As filed with the Securities and Exchange Commission on July 21 2004
Registration No. 333-106145
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM SB-2
REGISTRATION STATEMENT
AMENDMENT #2
UNDER THE SECURITIES ACT OF 1933
CONSOLE MARKETING INC.
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(Exact name of registrant as specified in its charter)
Nevada 7372 98-0363767
- ------------------------------- --------------------- ------------------------
(State or other jurisdiction of (primary standard (I.R.S. Employer
incorporation or organization) industrial code) Identification Number)
Suite 212, 1166 Alberni Street
Vancouver, British Columbia (604) 681-1064
Canada V6E 3Z3
- ---------------------------------------- -------------------------------
(Address of principal executive offices) (Registrant's telephone number)
AGENT FOR SERVICE:
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Michael Jackson, President
Console Marketing Inc.
Suite 212, 1166 Alberni Street
Vancouver, British Columbia V6E 3Z3
(604) 681-1064
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [_]
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CALCULATION OF REGISTRATION FEE
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Dollar Proposed Proposed
Title of each class of Amount Shares maximum maximum Amount of
securities to be to be to be offering price aggregate Registration fee
registered registered registered per unit offering price
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Class A Common Stock $ 106,250 4,250,000 $ .025 $ 106,250 $ 8.59(1)
=====================================================================================================
<FN>
(1) previously paid.
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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 the date the Commission, acting pursuant to Section 8(a), may
determine.
We will amend and complete the information in this prospectus. Although we are
permitted by US federal securities law to offer these securities using this
prospectus, we may not sell them nor accept your offer to buy them until the
documentation filed with the Securities and Exchange Commission relating to
these securities has been declared effective by the Commission. This prospectus
is not an offer to sell these securities nor our solicitation of your offer to
buy these securities in any jurisdiction where that would not be permitted or
legal.
PROSPECTUS Date: July 21, 2004
CONSOLE MARKETING INC.
Suite 212, 1166 Alberni Street
Vancouver, British Columbia V6E 3Z3 CANADA
(604) 681-1064
4,250,000 Shares of Common Stock
This is the initial public offering of common stock of Console Marketing Inc.
and no public market currently exists for shares of Console Marketing Inc.'s
common stock. The initial public offering price is $0.025 per share of common
stock, which was arbitrarily determined. The offering is on a best efforts basis
and the minimum number of shares that must be subscribed for shall be 2,125,000.
Funds will be held in trust pending the sale of the minimum number of shares.
The latest date on which this offering will close will be 90 days after the date
of this prospectus has been declared effective unless extended for a further 90
days at the discretion of the Company.
The Company will issue 2,125,000 Common Stock Shares, if the minimum offering is
subscribed for and up to a maximum of 4,250,000 Common Stock Shares having a par
value of $0.001 which shares do not permit cumulative voting for the election of
Directors and for which shareholders do not have any pre-emptive rights to
purchase shares of the issuers common stock.
- --------------------------------------------------------------------------------------------------
PER SHARE MIN. NO OF SHARES SOLD
TOTAL FUNDS RECEIVED MAX. NO OF SHARES SOLD
TOTAL FUNDS RECEIVED
- ---------------------------------- ---------- ------------------------ ------------------------
Offering Price $ 0.025 $ 53,125 $ 106,250
- ---------------------------------- ---------- ------------------------ ------------------------
Less Estimated Offering Expenses $ 0.008 / ($17,000) ($17,000)
(Minimum / Maximum) $ 0.004
- ---------------------------------- ---------- ------------------------ ------------------------
Net Proceeds to Console Marketing $ 0.017 / $ 36,125 $ 89,250
(Minimum / Maximum) $ 0.021
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--------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or passed on the
adequacy or accuracy of the disclosures in the prospectus. Any representation to
the contrary is a criminal offence.
There is no established public market for our common stock, and the offering
price has been arbitrarily determined. Our common stock is not currently listed
or quoted on any quotation service. Our President, Michael Jackson, will sell
the Shares without the use of an underwriter on a best efforts basis.
This offer will terminate 90 days after acceptance of this Prospectus but may be
extended for a further 90 days at the option of the Company. There are no
pre-existing contractual agreements for any person to purchase the shares.
Shares will be offered in Canada and Europe. No shares will be offered to
residents of the United States.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 2.
TABLE OF CONTENTS
PART I-PROSPECTUS
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . .5
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
DETERMINATION OF OFFERING PRICE . . . . . . . . . . . . . . . . . . . . . . . .6
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS . . . . . . . . . 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . 8
DESCRIPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . .9
INTEREST OF NAMED EXPERTS AND COUNSEL . . . . . . . . . . . . . . . . . . . . .9
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
ORGANIZATION WITHIN THE LAST 5 YEARS . . . . . . . . . . . . . . . . . . . . .10
DESCRIPTION OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION . . . . . . . . . . 17
DESCRIPTION OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . .19
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . .19
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . 20
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
page i
SUMMARY INFORMATION AND RISK FACTORS
PROSPECTUS SUMMARY
CONSOLE MARKETING INC.
Console Marketing Inc. ("Console Marketing" or the "Company") is a corporation
formed under the laws of the State of Nevada, on November 19th 2001, with
principal executive offices are located in Vancouver, British Columbia, Canada.
The Company is extra-territorially registered in Canada in order to also conduct
business in Canada.
The primary objective of the business is to market and sell licenses to land
based and Internet based companies ("Clients") for them to use our proprietary
software program known as the "TargetBar Console" (the "Console " and/or
"Toolbar"), which will enable them to maintain a relationship with their
customers. The Console is a small toolbar similar to the Windows toolbar that is
located at the top of ones browser. The Console toolbar (the "Toolbar")is
branded with the company's name, color scheme and logo, continually displays
customized information of interest to the user such as corporate information,
streaming news, sports information, stock quotes and/or oriented content which
occupies a minimal area of a dedicated screen. While delivering this content,
the Console also has the capacity to display advertising material targeted
directly to the user. Our Clients will offer their customers the ability to
download the Toolbar onto their web browser. The Console Toolbar can be located
in any location on the customer's web browser that the customer wishes. As the
Console Toolbar would be constantly open on the customer's browser (although a
customer has the ability to hide it) it provides the Client with a constant
presence on the customer's desktop.
The rationale for a Client having a constant presence on their customer's
desktop is the advertising appeal and the branding that the Client is able to
create. It also establishes a nexus between the two parties and it is
management's opinion that it will create loyalty and therefore increase Clients
revenue potential. An example of this would be if we sold a License to The Wall
Street Journal. One would assume that if a customer has the Wall Street Journal
Toolbar opened on his/her desktop and constantly reviewed news, offers and
advertising, that if the client was going to purchase a newspaper or a product
offer, that they would do so from The Wall Street Journal,
The TargetBar Console software was developed by Michael Jackson, John Buddo and
Cecil Morris. Mr. Jackson is the President of the Company.
Since inception, the company has been preparing this SB-2 Prospectus and working
on refining the software, analyzing the market potential for the product and
discussing the product with potential users. Management believes that there
exists a substantial market for the Toolbar, which the Company wishes to
capitalize upon.
NAME, ADDRESS, AND TELEPHONE NUMBER OF REGISTRANT
Console Marketing Inc.
Suite 212, 1166 Alberni Street
Vancouver, British Columbia V6E 3Z3 CANADA
Tel: (604) 681-1064
Fax: (604) 648-2091
Part I - page 1
THE OFFERING
Price per share Offered $0.025
Common Stock Offered by Console Marketing 4,250,000 shares
Common Stock Outstanding Prior to Offering 4,300,000 shares
Common Stock Outstanding After Offering assuming 50% of
offering sold 6,425,000 shares
Common Stock Outstanding After Offering assuming 100% of
the offering is sold 8,550,000 shares
(The Company will withdraw the offering if less than 50% of the offering is
subscribed for by the closing date.) If the minimum offering is not reached, the
funds held in escrow will promptly be returned to the investors, without
interest.
The Companies Officers and Directors may subscribe for shares under this
offering for investment purposes.
Console Marketing expects to use the net proceeds for organizational purposes
and to commence a marketing campaign to sell Console Licenses, products and
services to specific markets, initially in North America.
The offering will close 90 days after acceptance of this Prospectus has been
declared effective by the SEC. Console Marketing may, at their discretion,
extend the closing for a further 90 days
SUMMARY OF FINANCIAL INFORMATION
During the period from November 19th 2001 through May 31st 2004, Console
Marketing has engaged in no significant operations other than organizational
activities, acquisition of the TargetBar Console software program and
preparation for registration of its' securities under the Securities Act of
1933, as amended. No revenues were received by Console Marketing during this
period.
Net losses and accumulated deficits during this period were: $37,427. The
Company currently has cash on hand of $45.
Console Marketing remains in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
shareholders' equity. Consequently, Console Marketing's balance sheet as of May
31st 2004 reflects total assets of $45, total liabilities of $25,472 and a
stockholders deficiency of $25,427. The Company earned, from November 19th 2001
(date of inception) to May 31st 2004, no revenue and incurred expenses of
$37,427, which resulted in a net loss of $37,427.
Console Marketing's business plan is to raise $106,250 as initial capital and
commence marketing the TargetBar Console Licenses to corporate organizations.
Console Marketing will engage commissioned salespeople to market the product.
The net proceeds to Console Marketing from the sale of the 4,250,000 shares of
common stock offered by us at an assumed initial public offering price of $.025
per share are estimated to be $89,250 after deducting estimated offering
expenses of $17,000, which will be paid out of proceeds of the offering.
Therefore, if the offering is fully subscribed, Console Marketing should have
sufficient capital to launch their business plan.
In the event the minimum offering is not subscribed for, Mr. Jackson will
personally pay for the Offering Expenses.
Part I - page 2
RISK FACTORS
CONSOLE MARKETING HAS INCURRED LOSSES SINCE ITS' INCEPTION IN NOVEMBER 19TH,
2001 AND EXPECTS LOSSES TO CONTINUE FOR THE FORESEEABLE FUTURE, WHICH WOULD
NEGATIVELY AFFECT THE COMPANIES SHARE VALUE.
Console Marketing is in the extreme early stages of development and could fail
before implementing its' business plan. It is a "start up" venture that will
incur net losses for the foreseeable future. Console Marketing has only recently
acquired its principal asset and will incur additional expenses before becoming
profitable, if it ever becomes profitable. It is a relatively young company that
has no history of earnings or profit. There is no assurance that it will operate
profitably or provide a return on investment in the future.
The Company's auditors have expressed 'substantial doubt about the Company's
ability to continue as a going concern'.
FAILURE OF THE COMPANY'S BUSINESS PLAN WOULD RESULT IN THE COMPANY SHARES HAVING
LITTLE OR NO VALUE.
If the Company is unable to sell Licenses with a result that the business plan
does not succeed and the Company fails to generate sufficient revenue to
continue operating economically, the Company's shares will have little or
novalue as a result, Console Marketing would have great difficulty raising
additional capital. In addition, there would be a limited public market, if any,
for resale of the shares of Console Marketing's common stock issued in this
offering.
