As Filed with the Securities and Exchange Commission on May 9, 2002
Registration No.___-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
AMENDMENT 8 TO
FORM SB-2, REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------------
Anagram Plus, Inc.
(Name of small business issuer in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
3944
(Primary Standard Industrial
Classification Number)
65-1045323
(I.R.S. Employer Identification
Number)
Anagram Plus, Inc.
2700 N. Military Trail
Suite 100
Boca Raton, FL 33431
(561) 241-3621
(Address, including zip code, and telephone number, including area code, of each
registrant's principal offices)
Frederick M. Mintz, Esq.
Mintz & Fraade, P.C.
488 Madison Avenue
New York, New York 10022
Telephone No.: (212) 486-2500
Facsimile No.: (212) 486-0701
(Name, address and Telephone
number of agent for service)
--------------------
Approximate date of proposed sale to public:
As soon as practicable after this Registration Statement becomes
effective.
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. |X|
If this Form is a post-effective amendment filed pursuant to Rule 462 (c)
under the Securities Act, pleased check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_| _________________________.
If delivery of the prospectus is expected to be pursuant to Rule 434,
please check the following box. |_|
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.
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------
Proposed
Title of Proposed Maximum Maximum
securities to Amount to be Offering Price Aggregate Amount of
be registered registered Per Share(1) Offering Price registration fee
- --------------------------------------------------------------------------------------------------
Common Stock, par
value $0.001(2) 236,000 $1.00 $ 236,000 $59.00
- --------------------------------------------------------------------------------------------------
Common Stock, par
value $0.001(3) 2,500,000 $1.00 $2,500,000 $625.00
- --------------------------------------------------------------------------------------------------
Total
Total 2,736,000 Registration Fee $684.00
- --------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
(2) Offered by the persons named in this prospectus under the caption "Selling
Stockholders".
(3) Offered by us.
This prospectus relates to 2,736,000 shares of our common stock, of which
236,000 shares are owned by the persons named in this prospectus under the
caption "Selling Stockholders". The shares of our common stock may be sold
directly or through brokers or dealers. The 236,000 shares may be offered from
time to time by the selling stockholders through ordinary brokerage transactions
in the over-the-counter market, in negotiated transactions or through other
commonly used methods to trade publicly available stock, at market prices
prevailing at the time of sale or negotiated prices. Up to 2,500,000 shares of
our common stock are being sold by us, on a self-underwritten, best efforts
basis, with no minimum. Our offering will commence on the date of this
prospectus and will continue until the earlier of December 31, 2002, all of the
shares offered are sold, or we otherwise terminate the offering.
We will bear all the costs and expenses associated with the preparation
and filing of this registration statement.
ii
SUBJECT TO COMPLETION, DATED May 9, 2002
PROSPECTUS
2,736,000 shares
Anagram Plus, Inc.
Common Stock
$1.00 per share
This is the first public offering of Anagram's securities. The common
stock available for sale as a result of this prospectus will be sold by Anagram
and current stockholders. Anagram will not receive any money from the sale of
its common stock by the selling stockholders.
Prior to this offering, there has been no public market for the common
stock. We have not yet applied to have the common stock traded on the OTC
Bulletin Board, which is maintained by the National Association of Securities
Dealers, Inc. If an application is not filed or if our application is not
approved, there will be no trading market for the common stock. The Company's
shares and the shares of the Selling Shareholders offered pursuant to this
prospectus will be sold at a price of $1.00. Thereafter, if our application is
approved, the shares of the Selling Shareholders will be priced based upon bid
and ask quotes submitted by broker-dealers.
The offering will commence on the date of this prospectus and will
continue until the earlier of December 31, 2002, all of the shares offered are
sold, or we otherwise terminate the offering.
----------
An investor should read the Risk Factors section of this prospectus,
commencing on page 3 before deciding whether to invest in these securities.
----------
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.
The date of this prospectus is , 2002
iii
TABLE OF CONTENTS
Page
----
Prospectus summary .................................................................. 1
Summary financial information ....................................................... 2
Risk factors ........................................................................ 3
Use of proceeds ..................................................................... 10
Capitalization ...................................................................... 11
Dilution ............................................................................ 12
Management's discussion and analysis of financial condition and results of operations 13
Business ............................................................................ 18
Dividend policy ..................................................................... 21
Employees ........................................................................... 21
Management .......................................................................... 22
Executive compensation .............................................................. 24
Certain relationships and transactions .............................................. 25
Principal stockholders .............................................................. 26
Plan of distribution ................................................................ 27
Description of the securities ....................................................... 29
Legal matters ....................................................................... 31
Experts ............................................................................. 31
Available information ............................................................... 32
Index to financial statements ....................................................... F-I
iv
Summary
Our business
Anagram Plus, Inc. is a fifty one (51%) percent stockholder of Prodijeux,
Inc. Prodijeux was founded in October 1998, and is a Canadian corporation based
in Montreal, Quebec, Canada. Prodijeux specializes in the creation and
development of interactive "edutainment" products. Edutainment is a term
utilized in the Toy and Game Industry, which refers to products which provide an
educational experience through an entertainment medium. Edutainment products are
available in the form of traditional family board games, CD-ROM and online
multi-player games. Prodijeux has commenced distributing its edutainment
products through traditional retail outlets, such as toy stores, bookstores and
specialty learning stores as well as through its own and Anagram's web site.
Prodijeux has entered into a written agreement with Northern Group pursuant to
which, Northern Group is its U.S. sales manager. Northern Group also acts as a
sales representative for the states of Illinois, Wisconsin and Minnesota. Sales
in other states will be handled via other sales agencies as arranged by Northern
Group. Prodijeux has begun to launch the first in its line of edutainment
products, WordXchange(R), a word game intended by Prodijeux's management to
rival Scrabble(R). WordXchange(R) is a brain-twisting word game, which has two
versions: an advanced edition (ages 10 and up) and a junior edition (ages 5 and
up), allowing it to be stimulating and entertaining for a wide range of
consumers. The advanced edition is available in English under the name
WordXchange(R), and in French, under the name AnagramPlus. AnagramPlus,
introduced to the public in the fall of 2000 at the International Book Fair in
Montreal, was exhibited at the Paris International Toy and Game Festival (Paris
International Toy Fair) in 2001, and at the American Toy and Game Festival
(American International Toy Fair) in New York in February 2002 and 2001. The
consolidated revenues for Anagram and its subsidiary for the most recent
unaudited period (six months ended December 31, 2001) were $29,783. The
unaudited consolidated loss for the six months ended December 31, 2001 was
$131,761. The revenues for Prodijeux for the most recent audited period (October
1, 2000 to June 30, 2001) were $24,487. The losses for Anagram for the most
recent audited period (January 1, 2001 to June 30, 2001) were $109,339.
Prodijeux's losses for the most recent audited period (October 1, 2000 to June
30, 2001) were $241,703. The losses for Anagram, which include its share of
losses of Prodijeux pursuant to the equity method of accounting, for the most
recent audited period (January 1, 2001 to June 30, 2001) were $109,339.
Management believes that Prodijeux will become profitable through the
development and sale of its products, and, therefore increase the value of
Anagram through its investment in Prodijeux.
Neither Anagram nor Prodijeux will receive any proceeds from the sale of
the 236,000 shares of our common stock by the selling stockholders. Anagram will
use the net proceeds of the offering of 2,500,000 shares of its common stock to
fund, pursuant to a loan agreement, Prodijeux's working capital and general
corporate purposes including but not limited to product development, selling and
marketing. No public market for our securities existed prior to this offering. A
total of up to 2,736,000 shares may be sold based upon this prospectus.
Anagram's executive offices are located at 2700 N. Military Trail, Suite
100, Boca Raton, FL 33431. The telephone number is 561-241-3621 and the
facsimile number is 561-241-3055. The
1
executive offices of Prodijeux are located at 1751 Richardson Street, Suite
5507, Montreal, Quebec, H3K 1G6, Canada. The telephone number is 514-932-4744.
Summary financial information
Anagram was formed on October 1, 2000 and is a fifty-one (51%) stockholder
of Prodijeux. The following financial data of Anagram and Prodijeux should be
read in conjunction with our and Prodijeux's financial statements, which are
included in this prospectus. The financial data of Anagram has been provided
based upon the audited periods from January 1, 2001 to June 30, 2001 and from
July 1, 2000 (inception) through December 31, 2000. The financial data of
Prodijeux has been provided based in the audited periods from October 1, 2000 to
June 30, 2001 and from July 1, 1999 to September 30, 2000. The consolidated
financial data of Anagram has been provided for the unaudited period from July
1, 2001 to December 31, 2001.
Anagram Plus, Inc. and Subsidiary
December 31, 2001
-----------------
Balance sheet data:
Working capital (deficit) $(315,114)
Total Current Assets $ 95,960
Total Liabilities $ 446,769
Stockholders' deficit $(333,209)
Statement of operations data:
Sales $ 29,783
Cost of goods sold $ 33,686
Gross Loss $ (3,903)
Loss from operations $(122,495)
Net Loss $(131,761)
Anagram Plus, Inc.
June 30, 2001 December 31, 2000
------------- -----------------
Balance sheet data:
Working capital(deficit) $(253,376) $(143,970)
Investment in Prodijeux $ 224,968 $ 109,227
Total assets $ 225,507 $ 110,143
Total liabilities $ 253,915 $ 144,886
Stockholders' deficit $ (28,408) $ (34,743)
Statement of operation data:
Net revenue $ 0 $ 0
Operating expenses $ 9,484 $ 2,416
Loss from investment $ 95,386 $ 38,327
Interest expense $ 4,469 $ 0
Net loss $ 109,339 $ 40,743
2
Prodijeux, Inc.
June 30, 2001 September 30, 2000
Balance sheet data:
Working capital (deficit) $ 77,715 $ (6,392)
Total assets $ 114,723 $ 6,666
Total liabilities $ 347,530 $ 61,467
Stockholders' deficit $(232,807) $(54,801)
Statement of operations data:
Sales $ 24,487 $ 0
Cost of good sold $ 27,313 $ 0
Gross loss $ (2,826) $ 0
Net loss $(241,703) $(30,233)
Risk factors
An investment in our common stock involves a high degree of risk. If any
of the following risks actually occur, our business, financial condition and
operations will be materially affected.
