SEC FILE NO:
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MILK BOTTLE CARDS INC.
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(Exact name of registrant as specified in its charter)
Nevada 2771 20-1904354
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(State or other jurisdiction (Primary Standard (IRS Employer
of incorporation or Industrial Identification No.)
organization) Classification
Code Number)
127 East 18th Ave., Vancouver
British Columbia, Canada, V5V 1E4
Telephone 604 733 6194
Fax 604 733 6195
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(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Michael M. Kessler, Esq.
Lewis, Kessler & Kelsch
3406 American River Drive
Sacramento, California 95864
Telephone: (916) 239-4000
Fax: (916) 239-4008
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(Name, address, including zip code, and telephone number, including
area code, of agent for service)
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. [ ]
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective in
accordance with section 8(a) of the Securities Act of 1933 or until
the registration statement shall become effective on such date as the
Securities and Exchange Commission, acting pursuant to such Section
8(a), may determine.
CALCULATION OF REGISTRATION FEE
-------------------------------
Proposed Proposed
Offering Maximum Amount of
Title of Amount Price Aggregate Registration
each Class to be per Share Offering Fee (1)
of Securities Registered (4) Amount
to be
Registered(2)(3)
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Common Stock 1,000,000 $ .025 $25,000 $ 3.17
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(1) The registration fee has been paid via Fedwire in connection with
this registration.
(2) We intend to offer, on a best efforts basis, 1,000,000 shares of our
common stock (the "Shares"). In the event we do not raise the proceeds
before the expiration date of the offering, all funds raised will be
returned promptly to the subscribers without deductions or interest.
(3) This is an initial offering and no current trading market exists
for our common stock. The average price paid for the currently issued
and outstanding common stock was $.005 per share.
(4) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c).
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective in
accordance with section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Securities and Exchange Commission, acting pursuant to such section
8(a), may determine.
2
PROSPECTUS
Milk Bottle Cards Inc.
1,000,000 shares of common stock (Offering)
$.025 Per Share
This is the initial offering of common stock of Milk Bottle Cards Inc. and
no public market currently exists for these shares. Milk Bottle Cards Inc.
is offering for sale 1,000,000 shares of its common stock on a "self-
underwritten" basis, which means our officers and directors will attempt
to sell the shares. The shares will be offered at a fixed price of $.025
per share for a period of 180 days from the date of this prospectus, and
may be extended by our Board of Directors for an additional 90 days. There
is no minimum number of shares required to be purchased. In the event we
do not raise the proceeds before the expiration date of the offering, all
funds raised will be returned promptly to subscribers without deductions
or interest.
Milk Bottle Cards Inc. is a development stage, start up company, and any
investment in the shares offered herein involves a high degree of risk.
You should only purchase shares if you can afford a complete loss of your
investment. BEFORE INVESTING, YOU SHOULD CAREFULLY READ THIS PROSPECTUS
AND, PARTICULARLY, THE "RISK FACTORS" SECTION, BEGINNING ON PAGE 6.
Neither the U.S. Securities and Exchange Commission nor any state
securities division has approved or disapproved these securities, or
determined if this prospectus is current or complete. Any representation
to the contrary is a criminal offense.
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Public Underwriting Proceeds to Us
Offering or Sales After Completion
Price Commissions of the Offering (2)
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Common Stock (1)
Total Offering $.025 0 $ 25,000
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(1) As of the date of this prospectus, there is no public trading market
for our common stock and no assurance that a trading market for our
shares will ever develop.
(2) The proceeds to us are shown before deduction for legal, accounting,
printing, and other expenses, estimated at $6,000.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement
filed with the U.S. Securities and Exchange Commission is effective.
This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
Subject to Completion, Dated , 2005
3
TABLE OF CONTENTS
Page No.
SUMMARY OF PROSPECTUS. . . . . . . . . . . . . . . . . . . . . . . 5
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
RISKS ASSOCIATED WITH OUR COMPANY. . . . . . . . . . .. . . . . . . 6
RISKS ASSOCIATED WITH THIS OFFERING . . . . . . . . . .. . . . . . .9
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . .10
DETERMINATION OF OFFERING PRICE. . . . . . . . . . . . . . . . . .11
DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES. . . . . . . . . . .11
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . .12
Terms of the Offering . . . . . . . . . . . . . . . . . . . .13
Procedure for Subscribing . . . . . . . . . . . . . . . . . .13
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . .. . . . . . 13
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS . . . 13
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . .15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . 15
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . . .. . .16
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . .. . .17
DESCRIPTION OF BUSINESS . . . . . . . . . . . . . . . . . . . . . 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . 24
Proposed Milestones to Implement Business Operations . . . . .25
DESCRIPTION OF PROPERTY. . . . . . . . . . . . . . . . . . . . . . 26
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . 26
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . . . . . 27
EXPERTS AND LEGAL COUNSEL. . . . . . . . . . . . . . . . . . . . . 29
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . .. . . . . 30
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . 30
DEALER PROSPECTUS DELIVERY OBLIGATION
Until ________________________, all dealers that effect transactions in
these securities, whether or not participating in this offering, may be
required to deliver a prospectus. This is in addition to the dealers'
obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
4
MILK BOTTLE CARDS INC.
127 East 18th Ave., Vancouver
British Columbia, Canada, V5V 1E4
SUMMARY OF PROSPECTUS
=====================
General Information about Our Company
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Milk Bottle Cards Inc. was incorporated in the State of Nevada on November
19, 2004. We were formed to develop and sell greeting cards. We have not
generated any revenues to date; we have been issued a "substantial doubt"
going concern opinion from our auditors; and our only asset is our cash in
the bank, consisting of $9,841, the balance of cash generated from the
issuance of shares to our founders.
We are planning to develop and sell a collection of greeting cards and if
the initial collection is successful and when revenues are sufficient to
support expansion, we will expand the collection of cards.
Our administrative offices are located at 127 East 18th Ave., Vancouver,
British Columbia, Canada, V5V 1E4. This is the home of our President and
sole director, Nicole Milkovich and the office is provided to us rent
free. Our registered statutory office is located at 711 S. Carson Street,
Suite 4, Carson City, Nevada 89701. Our fiscal year end is January 31.
The Offering
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Following is a brief summary of this offering. Please see the Plan of
Distribution; Terms of the Offering section for a more detailed
description of the terms of the offering.
Securities Being Offered 1,000,000 shares of common stock, par
value $.001.
Offering Price per Share $.025
Offering Period The shares are being offered for a
period not to exceed 180 days,
unless extended by our Board of
Directors for an additional 90 days.
In the event we do not raise the
proceeds before the expiration date
of the offering, all funds raised
will be returned promptly to the
subscribers without deductions or
interest.
Net Proceeds to Our Company $ 19,000
5
Use of Proceeds We intend to use the proceeds to
pay for offering expenses and to
generally implement our business
operations.
Number of Shares
Outstanding Before
the Offering: 2,000,000
Number of Shares
Outstanding
After the Offering: 3,000,000
Our officers, directors, control persons and affiliates will not purchase
any shares in this offering.
RISK FACTORS
=============
An investment in these securities involves an exceptionally high degree
Of risk and is extremely speculative in nature. In addition to the other
information regarding our company contained in this prospectus, you should
consider many important factors in determining whether to purchase shares.
Following are what we believe are all of the material risks involved if
you decide to purchase shares in this offering.
RISKS ASSOCIATED WITH OUR COMPANY:
==================================
Since we are a development stage company, have generated no revenues and
lack an operating history, an investment in the shares offered herein is
highly risky and could result in a complete loss of your investment if we
are unsuccessful in our business plans.
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Our company was incorporated in November 2004; we have just recently
commenced the development of the initial greeting card collection; and we
have not yet realized any revenues. We have no operating history upon
which an evaluation of our future prospects can be made. Such prospects
must be considered in light of the substantial risks, expenses and
difficulties encountered by new entrants into the highly competitive
greeting card industry. Our ability to achieve and maintain profitability
and positive cash flow is highly dependent upon a number of factors,
including our ability to attract and retain customers for our greeting
cards, while keeping costs to a minimum. Based upon current plans, we
expect to incur operating losses in future periods as we incur expenses
associated with the initial startup of our business. Further, we cannot
guarantee that we will be successful in realizing revenues or in achieving
or sustaining positive cash flow at any time in the future. Any such
failure could result in the possible closure of our operations or force
us to seek additional capital through loans or additional sales of our
equity securities to continue business operations, which would dilute the
value of any shares you purchase in this offering.
6
We are totally dependent on the proceeds from this offering to implement
our proposed business plans. We do not have any other sources of funding
and may be unable to find any such funding, if and when needed, which
could severely limit any possible revenues and result in a failure of our
business and a total loss of your investment.
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We are planning to use the proceeds of this offering to complete the
design and production of our initial greeting card line. Other than the
shares offered by this prospectus, no other source of capital has been
identified or sought. We expect expenses for the first year following
receipt of the proceeds from this offering to be approximately $23,000, or
92% of the total offering proceeds, which will only allow us to develop
our initial collection of cards. There can be no assurance that we will be
able to raise additional funding, if we do not generate sufficient
revenues, to fully implement our business plans and develop and sell a
more expansive collection of greeting cards. Our auditors have expressed
substantial doubt as to our ability to continue as a going concern.
