As filed with the Securities and Exchange Commission on November 29, 2002
Registration No. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
__________________
THE DEALER SHEET, INC.
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(Name of small business issuer in its charter)
Colorado 2721 84-1613631
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(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
__________________
7858 East Long Place
Centennial, Colorado 80112; (303) 918-2333
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(Address and telephone number of principal executive offices)
7858 East Long Place
Centennial, Colorado 80112
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(Address of principal place of business or intended principal place of business)
Mr. Evan Lee
7858 East Long Place
Centennial, Colorado 80112; (303) 918-2333
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(Name, address and telephone number of agent for service)
Please send copies of all correspondence to:
PATRICIA CUDD, ESQ.
Cudd & Associates
12441 West 49th Avenue, Suite #1-A
Wheat Ridge, Colorado 80033
Telephone: (303) 861-7273
Approximate date of proposed sale to the public:
As soon as practicable after the Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________________________
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Each Dollar Maximum Maximum Amount of
Class of Securities Amount to Offering Price Aggregate Registration
to Be Registered Be Registered Per Share* Offering Price* Fee
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Common Stock,
$.001 par value $100,000 $.05 $100,000 $9.20
TOTAL $100,000 $9.20
*Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o).
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 that specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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PART I - Narrative Information Required in Prospectus
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Item 2. Significant Parties.
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List the full names and business and residential addresses, as applicable,
for the following persons:
(1) The issuer's directors:
Residence/Business Address:
Evan Lee 7858 East Long Place
Centennial, Colorado 80112
Rebecca Flowers 1289 Xanadu Street
Aurora, Colorado 80111
(2) The issuer's officers:
Residence/Business Address:
Evan Lee 7858 East Long Place
Centennial, Colorado 80112
Rebecca Flowers 1289 Xanadu Street
Aurora, Colorado 80111
(3) The issuer's general partners:
The issuer is a corporation and, accordingly, has no general partners.
(4) Record owners of 5 per cent or more of any class of the issuer's
equity securities:
The following individuals, whose addresses are set forth in Items 1.(a) and
(b) above, are the owners of record of five per cent or more of the outstanding
shares of common stock of The Dealer Sheet, Inc.
Shares Owned Per Cent of Class
Name of Record Owner of Record* Before Offering
- -------------------- ------------ -----------------
Evan Lee 1,000,000 48.3%
Rebecca Flowers 1,000,000 48.3%
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*Based upon 2,070,000 shares of our common stock issued and outstanding as
of the date of this prospectus.
(5) Beneficial owners of 5 per cent or more of any class of the issuer's
equity securities:
See the response to Item 2.,(4) above.
(6) Promoters of the issuer:
Mr. Evan Lee and Ms. Rebecca Flowers may be deemed to be "promoters" of The
Dealer Sheet, as that term is defined in the Securities Act of 1933.
(7) Affiliates of the issuer:
Mr. Evan Lee and Ms. Rebecca Flowers are affiliates of The Dealer Sheet.
(8) Counsel to the issuer with respect to the proposed offering:
Patricia Cudd, Esq.
Cudd & Associates
12441 West 49th Avenue, Suite #1-A
Wheat Ridge, Colorado 80033
(9) Each underwriter with respect to the proposed offering:
Not applicable. There is no underwriter(s) with respect to the proposed
offering.
(10) The underwriter's directors:
Not applicable.
(11) The underwriter's officers:
Not applicable.
(12) The underwriter's general partners:
Not applicable.
(13) Counsel to the underwriter:
Not applicable.
Item 3. Relationship with Issuer of Experts Named in Registration Statement.
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No expert named in the registration statement as having prepared or
certified any part thereof was employed for that purpose on a contingent basis
or, at the time of the preparation or certification or at any time thereafter,
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had a material interest in The Dealer Sheet or was connected with The Dealer
Sheet as a promoter, underwriter, voting trustee, director, officer or employee.
The Dealer Sheet has no parents or subsidiaries.
Item 4. Selling Security Holders.
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Not applicable. None of our shareholders is offering any shares of common
stock in the offering.
Item 5. Changes in and Disagreements with Accountants.
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Not applicable. We had no independent accountant prior to the retention of
Jonathon P. Reuben, CPA, An Accountancy Corporation, 23440 Hawthorne Boulevard,
Suite #270, Torrance, California 90505, in October 2002. There has been no
change in our independent accountant during the period commencing with the
retention of Jonathon P. Reuben, CPA, An Accountancy Corporation, through the
date of this report.
Item 6. Disclosure of Commission Position on Indemnification for Securities Act
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Liabilities.
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Under Colorado law and pursuant to our Articles of Incorporation, we may
indemnify our officers and directors for various expenses and damages resulting
from their acting in those capacities. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to our
officers or directors pursuant to those provisions, we have been informed by our
counsel that, in the opinion of the U.S. Securities and Exchange Commission, the
indemnification is against public policy as expressed in the Securities Act of
1933, and is therefore unenforceable.
3
The Dealer Sheet, Inc.
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(Exact name of Company as set forth in Charter)
Type of securities offered: Shares of common stock, $.001 par value per share
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Maximum number of securities offered: 2,000,000 shares of common stock
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Minimum number of securities offered: 1,000,000 shares of common stock
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Price per security: $.05 per share
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Total proceeds: If maximum sold: $100,000 If minimum sold: $50,000
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(See Questions 9 and 10)
Is a commissioned selling agent selling the securities
in this offering? [ ] Yes [X] No
If yes, what per cent is commission of price to public? -0-% Not applicable.
Is there other compensation to selling agent(s)? [ ] Yes [X] No Not
applicable
Is there a finder's fee or similar payment to any person? [ ] Yes [X] No (See
Question No. 22)
Is there an escrow of proceeds until minimum is obtained? [ ] Yes [X] No (See
Question No. 26)
Is this offering limited to members of a special group,
such as employees of The Dealer Sheet or individuals? [ ] Yes [X] No (See
Question No. 25)
Is transfer of the securities restricted? [ ] Yes [X] No (See
Question No. 25)
INVESTMENT IN SMALL BUSINESSES INVOLVES A HIGH DEGREE OF RISK, AND
INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO
LOSE THEIR ENTIRE INVESTMENT. SEE QUESTION NO. 2 FOR THE RISK FACTORS THAT
MANAGEMENT BELIEVES PRESENT THE MOST SUBSTANTIAL RISKS TO AN INVESTOR IN THIS
OFFERING.
If we do not receive subscriptions for at least 1,000,000 shares of common
stock within 90 days from the date of this prospectus, we will refund the funds
promptly to subscribers, without deduction or interest. Management, in its sole
discretion, may extend the offering period for up to an additional 90 days.
After we have received proceeds from the sale of 1,000,000 shares of common
stock, we may continue the offering without any refund provisions until all
2,000,000 shares of common stock are sold, the expiration of 90 days from the
date of this prospectus unless extended as described above or until we elect to
terminate the offering, whichever occurs first.
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IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED OR APPROVED BY
ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE,
THESE AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE U.S. SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS
OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON
THE ACCURACY OR COMPLETENESS OF ANY PROSPECTUS OR SELLING LITERATURE.
The Dealer Sheet:
[ ] Has never conducted operations.
[X] Is in the development stage.
[X] Is currently conducting operations.
[ ] Has shown a profit in the last fiscal year.
[ ] Other (Specify):
(Check at least one, as appropriate)
This offering has been registered for offer and sale in the following states:
State State File No. Effective Date
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Colorado
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TABLE OF CONTENTS
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Page
The Company 8
Risk Factors 9
Business and Properties 16
Offering Price Factors 30
Use of Proceeds 32
Capitalization 36
Description of Securities 37
Plan of Distribution 39
Dividends, Distributions and Redemptions 43
Officers and Key Personnel of the Company 43
Directors of the Company 44
Principal Stockholders 46
Management Relationships, Transactions and Remuneration 48
Litigation 50
Federal Tax Aspects 51
Miscellaneous Factors 51
Management's Discussion and Analysis of Certain Relevant Factors 51
Financial Statements F-1
(begin boldface)
Until __________ __, 2003 (90 days after the date of this prospectus), 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.
(end boldface)
6
THIS PROSPECTUS CONTAINS ALL OF THE REPRESENTATIONS BY THE COMPANY
CONCERNING THIS OFFERING, AND NO PERSON SHALL MAKE DIFFERENT OR BROADER
STATEMENTS THAN THOSE CONTAINED HEREIN. INVESTORS ARE CAUTIONED NOT TO RELY UPON
ANY INFORMATION NOT EXPRESSLY SET FORTH IN THIS PROSPECTUS.
This Prospectus, together with Financial Statements and other Attachments,
consists of a total 53 pages.
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THE COMPANY
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1. Exact corporate name: The Dealer Sheet, Inc.
State and date of incorporation: Colorado; March 27, 2002.
Street address of principal office: 7858 East Long Place, Centennial,
Colorado 80112.
Company telephone number: (303) 918-2333.
Company e-mail address: www.thedealersheet.com
Fiscal year: December 31.
Person(s) to contact at Company with respect to offering: Mr. Evan Lee.
Telephone number (if different from above): Not applicable. Same as above.
The Offering
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Shares of common stock offered by this prospectus:
Minimum............................................ 1,000,000 shares
Maximum............................................ 2,000,000 shares
Price per share: $.05
Termination date of the minimum offering: 90 days from the
date of this
prospectus*
Termination date of the maximum offering: 90 days from the
date of this
prospectus unless
extended for up to
an additional 90 days
Common stock outstanding prior to the offering: 2,070,000 shares
Common stock to be outstanding upon completion of the offering:
Minimum............................................ 3,070,000 shares
Maximum............................................ 4,070,000 shares
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*If the minimum is not obtained, the funds will be promptly returned to
subscribers, without deduction or interest.
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Selected Financial Information
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We were only recently organized on March 27, 2002, and only recently
commenced business as the publisher of a weekly magazine reporting on the values
and the fluctuations in value of rare coins and the market for rare coins. We
have no subscribers for our weekly magazine and a limited number of advertisers
who have committed to purchase advertising on a month-to-month basis as of the
date of this memorandum. We have yet to realize meaningful revenues. We may
never generate earnings from our business.