Anagram is a company whose primary asset is a majority interest in Prodijeux, a
company with limited operations, and there can be no assurance that either
Anagram or Prodijeux will ever become profitable.
Anagram is a company whose primary asset is a majority interest in
Prodijeux. Prodijeux has limited operations. At this time, Anagram does not
contemplate commencing active operations directly. The company in which Anagram
has an investment, Prodijeux, is entering a highly competitive market. You
should be aware of the difficulties which Prodijeux will encounter because it is
a recently formed company and has only recently commenced operations, including,
but not limited to, competition and unanticipated costs and expenses. There can
be no assurance that Anagram will ever realize a positive net cash flow from its
investment in Prodijeux. If Prodijeux's business and development plans prove to
be unsuccessful, stockholders may lose all or a substantial part of their
investments.
Anagram has no limitation upon its ability to sell its interest in Prodijeux,
and Anagram may sell its interest in Prodijeux at a loss.
Anagram may sell its interest in Prodijeux. There is no guarantee that
Prodijeux will ever become profitable. If Prodijeux does not realize a profit at
some point in the future, Anagram may decide to sell its interest in Prodijeux,
and may sell its interest at a loss.
3
Anagram's primary asset is a 51% interest in Prodijeux, which may require, and
Anagram may not be able to obtain, additional financing to meet its capital
requirements.
Prodijeux will need additional financing to meet its capital requirements
for product development, administrative expenses and other costs. Prodijeux
currently has no arrangements to obtain additional financing and Prodijeux will
be dependent upon sources such as: future earnings, the availability of funds
from private sources including, but not limited to, loans and additional private
placements, and the availability of funds through an additional public offering.
In view of its lack of an operating history, Prodijeux's ability to obtain
additional funds is limited. Additional financing may only be available, if at
all, upon terms which may not be commercially advantageous. If adequate funds
are not available from operations or additional sources of financing,
Prodijeux's business will be materially adversely affected.
The Directors of Anagram may invest additional corporate assets in a subsidiary
of which Anagram owns only 51%
The Board of Directors of Anagram may determine to invest additional assets of
Anagram in Prodijeux in excess of its commitment to loan Prodijeux up to
$600,000 if it is determined to be in the best interest of Anagram to both
protect existing investments and to help Prodijeux increase its business. A
court of law could find that Anagram is wasting corporate assets by investing
them in a subsidiary of which Anagram owns only 51% if it is not obligated to do
so or does not receive additional equity interest.
In Delaware, each director owes a fiduciary obligation to exercise his or her
judgment in the best interests of the corporation. Directors violate their
fiduciary duty to the corporation when they misuse or waste corporate funds.
There can be no assurance that Anagram or Prodijeux will ever achieve
profitability.
There can be no assurance that Anagram or Prodijeux will ever achieve
profitability. Revenues and operating results may fluctuate from quarter to
quarter and from year to year due to a combination of factors, including, but
not limited to, Prodijeux's cost of production, sales of its products and
variations in expenditures for personnel and marketing. Prodijeux may incur
significant expenditures to fund research and development of new products or
improvements to their existing edutainment products. This would adversely affect
Anagram's ability to generate a profit. Anagram may never be able to achieve
profitability on a quarterly or annual basis. If Anagram does not, business will
be adversely affected and potential investors will lose all or substantially all
of their investment.
Qualified Report of Independent Auditors
Our independent auditor's report on our financial statements includes an
explanatory paragraph stating that the accompanying financial statements have
been prepared assuming that we will continue as a going concern. Our operations
have generated losses and cash flow deficiencies from inception, which raises
substantial doubt about our ability to continue as a going concern. We may be
unable to continue as a going concern.
4
Anagram is dependent upon the introduction and success of a new game
WordXchange(R), and there can be no assurance that that WordXchange will ever
achieve any significant market acceptance.
Anagram's success depends upon the value of Prodijeux as well as any
dividends paid on Prodijeux's common stock. Prodijeux's success depends largely
upon its new edutainment products, WordXchange(R) and the Junior Edition. There
can be no assurance that WordXchange(R) will achieve any significant degree of
market acceptance, or that such acceptance will be sustained for any meaningful
period. The failure of WordXchange(R) to achieve or sustain market acceptance
would have a material adverse effect upon our business, operating results and
financial condition.
The Edutainment industry is extremely competitive, and there is no guarantee
that competitors with superior resources will not bring new, better and cheaper
edutainment games to the market more quickly than Anagram's primary interest,
Prodijeux.
Competitors with superior resources may be able to bring new, better and
cheaper edutainment games to the market more quickly than Prodijeux, thereby
gaining a competitive edge over Prodijeux. Anagram believes that the quality of
Prodijeux's goods and services combined with the expertise of their combined
management should give Prodijeux a competitive advantage. However, there can be
no assurance that Prodijeux will be able to compete successfully or that
competitive pressures faced by Prodijeux will not have a material adverse effect
upon its business, operating results and financial condition. Anagram will not
be directly engaged in any part of Prodijeux's business including, but not
limited to, development, production and sales of WordXchange(R).
WordXchange(R)'s major competition in the word game category is Scrabble(R).
Scrabble(R) has been the leader in word games sales for more than 50 years.
WordXchange(R)'s success will depend heavily upon its ability to compete with
Scrabble(R) and other word games.
Anagram's success is dependent upon the key personnel of Prodijeux, and the
potential loss of such key personnel would have a material adverse effect upon
Prodijeux, thereby affecting Anagram adversely.
Prodijeux's success depends to a significant extent upon the performance
and continued services to Prodijeux of Michael Chiarore, co-founder and
President of Prodijeux, and Rodolphe Charpentier, Prodijeux's co-founder,
Vice-President of Marketing and Creative Director of Research and Development.
Michel Chiarore is in charge of Prodijeux's operations, manufacturing and
distribution of Prodijeux's product line, and is experienced in dealing with
suppliers and buyers. Rodolphe Charpentier is the creator of the WordXchange(R)
game and has seventeen years of experience in the design and communications
fields.
The loss of services of either Mr. Chiarore or Mr. Charpentier would have
a material adverse effect upon Prodijeux's business and its prospects.
5
Our majority shareholder could exert significant influence over matters
requiring stockholder approval.
ADC Development is Anagram's initial shareholder and owns 6,000,000 shares
of our common stock and is its majority shareholder. Accordingly, ADC
Development will be able to exert complete control over matters requiring
approval by Anagram's stockholders, including, but not limited to, the election
of directors and the approval of mergers or other business combinations. In
addition, a company owned by Anagram's president, Paul Michelin and his wife,
owns 83% of ADC Development.
A portion of Prodijeux's future business plans will depend upon its Internet
marketing strategy and its business, and thereby Anagram's business would be
adversely effected if use of the Interest fails to grow in the future.
Prodijeux plans to take full advantage of the potential of the Internet
through development of a Website to promote Prodijeux's product, WordXchange(R).
A portion of Prodijeux's business depends upon its Internet marketing strategy
and its business will be adversely effected if use of the Internet fails to grow
in the future.
The market for Anagram's securities is unsure and may be volatile
There is no current market for Anagram's securities and there can be no
assurance that a market will exist in the future. In addition, if a trading
market does develop, there can be no assurance that Anagram's common stock can
be resold either at or near its original trading prices. Anagram intends to
arrange to list its common stock on the NASD Bulletin Board, which is maintained
by the NASD. However, there can be no assurance that Anagram will qualify, or if
it qualifies will continue to qualify, for such listing.
Prodijeux conducts business and has operations in countries other than the
United States and any changes in international markets or currencies may
materially affect its operations, and consequently Anagram's value.
Prodijeux conducts its business and maintains, and intends to maintain,
ongoing operations in the United States, Canada, Asia, and other international
markets. Fluctuations in the foreign exchange rates between the United States
dollar and these other countries could have an adverse affect upon Prodijeux's
operating results in the future. Prodijeux may seek to limit its exposure to the
risk of currency fluctuations by engaging in foreign currency transactions,
which could expose us to substantial risk of loss. Prodijeux's management has
limited experience in managing international transactions and has not yet
formulated a strategy to protect us against currency fluctuations. There can be
no assurance that fluctuations in foreign currency exchange rates will not have
a significant adverse impact upon Prodijeux's future operating results.
6
Prodijeux's and Anagram's success is dependent upon independent third parties to
manufacture the product.
Prodijeux does not intend to conduct manufacturing operations on a
continuing basis and will be dependent upon independent third parties to
manufacture and ship WordXchange(R) and the Junior Edition. Prodijeux expects to
continue to be dependent upon such manufacturers for the foreseeable future.
These manufacturers will be responsible for timely and cost-effective
manufacturing, which may affect Prodijeux's ability to cost-effectively compete
with other similar products. Therefore, Prodijeux is dependent upon the
continued viability and financial stability of these manufacturers. In addition,
these third party manufacturers are expected to produce WordXchange(R) and other
products to specifications supplied by Prodijeux. However, there can be no
assurance that these instructions will be followed by the manufacturers.
Reliance upon suppliers, as well as industry supply conditions, generally
involves several risks, including the possibility of defective parts or
components, increase in component costs and reduced control over delivery
schedules, any and all of which would adversely affect Prodijeux's financial
results. Although Anagram is the majority shareholder of Prodijeux, Anagram has
no control over the costs of production and manufacture by third parties. Delays
or rising costs in the production of WordXchange(R) would have a material
adverse effect upon Anagram's business and prospects.
There can be no assurance that Anagram will pay any dividends on its common
stock.
There can be no assurance that Anagram will have sufficient earnings to
pay any dividends with respect to the common stock. Moreover, even if Anagram
has sufficient earnings, Anagram is not obligated to declare dividends with
respect to the common stock. The future declaration of any cash or stock
dividends will be in the sole and absolute discretion of our Board of Directors
and will depend upon our earnings, capital requirements, financial position,
general economic conditions and other pertinent factors. It is also possible
that the terms of any future debt financing may restrict the payment of
dividends. To date, Anagram presently intends to retain earnings, if any, for
the development and expansion of its business.