We cannot predict when or if we will produce revenues, which could
result in a total loss of your investment if we are unsuccessful in our
business plans.
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We just commenced operations and are developing our initial collection of
greeting cards. As such, we have not yet realized any revenues from
operations. In order for us to continue with our plans and develop and
sell our greeting cards, we must raise our initial capital through this
offering. The timing of the completion of the milestones needed to
commence operations and generate revenues is contingent on the success of
this offering. There can be no assurance that we will generate revenues or
that revenues will be sufficient to maintain our business. As a result,
you could lose all of your investment if you decide to purchase shares in
this offering and we are not successful in our proposed business plans.
Since our success depends upon the efforts of Nicole Milkovich, the key
member of our management, our failure to retain Nicole Milkovich will
negatively affect our business, operating results and financial results.
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Our business is greatly dependent on the efforts of our President, Nicole
Milkovich. We have no full time employees and only two part-time
employees, Nicole Milkovich and Carlos Bolbrugge, our officers and
directors, neither of whom are compensated for their services. Our success
will also depend in large part upon our ability to attract, develop,
motivate and retain highly skilled artistic and technical employees in
order to expand our card collection from the initial line. Competition for
qualified personnel in this industry is intense and we may not be able to
hire or retain qualified personnel, if and when needed. We have not
entered into a management agreement with Nicole Milkovich and the loss of
her services could have a negative impact on our business operations,
operating results and possible revenues.
7
Our officers and director have conflicts of interest in that they have
other activities that will prevent them from devoting full-time to our
operations, which may slow our operations and as a result may reduce our
financial results.
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Our officers and director have conflicts of interest in that they have
other activities that will prevent them from devoting full-time to our
operations. Nicole Milkovich, our President, Secretary, Chief Financial
Officer and sole Director will devote approximately 20 hours per week to
our operations. Carlos Bolbrugge, our Vice President of Design, will
devote approximately 10 hours per week to our operations. This may
negatively affect our operations and reduce or limit our potential
revenues and financial results.
The greeting card industry is highly competitive and if our collection of
cards are not well received and/or successful, we may be unable to
generate revenues, which could result in a total loss of your investment.
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The greeting card industry is highly competitive with respect to price and
quality of the cards, as well as the accessibility of the cards for
consumers and, as a result, there is a high failure rate in the industry.
There are numerous well-established competitors, including large
international card companies, regional and local card companies possessing
substantially greater financial, marketing, personnel and other resources
than our company. There can be no assurance that we will be able to
respond to all of the competitive factors affecting the card industry and
successfully develop a greeting card line that will be well received and
profitable. The greeting card industry is generally affected by changes in
consumer preferences and national, regional and local economic conditions,
as well as demographic trends. If we are unable to successfully produce
and market our greeting card line and generate revenues, you could lose
any investment you make in our securities.
Because we do not currently have any patent or trademark protection for
our greeting card line, there is no guarantee that someone else will not
duplicate our ideas and bring them to market before we do or make a better
product, either of which could severely limit our proposed sales and
revenues.
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We believe our greeting card line will be unique; however, we currently
have no patents or trademarks for our designs or brand name. As business
is established and operations expand, we may seek such protection;
however, we currently have no plans to do so. Despite efforts to protect
our proprietary rights, such as our designs and brand name, since we have
no patent or trademark rights unauthorized persons may attempt to copy
aspects of our business, including our designs, greeting cards and other
proprietary information. Any encroachment upon our proprietary
information, including the unauthorized use of our brand name, the use of
a similar name by a competing company or a lawsuit initiated against us
for infringement upon another company's proprietary information or
improper use of their trademark, may affect our ability to create brand
name recognition, cause customer confusion and/or have a detrimental
8
effect on our business. Litigation or proceedings before the U.S. or
International Patent and Trademark Offices may be necessary in the future
to enforce our intellectual property rights, to protect our trade secrets
and domain name and/or to determine the validity and scope of the
proprietary rights of others. Any such infringement, litigation or adverse
proceeding could result in substantial costs and diversion of resources
and could seriously harm our business operations and/or results of
operations.
RISKS ASSOCIATED WITH THIS OFFERING:
=======================================
Buying low-priced penny stocks is very risky and speculative.
- ------------------------------------------------------------
The shares being offered are defined as a penny stock under the Securities
and Exchange Act of 1934, and rules of the Commission. The Exchange Act
and such penny stock rules generally impose additional sales practice and
disclosure requirements on broker-dealers who sell our securities to
persons other than certain accredited investors who are, generally,
institutions with assets in excess of $5,000,000 or individuals with net
worth in excess of $1,000,000 or annual income exceeding $200,000, or
$300,000 jointly with spouse), or in transactions not recommended by the
broker-dealer. For transactions covered by the penny stock rules, a
broker-dealer must make a suitability determination for each purchaser
and receive the purchaser's written agreement prior to the sale. In
addition, the broker-dealer must make certain mandated disclosures in
penny stock transactions, including the actual sale or purchase price and
actual bid and offer quotations, the compensation to be received by the
broker-dealer and certain associated persons, and deliver certain
disclosures required by the Commission. Consequently, the penny stock
rules may affect the ability of broker-dealers to make a market in or
trade our common stock and may also affect your ability to resell any
shares you may purchase in this offering in the public markets.
Due to the lack of a trading market for our securities, you may have
difficulty selling any shares you purchase in this offering.
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There is presently no demand for our common stock, as our securities are
not listed for trading on any public market. While we do intend to apply
for quotation in the Over-the-Counter Bulletin Board, we cannot guarantee
that our application will be approved or that our securities will be
listed and quoted on any public market. If no market is ever developed for
our common stock, it will be difficult for you to sell any shares you
purchase in this offering. In such a case, you may find that you are
unable to achieve any benefit from your investment or liquidate your
shares without considerable delay, if at all. In addition, if we fail to
have our common stock quoted on a public trading market, your common stock
will not have a quantifiable value and it may be difficult, if not
impossible, to ever resell your shares, resulting in an inability to
realize any value from your investment.
9
You will incur immediate and substantial dilution of the price you pay for
your shares.
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Our existing stockholders acquired their shares at a cost substantially
less than that which you will pay for the shares you purchase in this
offering. Accordingly, any investment you make in these shares will result
in the immediate and substantial dilution of the net tangible book value
of those shares from the $.025 you pay for them. Assuming we complete
this offering and receive the net proceeds, the net tangible book value of
your shares will be $.008 per share, substantially less than what you paid
for them.
Our officers and directors have voting control of our common stock, which
could result in shareholder decisions being made on matters you may not
agree with or that may not necessarily be of benefit to you as a
shareholder.
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Because our officers and directors control a large percentage of our
common stock, they have the power to control our management and its
decisions. Our officers and sole director together own a total of
2,000,000, which will be approximately 67% of our issued and outstanding
common stock. As such, in accordance with provisions in our articles of
incorporation and bylaws, they are able to control who is elected to our
board of directors and thus could act, or could have the power to act, as
our management. The interests of our officers and directors may not be, at
all times, the same as that of our other shareholders. Where those
conflicts exist, our shareholders will be dependent upon our officers and
directors exercising, in a manner fair to all of our shareholders, their
fiduciary duties as officers and directors. Also, these officers and
directors will have the ability to significantly influence the outcome of
most corporate actions requiring shareholder approval, including any
possible change in business plans, merger of our company with or into
another company, the sale of all or substantially all of our assets and/or
amendments to our articles of incorporation, even though none of such
events is planned or proposed.
USE OF PROCEEDS
===============
We have estimated the net proceeds to us from this offering to be $19,000.
We expect to disburse these proceeds in the priority set forth below,
during the first 12 months after completion of this offering:
Total Proceeds $ 25,000
Less: Estimated Offering Expenses 6,000
---------
Net Proceeds to Us: $ 19,000
---------
Administrative and Office 1,000
Supplies for initial inventory 2,000
Equipment 1,000
Accounting, auditing and Legal 8,000
Advertising and Marketing 5,000
Working Capital 2,000
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Total Net Proceeds $ 19,000
10 =========
DETERMINATION OF OFFERING PRICE
===============================
The offering price of the shares has been determined arbitrarily by us.
The price does not bear any relationship to our assets, book value,
earnings, or other established criteria for valuing a privately held
company. In determining the number of shares to be offered and the
offering price we took into consideration our capital structure and the
amount of money we would need to implement our business plans.
Accordingly, the offering price should not be considered an indication
of the actual value of our securities.
DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES
=============================================
Dilution represents the difference between the offering price and the net
tangible book value per share immediately after completion of this
offering. Net tangible book value is the amount that results from
subtracting total liabilities and intangible assets from total assets.
Dilution arises mainly as a result of our arbitrary determination of the
offering price of the shares being offered. Dilution of the value of the
shares you purchase is also a result of the lower book value of the shares
held by our existing stockholders.
