------- --------------------
(State or other jurisdiction (Primary Standard Classi- (IRS Employer
of incorporation) fication Code Number) I.D. Number)
13414 South 47th Place
Phoenix, AZ 85044
(866) 200-0918
------------------------------------------
(Address and telephone number of principal executive offices)
13414 South 47th Place
Phoenix, AZ 85044
(Address of principal place of business or intended principal place of business)
Joel Klandrud
13414 South 47th Place
Phoenix, AZ 85044
(866) 200-0918
------------------------------------------
(Address and telephone number of principal executive offices)
Copies Of all communications, including all communications sent
to the agent for service, should be sent to:
William T. Hart, Esq.
Hart & Trinen, LLP
1624 Washington Street
Denver, Colorado 80203
303-839-0061
As soon as practicable after the effective date of this Registration Statement
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed
Class of Maximum Maximum
Securities Securities Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share (1) Price Fee
- ---------- ---------- ---------- ---------- -------------
Common Stock (2) 1,260,000 $0.20 $252,000 $10
- ----------------------------------------------------------------------------
(1) Offering price computed in accordance with Rule 457.
(2) Shares of common stock offered by selling shareholders
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 l933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS
QUANTUM INFORMTION, INC.
Common Stock
By means of this prospectus a number of shareholders of Quantum
Information, Inc. are offering to sell up to 1,260,000 shares of Quantum's
common stock at a price of $0.20 per share. If and when Quantum's common stock
becomes quoted on the OTC Bulletin Board, the shares owned by the selling
shareholders may be sold in the over-the-counter market, or otherwise, at prices
and terms then prevailing or at prices related to the then-current market price,
or in negotiated transactions.
Quantum will not receive any proceeds from the sale of the common stock by
the selling stockholders. Quantum will pay for the expenses of this offering
which are estimated to be $35,000, of which approximately $20,000 has been paid
as of the date of this prospectus.
As of the date of this prospectus there was no public market for Quantum's
common stock. Although Quantum plans to have its shares quoted on the OTC
Bulletin Board, Quantum may not be successful in establishing any public market
for its common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. FOR A
DESCRIPTION OF CERTAIN IMPORTANT FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" BEGINNING ON PAGE 2 OF THIS
PROSPECTUS.
The date of this prospectus is July __, 2008.
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PROSPECTUS SUMMARY
Quantum was incorporated in Nevada on May 19, 2005.
Quantum plans to be involved in the production and distribution of motion
pictures, documentaries, commercials, training films and other forms of visual
entertainment. As of June 30, 2008 Quantum had not commenced operations.
Quantum's offices are located at 13414 South 47th Place, Phoenix, AZ
85044. Quantum's telephone number is (866) 200-0918 and its facsimile number is
(772) 679-6287.
As of June 30, 2008 Quantum had 2,860,000 outstanding shares of common
stock.
Quantum does not have a website. Quantum is not a blank check company
required to comply with Rule 419 of the Securities and Exchange Commission.
Forward Looking Statements
This Prospectus contains various forward-looking statements that are based
on Quantum's beliefs as assumptions made by and information currently available
to Quantum. When used in this Prospectus, the words "believe", "expect",
"anticipate", "estimate" "intend", "project", "predict" and similar expressions
are intended to identify forward-looking statements. These statements may
involve projections, capital requirements, operating expenses, and the like, and
are subject to certain risks, uncertainties and assumptions which could cause
actual results to differ materially from projections or estimates. Factors which
could cause actual results to differ materially are discussed at length under
the heading "Risk Factors". Should one or more of the enumerated risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected. Investors should not place undue reliance on forward-looking
statements, all of which speak only as of the date made.
The Offering
By means of this prospectus a number of Quantum's shareholders are
offering to sell up to 1,260,000 shares of its common stock at a price of $.20
per share. If and when Quantum's common stock becomes quoted on the OTC Bulletin
Board or listed on a securities exchange, the shares owned by the selling
shareholders may be sold in the over-the-counter market, or otherwise, at prices
and terms then prevailing or at prices related to the then-current market price,
or in negotiated transactions.
The purchase of the securities offered by this prospectus involves a high
degree of risk. Risk factors include the lack of any relevant operating history,
losses since Quantum was incorporated, and the possible need for Quantum to sell
shares of its common stock to raise additional capital. See "Risk Factors"
beginning on page 2 of this prospectus for additional Risk Factors.
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RISK FACTORS
The securities being offered involve a high degree of risk. Prospective
investors should consider the following risk factors which affect Quantum's
business and this offering. These risk factors discuss all material risks which
pertain to an investment in Quantum's common stock. If any of the risks
discussed below materialize, Quantum's common stock could decline in value or
become worthless.
Risk Factors Related to Quantum's Business.
Quantum has not commenced operations and may never be profitable. Quantum has
not commenced operations, does not have any revenue and expects to incur losses
during the foreseeable future. As a result of Quantum's lack of any operating
history, it is difficult for potential investors to evaluate its business. There
can be no assurance that Quantum will be profitable or that the shares which may
be sold in this offering will have any value.
The motion picture/television/visual entertainment industry is highly
speculative and inherently risky for the following reasons:
o The motion picture industry is highly competitive. In the production phase,
competition will affect Quantum's ability to obtain the services of
preferred performers and other creative personnel. Quantum will be
competing with the producers of other films in arranging for distribution
in the domestic theatrical marketplace and in other markets and media.
Quantum's projects will be competing directly with other motion pictures
and indirectly with other forms of public entertainment. Quantum will
compete with numerous larger motion picture production companies and
distribution companies which have substantially greater resources.
o Many films are released each year that are not commercially successful and
fail to recoup their production costs from United States theatrical
distribution. Foreign and ancillary markets have therefore become
increasingly important. Although both foreign and ancillary markets have
grown, neither provides a guarantee of revenue. Licensing of a motion
picture in the ancillary markets is particularly dependent upon performance
in theatrical distribution. If a motion picture is not an artistic or
critical success or if, for any reason, it is not well-received by the
public, it will likely be a financial failure.
o The ultimate profitability of any motion picture depends upon its audience
appeal in relation to the cost of its production and distribution. The
audience appeal of a given motion picture depends, among other things, on
unpredictable critical reviews and changing public tastes which cannot be
anticipated with certainty.
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o The production or distribution of a project may be abandoned at any stage
if further expenditures do not appear commercially feasible, with the
resulting loss of some or all of the funds previously expended on the
development, production or distribution of the project, including funds
expended in connection with the development of the screenplay and other
pre-production aspects.
o The costs of producing motion pictures are often underestimated and may be
increased by factors beyond the control of the producers. The factors may
include weather conditions, illness of technical and artistic personnel,
artistic requirements, labor disputes, governmental regulations, equipment
breakdowns and other production disruptions. While Quantum intends to
engage production personnel who have demonstrated an ability to complete
films within an assigned budget, the risk of a film running over budget is
always significant and may have a substantial adverse impact on the
profitability of a project.
o The profitable distribution of a motion picture, program or other project
depends in large part on the availability of one or more capable and
efficient distributors who are able to arrange for appropriate advertising
and promotion, proper release dates and bookings theaters. Quantum
presently has no distribution arrangements and there can be no assurance
that profitable distribution arrangements will be obtained, or that
Quantum's projects can or will be distributed profitably.
o Foreign distribution of a motion picture (i.e., outside the United States
and Canada) may require the use of foreign distributors. Some foreign
countries impose government regulations on the distribution of films. Also
revenues derived from the distribution of a project in foreign countries,
if any, may be subject to currency controls and other restrictions that may
delay the receipt of revenue from the project.