Prodijeux expects to incur significant losses for the foreseeable future and
there can be no assurance that Prodijeux or Anagram will ever achieve
profitability.
Prodijeux is still in the process of developing its products and therefore
it expects to incur significant losses on both a quarterly and an annual basis
for the foreseeable future. Prodijeux and Anagram are expecting losses to
continue until such time as WordXchange(R) is established, is being widely
marketed and/or Prodijeux enters into a contract with toy stores or other
retailer for distribution of WordXchange(R).
Anagram may be subject to the Securities and Exchange Commission's "penny stock"
rules if our common stock sells below $5.00 per share.
Anagram's shares may now and in the future be subject to the penny stock
rules under the Securities Exchange Act of 1934 which regulate broker-dealer
practices for transactions in "penny
7
stocks." Penny stocks generally are equity securities with a price of less than
U.S. $5.00. The penny stock rules require broker-dealers to deliver a
standardized risk disclosure document prepared by the SEC which provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer must also provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson, 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 completing the transaction and must
be given to the customer in writing before or with the customer's confirmation.
In addition, the penny stock rules require that prior to a transaction,
the broker and/or 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.
The penny stock rules are burdensome and may reduce purchases of any
offerings and reduce the trading activity for Anagram's common shares. As long
as Anagram's common shares are subject to the penny stock rules, the holders of
such common shares may find it more difficult to sell their securities.
Conflicts may exist with certain of Anagram's officers and directors, which may
cause them to give priority to other matters over the needs of Anagram, which
may materially affect our operations
There are several conflicts associated with Anagram's officers and
directors. These conflicts include, engaging in other businesses similar or
dissimilar to ours and allocating their time and services between us and the
other entities with which they are involved. Robert Michelin, is a member of
both Anagram's Board of Directors and Prodijeux's Board of Directors. In
addition to sitting on Anagram's Board of Directors and Prodijeux's Board of
Directors, Paul Michelin is a member of the Board of Directors of a number of
other companies.
Unforeseen price increases in raw materials may result in the increase in the
estimated cost of production for WordXchange(R), thereby having a material
adverse effect upon Anagram's and Prodijeux's business and prospects.
Prodijeux is dependent upon independent manufacturers and suppliers for
production of WordXchange(R) and the Junior Edition. These independents are
located in Asia. The market for raw materials may be volatile and unpredictable.
As a result, the costs of manufacture could far exceed any estimates made by
Prodijeux or Anagram. Although Anagram is the majority shareholder of Prodijeux,
neither Anagram nor Prodijeux have any control over the costs of production and
manufacture. Delays or rising costs in the production WordXchange(R) will have a
material adverse effect upon our business and prospects.
Prodijeux is dependent upon foreign manufacturers, and currency and exchange
fluctuations may have a material adverse effect upon Anagram's and Prodijeux's
business and prospects.
Because a large percentage of manufacturers and suppliers which Prodijeux
is dependent
8
upon are located in foreign locales, it is subject to a risk of currency and
exchange rate fluctuations. In addition, the market may be subject to foreign
government currency and/or other restrictions.
Inability of Prodijeux to negotiate and close contracts with major distributors.
Prodijeux has begun marketing WordXchange(R) on a limited basis and,
through March 2002, had sold approximately 6,196 units. Prodijeux has negotiated
and signed a distribution agreement with S & F Associates, Inc., based in
Portland, Oregon, for US distribution of WordXchange(R). Prodijeux has also
entered into a sales management contract with Northern Group to manage and
oversee sales throughout the United States, as well as a sales representation
agreement for the states of Wisconsin, Illinois and Minnesota. While Prodijeux
intends to enter into contracts with distributors to offer and sell
WordXchange(R) and other products, there is no assurance that it will be able to
negotiate or conclude satisfactory distributor agreements or, if negotiated and
concluded, that such distributors will abide by the terms of said agreements.
There can be no assurance that contracted distributors will employ qualified or
competent personnel or that they will be able find retailers willing to carry
and purchase Prodijeux's products. While Anagram is a majority shareholder of
Prodijeux, Anagram does not have any control over the terms of any agreement for
the distribution of WordXchange(R). Delays or rising costs in the distribution
and retail sale of WordXchange(R) will have a material adverse effect upon
Prodijeux's business and prospects.
Forward-looking statements
Statements in this Prospectus discuss future expectations and plans which
are considered forward-looking statements. Sentences which incorporate words
such as "believes," "intends," "expects," "predicts," "may," "will," "should,"
"contemplates," "anticipates," or similar statements are based on our beliefs
and expectations using the most current information available to it. In view of
the fact that the discussions in this Registration Statement are based upon our
estimates and beliefs concerning circumstances and events which have not yet
occurred, the anticipated results are subject to changes and variations as
future operations and events actually occur and could differ materially from
those discussed in the forward-looking statements. Moreover, although Anagram
reasonably expects, to the best of its knowledge and belief, that the results to
be achieved by it will be as set forth, this is not a guarantee and there can be
no assurance that any of the potential results which are described will occur.
Furthermore, there will usually be differences between the forecasted and actual
results because events and circumstances frequently do not occur as expected,
and the differences may be material.
9
Use of proceeds
Anagram will not receive any proceeds from the sale of the 236,000 shares
of its common stock by selling stockholders. The estimation of the proceeds, as
listed in the table below, are based upon an assumed initial offering price of
$1.00 per share and estimated offering expenses of $75,000. There can be no
assurance that any proceeds will be received on this best-efforts, no minimum,
basis offering. Regardless of the amount raised, the net proceeds of this
offering will fund, pursuant to a loan agreement, Prodijeux's working capital
and general corporate purposes, including product development, selling and
marketing. Anagram will advance approximately $130,000 to Prodijeux to pay the
remaining amount due to Prodijeux under the loan agreement. The remaining
proceeds will be used to continue to fund Prodijeux with the development of
WordXchange(R) junior edition and other new games, i.e., travel and electronic
versions. Anagram reserves the right to utilize a portion of the proceeds to
repay a portion or all of its loan from ADC Development Corp.
% of Offering Net Proceeds
------------- ------------
100% $2,425,000
75% $1,800,000
50% $1,175,000
25% $ 550,000
It is estimated that the net funds received will be utilized for the following
items in the percentages listed.
100% 75% 50% 25%
Game Production $727,500 $540,000 $352,500 $165,000
Expansion of Product Line $485,000 $360,000 $235,000 $110,000
Overhead expenses, including $727,500 $540,000 $352,500 $165,000
consumer and distribution channel
marketing
Anagram operating expenses $485,000 $360,000 $235,000 $110,000
10
Capitalization
The following table sets forth our capitalization as of December 31,
2001 on an unaudited basis.
Liabilities
Current liabilities $ 411,074
Long-term liabilities $ 35,695
Stockholders' deficit
Common stock,
$.001 par value $ 6,236
Additional Paid in Capital $ 115,438
Accumulated deficit $(449,628)
Total stockholders' deficit $(333,209)
Total liabilities
and stockholders' deficit $ 113,560
11
Dilution
As of December 31, 2001, Anagram's Common Stock had a negative net
tangible book value per share of approximately $0.05. "Net tangible book value
per share" is the amount of total tangible assets (at book value) less total
liabilities, divided by the number of shares of Common Stock outstanding. After
giving effect to the sale of the maximum number of shares offered hereby at the
purchase price of $1.00 per Share, after deduction of the estimated expenses of
this Offering, the pro forma "net tangible book value per share" as of that date
would be approximately $0.34 per share. This represents an immediate increase in
the pro forma net tangible book value of approximately $0.39 per share to
existing stockholders and an immediate dilution (i.e., the difference between
the subscription price per Share and such pro forma net tangible book value per
share) of approximately $0.61, based upon the purchase price of $1.00 per share
of Common Stock. Please see the table below for corresponding numbers for a
100%, 75%, 50% and 25% successful offering. There can be no assurance that
Anagram will be able to sell any of its shares of common stock.
Pro Forma Net Tangible Book Increase in Pro Forma Net Tangible
% of Offering Value per Share Book Value per Share Dilution
------------- --------------- -------------------- --------
100% $0.34 $0.39 $0.61
75% $0.24 $0.29 $0.71
50% $0.14 $0.19 $0.81
25% $0.03 $0.08 $0.92
The following discussion should be read in conjunction with the financial
statements and the notes to those statements, which appear elsewhere in this
prospectus. The following discussion contains forward-looking statements, which
reflect Anagram's and Prodijeux's plans, estimates and beliefs. Anagram's and
Prodijeux's actual results could differ materially from those discussed in the
forward-looking statements. Factors which could cause or contribute to such
differences include, but are not limited to, those discussed below and elsewhere
in this prospectus.
12
Management's discussion and analysis
of financial condition and results of operations
Overview
Since inception, all of Prodijeux's activities have been devoted to the
creation and development of WordXchange(R). Both companies have also been
preparing for the introduction into the marketplace of Prodijeux's products.
Prodijeux has raised $137,859.40 (CDN$206,500) in operating capital through the
investment of tangible and intangible assets by its founders, Michel Chiarore
and Rodolphe Charpentier.
Anagram purchased a forty-nine and one half percent (49.5%) interest in
Prodijeux, in consideration of $66,670 (CDN $100,000). Anagram further
purchased, as of July 1, 2001, an additional 1.5 percent interest in Prodijeux,
Inc., for approximately $2,020 (CDN $3,030). As of the purchase of the stock,
Anagram owns a 51% majority interest in Prodijeux, Inc. and, therefore, has the
ability to influence the marketing and financial direction of Prodijeux.
Anagram has also agreed to loan Prodijeux up to approximately $600,000
(CDN $954,000), of which $470,370 (CDN $748,163) has been advanced as of March
31, 2002, at an interest rate of seven (7%) percent per annum to be repaid upon
the earlier of Prodijeux achieving sales of at least fifty thousand (50,000)
units of WordXchange or October 1, 2002.