CONSOLE MARKETING IS SOLELY DEPENDENT UPON AMOUNTS TO BE RAISED IN THIS
OFFERING THE PROCEEDS OF WHICH MAY BE INSUFFICIENT TO ACHIEVE REVENUES. THE
COMPANY WILL HAVE TO OBTAIN ADDITIONAL FINANCING, WHICH MAY NOT BE AVAILABLE
WHICH WOULD ERODE THE VALUE OF THE SHAREHOLDER'S SHARES
Console Marketing has limited funding. It is solely dependent on the proceeds
to be raised in this offering, and the results of the offering are uncertain. If
only 50% of the shares being offered are sold, the net proceeds to Console
Marketing will be approximately $36,125 after deducting estimated offering
expenses of $17,000 that have not yet been paid. This amount will only enable
the Company to begin to establish an office. It will need additional funds to
complete its development phase and achieve a sustainable sales level where
ongoing operations can be funded out of revenues. In this case the Company will
have to obtain additional financing through an offering or capital contributions
by current shareholders. No commitments to provide additional funds have been
made by management or shareholders. Accordingly, there can be no assurance that
any additional funds will be available on terms acceptable to Console Marketing
or at all.
NO MARKET MAY DEVELOP FOR CONSOLE MARKETING'S COMMON STOCK AND INVESTORS MAY BE
UNABLE TO SELL THEIR SHARES.
There is no public market for Console Marketing's common stock and no assurance
can be given that a market will develop or that any shareholder will be able to
liquidate his investment without considerable delay, if at all. The trading
market price of Console Marketing' common stock may decline below the offering
price. If a market should develop, the price may be highly volatile. In
addition, an active public market for Console Marketing's common stock may not
develop or be sustained. Owing to the low price of the securities, many
brokerage firms may not be willing to effect transactions in the securities.
Even if a purchaser finds a broker willing to effect a transaction in Console
Marketing' common stock, the combination of brokerage commissions, state
transfer taxes, if any, and other selling costs may exceed the selling price.
Further, many lending institutions will not permit the use of such securities as
collateral for loans. Thus, a purchaser may be unable to sell or otherwise
realize the value invested in Console's Investment stock.
Part I - page 3
THE OFFERING PRICE OF THE SHARES IN THIS OFFERING WAS ARBITRARILY DETERMINED AND
IS NO INDICATION OF THE TRUE VALUE OF THE STOCK, AS A RESULT, INVESTORS MAY BE
UNABLE TO SELL THEIR SHARES.
The offering price of the shares has been arbitrarily determined by Console
Marketing based upon what it believes purchasers of such speculative issues
would be willing to pay for the stock and bears no basis in relation to assets,
book value or any other established criteria of value. The offering price may
not reflect the market price of our shares after the offering. No assurance can
be given that the shares will have a market value or that they can be resold at
this price if and when an active secondary market might exist.
CONSOLE MARKETING MAY NEED ADDITIONAL FINANCING WHICH MAY NOT BE AVAILABLE, OR
WHICH MAY DILUTE THE OWNERSHIP INTEREST OF INVESTORS
In the event the Company is only able to sell 50% of the Offering, Console
Marketing's ultimate success will depend on its ability to raise additional
capital. The amount that will be raised from the sale of 50% of the Offering is
$53,125 and the Company requires $136,000 to fully achieve its business
objectives. No commitments to provide additional funds have been made by
management or other shareholders. Console Marketing has not investigated the
availability, source or terms that might govern the acquisition of additional
financing. When additional capital is needed, there is no assurance that funds
will be available from any source or, if available, that they can be obtained on
terms acceptable to Console Marketing. If not available, Console Marketing's
operations would be severely limited, and it would be unable to implement its
business plan. If funds are raised in the future, this will result in dilution
to the subscribers of this offering. There are further risks that if the Company
raises the minimum funding, it may still fail to achieve its business objectives
and may cease operations.
INVESTORS MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF CONSOLE MARKETING
INC. STOCK ANDNO MARKET MAY DEVELOP FOR THE COMPANY'S SECURITIES WHICH COULD
RESULT IN INVESTORS LOSING THEIR ENTIRE INVESTMENT.
Depending on the market conditions and the success of the Company in achieving
its' business plan, there may be no market for the Securities being offered, in
which event the securities may have little value and may not be saleable.
Investors may lose their entire investment if a market fails to develop.
The stock may fall quickly in value. Investors may be unable to reap any profit
from any sale of the stock, if they can sell it at all.
PURCHASERS MUST RELY ON MR. JACKSON'S ABILITIES FOR ALL DECISIONS, AS HE WILL
CONTROL THE MAJORITY OF THE STOCK AFTER THE OFFERING.
Mr. Jackson is serving as Console Marketing's President and director. Console
Marketing will be heavily dependent upon Mr. Jackson's entrepreneurial skills
and experience to implement its' business plan and may, from time to time, find
that his inability to devote full time attention to its' affairs will result in
delay(s) in progress towards the implementation of its' business plan. The
Company has entered into an agreement with Mr. Jackson to operate the Company on
a day-to-day basis. The contract is for 1 year and automatically renews annually
unless cancelled. Mr. Jackson is entitled to a consideration of $6,000 per
annum, which he has agreed to defer the remaining portion until such time as the
Company is generating revenue. Mr. Jackson intends to devote 20 hours a week to
the Business of Console Marketing.
THE POTENTIAL IMPOSITION OF A SALES TAX ON THE SALE OF GOODS AND SERVICES OVER
THE INTERNET MAY SUBSTANTIALLY IMPAIR CONSOLE MARKETING' OPPORTUNITY TO DERIVE
FINANCIAL BENEFIT FROM THE SALES OF ITS PRODUCTS.
Legislative proposals have been made at the federal, state and local levels, as
well as by foreign governments, to impose a sales tax on the sale of goods and
services over the Internet. Although a three-year moratorium now exists on new
state and local taxes on electronic commerce, once the
Part I - page 4
moratorium is lifted, it is entirely possible that federal and/or state taxes
may be imposed on Internet commerce. Such taxes could have a chilling effect on
the sale of goods and services over the Internet, which, in turn, could limit
Console Marketing' ability to generate profits from the sale of its products
over the Internet.
CONSOLE MARKETING IS COMPETING WITH OTHER COMPANIES THAT MAY HAVE LONGER
OPERATING HISTORIES AND GREATER BRAND RECOGNITION WHICH WOULD MAKE IT DIFFICULT
FOR THE COMPANY TO SUCCEED IN THIS MARKETPLACE.
HotBar.com, has developed a similar program which they market under their own
brand name. Their business model is based on providing colored 'skins' to a
browser's toolbar and links to third party sites where they earn revenue from
affiliation programs. We are also aware that Visa International has, since
February 2001, been using a similar software program to offer their customers
special incentive programs. The company may find it difficult competing against
companies such as HotBar and Visa International who have significantly greater
financial power as well as corporate branding and credibility and as a result
the Company may fail to achieve sales of Licenses and earn revenue. As a result
the company may fail to succeed.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Prospectus Summary", "Risk Factors", "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
"Description of Business", and elsewhere in this prospectus constitute
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may", "should", "expects", "plans",
"anticipates", "believes", "estimated", "predicts", "potential", or "continue"
or the negative of such terms or other comparable terminology. These statements
are only predictions and involve known and unknown risks, uncertainties, and
other factors that may cause Console Marketing's actual results, levels of
activity, performance, or achievements to be materially different from any
future results, levels of activity, performance, or achievements expressed or
implied by such forward-looking statements. These factors include, among other
things, those listed under "Risk Factors" and elsewhere in this prospectus.
Although Console Marketing believes that the expectations reflected in the
forward-looking statements are reasonable, it cannot guarantee future results,
levels of activity, performance, or achievements.
Part I - page 5
USE OF PROCEEDS
The net proceeds to Console Marketing, from the sale of the 4,250,000 shares of
common stock offered by Console Marketing Inc. hereunder at an assumed initial
public offering price of $.025 per share are estimated to be $89,250, after
deducting projected offering expenses of $17,000, which are currently unpaid and
will be paid out of proceeds of the offering. Console Marketing expects to use
the net proceeds listed in order of priority as follows:
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ASSUMING SALE OF ASSUMING SALE OF ASSUMING SALE OF
50% OF STOCK BEING 75% OF STOCK BEING 100% OF STOCK BEING
OFFERED OFFERED OFFERED
- ---------------------------- ------------------ ------------------ -------------------
Gross Proceeds of Offering 53,125 79,687 106,250
Offering Expenses 17,000 17,000 17,000
================== ================== ===================
NET PROCEEDS OF OFFERING 36,125 62,687 89,250
Use of Net Proceeds
Office Equipment and set-up 10,000 15,000 20,000
Organizational Purposes 1,000 1,000 1,000
Advertising Campaign 12,000 24,000 12,00030,000
Website Maintenance Fee 2,000 2,000 2,000
Hire Salesperson(s) & salary 4,000 20,000 36,000
Miscellaneous 7,125 687 250
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The Company has opened a current operating Bank Account at the HSBC Bank Canada.
All subscription deposits will be held in trust by the Company's lawyers, Fraser
Milner Casgrain LLP of Vancouver.
Console Marketing is not currently a party to any contract, letters of intent,
commitments or agreements other than the Acquisition Agreement and the
Management Agreement attached as Exhibits, and is not currently engaged in
active negotiations with respect to any other acquisition.
DETERMINATION OF OFFERING PRICE
Console Marketing arbitrarily determined the price of the Units in this
Offering. The offering price is not an indication of and is not based upon the
actual value of Console Marketing. It bears no relationship to the book value,
assets or earnings of Console Marketing or any other recognized criteria of
value. The offering price should not be regarded as an indicator of the future
market price of the securities as the value of the shares could drop
significantly below the offering price.
DILUTION
As there is no established public market for the common equity being registered,
the price established for the shares were arbitrarily determined by management
based on their opinion of what the market would bear in subscribing for shares.
As there is currently no revenue generated by the Company, Management does not
believe that the share value is in excess of $0.025 per share being the offering
price.
The Offering Price is substantially greater than what was paid for by the
Officers and Directors and as a result the value of the shares offered under
this prospectus will be substantially diluted.
Part I - page 6
1 Net tangible book value per share prior to this distribution is
(0.0059).
2 Net tangible book value per share after this distribution is $0.075.
3 The amount of the increase in such net tangible book value per share
attributable to cash payments made by purchasers of shares being
offered is $0.0134.
4 The amount of the immediate dilution from the Offering Price, which
will be absorbed by the purchasers, is $0.0175.
PLAN OF DISTRIBUTION
Console Marketing will offer and sell its common stock through its officer and
director, Michael Jackson pursuant to and in compliance with Rule 3a4-1 of the
Exchange Act. There are currently no plans at present to conduct any general
solicitation in conjunction with this offering (other than the filing of this
registration statement). All sales will be made in compliance with the
securities laws of local jurisdictions. Mr. Jackson will offer to sell the
securities to people that he knows and has done business with in Canada and
Europe. No shares will be offered to Investors from the USA on a best efforts
basis.