Summary Balance Sheet Data:
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As of
September 30, 2002
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Working capital ........................................... $15,701
Total assets............................................... $29,680
Total liabilities.......................................... $(1,440)
Total stockholders' equity................................. $28,240
Summary Operating Data:
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Inception
(March 27, 2002)
through
September 30, 2002
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Net loss .................................................. $(2,760)
Basic loss per share ...................................... $(0.00)
Weighted average number of shares
of common stock outstanding.............................. 2,070,000
RISK FACTORS
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2. List in the order of importance the factors that The Dealer Sheet
considers to be the most substantial risks to an investor in this offering in
view of all facts and circumstances or that otherwise make the offering one of
high risk or speculative (i.e., those factors that constitute the greatest
threat that the investment will be lost in whole or in part, or not provide an
adequate return).
Risk Factors Related to Our Business
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We are a development-stage company with limited prior business operations
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and we may not be able to establish ourselves as a going concern. We are the
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publisher of a weekly magazine reporting on the values and the fluctuations in
value of rare coins and the market for rare coins. Because we are a new
business, we are not likely to succeed unless we can overcome the obstacles we
9
face. We have only limited operating history on which you can base an evaluation
of our business and prospects. Our efforts, since inception, have been allocated
primarily to the following:
o Organizational activities;
o Developing a business plan;
o Obtaining interim funding;
o Obtaining a limited number of advertisers who have committed to
purchase advertising on a month-to-month basis; and
o Establishing and enhancing our web site on the Internet.
In order to establish ourselves as a going concern, we are dependent upon the
anticipated proceeds of this offering, the receipt of additional funds from
other sources to continue business operations and/or the achievement of
profitable operations. You should be aware of the increased risks,
uncertainties, difficulties and expenses we face as a numismatic magazine
publisher with limited operating history in a new and rapidly evolving market.
If we are unable to raise additional funds or achieve profitability or if we
encounter unexpected difficulties and expenses, then our business may fail.
We have realized minimal revenues and no earnings, and we may not be able
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to achieve profitable operations in the future. We have no subscribers for our
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weekly numismatic magazine and only a limited number of advertisers who have
committed to purchase advertising on a month-to-month basis. Accordingly, we
have yet to realize meaningful revenues from subscriptions or advertising. We
realized a net loss of $(2,760) for the period from inception (March 27, 2002)
through September 30, 2002. We may not be able to achieve profitable operations
in the future from the publication of a weekly magazine reporting on the values
and the market for rare coins. Our success in the business of publishing a
numismatic magazine to be available through the mail and online is dependent
upon our achieving profitable operations or obtaining additional financing to
enable us to fully implement our business plan. If we are unable to obtain
additional debt and/or equity financing from this or other securities offerings
or otherwise, then we will not be able to continue as a going concern unless we
realize meaningful revenues. During the development stage of our operations, the
revenues generated from operations can be expected to be insufficient to cover
expenses.
We expect significant increases in our costs and expenses to result in a
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loss for at least the next year, which, in turn, may cause us to cease
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operations. We have not achieved profitability. If we do not obtain a large
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enough circulation or enough advertisers to generate sufficient revenues and
achieve profitability, then we will not be able to implement our business plan
and/or continue as a going concern. We believe that we will continue to incur
operating and net losses for at least the next year, and possibly longer, and
that the rate at which we incur these losses will increase significantly from
current levels. We intend to increase our costs and expenses substantially as
we:
10
o Purchase computer equipment and office furniture;
o Increase our circulation and marketing activities;
o Increase our general and administrative functions to support our
growing operations; and
o Establish and develop our Internet web site.
We may find that these efforts will be more expensive than we currently
anticipate or that these efforts may not result in proportional increases in our
revenues, which would further increase our losses. Accordingly, we believe that
we may incur an operating and net loss for at least the next year, and possibly
longer, and that the rate at which we incur these losses may increase. In that
event, if our revenues continued to be insufficient to cover our operating
expenses, we would be unable to continue in business as a going concern unless
we were able to obtain additional debt and/or equity financing. If our financial
condition did not improve, we would cease operations and our shareholders would
lose their entire investment.
We have limited assets and working capital and minimal shareholders' equity
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and, if our financial condition does not improve, we will cease operations and
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our shareholders will lose their entire investment. As of September 30, 2002, we
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had total assets of $29,680, including $17,141 in cash and cash equivalents,
$2,539 in computer equipment (net of accumulated depreciation of $181) and
$10,000 in deferred offering costs. Our working capital and total stockholders'
equity as of September 30, 2002, were $15,701 and $29,740, respectively.
Accordingly, we have only very limited assets, including working capital, and
financial resources and minimal stockholders' equity. Our two executive
officers, directors and principal shareholders received 2,000,000 shares of our
common stock in exchange for $24,000 in cash. In addition, we issued 70,000
shares of common stock to two shareholders for $7,000 in cash. After this
offering, which, if completed, will yield net proceeds of a minimum of $38,500
and a maximum of $88,500, our working capital may be dissipated by current
liabilities. Our financial condition may not improve. We believe that the
proceeds of this offering, together with revenues from operations, will be
sufficient to implement our business plan on a limited scale over the next year.
However, we do not expect to continue in operation, without an infusion of
capital, after the expiration of one year from the closing of this offering. In
order to obtain additional equity financing, we may be required to dilute the
interest of existing shareholders or forego a substantial interest in our
revenues, if any. See "Certain Transactions" for a more detailed description of
our capitalization and financial condition.
Because we will need to raise additional funds and these funds may not be
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available to us when we need them, we may need to change our business plan, sell
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or merge our business or face bankruptcy. The minimum and maximum net proceeds
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of this offering are $38,500 and $88,500, respectively, and, therefore, are
sufficient to conduct only a limited amount of activity. If the proceeds of this
offering are insufficient to enable us to continue operations until we are able
to generate significant revenue or obtain additional capital on acceptable
terms, our business may fail. Particularly if only the minimum number of shares
11
of common stock being offered hereby is sold, our continued operation will be
dependent on our ability to generate operating revenue or procure additional
financing. Based on our current projections, we will need to raise funds after
the expiration of one year from the closing of this offering through the
issuance of equity, equity-related or debt securities in addition to the funds
we are raising in this offering. We will need to raise additional capital sooner
than one year after the closing of this offering if we are unable to sell at
least the minimum number of shares of common stock being offered or if we
receive the minimum proceeds and our sales are lower than expected. Additional
capital may not be available to us on favorable terms when required, or at all.
If this additional financing is not available to us, we may need to dramatically
change our business plan, sell or merge our business or face bankruptcy.
Management has agreed to provide the necessary working capital so as to permit
The Dealer Sheet to continue as a going concern over the one-year period
following the closing of this offering. However, management may be unable to do
so in the event that this becomes necessary. In addition, our issuance of equity
or equity-related securities will dilute the ownership interest of existing
shareholders and our issuance of debt securities could increase the risk or
perceived risk of our company. Any of these actions could cause our stock price
to fall. Apart from our requirements for capital in addition to the anticipated
proceeds of this offering, prospective investors should be aware of the
possibility that we will not raise any funds in this offering.
We may not succeed in establishing The Dealer Sheet brand, which would
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adversely affect customer acceptance and our revenues. The market for a magazine
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reporting on the values and the fluctuations in value of rare coins and the
market for rare coins, is in the early stage. There is one other such magazine,
to the best of our knowledge, in existence as of the date of this prospectus. We
may lose the opportunity to build a critical mass of customers if we do not
establish our brand quickly. Promoting and positioning our brand will depend
largely on the success of our marketing efforts and our ability to provide
consistent, high quality customer experiences. To promote our brand, we will
incur substantial expense in our marketing efforts, initially, via
advertisements in print publications together with advertising on web sites that
we believe our customers are likely to visit and attendance at numismatic trade
shows. We will also incur substantial expense in our efforts to enter into
strategic alliances with online and more traditional companies that we believe
will promote our brand and drive customers to our web site. Ultimately, we will
also need to expend funds to attract and train customer service personnel and to
develop content to help build our brand and attract customers to our web site.
We will incur additional losses if these brand promotion activities do not yield
increased revenues.
Because our executive officers and directors are our only employees, devote
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only 50% of their time to our business and are not bound by employment
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agreements, we may not be able to achieve profitability or maintain our
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operations with the limited time commitment of these individuals and we may
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realize serious harm if they leave. Mr. Evan Lee, our President/Chief Executive
- -----------------------------------
Officer, and Ms. Rebecca Flowers, our Secretary/Treasurer/Chief Financial and
Accounting Officer, and directors of The Dealer Sheet, are our only employees.
For the foreseeable future, we have no plans to employ any other personnel. Each
individual devotes approximately 50% of his or her time and effort to our
business and affairs currently. We may not be able to achieve profitability or
maintain our operations with the limited time commitment of our executive
officers and directors. We face the additional risk that Mr. Lee and/or Ms.
Flowers could leave with little or no prior notice because they are not bound by
12
employment agreements. If we lost the services of Mr. Lee, our business would
fail unless we were successful in finding a suitable replacement. We do not have
a "key person" life insurance policy covering Mr. Lee or Ms. Flowers.
We must enter into strategic relationships to help promote our web site
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and, if we fail to develop, maintain or enhance these relationships, we may not
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be able to attract and retain subscribers and advertisers, build The Dealer
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Sheet brand and enhance our sales and marketing capabilities. We believe that
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our ability to attract subscribers and advertisers for the online version of our
weekly numismatic magazine, facilitate broad market acceptance of the magazine
and The Dealer Sheet brand and enhance our sales and marketing capabilities
depends on our ability to develop and maintain strategic relationships with
other numismatic and other web sites and portals that can drive customer traffic
to our web site. If we are unsuccessful in developing or maintaining these
relationships, or if the relationships do not assist us in attracting or
retaining customers, it may be difficult to grow our business.
We may be unable to adequately protect or enforce our intellectual property
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rights. We rely on trade secret law to protect our intellectual property. These
- -------
laws afford only limited protection. Despite our efforts to protect our
proprietary rights, unauthorized persons may attempt to copy our numismatic
magazine and aspects of our web site, including the look, feel and organization
of our web site, the technology used to operate our web site and our content. We
have not filed an application to secure registration for our trademark, "The
Dealer Sheet," in the United States or any other country. Any encroachment upon
our proprietary information, the unauthorized use of our trademark, the use of a
similar name by a competing company or a lawsuit initiated against us for our
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 effect on our business.
Litigation or proceedings before the U.S. Patent and Trademark Office may
be necessary in the future to enforce our intellectual property rights, to
protect our trade secrets and domain name and to determine the validity and
scope of the proprietary rights of others. Any litigation or adverse proceeding
could result in substantial costs and diversion of resources and could seriously
harm our business and operating results. Finally, if we make The Dealer Sheet or
www.thedealersheet.com available internationally, the laws of many countries do
- ----------------------
not protect our proprietary rights to as great an extent as do the laws of the
United States.