In addition to possessing the ability to influence the marketing and
financial direction of Prodijeux, Anagram has the ability to, among other
things: make overriding decisions on any issue that comes before the Board of
Director's of Prodijeux, hire and terminate members of Prodijeux's management
(including members of the board), and sell the assets of Prodijeux at any time
and at any price. Since Anagram has financial control of Prodijeux, the Company
will be presenting financial statements on a consolidated basis as required by
generally accepted accounting principles.
Prodijeux has entered into a sales management agreement with a company
based in Wisconsin. This company will act as sales agent for Prodijeux in three
Midwestern states while organizing a sales network of other agencies to cover
other areas of the United States as well as the English speaking area of Canada.
Prodijeux is currently in discussion with other such sales agencies with regard
to the finalization of the necessary contracts.
Prodijeux is currently contacting several agencies to develop a
promotional campaign that will introduce WordXchange(R) t potential
distributors, retailers and consumers in both the United States and Canada.
Prodijeux plans to heavily promote WordXchange(R) and the related junior edition
to achieve sales exceeding the current production run of 10,000 units.
Through March 31, 2002, Prodijeux has sold 6,196 units to various
retailers and wholesalers. Additionally, Prodijeux is currently in negotiations
with a French distributor for a short-term order of approximately 3,000 units
and an additional order of 30,000 units for 2002. This order would be the single
largest order of the game to date. However, there is no guarantee that Prodijeux
will be successful with respect to these negotiations.
13
Results of operations
Six Months Ended December 31, 2001
The following table sets forth the percentage of net loss represented by
the line items in the consolidated statement of operations of Anagram Plus and
subsidiary for the six months ended December 31, 2001:
Amount Percentage
------ ----------
Sales $ 29,783 (23%)
Cost of goods sold $ (33,686) 26%
Operating expenses $(118,592) 90%
Other income and expenses
Interest income $ 225 0%
Interest expense $ (9,491) 7%
Net loss for the period $(131,761) 100%
As of July 1, 2001 Anagram possessed financial control of Prodijeux and,
therefore, the information discussed for the six months ended December 31, 2001
is presented on a consolidated basis as required by generally accepted
accounting principles.
Revenues
During the six months ended December 31, 2001, the Company made sales of
$29,783. Sales were made to several toy and game retailers and distributors. The
Company has sold another 313 units through March 31, 2002. The Company is
continuing to negotiate with different retailers and distributors in order to
increase sales.
Cost of Goods Sold
The Company's cost of goods sold for the period was $33,686, which led to
a gross loss for the period of $3,903. This was due to the fact that the
Company, was selling earlier versions of the game at deep discounts, resulting
in games being sold at, or below cost. Additionally, the Company is selling
games in small lots, at deep discounts, in order to introduce the game to a wide
variety of retailers and distributors as part of building the name recognition.
Management believes that as the smaller lots are sold retailers will re-order in
larger lots at a price that will result in gross profit in the near future.
14
Operating expenses
The Company's salary expense for the period was $34,803 and is related to
the salaries of the officer's of Prodijeux. Management anticipates that when
sales begin to increase at a faster level the Company will need to hire a sales
force and an administrative staff as well as a production design staff.
Currently, the functions referred to above are being performed by the officer's
of Prodijeux.
Consulting expense for the period was $39,362 which includes services by a
member of the board of directors and by a consultant who assists the Company
with the marketing and distribution of the game. Management believes that the
consulting fees will remain at the current level for the foreseeable future as
the Company continues to negotiate distribution agreements.
The Company's expense for professional fees for the period was $8,937 and
included legal and accounting expenses incurred in the normal course of
business.
Travel expenses for the period totaled $7,819 and was related to travel to
different toy fairs and travel to meet with potential retailers and potential
distributors.
Periods ended June 30, 2001 and December 31, 2000
Anagram has not generated revenue to date and its operating expenses are
related to accounting and administrative fees. Anagram's allocated portion of
the Prodijeux loss is the most significant item effecting the statement of
operations of Anagram. Therefore the focus of management's discussion will be on
the results of Prodijeux's operations
The following table sets forth the percentage of net loss represented by
the line items in the respective statements of operations of Anagram for the six
months ended June 30, 2001 and of Prodijeux for the nine months ended June 30,
2001:
Anagram Plus, Inc. Prodijeux, Inc.
amount percentage amount percentage
------ ---------- ------ ----------
Revenues $ 0 0% $ 24,487 (10%)
Cost of Goods Sold -- -- ($27,313) 11%
Expenses ($9,483) 9% ($236,356) 98%
Other income and expenses
Interest expense ($4,470) 4% ($2,521) 1%
Loss from Investment ($95,386) 87% -- --
Net loss for the period ($109,339) 100% ($241,703) 100%
15
Revenues
During the nine months ended June 30, 2001 Prodijeux made the first sales
of its product line totaling $24,487. Sales were made to several different toy
and game retailers and distributors.
Cost of Goods Sold
Prodijeux's cost of goods sold for the period was $27,313, which led to a
gross loss for the period of $2,826. This was due to the fact that some earlier
versions of the game were sold at discounts, some of which resulted in the game
being sold at, or below cost. Prodijeux's management believes the current
version being marketed and sold will be used for the foreseeable future and does
not anticipate the need for selling at such discounts in the near future.
Operating expenses
Prodijeux's salary expense for the period was $65,368 and is related to
the salaries of the officers of the Company who are also the chief creators and
designers of the game. As sales increase, Prodijeux's management anticipates the
hiring of a sales and administrative force as well as a production design staff.
Prodijeux's consulting expense for the period was $61,878 and includes
consulting services provided by one of the members of the board of directors and
by a consultant who assists the Company with the marketing and distribution of
the game. Prodijeux's management believes that the consulting fees will remain
at the current level for the foreseeable future as the Company continues to
negotiate distribution agreements.
The professional fees for Prodijeux were $24,448 and related to legal and
accounting expenses incurred in the normal course of business.
Prodijeux's net loss for the period was $241,703 for the period ended
September30, 2001 and $30,233 for the year ended September 30, 2000. The Company
will continue to experience losses until it makes significant sales of the game.
Management anticipates sales increasing during the current fiscal year, but does
not have any current orders or sales that would lead to an expectation of
profitability in the fiscal year end June 30, 2002.
Losses from investment
Under the equity method of accounting Anagram includes its allocated share
of Prodijeux's losses in its statement of operations. For the six months ended
June 30, 2001 Anagram's allocated portion of the loss was $86,006. Anagram's
allocated portion of Prodijeux's loss for the three months ended December 31,
2000 was $33,637.
As required under the equity method of accounting Anagram also amortizes
the excess cost of its purchase of Prodijeux over a five year period. The
amortization was $9,380 and $4,690, respectively, for the periods ended June 30,
2001 and December 31, 2000.
16
Prior to July 1, 2001 Anagram and Prodijeux had different fiscal years.
Pursuant to the equity method of accounting, the Company has accounted for its
proportionate share of losses from the time of its original investment in
Prodijeux, October 1, 2000, through June 30, 2001, there was no effect due to
the different fiscal year ends.
Liquidity and capital resources of Anagram and Prodijeux Combined
Anagram intends to satisfy Prodijeux's working capital requirements
principally through issuance of debt and equity securities. As of December 31,
2001 Anagram had a negative working capital of $315,114.
The management of Anagram believes, based upon Prodijeux's current plans
and assumptions relating to its operations, including, assumptions with respect
to the progress of research and development and the costs associated with
production, marketing and sale of its products, that Anagram's current cash
position will be sufficient to satisfy Prodijeux's contemplated cash
requirements for a period of ninety (90) days after the date of this prospectus.
With respect to Prodijeux's liquidity requirements for the next 12 months,
Anagram believes that the cash flow generated from Prodijeux's intended future
operations and sales of WordXchange(R) will complement its current cash
position, as supplemented by Anagram, and Anagram further believes that it will
be able to satisfy any liquidity needs that may arise by short term financing.
If the need arises, Anagram currently contemplates seeking additional financing
or conducting a public offering in order to satisfy Prodijeux's additional cash
requirements and any obligations it may have.
Anagram has committed to loan Prodijeux up to approximately $600,000 (CDN
$954,000) for continuing operations. Through March 31, 2002, Anagram loaned
Prodijeux $470,370 (CDN $748,163). Anagram may increase the amount loaned
Prodijeux, if approved by the board of directors of Anagram.
Currently Anagram receives its funding primarily from its parent, ADC
Development Corp. ADC Development Corp. has committed to loan Anagram up to
$500,000 pursuant to the terms of a promissory note. Through March 31, 2002 ADC
Development Corp. has loaned Anagram $430,426. Depending upon the amount of
money raised through this offering, Anagram may need additional financing to
allocate to Prodijeux during the next twelve months.
Notes Payable
Anagram and Prodijeux borrowed money under different repayment terms from
a variety of sources as discussed the notes to the respective financial
statements. Other than the bank loan and the loan owed to Anagram that are
secured by all the assets of Prodijeux, all other debt owed by Prodijeux
consists of unsecured debt with varying repayment schedules. The unsecured loan
that is owed by Anagram is payable to its parent, ADC Development Corp. The
principal and outstanding interest on this note is due on June 30, 2002. If
Anagram is not in a position to repay this note by the
17
due date Anagram is confident that the terms of the note can be renegotiated and
an extension of time to make any repayments will be granted.
If, for any reason, other parties demand repayment as agreed upon in the
notes payable, Prodijeux will seek additional financing from Anagram if it
cannot meet the obligations based on its cash position at the time of the
demand. Prodijeux would request financing from Anagram and, if its own funds are
not available, Anagram would request the additional funds from ADC Development
Co.
Due to the nature of the relationships between Prodijeux and its
creditors, Anagram does not anticipate a creditor will demand repayment within
the next twelve months. Although, if Prodijeux's cash position allows Prodijeux
will pay off these debts earlier than scheduled to eliminate the payment of
additional interest charges. If Prodijeux cannot make timely repayments it would
request financing from Anagram who, if it cannot meet the request from its own
funds, would seek financing from its parent.