Shares will be offered for 90 days after the Prospectus has been declared
effective by the SEC. Console Marketing may at their discretion extend the
closing for a further 90 days.
LEGAL PROCEEDINGS
Console Marketing is not a party to any pending legal proceeding or litigation
and none of its' property is the subject of a pending legal proceeding. Further,
the officer and director knows of no legal proceedings against Console Marketing
or its' property contemplated by any governmental authority.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the name, age and position of each director and
executive officer of Console Marketing:
------------------------------------------------------
NAME AGE POSITION
---- --- --------
Michael Jackson 63 President, Director
------------------------------------------------------
On November 19th 2001, Mr. Jackson was elected as an officer and director of
Console Marketing. He will serve until the first annual meeting of Console
Marketing Inc.'s shareholders and until his successors are elected and
qualified. Thereafter, directors will be elected for one-year terms at the
annual shareholders' meeting. Officers will hold their positions at the pleasure
of the board of directors, absent any employment agreement. Mr. Jackson plans
to devote approximately 20 hours a week to the business of the company until it
is no longer a development company, at which time he will spend more than 50% of
his time on Company business. Mr. Jackson will oversee the marketing of the
software program.
Mr. Jackson incorporated Hillcon Developments Ltd. ("Hillcon") a real estate
development company, in 1978 and operated the Company as President until 1983.
In 1993 Mr. Jackson re-launched Hillcon and continues to operate the company as
President. The Company carries on business as land developers. Mr. Jackson's
expertise is to add value to property. Mr. Jackson's ability is to find
properties that are undervalued and/or underdeveloped, apply for rezoning and
re-sell the property for profit. He also acts as corporate counsel for Hillcon,
and prepares all legal documents and negotiates all contracts.
Part I - page 7
From July 1999 to September 2001, while continuing to operate Hillcon, Mr.
Jackson founded Poker.com Inc. Mr. Jackson acted as chief executive officer and
director of Poker.com Inc., a company that traded on the OTC.B.B under the
symbol "PKER". In December 2002, Mr. Jackson was re-appointed as CEO of
Poker.com Inc. for an interim period of 6 weeks and resigned in January, 2003.
In September, 2003 Poker.com Inc. changed its name to LegalPlay Entertainment
Inc.
Mr. Jackson's responsibilities at Poker.com Inc. were overseeing the legal
aspects of the company as well as managing the sales team.
Mr. Jackson served as president of Ryerson Corporation A.V.V., a position he has
held since January 2000. Ryerson is an investment company that deals in real
estate and equities. Mr. Jackson's duties include overseeing investment
strategies. Ryerson is the controlling shareholder of NetCo Investments Inc.
NetCo Investment's Registration Statement, on Form SB-2, was submitted to the
Securities and
Exchange Commission and became effective on July 9, 2004. Mr. Jackson is the
controlling shareholder of Ryerson and has been the sole officer and director of
NetCo Investments since March 2000.
Mr. Jackson also currently serves as president of UniNet Technologies Inc.,
("UniNet") a provider of administrative services to Internet companies. He has
held that position since January 1999 and is responsible for overseeing the
operations of the Company.
There are no plans, arrangements, or understandings pending for Console
Marketing to acquire or to be acquired by any company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of July 21, 2004, Console Marketing's
outstanding common stock owned of record or beneficially by each Executive
Officer and Director and by each person who owned of record, or was known by
Console Marketing to own beneficially, more than 5% of its common stock, and the
shareholdings of all Executive Officers and Directors as a group. Each person
has sole voting and investment power with respect to the shares shown.
- -----------------------------------------------------------------------------
SHARES OWNED PERCENTAGE OF
NAME SHARES OWNED
- ----------------------------------------------- ------------ --------------
Michael Jackson 3,900,000 90.69%
President and Director
Suite 212, 1166 Alberni Street
Vancouver, BC Canada V6E 3Z3
All Executive Officers and Directors as a Group 3,900,000 90.69%
- -----------------------------------------------------------------------------
Part I - page 8
DESCRIPTION OF SECURITIES
The following description of Console Marketing's capital stock is a summary of
the material terms of its' capital stock. This summary is subject to and
qualified in its entirety by Console Marketing's Articles of Incorporation and
bylaws, and by the applicable provisions of Nevada law.
The authorized capital stock of Console Marketing consists of 25,000,000 shares:
23,000,000 shares of Common Stock having a par value of $0.001 per share and
2,000,000 shares of Preferred Stock having a par value of $0.001 per share. The
Articles of Incorporation do not permit cumulative voting for the election of
directors, and shareholders do not have any preemptive rights to purchase shares
in any future issuance of Console Marketing's common stock.
The holders of shares of common stock of Console Marketing do not have
cumulative voting rights in connection with the election of the Board of
Directors, which means that the holders of more than 50% of such outstanding
shares, voting for the election of directors, can elect all of the directors to
be elected, if they so choose, and, in such event, the holders of the remaining
shares will not be able to elect any of Console Marketing's directors.
The holders of shares of common stock are entitled to dividends, out of funds
legally available therefore, when and as declared by the Board of Directors. The
Board of Directors has never declared a dividend and does not anticipate
declaring a dividend in the immediate future. Each outstanding share of common
stock entitles the holder thereof to one vote per share on all matters except
for cumulative voting of Directors. The holders of the shares of common stock
have no preemptive or subscription rights. In the event of liquidation,
dissolution or winding up of the affairs of Console Marketing, holders are
entitled to receive, pro-rata, the net assets of Console Marketing available to
shareholders after payment of all creditors and holders of preferred shares.
To the extent that additional shares of Console Marketing's common stock are
issued, the relative interests of existing shareholders may be diluted.
INTEREST OF NAMED EXPERTS AND COUNSEL
LEGAL MATTERS
The validity of the issuance of common shares to be sold by Console Marketing
under this prospectus and the shares was passed upon for the Company by Jack G.
Orr and the Law Offices of Jack G. Orr. Neither of these persons is the
beneficial owner or the registered owner of any interest in the Company, nor
have they been a promoter, underwriter, voting trustee, director, officer, or
employee of the Company. Neither of them have any contingent based agreement
with Console Marketing or any other interest in or connection to the Company.
EXPERTS
The accounting firm Manning Elliott Chartered Accountants of Vancouver, Canada
is the Company's current auditors who have prepared their report on the
financial statements for the periods ending August 31 2003 and August 31 2002.
Manning Elliott are experts in accounting and auditing.
Neither Manning Elliott nor Jack Orr were employed on a contingent basis in
connection with the registration or offering of Console Marketing's common
stock.
Part I - page 9
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Console Marketing's Articles of Incorporation provide that it will indemnify
its' officers and directors to the full extent permitted by Nevada State law.
Console Marketing's bylaws provide that it will indemnify and hold harmless each
person who was, is or is threatened to be made a party to or is otherwise
involved in any threatened proceedings by reason of the fact that he or she is
or was a director or officer of Console Marketing or is or was serving at the
request of Console Marketing as a director, officer, partner, trustee, employee,
or agent of another entity, against all losses, claims, damages, liabilities and
expenses actually and reasonably incurred or suffered in connection with such
proceeding.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of Console
Marketing pursuant to the forgoing provisions or otherwise, Console Marketing
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable.
ORGANIZATION WITHIN THE LAST 5 YEARS
Mr. Michael Jackson is the founder of the Company. Mr. Jackson received
3,900,000 shares as consideration for selling the Company the Console Toolbar
technology. Mr. Jackson will be attempting to raise capital for the Company by
selling shares under the Offering Prospectus.
DESCRIPTION OF BUSINESS
GENERAL
Console Marketing was incorporated under the laws of the State of Nevada on 19th
November 2001 and is in its' early development stage. To date, Console
Marketing's only activities have been organizational, directed at acquiring its'
principal asset, raising its' initial capital and developing its' business plan.
Console Marketing has not yet commenced commercial operations and has, to date,
never earned any revenues. Console Marketing has no full time employees and owns
no real estate.
INDUSTRY NEEDS
Growth of the Internet and electronic commerce. The Internet has become an
increasingly significant medium for communication, marketing, information and
commerce. At the IDC Internet Executive Forum held on September 28-29 1999, IDC
stated "in 1999 US$109 billion in purchases were impacted by the Internet".
IDC's vice president, Sean Kaldor, indicated that figure is expected to increase
more than ten-fold over the next five years to US $1.3 trillion in 2003, with
$842 million completed directly over the Web. Management believes that there are
currently 600 million Internet users worldwide. We believe that this dramatic
growth presents significant opportunities for on-line retailers.
Management believes that the biggest problem faced by an Internet website today
is retention of customers. With the Internet, there are no more captive
customers. The effective organization will be one that develops a structure
focused on the needs of its' customers. Corporations spend substantial monies on
banner advertising and marketing to acquire customers only to subsequently lose
a big portion of these customers to other web sites. In order for a corporation
to retain customers, their web sites have to be 'sticky' (i.e. there has to be a
reason for the customer to want to stay and return to the site.). They need to
be informative, dynamic and fun to visit and use. The Console enables a
corporation to offer their customers specific information that a customer wants
or needs such as corporate news, general news, big discounts including travel
discounts, prizes that can be won, etc. As the Console physically only takes up
a small portion of the customer's desktop, the customer would be inclined to
keep it open if the content
Part I - page 10
were interesting and/or exciting enough. The Console could also be hidden if the
customer needed the entire desktop area for other purposes.
ACQUISITION OF THE SOFTWARE PROGRAM
On November 19th 2001, Console Marketing's shareholders, Michael Jackson, Cecil
Morris and John Buddo, in return for 4,300,000 Common shares of Console
Marketing's common stock as consideration, sold, assigned and transferred to
Console Marketing their right, title and interest in their proprietary software
program,
The TargetBar Console, was developed at a cost of approximately $50,000 for
research and development. Management believes that this consideration is
compatible with what they would have received in an arms length transaction.
The acquisition will enable Console Marketing to sell, license and distribute
TargetBar Console software programs to third party corporations, via the
Internet, throughout the world.
The software program incorporates a Console or Toolbar, which is a "thin client"
toolbar. The Toolbar displays text messages and corporate information and
advertising. This creates a connection between the client and their customers.
When a customer downloads the Toolbar, it shows up on the customer's desktop.
Its' purpose on the desktop is twofold; it provides the user with quick and easy
access to common Internet tasks such as searching for a word or subject matter
and as a vehicle for the client providing dynamic content . The Console can be
docked or undocked and minimized to an icon on the customer's desktop
THE SOFTWARE PRODUCT
The business community, in the early stages of development of the Internet,
recognized that web-based marketing was important to their marketing strategy
but now realizes that it is a separate challenge to have users find their
corporate web site, and once they have, to keep them coming back. Console
Marketing has acquired a technology, the 'TargetBar Console', which addresses
this crucial element of retaining customers.
The 'TargetBar Console', is a proprietary software program developed by John
Buddo, Michael Jackson and Cecil Morris, which will be licensed to organizations
who will offer their customers the opportunity of downloading the software
program.