Third parties may also claim infringement by us with respect to past,
current or future technologies. We expect that participants in our markets will
be increasingly subject to infringement claims as the number of services and
competitors in our industry segment grows. Any claim, whether meritorious or
not, could be time-consuming, result in costly litigation, cause service upgrade
delays or require us to enter into royalty or licensing agreements. These
royalty or licensing agreements might not be available on terms acceptable to us
or at all.
Risk Factors Related to This Offering
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Because of the absence of escrow arrangements for the minimum offering
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proceeds, the funds paid for shares of common stock will not be insulated from
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our creditors, if any. Until such time as we have received and accepted
- -------------------------
subscriptions for at least 1,000,000 shares of common stock, all proceeds from
13
the offering will be held in our business checking account at US Bank, N.A.,
Denver, Colorado. Customarily, entities such as The Dealer Sheet, which are
seeking to raise equity funding, provide for the escrow or other impoundment of
the proceeds to be received from the minimum number of securities being offered.
No such escrow or impound arrangements have been made for the minimum proceeds
anticipated to by received by us from this offering. Thus, subscribers for the
minimum number of shares of common stock being offered by this prospectus are
subject to additional risks in that the funds paid for the shares will not be
insulated from our creditors, if any.
There is no public market for our common stock and, if a public market
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fails to develop or be sustained, then investors may be unable to sell, and
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therefore lose their investments in, the shares of common stock. There is no
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public market for our common stock and there is no assurance that a public
market will develop as a result of this offering or, if developed, that it will
be sustained. Many brokerage firms may not effect transactions in the securities
and many lending institutions may not permit their use as collateral for loans.
The common stock will be traded, if at all, in the "pink sheets" maintained by
members of the National Association of Securities Dealers, Inc., and possibly on
the electronic Bulletin Board. We will not satisfy the requirements either for
being quoted on the National Association of Securities Dealers' Automated
Quotations System or for listing on any national securities exchange.
Accordingly, until we qualify for NASDAQ or listing on an exchange, any trading
market that may develop for the common stock is not expected to qualify as an
"established trading market" as that term is defined in Securities and Exchange
Commission regulations, and is expected to be substantially illiquid.
The offering price of our common stock is arbitrary and was not determined
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based on a market price; therefore, it should not be considered to bear any
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relationship to our assets, book value or net worth and should not be considered
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to be an indication of our value. Because there is no public market for our
- -----------------------------------
common stock, the offering price was not determined based on a market price. The
factors considered in determining the offering price of the common stock include
our future prospects, the likely trading price for the common stock if a public
market develops and management's opinion of the implicit value of the company.
Accordingly, we have arbitrarily established the offering price of the common
stock and it should not be considered to bear any relationship to our assets,
book value or net worth and should not be considered to be an indication of our
value. The offering price is substantially higher than the book value per share
of our outstanding common stock. Accordingly, the investors in this offering
will pay the substantially higher price of $.05 per share for their shares of
common stock than the current shareholders who acquired their shares at an
average cost of $.015 per share. As a result, these new investors will incur
immediate substantial dilution of approximately $.02 to $.03 on their
investment, depending upon whether the maximum or the minimum offering is
achieved.
Because our management members will continue to control The Dealer Sheet,
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they will be able to determine the outcome of all matters requiring approval of
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our shareholders. Mr. Evan Lee, our President/Chief Executive Officer, and Ms.
- -----------------
Rebecca Flowers, our Secretary/Treasurer/Chief Financial and Accounting Officer,
14
and owners of 2,000,000 shares of our outstanding common stock, are controlling
persons of The Dealer Sheet because of their positions and share ownership. Even
following the completion of this offering, Mr. Lee and Ms. Flowers will own
approximately 49% to approximately 65% of our outstanding shares of common
stock. Therefore, our management members will be able to determine the outcome
of all matters requiring approval by our shareholders, including the election of
directors and the approval of mergers or other business combination
transactions. Accordingly, persons investing in this offering will bear
significant financial risk without having any significant voice in management,
and cannot be assured of ever having representation on the Board of Directors.
Further, The Dealer Sheet will not benefit from direction by more than two
individuals. See "Principal Shareholders" for a description of management's
share ownership and "Management" for background on Mr. Lee and Ms. Flowers.
Our stock price will fluctuate after this offering, which may result in
---------------------------------------------------------------------------
substantial losses for investors. The offering price for the shares of common
- -----------------------------------
stock being offered by this prospectus was arbitrarily selected and the trading
price will fluctuate after this offering once trading commences, if ever. The
fluctuation of the stock price could result in substantial losses for investors.
The market price of our common stock may fluctuate significantly in response to
a number of factors, some of which will be beyond our control. These factors
include:
o Quarterly variations in operating results;
o Announcements by us or our competitors of new product and service
offerings, significant contracts, acquisitions or strategic relationships;
o Publicity about our company, our products and services or our
competitors;
o Additions or departures of key personnel;
o Any future sales of our common stock; and
o Stock market price and volume fluctuations of publicly-traded
companies in general.
The trading prices of many public companies have been especially volatile and
many are at or near historical lows. Investors may be unable to resell their
shares of common stock at or above the offering price.
New shareholders will incur substantial dilution of approximately $.02 to
---------------------------------------------------------------------------
$.03 per share as a result of this offering. The current shareholders of The
- ---------------------------------------------
Dealer Sheet have acquired their shares of common stock at an average cost of
$.015 per share, which is substantially less than the price of $.05 per share to
be paid by the investors in this offering. Accordingly, the offering price is
substantially higher than the book value per share of our outstanding common
stock. As a result, an investor who acquires shares of common stock in this
offering will incur immediate substantial dilution of approximately $.03 per
share, in the event of the minimum offering, and approximately $.02 per share,
in the event of the maximum offering.
15
Sales of substantial amounts of our shares may depress our stock price. A
-------------------------------------------------------------------------
total of 2,000,000 shares being offered by The Dealer Sheet in this offering
will be available for resale immediately after the effectiveness of this
registration statement. The balance of 2,070,000 shares of common stock held by
our current shareholders, including an aggregate of 2,000,000 shares held by our
executive officers, become eligible for resale pursuant to Rule 144 commencing
in March 2003. Sales of a substantial number of shares of our common stock could
cause our stock price to fall. In addition, the sale of these shares could
impair our ability to raise capital through the sale of additional stock. After
this offering, we will have a maximum of 4,070,000 shares of common stock
outstanding, including 2,000,000 shares that we are selling in this offering
that may be resold immediately in the public market. The remaining 2,070,000
shares will be eligible for resale in the public market pursuant to Rule 144
commencing in March 2003. The number of shares outstanding and the number of
shares available for immediate resale are dependent upon the number of shares
sold in this offering.
Note: In addition to the above risks, businesses are often subject to risks not
foreseen or fully appreciated by management. In reviewing this Prospectus
potential investors should keep in mind other possible risks that could be
important.
BUSINESS AND PROPERTIES
-----------------------
3. With respect to the business of The Dealer Sheet and its properties:
(a) Describe in detail what business The Dealer Sheet does and proposes to
do, including what product or goods are or will be produced or services that are
or will be rendered.
General
- -------
The Dealer Sheet, Inc., is a development-stage corporation that was
organized under the laws of the State of Colorado on March 27, 2002. We intend
to publish a magazine in print and electronic format on a weekly basis providing
information on the values and the fluctuations in the values of rare coins and
the rare coin market. Our target markets include numismatic professionals and
collectors who require accurate current information on coin valuation and
pricing in order to make proper determinations regarding purchase and sale. We
expect that these persons will use the numismatic information we provide for
their professional endeavors, including market research and competitive pricing
among the three major coin grading services, as well as for their personal
collection activities. As of the date of this prospectus, we have no subscribers
for either the print or electronic format of our proposed weekly magazine and
only a limited number of advertisers who have committed to purchase advertising
on a month-to-month basis. For the period from inception through the date of
this prospectus, we have realized minimal revenues and a net loss from
operations. We have no partnering, joint venture or similar such arrangements
and/or commitments to enter into any such agreements.
Our goal is to become a competitive informational portal for the numismatic
professional and collector community and to be the source of choice of
numismatic professionals, collectors, enthusiasts and others for their
16
information on the values of rare coins and the market for rare coins. We
believe that numismatic professionals, organizations and auction houses, our
initial target market, will find The Dealer Sheet and www.thedealersheet.com, a
----------------------
print publication and Internet service, respectively, to be a valuable second
report (in addition to the Coin Dealer Newsletter) with which to assess the
numismatic market. Key elements of our strategy include the following:
o Providing reliable, current information on the values and the
fluctuations in value of rare coins and the market for rare coins in print and
electronic format;
o Publishing articles of interest to numismatic professionals, including
coin dealers, graders and authenticators, organizations, auction houses,
collectors and enthusiasts on such matters of general interest as the history of
rare coins and coin collecting, ancient coins, counterfeit and altered coins,
coin grading and authentication and the history, coin collections and other
resources of various numismatic organizations, societies and clubs;
o Growing our subscriber database from, initially, numismatic
professionals, organizations and auction houses to collectors, enthusiasts and
others;
o Delivering a demographically desirable numismatic business audience to
the advertisers in The Dealer Sheet and online at www.thedealersheet.com;
o Promoting repeat subscription and advertising through superior
customer service and continuous enhancement of our technology and web site
functionality; and
o Developing relationships with other companies that can help grow our
business.
We have allocated the minimum net proceeds of $38,500, and the maximum net
proceeds of $88,500, to be received from this offering for the purchase of
computer hardware and software and office furniture, marketing, web site
development, travel, professional fees and working capital. Additionally, in the
event that we sell at least 1,500,000 shares in this offering, we intend to
retain an individual to perform data entry services on an independent contract
basis. In the event that we sell 1,500,000 shares, we have allocated $12,320 for
this individual and, in the event of the maximum offering, we have allocated
$25,000 for this purpose. Because the funds anticipated to be received from this
offering that will be available to us are very limited, the potential uses for
these funds will also be limited.