Description of business
Anagram was incorporated under the laws of Delaware in October 2000. The
following discussion and disclosure represents Anagram's intended business plan
and intent with respect to the future operations of our business.
Proposed business
Anagram is a fifty-one (51%) percent stockholder of Prodijeux; Prodijeux
creates, develops, markets, produces and manufactures interactive edutainment,
which is learning entertainment in the form of traditional board games, CD-ROMs,
and online multi-player games. Prodijeux, Inc.'s products are designed to
provide the consumer with both entertainment and an educational experience. The
first product developed by Prodijeux is WordXchange(R), introduced in the Fall
of 2000 in the Canadian market as AnagramPlus(R). The product is currently sold
under that name in the province of Quebec. A number of different local chain
stores in Quebec and the United States have placed orders WordXchange(R).
Prodijeux plans to distribute its products through traditional outlets
such as game and toy stores, bookstores, gift and novelty stores, and catalogs.
Prodijeux also has its own web site, which Anagram considers an essential part
of its product development.
Description of WordXchange(R)
WordXchange(R) is classified as a word game in the GAMES and PUZZLES
category in the toy and game industry. WordXchange(R) has been designed in
English and French versions and plans are underway for a Spanish version.
WordXchange(R) is designed to be played by two to four players or teams. A
complete game is estimated to take 30-40 minutes to play. Prodijeux and Anagram
believe WordXchange(R) has all the ingredients to please many age groups ranging
from
18
young children to mature adults. WordXchange(R) is currently available in an
advanced edition designed for ages 10 and up and has a junior edition designed
for ages 5 and up that are currently being marketed.. It is Anagram's and
Prodijeux's belief that the game is of superior quality and is priced
competitively. The creators of WordXchange(R) sought to develop a game which is
more fun, creative, and challenging than Scrabble(R) while taking less time to
play. There can be no assurance that WordXchange(R) will achieve success and
popularity comparable to Scrabble(R).
WordXchange(R) Place in Market
Among the game and toy industry categories, WordXchange(R) is classified
as a word game in the Games and Puzzle Categories. This category represented 12%
of total toy sales in 2000 (source: World Toy Facts and Figures, ICTI/The NPD
Group Worldwide).
The North American traditional toy market (excluding video games)
experienced slightly higher sales in 2000 ($24.2 billion) when compared to 1999
($24.1 billion). The North American market accounted for 44.2% of total retail
sales. (source: World Toy Facts and Figures). ------------------- -------
According to data provided by the NPD Group in conjunction with the Toy
Manufacturers of America, Inc., in the year 2000, it is estimated that
manufacturers shipped 5 million units of word games; representing $38 million in
wholesale revenues.
According to commissioned research conducted by Hall & Partners (market
research firm) in the United States, Omnibus findings and focus group sessions
indicated that the strongest audience for the adult version of the game are:
females, between 25 and 45 years old with household incomes between $25,000 and
$75,000, who are looking for creative and educational outlets during their small
amount of free time.
Proposed Targeted Customer Base
Anagram and Prodijeux believe that the target market for WordXchange(R) is
large. Because Prodijeux will bring to the market the adult version
(WordXchange(R)) as well as WordXchange(R) junior edition, children under the
age of 10, university students professionals, and parents are all well within
WordXchange(R)'s target market. Anagram and Prodijeux believe that the strongest
market for the WordXchange(R)'s advanced edition are college-educated women,
between the ages of 25-45 with children and a household income between $25,000
and $75,000. Anagram and Prodijeux believe that in the age group containing
25-45 year olds, a high percentage of consumers favor interactive multi-player
games which demand intellectual and strategic acuity. Anagram and Prodijeux aim
to reach the segment of the market with consumers of superior education, higher
wages and an appreciation for fine design. The target consumer is concerned with
getting the best quality-to-price ratio available. The target consumer owns a
computer and is familiar with the Internet and its services. This segment is
also where Anagram and Prodijeux believe the highest proportion of Scrabble(R)
players to be.
19
Distribution strategies
Although Anagram is a majority shareholder in Prodijeux, Anagram does not
intend to be directly engaged in any part of Prodijeux's business including, but
not limited to, development, production and sales of WordXchange(R). Prodijeux's
intended primary objective will be distribution of its products. Distribution
will be facilitated through S& F Associates, Inc., based in Portland, Oregon.
Products will be shipped from Oregon to buyers as determined by sales
representatives in various sectors of the country who communicate orders to
Prodijeux's Montreal office. Prodijeux plans to close further deals with major
distributors in specific markets. Prodijeux is also seeking distribution
contracts with major toy and game industry retailers, including Gift and Novelty
stores, educational retailers, e-tailers, and catalogs. Prodijeux also plans to
attend trade shows, servicing industry-related manufacturers, distributors and
buyers, as well as consumer shows, which cater to the public at large. The basic
advantage of attending these shows is that attendance offers the opportunity to
introduce the game, popularize it, sell it, and establish industry contacts.
Anagram and Prodijeux consider the Internet an important distribution channel.
Prodijeux plans to take advantage of the full potential of the Internet by
developing a Website which will promote and sell WordXchange(R) and future
products through an online store, drawing prospective and current customers to
the site with helpful, timely information. Prodijeux will strategically
coordinate the Website and e-commerce activities with its marketing activities
for the traditional market, thus creating a synergistic and complementary
effect.
Sales and Marketing Strategy
Prodijeux intends to create unique packaging for WordXchange(R) in order
to create quick market awareness and product recognition. There can be no
assurance that this approach will be successful. This will be part of a
multi-faceted marketing campaign designed to introduce WordXchange(R) to the
retail market. Prodijeux is participating in retail and consumer tradeshows,
sending out media kits and sample games as means of creating a market for
WordXchange(R). Prodijeux also plans to develop a Web Site as an integral part
of its advertising and promotional plan. This will be crucial to quickly
developing a market and gaining market acceptance.
Trends in the Game Industry
Management believes that the toy and game industry is witnessing a return
to traditional family entertainment. As more and more people spend increasingly
significant parts of their professional and occupational time working with
computers and other technologies, the desire to spend less family time on
computer and technology areas has spread. Accordingly, Anagram believes that its
products will appeal to a large segment of the general population that is
looking form entertainment options that create an enhanced environment for
family interaction.
Downturn in the Economy
The past 2 years have seen a downturn in the American (and North American)
economy. Management believes that, as a result of stock market declines,
families do not have the means to sustain the same levels of consumer spending
that was seen during the 4-5 year period prior to
20
March 2000. Additionally, since the events of September 11th there has been a
concentration on families spending more time together at home. Management
believes that games like WordXchange will be played by the entire family during
the time they spend at home. Management believes that its sales should not be
seriously affected by an extended downturn in the economy and should be helped
by the focus on the family. The price points for its products suggest that a
decline in the purchase potential of consumers should not act as a hindrance to
sales. Prodijeux's lead products, WordXchange(R) and WordXchange(R) Junior
Edition, have anticipated retail prices in the $20 - $30 range. Purchases of
such items do not constitute major entertainment or leisure purchases for the
families who constitute Anagram's target consumers. While there are no
guarantees that the current economic downturn will not impact the sales of
WordXchange(R), it is the belief of the management of Anagram and Prodijeux that
Prodijeux's products would be seen as less expensive family entertainment
alternatives during such a period.
Dividend Policy
To date, Anagram has not paid dividends on its common stock and at the
present time, Anagram intends to retain earnings, if any, to loan to Prodijeux
for its development and expansion. There can be no assurance that Anagram will
have enough earnings to pay any dividends on its common stock. Even if Anagram
has sufficient earnings, it is not obligated to declare dividends on our common
stock. Anagram's Board of Directors has sole and absolute discretion whether to
declare any cash or stock dividends. This decision will be based upon the
following: earnings, capital requirements, our financial position, general
economic conditions, and other factors the board may consider. It is also
possible that the terms of any future debt financing may restrict the payment of
dividends.
Employees
Anagram currently does not have any employees and therefore does not
maintain "key man" insurance.
Excluding Prodijeux's executive officers and directors, Prodijeux
currently does not have any employees. Prodijeux does not maintain "key man"
insurance on the life of any of its employees.
Real Property Interests and Obligations
Anagram's offices are headquartered at 2700 N. Military Trail, Suite 100,
Boca Raton, Florida. Anagram is not charged rent or consulting fees by FMC
Group, Inc.
Prodijeux's offices are headquartered at 1751 Richardson Street, Suite
5507, Montreal, Quebec, H3K 1G6, Canada. Prodijeux leases its facility pursuant
to an operating lease, with a term of two years, payable in monthly
installments. The expected minimum lease payments for 2002 are $6,300 (CDN
$9,450).
21
Management
Executive officers and directors
The following table sets forth the names and ages of the members of
Anagram's board, Anagram's executive officers and the positions they each hold.
Name Age Position
- ---- --- --------
Paul Michelin 64 President & Director
Robert Michelin 38 Secretary & Director
Paul Michelin is Anagram's President and one of Anagram's Directors. Since 1992
Mr. Michelin has served as the President and a Director of FMC Group, Inc., a
financial consulting firm the stock of which he owns with his wife as joint
tenants with a right of survivorship. Mr. Michelin has also served since 1995 as
the Secretary and Director of COA Development Corp. f/k/a OT Computer Training
Corp., TL Industries, Inc., and International Software Technologies Corp. In
addition, Mr. Michelin has served as the Chairman of the Board and Director of
VI Solutions Inc. f/k/a SMC Multimedia Corp., which is engaged in the business
of video conferencing sales and services. Since August 1995, Mr. Michelin has
been a Director of Multicast Interactive Corp., f/k/a Stratosphere
Communications Corp. Mr. Michelin also served from 1990 until 2000 as Secretary
and Director of dotWAP.com f/k/a Nationwide Resources, Inc. which develops and
markets computer software. Furthermore, Mr. Michelin has served since 1996 as a
Director of Your Travel Connections, Inc., a travel agency 75% of which is owned
by Louisa Michelin. Mr. Michelin attended McGill University in Montreal, Canada.