This downloadable console will be customized in appearance for each new client
with a new 'skin' containing the corporate look and feel of colors, logo and
content relevant to their user group. The console will be an important component
of the private label branding solution the Company offers. When branding the
interface for a specific group, Console Marketing will be able to offer the
console as a method for the Corporation to extend their web site and brand
presence to the desktop.
The Toolbar will be developed by the Company exclusively for each Customer with
proprietary content and items of specific interest provided by the Client for
their customers. The Company will, by outsourcing, prepare the design and
incorporate the content for the Toolbar. The Toolbar can be used in the
following manner:
DESKTOP TASKS
Consolidated search engine
- --------------------------
A built-in text pane allows the user to easily perform a web search using some
of the most popular search engines. Incorporated engines include google.com,
lycos.com yahoo.com and msn.com.
Email reader
- ------------
The user's default e-mail reader can be quickly launched with the click of an
icon.
Part I - page 11
Favorites menu
- --------------
The user's Internet favorites can be accessed from an Exchange Console menu.
These links are the same as those found in the browser's favorites menu.
DYNAMIC CONTENT
Scrolling ticker
- ----------------
The Exchange Console incorporates a scrolling ticker that allows news sources to
serve news headlines in 'real time'. Ticker items can be clicked to display a
full article in a browser window. Moving the cursor over the ticker will pause
the scrolling. The ticker can be turned on or off.
Banner ads
- ----------
Banner ads can be easily displayed on the Exchange Console and linked to web
pages. Ads can also be rotated and updated in 'real time'.
Console Marketing will charge organizations for each download or a monthly
Licensing fee (whichever is the greater). The Console can also provide quick
access to certain features such as notification of pending messages, searches,
news etc.
EXAMPLE OF A CORPORATE CONSOLE
[GRAPHIC OMITED]
THE LICENSES
Console Marketing will design and produce a branded version (skin) for each
Licensee, as well as provide new feature and product development services to
further customize the product. In addition, Console Marketing will provide and
maintain a custom designed website for each Licensee.
The Console Marketing Toolbar was designed to support a flexible interface
architecture that readily supports a wide range of interface customizations. At
a very minimum each skin will incorporate the Licensee's corporate logo,
corporate colors and other visual enhancements to tie the branding of the
Toolbar to their organization.
In addition to visual enhancements the services offered through the Toolbar will
be customized to each organization so their users are provided with relevant
information that is of interest to the Licensee's target audience. Offering a
range of dynamic content providers that are available to the Licensee will do
this. Additional content sources can be integrated into the toolbar for each
Licensee if the Licensee wants to offer dynamic content that is not supported by
one of Console Marketing's existing content providers.
Console Marketing expects to charge the Licensees $3,000 for their Console
design and development and a minimum licensing fee of $2,000 per month or 10
cents per month per download per user (whichever is the greater). Hence, if
50,000 users download a Licensee's web site, Console Marketing would be paid a
licensing fee of $5,000.
The Licensee will offer their clients the opportunity of downloading the
TargetBar Console, which will provide corporate information and other content as
well as enable the corporation to sell advertising on the console. The Console
can also be used by an organization to offer products for sale (at regular or
discount prices).
Part I - page 12
Console Marketing's website is currently being developed but is not yet
complete. Console Marketing is finalizing the content, which should be completed
within 30 days after the prospectus has been declared effective.
BACKGROUND ON VENDORS
The vendors, Michael Jackson, John Buddo and Cecil Morris, spent the past 12
months developing their proprietary software program, which enables a Web site
to offer the Console to their customers by downloading the program.
Michael Jackson is president of the Company and coordinated the development of
the software program (for more information on Mr. Jackson, please refer to
'Directors, Executive Officers, Promoters and Control Persons.)
John Buddo has been involved in project management of Internet software programs
for the past 5 years. Mr. Morris is a software consultant resident in South
Africa and has been consulting for the past 8 years for the printing industry
and more recently for software development on the Internet.
Console Marketing Inc. will, in due course, employ their own web designers to
design the Licensee's branded skin.
IMPLEMENTATION OF BUSINESS PLAN: MILESTONES
Console Marketing's specific business plan is to create a website, hire sales
people, develop and implement an advertising campaign, establish an office and
generate revenue. Console Marketing intends to employ commissioned salespeople
to market the TargetBar Console to corporations who have a subscription base or
a database of at least 20,000 customers such as newspaper publishers, magazine
publishers, financial institutions, sports teams and music companies etc.
Console Marketing will achieve implementation of its business plan by meeting
the following milestones:
- MILESTONE 1: Create a Web Site. Console Marketing Inc. is developing
-----------------
their website. The corporate logo has been designed and the content is
in progress. The cost is estimated at $2,000. This milestone should be
complete by October 30th 2004.
- MILESTONE 2: Hire Salespeople. Console Marketing will have to engage
----------------
salespeople to sell Licenses. Console Marketing expects that it may
hire two commissioned salespeople during its' first year of operation.
The hiring process would include running advertisements in the local
newspaper and /or the Internet and conducting interviews. We
anticipate that hiring the salespeople may take four to eight weeks.
The cost of hiring the salespeople, not including compensation, is
estimated at $4,000. This milestone should be achieved by November
30th 2004.
- MILESTONE 3: Development of an Advertising Campaign. The next step
----------------------------------------
would be to develop an advertising campaign, including establishing a
list of prospects based on potential clients identified as having a
strong data or subscription base, and designing and printing sales
materials. We anticipate that it would take approximately six to ten
weeks to develop the advertising campaign, depending on the
availability of resources. The cost of developing the campaign is
estimated at approximately $12,000. This milestone should be achieved
by mid-December 2004.
- MILESTONE 4: Establish an Office. Console Marketing would establish an
--------------------
office for the sales force and for a web master/web designer. This
would include an office, furniture and equipment such as computers,
fax, photocopier, printer and telephones. It is anticipated that it
may take four to six weeks to locate acceptable office space and
select and purchase equipment. The expense of office rental, salary
and equipment is estimated to be $60,000 per year. The bulk of these
funds will come from future financing. Prior to establishing a
permanent office, the Company will use the premises of Hillcon
Developments Ltd., currently occupied by Mr. Jackson. This should
happen immediately upon closing. The initial cost of equipment is
estimated at $10,000.
Part I - page 13
- MILESTONE 5: Implementation of Advertising Campaign/Sales Calls.
-------------------------------------------------------
Implementation of the advertising campaign would begin with e-mailing
of the sales materials to the identified list of prospects.
Approximately two weeks thereafter, the salespeople would begin
telephone follow-ups. The costs are set out in Milestone 2 above. This
should occur by January 2005.
- MILESTONE 6: Achieve Revenues. It is difficult to quantify how long it
-----------------
will take to convert a sales call into actual sales and revenues.
Console Marketing will not begin receiving orders until its' sales
force is able to convince potential clients that the Console could be
a valuable tool to retain customer loyalty. Console Marketing hopes
that clients would enter into sub-licensing agreements within weeks of
a sales call, but it may take several months before a Licensee enters
into a contract. Assuming Console Marketing has received all necessary
approvals to begin raising funds by September 2004, and assuming an
offering period of approximately one month, in a best case scenario
Console Marketing may receive its first revenues as early as February
2005. However, a more realistic estimate of first revenues would be
April 2005 or later. The Company expects to sell 50 Licenses in their
first 12 months of active operation.
- MILESTONE 7: Raise Working Capital. The Company plans to raise a
------------------------
further $100,000 to achieve further Milestones. This should be
undertaken by September 2005.
As discussed more fully in Management's Discussion and Analysis-Liquidity and
Capital Resources section, the expenses of implementing Console Marketing's
business plan may exceed the funds raised by this offering, and Console
Marketing will raise additional financing through an offering or through capital
contributions by its' current shareholders. No commitments to provide additional
funds have been made by management or shareholders. Accordingly, there can be no
assurance that any additional funds will be available on terms acceptable to
Console Marketing or at all.
HOW OUR BUSINESS WILL GENERATE REVENUE
Console Marketing will charge organizations wishing to License the Console
software a set up cost of $3,000 and a monthly licensing fee of $2,000 or 10
per download per month (whichever is the greater).
Console Marketing would also earn revenue by selling exclusive content to its'
customers or otherwise acquiring rights to externally provided content such as
on-line investing, financial newsletters and stock quotes, specific sports news,
travel information and on-line discount shopping malls which can be re-sold to
the Licensee.
If Console Marketing were able to achieve a customer base of 25 Corporations
using the system, the company would earn $75,000 in set up fees plus a minimum
of $50,000 per month. We expect each salesperson to sell approximately 2
Licenses per month.
COMPETITION
The electronic commerce industry is new, rapidly evolving and intensely
competitive, and Console Marketing expects competition to intensify in the
future. Hence, the TargetBar Console is a valuable tool that can be used by a
retailer or any other corporate entity that wishes to sell to his customer
and/or retain the customer by offering valuable information and content. The
console creates a nexus between the Licensee and their customer and will develop
customer loyalty if content and/or services are valuable to the customer.
There are no other companies, to the knowledge of Console Marketing, that are
presently selling this program to third party clients. However, an Internet
company, HotBar.com, has developed a similar program, which they market under
their own brand name. Their business model is based on providing colored 'skins'
to a browser's toolbar and links to third party sites where they earn revenue
from affiliation
Part I - page 14
programs. Console Marketing is also aware that Visa International has, since
February 2001, been using a similar software program to offer their customers
special incentive programs.
Console Marketing's competitors will include:
- Traditional advertising mediums such as newspaper and magazine
advertising.
- On-line banner advertising.
- Direct sales marketing organizations.
- Other companies that will develop a similar console.
Many of Console Marketing's potential competitors may have longer operating
histories, larger customer or user bases, greater brand recognition and
significantly greater financial, marketing and other resources than Console
Marketing has. Competitors have and may continue to adopt aggressive pricing
policies and devote substantially more resources to website and systems
development than Console Marketing does. Increased competition may result in
reduced operating margins and loss of market share.
Console Marketing believes that the principal competitive factors faced by their
Licensees are their:
- Ability to attract and retain customers;
- Breadth of product selection;
- Product pricing;
- Ability to customize products and information;
- Quality and responsiveness of customer service.
Console Marketing believes that the Console can be a valuable tool to enable the
Licensee to compete favorably with the competition. However, Console Marketing
will have no control over how successful its' Clients and/or their competitors
are in addressing these factors.
Console Marketing hopes to attract and retain corporate organizations through
the following key attributes of its' business:
- By assisting them in designing competitive Consoles and content.
- Low Costs - Console Marketing intends to charge clients $2,000 per
month or 10 per month per download (whichever is the greater) which
is, in the opinion of management, an extraordinarily low cost to
retain a customer. In a situation where an organization has 50,000
customers who download the Console software, the revenue generated by
the organization for Console Marketing would be $5,000 per month.
- Customer Service. By providing customers with an exceptional and
timely service.
REGULATION OF THE INTERNET
In general, existing laws and regulations apply to transactions and other
activity on the Internet; however, the precise applicability of these laws and
regulations to the Internet is sometimes uncertain. The vast majority of such
laws were adopted prior to the advent of the Internet and, as a result, do not
contemplate or address the unique issues of the Internet or electronic commerce.