Our weekly magazine will initially be available in print format only. We
expect, but cannot assure, that the first issue will be available on or about
December 1, 2002. We expect to have the magazine available in electronic format
commencing in May 2003 approximately. It is our opinion that we will be
successful in competing with The Coin Dealer Newsletter, our sole existing
competitor to the best of our knowledge, because: (i) we believe that numismatic
professionals, organizations, auction houses, collectors and enthusiasts will
welcome The Dealer Sheet and www.thedealersheet.com as a valuable second source
of information in the volatile rare coin marketplace and (ii) The Coin Dealer
Newsletter reports only the valuations and fluctuations of coins graded and
authenticated by only two major coin grading services. Mr. Evan Lee, the
17
President, the Chief Executive Officer and a director of The Dealer Sheet, has
been employed in the position of Internet marketing and print catalog editor by
Slater Numismatics, LLC, Englewood, Colorado, a national retailer and wholesaler
of rare coins and currency, since January 2002. Ms. Rebecca Flowers, the
Secretary, the Treasurer, the Chief Financial and Accounting Officer and a
director of The Dealer Sheet, has been employed, since June 2001, as the office
manager for Slater Numismatics, LLC.
Description of Magazine
- -----------------------
As a small publisher of a weekly numismatic magazine, we are dedicated to
serving the numismatic professional, collector and enthusiast by providing
accurate information on the values and the fluctuations in value of rare coins
and the rare coin market in the print version of our magazine and the online
form of the magazine to be available on our web site located at
http://www.thedealersheet.com; expert information on matters of interest to coin
- -----------------------------
professionals, organizations, auction houses, collectors and enthusiasts; and
superior customer service. Our numismatic magazine will report the valuations
and fluctuations in the valuation of coins graded and authenticated by the three
major coin grading services, including Professional Coin Grading Service,
Numismatic Guaranty Corp. and Independent Coin Grading Company. We will seek to
monitor all possible transactions and offers to buy and sell coins sight-unseen.
The coins may be certified or "raw" (uncertified), but the grading must adhere
to the current leading standard. Bids reported will also consider activity in
the certified sight-unseen market. Such bids may include consideration of all
costs attendant to certification for a particular service. Bids for a "raw" coin
may be higher or lower than for a certified specimen due to current market
conditions. The coin may not change bids just because a dealer lowers his bid,
but will be strongly influenced by sells that are lower than current bid/ask
levels. Our weekly magazine will only provide bids for certified coins.
The information available in The Dealer Sheet and at www.thedealersheet.com
will exceed the more limited information available in the Coin Dealer
Newsletter, our only competitor, to the best of our knowledge, as of the date of
this memorandum. The Coin Dealer Newsletter reports the valuations and
fluctuation of coins graded and authenticated by just two of the major grading
services. We strive to provide customers with a convenient, informative
experience by providing an organized, logical and customer-friendly Internet
site designed in an attractive manner so as to capture and maintain the interest
of most visitors. We will provide information, including the denomination, the
grade and the value, for each coin.
We intend to charge subscribers fixed fees, on an annual or monthly basis,
for our print publication and for access to the online publication. While we
have not yet determined a fixed schedule for fees that we will charge for
advertising in the form of print advertisements in The Dealer Sheet or banner or
button advertisements on our web site, we have commitments from a limited number
of advertisers on a month-to-month basis. We plan to offer a number of
advertising options that can be purchased separately or in packages, or rotated
on a run-of-site basis or targeted to a particular audience, such as early
copper specialists or Morgan dollar collectors. Payment arrangements for
subscriptions and advertising will be able to be made using credit cards. We
will implement security measures, including but not limited to layering, locking
and encryption, in order to secure, to our best ability, the commercial
18
transactions conducted on our web site. Detailed instructions will be available
on our site to enable the subscriber or advertiser to consummate the purchase
transaction with as much ease and simplicity as is possible. We expect to
compete on the basis of our reputation among customers as the definitive source
of information on the values and the fluctuations in value of rare coins and the
market for rare and, to a lesser extent, on the basis of price.
We will attract and retain customers by emphasizing the following key
factors:
Single Source of Information. We will provide consumers with a single
------------------------------
source for their information needs, updated weekly, for values and fluctuations
in the values of rare coins and the market for rare coins. Additionally, we will
offer articles on topics of interest to coin professionals, collectors and
enthusiasts. We will report the valuations and fluctuations in the valuation of
rare coins graded and authenticated by the three major coin grading services;
whereas our only direct competitor as of the date of this memorandum reports
this information with regard to coins graded and authenticated by just two of
the major grading services. However, our ability to provide information on an
ongoing basis is limited by the fact that we have minimal assets, a significant
net loss, negative working capital and going concern problems. Our online
business model also enables us to dynamically change the mix of information and
informative articles to meet consumer needs and interests.
Reliable, Current Information. Information, including the denomination, the
-----------------------------
grade and the value, updated weekly, will accompany each coin featured on our
web site. Accordingly, we will provide numismatic professionals, including coin
dealers, graders and authenticators, coin collectors and all persons who have an
interest in numismatics, with the reliable, current information they need to
make informed purchase and sale decisions.
Superior Viewing Experience. We will strive to provide an intuitive,
-----------------------------
easy-to-use web site, providing all of the resource information needed by
numismatic professionals, collectors and enthusiasts, including the
denomination, the grade and the value of each coin.
Quality Customer Service. The typical online shopping experience begins
-------------------------
with the search for products that meet specific needs, including the online
ordering process and extends through product delivery and post-purchase support.
We believe that the ability to fulfill customer needs for accurate information
on a weekly basis or efficiently handle customer inquiries is as important to
customer satisfaction as product selection. While we will not have the financial
resources as a result of this offering to employ any customer service personnel,
we intend to develop our own in-house customer service operation in the future.
Circulation
- -----------
The circulation of our weekly numismatic magazine will drive the quality
and amount of advertising we attract. Our magazine will be primarily sold by
subscription and delivered to subscribers online or through the mail.
Subscriptions will be sold by direct mail and online and telephone solicitation.
We have no subscribers for our weekly magazine and a limited number of
advertisers who have committed to purchase advertising on a month-to-month
basis.
19
Paper and Printing
- ------------------
We expect that the version of "The Dealer Sheet" to be available through
the mail will initially be printed on good quality (20 pound or better), letter
size (8 1/2" by 11"), white, copy paper and stapled in the upper left margin. We
anticipate that the magazine will be between five and ten pages in length. Our
personnel will perform the printing and stapling for the foreseeable future
using the company's equipment. We anticipate that an adequate supply of paper
will be available from many sources to fulfill our needs, but periodic shortages
may occur in the event of strikes or other unexpected disruptions in the paper
industry. Depending upon the success of our efforts to increase The Dealer
Sheet's circulation, we may in the future utilize a better grade of paper for
"The Dealer Sheet" or even the lightweight coated paper used in the production
of most magazines. In addition, we may outsource the printing and binding of the
magazine to an independent printing concern in the Denver, Colorado,
metropolitan area. Printing contracts are either fixed-term or open-ended at
fixed prices with, in some cases, adjustments based on certain criteria.
The Internet and Electronic Commerce
- ------------------------------------
The Internet has become an increasingly significant medium for
communication, exchange of information and commerce. We believe this increased
usage is because of a number of factors, including the following:
o A large installed base of personal computers;
o Advances in the speed of personal computers and modems;
o Easier and less expensive access to the Internet;
o Improvements in network security, infrastructure and bandwidth;
o A wider range of online offerings; and
o Growing consumer awareness of the benefits of online shopping.
However, there are many risks associated with the conduct of business on the
Internet, including, among others, security, viruses and fraud. While hacking is
a serious threat to electronic commerce companies such as The Dealer Sheet, the
greatest threat to the security of our business transactions on the Internet is
expected to arise from our own employees. We, like most other online retailers,
intend to continuously implement a wide range of hardware security measures to
offer network protection and business continuity. Many development-stage
companies, like us, lack the capital and/or customer demand to warrant the
investment in electronic security protective applications and technologies.
Further, while many companies have a formal security policy, we believe that
nearly all are far from adequate and very few companies educate all members of
20
staff, conduct risk analysis on a regular basis and regularly assess their
software for security flaws.
With the wide range of security flaws inherent in the Internet, we can be
expected to be at a serious disadvantage, as compared to our competitors,
especially with regard to electronic commercial transactions, if we fail to
protect or minimize the risks to The Dealer Sheet from security threats. While
the Internet represents a new and highly lucrative market, we expect to be
challenged by the necessity to become fully aware of new technologies so that we
can manage the risks associated with conducting transactions over the web.
Technology and Network Operations
- ---------------------------------
We will implement services and systems for site management, searching and
customer interaction. Our system will be custom-designed and written for
performance, reliability and scalability using software applications for:
o Displaying information, including the denomination, the grade and the
value, for each coin in an organized, logical and customer-friendly way;
o Accepting, verifying, organizing and managing subscriptions and orders
for advertising; and
o Notifying and updating customers on the status of subscriptions and
orders for advertising.
These systems and services will employ a combination of our own proprietary
technologies and commercially available, licensed technologies. Our proprietary
technologies will be embodied in software that is exclusively owned and
implemented by us. We will have a non-exclusive license to use a commerce
application similar to a shopping cart, which will be customized for us. This
commerce application will be integrated with our custom software, enabling a
fully automated order fulfillment process. We will realize many benefits from
the integration of these systems, including:
o Tracking subscriptions and orders for advertising in real-time;
o Making rapid changes to processes; and
o Efficiently expanding our infrastructure.
Our operating system is Windows Advanced Server 2000 and our software
platform and architecture is integrated with Microsoft Sequel Server Version 6.
Our production system is located at 7858 East Long Place, Centennial, Colorado
80112, with power backup and high-speed Internet connection. We will address the
goals of performance, reliability and scalability. Our objective is to have fast
download times and make use of caching and load balancing at the web server and
application level for optimal performance. We will outsource development work to
outside consultants. Our web site will be up and running twenty-four hours a
21
day, seven days a week. We anticipate that we will continue to devote
significant resources to product development in the future as we add new
features and functionality to our web site.
(b) Describe how these products or services are to be produced or rendered
and how and when The Dealer Sheet intends to carry out its activities. If The
Dealer Sheet plans to offer a new product(s), state the present stage of
development, including whether or not a working prototype(s) is in existence.
Indicate if completion of development of the product would require a material
amount of the resources of The Dealer Sheet, and the estimated amount. If The
Dealer Sheet is or is expected to be dependent upon one or a limited number of
suppliers for essential raw materials, energy or other items, describe. Describe
any major existing supply contracts.