As of January 31, 2005, the net tangible book value of our shares was
$3,966, or approximately $.002 per share, based upon 2,000,000 shares
outstanding.
Upon completion of this Offering, but without taking into account any
change in the net tangible book value after completion of this Offering,
other than that resulting from the sale of the Shares and receipt of the
net proceeds of $25,000, less offering expenses of $6,000, the net
tangible book value of the 3,000,000 shares to be outstanding will be
$22,966, or approximately $.008 per Share. The purchasers of Shares in
this Offering will incur immediate dilution (a reduction in net tangible
book value per share from the offering price of $.025 per Share) of $.017
per share. As a result, after completion of the offering, the net tangible
book value of the shares held by purchasers in this offering would be
$.008 per share, 68% less than the $.025 price they paid for their shares.
After completion of the sale of the shares in this offering, the new
shareholders will own approximately 33% of the total number of shares then
outstanding, for which they will have made a cash investment of $25,000,
or $.025 per Share.
The following table illustrates the per share dilution to new investors
and does not give any effect to the results of any operations subsequent
to January 31, 2005 or the date of this prospectus:
Public Offering Price per Share $ .025
Net Tangible Book Value prior to this Offering $ .002
Net Tangible Book Value After Offering $ .008
Immediate Dilution per Share to New Investors $ .017 (68%)
11
The following table summarizes the number and percentage of shares
purchased, the amount and percentage of consideration paid and the
average price per Share paid by our existing stockholders and by
new investors in this offering:
Total
Price Number of Percent of Consideration
Per Share Shares Held Ownership Paid
--------- ----------- ---------- -------------
Existing
Stockholders $ .005 2,000,000 67% $ 10,000
Investors in
This Offering $ .025 1,000,000 33% $ 25,000
PLAN OF DISTRIBUTION
--------------------
This is a self-underwritten offering, which means the shares will be sold
by our officers and directors; no underwriters will be engaged to sell the
shares. This prospectus is part of a registration statement filed with the
U.S. Securities and Exchange Commission that permits our officers and
directors to sell the Shares directly to the public, with no commission or
other remuneration payable to them for any shares they sell. There are no
plans or arrangements to enter into any contracts or agreements to sell
the Shares with any broker or dealer.
Nicole Milkovich, our President, Secretary, Chief Financial Officer and
sole Director; and Carlos Bolbrugge, our Vice President of design, will
offer the shares to friends, family members and business acquaintances.
The officers and directors will not register as broker-dealers pursuant
to Section 15 of the Securities Exchange Act of 1934, in reliance upon
Rule 3a4-1, which sets forth those conditions under which a person
associated with an Issuer may participate in the offering of the
Issuer's securities and not be deemed to be a broker-dealer.
a. None of our officers or directors are subject to a statutory
disqualification, as that term is defined in Section 3(a)(39)
of the Act, at the time of his participation; and,
b. None of our officers or directors will be compensated in
connection with their participation by the payment of
commissions or other remuneration based either directly or
indirectly on transactions in securities; and
c. None of our officers or directors are, or will be at the time
of his participation in the offering, an associated person of
a broker-dealer; and
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d. All of our officers and directors meet the conditions of
paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in
that they (A) primarily perform, or are intended primarily
to perform at the end of the offering, substantial duties for
or on behalf of our company, other than in connection with
transactions in securities; and (B) are not brokers or dealers,
or been associated persons of a broker or dealer, within the
preceding twelve months; and (C) have not participated in
selling and offering securities for any Issuer more than once
every twelve months other than in reliance on Paragraphs
(a)(4)(i) or (a)(4)(iii).
Our officers, directors, control persons and affiliates will not purchase
any shares in this offering.
Terms of the Offering
- ---------------------
The Shares will be sold at the fixed price of $.025 per Share until the
completion of this offering. There is no minimum amount of subscription
required per investor.
This offering will commence on the date of this prospectus and continue
for a period of 180 days, unless we extend the offering period for an
additional 90 days, or unless the offering is completed or otherwise
terminated by us (the "Expiration Date").
Procedures for Subscribing
- --------------------------
If you decide to subscribe for any shares in this offering, you will be
required to execute a Subscription Agreement and tender it, together with
a check or certified funds to us. All checks for subscriptions should be
made payable to Milk Bottle Cards Inc.
LEGAL PROCEEDINGS
==================
We are not involved in any pending legal proceeding nor are we aware of
any pending or threatened litigation against us.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
============================================================
Each of our directors is elected by the stockholders to a term of one
year and serves until his or her successor is elected and qualified.
Each of our officers is elected by the Board of Directors to a term
of one year and serves until his or her successor is duly elected and
qualified, or until he or she is removed from office. The Board of
Directors has no nominating, auditing or compensation committees.
The name, address, age and position of our officers and directors is set
forth below:
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Name and Address Age Position(s)
- ----------------- --- -----------
Nicole Milkovich 32 President, CEO, Secretary,
127 East 18th Ave. Treasurer, CFO, Principal
Vancouver, British Columbia Accounting Officer and
Canada, V5V 1E4 Director
Carlos Bolbrugge 33 Vice President of Design
1553 Woods Drive
North Vancouver, BC
Canada, V7R 1A8
The persons named above have held their offices/positions since inception
of our Company and are expected to hold said offices/positions until the
next annual meeting of our stockholders. The officers and directors are
our only officers, directors, promoters and control persons. There are no
relationships between our officers and directors.
Background Information about Our Officers and Directors
- -------------------------------------------------------
Nicole Milkovich has been our President, Chief Executive Officer,
Secretary, Treasurer, Chief Financial Officer, Principal Accounting
Officer and a Director since inception. Nicole graduated from Capilano
College in North Vancouver, British Columbia with a Diploma in Studio Art
in 1997. In 2000, she obtained her Bachelor of Fine Arts Degree in Visual
Art from the Emily Carr Institute of Art and Design. Nicole has worked in
the graphic design field since graduation. From November 2000 until the
present, Nicole has been employed by Nick Milkovich Architects as a full-
time graphic designer, while taking on various graphic design independent
contracts outside of the office. In 2001, Nicole was hired by the
Architectural Institute of British Columbia to design all print materials
for their annual conference, she has held this contract for the past three
years. In the past five years, Nicole has had numerous design contracts
with companies such as: Eckford & Associates, Landscape Architects;
Steelhead Society of British Columbia; MAL Design; Equilibrium Nutrition;
Online Canadian Pharmacy; Dilemma Productions; Walk Music; Black Dog
Productions; and most recently, the Pacific Salmon Foundation. Nicole
Milkovich devotes approximately 20 hours per week to our business.
Carlos Bolbrugge has been our Vice-President of Design since inception.
Carlos graduated from Capilano College in North Vancouver, British
Columbia with a Diploma in Graphic Design and Illustration in 1995. From
June 1998 until the present, Carlos has been employed in the film
industry, as a full-time graphic designer, while taking on various graphic
design independent contracts outside of the film industry. Over the past
three years, Carlos has worked with Nicole Milkovich on several design
projects for various clients such as: Eckford & Associates, Landscape
Architects; Steelhead Society of British Columbia, Dilemma Productions,
and Black Dog Productions. Carlos devotes approximately 10 hours per week
to our business.
14
EXECUTIVE COMPENSATION
----------------------
Currently, neither of our officers and directors are being compensated for
their services; however, they are reimbursed for any out-of-pocket
expenses they incur on our behalf. In the future, if and when we become
profitable from revenues generated, we may approve payment of salaries for
our officers and directors, but currently, no such plans have been a
approved. We also do not currently have any benefits, such as health
insurance, life insurance or any other benefits available to our
employees.
In addition, none of our officers, directors or employees are party to
any employment agreements.
- ------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------
Annual Compensation Long-Term Comp.
Other Awards Payouts
Name and Annual
Position(s) Year Salary Bonus Comp.
- ------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
Nicole Milkovich 2004 None None None None None
President, CEO,
Secretary, Treasurer,
Chief Financial Officer,
Principal Accounting
Officer and Director
Carlos Bolbrugge 2004 None None None None None
Vice President of Design
- ------------------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
==============================================================
The following table sets forth, as of the date of this prospectus, the
total number of shares owned beneficially by each of our directors,
officers and key employees, individually and as a group, and the present
owners of 5% or more of our total outstanding shares. The table also
reflects what such ownership will be assuming completion of the sale of
all shares in this offering, which we can't guarantee. The stockholder
listed below has direct ownership of his/her shares and possesses sole
voting and dispositive power with respect to the shares.