Mr. Michelin has also served as a Director of Visitel Enterprises from January
2000 through May 5, 2001, as Director of QwikCap Corp. f/k/a Pacific Multimedia
Corp. since September 1999, and as President and as Director of Solutions
Software f/k/a MIS Solutions, Inc. since March 16, 2001. From 1983 to 1987, Mr.
Michelin was a principal of Michelin & Company, Inc., a brokerage firm. In 1986
and 1987, certain allegations were made against Mr. Michelin and Michelin &
Company, Inc. with respect to non-compliance with certain state and NASD
regulations. Mr. Michelin has advised management that the foregoing claims were
totally without merit. Nevertheless, he chose to pay certain fines in order to
avoid the expenditure of substantial time and money in litigation. The Company
made a determination to cease business and elected not to pay the fine to the
NASD in view of the fact that the only penalty for non-payment would be the
suspension of its business, which the Company had determined to cease.
Robert Michelin is Anagram's Secretary and one of Anagram's Directors. Since
February 2000, Mr. Michelin has acted as the General Counsel for the Canadian
Network for Vaccines and Immunotherapeutics (CANVAC), an initiative created by
the Canadian government to commercialize university research in Canada. Mr.
Michelin has also served as the Vice President of Kensington Sports Management,
Inc., a sports management firm specializing in the representation of
professional coaches since January 1999. Kensington Sports Management is located
in Montreal, Quebec, Canada. Mr. Michelin previously practiced law specializing
in labor and employment matters. From September 1994 to June 1996, he was an
attorney with the law firm of Heeman
22
Blaikie located in Montreal, Quebec, Canada. Mr. Michelin was a sole
practitioner from June 1996 to November 1997 and was an attorney with the firm
of O'Connor, Greenspoon (presently known as Greenspoon, Perreault), also located
in Montreal, Quebec, Canada, from November 1997 to January 1999. Mr. Michelin
has been an independent journalist specializing in legal subjects since 1996.
Mr. Michelin attended McGill University in Montreal and L'Institut d'Etudes
Politiques in Paris, France.
The following table sets forth the names and ages of the members of
Prodijeux's board, their executive officers and the positions they each hold.
Name Age Position
- ---- --- --------
Michel Chiarore 42 Director, President
Rodolphe Charpentier 43 Director, Vice President, Creative Director
Paul Michelin 63 Director
Robert Michelin 37 Director
James Perretty 38 Director
Michel Chiarore is Prodijeux's President, and is in charge of operations,
manufacturing and distribution of Prodijeux's product line. He has also been one
of Prodijeux's Directors since 1998
Mr. Chiarore is the founder and president of Diffusion Le Bouquin inc. in
Montreal, Diffusion Le Bouquin inc. is a book distribution company, of which he
is still President. His experience in the distribution business aided the
company in creating and establishing its distribution network.
His experience further includes 16 years as a manager of a bookstore with
expertise in serving school commissions, government agencies and specialized
organizations.
Rodolphe Charpentier is the cofounder and creative director of product research
and development for Prodijeux, Inc. He is also one of Prodijeux's Directors and
its Creative Director and Vice President of Marketing.
Previous to his responsibilities at Prodijeux, Mr. Charpentier worked, for over
17 years, as a communications and design consultant in industries ranging from
corporate and public interests groups to fashion and commercial packaging. From
1996 to 1998, he focused mainly on the fashion trade, creating seasonal ad
campaigns for national retail chains such as Reitmans, Smart Set, Parasuco Jeans
and Bedo.
James Perretty is one of our directors. He also serves as Secretary and a
Director of International Child Care Corp. Mr. Perretty also serves as the Vice
President/Secretary and a Director of Children
23
of America, Inc. Mr. Perretty has been the Vice President/Secretary and a
Director of ADC Development Corp. f/k/a Time To Train.com since its inception in
March, 1999. Mr. Perretty has been the secretary of Childcare Corp. since
January, 2000. Since 1995, Mr. Perretty has served as Vice President of FMC
Group, Inc., a financial consulting firm. Since 1996, Mr. Perretty has also
served, as President and a Director of Nationwide Resources, Inc., which through
its ownership of Eti International, Ltd., a United Kingdom Corporation, develops
and markets computer software. Nationwide Resources Inc. subsequently changed
its name to dotWap.com Holdings Corp. in December 1999 at which time Mr.
Perretty served as Secretary until July 2000. Furthermore, since 1997, Mr.
Perretty has also served as Secretary and Director for Visual Interactive
Solutions, Inc. f/k/a Stratosphere Multimedia Corp., which engaged in the
business of video conferencing sales and services. Mr. Perretty is also Director
of QwikCap Corp. (f/k/a Pacific Multimedia Corp. and QwikCap Information
Services, Inc.), and was its President until September 1999. QwikCap. Corp
develops and markets computer software systems. From 1984 to 1994, Mr. Perretty
served as a Public Relations Consultant for the Communications Group, a public
relations marketing firm. From 1994 to 1995, Mr. Perretty was an Advertising
Account Executive and Vice President of Finance for Creative Communications
Advantage, an advertising agency. Mr. Perretty received a B.A.A. degree in
Business Administration from Broward Community College.
Outside directors will not be compensated for attendance at board meetings. Each
outside director will be entitled to reimbursement for reasonable expenses
incurred with respect to attending each meeting.
Executive compensation
Anagram:
Paul Michelin, Anagram's President and one of its Directors, does not
presently receive compensation.
Robert Michelin, Anagram's Secretary and one of its Directors, does not
presently receive compensation.
Prodijeux:
Prodijeux has entered into an employment agreement with its president,
Michel Chiarore. The agreement provides a salary in the amount of $37,722.00
(CDN $60,000) per year. The agreement also provides for an annual bonus
equivalent to five (5%) of the pre-tax profits of Prodijeux as calculated by
outside auditors in accordance with GAAP, above the first $75,444.00 (CDN
$120,000) of such profits during the year. Prodijeux may terminate the agreement
at any time, with or without cause.
Prodijeux has entered into an employment agreement with its vice president
and creative director, Rodolphe Charpentier. The agreement provides a salary in
the amount of $37,722.00 (CDN
24
$60,000) per year. The agreement also provides for an annual bonus equivalent to
five (5%) of the pre-tax profits of Prodijeux as calculated by outside auditors
in accordance with GAAP, above the first $75,444.00 (CDN $120,000) of such
profits during the year. Prodijeux may terminate the agreement at any time, with
or without cause.
Prodijeux also retains Anagram's secretary, Robert Michelin, as an
independent contractor. Mr. Michelin is paid a monthly retainer of $1,266 (CDN
$2,000).
Stock option plan
Anagram intends to implement a stock option plan in the future. The
purpose of the plan will be to provide its directors, officers, key employees
and consultants with additional incentives by increasing their ownership
interests. The stock option plan, which Anagram anticipates will incorporate
both qualified and non-qualified options, will contain terms that shall be
approved by the board and submitted to the shareholders for approval.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant 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 as expressed in the Act and is therefore unenforceable.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by us or the Selling Shareholders.
Neither the delivery of this Prospectus, nor any sale made hereunder shall,
under any circumstances, create any implication that there has been no change in
our affairs since the date hereof or that the information contained herein is
correct as of any date subsequent to the date hereof. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
offered hereby by anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation.
Certain relationships and transactions
ADC Development Corp., of which FMC Group Inc. owns eighty-three (83%)
percent of its capital stock, owns the majority of our outstanding common stock.
Accordingly, FMC Group through ADC Development will be able to exert complete
control over matters requiring approval by our stockholders, including, but not
limited to the election of directors and the approval of mergers or other
business combinations.
25
Two of Anagram's directors are related, as Robert Michelin is Paul
Michelin's nephew.
Anagram owns fifty one (51%) percent of the outstanding stock of
Prodijeux. Anagram has also agreed to loan Prodijeux approximately $600,000 (CDN
$954,000), of which $470,370 (CDN $748,163) has been advanced as of March 31,
2002, at an interest rate of seven (7%) percent per annum. This loan is to be
repaid upon the earlier of (i) Prodijeux achieving sales of at least fifty
thousand (50,000) units of WordXchange(R), or (ii) by October 1, 2002. The
current loan will be funded by Anagram through its parent ADC Development Corp.
Anagram's loan from ADC Development Corp. is for an amount up to $500,000
at an interest rate of 6% per year, with the unpaid principal and interest
balance due on June 30, 2002.
Principal stockholders
The following table sets forth the number of common stock owned and the
percentage of our outstanding shares of common stock for the following:
o all persons who own more than five percent of our outstanding common
stock;
o each officer and director;
o officers and directors as a group.
- --------------------------------------------------------------------------------
AMOUNT Of PERCENTAGE PERCENTAGE
BENEFICIAL BEFORE AFTER
NAME OWNERSHIP OFFERING OFFERING
- ---- --------- -------- --------
- --------------------------------------------------------------------------------
ADC Development Corp.
2700 North Military Trail, # 100,
Boca Raton, Florida, 33431 6,000,000 96% 69%
- --------------------------------------------------------------------------------
Paul Michelin,
Director and President (1) 6,000,000 96% 69%
- --------------------------------------------------------------------------------
Robert Michelin, Director and
Secretary 0 0% 0%
- --------------------------------------------------------------------------------
All Officers & Directors as a group -
Two people (1) 6,000,000 96% 69%
- --------------------------------------------------------------------------------
(1) Includes 6,000,000 shares held by ADC Development Corp., of which
eighty-three (83%) percent of its capital stock is owned by FMC Group Inc., of
which Mr. Michelin is the President and a Director. Mr. Michelin, together with
his wife are the sole shareholders of FMC Group, Inc..