See the response to Item 3.(a) hereinabove. We are presently in the process
of producing a numismatic magazine to be published weekly. "The Dealer Sheet,"
the print form of the publication, will first be available through the mail on
or about February 1, 2003, and www.thedealersheet.com, the online publication,
----------------------
will be available electronically commencing in June 2003 approximately. We have
no plans to offer any other products at the present time. We have no existing
supply contracts. We will choose our suppliers based upon the quality and price
of the merchandise available. We believe that, except for unexpected disruptions
in the paper industry, we will have no difficulty in obtaining supplies of the
good quality (20 pound or better), letter size, white, copy paper to be used
initially in the production of The Dealer Sheet at attractive prices from a
variety of suppliers. Even if we upgrade the quality of the paper we use in the
future, we do not expect to have any difficulty obtaining the desired paper from
a number of suppliers.
(c) Describe the industry in which The Dealer Sheet is selling or expects
to sell its products or services and, where applicable, any recognized trends
within that industry. Describe that part of the industry and the geographic area
in which the business competes or will compete.
See the response to item 3.(a) hereinabove with regard to the limitation of
our business to the publication of a weekly magazine in print and electronic
format providing information on the values and the fluctuations in the values of
rare coins and the rare coin market. We believe that the business of the
publication of a numismatic magazine of this type is in its infancy because we
know of only one existing, direct competitor, The Coin Dealer Newsletter,
Torrance, California, which reports the valuations and fluctuations of coins
graded and authenticated by only two major coin grading services. We occupy a
small niche within the sizable magazine publishing industry. We do not believe
that there are any recognized trends within our niche in the magazine publishing
industry. However, the market for information of all types has increased
dramatically in recent years. While we believe, we cannot be certain, that this
recognized industry trend will continue in the future. The Internet has become
an increasingly significant medium for commerce in many industries. Our success
depends upon the widespread acceptance and use of the Internet as an effective
medium of business and communication by our target customers. While we cannot be
certain, we expect rapid growth in the use of and interest in the Internet to
continue, although the rate of growth may not be at historical rates. We believe
that our business may not be profitable for the next several years during which
expenses related to our organization and development may cause us to continue to
22
incur a loss from operations. Although our publication will be available through
the mail or electronically throughout the world, our primary target market will
be subscribers and advertisers located in the United States.
Indicate whether competition is or is expected to be by price, service, or other
basis. Indicate (by attached table if appropriate) the current or anticipated
prices or price ranges for The Dealer Sheet products or services, or the formula
for determining prices, and how these prices compare with those of competitors'
products or services, including a description of any variations in product or
service features. Name the principal competitors that The Dealer Sheet has or
expects to have in its area of competition. Indicate the relative size and
financial and market strengths of The Dealer Sheet's competitors in the area of
competition in which The Dealer Sheet is or will be operating. State why The
Dealer Sheet believes it can effectively compete with these and other companies
in its area of competition.
As of the date of this prospectus, we have, to the best of our knowledge,
only one direct competitor, The Coin Dealer Newsletter, a Torrance,
California-based publisher of a weekly magazine reporting on the values and the
fluctuations in value of rare coins graded and authenticated by two of the three
major coin grading services. We expect to be able to compete successfully with
The Coin Dealer Newsletter, our sole existing competitor, because: (i) we
believe that numismatic professionals will welcome The Dealer Sheet and
www.thedealersheet.com as an additional source of information in the volatile
rare coin marketplace and (ii) because The Coin Dealer Newsletter reports only
the valuations and fluctuations of coins graded and authenticated by only two
major coin grading services. However, competition is expected to intensify in
the future, which may result in fewer subscribers and advertisers for our
numismatic magazine, reduced revenue from subscriptions and advertising and loss
of market share. Competition from traditional and online magazines may result in
price reductions and decreased demand for our publication. Our current
competitor and potential competitors have or will have longer operating
histories, larger customer or user bases, greater brand recognition and/or
significantly greater financial, marketing and other resources than we do. Many
of these current and potential competitors can devote substantially more
resources to web site and systems development than we can. In addition, larger,
more well-established and financed entities may acquire, invest in or form joint
ventures with online competitors as the use of the Internet and other online
services increases. The Coin Dealer Newsletter and/or our potential competitors
may be able to provide subscribers and advertisers with more favorable terms,
process customer orders more efficiently, provide more extensive numismatic
information and/or update information more frequently than we can.
We believe that the following are principal competitive factors in our
market:
o Reliability and currency of numismatic information;
o Web site recognition;
o Speed and accessibility of web site;
o Customer service; and
23
o Price.
While we expect to compete as a quality provider of reliable, current,
numismatic information and, to a lesser extent, on the basis of price, we are
not certain that this strategy will be successful. We hope, to the extent
practicable, to minimize our weaknesses, including, among others, our
undercapitalization, cash shortage, limitations with respect to personnel,
technological, financial and other resources and lack of a subscriber and
advertiser base and market recognition, through our utilization of the Internet;
which eliminates the need for a sizeable marketing staff. However, our
opportunity to obtain a large circulation and sizeable advertising revenue may
also be limited by our financial resources and other assets.
Note: Because this prospectus focuses primarily on details concerning The Dealer
Sheet rather than the industry in which The Dealer Sheet operates or will
operate, potential investors may wish to conduct their own separate
investigation of The Dealer Sheet's industry to obtain broader insight in
assessing The Dealer Sheet's prospects.
(d) Describe specifically the marketing strategies The Dealer Sheet is
employing or will employ in penetrating its market or in developing a new
market. Set forth in response to Question 4 below the timing and size of the
results of this effort that will be necessary in order for The Dealer Sheet to
be profitable. Indicate how and by whom its products or services are or will be
marketed (such as by advertising, personal contact by sales representatives,
etc.), how its marketing structure operates or will operate and the basis of its
marketing approach, including any market studies. Name any customers that
account for, or based upon existing orders will account for, a major portion
(20% or more) of The Dealer Sheet's sales. Describe any major existing sales
contracts.
Our initial target market will be numismatic professionals, including coin
dealers, graders and authenticators, organizations and auction houses. Our
marketing strategy is designed to attract these numismatic professionals,
organizations and auctions houses and, in addition, collectors and enthusiasts,
meet or exceed customer expectations, drive repeat subscriptions and advertising
and build enduring brand equity. In order to implement this strategy, we intend
to implement an integrated marketing campaign that has not yet commenced,
including online and telephone solicitation and direct mail, as follows:
Advertising. We will design our advertising to build brand equity, create
-----------
awareness and generate initial subscriptions for our weekly magazine and
advertising in print and on our web site. Depending on the availability of
funds, we intend to use a mix of advertising methods, including:
o Word of mouth referrals and recommendations by satisfied coin
professionals, collectors and enthusiasts;
o Advertisements in print publications, such as magazines and
newspapers;
o Online banners, text links and e-mail newsletters; and
24
o Mailings of brochures to, among others, coin professionals, such as
coin dealers, graders and authenticators, collectors and enthusiasts; and
o Attendance at numismatic trade shows.
Our proposed integrated marketing campaign with regard to all of the methods
described above is in the design stage and we have not yet taken any steps
toward their implementation.
Customer Service. We believe that a high level of customer service and
-----------------
support is critical to retaining and expanding our subscriber and advertiser
base. No portion of the proceeds of this offering has been allocated for the
employment of any customer support personnel. Accordingly, we expect to be
dependent upon the proceeds, if any, to be received from future equity and/or
debt financing for this purpose. Our management members will be available via
e-mail, generally, from 8:00 a.m. to 5:00 p.m., Mountain Time, Monday to Friday,
and can also be reached by voicemail.
We are dedicated to customer satisfaction. We will deliver on this
commitment in a number of ways, including:
o Customer service guarantee of a one business day response time for all
inquiries;
o Privacy guarantee to use personal information exclusively to process
orders and not to sell, trade or rent the information to other companies; and
o Security guarantee ensuring protection of personal information and
compensation to consumers for the amount of their liability, up to $50, in the
unlikely event of unauthorized interception and use of their credit card.
(e) State the backlog of written firm orders for products and/or services
as of a recent date (within the last 90 days) and compare it with the backlog of
a year ago from that date.
We have no backlog of written firm orders for advertising in, or
subscriptions to, our weekly numismatic magazine.
Explain the reason for significant variations between the two figures, if any.
Indicate what types and amounts of orders are included in the backlog figures.
State the typical orders. If The Dealer Sheet's sales are seasonal or cyclical,
explain.
Not applicable. See the response to this Item above. We do not expect our
business to be seasonal or cyclical.
(f) State the number of The Dealer Sheet's present employees and the
number of employees it anticipates it will have within the next 12 months. Also,
indicate the number by type of employee (i.e., clerical, operation,
administrative, etc.) The Dealer Sheet will use, whether or not any of them are
subject to collective bargaining agreements, and the expiration date(s) of any
collective bargaining agreement(s). If The Dealer Sheet's employees are on
25
strike, or have been in the past three years, or are threatening to strike,
describe the dispute. Indicate any supplemental benefits or incentive
arrangements The Dealer Sheet has or will have with its employees.
Mr. Evan Lee and Ms. Rebecca Flowers, our executive officers and directors,
are our only employees currently. We do not anticipate the employment of any
additional individuals within the next twelve months. We have no plans to adopt
any supplemental benefits or incentive arrangements at the present time. If we
sell at least 1,500,000 shares of common stock in this offering, we intend to
retain an individual to perform data entry services on an independent contract
basis. We have allocated the sum of $12,320 for this individual, if we sell
1,500,000 shares, and the amount of $25,000 for this individual, in the event of
the maximum offering.
(g) Describe generally the principal properties (such as real estate,
plant and equipment, patents, etc.) that The Dealer Sheet owns, indicating also
what properties it leases and a summary of the terms under those leases,
including the amount of payments, expiration dates and the terms of any renewal
options. Indicate what properties The Dealer Sheet intends to acquire in the
immediate future, the cost of such acquisitions and the sources of financing it
expects to use in obtaining these properties, whether by purchase, lease or
otherwise.
We presently own no real property. We maintain our offices rent-free at the
residence of Mr. Evan Lee, the President/Chief Executive Officer, a director and
a 48.3% shareholder of The Dealer Sheet, located at 7858 East Long Place,
Centennial, Colorado 80112. These arrangements are verbal and we have no lease
with Mr. Lee to rent premises at his residence for the one-year period following
the closing of the offering. We anticipate the continued utilization of these
facilities on a rent-free basis until such time, if ever, as we obtain
sufficient funding from debt and/or equity financing and/or generate a level of
earnings sufficient to enable us to pay rent for our present offices or obtain
office space from an unaffiliated third party. The space we currently occupy is
expected to be adequate to meet our foreseeable future needs. We have allocated
no portion of the proceeds of this offering for the purchase of any real
property.