15
Name and Address No. of No. of Percentage
Beneficial Shares Shares of Ownership
Owner Before After Before After
Offering Offering Offering Offering
- ----------------------- -------- ---------------------------------
Nicole Milkovich 2,000,000 2,000,000 100% 67%
127 East 18th Ave.
Vancouver, BC
Canada, V5V 1E4
Carlos Bolbrugge None None 0% 0%
1553 Woods Drive
North Vancouver, BC
Canada V7R 1A8
- ------------------------
All Officers and
Directors as a Group 2,000,000 2,000,000 100% 67%
Future Sales by Existing Stockholders
- -------------------------------------
A total of 2,000,000 shares have been issued to the existing stockholders,
all of which are held by our officers and directors and are restricted
securities, as that term is defined in Rule 144 of the Rules and
Regulations of the SEC promulgated under the Act. Under Rule 144, such
shares can be publicly sold, subject to volume restrictions and certain
restrictions on the manner of sale, commencing one year after their
acquisition. Any sale of shares held by the existing stockholders
(after applicable restrictions expire) and/or the sale of shares
purchased in this offering (which would be immediately resalable after
the offering), may have a depressive effect on the price of our common
stock in any market that may develop, of which there can be no assurance.
Our principal stockholder does not have any existing plans to sell her
shares at any time after this offering is complete.
DESCRIPTION OF SECURITIES
=========================
Common Stock
- ------------
Our authorized capital stock consists of 100,000,000 shares of common
stock, par value $.001 per share. The holders of our common stock (i)
have equal ratable rights to dividends from funds legally available
therefor, when, as and if declared by our Board of Directors; (ii) are
entitled to share in all of our assets available for distribution to
holders of common stock upon liquidation, dissolution or winding up
of our affairs; (iii) do not have preemptive, subscription or conversion
rights and there are no redemption or sinking fund provisions or rights;
and (iv) are entitled to one non-cumulative vote per share on all
matters on which stockholders may vote.
16
Non-cumulative Voting
- ---------------------
Holders of shares of our common stock do not have cumulative voting
rights, which means that the holders of more than 50% of the
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 our directors. After this offering is completed, the present
stockholders will own approximately 67% of our outstanding
shares and the purchasers in this offering will own 33%.
Cash Dividends
- --------------
As of the date of this prospectus, we have not paid any cash dividends
to stockholders. The declaration of any future cash dividend will be
at the discretion of our Board of Directors and will depend upon our
earnings, if any, our capital requirements and financial position, our
general economic conditions, and other pertinent conditions. It is
our present intention not to pay any cash dividends in the foreseeable
future, but rather to reinvest earnings, if any, in our business
operations.
INDEMNIFICATION
===============
Pursuant to provisions set forth in our Articles of Incorporation and By-
Laws, we may indemnify an officer or director who is made a party to any
proceeding, including a law suit, because of his/her position, if he/she
acted in good faith and in a manner he reasonably believed to be in our
best interest. In certain cases, we may advance expenses incurred in
defending any such proceeding. To the extent that the officer or director
is successful on the merits in any such proceeding as to which such person
is to be indemnified, we must indemnify him/her against all expenses
incurred, including attorney's fees. With respect to a derivative action,
indemnity may be made only for expenses actually and reasonably incurred
in defending the proceeding, and if the officer or director is judged to
be liable, only by a court order. The indemnification is intended to be
to the fullest extent permitted by the laws of the State of Nevada.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons
pursuant to the provisions above, or otherwise, we have 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 us of expenses incurred or paid by one of our
directors, officers, or control persons in the successful defense of
any action, suit or proceeding, is asserted by one of our directors,
officers, or control persons in connection with the securities being
17
registered, we will, unless in the opinion of our counsel the matter
has been settled by a controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification is
against public policy as expressed in the Securities Act, and we will
be bound and governed by the final adjudication of such issue.
DESCRIPTION OF OUR BUSINESS
---------------------------
General Information
- -------------------
Milk Bottle Cards Inc. is a development stage company that was
incorporated in the State of Nevada on November 19, 2004. We maintain our
business office at 127 East 18th Ave., Vancouver, British Columbia, V5V
1E4 Canada, in the home of Nicole Milkovich, our President, which we use
on a rent-free basis.
We intend to develop a collection of greeting cards for retail and
wholesale distribution. We intend to use the net proceeds from this
offering to develop our business operations.
Background of the Industry of Greeting Cards
- --------------------------------------------
The custom of sending greeting cards can be traced back to the ancient
Chinese, who exchanged messages of good will to celebrate the New Year,
and to the early Egyptians, who conveyed their greetings on papyrus
scrolls. Handmade paper greeting cards were being exchanged in Europe
sometime in the 13th Century. The Germans are known to have printed New
Year's greetings from woodcuts as early as 1400, and handmade paper
Valentines were being exchanged in various parts of Europe in the early to
mid-1400s. By the 1850s, the greeting card had been transformed from a
relatively expensive, handmade and hand-delivered gift to a popular and
affordable means of personal communication, due largely to advances in
printing and mechanization, as well as the introduction of the postage
stamp.
Louis Prang, a German immigrant who started a small lithographic business
near Boston in 1856, is generally credited with the start of the greeting
card industry in America. In 1875, he introduced the first complete line
of Christmas cards to the American public but by the 1890s, cheap
imitative import cards entered the American market, eventually forcing
Prang to abandon his greeting card publishing business.
In the early 1900s, the domestic business climate for greeting cards
increased and a number of today's leading publishers were founded.
Following World War I, new publishers continued to enter the field and
increased competition produced important innovations in printing
processes, art techniques and decorative treatments for greeting cards.
During World War II, the greeting card industry flourished during the war
effort, helping the government sell war bonds and providing cards for the
soldiers overseas.
18
Since the 1980s, alternative cards - cards not made for a particular
holiday or event - gained in popularity. Explosive growth in electronic
technology, and the adoption of the Internet, gave birth to the electronic
greeting card or "E-card" in the late 1990s. The development of this
entirely new medium for card-sending served to further expand the
industry, producing new E-card publishers as well as E-greeting card
offerings by traditional greeting card publishers.
Our Proposed Business
- ---------------------
We intend to operate our business in a two-pronged manner. We plan to
produce quality handmade greeting cards and then sell those products
through a variety of distribution channels, both wholesale and retail.
We intend to retail our greeting card line through an online store which
will be established on our website at www.milkbottlecards.com, at craft
shows and at home parties. We will also wholesale our greeting cards to
small gift and card stores and flower stores, either by selling direct or
by consigning cards to them.
Initial Greeting Card Line
- --------------------------
Our initial greeting card collection will fall into two categories: (1)
everyday greeting cards, including Birthday, Anniversary and Get Well; and
(2) seasonal cards, including Christmas, Valentine's Day, Mother's Day and
Father's Day. In addition, we will produce hand painted blank greeting
cards so the purchaser will be able to customize the card to any occasion.
We intend to manufacture our cards in two ways -- Printed and Hand
Painted. The printed cards will be printed in our office using an ink-jet
printer and sprayed with a sealer to protect the surface. The hand painted
cards will be painted on high-quality watercolor paper. We estimate the
approximate cost of producing an average card will be $1.00 to $1.40,
depending on which technique is used. This cost is expected to drop once
we start to purchase supplies in larger quantities. We currently intend to
sell our cards to retailers for $2.50 to $3.50, resulting in a retail
price to the end consumer of $4.95 to $6.95 each, which is competitively
priced within the industry. We will maintain this retail price range of
$4.95 to $6.95 per card when selling direct to the consumer through our
website, craft shows and through home parties. The cards will be stamped
on the back with our company logo and website address to ensure a unique
feel of the product and a brand awareness, which we hope will eventually
lead customers to our website for repeat sales. The cards will be
individually wrapped in cellophane sleeves with coordinating envelopes.
Printed Cards will be limited edition printed greeting cards. The
technique for these cards will be for the design to be collaged, scanned
and then printed in small batches for a series of cards based on the
trends of the seasons; utilizing different colors, patterns, textures and
themes.
19
Hand Painted Cards will be one-of-a-kind designed cards painted on high
quality watercolor paper, with matching envelopes. We will continue to
experiment with different card-making techniques and materials, varying
the themes, patterns and colors that we feel the public will want to
purchase. As new designs are developed, new cards will be added to our
collection, while poor selling cards will be eliminated.
Market Analysis
- ---------------
Initially, we will endeavor to sell our greeting cards regionally
throughout the Vancouver area of British Columbia, Canada. We will attempt
to wholesale and/or consign our line to gift stores, card stores and
flower stores. We will attempt to identify distinct establishments for
each type that cater to higher income individuals who are interested in
buying greeting cards that are hand made, unique in design and that are
not mass produced. We believe that there is a growing number of people who
enjoy homemade greeting cards and appreciate that they can give these
cards to their intended recipients knowing that they are special cards and
that the recipient will not be receiving the exact same card from other
people. In addition to extensively marketing and establishing a presence
in the Vancouver area, we also intend to sell our greeting cards over the
Internet, thereby increasing the possibility of expanding our geographic
markets throughout North America.
As we establish our operations and expand our inventory of initial cards,
we intend to expand our geographic coverage for our wholesale business, a
well. We may also be able to expand our geographic coverage for certain
aspects of our retail sales beyond Internet exposure and sales, such as
through gift and home living shows in other regions..