Nevertheless, numerous federal and state government agencies have already
demonstrated significant activity in promoting consumer protection and enforcing
other regulatory and disclosure statutes on the Internet. Additionally, due to
the increasing use of the Internet as a medium for commerce and communication,
it is possible that new laws and regulations may be enacted with respect to the
Internet and electronic commerce covering issues such as user privacy, freedom
of expression, advertising, pricing, content and quality of products and
services, taxation, intellectual property rights and information security. The
adoption of such laws or regulations and the applicability of existing laws and
regulations to the Internet may impair the growth of Internet use but may result
in an increase in Console Marketing's sales as corporations find it more
important to retain existing customers than find new ones.
Part I - page 15
EMPLOYEES
Console Marketing is a development stage Company and currently has one employee,
Michael Jackson, its' President who currently manages the Company. Console
Marketing looks to Mr. Jackson for his entrepreneurial skills and talents. For a
complete discussion of Mr. Jackson's experience, please see "Directors and
Executive Officers." Management plans to use consultants, attorneys and
accountants as necessary and shall only engage full-time employees as funds
become available. Console Marketing may hire commissioned salespeople rather
than full time employees. A portion of any employee compensation likely would
include the right to acquire stock in Console Marketing, which would dilute the
ownership interest of holders of shares of its' common stock.
MATERIAL CONTRACTS
Console Marketing has acquired ownership of the TargetBar Console software
program by Purchase Agreement, which is attached hereto as Exhibit 10.1. A
Management Agreement with Mr. Jackson is attached as Exhibit 5.0
AVAILABLE INFORMATION AND REPORTS TO SECURITIES HOLDERS
Console Marketing has filed with the Securities and Exchange Commission a
registration statement on Form SB-2 with respect to the common stock offered by
this prospectus. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the registration
statement or the exhibits and schedules which are part of the registration
statement. For further information with respect to Console Marketing and its
common stock, see the registration statement and the exhibits and schedules
thereto. Please call the Commission at 1-800-SEC-0330 for further information
about the public reference rooms. Console Marketing's filings with the
Commission are also available to the public from the Commission's website at
http://www.sec.gov.
Upon completion of this offering, Console Marketing will become subject to the
information and periodic reporting requirements of the Securities Exchange Act
and, accordingly, will file periodic reports, proxy statements and other
information with the Commission. Such periodic reports, proxy statements and
other information will be available for inspection and copying at the
Commission's public reference rooms, and the website of the Commission referred
to above.
The Company will send Annual Reports to their shareholders, which will include
audited financial statements.
Part I - page 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of Console Marketing's financial condition
and results of operations should be read in conjunction with the Financial
Statements and accompanying notes and the other financial information appearing
elsewhere in this Prospectus.
This prospectus contains forward-looking statements, the accuracy of which
involves risks and uncertainties. Words such as "anticipates," "believes,"
"plans," "expects," "future," "intends" and similar expressions are used to
identify forward-looking statements. This prospectus also contains
forward-looking statements attributed to certain third parties relating to their
estimates regarding the potential markets for Console Marketing's products.
Prospective investors should not place undue reliance on these forward-looking
statements, which apply only as of the date of this prospectus. Console
Marketing's actual results could differ materially from those anticipated in
these forward-looking statements for many reasons, including the risks faced by
Console Marketing described in "Risk Factors" and elsewhere in this prospectus.
The following discussion and analysis should be read in conjunction with Console
Marketing's Financial Statements and Notes thereto and other financial
information included elsewhere in this prospectus.
RESULTS OF OPERATIONS
During the period from November 19th 2001 through May 31, 2004, Console
Marketing has engaged in no significant operations other than organizational
activities, acquisition of the TargetBar Console software program and
preparation for registration of its' securities under the Securities Act of
1933, as amended. No revenues were received by Console Marketing during this
period.
Net losses and accumulated deficits from November 19, 2001 to May 31, 2004 were:
$37,427.
For the current fiscal year, Console Marketing anticipates incurring a loss as a
result of organizational expenses, expenses associated with registration under
the Securities Act of 1933 and expenses associated with setting up a company
structure to begin implementing its business plan. Console Marketing anticipates
that until these procedures are completed, it will not generate revenues, and
may continue to operate at a loss thereafter, depending upon the performance of
the business.
Console Marketing's business plan is to raise working capital and start
marketing the TargetBar Console to corporate organizations.
LIQUIDITY AND CAPITAL RESOURCES
Console Marketing is conducting this offering, in part, because it believes that
an early registration of its' equity securities will minimize some of the
impediments to capital formation that otherwise exist. By having a registration
statement in place, Console Marketing believes it will be in a better position,
either to conduct a future public offering of its' securities or to undertake a
private placement with registration rights, than if it were a completely private
company. Registering its' shares will help minimize the liquidity discounts
Console Marketing may otherwise have to take in a future private placement of
its' equity securities, because investors will have a high degree of confidence
that the Rule 144(c)(1) public information requirement will be satisfied, and a
public market will exist to effect Rule 144(g) broker transactions. Console
Marketing believes that the cost of registering its' securities, and undertaking
the affirmative disclosure obligations that such a registration entails, will be
more than offset by avoiding deep liquidity discounts in future sales of
securities.
No commitments to provide additional funds have been made by management or
shareholders. Accordingly, there can be no assurance that any additional funds
will be available on terms acceptable to Console Marketing or at all. Console
Marketing expects to begin earning revenues shortly after a sales force is in
place. In the event the Company is unable to raise any financing from this
offering the offering expenses will be paid for by Mr. Jackson, a shareholder.
Part I - page 17
Console Marketing remains in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
shareholders' equity. As of the date of this prospectus, the Company has yet to
generate any revenue from its' business operations.
As of May 31 2004, the Company has received $22,322 from related parties, which
was used to fund the Company's operation activities of $22,277 which resulted in
a $45 cash balance. As of May 31st 2004, this cash balance of $45 represents the
Company's only asset and the Company's liabilities are $25,472.
Console Marketing Inc. plans to engage one or two commissioned salespeople to
commence a marketing campaign to License the TargetBar Console technology.
Console Marketing expects to begin earning revenues shortly after a sales force
is in place.
Console Marketing's business plan is to raise $106,250 as initial capital and
commence marketing the TargetBar Console Licenses to corporate organizations.
Console Marketing will engage commissioned salespeople to market the products.
Based primarily on discussions with management, Console Marketing believes that
during its first 9 months of operation it will require approximately $81,000 to
achieve a sustainable sales level where ongoing operations can be funded out of
revenues. This capital is intended to cover costs of advertising, hiring and
paying two salespeople and administrative expenses.
The net proceeds to Console Marketing from the sale of the 4,250,000 shares of
common stock offered by Console Marketing hereby at an assumed initial public
offering price of $.025 per share are estimated to be $89,250 after deducting
estimated offering expenses of $17,000, which will be paid out of proceeds of
the offering. Therefore, if the offering is fully subscribed, Console Marketing
should have sufficient capital to launch their business plan.
Console Marketing has no commitments for capital expenditures. The capital
requirement for the first 12 months of operations is estimated at $114,000 and
the capital requirement for the first 6-month period is estimated at $$53,000.
Console Marketing will, in due course, need additional capital to carry out its'
business plan. No commitments to provide additional funds have been made by
management or other shareholders. Accordingly, there can be no assurance that
any additional funds will be available on terms acceptable to Console Marketing
or at all. If not available, Console Marketing Inc.'s operations would be
severely limited, and it would be unable to implement its' business plan, and
may fail. Console Marketing has no commitments for capital expenditures.
However, the Company is confident that if they are able to raise the minimum
funding proposed under this Offering, they will be in a position to launch their
marketing campaign and start earning revenue. Management believes that as soon
as they are able to earn and show revenue, they will be in a stronger position
to raise further capital through a private placement.
In the process of carrying out its business plan, Console Marketing may
determine that it cannot raise sufficient capital to support the business on
acceptable terms, or at all. Console Marketing Inc.'s board of directors has a
fiduciary duty to act in the best interests of the corporation and its'
shareholders. The board of directors may decide that it is in the best
interests of the corporation and its' shareholders to liquidate the business.
Console Marketing is not currently a party to any contracts, letters of intent,
commitments or agreements and is not currently engaged in active negotiations
with respect to any acquisitions other than the TargetBar acquisition (Exhibit
10.1) and the Management Agreement with Mr. Jackson (Exhibit 5.0).
Part I - page 18
DESCRIPTION OF PROPERTY
Console Marketing currently maintains limited commercial office space, occupied
by Michael Jackson, for which it pays no rent. Hillcon Developments Ltd. rents
their offices on a month-to-month basis. Its' address is Suite 212, 1166 Alberni
Street, Vancouver, British Columbia V6E 3Z3, Canada and its' phone number is
(604) 681-1064. Console Marketing does not believe that it will need to obtain
additional office space at any time in the foreseeable future until its'
business plan is more fully implemented.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No director, executive officer or nominee for election as a director of Console
Marketing, and no owner of five percent or more of Console Marketing's
outstanding shares or any member of their immediate family has entered into or
proposed any transaction in which the amount involved exceeds $60,000.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No established public trading market exists for Console Marketing's securities.
Console Marketing has no common equity subject to outstanding purchase options
or warrants. Console Marketing has no securities convertible into its' common
equity. There is no common equity that Console Marketing has agreed to register
under the Securities Act for sale by shareholders. Except for this offering,
there is no common equity that is being, or has been publicly proposed to be,
publicly offered by Console Marketing
As of May 31st 2004, there were 4,300,000 shares of common stock outstanding,
held by 3 shareholders of record of which one shareholder is a Director and
Officer. Upon effectiveness of the registration statement that includes this
prospectus, many of Console Marketing's outstanding shares will be eligible for
sale. The shares issued prior to this prospectus will be subject to Rule 144 of
the Securities Act of 1933, in addition to providing an exemption for re-sales
of securities, restricts sales by affiliates to one percent of the issuer's
outstanding stock in any given 3 month period.
To date, Console Marketing has not paid any dividends on its' common stock and
does not expect to declare or pay any dividends on its common stock in the
foreseeable future. Payment of any dividends will depend upon Console
Marketing's future earnings, if any, its' financial condition, and other factors
as deemed relevant by the Board of Directors.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows certain compensation information for
services rendered in all capacities for the years ended December August 31 2001,
2002 and 2003. Other than as set forth herein, no executive officer's salary and
bonus exceeded $100,000 in any of the applicable years. The following
information includes the dollar value of base salaries, bonus awards, the number
of stock options granted and certain other compensation, if any, whether paid or
deferred.
- ---------------------------------------------------------------------------------
NAME AND PRINCIPAL POSITION AUG 31 ANNUAL COMPENSATION SECURITIES, UNDERLYING
OPTIONS/SAR'S
- --------------------------- ------ -------------------- ----------------------
Michael Jackson 2002 $ 4,500 nil
President 2003 $ 6,000 nil
2004* $ 4,500 nil
- ---------------------------------------------------------------------------------
* as of May 31st 2004.