As of September 30, 2002, we had personal property valued, at historical
cost, at a total of $2,539, including computer equipment (net of accumulated
depreciation of $181). We have allocated the sums of $8,500 out of the offering
proceeds for the purchase of computer hardware and software and $5,000 out of
the offering proceeds for the purchase of office furniture.
(h) Indicate the extent to which The Dealer Sheet's operations depend or
are expected to depend upon patents, copyrights, trade secrets, know-how or
other proprietary information and the steps undertaken to secure and protect
this intellectual property, including any use of confidentiality agreements,
covenants-not-to-compete and the like. Summarize the principal terms and
expiration dates of any significant license agreements. Indicate the amounts
expended by The Dealer Sheet for research and development during the last fiscal
year, the amount expected to be spent this year and what percentage of revenues
research and development expenditures were for the last fiscal year.
26
We rely on trade secret law to protect our intellectual property. These
laws afford only limited protection. Despite our efforts to protect our
proprietary rights, unauthorized persons may attempt to copy aspects of our web
site, including the look and feel of our web site, photographic prints that we
sell, product organization, product information and sales mechanics or to obtain
and use information that we regard as proprietary, such as the technology used
to operate our web site and our content. We have not filed an application to
secure registration for our trademark, "The Dealer Sheet," in the United States
or any other country. Any encroachment upon our proprietary information, the
unauthorized use of our trademark, the use of a similar name by a competing
company or a lawsuit initiated against us for our 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 effect on our business.
Litigation or proceedings before the U.S. Patent and Trademark Office may
be necessary in the future to enforce our intellectual property rights, to
protect our trade secrets and domain name and to determine the validity and
scope of the proprietary rights of others. Any litigation or adverse proceeding
could result in substantial costs and diversion of resources and could seriously
harm our business and operating results. Finally, if we sell our handmade,
natural, vegetable-based soaps and gift baskets internationally, the laws of
many countries do not protect our proprietary rights to as great an extent as do
the laws of the United States.
We have expended no funds for research and development during our last
fiscal year ended December 31, 2001, and we do not expect to incur any research
and development expenditures this year.
(i) If The Dealer Sheet's business, products, or properties are subject to
material regulation (including environmental regulation) by federal, state, or
local governmental agencies, indicate the nature and extent of regulation and
its effects or potential effects upon The Dealer Sheet.
We are not currently subject to direct federal, state or local regulation
other than the regulations applicable to businesses generally or directly
applicable to electronic commerce. However, as the Internet becomes increasingly
popular, it is possible that a number of laws and regulations may be adopted
with respect to the Internet. These laws may cover issues such as user privacy,
freedom of expression, pricing, content and quality of products and services,
taxation, advertising, intellectual property rights and security of information.
Furthermore, the growth of electronic commerce may prompt demand for more
stringent consumer protection laws. Several states have proposed legislation to
limit the uses of personal user information gathered online or require online
services to establish privacy policies. The Federal Trade Commission has also
initiated action against at least one online service regarding the manner in
which personal information is collected from users and provided to third persons
and has proposed regulations restricting the collection and use of information
from minors online. We will not provide individual personal information
regarding our users to third persons and we will not identify registered users
by age. However, the adoption of additional privacy or consumer protection laws
could create uncertainty in usage of the Internet and reduce the demand for our
online publication or require us to redesign our web site.
27
We are not certain how our business may be affected by the application of
existing laws governing issues such as property ownership, copyrights,
encryption and other intellectual property issues, taxation, libel, obscenity,
qualification to do business and personal privacy. The vast majority of these
laws were adopted prior to the advent of the Internet. As a result, they do not
contemplate or address the unique issues of the Internet and related
technologies. Changes in laws intended to address these issues could create
uncertainty in the Internet marketplace. This uncertainty could reduce demand
for our numismatic publication, increase the cost of doing business as a result
of litigation costs and/or increase product delivery costs.
(j) State the names of any subsidiaries of The Dealer Sheet, their
business purposes and ownership, and indicate which are included in the
Financial Statements attached hereto. If not included, or if included but not
consolidated, please explain.
Not applicable. We have no subsidiaries.
(k) Summarize the material events in the development of The Dealer Sheet
(including any material mergers or acquisitions) during the past five years, or
for whatever lesser period The Dealer Sheet has been in existence. Discuss any
pending or anticipated mergers, acquisitions, spin-offs or recapitalizations. If
The Dealer Sheet has recently undergone a stock split, stock dividend or
recapitalization in anticipation of this offering, describe (and adjust
historical per share figures elsewhere in this Prospectus accordingly).
There have been no material events, such as mergers, acquisitions,
spin-offs, recapitalizations, stock splits or stock dividends, in our
development since our inception on March 27, 2002.
4.(a) If The Dealer Sheet was not profitable during its last fiscal
year, list below in chronological order the events which in management's opinion
must or should occur, or the milestones which in management's opinion The Dealer
Sheet must or should reach, in order for The Dealer Sheet to become profitable,
and indicate the expected manner of occurrence or the expected method by which
The Dealer Sheet will achieve the milestones.
In order to become fully operational and profitable, we must achieve each
of the milestones described below.
o We must increase our circulation. As of the date of this prospectus,
----------------------------------
we have no subscribers for our numismatic publication in either print or
electronic format. We will incur expenses for marketing and advertising needed
to increase our circulation. We have allocated the sum of $16,000 out of the
maximum anticipated proceeds of this offering and the amount of $8,000 out of
the minimum offering proceeds for marketing and advertising. Because we are in
the development stage, we cannot be certain of the amount of revenue we must
generate from magazine subscriptions and/or advertising in order for The Dealer
Sheet to become profitable. If the portion of the offering proceeds we have
allocated for marketing and advertising proves to be inadequate, we will be
dependent upon debt and/or equity financing in addition to the proceeds of this
offering in order to increase our funding to a level that will enable us to
28
break even or become profitable. This additional needed capital may not be
available upon acceptable terms, or at all.
o We must thoroughly market the "The Dealer Sheet" brand name and our
----------------------------------------------------------------------
numismatic magazine. We will conduct brand name marketing on the Internet during
- --------------------
the initial year of our operation. We will need to expend funds for advertising
on web sites on the Internet that we believe our customers are likely to visit,
including registering with various search engines, during the first year of
operation following the closing of this offering. We also expect to expend funds
to promote and position our brand via mailings of brochures. We anticipate
having sufficient funds available for Internet advertising and mailings of
brochures. We will also need to incur substantial expense in our efforts to
enter into strategic alliances with online and more traditional companies that
we believe will promote our brand and drive customers to our web site.
Ultimately, we will also need to expend funds to attract and train customer
service personnel and to develop content to help build our brand and attract
customers to our web site. These last two milestones are long-range in nature
and we have no anticipated sources of funding for their accomplishment as of the
date of this prospectus.
o We must develop and enhance our web site. We will need to continue to
devote significant resources to further develop and add new features and
functionality to our web site in the future. These features and systems may
relate to, among other things, information display; site and customer order
management; customer interaction; and performance, reliability and scalability.
Our objective is to have fast download times and achieve optimal performance. We
expect that the sum of $4,500 out of the offering proceeds allocated for web
site development will be sufficient to accomplish this milestone in the initial
year after the closing of this offering. In subsequent years, a portion of sales
revenues and/or financing in addition to that received from this offering will
need to be allocated for web site enhancement.
We will pursue these steps with the funds raised in this offering of common
stock, if any. However, funding for the completion of these milestones is
dependent upon the receipt of capital from equity and/or debt financing in
addition to that anticipated from this offering and/or the realization of
profits from operations. Because of this, we are unable to anticipate the timing
of the milestones from when we begin offering the shares of common stock after
effectiveness of the registration statement of which this prospectus is a part.
Further, because we have only commenced the milestones listed above, we are not
yet able to determine the costs associated with each milestone.
(b) State the probable consequences to The Dealer Sheet of delays in
achieving each of the events or milestones within the above time schedule, and
particularly the effect of any delays upon The Dealer Sheet's liquidity in view
of The Dealer Sheet's then anticipated level of operating costs. (See Questions
No. 11 and 12)
The probable consequences to us of delays in achieving each of the
milestones listed in Item 4.(a) immediately above is that we will likely
continue to incur operating and net losses during the period of the delays, and
the rate at which we incur these losses may increase. Any delays are expected to
have an adverse effect on our liquidity because we intend to increase our costs
and expenses substantially as we purchase computer hardware and software and
29
office furniture; increase our sales and marketing activities; increase our
general and administrative functions to support our growing operations; and
complete and further develop our Internet web site. In the event that we are
unable to implement our business plan and/or continue as a going concern because
of the realization of continuing losses, we may need to dramatically change our
business plan, sell or merge our business or face bankruptcy.
We have no plans to make any changes in our current business plan so long
as management determines it to be viable and we are able to continue in business
as a going concern. The factors that management intends to consider in making
the determination as to whether our business plan is viable include, among
others, (i) the amount of proceeds we realize from this offering, (ii) the
results of our efforts to raise funding in addition to that anticipated from
this offering, (iii) the results of our proposed integrated marketing campaign;
(iv) the success of our efforts to increase our circulation; and (v) the amount
of advertising revenue we are capable of generating. If, at any time, based upon
consideration of the foregoing factors, management determines that we are unable
to implement our business plan or continue in operation as a going concern, we
will explore all available alternatives, including a possible change in our
business plan, sale of our business, merger, acquisition or other business
combination with another company or, if unavoidable, voluntary bankruptcy
filing. However, even if we are achieving the milestones required in order for
us to become profitable, we intend to consider any attractive business
opportunity presented to us, including, but not limited to, the sale of our
business to a larger company or a joint venture, merger or other business
combination with a small or mid-sized company for the purpose of increasing our
circulation. As of the date of this prospectus, we have no present intent to
change our business plan, sell our business or merge with or acquire another
company.
Note: After reviewing the nature and timing of each event or milestone,
potential investors should reflect upon whether achievement of each within the
estimated time frame is realistic and should assess the consequences of delays
or failure of achievement in making an investment decision.
OFFERING PRICE FACTORS
----------------------
If the securities offered are common stock, or are exercisable for or
convertible into common stock, the following factors may be relevant to the
price at which the securities are being offered.