Competition
- -----------
Competition for our greeting card collection comes from two distinct
groups of producers of greeting cards. The first group are the large
multinational corporations who have traditionally mass produced greeting
cards for the consumer market and are the leaders in the industry. The
second group contains smaller companies focusing on different niche
segments within the greeting card market, as well as individuals or small
organizations producing small volumes of hand made greeting cards.
Our major competitors will be the large multinational greeting card
companies, which include Hallmark Cards Inc., American Greetings
Corporation, Taylor Corporation, 123greetings.com Inc. and CSS Industries,
Inc. These companies tend to mass produce greeting cards for the consumer
market and have been quite successful in doing so. In addition to
traditional paper based greeting cards, many of these companies have
developed divisions that provide online greeting cards, wedding
invitations, birth announcements, etc., as well as different seasonal
offerings that might include gift wrap, ribbons and bows. These companies
have extensive resources for development, manufacturing, marketing,
distribution and sales of their greeting card collections and associated
product offerings. While these multinationals mass produce and distribute
their cards throughout North America, we believe that there is still room
in the industry to target market those consumers who do not want mass
produced greeting cards, but would rather have a more unique and hand made
greeting card.
20
There are also a large number of individuals and small organizations
producing small volumes of hand made greeting cards for distribution and
sale to specialty shops, including card and gift shops, flower shops as
well as through the Internet. There are no significant barriers to entry
into the greeting card industry, virtually any motivated individual could
commence a business and start designing, manufacturing and selling
greeting cards immediately. We feel that we can successfully compete in
this small, handmade segment of the industry quite effectively with our
unique, handmade card designs and verses.
We believe that the key factors for our success will be to design a unique
and appealing collection of greeting cards, utilize quality paper and
competitive pricing. We also intend to focus on selling our greeting cards
to markets we will target that specialize in carrying handmade and
specialty greeting cards. Establishing the "Milk Bottle Cards" brand name
will be essential to the success of our company. We will need to
continually reinforce to the consumer that our greeting cards are unique,
high quality, of good value and are readily available for purchase. We
believe that consumers will develop into repeat customers if we can
continue to deliver on these key factors. By aggressively focusing on
several different sales channels, we feel that we will be able to build up
our brand name, which will assist us in competing in the very competitive
greeting card industry.
Sales and Distribution Methods
- ------------------------------
We plan to market our products both to wholesale and retail distributors
in a number of different ways. We initially intend to target and
wholesale, or consign, if necessary to familiarize customers with our
brand name, to small gift shops, card stores and flower stores. We also
plan to retail our products through parties hosted by individuals, at gift
and home living shows, and via an online Internet store on our website at
www.milkbottlecards.com. We have reserved the domain name and have engaged
the services of a website developer to design and host our website.
Using direct marketing and sales, we will sell our product to small gift
shops, card stores and flower stores. As the market for greeting cards is
quite competitive, we feel that we may initially have to offer consignment
terms to potential customers. Once we start to establish our brand name,
however, and begin generating revenues, we will be in a stronger position
and will no longer need to offer consignment terms for our cards.
As funds become available, we also plan to generate direct sales at
parties hosted by individuals who will receive a 20% commission on all
products sold at the party. The host of the party will invite individuals
by word of mouth or through invitations, such as has historically been
done with Tupperware and MaryKay Cosmetics, as well as many other
companies. This method tends to keep costs associated with this form of
sale to a minimum. When funds are available and we are ready to expand
into this form of marketing and sales, we intend to place ads in local
newspapers and handouts.
21
As funds allow, we also plan to attend local gift and home living shows
where it we will display and sell our products. This method will also
keep sales costs fairly low; however, as there are not that many such
shows, the amount of sales from this method is not expected to be
significant.
We are currently in the process of building our website to host an online
store at www.milkbottlecards.com, where our greeting card collection can
be viewed, purchased and shipped. Due to the high cost of shipping, we
plan to initially only make our products available within North America
and there will be a minimum order size of twelve cards. We will develop a
user friendly interactive web site where consumers can view the greeting
cards, order the cards and provide shipping information. As Internet usage
continues to grow and online purchases become much more commonplace, it is
expected that we will incorporate online credit card purchases and
Internet sales will become an inexpensive and effective way for us to sell
our greeting cards.
We intend to use our website as not only an online store, but a marketing
tool as well. The website will contain pictures and information about all
of our greeting cards. We will attempt to strategically place the website
on many different and popular search engines. We will attempt to drive
traffic to our website using direct email marketing campaigns, starting
with friends, family and business associates. Our greeting cards will be
wrapped in clear plastic covers and stickers with Milk Bottle Cards used
to seal them. This will continue to reinforce the Milk Bottle Cards brand
name and be consistent with the website.
Suppliers and Raw Materials
- ---------------------------
We currently purchase our supplies from two primary sources: Printing Ink,
of Vancouver, British Columbia, and Opus Framing of Vancouver, British
Columbia. We do not have any written contracts with these suppliers yet
and are on a cash purchase basis at this time. Once our business is
established and our inventory increases, we intend to shop for better
prices based on larger lot purchases of paper and inks used in our card
making process. All of the materials and supplies used in our card making
process are readily available from many different suppliers and, if and
when necessary, we will be able to substitute our current suppliers if
certain supplies we need are unavailable or if we are able to obtain
better quality and better prices for the supplies we use.
Equipment
- ---------
Ms. Nicole Milkovich, an officer and director, currently provides the
usage of computer and technical equipment for the development and
manufacturing of the greeting card collection, on a rent-free basis. This
equipment consists of an Apple Macintosh PowerBook G4 computer, an Epson
Ink Jet printer and an Agfa scanner. We anticipate that this equipment
will be sufficient to develop our business operations into the foreseeable
future; however, if there is high initial demand for our greeting cards,
we will require an additional printer. We estimate that we can purchase an
additional printer for approximately $300. We are responsible for
22
purchasing all the assorted inks, paper and supplies associated with the
development of the greeting cards and reimburse Mr. Milkovich for such
costs and expenses incurred on our behalf.
Patents and Trademarks
- ----------------------
We do not currently have any patent or trademark protection. If we
determine it is feasible to file for such trademark protection, we still
have no assurance that doing so will prevent competitors from using the
same or similar names, marks, concepts or appearance.
Government and Industry Regulation
- ----------------------------------
Regulation of Internet - Websites are not currently subject to direct
federal laws or regulations applicable to access, content or commerce on
the Internet. However, due to the increasing popularity and use of the
Internet, it is possible that a number of laws and regulations may be
adopted with respect to the Internet covering issues such as:
* user privacy
* freedom of expression
* pricing
* content and quality of products and services
* taxation
* advertising
* intellectual property rights
* information security
The adoption of any such laws or regulations might decrease the rate of
growth of Internet use, which in turn could decrease the demand for our
services, increase the cost of doing business or in some other manner have
a negative impact on our business, financial condition and operating
results. In addition, applicability to the Internet of existing laws
governing issues such as property ownership, copyrights and other
intellectual property issues, taxation, libel, obscenity and personal
privacy is uncertain. The vast majority of such laws were adopted prior
to the advent of the Internet and related technologies and, as a result,
do not contemplate or address the unique issues of the Internet and
related technologies.
We will abide by all copyright laws and will ensure that any copyrighted
information that is provided on our website or included in any or our
greeting card offerings has received approval from the source of the
copyright information. When using the information provided or refurbished
from other sources and to protect us from any potential intellectual
property claims, we will endeavor to obtain all necessary consents prior
to the use of the sources and will reference the sources to give full
credit where it is due.
Employees and Employment Agreements
- -----------------------------------
At present, we have no employees, other than, Nicole Milkovich and Carlos
Bolbrugge, our officers and directors, who will not be compensated for
their services until such time as we become profitable. At such time, our
23
Board of Directors will determine the amount of compensation that will be
paid to our officers and directors, if any. Ms. Milkovich devotes
approximately 20 hours per week of her time to our operations and Mr.
Bolbruggee devotes approximately 10 hours per week. Nicole's duties will
be to handle our day-to-day operations and Carlos assists Nicole on an as-
needed basis. Ms. Milkovich and Mr. Bolbrugge do not have employment
agreements with us. We presently do not have pension, health, annuity,
insurance, stock options, profit sharing or similar benefit plans;
however, we may adopt plans in the future. There are presently no
personal benefits available.
As and when funds become available, we intend to hire third party
independent contractors for development of our website and to host our
website, who will be under the supervision of our officers and directors.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
=========================================================
We are a start-up, development stage company and have not yet generated or
realized any revenues from our business operations. Since inception, we
have incurred net losses of $6,034.
The following table provides selected financial data about our company
for the period from November 19, 2004, the date of incorporation, through
January 31, 2005. For detailed financial information, see the audited
Financial Statements included in this prospectus.
Balance Sheet Data:. 1/31/05
------------------ -------
Cash $ 9,841
Total assets $ 9,841
Total liabilities $ 5,875
Stockholders' equity $ 3,966
Our estimated expenses for the next twelve months of operations are as
outlined below:
Administrative and Office 1,000
Supplies for initial inventory 2,000
Equipment 1,000
Accounting and Legal 8,000
Advertising and Marketing 5,000
Working Capital 2,000
Other than the shares offered by this prospectus, no other source of
capital has been has been identified or sought.