The failure of Quantum to obtain capital may significantly restrict Quantum's
proposed operations. To enable Quantum to continue in business Quantum will
eventually need to earn a profit or obtain additional financing until Quantum is
able to earn a profit. Quantum does not know what the terms of any future
capital raising may be but any future sale of Quantum's equity securities would
dilute the ownership of existing stockholders and could be at prices
substantially below the price of the shares of common stock sold in this
offering. The failure of Quantum to obtain the capital which it requires will
result in the slower implementation of Quantum's business plan or its inability
of Quantum to implement its business plan. There can be no assurance that
Quantum will be able to obtain any capital which it will need.
Quantum will not receive any proceeds from the sale of the shares offered
by the selling shareholders.
Since Quantum's officer plans to devote only a portion of his time to Quantum's
business, its chances of being profitable will be less than if it had full time
management. As of the date of this prospectus Quantum had only one officer who
is involved with other business endeavors which could take precedence over the
officer's duties to Quantum.
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Risks Related to This Offering
As of the date of this prospectus there was no public market for Quantum's
common stock and if no public market develops, purchasers of the shares offered
by this prospectus may be unable to sell their shares. If purchasers are unable
to sell their shares, purchasers may never be able to recover any amounts which
they paid for Quantum's shares.
Because there is no public market for Quantum's common stock, the price for its
shares was arbitrarily established, does not bear any relationship to Quantum's
assets, book value or net worth, and may be greater than the price which
investors in this offering may receive when they resell their shares.
Accordingly, the offering price of Quantum's common stock should not be
considered to be any indication of the value of its shares. The factors
considered in determining the offering price included Quantum's future prospects
and the likely trading price for its common stock if a public market ever
develops.
Should a market for Quantum's common stock ever develop, disclosure requirements
pertaining to penny stocks may reduce the level of trading activity in the
market for Quantum's common stock and investors may find it difficult to sell
their shares. If a market ever develops for the common stock of Quantum, trades
of its common stock will be subject to Rule 15g-9 of the Securities and Exchange
Commission, which rule imposes certain requirements on broker/dealers who sell
securities subject to the rule to persons other than established customers and
accredited investors. For transactions covered by the rule, brokers/dealers must
make a special suitability determination for purchasers of the securities and
receive the purchaser's written agreement to the transaction prior to sale. The
Securities and Exchange Commission also has rules that regulate broker/dealer
practices in connection with transactions in "penny stocks". 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 the
NASDAQ system, provided that current price and volume information with respect
to transactions in that security is provided by the exchange or system). The
penny stock rules require a broker/ dealer, prior to a transaction in a penny
stock not otherwise 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. The bid and
offer quotations, and the broker/dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to making
a purchase or sale and must be given to the customer in writing before or with
the customer's confirmation.
DILUTION AND COMPARATIVE SHARE DATA
As of April 30, 2008 Quantum had 2,860,000 outstanding shares of common
stock, which had a net tangible book value of $0.03 per share. These shares were
sold for cash of $122,998.
The following table illustrates per share dilution and the comparative
stock ownership of Quantum's stockholders as compared to the investors in this
offering, assuming all shares offered by this prospectus are sold.
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Shares outstanding as of April 30, 2008 2,860,000
Shares offered by selling shareholders 1,260,000
Net tangible book value per share at as of April 30, 2008 $0.03
Offering price, per share $0.20
Dilution to purchasers of shares offered by this prospectus $0.17
Equity ownership by purchasers of shares offered by this prospectus 44%
The following table shows the cash amount paid by the present shareholders
of Quantum for their shares of Quantum's common stock:
Name Price Paid Per Share
Officers and Directors $0.01
Investors in private offering $0.10 CDN$
MARKET FOR QUANTUM'S COMMON STOCK.
Quantum's common stock is not quoted on any exchange and there is no
public trading market.
As of June 30, 2008, Quantum had 2,860,000 outstanding shares of common
stock and 55 shareholders. Quantum does not have any outstanding options,
warrants or other arrangements providing for the issuance of additional shares
of its capital stock.
All of the outstanding shares of Quantum are restricted securities and if
not sold by means of this prospectus may be sold in accordance with Rule 144 of
the Securities and Exchange Commission beginning three months after the date of
this prospectus.
Holders of common stock are entitled to receive dividends as may be
declared by the Board of Directors. Quantum's Board of Directors is not
restricted from paying any dividends but is not obligated to declare a dividend.
No dividends have ever been declared and it is not anticipated that dividends
will ever be paid.
Quantum's Articles of Incorporation authorize its Board of Directors to
issue up to 10,000,000 shares of preferred stock. The provisions in the Articles
of Incorporation relating to the preferred stock allow Quantum's directors to
issue preferred stock with multiple votes per share and dividend rights which
would have priority over any dividends paid with respect to the holders of
Quantum's common stock. The issuance of preferred stock with these rights may
make the removal of management difficult even if the removal would be considered
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beneficial to shareholders generally, and will have the effect of limiting
shareholder participation in certain transactions such as mergers or tender
offers if these transactions are not favored by Quantum's management.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AND PLAN OF OPERATION
The following discussion of financial condition and results of operations
should be read in conjunction with the consolidated financial statements and the
notes to the consolidated financial statements, which are included elsewhere in
this prospectus.
Quantum was incorporated on May 19, 2005. As of the date of this
prospectus Quantum had only recently commenced operations.
Between January and March 2008 Quantum sold 1,060,000 shares of its common
stock, at a price of $.10 CDN per share, to a group of private investors.
As of the date of this prospectus Quantum had cash on hand of
approximately $65,000.
Quantum's plan of operation is described in more detail in the "Business"
section of this prospectus.
Other than the matters discussed in the Risk Factors section of this
prospectus, Quantum does not know of any trends, events or uncertainties that
have had or are reasonably expected to have a material impact on Quantum'
operations or financial condition.
Quantum's future plans will be dependent upon the amount of capital
Quantum is able to raise. Quantum may attempt to raise additional capital
through the private sale of its equity securities or borrowings from third party
lenders. Quantum does not have any commitments or arrangements from any person
to provide Quantum with any additional capital. If additional financing is not
available when needed, Quantum may cease operations. Quantum does not have any
plans, arrangements or agreements to sell its assets or to merge with another
entity.
As of April 30, 2008 and the date of this prospectus, Quantum did not have
any material capital commitments, other than funding its operating losses.
Quantum's significant accounting policies are discussed in Note 2 to its
financial statements included as part of this prospectus.
PROPOSED BUSINESS
Quantum plans to be engaged in the production, distribution and marketing
of filmed entertainment products, including theatrical motion pictures,
television programs, home video products, and digitally delivered entertainment
and media.
The theatrical motion picture industry in the United States has changed
substantially over the last three decades and continues to evolve rapidly.
Historically, the "major studios" financed, produced and distributed the vast
majority of American-made motion pictures. During the most recent decade, many
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of the motion pictures released have been produced by so-called "independent"
producers even though some of the production financing for films and
distribution funds have been provided by the major studio/distributors.
Technological developments have resulted in the availability of
alternative forms of leisure time entertainment, including expanded pay and
basic cable television, syndicated television, video cassettes, video discs,
digital video disks (DVDs) and video games. During the last several years,
revenues from licensing of motion pictures to network television have decreased
(and fewer films are now being licensed for any price to network television),
while revenues from pay television, DVDs and the internet have increased.