26
Plan of distribution
Prior to this offering, no public market for our securities existed. A
total of up to 2,736,000 shares may be sold pursuant to this prospectus. This
includes 2,500,000 shares of our common stock, which as of the date of this
Prospectus, have not been issued. Such shares are being offered by us at a price
of $1.00, using our officers, directors, and broker-dealers on a
self-underwritten, best efforts basis. The broker-dealers referred to in this
section may be deemed to be underwriters. The broker-dealers' commissions will
be paid as may be negotiated in accordance with applicable laws and regulations.
The remaining 236,000 shares may be sold pursuant to this prospectus by the
stockholders listed below, at a price of $1.00. Anagram will not receive any of
the proceeds from the sale of its common stock by the selling stockholders.
Except as described above, the stockholders selling Anagram's stock have never
held any position or office with Anagram or had any other material relationship
with Anagram.
We intend to apply to have the common stock traded on the OTC Bulletin
Board, which is maintained by the National Association of Securities Dealers,
Inc. If our application is approved the Selling Stockholders may sell their
shares at market prices prevailing at the time of the sale, at prices related to
such prevailing market prices, at negotiated prices or fixed prices. The selling
stockholders may use broker-dealers to sell their shares. Sales through brokers
or dealers may involve one or more of the following:
-block trades in which the broker or dealer so engaged will attempt
to sell the selling stockholder's shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction;
-purchases by a broker or dealer as principal and resale by such
broker or dealer for its own account pursuant to this prospectus; or
-ordinary brokerage transactions and transactions in which the
broker solicits purchasers.
If a broker or dealer is engaged by a selling stockholder, such broker or
dealer may either receive discounts or commissions from the selling
stockholders, or they will receive commissions from purchasers of shares for
whom they acted as agents. Affiliates of one or more of the selling stockholders
may act as principals or agents in connection with the offer or sale of shares
by selling stockholders.
Selling stockholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act of
1933, as amended, provided that they meet the criteria and conform to the
requirements of that Rule.
Selling stockholders have been advised that during the time each is
engaged in distribution of the securities covered by this Prospectus, to the
extent applicable, each must comply with Regulation M under the Securities
Exchange Act of 1934, as amended, and pursuant to such Regulation:
-shall not engage in any stabilization activity in connection with
our securities;
-shall furnish each broker through which securities covered by this
Prospectus may be
27
offered the number of copies of this Prospectus which are required by each
broker; and
-shall not bid for or purchase any of our securities or attempt to
induce any person to purchase any of our securities other than as permitted
under the Securities Exchange Act of 1934, as amended.
The following list assumes all shares which will be registered based on
the filing of this prospectus are sold by the selling shareholders.
- ------------------------------------------------------------------------------------------------------
Shares Percentage of
owned Shares owned shares
Selling prior to Shares following following
Stockholder offering registered offering offering
- ------------------------------------------------------------------------------------------------------
John C. Caras 40,000 40,000 0 0%
- ------------------------------------------------------------------------------------------------------
Joseph Cantore 6,000 6,000 0 0%
- ------------------------------------------------------------------------------------------------------
Angela Grandinetti 20,000 20,000 0 0%
- ------------------------------------------------------------------------------------------------------
Samantha Hockenberry 20,000 20,000 0 0%
- ------------------------------------------------------------------------------------------------------
Teddy Hockenberry 20,000 20,000 0 0%
- ------------------------------------------------------------------------------------------------------
Joseph Letzelter 10,000 10,000 0 0%
- ------------------------------------------------------------------------------------------------------
Marcai Levin 40,000 40,000 0 0%
- ------------------------------------------------------------------------------------------------------
James Perretty 10,000 10,000 0 0%
- ------------------------------------------------------------------------------------------------------
Jeanne Perretty 10,000 10,000 0 0%
- ------------------------------------------------------------------------------------------------------
Thad Pryor 40,000 40,000 0 0%
- ------------------------------------------------------------------------------------------------------
Stephen S. Shelman 10,000 10,000 0 0%
- ------------------------------------------------------------------------------------------------------
Keith Neil Thompson 10,000 10,000 0 0%
- ------------------------------------------------------------------------------------------------------
28
Description of the securities
General
The following description summarizes our authorized and currently
outstanding securities. Anagram is authorized to issue Twenty Million
(20,000,000) shares of common stock, par value $.001 per share and a maximum of
Two Million (2,000,000) shares of preferred stock, $.01 per share. There are
6,236,000 shares of common stock issued and outstanding as of the date of this
prospectus. No shares of preferred stock have been issued.
Common stock
Each holder of shares of Anagram's common stock, issued and outstanding,
is entitled to one vote per share held and has the sole right and power to vote
upon all matters upon which a vote of stockholders is taken. Neither the
certificate of incorporation nor our by laws permit Anagram's stockholders to
vote their shares cumulatively. Upon liquidation, dissolution, or winding up of
the business, the owners of common stock are entitled to receive Anagram's net
assets in proportion to the respective number of shares held by them, following
payment to our preferred stockholders. The holders of common stock do not have
any preemptive right to subscribe for or purchase any shares of any class of
stock.
To date, Anagram has never paid dividends on any of its common stock.
Anagram does not guarantee that it will have enough earnings to pay any
dividends on its common stock. Even if Anagram has sufficient earnings, it is
not required to declare dividends on its common stock. Whether Anagram should
declare cash or stock dividends will be in the sole and absolute discretion of
its board and will depend upon its earnings, capital requirements, financial
position, general economic conditions and other relevant factors. It is also
possible that the terms of any future debt financing may restrict declaration of
dividends.
Preferred stock
Anagram is authorized by its certificate of incorporation to issue
preferred stock, in one or more series which may contain rights, privileges and
limitations, including:
o Conversion privileges
o Dividends
o Redemption rights
o Liquidation privileges.
Except as specifically provided by the Delaware General Corporation Law
relating to the voting by all classes of stock, holders of preferred stock will
have no voting rights unless specifically granted by Anagram's board. Anagram
has not issued any of our preferred stock, as of the date of this prospectus and
currently have no plans to do so.
If any shares of preferred stock are issued, a certificate of designation,
setting forth the series
29
of such preferred stock and the rights, privileges and limitations of the
holders of the preferred stock will be filed with the Secretary of State of the
State of Delaware. This may have the effect of delaying, deferring or preventing
a change in control of Anagram's management without further action by other
stockholders and may adversely affect the rights of the holders of its common
stock.
Warrants
As of the date of this registration statement, there are no warrants to
purchase shares of Anagram's common stock outstanding.
Determination of offering price
Prior to this offering of Anagram's common stock, there has been no public
market for any of its securities and there can be no assurance that a market
will develop. The price of Anagram's common stock, when sold by its stockholders
will be determined by broker-dealers and market makers in negotiated
transactions, or trades over the open market where Anagram intends to list its
common stock. Among factors which may be considered by broker-dealers, market
makers and investors to determine the price for Anagram's securities in the
public market are:
o estimates of our business potential;
o prevailing market conditions in the U.S. economy and the market in
which Anagram and Prodijeux intend to compete;
o an evaluation of other companies comparable to Anagram and Prodijeux
and their ability to effectively compete with Prodijeux's product.
Transfer agent
The transfer agent for Anagram's common stock is Liberty Transfer Company,
274B New York Avenue, Huntington, New York 11243
Shares eligible for future sale
Prior to this offering, there has been no public market for Anagram's
common stock. Future sales of substantial amounts of common stock in the public
market, or the availability of shares for sale, could adversely affect the
prevailing market price of Anagram's common stock and its ability to raise
capital through an offering of equity securities.
The 2,736,000 shares of common stock offered in this offering will be
immediately tradable without restriction under the Securities Act, except for
any shares held by an "affiliate" of Anagram, as that term is defined in the
Securities Act. Affiliates will be subject to the resale limitations of Rule 144
under the Securities Act. The remaining 6,000,000 shares of common stock will be
deemed "restricted securities" as defined in Rule 144.
30
In general, under Rule 144, a stockholder, or stockholders, whose shares
are aggregated, who has beneficially owned "restricted securities" for at least
one year will be entitled to sell an amount of shares within any three month
period, equal to the greater of:
(i) 1% of the then outstanding shares of common stock; or
(ii) the average weekly trading volume in the common stock during the four
calendar weeks immediately preceding the date on which notice of the sale is
filed with the commission, provided certain requirements are satisfied.
In addition, Anagram's affiliates must comply with additional requirements
of Rule 144 in order to sell shares of common stock, including shares acquired
by affiliates in this offering. Under Rule 144, a stockholder who had not been
Anagram's affiliate at any time during the 90 days preceding a sale by him,
would be entitled to sell those shares without regard to the Rule 144
requirements if he owned the restricted shares of common stock for a period of
at least two years. The foregoing summary of Rule 144 is not a complete
description.
Interest of named experts and counsel
Legal matters
The legality of Anagram's common stock has been passed upon on our behalf
by Mintz & Fraade, P.C., New York, New York.
Experts
The financial statements included in this prospectus and in the
registration statement have been audited. Anagram's financial statements have
been audited by Daszkal Bolton, LLP. 2401 NW Boca Raton Blvd., Suite 100, Boca
Raton, FL 33431, independent certified public accountants, to the extent and for
the periods set forth in their reports appearing elsewhere in this prospectus
and in the registration statement, and are included in reliance upon such
reports given upon the authority of each said firm as experts in accounting and
auditing.
Prodijeux's financial statements have been audited by Perreault, Wolman,
Grzywacz & Co., 5250 Ferrier, Suite 814, Montreal, Quebec H4P 2N7, independent
chartered accountants, to the extent and for the periods set forth in their
reports appearing elsewhere in this prospectus and in the registration
statement, and are included in reliance upon such reports given upon the
authority of each said firm as expects in accounting and auditing.
Legal proceedings
Neither Anagram nor Prodijeux know of any litigation pending, threatened
or contemplated, or unsatisfied judgments, against them, or of any proceeding to
which they are a party.