Part I - page 19
Mr. Jackson received remuneration from the Company of $6,000 for carrying out
the day-to-day management responsibilities of the Company. Mr. Jackson has
agreed to defer the remaining portion of the payment until revenue has been
earned by the Company. Console Marketing has no stock option, retirement,
incentive, defined benefit, actuarial, pension or profit-sharing programs for
the benefit of directors, officers or other employees, but the Board of
Directors may recommend adoption of one or more such programs in the future.
Console Marketing has no employment contract or compensatory plan or arrangement
with any executive officer of Console Marketing. The director currently does not
receive any cash compensation from Console Marketing for his service as a member
of the board of directors. There is no compensation committee, and no
compensation policies have been adopted. See "Certain Relationships and Related
Transactions."
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
The registrant has made no changes and has no disagreements with the Company's
accountants on accounting and financial disclosures.
FINANCIAL STATEMENTS
The Financial Statements required by this Item are included at the end of this
report beginning on page F-1.
Part I - page 20
PART II-INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Console Marketing's Articles of Incorporation provide that it must indemnify
its' directors and officers to the fullest extent permitted under Nevada law
against all liabilities incurred by reason of the fact that the person is or was
a director or officer of Console Marketing or a fiduciary of an employee benefit
plan, or is or was serving at the request of Console Marketing as a director or
officer, or fiduciary of an employee benefit plan, of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise.
The effect of these provisions is potentially to indemnify Console Marketing's
directors and officers from all costs and expenses of liability incurred by them
in connection with any action, suit or proceeding in which they are involved by
reason of their affiliation with Console Marketing. Pursuant to Nevada law, a
corporation may indemnify a director, provided that such indemnity shall not
apply on account of: (a) acts or omissions of the director finally adjudged to
be intentional misconduct or a knowing violation of law; (b) unlawful
distributions; or (c) any transaction with respect to which it was finally
adjudged that such director personally received a benefit in money, property, or
services to which the director was not legally entitled.
The Bylaws of Console Marketing, filed as Exhibit 3.2, provide that it will
indemnify its' officers and directors for costs and expenses incurred in
connection with the defense of actions, suits, or proceedings against them on
account of their being or having been directors or officers of Console
Marketing, absent a finding of negligence or misconduct in office. Console
Marketing's Bylaws also permit it to maintain insurance on behalf of its'
officers, directors, employees and agents against any liability asserted against
and incurred by that person.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following expenses are estimates related to costs of registration
--------------------------------------------------------------
AMOUNT TO
BE PAID
-------------------------------------------------- ----------
SEC registration fee $ 8.59
Printing and engraving expenses 100
Attorney's fees and expenses 5,000
Accountant's fees and expenses 8,000
Transfer agent's and registrar's fees and expenses 500
Miscellaneous 3,391.41
==========
TOTAL $ 17,000
--------------------------------------------------------------
The Registrant will bear all expenses shown above.
Attorney's fees will be expended for legal opinion and assistance in preparing
this SB-2. The Company has, to date, paid $1,020 to James N. Rodgers, $500 to
Dieterich and Associates and $2,500 to Jack Orr.
Part II - page 21
RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sale of Console
Marketing's securities without registration since its' formation. No such sales
involved the use of an underwriter and no commissions were paid in connection
with the sale of any securities.
On November 19th 2001, Console Marketing issued 3,900,000 shares of common stock
to Michael Jackson, 200,000 shares of common stock to Cecil Morris and 200,000
shares of common stock to John Buddo in compensation for the sale of the
TargetBar Console software program which the Vendor's valued at $43,000.
The issuance of the shares was exempt from registration under Rule 506 of
Regulation D, sections 3(b) and 4(2) of the Securities Act of 1933, as amended,
due to the shareholder's status as the founders and initial management of
Console Marketing, and their status as accredited investors, and the limited
number of investors (three) and the offer and sale of the stock outside the
United States.
EXHIBITS
The following exhibits are filed as part of this Registration Statement:
EXHIBIT NUMBER DESCRIPTION
3.1* Articles of Incorporation
3.2* Bylaws
4.1* Specimen Stock Certificate
4.2* Stock Subscription Agreement
5.0* Management Agreement
5.1 Opinion re: legality
10.1* Acquisition Agreement
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (see Exhibit 5.1)
27.1* Financial Statements
* Previously filed.
Item # 28 UNDERTAKINGS
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:
(i) Include any prospectus required by section 10(a)(3) of the Securities
Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement; and
(iii) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the Offering of the securities of the securities at that time
to be the initial bona fide Offering.
Part II - page 22
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the Offering.
(4) Provide to the Underwriters at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names
as required by the Underwriters to permit prompt delivery to each
purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Vancouver, British Columbia, Canada, on July 21 2004.
CONSOLE MARKETING INC.
By: /s/ Michael Jackson
--------------------------------
Michael Jackson, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
SIGNATURE TITLE DATE
/s/ Michael Jackson July 21, 2004
- -------------------- ---------------------------- -------------
Michael Jackson President and Director
Principal Financial Officer
Principal Accounting Officer
Part II - page 23
CONSOLE MARKETING INC.
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
May 31, 2004
(Stated in US Dollars)
(Unaudited)
---------
F-1
Console Marketing Inc.
(A Development Stage Company)
Balance Sheets
(expressed in U.S. dollars)
- --------------------------------------------------------------------------------------------
May 31, August 31,
2004 2003
(unaudited) (audited)
$ $
- --------------------------------------------------------------------------------------------
ASSETS
Currents Assets
Cash 45 140
Intangible Assets (Note 3) - -
- ---------------------------------------------------------------- ------------ ------------
Total Assets 45 140
================================================================ ============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable 1,950 1,373
Accrued liabilities 1,200 2,000
Due to related parties (Note 4(d)) 22,322 14,483
- ---------------------------------------------------------------- ------------ ------------
Total Current Liabilities 25,472 17,856
- ---------------------------------------------------------------- ------------ ------------
Contingent Liability (Note 1)
Stockholders' Deficit
Preferred Stock: 2,000,000 shares authorized with a par
value of $.001; none issued - -
Common Stock: 23,000,000 shares authorized with a par value of
$.001; 4,300,000 issued and outstanding respectively 4,300 4,300
Additional Paid-in Capital (4,300) (4,300)
Donated Capital (Note 4(a)) 12,000 9,750
Deficit Accumulated During the Development Stage (37,427) (27,466)
- ---------------------------------------------------------------- ------------ ------------
Total Stockholders' Deficit (25,427) (17,716)
- ---------------------------------------------------------------- ------------ ------------
Total Liabilities and Stockholders' Deficit 45 140
================================================================ ============ ============
(The accompanying notes are an integral part of the financial statements)
F-2
Console Marketing Inc.
(A Development Stage Company)
Statements of Operations
(expressed in U.S. dollars)
(unaudited)
- ---------------------------------------------------------------------------------------------------------------------
Accumulated from
November 19,
2001
Three Months Ended Nine Months Ended (Date of Inception)
May 31, May 31, to May 31,
2004 2003 2004 2003 2004
$ $ $ $ $
Revenue - - - - -
- ------------------------------------------ ------------ ----------- ----------- ----------- --------------------
Expenses
Accounting and legal 350 1,570 1,150 2,820 8,925
Interest 144 - 432 - 432
Organizational expenses 205 44 1,629 389 5,570
Management fees (Note 4(b)) 1,500 1,500 4,500 4,500 10,500
Value of consulting services donated by a
related party - - - - 4,500
Value of rent donated by a related party
(Note 4(a)) 750 750 2,250 2,250 7,500
- ------------------------------------------ ------------ ----------- ----------- ----------- --------------------
2,949 3,864 9,961 9,959 37,427
- ------------------------------------------ ------------ ----------- ----------- ----------- --------------------
Net Loss for the Period (2,949) (3,864) (9,961) (9,959) (37,427)
- ------------------------------------------ ------------ ----------- ----------- ----------- --------------------
Basic and Diluted Loss Per Share - - - -
- ------------------------------------------ ------------ ----------- ----------- ----------- --------------------
Weighted Average Number of Common
Shares Outstanding 4,300,000 4,300,000 4,300,000 4,300,000
- ---------------------------------------------------------------------------------------------------------------------
(The accompanying notes are an integral part of the financial statements)
F-3
Console Marketing Inc.
(A Development Stage Company)
Statements of Cash Flows
(expressed in U.S. dollars)
(unaudited)
- -----------------------------------------------------------------------
Nine Months Ended
May 31
2004 2003
$ $
- ---------------------------------------------- ----------- ----------
Cash Flows to Operating Activities
Net loss for the period (9,961) (9,959)
Adjustments to reconcile net loss to cash
Value of rent donated by a related party 2,250 2,250
Change in non cash working capital items -
Accounts payable and accrued liabilities (223) 577
- ---------------------------------------------- ----------- ----------
Net Cash Used in Operating Activities (7,934) (7,132)
- ---------------------------------------------- ----------- ----------
Cash Flows From Financing Activities
Advances from related parties 7,839 6,067
- ---------------------------------------------- ----------- ----------
Net Cash From Financing Activities 7,839 6,067
- ---------------------------------------------- ----------- ----------
Decrease in cash (95) (1,065)
Cash - Beginning of Period 140 1,255
- ---------------------------------------------- ----------- ----------
Cash - End of Period 45 190
============================================== =========== ==========
Supplemental Disclosures
Interest paid - -
Income tax paid - -
============================================== =========== ==========
(The accompanying notes are an integral part of the financial statements)
F-4
Console Marketing Inc.
(A Development Stage Company
Notes to the Financial Statements
(expressed in U.S. dollars)
(unaudited)
1. Development Stage Company
Console Marketing Inc. herein (the "Company") was incorporated in the State
of Nevada, U.S.A. on November 19, 2001. The Company's business plan is to
market and provide Internet services for a software program (See Note 3)
known as the "TargetBar Console" that allows companies to extend and
maintain their website presence on a users' desktop while the user is
involved in other activities. In a development stage company, management
devotes most of its activities in implementing its business plan. Planned
principal business activities have not yet begun. The ability of the
Company to emerge from the development stage with respect to its planned
principal business activity is dependent upon its successful efforts to
raise equity financing and then to generate profits. There is no guarantee
that the Company will be able to raise any equity financing and or become
profitable. There is substantial doubt regarding the Company's ability to
continue as a going concern.
The Company will file an SB-2 Registration Statement with the U.S.
Securities and Exchange Commission which includes a public offering of
4,250,000 common shares at $.025 per share on a best efforts basis with a
minimum subscription of 2,125,000 shares.
2. Summary of Significant Accounting Policies
(a) Basis of Accounting
These financial statements have been prepared in accordance with
United States generally accepted accounting principles and are
expressed in United States dollars.
(b) Year End
The Company's fiscal year end is August 31.
(c) Long-Lived Assets
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" establishes a single accounting model for long-lived assets to
be disposed of by sale including discontinued operations. SFAS 144
requires that these long-lived assets be measured at the lower of the
carrying amount or fair value less cost to sell, whether reported in
continuing operations or discontinued operations.
(d) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of
three months or less at the time of issuance to be cash equivalents.