Quantum will attempt to produce films, programs and other visual media
projects at the lowest possible cost consistent with the quality that it seeks
to achieve. Quantum plans to avoid the substantial overhead of major studios by
maintaining only a small administrative staff and engaging production staff only
as required.
As of the date of this prospectus, Quantum has purchased commercial grade
digital camera equipment and was working with several production companies on a
work-for-hire basis.
Revenue Sources
Quantum expects to derive revenue from the exploitation of entertainment
properties across multiple media and distribution channels. Quantum expects to
receive revenue from all of the following sources on a project-by-project basis:
o Producer and production fees for services in the creation and production of
motion pictures, television programs and other visual media;
o Royalties from future earnings of the projects that Quantum may develop or
produce;
o Royalty payments from merchandising consumer products bearing the logos,
brands, and other forms of intellectual property from Quantum's films,
television programs and other visual media; and
o Royalties and license payments from exploitation of soundtrack and music
publishing rights for music from Quantum's films, television programs and
archives.
The distribution channels associated with these revenue streams are
discussed below:
Theatrical Distribution and Exhibition
Once a film or program has been completed, planning the theatrical
release schedule begins. Numerous negotiations and strategic issues must be
managed, including the film's release date, distribution pattern and number of
screens (wide release, limited release or platform release) and exhibitor
(theater and theater chain) financial terms.
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Theatrical revenues are divided between the distributor and the theater
owners (exhibitors). The division of theatrical proceeds is usually determined
through negotiation between the exhibitors and distributors.
"Film rentals" are the portion of a film's theatrical revenues remitted
to a distributor. As a general rule of thumb, a distributor receives 50% of a
film's gross theatrical revenues. However, the actual division of box-office
proceeds is based upon a formula in which the distributor gets a
disproportionate share of the box-office in the early release of a film.
Therefore, theater exhibitors prefer long-running successful films, as opposed
to films that have big opening weekends and subsequently have substantial
drop-offs.
Whether a film has been financed by a studio or has been acquired from an
outside source for distribution, the studio receives a distribution fee. A
distribution fee is a percentage charge on incoming film rentals from theaters,
video revenues, pay television, etc. The fee is designed to support the
existence of the distribution organization and does not apply toward the
recovery of any expenses related to releasing the film (such as prints and
advertising). Deductions for direct costs of marketing a film are made after the
imposition of the fee. The amount of the distribution fee can vary substantially
depending upon many factors. The most important factor in determining the amount
of the fee is whether the film has been financed internally or externally.
Home Video - Video Cassette and DVD
As the market has matured, video revenues have become the most
significant and consistent source of income for producers and distributors.
During the past several years, an increasing number of motion pictures and
programs are bypassing theatrical distribution and are being released directly
to the home video market.
Pay-Per-View and Video on Demand
Pay-per-view refers to films shown on television which subscribers can
order through their local cable operators. Additionally, with the rise of
technology and other digital distribution platforms, Pay-Per-View can also occur
via satellite and Internet delivery methods.
Pay Cable
Pay cable refers to individual cable stations that have a monthly
subscription fee, such as HBO, Showtime, The Movie Channel, Cinemax, Starz and
Encore. Pay cable programming is comprised primarily of three facets:
o Movies licensed from studios and independent distributors;
o Pay cable premiere movies that are shown for the first time on the pay
cable service. These movies are both financed and produced by the cable
network itself or licensed from independent producers;
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o Special events, such as sporting events and concerts.
Basic Cable
Basic cable refers to a group of cable stations that are generally
included in a basic cable package, such as THE SUNDANCE CHANNEL, THE INDEPENDENT
FILM CHANNEL, TNT, TBS, LIFETIME, USA, and others. Basic cable stations, like
the pay cable stations, are now producing a significant number of their own
projects.
Network Television
In the United States, broadcast network rights are granted to ABC, CBS,
NBC, FOX, UPN, WB and other entities formed to distribute programming to a large
group of stations. The commercial television networks license motion pictures
and other programming for a limited number of exhibitions during a period that
usually commences two to three years after a project's initial theatrical
release.
Television Syndication
Quantum may license the right to broadcast a motion picture on local,
commercial television stations in the United States, usually for a period
commencing five years after initial theatrical release of the project, but
earlier if the producer has not entered into a commercial television network
license. These contracts are usually for between five to eight showings of a
film extending over a period of 3 to 5 years. This activity, known as
"syndication," has become an important source of revenue as the number of
stations has proliferated, and thus the competition for programming among local
television stations has increased.
Foreign Distribution and Exhibition
All of the major American distributors (i.e. Warner Brothers, Universal,
etc.) have distribution networks in the major overseas countries. However, each
foreign country has its own local and independent distribution companies that
not only distribute local product, but also compete against the local branch of
the major studios for independently financed films.
Competition
The sale and distribution of filmed entertainment is highly competitive.
The entertainment industry consists of major film distributors/studios such as:
Sony Pictures, Paramount, Twentieth Century Fox, Warner Brothers, The Walt
Disney Company, and Universal. Today, the major studios are multi-national,
multi-media and mass marketing communication complexes with wholly owned
distribution operations throughout the world. In addition to these majors, there
are numerous independent production and distribution companies. Many of
Quantum's competitors are larger and better capitalized than Quantum and have
existing distribution channels. In addition, the number of films or television
products released in any given period may create an oversupply of product in the
market, and that may reduce Quantum's share of potential sales and make it more
difficult for Quantum's products to succeed.
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Quantum believes that the principal competitive factors in its market are
the quality of the entertainment product and brand recognition.
Plan of Operation
As its first project, Quantum will attempt to produce a short (45 minutes)
motion picture.
The production of a motion picture usually involves four steps:
development, pre-production, production and post-production. During development,
the screenplay is commissioned or acquired. The screenplay may be adapted from
an existing work acquired by the producer or developed as an original screenplay
having its origin in a story line or scenario conceived or acquired by the
producer. In the development phase, the producer typically seeks production
financing and tentative commitments from a director, the principal cast members
and other creative personnel. A proposed production schedule and budget are also
prepared during this phase.
Upon completing the screenplay and arranging financing, pre-production of
the motion picture begins. In this phase, the producer engages creative
personnel to the extent not previously committed; finalizes the filming
schedules and production budget; obtains insurance and secures completion
guaranties, if necessary; establishes filming locations and secures any
necessary studio facilities and stages, and prepares for the start of actual
filming.
The production phase begins when principal photography begins and
continues until completion of principal photography, generally less than a
period of three months.
Following completion of principal photography in the post-production
phase, the motion picture is edited, opticals, dialogue, music and any special
effects are added, and voice, effects and music sound tracks and pictures are
synchronized. This results in the production of the negative from which release
prints of the motion picture are made.
Production costs consist of acquiring or developing the screenplay, film
studio rental, principal photography, post-production and the compensation of
creative and other production personnel.
After the motion picture has been completed Quantum will attempt to
distribute the film in the United States and in the international market, either
directly or through other distribution companies. The distribution of films and
programs is accomplished by marketing them to exhibitors in trade shows and by
other direct marketing methods. Distribution agreements typically provide that
the distributor will pay the print and advertising costs incurred in marketing
the films, and will in return receive reimbursement of its costs from the first
gross revenue or net profits interest in the film. Film distributors may give
minimum guarantees for sales volumes and commit to pay a minimum amount
regardless of actual sales. Foreign distributors often pay a fixed price up
front and collect all gross revenues from the exhibition of the film in their
territory for their own account.