31
Available Information
Anagram and Prodijeux have filed with the Securities and Exchange
Commission a registration statement on Form SB-2 under the Securities Act,
together with all amendments and exhibits, for the securities registered by this
registration statement. This prospectus, filed as a part of the registration
statement, does not contain all of the information set forth in, or annexed as
exhibits to, the registration statement, parts of which are omitted in
accordance with the rules and regulations of the commission. For further
information about Anagram and Prodijeux, please refer to the registration
statement, including its exhibits and schedules, which may be inspected without
charge at the principal office of the commission, 450 Fifth Street, NW,
Washington, D.C. 20549, or at other regional offices of the commission. Copies
of such material may be obtained by mail from the Public Reference Section of
the Commission at 450 Fifth Street, NW, Washington, D.C. 20549, at prescribed
rates. To obtain information on the operation of the Public Reference Room, the
Securities and Exchange Commission can be contacted at 1-800-SEC-0330. Such
material may also be accessed electronically at the SEC's home page on the
Internet at http://www.sec.gov.
32
PART II
Indemnification of Directors and Officers.
Article SEVENTH of the Registrant's Certificate of Incorporation, contains
the following provision with respect to the indemnification of directors of the
Company:
"SEVENTH: The personal liability of the directors of the Corporation
is hereby eliminated to the fullest extent permitted by the provisions of
Section 102(b)(7) of the General Corporation Law of the State of Delaware, as
the same may be amended or supplemented."
Sections 1, 2, 3 and 4 of Article 8 of the Registrant's By-laws contain
the following provisions with respect to the indemnification of directors,
officers and authorized representatives:
"Section 1. Indemnification of Directors and Officers in Third Party
Proceedings. The Corporation shall indemnify any director or officer of the
Corporation who was or is an "authorized representative" of the Corporation
(which shall mean for the purposes of this Article a director or officer of the
Corporation, or a person serving at the request of the Corporation as a
director, officer, partner or trustee of another corporation, partnership, joint
venture, trust or other enterprise) and who was or is a "party" (which shall
include for purposes of this Article the giving of testimony or similar
involvement) or is threatened to be made a party to any "third party proceeding
" (which shall mean for purposes of this Article any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of the Corporation) by
reason of the fact that such person was or is an authorized representative of
the Corporation, against expenses (which shall include for purposes of this
Article attorney's fees and disbursements), judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such third party proceeding if such person acted in good faith
and in a manner such person reasonably believed to be in, or not opposed to, the
best interests of the Corporation and, with respect to a criminal third party
proceeding (which shall include for purposes of this Article any investigation
which could or does lead to a criminal third party proceeding) had not
reasonable cause to believe such conduct was unlawful. The termination of any
third party proceeding by judgment, order, settlement, indictment, conviction or
upon a plea of no contest or its equivalent, shall not, of itself, create a
presumption that the authorized representative did not act in good faith and in
a manner which such person reasonably believed to be in or not opposed to the
best interests of the Corporation, and, with respect to any criminal third party
proceeding, had reasonable cause to believe that such conduct was unlawful.
Section 2. Indemnification of Directors and Officers in Corporate
Proceedings. The Corporation shall indemnify any director or officer of the
Corporation who was or is an authorized representative of the Corporation and
who was or is a party or is threatened to be made a party to any "corporate
proceeding" (which shall mean for purposes of this Article any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor or any investigative proceeding by or on behalf
of the Corporation) by reason of the fact that such person was or is an
authorized representative of the Corporation, against expenses (including
attorneys' fees and disbursements) actually and reasonably incurred by such
person in connection with the defense or settlement of such corporate proceeding
if such person acted in good faith and in a manner such person reasonably
believed to be in, or not opposed to, the best interests of the Corporation,
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of such person's duty to the
Corporation unless and only to the extent that the court in which such corporate
proceeding was pending shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
authorized representative is fairly and reasonably entitled to indemnity for
such expenses which the court shall deem proper.
Section 3. Indemnification of Authorized Representatives. To the
extent that an authorized representative of the Corporation who neither was nor
is a director or officer of the Corporation has been successful on the merits or
otherwise in defense of any third party or corporate proceeding or in defense of
any claim, issue or matter therein, such person shall be indemnified against
expenses actually and reasonably incurred by such person in connection
therewith. Such an authorized representative may, at the discretion of the
Corporation, be indemnified by the Corporation in any other circumstances to any
extent if the Corporation would be required by Section 1 or 2 of this Article
VIII to indemnify such person in such circumstances to such extent as if such
person were or had been a director or officer of the Corporation.
Section 4. General Terms. Any indemnification under Section 1 and
Section 2 of this Article VIII (unless ordered 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 had met the applicable standard of conduct set forth in
Section 1 and Section 2 of this Article VIII. Such determination shall be made
(i) by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (ii) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in written
opinion, or (iii) by the stockholders.
Expenses incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in these By-laws.
Section 145 of the Delaware General Corporation Law also contains
provisions entitling directors and officers of the Company to indemnification
from judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees, as the result of an action or
proceeding in which they may be involved by reason of being or having been a
director or officer of the Company (or, at the request of the Company, a
director or officer of another corporation or other enterprise); provided the
officers or directors acted in good faith. The Company also may obtain an
insurance policy which will cover officers and directors for any liability
arising out of their actions in such capacity.
The foregoing do not and will not eliminate or limit the liability of a
director for violating his duty of loyalty (which includes the obligation of a
director of the Company to refrain from self-dealing with respect to the
Company, improperly competing with the Company or usurping Company
opportunities), failing to act in good faith, engaging in intentional misconduct
or knowingly violating a law or participating in the payment of a dividend or a
stock repurchase or redemption for himself. The foregoing also do not and will
not affect any director's liability under federal securities laws or the
availability of equitable remedies such as an injunction or rescission for
breach of fiduciary duty.
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth an itemized list of all expenses to be
borne by the Registrant in connection with the issuance and distribution of the
securities being registered hereby other than underwriting discounts and
commissions and non-accountable expenses.
SEC Registration Fee ........................................ $ 684.00
Printing and Engraving ...................................... * 5,000.00
Legal Fees and Expenses ..................................... *40,000.00
Accounting Fees and Expenses ................................ * 5,000.00
Transfer Agent Fees ......................................... * 4,000.00
Miscellaneous Expenses ...................................... 20,316.00
----------
TOTAL .............................................. $75,000.00
- ----------
* Estimated.
Item 26. Sales of Unregistered Securities.
Effective October 4, 2000, Anagram issued an aggregate of 6,000,000 shares
of common stock as founder's shares. The issuance of all such shares of common
stock did not require registration under the Securities Act in that all of such
shares of common stock were issued pursuant to a Section 4(2) private offering.
An aggregate of up to 236,000 shares may be sold pursuant to this prospectus by
the selling shareholders. As described elsewhere in this registration statement,
the selling shareholders are friends, relatives and business associates of the
officers and directors of Anagram. The issuance of all such shares of common
stock did not require registration under the Securities Act in that all of such
shares of common stock were issued pursuant to an exemption from the
registration requirements of the Securities Act afforded by Rule 506 of Section
4(2) thereof. Neither Anagram nor Prodijeux will not receive any of the proceeds
from the sale of shares of common stock by the selling shareholders.
II-3
Item 27. Exhibits.
Number Description
- ------ -----------
3.1 Articles of Incorporation of Anagram.
3.2 By-Laws of Anagram.
3.3 Articles of Incorporation of Prodijeux
3.4 By-Laws of Prodijeux
4.1 Specimen Common Stock Certificate.
5.1 Opinion of Mintz & Fraade, P.C.
23.1 Consent of Mintz & Fraade, P.C. (Included in 5.1)
23.2 Consent of Daszkal Bolton, LLP
23.3 Consent of Perreault, Wolman, Grywacz & Co.
24.1 Power of Attorney (set forth on the signature page of this
Registration Statement).
- -----------
Item 28. Undertakings.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to any of the provisions described under Item 24 above, 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
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 such
indemnification by it is against public policy as expressed in the Securities
Act and will governed by the final adjudication of such issue.
The Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(a) include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) reflect in this prospectus any facts or events which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the registration statement; and,
notwithstanding the forgoing, 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 the
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
II-4
(c) Include any additional or changed material information with
respect to the plan of distribution.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering; and
The Registrant hereby further undertakes that it will:
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act as part of this Registration Statement as
of the time the Commission declared it effective; and
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the Registration
Statement, and that offering of such securities at that time as the
initial bona fide offering of those securities.
II-5
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, Anagram
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form SB-2 and authorize this registration statement to
be signed on its behalf by the undersigned, in Boca Raton, State of Florida, on
May 9, 2002.
Anagram Plus, Inc.
By: /s/ Paul Michelin
----------------------------
Paul Michelin, President
By: /s/ Robert Michelin
----------------------------
Robert Michelin, Secretary
II-6
INDEX TO FINANCIAL STATEMENTS
Anagram and Subsidiary (Unaudited)
Consolidated Balance Sheet ......................................... F-2
Consolidated Statement of Operations ............................... F-3
Consolidated Statement of Changes in Stockholder's Deficit ......... F-4
Consolidated Statement of Cash Flows ............................... F-5
Notes to Consolidated Financial Statements ......................... F-6-10
Anagram
Independent Auditors' Report ....................................... F-11
Financial Statements
Balance Sheets ...................................................F-12
Statements of Operations .........................................F-13
Statements of Changes in Stockholders' Deficit ...................F-14
Statements of Cash Flows .........................................F-15
Notes to Financial Statements ......................................F-16 - F-19
Prodijeux
Independent Auditors' Report ..............................................F-20
Financial Statements
Balance Sheets ...................................................F-21
Statements of Changes in Stockholders' Deficit ...................F-22
Statement of Operations ..........................................F-23
Statements of Cash Flows .........................................F-24
Notes to Financial Statements ......................................F-25 - F-29
AnagramPlus, Inc.
2,736,000 shares
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PROSPECTUS
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We have not authorized anyone to give any information or to make any
representations other than those contained in this prospectus. No other
information should be relied upon. The information contained in this prospectus
is current only to the date of this prospectus. This prospectus does not offer
to sell any securities in any jurisdiction where to do so would be unlawful.
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Until , 2002, 25 days after the date of this prospectus, 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 obligations of dealers to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
______ , 2002