To date, we have never had any discussions with any possible acquisition
candidate nor have we any intention of doing so.
24
Plan of Operation
- -----------------
Proposed Milestones to Implement Business Operations:
- ----------------------------------------------------
In order to become fully operational and profitable, we will need to
achieve each of the milestones outlined below:
- - Develop and launch our website at www.milkbottlecards.com. We have
verbally engaged Gary Baerg at Nucleus Networks (1932 West First Ave,
Vancouver, BC) to design, develop and launch our website for $250. In
addition, Mr. Baerg has been engaged to host the website until December
31, 2005 for $50. There are no written agreements between us and Mr.
Baerg. Nicole and Carlos will work with Mr. Baerg in the artistic layout
and functionality of the website. The initial website is scheduled to
launch by May 1, 2005.
- - Develop marketing materials. All marketing materials will be developed
in-house by our officers and directors at no cost to us, other than
minimal expense costs of development. The initial marketing materials will
be based on the same design concepts used in the website and will consist
of logo, letterhead, small point of purchase display materials and
corporate stickers used to seal the plastic covers/sleeves used to protect
the cards. This marketing material will be developed by May 1, 2005.
- - Develop the initial card collection. This initial greeting card
collection will consist of samples of both printed and hand painted cards.
We plan on initially developing printed cards: Birthday, Anniversary and
Get Well cards. In addition, and given the time of the year, we will
develop Father's and Mother's day cards. We will also develop some hand
painted cards, reflecting spring and summer colors. The initial collection
of sample cards is expected to be completed by May 15, 2005.
- - Increase our card collection inventory. We will incur expenses
associated with the purchase of supplies to expand our card collection. We
anticipate we will require a minimal level of supplies including paper,
ink, paint, glue, cellophane and stickers to produce our initial
collection of cards and to provide a modest level of inventory of finished
cards that will be ready for immediate resale. We estimate that we will
require approximately 500 finished cards (printed and hand painted) in
inventory to begin our initial marketing campaign. We estimate that this
initial level of inventory of supplies and finished cards will cost
approximately $1,000 and will be completed by May 31, 2005 to coincide
with the launch of our website.
- - Implement direct sales campaign. As soon an our initial card collection
inventory is ready, we intend to implement our direct sales campaign by
contacting small gift shops, card stores and flower stores in and around
the Vancouver, British Columbia region. We are currently gathering
information on potential clients and plan to commence this direct
marketing campaign in June 2005; the estimated cost to complete this phase
is approximately $500.
25
- - Commence hosting home party sales. Our President anticipates hosting a
"Spring into Summer" home party, where she will invite her family, friends
and business associates to view and purchase the initial collection of
cards, in an effort to introduce them to Milk Bottle Cards and provide
them with the opportunity to book and host their own parties. We
anticipate hosting our "Spring into Summer" home party sometime in June
2005 and it is anticipated that the cost will be approximately $100.
- - Attend gift and home living trade shows. We plan on attending local gift
and home living trade shows, as and when financial resources are
available. As funds are available, we also plan on attending similar trade
show in other regions of Canada and the United States. Until such
financial resources area available, we will continue to gather information
on these other trade shows and identify and prioritize the different shows
that we would like to attend when the resources are available. We will
start to gather this information in June 2005 and continue on an ongoing
basis to source more current information on other trade shows, as and when
it becomes available.
- - Continue to expand our greeting card collection and improve our website.
We will continue to expand our greeting card collection and as the
collection become more extensive, we will also expand our website to
accommodate this expected growth. While our initial website will be
launched by June 1, 2005, we will continue to enhance the website to make
it more user friendly and to display our expanding greeting card
collection. This expansion of the greeting card collection and enhancement
to the website will commence when financial resources are available will
continue through the normal development of our ongoing business
operations.
DESCRIPTION OF PROPERTY
=======================
We do not currently own any property. We operate our business from the
home of our President, Nicole Milkovich, on a rent-free basis. It is
anticipated this arrangement will remain until we begin generating
revenues and our operations expand, at which time we will seek to lease
shared office facilities at competitive market rates, on a month-to-month
basis. It is our opinion that our current office space will meet our needs
for the foreseeable future.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
==============================================
We operate our business from the home of our President, Nicole Milkovich,
and currently use her computer equipment to produce our greeting cards, on
a rent-free basis.
26
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
========================================================
No public market currently exists for shares of our common stock.
Following completion of this offering, we intend to apply to have our
common stock listed for quotation on the Over-the-Counter Bulletin Board;
however, there is no assurance that we will be successful in doing so.
Penny Stock Rules
- -----------------
The Securities and Exchange Commission has also adopted rules that
regulate broker-dealer practices in connection with transactions in
penny stocks. Penny stocks are generally equity securities with a price
of less than $5.00 (other than securities registered on certain national
securities exchanges or quoted on the Nasdaq system, provided that
current price and volume information with respect to transactions in
such securities is provided by the exchange or system).
A purchaser is purchasing penny stock which limits the ability to
sell the stock. The shares offered by this prospectus constitute penny
stock under the Securities and Exchange Act. The shares will remain
penny stocks for the foreseeable future. The classification of penny
stock makes it more difficult for a broker-dealer to sell the stock into
a secondary market, which makes it more difficult for a purchaser to
liquidate his/her investment. Any broker-dealer engaged by the purchaser
for the purpose of selling his or her shares in us will be subject to
Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather
than creating a need to comply with those rules, some broker-dealers
will refuse to attempt to sell penny stock.
The penny stock rules require a broker-dealer, prior to a transaction in
a penny stock not otherwise exempt from those rules, to deliver a
standardized risk disclosure document prepared by the Commission, which:
- - - contains a description of the nature and level of risk in the
market for penny stocks in both public offerings and secondary
trading;
- - - contains a description of the broker's or dealer's duties to
the customer and of the rights and remedies available to the
customer with respect to a violation to such duties or other
requirements of the Securities Act of 1934, as amended;
- - - contains a brief, clear, narrative description of a dealer
market, including "bid" and "ask" prices for penny stocks
and the significance of the spread between the bid and ask
price;
- - - contains a toll-free telephone number for inquiries on
disciplinary actions;
- - - defines significant terms in the disclosure document or in
the conduct of trading penny stocks; and
27
- - - contains such other information and is in such form (including
language, type, size and format) as the Securities and
Exchange Commission shall require by rule or regulation;
The broker-dealer also must provide, prior to effecting any transaction
in a penny stock, to the customer:
- the bid and offer quotations for the penny stock;
- the compensation of the broker-dealer and its salesperson in the
transaction;
- the number of shares to which such bid and ask prices apply, or
other comparable information relating to the depth and liquidity
of the market for such stock; and
- monthly account statements showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in
a penny stock not otherwise exempt from those rules; the broker-dealer
must make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the purchaser's written
acknowledgment of the receipt of a risk disclosure statement, a written
agreement to transactions involving penny stocks, and a signed and dated
copy of a written suitability statement. These disclosure requirements
will have the effect of reducing the trading activity in the secondary
market for our stock because it will be subject to these penny stock
rules. Therefore, stockholders may have difficulty selling their
securities.
Regulation M
- ------------
Our officers and directors, who will offer and sell the Shares, are
aware that they are required to comply with the provisions of
Regulation M promulgated under the Securities Exchange Act of 1934,
as amended. With certain exceptions, Regulation M precludes the
officers and directors, sales agents, any broker-dealer or other
person who participate in the distribution of shares in this
offering from bidding for or purchasing, or attempting to induce any
person to bid for or purchase any security which is the subject of
the distribution until the entire distribution is complete.
As an exception to these rules, an underwriter may engage in
transactions effected in accordance with Regulation M that are
intended to stabilize, maintain or otherwise affect the price of our
common stock. The underwriter may engage in over-allotment sales,
syndicate covering transactions, stabilizing transactions and penalty
bids in accordance with Regulation M. Over-allotments occur when an
underwriter sells more shares than it purchases in an offering. In
order to cover the resulting short position, the underwriter may
exercise the over-allotment option described above. Additionally, an
underwriter may engage in syndicate covering transactions. Syndicate
covering transactions are bids for or purchases of stock on the open
market by the underwriter in order to reduce a short position incurred
28
by the underwriter on behalf of the underwriting syndicate. There is no
contractual limit on the size of any syndicate covering transaction.
Stabilizing transactions consist of bids or purchases made by an
underwriter for the purpose of preventing or slowing a decline in the
market price of our securities while the offering is in progress.
A penalty bid is an arrangement permitting the underwriter to reclaim the
selling concession that would otherwise accrue to an underwriter if the
common stock originally sold by the underwriter was later repurchased by
the underwriter and therefore was not effectively sold to the public by
such underwriter.
We have not and do not intend to engage the services of an underwriter
in connection with the offer and sale of the Shares in this offering.