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Once the motion picture has had a theatrical release, it can be
distributed to television stations, cable television operators and home video
sales and rental companies. In this regard, and to the extent feasible, Quantum
intends to retain the distribution rights to all ancillary distribution
channels.
The estimated costs to produce this motion picture are as follows:
Script acquisition and development $ 15,000
Purchase of filmmaking equipment 85,000
Purchase of post production computers and software 15,000
Production expenses 100,000
Marketing 5,000
-----------
$220,000
Quantum will attempt to fund the costs of producing the motion picture
through internal sources, the sale of its securities or through licensing or
pre-selling the film to various distribution channels.
As of the date of this prospectus Quantum had cash of approximately
$65,000.
As of the date of this prospectus Quantum had not specified a subject or
selected a screenplay for its first project.
General
Quantum's offices are located at 13414 South 47th Place, Phoenix, AZ 85044. The
750 square feet of office space is occupied under a lease requiring rental
payments of $1,500 per month until January 1, 2009.
As of June 30, 2008 Quantum did not have any full time employees.
MANAGEMENT
Quantum's officers and directors are listed below. Quantum's directors are
generally elected at the annual shareholders' meeting and hold office until the
next annual shareholders' meeting or until their successors are elected and
qualified. Quantum's executive officers are elected by its board of directors
and serve at its discretion.
Name Age Position
Joel Klandrud 43 President, Principal Financial Officer, Principal
Accounting Officer and a Director
Sandra Dosdall 39 Director
The following is a brief description of the business background of
Quantum's officers and directors.
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Joel Klandrud has been a director of Quantum since its inception and has been an
officer of Quantum since January 2008. Since January 1998 until the present time
Mr. Klandrud has been self employed as an Internet consultant and marketing
strategist. Mr. Klandrud's degree is in Marketing from Arizona State University.
Mr. Klandrud also studied film production at the Scottsdale College in Arizona
which has a nationally renowned film program from June of 2004 to May of 2006.
Mr. Klandrud has won awards for his short films including best picture and best
cinematography. Mr. Klandrud completed his first feature length film as Director
of Photography in June 2008.
Sandra Dosdall has been an officer of Quantum since January 2008. Since July
2005 Mrs. Dosdall has been a Capital Management Consultant with Futures
Investment Corp. Since August 2003 Mrs. Dosdall has been a Director and the Head
of Administration for Dosdall Properties, a real estate firm. Mrs. Dosdall has
previously held consulting positions with Prestwick Captial Management (January
2005 to August 2006). Between July 2002 and March 2005, Mrs. Dosdall was
Director of Adminstration for Data Signal International, a firm involved with
currency exchange software development, where she managed all aspects of
customer service, training, technical support, quality control, inventory and
human resources.
Quantum does not have a compensation committee. Quantum's Directors serve
as its Audit Committee. Quantum does not have a financial expert. Mr. Klandrud
and Ms. Dosdall are not independent as that term is defined Section 121(A) of
the Listing Standards of the American Stock Exchange.
Executive Compensation.
The following table shows the compensation paid or accrued to Quantum's
officers during the period presented. Since Quantum's inception, no officer has
received compensation in excess of $100,000.
All Other
Annual
Stock Option Compen-
Name and Principal Fiscal Salary Bonus Awards Awards sation
Position Year (1) (2) (3) (4) (5) Total
- ------------------ ----- ------ ----- ------ ----- --------- -----
Joel Klandrud, 2008 -- -- -- -- -- --
President since
January 8, 2008
(1) The dollar value of base salary (cash and non-cash) earned.
(2) The dollar value of bonus (cash and non-cash) earned.
(3) During the periods covered by the table, the value of Quantum's shares
issued as compensation for services to the persons listed in the table.
(4) The value of all stock options granted during the periods covered by the
table.
(5) All other compensation received that Quantum could not properly report in
any other column of the table.
Stock Options. Quantum has not granted any stock options and does not have
any stock option plans in effect as of the date of this prospectus. In the
future, Quantum may grant stock options to its officers, directors, employees or
consultants.
13
Long-Term Incentive Plans. Quantum does not provide its officers or
employees with pension, stock appreciation rights, long-term incentive or other
plans and has no intention of implementing any of these plans for the
foreseeable future.
Employee Pension, Profit Sharing or other Retirement Plans. Quantum does
not have a defined benefit, pension plan, profit sharing or other retirement
plan, although it may adopt one or more of such plans in the future.
Compensation of Directors. Quantum's directors do not receive any
compensation pursuant to any standard arrangement for their services as
directors.
The following shares the compensation Quantum plans to pay its officer
during the twelve months ended July 31, 2009 and the amount of time this person
plans to devote to Quantum's business.
% of Time
Proposed to be Devoted to
Name Compensation Quantum's Business
Joel Klandrud $2,000/Mo. 50%
Sandra Dosdall (1) $1,000/Mo. 30%
(1) Although not an officer, Mrs. Dosdall will be providing administrative
services to Quantum.
Quantum does not have any employment agreements with its officers or
employees. Quantum does not maintain any keyman insurance on the life or in the
event of disability of any of its officers.
Transactions with Related Parties and Recent Sales of Securities
The following lists all shares of Quantum's common stock which have been
sold since its incorporation:
Consideration
Shareholder Date of Sale Shares Sold Paid for Shares
Joel Klandrud 1-10-08 900,000 $9,000
Sandra Dosdall 1-10-08 900,000 $9,000
Private Investors 1-20-08 1,060,000 CDN$0.10 per share
PRINCIPAL SHAREHOLDERS
The following table shows the ownership of Quantum's common stock as of the
date of this prospectus by each shareholder known by Quantum to be the
14
beneficial owner of more than 5% of Quantum's outstanding shares, each director
and executive officer and all directors and executive officers as a group.
Except as otherwise indicated, each shareholder has sole voting and investment
power with respect to the shares they beneficially own.
Name and Address Number of Shares Percent of Class
Joel Klandrud 900,000 31%
Sandra Dosdall 900,000 31%
By means of this prospectus, Mr. Klandrud and Ms. Dosdall plan to sell a
portion of their shares. See "Selling Shareholders" below for more information.
SELLING SHAREHOLDERS
The persons listed in the following table plan to offer the shares shown
opposite their respective names by means of this prospectus. The owners of the
shares to be sold by means of this prospectus are referred to as the "selling
shareholders". With the exception of Joel Klandrud and Sandra Dosdall the
selling shareholders acquired their shares from Quantum in private transactions
for cash at a price of $0.10 CDN per share. Mr. Klandrud and Ms. Dosdall
acquired their shares for cash at a price of $0.01 per share.
Quantum will not receive any proceeds from the sale of the shares by the
selling shareholders. Quantum will pay all costs of registering the shares
offered by the selling shareholders. These costs, based upon the time related to
preparing this section of the prospectus, are estimated to be $2,000. The
selling shareholders will pay all sales commissions and other costs of the sale
of the shares offered by them.