5. What were net, after-tax earnings for the last fiscal year? (If
losses, show in parenthesis.)
Total $(2,760) ($(0.00) per share) for the period from March 27, 2002
(inception) through September 30, 2002.
6. If The Dealer Sheet had profits, show offering price as a multiple of
earnings. Adjust to reflect for any stock splits or recapitalizations, and use
conversion or exercise price in lieu of offering price, if applicable.
30
Offering Price Per Share =
------------------------------------------ -------------------------
Net After-Tax Earnings Last Year Per Share (price/earnings multiple)
Not applicable. We had a loss for the period from March 27, 2002
(inception) through September 30, 2002.
7.(a) What is the net tangible book value of The Dealer Sheet? (If
deficit, show in parenthesis.) For this purpose, net tangible book value means
total assets (exclusive of copyrights, patents, goodwill, research and
development costs and similar intangible items) minus total liabilities.
$29,740 ($0.01 per share)
If the net tangible book value per share is substantially less than this
offering (or exercise or conversion) price per share, explain the reasons for
the variation.
The difference between the price per share of common stock being offered
hereby and the net tangible book value per share is primarily attributable to
the fact that the existing four shareholders of The Dealer Sheet, including Mr.
Evan Lee and Ms. Rebecca Flowers, our executive officers and directors, acquired
their aggregate 2,070,000 shares, representing 100% of our outstanding shares,
of common stock at an average cost of approximately $.015 per share, which is
substantially less than the price of $.05 per share to be paid by the investors
in this offering. If this offering is successful and we succeed in achieving the
milestones described in Item 4.(a) above, we expect that our sales, revenues,
assets, shareholders' equity and net tangible book value will increase; our
liquidity may improve; and we may achieve profitability.
(b) State the dates on which The Dealer Sheet sold or otherwise issued
securities during the last 12 months, the amount of such securities sold, the
number of persons to whom they were sold, and relationship of such persons to
The Dealer Sheet at the time of sale, the price at which they were sold and, if
not sold for cash, a concise description of the consideration. (Exclude bank
debt.)
Date Relationship Number Price
Of Sale Name of Shareholder of Shareholder of Shares Per Share Consideration
- -------- ------------------- ------------------ --------- --------- -------------
3/28/02 Evan Lee President, Chief 1,000,000 $.012 $12,000
Executive Officer
and Director
3/28/02 Rebecca Flowers Secretary, Treas- 1,000,000 $.012 $12,000
urer, Chief
Financial and
Accounting
Officer and
Director
31
6/3/02 Mark A. Bogani None 50,000 $.10 $5,000
6/3/02 Stephen Slater None 20,000 $.10 $2,000
8.(a) What percentage of the outstanding shares of The Dealer Sheet
will the investors in this offering have? (Assume exercise of outstanding
options, warrants or rights and conversion of convertible securities, if the
respective exercise or conversion prices are at or less than the offering price.
Also assume exercise of any options, warrants or rights and conversions of any
convertible securities offered in this offering.)
If the maximum is sold: 49.1%
If the minimum is sold: 32.6%
(b) What post-offering value is management implicitly attributing to the entire
company by establishing the price per security set forth on the cover page (or
exercise or conversion price if common stock is not offered)? (Total outstanding
shares after offering times offering price, or exercise or conversion price if
common stock is not offered.)
If the maximum is sold: $203,500*
If the minimum is sold: $153,500*
*These values assume that The Dealer Sheet's capital structure would be
changed to reflect any conversions of outstanding convertible securities and any
use of outstanding securities as payment in the exercise of outstanding options,
warrants or rights included in the calculation. The type and amount of
convertible or other securities thus eliminated would be: not applicable. These
values also assume an increase in cash in The Dealer Sheet by the amount of any
cash payments that would be made upon cash exercise of options, warrants or
rights included in the calculations. The amount of such cash would be: $-0-. Not
applicable.
We have no outstanding convertible securities, including options, warrants
or other rights.
(For above purposes, assume outstanding options are exercised in determining
"shares" if the exercise prices are at or less than the offering price. All
convertible securities, including outstanding convertible securities, shall be
assumed converted and any options, warrants or rights in this offering shall be
assumed exercised.)
Note: After reviewing the above, potential investors should consider whether or
not the offering price (or exercise or conversion price, if applicable) for the
securities is appropriate at the present stage of The Dealer Sheet's
development.
USE OF PROCEEDS
---------------
9.(a) The following table sets forth the use of the proceeds from this
offering:
32
If Minimum If Maximum
Sold Sold
Amount Per Cent Amount Per Cent
---------- -------- ---------- --------
Total Proceeds $50,000 100.00% $100,000 100.00%
------- ------- -------- -------
Less: Offering Expenses
Commissions & Finders Fees -0- 0.00% -0- 0.00%
Legal & Accounting* 8,500 17.00% 8,500 8.50%
Copying & Advertising -0- 0.00% -0- 0.00%
Other (Specify):
Electronic Filing Fees 1,500 3.00% 1,500 1.50%
Miscellaneous 775 1.55% 775 .78%
Transfer Agent Fees 500 1.00% 500 .05%
Blue Sky Filing Fees 200 .40% 200 .20%
SEC Registration Fee 25 .05% 25 .03%
Net Proceeds from Offering 38,500 77.00% 88,500 88.50%
Use of Net Proceeds
Computer Hardware/Software 8,500 17.00% 8,500 8.50%
Marketing 8,000 16.00% 16,000 16.00%
Professional Fees 4,000 8.00% 4,000 4.00%
Working Capital 4,000 8.00% 16,500 16.50%
Office Furniture 5,000 10.00% 5,000 5.00%
Web Site Development 4,500 9.00% 4,500 4.50%
Travel 4,500 9.00% 9,000 9.00%
Data Entry Subcontractor -0- 0.00% 25,000 25.00%
---------- -------- ---------- --------
Total Use of Net Proceeds $38,500 77.00% $ 88,500 88.50%
If 1,500,000
Shares Sold
Amount Per Cent
------------ --------
Total Proceeds $75,000 100.00%
------- -------
Less: Offering Expenses
Commissions & Finders Fees -0- 0.00%
Legal & Accounting* 8,500 11.33%
Copying & Advertising -0- 0.00%
Other (Specify):
Electronic Filing Fees 1,500 2.00%
33
Miscellaneous 775 1.03%
Transfer Agent Fees 500 .67%
Blue Sky Filing Fees 200 .27%
SEC Registration Fee 25 .03%
Net Proceeds from Offering 63,500 84.67%
Use of Net Proceeds
Computer Hardware/Software 8,500 11.33%
Marketing 12,000 16.00%
Professional Fees 4,000 5.33%
Working Capital 10,430 13.91%
Office Furniture 5,000 6.67%
Web Site Development 4,500 6.00%
Travel 6,750 9.00%
Data Entry Subcontractor 12,320 16.43%
------------ --------
Total Use of Net Proceeds $63,500 84.67%
- ------------------
*The total legal fees for this offering will be $20,000, of which amount
$15,000 has been paid heretofore with funding from other sources. The total
accounting fees for this offering will be $5,000, of which amount $1,500 has
been paid heretofore with funding from other sources.
(b) If there is no minimum amount of proceeds that must be raised before
The Dealer Sheet may use the proceeds of the offering, describe the order of
priority in which the proceeds set forth above in the column "If Maximum Sold"
will be used.
Not applicable. We must raise a minimum of at least $50,000 from the sale
of shares of common stock before we may use the proceeds of the offering.
Note: After reviewing the portion of the offering allocated to the payment of
offering expenses, and to the immediate payment to management and promoters of
any fees, reimbursements, past salaries or similar payments, a potential
investor should consider whether the remaining portion of his investment, which
would be that part available for future development of The Dealer Sheet's
business and operations, would be adequate.
10.(a) If material amounts of funds from sources other than this
offering are to be used in conjunction with the proceeds from this offering,
state the amounts and sources of such other funds, and whether funds are firm or
contingent. If contingent, explain.
Not applicable. No material amounts of funds from sources other than this
offering are to be used in conjunction with the proceeds from this offering.
(b) If any material part of the proceeds is to be used to discharge
indebtedness, describe the terms of such indebtedness, including interest rates.
34
If the indebtedness to be discharged was incurred within the current or previous
fiscal year, describe the use of proceeds of such indebtedness.
Not applicable. No part of the proceeds is to be used to discharge
indebtedness.
(c) If any material amount of proceeds is to be used to acquire assets,
other than in the ordinary course of business, briefly describe and state the
cost of the assets and other material terms of the acquisitions. If the assets
are to be acquired from officers, directors, employees or principal stockholders
of The Dealer Sheet or their associates, give the names of the persons from whom
the assets are to be acquired and set forth the cost to The Dealer Sheet, the
method followed in determining the cost, and any profit to such persons.
We will acquire assets with a total of $13,500 of the proceeds of the
offering. The amount of $8,500 has been allocated for the acquisition of
computer hardware and software and the sum of $5,000 has been allocated for the
purchase of office furniture. The assets will be purchased for cash. We will not
acquire any of these assets from Mr. Evan Lee or Ms. Rebecca Flowers, our
officers, directors, employees and principal stockholders, or their associates.
(d) If any amount of the proceeds is to be used to reimburse any officer,
director, employee or stockholder for services already rendered, assets
previously transferred, or monies loaned or advanced, or otherwise, explain:
Not applicable. No amount of the proceeds is to be used to reimburse any
officer, director, employee or shareholder for services already rendered, assets
previously transferred, monies loaned or advanced or otherwise.
11. Indicate whether The Dealer Sheet is having or anticipates having
within the next 12 months any cash flow or liquidity problems and whether or not
it is in default or in breach of any note, loan, lease or other indebtedness or
financing arrangement requiring The Dealer Sheet to make payments. Indicate if a
significant amount of The Dealer Sheet's trade payables have not been paid
within the stated trade term. State whether The Dealer Sheet is subject to any
unsatisfied judgments, liens or settlement obligations and the amounts thereof.
Indicate The Dealer Sheet's plans to resolve any such problems.