In general, the purchase of a security to stabilize or to reduce a
short position could cause the price of the security to be higher
than it might otherwise be. Sales of securities by us or even the
potential of these sales could have a negative effect on the market
price of the shares of common stock offered hereby.
Reports
- -------
We are subject to certain reporting requirements and will furnish annual
financial reports to our stockholders, certified by our independent
accountants, and will furnish unaudited quarterly financial reports in
our quarterly reports filed electronically with the SEC. All reports and
information filed by us can be found at the SEC website, www.sec.gov.
Stock Transfer Agent
- --------------------
The stock transfer agent for our securities is Holladay Stock Transfer,
2939 N. 67th Place, Scottsdale, Arizona 85251, telephone (480) 481-3940.
EXPERTS AND LEGAL COUNSEL
=========================
Our financial statement for the period from November 19, 2004 (inception)
to
January 31, 2005, included in this prospectus have been audited by Dale
Matheson Carr-Hilton LaBonte, Chartered Accountants, #1300 - 1140 West
Pender Street, Vancouver, B.C. Canada V6E 4G1. We include the financial
statements in reliance on the report of Dale Matheson Carr-Hilton LaBonte,
given upon their authority as experts in accounting and auditing.
The law offices of Lewis Kessler Kelsch, of Sacramento, California
has passed upon the validity of the shares being offered and certain other
legal matters and is representing us in connection with this offering.
29
AVAILABLE INFORMATION
======================
We have filed a Registration Statement on form SB-2 under the Securities
Act of 1933 with the Securities and Exchange Commission with respect to
the shares of our common stock offered through this prospectus. This
Prospectus is filed as a part of that Registration Statement, but does not
contain all of the information contained in the Registration Statement and
exhibits. Statements made in the Registration Statement are summaries the
material terms of the referenced contracts, agreements or documents of the
company. You may inspect the Registration Statement, exhibits and
schedules filed with the Securities and Exchange Commission at the
Commission's principal office in Washington, D.C. Copies of all or any
part of the Registration Statement may be obtained from the Public
Reference Section of the Securities and Exchange Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the Commission at 1-800-
SEC-0330 for further information on the operation of the public
reference rooms. The Securities and Exchange Commission also maintains a
web site http://www.sec.gov that contains reports, proxy statements and
information regarding registrants that file electronically with the
Commission. Our Registration Statement and the referenced exhibits can
also be found on this site.
FINANCIAL STATEMENTS
=====================
Our fiscal year end is January 31. We intend to provide audited
financial statements to our stockholders on an annual basis, as reported
on by an Independent Registered Public Accounting firm, in our annual
reports. Our audited financial statement for the period from November 19,
2004 (inception) to January 31, 2005, immediately follow.
30
MILK BOTTLE CARDS INC.
(A Development Stage Enterprise)
FINANCIAL STATEMENTS
JANUARY 31, 2005
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BALANCE SHEET
STATEMENT OF OPERATIONS
STATEMENT OF STOCKHOLDERS' EQUITY
STATEMENT OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
31
DALE MATHESON Partnership Of:
CARR-HILTON LABONTE Robert J. Burkart, Inc. James F. Carr-Hilton, Ltd.
- --------------------- Alvin F. Dale, Ltd. Peter J. Donaldson, Inc.
CHARTERED ACCOUNTANTS Wilfred A. Jacobson, Inc. Reginald J. LaBonte, Ltd.
Robert J. Matheson, Inc. Fraser G. Ross,Ltd.
Brian A. Shaw, Inc. Anthony L. Soda, Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Milk Bottle Cards Inc.
We have audited the balance sheet of Milk Bottle Cards Inc. (a development
stage enterprise) as at January 31, 2005 and the statements of operations,
stockholders' equity and cash flows for the period from November 19, 2004
(inception) to January 31, 2005. 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 audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform an audit to obtain reasonable assurance
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at January 31, 2005 and
the results of its operations and cash flows and the changes in
stockholders' equity for the period from November 19, 2004 (inception) to
January 31, 2005 in accordance with generally accepted accounting
principles in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company is dependent on raising additional capital
to fund future operations and anticipates ongoing losses from its planned
business operations which raises substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 1. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/ "Dale Matheson Carr-Hilton LaBonte"
Dale Matheson Carr-Hilton LaBonte
CHARTERED ACCOUNTANTS
Vancouver, B.C.
February 28, 2005
32
Milk Bottle Cards Inc.
(A Development Stage Enterprise)
Balance Sheet
January 31, 2005
A S S E T S
- -----------
Current Assets
- --------------
Cash $ 9,841
----------
Total Assets $ 9,841
==========
L I A B I L I T I E S
- ---------------------
Current Liabilities
- -------------------
Accounts Payable $ 5,875
----------
Total Current Liabilities 5,875
----------
S T O C K H O L D E R S ' E Q U I T Y
- ----------------------------------------
Common Stock
100,000,000 authorized common shares,
par value $0.001
2,000,000 common shares issued and outstanding 2,000
Additional Paid-in-Capital 8,000
Deficit accumulated during development stage (6,034)
----------
Total Stockholders' Equity 3,966
----------
Total Liabilities and Stockholders' Equity $ 9,841
Going Concern Contingency (Note 1)
The accompanying notes are an integral part of these financial statements.
33
Milk Bottle Cards Inc.
(A Development Stage Enterprise)
Statement of Operations
November 19, 2004
(inception) to
January 31, 2005
-----------------
Revenues:
- --------
Revenues $ -
-------------
Expenses:
- --------
General and Administrative Expenses 6,034
-------------
Total Expenses 6,034
-------------
Net Income (Loss) for the period $ (6,034)
=============
Basic and Diluted Loss Per Common Share (0.00)
=============
Weighted Average number of Common
Shares Outstanding 1,729,730
=============
The accompanying notes are an integral part of these financial statements.
34
Milk Bottle Cards Inc.
(A Development Stage Enterprise)
Statement of Stockholders' Equity
For the period from November 19, 2004 (inception) to January 31, 2005
Accumulated
Deficit During
$0.001 Paid-In Development Stockholders'
Shares Par Value Capital Period Equity
--------- -------- -------- ------------- ------------
Balance, November 19,
2004 - $ - $ - $ - $ -
Shares issued for
cash at $0.005 per
share-November 29,
2004 2,000,000 2,000 8,000 - 10,000
Net income (loss)
for the period from
November 19, 2004
(inception) to
January 31, 2005 (6,034) (6,034)
----------- -------- -------- ---------- -----------
Balance,
January 31, 2005 2,000,000 2,000 8,000 (6,034) 3,966
=========== ======== ======== ========== ===========
The accompanying notes are an integral part of these financial statements.
35
Milk Bottle Cards Inc.
(A Development Stage Enterprise)
Statement of Cash Flows
November 19, 2004
(inception) to
January 31, 2005
-----------------
Cash Flows from Operating Activities:
- ------------------------------------
Net Loss for the period $ (6,034)
Change in non-cash working capital items:
Accounts Payable 5,875
-----------
Net Cash Used in Operating Activities (159)
-----------
Cash Flows from Financing Activities:
- ------------------------------------
Common Stock issued for cash 10,000
-----------
Net Cash Provided by Financing Activities 10,000
-----------
Net Increase in Cash 9,841
Cash, Beginning of Period -
-----------
Cash, End of Period $ 9,841
===========
Supplemental Disclosures:
- ------------------------
Interest paid $ -
===========
Taxes paid $ -
===========
The accompanying notes are an integral part of these financial statements.
36
Milk Bottle Cards Inc.
(A Development Stage Enterprise)
January 31, 2005
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
- -----------------------------------------------------
Organization
- ------------
Milk Bottle Cards Inc. (the "Company") was incorporated under the laws of
the State of Nevada on November 19, 2004 for the purpose of producing,
distributing and marketing a collection of greeting cards.
The Company has a total of 100,000,000 authorized common shares with a par
value of $0.001 per share and 2,000,000 common shares issued and
outstanding as of January 31, 2005.
The Company has been in the initial organization stage since inception and
has no business assets nor current operating revenues. The Company's
ability to continue as a going concern is dependent on raising additional
capital to fund future operations and ultimately to attain profitable
operations. Accordingly, these factors raise substantial doubt as to the
Company's ability to continue as a going concern.
The Company is planning to file a form SB-2 Registration Statement in
connection with a planned prospectus offering of up to 1,000,000 shares of
the Company's common stock at a price of $0.025 per share for gross
proceeds of $25,000.
The Company expects to satisfy its cash requirements for the next twelve
months with the current cash in the bank, proceeds from the planned
offering and advances from the Company's sole director if required.
Basis of presentation
- ---------------------
These financial statements are presented in United States dollars and have
been prepared in accordance with United States generally accepted
accounting principles.
The Company's year end is January 31, 2005 with its initial period being
from November 19, 2004 to January 31, 2005.
Development Stage Enterprise
- ----------------------------
The Company is a development stage enterprise, as defined in Financial
Accounting Standards Board Statement ("SFAS") No. 7. The Company is
devoting all of its present efforts to securing and establishing a new
business. Its planned principal operations have not commenced and
accordingly, no revenue has been derived during the organizational period.