Shares to Share
Be Sold Ownership
Shares in this After Percentage
Name Owned Offering Offering Ownership
Joel Klandrud 900,000 100,000 800,000 28%
Sandra Dosdall 900,000 100,000 800,000 28%
Brandon Antonini 15,000 15,000 -- --
Chad Armstrong 20,000 20,000 -- --
Jill Babcock 20,000 20,000 -- --
Brad Babcock 20,000 20,000 -- --
Bill Boswell 5,000 5,000 -- --
Aaron Cain 20,000 20,000 -- --
Aaron Cain Professional Corp. 20,000 20,000 -- --
Candice Cain 20,000 20,000 -- --
Billy Campbell 20,000 20,000 -- --
Mary Campbell 20,000 20,000 -- --
Charles Critchley
Professional Corp. 20,000 20,000 -- --
Gerry Collinge 20,000 20,000 -- --
Mike Collinge 20,000 20,000 -- --
Chad Ewaniuk 10,000 10,000 -- --
15
Shares to Share
Be Sold Ownership
Shares in this After Percentage
Name Owned Offering Offering Ownership
Matt Fell 20,000 20,000 -- --
Kerri Fell 20,000 20,000 -- --
John Fife 10,000 10,000 -- --
Paul Fisher 20,000 20,000 -- --
Gerry Franco 40,000 40,000 -- --
Cheter Godfrey 20,000 20,000 -- --
Dale Hutton 20,000 20,000 -- --
Hymark Field Consulting 40,000 40,000 -- --
Wade Klimpke 20,000 20,000 -- --
Klimpke Holdings LTD 20,000 20,000 -- --
Terence Laverty 15,000 15,000 -- --
Derrick Lewis 5,000 5,000 -- --
Brad Lindemann 15,000 15,000 -- --
Noel Lumsden 20,000 20,000 -- --
Jennifer Macfawn 15,000 15,000 -- --
Brian Mattis 20,000 20,000 -- --
Brian Mcrae 15,000 15,000 -- --
Michelle Morgan 20,000 20,000 -- --
Tamara Normand 10,000 10,000 -- --
Dean Ocanica 20,000 20,000 -- --
Jay Park 20,000 20,000 -- --
John Reeves 20,000 20,000 -- --
Linda Reeves 20,000 20,000 -- --
Scott Reeves 40,000 40,000 -- --
Brad Rourke 50,000 50,000 -- --
Rubix Investment Solutions 20,000 20,000 -- --
Shushwap Adventures 5,000 5,000 -- --
Tara Smith 20,000 20,000 -- --
Michael Steen 20,000 20,000 -- --
Greg Terriff 15,000 15,000 -- --
Tyler J Optometric Corp. 20,000 20,000 -- --
Urban Core Finishing 20,000 20,000 -- --
Desiree Verstoep 5,000 5,000 -- --
Trevor Warrener 20,000 20,000 -- --
Cori Warrener 20,000 20,000 -- --
Nolan Weir 20,000 20,000 -- --
1047081 Alberta Ltd 15,000 15,000 -- --
1136351 Alberta LTD 30,000 30,000 -- --
1245339 Alberta Ltd 30,000 30,000 -- --
1248176 Alberta Ltd 15,000 15,000 -- --
The controlling persons of the non-controlling individual selling
shareholders are:
16
Name of Shareholder Controlling Person
Aaron Cain Professional Corp. Aaron Cain
Charles Critchley Professional Corp. Charles Critchley
Hymark Field Consulting Jerry Franco
Klimpke Holdings Ltd. Wade Klimpke
Rubix Investment Solutions Paul Fisher
Shushwap Adventures Mike Collinge
Tyler J Optometric Corp. Tyler Degelman
Urban Core Finishing Michael Collinge
1047081 Alberta Ltd Brandon Antonini
1136351 Alberta Ltd Guy Terriff
1245339 Alberta Ltd Michael Steen
1248176 Alberta Ltd Kyle Hansen
No selling shareholder has, or had, any material relationship with
Quantum, or Quantum's officers or directors. To Quantum's knowledge, no selling
shareholder is affiliated with a broker dealer.
Manner of Sale.
The shares of common stock owned by the selling shareholders may be
offered and sold by means of this prospectus from time to time as market
conditions permit. Since as of the date of this prospectus no market exists for
Quantum's common stock, sales by the selling shareholders, until Quantum's
common stock becomes quoted on the OTC Bulletin Board or listed on a securities
exchange, will be made at a price of $.20 per share. If and when Quantum's
common stock becomes quoted on the OTC Bulletin Board or listed on a securities
exchange, the shares owned by the selling shareholders may be sold in the
over-the-counter market, or otherwise, at prices and terms then prevailing or at
prices related to the then-current market price, or in negotiated transactions.
These shares may be sold by one or more of the following methods, without
limitation:
o a block trade in which a broker or dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o face-to-face transactions between sellers and purchasers without a
broker/dealer.
In competing sales, brokers or dealers engaged by the selling shareholders
may arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from selling shareholders in amounts to be
17
negotiated. As to any particular broker-dealer, this compensation might be in
excess of customary commissions. Neither Quantum nor the selling stockholders
can presently estimate the amount of such compensation. Notwithstanding the
above, no NASD member will charge commissions that exceed 8% of the total
proceeds from the sale.
The selling shareholders and any broker/dealers who act in connection with
the sale of the shares may be deemed to be "underwriters" within the meaning of
ss.2(11) of the Securities Acts of 1933, and any commissions received by them
and any profit on any resale of the shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.
If any selling shareholder enters into an agreement to sell his or her
shares to a broker-dealer as principal, and the broker-dealer is acting as an
underwriter, Quantum will file a post-effective amendment to the registration
statement, of which this prospectus is a part, identifying the broker-dealer,
providing required information concerning the plan of distribution, and
otherwise revising the disclosures in this prospectus as needed. Quantum will
also file the agreement between the selling shareholder and the broker-dealer as
an exhibit to the post-effective amendment to the registration statement.
The selling stockholders may also sell their shares pursuant to Rule 144
under the Securities Act of 1933.
Quantum has advised the selling shareholders that they and any securities
broker/dealers or others who may be deemed to be statutory underwriters will be
subject to the prospectus delivery requirements under the Securities Act of
1933. Quantum has also advised each selling shareholder that in the event of a
"distribution" of the shares owned by the selling shareholder, such selling
shareholder, any "affiliated purchasers", and any broker/dealer or other person
who participates in the distribution may be subject to Rule 102 of Regulation M
under the Securities Exchange Act of 1934 ("1934 Act") until their participation
in that distribution is completed. Rule 102 makes it unlawful for any person who
is participating in a distribution to bid for or purchase stock of the same
class as is the subject of the distribution. A "distribution" is defined in Rule
102 as an offering of securities "that is distinguished from ordinary trading
transactions by the magnitude of the offering and the presence of special
selling efforts and selling methods". Quantum has also advised the selling
shareholders that Rule 101 of Regulation M under the 1934 Act prohibits any
"stabilizing bid" or "stabilizing purchase" for the purpose of pegging, fixing
or stabilizing the price of the common stock in connection with this offering.
DESCRIPTION OF SECURITIES
Common Stock
Quantum is authorized to issue 75,000,000 shares of common stock. As of
the date of this prospectus Quantum had 2,860,000 outstanding shares of common
stock. Holders of common stock are each entitled to cast one vote for each share
held of record on all matters presented to shareholders. Cumulative voting is
not allowed; hence, the holders of a majority of the outstanding common stock
can elect all directors.
18
Holders of common stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available for dividends
and, in the event of liquidation, to share pro rata in any distribution of
Quantum's assets after payment of liabilities. The Board of Directors is not
obligated to declare a dividend and it is not anticipated that dividends will
ever be paid.
Holders of common stock do not have preemptive rights to subscribe to
additional shares if issued by Quantum. There are no conversion, redemption,
sinking fund or similar provisions regarding the common stock. All of the
outstanding shares of common stock are fully paid and non-assessable and all of
the shares of common stock offered by this prospectus will be, upon issuance,
fully paid and non-assessable.