(e) Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the periods. Actual results could differ from
those estimates.
F-5
Console Marketing Inc.
(A Development Stage Company)
Statements of Cash Flows
(expressed in U.S. dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
(f) Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with
SFAS No. 128, "Earnings per Share" (SFAS 128). SFAS 128 requires
presentation of both basic and diluted earnings per share (EPS) on the
face of the income statement. Basic EPS is computed by dividing net
income (loss) available to common shareholders (numerator) by the
weighted average number of shares outstanding (denominator) during the
period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period including stock options, using
the treasury stock method, and convertible preferred stock, using the
if-converted method. In computing Diluted EPS, the average stock price
for the period is used in determining the number of shares assumed to
be purchased from the exercise of stock options or warrants. Diluted
EPS excludes all dilutive potential shares if their effect is anti
dilutive.
(g) Revenue Recognition
The Company recognizes revenue from licensing software in accordance
with AICPA Statement of Position No. 97-2, as amended, Software
Revenue Recognition and SEC Staff Accounting Bulletin 101. Revenue
from the sale of software is recognized upon delivery of the product
when persuasive evidence of an arrangement exists, the price is fixed
or determinable, collection of the resulting receivable is probable,
and product returns can be reasonably estimated. This policy is
prospective in nature as the Company has not generated any revenues.
(h) Comprehensive Loss
SFAS No. 130, "Reporting Comprehensive Income," establishes standards
for the reporting and display of comprehensive loss and its components
in the financial statements. As at May 31, 2004, the Company has no
items that represent comprehensive loss and, therefore, has not
included a schedule of comprehensive loss in the financial statements.
(i) Financial Instruments
The Company's financial instruments consist of cash, accounts payable,
accrued liabilities, advances from related parties and others. Unless
otherwise noted, it is management's opinion that the Company is not
exposed to significant interest, currency or credit risks arising from
these financial instruments. The fair value of cash, accounts payable
and accrued liabilities, advances from related parties and other
advances approximates their carrying value due to the immediate or
short-term maturity of these financial instruments.
(j) Software Development Costs
Costs incurred in the research and development of software products
are charged to operations as incurred until technological feasibility
has been established. After technological feasibility is established,
any additional costs are to be capitalized in accordance with SFAS No.
86, "Accounting for the Cost of Computer Software to be Sold, Leased
or Otherwise Marketed". The establishment of technological feasibility
and the ongoing assessment of recoverability of capitalized software
development costs require considerable judgment by management with
respect to certain external factors such as anticipated future
revenues, estimated economic life and changes in software and hardware
technologies. No software development costs have been capitalized as
of May 31, 2004.
(k) Foreign Currency Transactions/Balances
The Company's functional currency is the United States dollar.
Occasional transactions occur in Canadian currency, and management has
adopted SFAS No. 52, "Foreign Currency Translation". Monetary assets
and liabilities denominated in foreign currencies are translated into
United States dollars at rates of exchange in effect at the balance
sheet date. Non-monetary assets, liabilities and items recorded in
income arising from transactions denominated in foreign currencies are
translated at rates of exchange in effect at the date of the
transaction.
F-6
Console Marketing Inc.
(A Development Stage Company)
Statements of Cash Flows
(expressed in U.S. dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
(l) Concentration of Credit Risk
Financial instruments that potentially subject the Company to credit
risk consist principally of cash. Cash was deposited with a high
quality credit institution.
(m) New Accounting Pronouncements
In December 2003, the United States Securities and Exchange Commission
issued Staff Accounting Bulletin No. 104, "Revenue Recognition" (SAB
104), which supersedes SAB 101, "Revenue Recognition in Financial
Statements." The primary purpose of SAB 104 is to rescind accounting
guidance contained in SAB 101 related to multiple element revenue
arrangements, which was superseded as a result of the issuance of EITF
00-21, "Accounting for Revenue Arrangements with Multiple
Deliverables." While the wording of SAB 104 has changed to reflect the
issuance of EITF 00-21, the revenue recognition principles of SAB 101
remain largely unchanged by the issuance of SAB 104. The adoption of
SAB 104 did not have a material impact on the Company's financial
statements.
(n) Interim Financial Statements
These interim unaudited financial statements have been prepared on the
same basis as the annual financial statements and in the opinion of
management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company's
financial position, results of operations and cash flows for the
periods shown. The results of operations for such periods are not
necessarily indicative of the results expected for a full year or for
any future period.
3. Intangible Asset
The Company acquired a proprietary software product known as TargetBar
Console. The Company issued 4,300,000 common shares to the vendors for all
rights, title and interest to the proprietary product. The shares are to be
distributed amongst the three vendors at their discretion. One of the
vendors is the President of the Company. The software product was recorded
at no value due to the lack of historical cash flow, the lack of an
established market for the product and one of the vendors being a non-arms
length party and no evidence existed as to their cost of developing the
product. However, it is the Company's intention to implement its business
plan by hiring commissioned sales staff, developing an advertising
campaign, establishing an office, implementing the advertising campaign and
begin making sales and licensing the product.
4. Related Party Balances/Transactions
Related party transactions are recorded at their exchange amounts.
See Note 3 for a software product purchased from a related party with
shares of the Company.
The amounts owing to the President of the Company and a company under his
control are for cash advances, an assignment of debt, management fees and
organizational expenses paid on behalf of the Company and are non-interest
bearing, unsecured with no fixed terms of repayment.
(a) The President of the Company has donated rent valued at $250 per month
which has been charged to operations and treated as donated capital.
(b) In September 2002, the Company entered into a management agreement
with the President of the Company to pay for management services
valued at $500 per month for a term of one year. The management
agreement automatically renews each year.
F-7
Console Marketing Inc.
(A Development Stage Company)
Statements of Cash Flows
(expressed in U.S. dollars)
(unaudited)
4. Related Party Balances/Transactions (continued)
(c) On June 5, 2003 the Company received $25,000 by way of a promissory
note from Hokley Limited, a non-related party. The promissory note
bears interest at 5% and is due on June 5, 2006. On July 15, 2003 the
President of the Company entered into an assignment with Hokley
Limited; whereby Hokley Limited assigned all right, title and interest
of the promissory note to the President of Company. At May 31, 2004
the amount owing on the promissory note was $12,153.
F-8
CONSOLE MARKETING INC.
(A Development Stage Company)
REPORT AND FINANCIAL STATEMENTS
August 31, 2003 and 2002
(Stated in US Dollars)
--------------------
[GRAPHIC OMITED]
M A N N I N G E L L I O T T 11th floor, 1050 West Pender Street,
Vancouver, BC, Canada V6E 3S7
CHARTERED ACCOUNTANTS Phone: 604.714.3600 Fax: 604.714.3669
Web:manningelliott.com
Independent Auditors' Report
----------------------------
To the Stockholders and Board of Directors of
Console Marketing Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Console Marketing Inc. (A
Development Stage Company) as of August 31, 2003 and 2002 and the related
statements of operations, stockholders' equity and cash flows accumulated for
the period from November 19, 2001 (Date of Inception) to August 31, 2003 and the
year ended August 31, 2003 and from November 19, 2001 (Date of Inception) to
August 31, 2002. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
used in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the aforementioned financial statements present fairly, in all
material respects, the financial position of Console Marketing Inc. (A
Development Stage Company), as of August 31, 2003 and 2002, and the results of
its operations and its cash flows accumulated for the period from November 19,
2001 (Date of Inception) to August 31, 2003 and the year ended August 31, 2003
and from November 19, 2001 (Date of Inception) to August 31, 2002, in conformity
with generally accepted accounting principles used in the United States of
America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has not generated any revenues or started its planned
principal business activity. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also discussed in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ "Manning Elliott"
CHARTERED ACCOUNTANTS
Vancouver, Canada
February 9, 2004
Console Marketing Inc.
(A Development Stage Company)
Balance Sheets
(expressed in U.S. dollars)
August 31, August 31,
2003 2002
$ $
- --------------------------------------------------------------- ------------ -------------
ASSETS
Currents Assets
Cash 140 1,255
Intangible Assets (Note 3) - -
- --------------------------------------------------------------- ------------ -------------
Total Assets 140 1,255
=============================================================== ============ =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable 1,373 73
Accrued liabilities 2,000 1,000
Due to related parties (Note 4) 14,483 5,538
- --------------------------------------------------------------- ------------ -------------
Total Current Liabilities 17,856 6,611
- --------------------------------------------------------------- ------------ -------------
Contingent Liability (Note 1)
Stockholders' Deficit
Common Stock: 23,000,000 shares authorized with a par value of
$.001; 4,300,000 issued and outstanding respectively 4,300 4,300
Additional Paid-in Capital (4,300) (4,300)
- --------------------------------------------------------------- ------------ -------------
- -
Preferred Stock: 2,000,000 shares authorized with a par
value of $.001; none issued - -
Donated Capital (Note 4) 9,750 6,750
- --------------------------------------------------------------- ------------ -------------
9,750 6,750
Deficit Accumulated During the Development Stage (27,466) (12,106)
- --------------------------------------------------------------- ------------ -------------
Total Stockholders' Deficit (17,716) (5,356)
- --------------------------------------------------------------- ------------ -------------
Total Liabilities and Stockholders' Deficit 140 1,255
=============================================================== ============ =============
(The accompanying notes are an integral part of the financial statements)
F-1
Console Marketing Inc.
(A Development Stage Company
Statements of Operations
(expressed in U.S. dollars)
From Accumulated from
November 19, November 19,
For the year 2001 2001
ended (Date of Inception) (Date of Inception)
August 31, to August 31, to August 31,
2003 2002 2003
$ $ $
Revenue - - -
- ----------------------------------------------- -------------- -------------------- --------------------
Expenses
Accounting and legal 4,775 3,000 7,775
Organizational expenses 1,585 2,356 3,941
Management fees (Note 4. b) 6,000 - 6,000
Value of consulting services donated by a
related party - 4,500 4,500
Value of rent donated by a related party (Note
4. a) 3,000 2,250 5,250
- ----------------------------------------------- -------------- -------------------- --------------------
15,360 12,106 27,466
- ----------------------------------------------- -------------- -------------------- --------------------
Net Loss for the Period (15,360) (12,106) (27,466)
=============================================== ============== ==================== ====================
Basic Loss Per Share - -
=============================================== ============== ==================== ====================
Weighted Average Number of Common Shares
Outstanding 4,300,000 4,300,000
=============================================== ============== ==================== ====================
(Diluted loss per share has not been presented as the result is anti-dilutive)
(The accompanying notes are an integral part of the financial statements)
F-2
Console Marketing Inc.