37
Milk Bottle Cards Inc.
(A Development Stage Enterprise)
January 31, 2005
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies (con't)
- -------------------------------------------------------------
Use of Estimates
- ----------------
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 on contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Fair Value of Financial Instruments
- -----------------------------------
In accordance with the requirements of SFAS No. 107, management has
determined the estimated fair value of financial instruments using
available market information and appropriate valuation methodologies. The
fair value of financial instruments classified as current assets or
liabilities approximate carrying value due to the short-term maturity of
the instruments.
Federal Income Tax
- ------------------
The Company has adopted the provisions of SFAS No. 109, Accounting for
Income Taxes. The Company accounts for income taxes pursuant to the
provisions of the Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes", which requires an asset and liability
approach to calculating deferred income taxes. The asset and liability
approach requires the recognition of deferred tax liabilities and assets
for the expected future tax consequences of temporary differences between
the carrying amounts and the tax basis of assets and liabilities.
Earnings (loss) per Common Share
- --------------------------------
The Company has adopted SFAS No. 128, "Earnings Per Share," which
simplifies the computation of earnings per share.
Basic earnings (loss) per share is computed on the basis of the weighted
average number of common shares outstanding during the period.
Diluted earnings (loss) per share is computed on the basis of the weighted
average number of common shares and dilutive securities outstanding during
the period. Dilutive securities having an anti-dilutive effect on diluted
earnings (loss) per share are excluded from the calculation.
Diluted loss per share is equal to basic loss per share as there are no
dilutive securities outstanding.
Stock-Based Compensation
- ------------------------
The Company has not adopted a stock option plan and has not granted any
stock options. Accordingly no stock-based compensation has been recorded
to date.
38
Milk Bottle Cards Inc.
(A Development Stage Enterprise)
January 31, 2005
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies (con't)
- ------------------------------------------------------------
Comprehensive Income
- --------------------
SFAS No. 130, "Reporting Comprehensive Income," establishes standards for
reporting and presentation of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all
changes in equity except those resulting from investments by owners and
distributions to owners. Among other disclosures, SFAS No.130 requires
that all items that are required to be recognized under current accounting
standards as components of comprehensive income be reported in a financial
statement that is presented with the same prominence as other financial
statements. The Company does not have any assets requiring disclosure of
comprehensive income.
Recent accounting pronouncements
- --------------------------------
In December 2004, the FASB issued SFAS No. 123 (Revised 2004), Share-Based
Payment ("SFAS 123(R)"), which requires the compensation cost related to
share-based payments, such as stock options and employee stock purchase
plans, be recognized in the financial statements based on the grant-date
fair value of the award. SFAS 123(R) is effective for all interim periods
beginning after December 15, 2005. Management does not believe that the
adoption of this standard will have a material impact on the Company's
financial condition or results of operations.
In December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary
Assets, an amendment of APB Opinion No. 29, Accounting for Non-monetary
Transactions ("SFAS 153") SFAS 153 requires that exchanges of non-monetary
assets are to be measured based on fair value and eliminates the exception
for exchanges of non-monetary, similar productive assets, and adds an
exemption for non-monetary exchanges that do not have commercial
substance. SFAS 153 will be effective for fiscal periods beginning after
June 15, 2005. Management does not believe that the adoption of this
standard will have a material impact on the Company's financial condition
or results of operations.
Note 2 - Common Stock
- -----------------------
The Company's authorized capitalization is 100,000,000 common shares with
a par value of $0.001 per share.
To date, the Company has not granted any stock options and has not
recorded any stock-based compensation.
A total of 2,000,000 shares of the Company's common stock were issued to
the founding and sole director of the Company pursuant to a stock
subscription agreement at $0.005 per share for total proceeds of $10,000.
39
Milk Bottle Cards Inc.
(A Development Stage Enterprise)
January 31, 2005
Notes to Financial Statements
Note 3 - Related Parties
- --------------------------
The Company currently has no significant related party transactions with
any related individuals or entities.
The Company currently uses office space provided by the director of the
Company on a rent-free basis not subject to any formal rental or lease
agreement. The Company has determined that the fair value of the office
space provided is not significant and accordingly no related rent expense
has been recorded in these financial statements.
Note 4 - Income Taxes
- ---------------------
The Company has net operating loss carry-forwards of approximately $6,000
which may be available to offset future taxable income. Due to the
uncertainty of realization of these loss carry-forwards, a full valuation
allowance has been provided for this deferred tax asset.
Note 5 - Subsequent Events
- ----------------------------
The Company is currently planning to file a form SB-2 Registration
Statement under the Securities Act of 1933 with the U.S. Securities and
Exchange Commission to raise up to $25,000 by way of a prospectus offering
of 1,000,000 shares of the Company's common stock at a price of $0.025 per
share.
40
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
------------------------------------------------
Item 24. Indemnification of directors and officers.
- ----------------------------------------------------
Pursuant to the Articles of Incorporation and By-Laws of the
corporation, we may indemnify an officer or director who is made a
party to any proceeding, including a law suit, because of his position,
if he acted in good faith and in a manner he reasonably believed to
be in our best interest. In certain cases, we may advance expenses
incurred in defending any such proceeding. To the extent that the
officer or director is successful on the merits in any such proceeding
as to which such person is to be indemnified, we must indemnify him
against all expenses incurred, including attorney's fees. With
respect to a derivative action, indemnity may be made only for expenses
actually and reasonably incurred in defending the proceeding, and if the
officer or director is judged liable, only by a court order. The
indemnification is intended to be to the fullest extent permitted by
the laws of the State of Nevada.
As regards indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors or officers
pursuant to the foregoing provisions, we are informed that, in the
opinion of the Commission, such indemnification is against public
policy, as expressed in the Act and is, therefore, unenforceable.
Item 25. Other expenses of issuance and distribution.
- ------------------------------------------------------
Expenses incurred or (expected) relating to this Prospectus and
distribution are as follows:
Legal and Professional fees $ 3,500
Accounting 1,900
Transfer Agent fees 500
Printing of Prospectus 100
----------
TOTAL $ 6,000
To date, we have incurred an accounts payable to our accountant for fees
charged to prepare our initial audit. We don't intend to incur any other
expenses unless and until we complete this offering and fully commence
our business plans.
Item 26. Recent sales of unregistered securities.
- --------------------------------------------------
Set forth below is information regarding the issuance and sales of
securities without registration since inception. No such sales involved
the use of an underwriter; no advertising or public solicitation were
involved; the securities bear a restrictive legend; and no commissions
were paid in connection with the sale of any securities.
41
On November 29, 2004, 2,000,000 shares of common stock were issued to
Nicole Milkovich, our President, Secretary, Chief Financial Officer and
sole director of Milk Bottle Cards, Inc., as founders' shares, in
exchange for $10,000, or $.005 per share, in. These securities were
issued in reliance upon the exemption contained in Section 4(2) of the
Securities Act of 1933. These securities were issued to officers and
directors of the company, bear a restrictive legend and were issued to
non-US residents.
Item 27. Exhibits.
- --------------------
Exhibit Index:
- -------------
Exhibit
Number Description
----------------------------------------------
3.1 Articles of Incorporation
3.2 Bylaws
5 Opinion re: Legality
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (See Exhibit 5)
99 Form of Subscription Agreement
Item 28. Undertakings
- -----------------------
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) Reflect in the prospectus any facts which, individually
or together, represent a fundamental change in the
information in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement;
(iii) Include any additional or changed material information
on the plan of distribution.
42
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 such securities at that time to be the
initial bona fide offering.
3. File a post-effective amendment to remove from registration any
of the securities registered which remain unsold at the end of the
offering.
(d) The undersigned Registrant hereby undertakes to provide
to the purchasers in this offering certificates in such
denominations and registered in such names as required
to permit prompt delivery to each purchaser.
(e) Insofar as indemnification for liabilities arising under
the Securities Act (the "Act") may be permitted to directors,
officers and controlling persons of the small business
issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the small business
issuer of expenses incurred or paid by a director, officer,
or controlling of the small business issuer 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
small business issuer will, unless in the opinion of counsel
the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether
such indemnification is against public policy as expressed in
the Securities Act, and will be governed by the final
adjudication of such issue.
(f) The undersigned Registrant hereby undertakes that:
(1) For determining any liability under the Securities Act,
it will treat the information omitted from the form
of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the small business issuer
under Rule 424(b)(1) or (4) or 497(h) under the Securities
Act as part of this registration statement as of the time
the Commission declared it effective.
(2) For determining any liability under the Securities Act,
treat each post-effective amendment that contains a form
of prospectus as a new registration statement for the
securities offered in the registration statement, and
that offering of the securities at that time as the
bona fide offering of those securities.
43
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 prospectus to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Vancouver,
Country of Canada.
April 10, 2005 Milk Bottle Cards, Inc., Registrant
/s/ Nicole Milkovich
-----------------------------------
By: Nicole Milkovich, President,
CEO, Secretary, Treasurer, CFO,
Principal Accounting Officer and
Sole Director
44