Preferred Stock
Quantum is authorized to issue 10,000,000 shares of preferred stock.
Shares of preferred stock may be issued from time to time in one or more series
as may be determined by Quantum's Board of Directors. The voting powers and
preferences, the relative rights of each such series and the qualifications,
limitations and restrictions of each series will be established by the Board of
Directors. Quantum's directors may issue preferred stock with multiple votes per
share and dividend rights which would have priority over any dividends paid with
respect to the holders of Quantum's common stock. The issuance of preferred
stock with these rights may make the removal of management difficult even if the
removal would be considered beneficial to shareholders generally, and will have
the effect of limiting shareholder participation in transactions such as mergers
or tender offers if these transactions are not favored by Quantum's management.
As of the date of this prospectus Quantum had not issued any shares of preferred
stock.
Transfer Agent
As of the date of this prospectus Quantum had not appointed a transfer
agent for its common stock.
LEGAL PROCEEDINGS
Quantum is not involved in any legal proceedings and Quantum does not know
of any legal proceedings which are threatened or contemplated.
INDEMNIFICATION
The Nevada Revised Statutes authorize indemnification of a director,
officer, employee or agent of Quantum against expenses incurred in connection
with any action, suit, or proceeding to which he is named a party by reason of
his having acted or served in such capacity, except for liabilities arising from
his own misconduct or negligence in performance of his duty. In addition, even a
director, officer, employee, or agent of Quantum who was found liable for
misconduct or negligence in the performance of his duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
19
competent jurisdiction determines such person is fairly and reasonably entitled
to indemnification. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, or persons
controlling Quantum pursuant to the foregoing provisions, Quantum has been
informed 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.
AVAILABLE INFORMATION
Quantum has filed with the Securities and Exchange Commission a
Registration Statement on Form S-1 (together with all amendments and exhibits)
under the Securities Act of 1933, as amended, with respect to the Securities
offered by this prospectus. This prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Securities and
Exchange Commission. For further information, reference is made to the
Registration Statement which may be read and copied at the Commission's Public
Reference Room at 100 F. Street, N.E., Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The registration statement is also available at
www.sec.gov, the website of the Securities and Exchange Commission.
20
QUANTUM INFORMATION, INC.
AUDITED FINANCIAL STATEMENTS
APRIL 30, 2008
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To: The Board of Directors and Shareholders
Quantum Information Inc.
Phoenix, Arizona
I have audited the accompanying balance sheet of Quantum Information Inc. as of
April 30, 2008 and the related statements of operations, retained earnings and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion the financial statements referred to above present fairly, in all
material respects, the financial position of Quantum Information, Inc. as of
April 30, 2008, and the results of its operations and its retained earnings and
cash flows in conformity with United States generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered a loss and has not yet commenced
operations. This raises substantive doubt about the Company's ability to
continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
The Company has determined that it is not required to have, nor was I engaged to
perform, an audit of the effectiveness of its documented internal controls over
financial reporting.
/s/ John Kinross-Kennedy
John Kinross-Kennedy
Certified Public Accountant
Irvine, California
July 7, 2008
QUANTUM INFORMATION INC.
(A Development Stage Company)
BALANCE SHEET
As at April 30, 2008
ASSETS
Current Assets
Cash and Cash Equivalents $ 76,697
Prepaids $ 1,500
------------------
Property and Equipment, net
Equipment 23,264
------------------
TOTAL ASSETS $ 101,461
=================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Officer Loan $ 1,750
-----------------
Commitments and contingencies (Note 4)
Stockholders' Equity
Common Stock, $0.001 par value, 75,000,000 shares authorized,
2,860,000 shares issued and outstanding 2,860
Additional paid-in capital 120,138
Deficit accumulated in the development stage (23,287)
-----------------
Total Stockholders' Equity 99,711
-----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 101,461
================
The accompanying notes are an integral part of these financial statements
F-1
QUANTUM INFORMATION INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the period
of Inception,
For the three For the from May 19,
months ended year ended 2005 through
April 30, 2008 April 30, 2008 April 30, 2008
-------------- -------------- -------------
Revenues $ 6,400 $ 6,400 $ 6,400
------------ ------------- -----------
Costs and Expenses
Professional Fees 19,964 19,964 19,964
Occupancy Expense 5,930 5,930 5,930
Other General & Administrative 3,793 3,793 3,793
------------ ----------- -----------
Total Expenses 29,687 29,687 29,687
----------- ----------- -----------
Operating Loss (23,287) (23,287) (23,287)
------------ ----------- -----------
Net Income (Loss) $ (23,287) $ (23,287) $ (23,287)
=========== =========== ==========
Basic and Dilutive net
loss per share $ (0.03) $ (0.11)
=========== ===========
Weighted average number
of shares outstanding,
basic and diluted $ 824,444 $ 202,732
=========== ===========
The accompanying notes are an integral part of these financial statements
F-2
QUANTUM INFORMATION INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the period
of Inception,
For the three For the from May 19,
months ended year ended 2005 through
April 30, 2008 April 30, 2008 April 30, 2008
-------------- -------------- -------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (Loss) $ (23,287) $ (23,287) $ (23,287)
Adjustments to reconcile
net loss to net cash
used by operating
activities:
Depreciation 300 300 300
Change in operating assets
and liabilities:
Increase (Decrease)
in prepaids (1,500) (1,500) (1,500)
----------- ------------ -----------
Net Cash provided by
(used by) Operating
Activities (24,487) (24,487) (24,487)
----------- ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (23,564) (23,564) (23,564)
----------- ------------ -----------
Net Cash (used by)
Investing Activities (23,564) (23,564) (23,564)
----------- ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the sale of
Common Stock 122,998 122,998 122,998
Proceeds from loan from
officer 1,750 1,750 1,750
----------- ------------ -----------
Net Cash provided by
Financing Activities 124,748 124,748 124,748
----------- ------------ -----------
NET INCREASE IN CASH 76,697 76,697 76,697
CASH AT BEGINNING OF PERIOD - - -
----------- ------------ -----------
CASH AT END OF PERIOD $ 76,697 $ 76,697 $ 76,697
=========== =========== ==========
CASH PAID FOR:
Interest $ - $ - $ -
Income Taxes $ - $ - $ -
The accompanying notes are an integral part of these financial statements
F-3
QUANTUM INFORMATION INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the year ended April 30, 2008
Accumulated
Deficit
Additional During
Common Stock Paid-in Development
Shares Amount Capital Stage Total
--------------------------------------------
Balances at May 19, 2007 - $ - $ - $ - $ -
Common stock issued for cash
on January 10, 2008 at $0.01
per share 1,800,000 1,800 16,200 18,000
Common stock issued for cash on
February 20, 2008 at $0.10 (CDN$)
per share 1,060,000 1,060 103,938 104,998
Net loss for the year ended April (23,287) (23,287)
30, 2008 --------- -------- -------- ------- -------
alances at April 30, 2008 2,860,000 $ 2,860 $120,138 $(23,287) $99,711
========= ======== ======== ======== =======
The accompanying notes are an integral part of these financial statements
F-4
QUANTUM INFORMATION INC.
NOTES TO FINANCIAL STATEMENTS
For the year ended April 30, 2008
NOTE 1 - BUSINESS AND OPERATIONS
The Company was incorporated under the name Inkie Entertainment Group, Inc. on
May 19, 2005 in Nevada. The Company changed its name in January 2008 to Quantum
Information Inc. The Company's authorized capital consists of 75,000,000 shares
of common voting stock and 10,000,000 shares of preferred stock.