(A Development Stage Company)
Statements of Cash Flows
(expressed in U.S. dollars)
From Accumulated from
November 19, November 19,
For the year 2001 2001
ended (Date of Inception) (Date of Inception)
August 31, to August 31, to August 31,
2003 2002 2003
$ $ $
Cash Flows to Operating Activities
Net loss for the period (15,360) (12,106) (27,466)
Adjustments to reconcile net loss to cash
Value of rent donated by a related party 3,000 2,250 5,250
Value of consulting services donated by a
related party - 4,500 4,500
Change in non cash working capital items
Accounts payable and accrued liabilities 2,300 1,073 3,373
- --------------------------------------------------- -------------- -------------------- --------------------
Net Cash Used In Operating Activities (10,060) (4,283) (14,343)
- --------------------------------------------------- -------------- -------------------- --------------------
Cash Flows from Financing Activities
Advances from related parties 8,945 5,538 14,483
- --------------------------------------------------- -------------- -------------------- --------------------
Net Cash from Financing Activities 8,945 5,538 14,483
- --------------------------------------------------- -------------- -------------------- --------------------
Increase (Decrease) in Cash (1,115) 1,255 140
Cash - Beginning of Period 1,255 - -
- --------------------------------------------------- -------------- -------------------- --------------------
Cash - End of Period 140 1,255 140
=================================================== ============== ==================== ====================
Non-Cash Financing Activities
A total of 4,300,000 shares were issued for the
acquisition of a License (Note 3) - - -
Supplemental Disclosures
Interest paid - - -
Income tax paid - - -
(The accompanying notes are an integral part of the financial statements)
F-3
Console Marketing Inc.
(A Development Stage Company)
Statement of Stockholders' Deficit
From November 19, 2001 (Date of Inception) to August 31, 2003
(expressed in U.S. dollars)
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
# $ $ $
Balance - November 19, 2001 (Date of Inception) - - - -
Stock issued for "The Targetbar License" 4,300,000 4,300 (4,300) -
Net loss for the period - - - (12,106)
- ----------------------------------------------- --------- ------- ------------ -------------
Balance - August 31, 2002 4,300,000 4,300 (4,300) (12,106)
Net loss for the year - - - (15,360)
- ----------------------------------------------- --------- ------- ------------ -------------
Balance - August 31, 2003 4,300,000 4,300 (4,300) (27,466)
=============================================== ========= ======= ============ =============
(The accompanying notes are an integral part of the financial statements)
F-4
Console Marketing Inc.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
1. Development Stage Company
Console Marketing Inc. herein (the "Company") was incorporated in the State
of Nevada, U.S.A. on November 19, 2001. The Company's business plan is to
market and provide Internet services for a software program (See Note 3)
known as the "Targetbar Console" that allows companies to extend and
maintain their website presence on a users' desktop while the user is
involved in other activities.
In a development stage company, management devotes most of its activities
in implementing its business plan. Planned principal business activities
have not yet begun. The ability of the Company to emerge from the
development stage with respect to its planned principal business activity
is dependent upon its successful efforts to raise equity financing and then
to generate profits. There is no guarantee that the Company will be able to
raise any equity financing and or become profitable. There is substantial
doubt regarding the Company's ability to continue as a going concern.
The Company is currently in the process of filing an SB-2 Registration
Statement with the U.S. Securities and Exchange Commission which includes a
public offering of 4,250,000 common shares at $.025 per share on a best
efforts basis with a minimum subscription of 2,125,000 shares.
2. Summary of Significant Accounting Policies
(a) Basis of Accounting
These financial statements have been prepared in accordance with
United States generally accepted accounting principles and are
expressed in United States dollars.
(b) Year End
The Company's fiscal year end is August 31.
(c) Long-Lived Assets
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" establishes a single accounting model for long-lived assets to
be disposed of by sale including discontinued operations. SFAS 144
requires that these long-lived assets be measured at the lower of the
carrying amount or fair value less cost to sell, whether reported in
continuing operations or discontinued operations.
(d) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of
three months or less at the time of issuance to be cash equivalents.
(e) Use of Estimates and Assumptions
The preparation of financial statements in conformity with United
States generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the periods. Actual results
could differ from those estimates.
F-5
Console Marketing Inc.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
2. Summary of Significant Accounting Policies (continued)
(f) Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with
SFAS No. 128, "Earnings per Share" (SFAS 128). SFAS 128 requires
presentation of both basic and diluted earnings per share (EPS) on the
face of the income statement. Basic EPS is computed by dividing net
income (loss) available to common shareholders (numerator) by the
weighted average number of shares outstanding (denominator) during the
period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period including stock options, using
the treasury stock method, and convertible preferred stock, using the
if-converted method. In computing Diluted EPS, the average stock price
for the period is used in determining the number of shares assumed to
be purchased from the exercise of stock options or warrants. Diluted
EPS excludes all dilutive potential shares if their effect is anti
dilutive.
(g) Revenue Recognition
The Company recognizes revenue from licensing software in accordance
with AICPA Statement of Position No. 97-2, as amended, Software
Revenue Recognition and SEC Staff Accounting Bulletin 101. Revenue
from the sale of software is recognized upon delivery of the product
when persuasive evidence of an arrangement exists, the price is fixed
or determinable, collection of the resulting receivable is probable,
and product returns can be reasonably estimated. This policy is
prospective in nature as the Company has not generated any revenues.
(h) Comprehensive Loss
SFAS No. 130, "Reporting Comprehensive Income," establishes standards
for the reporting and display of comprehensive loss and its components
in the financial statements. As at August 31, 2003, the Company has no
items that represent comprehensive loss and, therefore, has not
included a schedule of comprehensive loss in the financial statements.
(i) Financial Instruments
The Company's financial instruments consist of cash, accounts payable,
accrued liabilities, advances from related parties and others. Unless
otherwise noted, it is management's opinion that the Company is not
exposed to significant interest, currency or credit risks arising from
these financial instruments. The fair value of cash, accounts payable
and accrued liabilities, advances from related parties and other
advances approximates their carrying value due to the immediate or
short-term maturity of these financial instruments.
(j) Software Development Costs
Costs incurred in the research and development of software products
are charged to operations as incurred until technological feasibility
has been established. After technological feasibility is established,
any additional costs are to be capitalized in accordance with SFAS No.
86, "Accounting for the Cost of Computer Software to be Sold, Leased
or Otherwise Marketed". The establishment of technological feasibility
and the ongoing assessment of recoverability of capitalized software
development costs require considerable judgment by management with
respect to certain external factors such as anticipated future
revenues, estimated economic life and changes in software and hardware
technologies. No software development costs have been capitalized as
of August 31, 2003.
(k) Foreign Currency Transactions/Balances
The Company's functional currency is the United States dollar.
Occasional transactions occur in Canadian currency, and management has
adopted SFAS No. 52, "Foreign Currency Translation". Monetary assets
and liabilities denominated in foreign currencies are translated into
United States dollars at rates of exchange in effect at the balance
sheet date. Non-monetary assets, liabilities and items recorded in
income arising from transactions denominated in foreign currencies are
translated at rates of exchange in effect at the date of the
transaction.
F-6
Console Marketing Inc.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
2. Summary of Significant Accounting Policies (continued)
(l) Concentration of Credit Risk
Financial instruments that potentially subject the Company to credit
risk consist principally of cash. Cash was deposited with a high
credit quality institution.
(m) New Accounting Pronouncements
In December 2003, the United States Securities and Exchange Commission
issued Staff Accounting Bulletin No. 104, "Revenue Recognition" (SAB
104), which supersedes SAB 101, "Revenue Recognition in Financial
Statements." The primary purpose of SAB 104 is to rescind accounting
guidance contained in SAB 101 related to multiple element revenue
arrangements, which was superseded as a result of the issuance of EITF
00-21, "Accounting for Revenue Arrangements with Multiple
Deliverables." While the wording of SAB 104 has changed to reflect the
issuance of EITF 00-21, the revenue recognition principles of SAB 101
remain largely unchanged by the issuance of SAB 104. The adoption of
SAB 104 did not have a material impact on the Company's financial
statements.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity". SFAS No. 150 establishes standards for how an issuer
classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an
issuer classify a financial instrument that is within its scope as a
liability (or an asset in some circumstances). The requirements of
SFAS No. 150 apply to issuers' classification and measurement of
freestanding financial instruments, including those that comprise more
than one option or forward contract. SFAS No. 150 does not apply to
features that are embedded in a financial instrument that is not a
derivative in its entirety. SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning
after June 15, 2003, except for mandatory redeemable financial
instruments of non-public entities. It is to be implemented by
reporting the cumulative effect of a change in an accounting principle
for financial instruments created before the issuance date of SFAS No.
150 and still existing at the beginning of the interim period of
adoption. Restatement is not permitted. The adoption of this standard
is not expected to have a material effect on the Company's results of
operations or financial position".
3. Intangible Asset
The Company acquired a proprietary software product known as Targetbar
Console. The Company issued 4,300,000 common shares to the vendors for all
rights, title and interest to the proprietary product. The shares are to be
distributed amongst the three vendors at their discretion. One of the
vendors is the President of the Company. The software product was recorded
at no value due to the lack of historical cash flow, the lack of an
established market for the product and one of the vendors being a non-arms
length party and no evidence exists as to their cost of developing the
product. However, it is the Company's intention to implement their business
plan by hiring commissioned sales staff, developing an advertising
campaign, establishing an office, implementing the advertising campaign and
begin making sales and licensing the product.
F-7
Console Marketing Inc.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
4. Related Party Balances/Transactions
Related party transactions are recorded at their exchange amounts. See Note
3 for a software product purchased from a related party with shares of the
Company.
The amounts owing to the President of the Company and a company under his
control except for 4(d) are for cash advances, management fees and
organizational expenses paid on behalf of the Company and are non-interest
bearing, unsecured with no fixed terms of repayment.
(a) The President of the Company has donated rent valued at $250 per
month. In fiscal 2002 the President donated services valued at $500
per month. These amounts have been charged to operations and treated
as donated capital.
(b) In September 2002, the Company entered into a management agreement
with the President of the Company to pay for management services
valued at $500 per month for a term of one year. The management
agreement automatically renews each year.
(c) On June 5, 2003 the Company received $25,000 by way of a promissory
note from Hokley Limited, a non-related party. The promissory note
bears interest at 5% and is due on June 5, 2006. On July 15, 2003 the
President of the Company entered into an assignment with Hokley
Limited; whereby Hokley Limited assigned all right, title and interest
of the promissory note to the President of Company. At August 31, 2003
the amount owing on the promissory note was $11,762.
5. Income Tax
The Company has adopted the provisions of Financial Accounting Standards
Board Statement No. 109 (SFAS 109), Accounting for Income Taxes. Pursuant
to SFAS 109 the Company is required to compute tax asset benefits for net
operating losses carried forward. The potential benefit of net operating
losses has not been recognized in the financial statements because the
Company cannot be assured that it is more likely than not that it will
utilize the net operating losses carried forward in future years. The
Company has net federal operating tax losses of $18,000 to offset future
years taxable income expiring from 2016 through 2018.
The components of the net deferred tax asset, the statutory tax rate, the
effective tax rate and the elected amount of the valuation allowance are
scheduled below:
2003 2002
$ $
Net Operating Loss 12,360 5,356
Statutory Tax Rate 34% 34%
Effective Tax Rate - -
Deferred Tax Asset 4,202 1,821
Valuation Allowance (4,202) (1,821)
- -------------------------------- -------- -------
Net Deferred Tax Asset - -
- -------------------------------- -------- -------
F-8