The financial statements presented include all adjustments which are, in the
opinion of management, necessary to present fairly the financial position,
results of operations and cash flows for the period presented in accordance with
the accounting principles generally accepted in the United States of America.
All adjustments are of a normal recurring nature.
Current Business of the Company
The Company had no material business operations from inception May 19, 2005
through 2007. In 2008 the Company made plans to produce feature films at low
cost, using its own digital camera equipment. To this end the Company raised
capital, purchased camera equipment and entered the development stage of film
production. Limited revenue was received from renting the camera equipment.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and equivalents
Cash and equivalents include investments with initial maturities of three months
or less.
Fair Value of Financial Instruments
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 107, "Disclosures About Fair Value of
Financial Instruments." SFAS No. 107 requires disclosure of fair value
information about financial instruments when it is practicable to estimate that
value. The carrying amounts of the Company's financial instruments as of April
30, 2008 approximate their respective fair values because of the short-term
nature of these instruments. Such instruments consist of cash, accounts payable
and accrued expenses. The fair value of related party payables is not
determinable.
F-5
QUANTUM INFORMATION INC.
NOTES TO FINANCIAL STATEMENTS
For the year ended April 30, 2008
Income Taxes
The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax assets and liabilities are
determined based on the difference between the tax basis of assets and
liabilities and their financial reporting amounts based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized. The Company generated deferred tax
credits through net operating loss carryforwards. However, a valuation allowance
of 100% has been established, as the realization of the deferred tax credits is
not reasonably certain, based on going concern considerations outlined below.
Equipment
Equipment, including camera equipment, is recorded at cost and depreciated using
straight line methods over the estimated useful lives of the related assets
ranging from 3 to 10 years. The Company reviews the carrying value of long-term
assets to be held and used when events and circumstances warrant such a review.
If the carrying value of a long-lived asset is considered impaired, a loss is
recognized based on the amount by which the carrying value exceeds the fair
market value. Fair market value is determined primarily using the anticipated
cash flows discounted at a rate commensurate with the risk involved. The cost of
normal maintenance and repairs is charged to operations as incurred. Major
overhaul that extends the useful life of existing assets is capitalized. When
equipment is retired or disposed, the costs and related accumulated depreciation
are eliminated and the resulting profit or loss is recognized in income.
Officer Loan
Commencing in 2008 the Company borrowed funds from an officer on an unsecured
basis. The loan is non-interest bearing and payable on demand. The total due
under these borrowings at April 30, 2008 was $1,750.
Going Concern
The Company's financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company had an initial
operating loss of $23,287 since commencing business in January, 2008. By the
year end April 30, 2008 the Company had generated a positive cash flow of
$76,697, primarily from the sale of stock. As a result the company at April 30,
F-6
QUANTUM INFORMATION INC.
NOTES TO FINANCIAL STATEMENTS
For the year ended April 30, 2008
2008 had a positive shareholders' equity of $81,711. However, the Company has
not yet established an ongoing source of revenues sufficient to cover its
operating costs and to allow it to continue as a going concern. The ability of
the Company to continue as a going concern is dependent on the Company obtaining
adequate capital to fund operating losses until it becomes profitable. If the
Company is unable to obtain adequate capital, it could be forced to cease
development of operations.
In order to continue as a going concern, develop a reliable source of revenues,
and achieve a profitable level of operations the Company will need, among other
things, additional capital resources. Management's plans to continue as a going
concern include raising additional capital through sales of common stock. In the
interim, shareholders of the Company are committed to meeting its minimal
operating expenses. However, management cannot provide any assurances that the
Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern.
Development-Stage Company
The Company is considered a development-stage company, having limited operating
revenues during the period presented, as defined by Statement of Financial
Accounting Standards ("SFAS") No. 7. SFAS No. 7 requires companies to report
their operations, shareholders deficit and cash flows since inception through
the date that revenues are generated from management's intended operations,
among other things. Management has defined inception as May 19, 2005. Since
inception, and more particularly since commencing business in January, 2008, the
Company has incurred an operating loss of $23,287. Much of this related to
consultants, as a means to generate working capital. The Company's working
capital has been generated through the sales of common stock. Management has
provided financial data since May 19, 2005, "Inception", in the financial
statements, as a means to provide readers of the Company's financial information
to make informed investment decisions.
Use of Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of expenses during the reporting
period. Actual results could differ from those estimates.
F-7
QUANTUM INFORMATION INC.
NOTES TO FINANCIAL STATEMENTS
For the year ended April 30, 2008
Earnings (Loss) Per Share
Statement of Financial Accounting Standards No. 128 "Earnings Per Share"
requires presentation of basic earnings per share and diluted earnings per
share. Basic income (loss) per share ("Basic EPS") is computed by dividing net
loss available to common stockholders by the weighted average number of common
shares outstanding during the period. Diluted earnings per share ("Diluted EPS")
is similarly calculated using the treasury stock method except that the
denominator is increased to reflect the potential dilution that would occur if
dilutive securities at the end of the applicable period were exercised. There
were no potential dilutive securities for the year ended April 30, 2008.
The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations for the year ended April 30,
2008.
Numerator:
Basic and diluted net loss per share:
Net Income (Loss) $ (23,287)
Denominator
Basic and diluted weighted average
number of shares outstanding 202,732
Basic and Diluted Net Loss Per Share $ 0.11
------------------------------------
NOTE 3 - RELATED PARTY TRANSACTIONS
On January 10, 2008 the Board authorized the issue of common stock to two
Directors:
Joel Klandrud 900,000 shares at a price of $0.01 per share
President, Chief Operating
Officer and Director
Sandra Dosdall 900,000 shares at a price of $0.01 per share
Director
Amount due to an officer was $1,750 as of April 30, 2008.
F-8
QUANTUM INFORMATION INC.
NOTES TO FINANCIAL STATEMENTS
For the year ended April 30, 2008
NOTE 4 - COMMITMENTS AND CONTINGENCIES
There were no commitments or contingencies in the three months ended April 30,
2008.
NOTE 5 - CAPITAL STOCK TRANSACTIONS
On January 10, 2008, 1,800,000 common shares were issued for cash at $0.01 per
share, realizing $18,000.
On February 20, 2008, 1,060,000 common shares were issued for cash at $0.10
(CDN$) per share, realizing $104,998.
At April 30, 2008 the Company had authorized 75,000,000 common shares, of which
the total issued and outstanding was 2,860,000.
NOTE 6 - LITIGATION
There were no legal proceedings against the Company with respect to matters
arising in the ordinary course of business. Neither the Company nor any of its
officers or directors is involved in any other litigation either as plaintiffs
or defendants, and have no knowledge of any threatened or pending litigation
against them or any of the officers or directors.
F-9
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY ...............................................
RISK FACTORS .....................................................
DILUTION AND COMPARATIVE SHARE DATA...............................
MARKET FOR QUANTUM'S COMMON STOCK ................................
MANAGEMENT'S DISCUSSION AND ANALYSIS
AND PLAN OF OPERATION .......................................
PROPOSED BUSINESS.................................................
MANAGEMENT .......................................................
PRINCIPAL SHAREHOLDERS............................................
SELLING SHAREHOLDERS..............................................
DESCRIPTION OF SECURITIES.........................................
LEGAL PROCEEDINGS.................................................
INDEMNIFICATION ..................................................
AVAILABLE INFORMATION.............................................
FINANCIAL STATEMENTS..............................................
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this prospectus, and
if given or made, such information or representations must not be relied upon as
having been authorized by Quantum Information, Inc. This prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, any of the
securities offered in any jurisdiction to any person to whom it is unlawful to
make an offer by means of this prospectus.
Until _______, 2008 all dealers effecting transactions in the registered
securities, 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 and with respect to their
unsold allotments or subscriptions.
5
PART II
Information Not Required in Prospectus
Item 13. Other Expenses of Issuance and Distribution.
The following table show the costs and expenses payable by the Company in
connection with this registration statement.
SEC Filing Fee $ 10
Blue Sky Fees and Expenses 500
Printing Expenses 500
Legal Fees and Expenses 25,000
Accounting Fees and Expenses 10,000
Miscellaneous Expenses 3,985
---------
TOTAL $ 39,995
=========
All expenses other than the SEC filing fee are estimated.
Item 14. Indemnification of Officers and Directors The Nevada Revised Statutes
provide that the Company may indemnify any and all of its officers, directors,
employees or agents or former officers, directors, employees or agents, against
expenses actually and necessarily incurred by them, in connection with the
defense of any legal proceeding or threatened legal proceeding, except as to
matters in which such persons shall be determined to not have acted in good
faith and in the Company's best interest.
Item 15. Recent Sales of Unregistered Securities.
The following lists all shares issued by the Company since its inception.
Name Date Shares Consideration (1)
- ---- ---- ------ -----------------
Joel Klandrud 1/10/08 900,000 $9,000.00
Sandra Dosdall 1/10/08 900,000 $9,000.00
Brandon Antonini 2/20/08 15000 $1,500.00
Chad Armstrong 2/20/08 20000 $2,000.00
Jill Babcock 2/20/08 20000 $2,000.00
Brad Babcock 2/20/08 20000 $2,000.00
Bill Boswell 2/20/08 5000 $ 500.00
Aaron Cain 2/20/08 20000 $2,000.00
Aaron Cain Professional Corp. 2/20/08 20000 $2,000.00
Candice Cain 2/20/08 20000 $2,000.00
Billy Campbell 2/20/08 20000 $2,000.00
Mary Campbell 2/20/08 20000 $2,000.00
Charles Critchley
Professional Corp. 2/20/08 20000 $2,000.00
Gerry Collinge 2/20/08 20000 $2,000.00
Mike Collinge 2/20/08 20000 $2,000.00
Chad Ewaniuk 2/20/08 10000 $1,000.00
Matt Fell 2/20/08 20000 $2,000.00
1
Name Date Shares Consideration (1)
- ---- ---- ------ -----------------
Kerri Fell 2/20/08 20000 $2,000.00
John Fife 2/20/08 10000 $1,000.00
Paul Fisher 2/20/08 20000 $2,000.00
Gerry Franco 2/20/08 40000 $4,000.00
Cheter Godfrey 2/20/08 20000 $2,000.00
Dale Hutton 2/20/08 20000 $2,000.00
Hymark Field Consulting 2/20/08 40000 $4,000.00
Wade Klimpke 2/20/08 20000 $2,000.00
Klimpke Holdings LTD 2/20/08 20000 $2,000.00
Terence Laverty 2/20/08 15000 $1,500.00
Derrick Lewis 2/20/08 5000 $ 500.00
Brad Lindemann 2/20/08 15000 $1,500.00
Noel Lumsden 2/20/08 20000 $2,000.00
Jennifer Macfawn 2/20/08 15000 $1,500.00
Brian Mattis 2/20/08 20000 $2,000.00
Brian Mcrae 2/20/08 15000 $1,500.00
Michelle Morgan 2/20/08 20000 $2,000.00
Tamara Normand 2/20/08 10000 $1,000.00
Dean Ocanica 2/20/08 20000 $2,000.00
Jay Park 2/20/08 20000 $2,000.00
John Reeves 2/20/08 20000 $2,000.00
Linda Reeves 2/20/08 20000 $2,000.00
Scott Reeves 2/20/08 20000 $2,000.00
Scott Reeves 2/20/08 20000 $2,000.00
Brad Rourke 2/20/08 50000 $5,000.00
Rubix Investment Solutions 2/20/08 20000 $2,000.00
Shushwap Adventures 2/20/08 5000 $ 500.00
Tara Smith 2/20/08 20000 $2,000.00
Michael Steen 2/20/08 20000 $2,000.00
Greg Terriff 2/20/08 15000 $1,500.00
Tyler J Optometric Corp. 2/20/08 20000 $2,000.00
Urban Core Finishing 2/20/08 20000 $2,000.00
Desiree Verstoep 2/20/08 5000 $ 500.00
Trevor Warrener 2/20/08 20000 $2,000.00
Cori Warrener 2/20/08 20000 $2,000.00
Nolan Weir 2/20/08 20000 $2,000.00
1047081 Alberta Ltd 2/20/08 15000 $1,500.00
1136351 Alberta LTD 2/20/08 30000 $3,000.00
1245339 Alberta Ltd 2/20/08 30000 $3,000.00
1248176 Alberta Ltd 2/20/08 15000 $1,500.00
(1) The consideration received from Joel Klandrud and Sandra Dosdall for their
shares is expressed in U.S. $. All other consideration is expressed in
Canadian $.
With the exception of the shares sold to Joel Klandrud and Sandra Dosdall,
all the other shares listed above were all issued to non-U.S. persons who
reside outside of the United States. The negotiations and agreements
relating to the issuance of these shares were made by the Company's officers
2
(who were non-U.S. persons) from Canada. The shares are restricted from
resale in the public markets for a period of one year from the date of their
issuance. There is no market for the Company's securities in the United
States and none of the securities have been transferred since their
issuance. The Company relied upon the exemption provided by Rule 901 of the
Securities and Exchange Commission with respect to the sale of these shares.
The Company relied upon the exception provided by Section 4(2) of the
Securities Act of 1933 with respect to the shares sold to Joel Klandrud and
Sandra Dosdall.
Item 16. Exhibits and Financial Statement Schedules
The following exhibits are filed with this Registration Statement:
Exhibit
Number Exhibit Name
3.1 Articles of Incorporation, as amended
3.2 Bylaws
5 Opinion of Counsel
23.1 Consent of Attorneys
23.2 Consent of Accountants
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(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 l0 (a)(3) of the
Securities Act:
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
and
3
(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.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities that remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of l933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. 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 of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(5) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser:
(i) If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to Rule
424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration
statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included in the
registration statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any person that is at that date
an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
4
of contract of sale prior to such effective date, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an
offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and
included in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use, supersede or
modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such date of first use.
(6) That, for the purpose of determining liability of the registrant under the
Securities Act of 1933 to any purchaser in the initial distribution of the
securities:
The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser bye means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
5
SIGNATURES
Pursuant to the requirements of the Securities Act of l933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Phoenix, Arizona on the 28th day
of July 2008.
QUANTUM INFORMATION INC.
By: /s/ Joel Klandrud
------------------------------------------
Joel Klandrud, President, Principal
Financial Officer and Principal
Accounting Officer
In accordance with the requirements of the Securities Act of l933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Joel Klandrud Director July 28, 2008
- ------------------------
Joel Klandrud
/s/ Sandra Dosdall Director July 28, 2008
- ------------------------
Sandra Dosdall
EXHIBITS
QUANTUM INFORMATION, INC.
REGISTRATION STATEMENT ON FORM S-1