We are not having and do not anticipate having within the next twelve
months any cash flow or liquidity problems if we are successful in raising at
least the minimum proceeds from this offering and our sales of magazine
subscriptions and advertising occur at expected levels. However, if we are
unable to sell at least the minimum number of shares of common stock being
offered or if we receive the minimum proceeds and our sales are lower than
expected, we could be expected to experience cash shortages preventing us from
paying our operating expenses on a timely basis. In that event, we would need to
raise additional capital sooner than one year after the closing of this
offering. Additional capital may not be available to us on favorable terms when
required, or at all. If this additional financing is not available, we may not
be able to continue in operation as a going concern and we may need to
dramatically change our business plan, sell or merge our business or face
bankruptcy. Management has agreed to provide the necessary working capital in
order to permit The Dealer Sheet to continue as a going concern over the
35
one-year period following the closing of this offering. However, in the event
that this becomes necessary, management may be unable to provide the required
funds.
Additionally, in the next twelve months, we intend to increase our costs
and expenses substantially as we increase our sales and marketing activities;
increase our circulation; acquire computer equipment and software and office
furniture; increase our general and administrative functions to support our
growing operations; and further develop our Internet web site. The additional
revenues that we expect to generate may not be sufficient to offset these costs
and expenses and enable us to operate profitably. Further, our efforts to grow
our business may be more expensive than we currently anticipate or these efforts
may not result in proportional increases in our revenues. As a result, we
believe that we may incur an operating and net loss for at least the next year,
and possibly longer, and that the rate at which we incur these losses may
increase. Our success is dependent upon our achieving profitable operations or
obtaining additional financing to enable us to fully implement our business
plan. If we are unable to obtain additional debt and/or equity financing from
this or other securities offerings or otherwise, then we will not be able to
continue as a going concern unless we realize meaningful revenues. If we fail to
generate meaningful revenues or raise adequate funding, we will cease operations
and our shareholders will lose their entire investment. In any event, we do not
expect to continue in operation after the expiration of one year from the
closing of this offering without an infusion of capital in addition to the funds
we are raising in this offering.
We are not a party to or the maker of any note, loan, lease or other
indebtedness or financing arrangement requiring us to make payments. Our trade
payables have been paid within the stated trade term. We are not subject to any
unsatisfied judgments, liens or settlement obligations.
12. Indicate whether proceeds from this offering will satisfy The Dealer
Sheet's cash requirements for the next 12 months, and whether it will be
necessary to raise additional funds. State the source of additional funds, if
known.
Management anticipates, without assurance, that the proceeds from this
offering will satisfy our cash requirements for the next twelve months and that
it will not be necessary to raise additional funds. If we receive the maximum
proceeds of this offering, we will have net proceeds of $88,500 available for
the purchase of computer equipment, software and office furniture, marketing and
advertising, the completion and enhancement of our web site, travel, the
retention of an independent contractor to perform data entry services and
working capital. We will only have net proceeds of $38,500 available for these
purposes, not including retention of the independent contractor, if we realize
the minimum offering proceeds. Accordingly, we expect the scale of our
operations to be directly related to the amount of funding available to us from
this offering. That is, we will operate on a significantly smaller scale if we
are only successful in raising the minimum, as compared to the maximum,
proceeds. Also, as discussed in Item 11. above, in the event that our costs and
expenses increase dramatically as we seek to grow our business, we may continue
to realize operating and net losses for the next year or longer, and we may
incur these losses at an increasingly rapid rate. Management has agreed to
provide the required working capital so as to permit us to continue in operation
36
as a going concern during the one-year period following the closing of this
offering. However, management may be unable to provide the required funding if
and when that becomes necessary.
CAPITALIZATION
--------------
13. Indicate the capitalization of The Dealer Sheet as of the most recent
balance sheet date (adjusted to reflect any subsequent stock splits, stock
dividends, recapitalizations or refinancings) and as adjusted to reflect the
sale of the minimum and maximum amount of securities in this offering and the
use of the net proceeds therefrom:
Amount Outstanding
As of: As Adjusted
9/30/02 Minimum Maximum
------- ------- -------
Debt:
Short-term debt (average interest rate __%) $1,440 $1,440 $1,440
Long-term debt (average interest rate __%) $-0- $-0- $-0-
Total debt $1,440 $1,440 $1,440
Stockholders' equity (deficit):
Preferred stock - par or state value (by
class of preferred in order of preferences) $-0- $-0- $-0-
Common stock - par or stated value $2,070 $3,070 $4,070
Additional paid in capital $28,930 $66,430 $115,430
Retained earnings (deficit) $(2,760) $(2,760) $(2,760)
Total stockholders equity $28,240 $66,740 $116,740
Total capitalization $29,680 $68,180 $118,180
Number of preferred shares authorized to be outstanding: 10,000,000 shares.
Par or stated value, if any: $.01.
Number of common shares authorized: 100,000,000 shares. Par or stated value
per share, if any: $.001.
Number of common shares reserved to meet conversion requirements or for the
issuance upon exercise of options, warrants or rights: -0- shares. Not
applicable.
DESCRIPTION OF SECURITIES
-------------------------
14. The securities being offered hereby are:
[X] Common stock
[ ] Preferred or preference stock
37
[ ] Notes or debentures
[ ] Units of two or more types of securities composed of:
[ ] Other:
15. These securities have:
Yes No
[ ] [X] Cumulative voting rights
[ ] [X] Other special voting rights
[ ] [X] Preemptive rights to purchase in new issues of shares
[ ] [X] Preference as to dividends or interest
[ ] [X] Preference upon liquidation
[ ] [X] Other special rights or preferences (specify):
Explain: not applicable.
16. Are the securities convertible? [ ] Yes [X] No
If so, state conversion price or formula.
Date when conversion becomes effective: - / - / - Not applicable.
Date when conversion expires: - / - / - Not applicable.
17.(a) If securities are notes or other types of debt securities:
(1) What is the interest rate? -0-% Not applicable.
If interest rate is variable or multiple rates, describe: not
applicable.
(2) What is the maturity date: - / - / - Not applicable.
If serial maturity dates, describe: not applicable.
(3) Is there a mandatory sinking fund? [ ] Yes [X] No Not applicable.
Describe: not applicable.
(4) Is there a trust indenture? [ ] Yes [X] No Not applicable.
Name, address and telephone number of trustee. Not applicable.
(5) Are the securities callable or subject to redemption? [ ] Yes [X]
No Not applicable.
Describe, including redemption prices: not applicable.
(6) Are the securities collateralized by real or personal property?
[ ] Yes [X] No Describe: not applicable.
(7) If these securities are subordinated in right of payment of
interest or principal, explain the terms of such subordination. Not
applicable.
38
How much currently outstanding indebtedness of The Dealer Sheet is
senior to the securities in right of payment of interest or principal? $-0-
Not applicable.
How much indebtedness shares in right of payment on an equivalent
(pari passu) basis? $-0- Not applicable.
How much indebtedness is junior (subordinated) to the securities? $-0-
Not applicable.
(b) If notes or other types of debt securities are being offered and The
Dealer Sheet had earnings during its last fiscal year, show the ratio of
earnings to fixed charges on an actual and pro forma basis for that fiscal year.
"Earnings" means pretax income from continuing operations plus fixed charges and
capitalized interest. "Fixed charges" means interest (including capitalized
interest), amortization of debt discount, premium and expense, preferred stock
dividend requirements of majority owned subsidiary, and such portion of rental
expense as can be demonstrated to be representative of the interest factor in
the particular case. The pro forma ratio of earnings to fixed charges should
include incremental interest expense as a result of the offering of the notes or
other debt securities.
Not applicable. Shares of common stock, not notes or other types of debt
securities, are being offered.
Note: Care should be exercised in interpreting the significance of the ratio of
earnings to fixed charges as a measure of the "coverage" of debt service, as the
existence of earnings does not necessarily mean that The Dealer Sheet's
liquidity at any given time will permit payment of debt service requirements to
be timely made. See Questions No. 11. and 12. See also the Financial Statements
and especially the Statement of Cash Flows.
18. If securities are preference or preferred stock: not applicable.
Are unpaid dividends cumulative? [ ] Yes [X] No
Are securities callable? [ ] Yes [X] No
Explain: Not applicable.
Note: Attach to this Prospectus copies or a summary of the charter, bylaw or
contractual provision or document that gives rise to the rights of holders of
preferred or preference stock, notes or other securities being offered.
We are offering shares of common stock, not preferred or preference stock,
notes or other securities having rights superior to the rights of shareholders
of common stock.
19. If securities are capital stock of any type, indicate restrictions on
dividends under loan or other financing arrangements or otherwise:
Not applicable. There are no restrictions on dividends under loan or other
financing arrangements or otherwise.
39
20. Current amount of assets available for payment of dividends (if
deficit must be first made up, show deficit in parenthesis): $(2,760)
It is highly unlikely that we will pay dividends on the common stock in the
foreseeable future.
PLAN OF DISTRIBUTION
--------------------
The Offering
- ------------
Shares of common stock offered by this prospectus:
Minimum............................................ 1,000,000 shares
Maximum............................................ 2,000,000 shares
Price per share: $.05
Termination date of the minimum offering: 90 days from the date
of this prospectus*
Termination date of the maximum offering: 90 days from the date
of this prospectus
unless extended for
up to an additional
90 days
Common stock outstanding prior to the offering: 2,070,000 shares
Common stock to be outstanding upon completion of the offering:
Minimum............................................ 3,070,000 shares
Maximum............................................ 4,070,000 shares
- ------------------
*If the minimum is not obtained, the funds will be promptly returned to
subscribers, without deduction or interest.
21. The selling agents (that is, the persons selling the securities as
agent for The Dealer Sheet for a commission or other compensation) in this
offering are:
Not applicable. There are no selling agents in this offering.
22. Describe any compensation to selling agents or finders, including
cash, securities, contracts or other consideration, in addition to the cash
commission set forth as a per cent of the offering price on the cover page of
this Prospectus. Also indicate whether The Dealer Sheet will indemnify the
selling agents or finders against liabilities under the securities laws.
40
("Finders" are persons who for compensation act as intermediaries in obtaining
selling agents or otherwise making introductions in furtherance of this
offering.)
Not applicable. We will not utilize the services of selling agents or
finders and, accordingly, no selling commissions or other compensation will be
paid with respect to sales of common stock in this offering.
23. Describe any material relationships between any of the selling agents
or finders and The Dealer Sheet or its management.
Not applicable. See the responses to Items 21. and 22. above.
Note: After reviewing the amount of compensation to the selling agents or
finders for selling the securities, and the nature of any relationship between
the selling agents or finders and The Dealer Sheet, a potential investor should
assess the extent to which it may be inappropriate to rely upon any
recommendation by the selling agents or finders to buy the securities.
24. If this offering is not made through selling agents, the names of
persons at The Dealer Sheet through which this offering is being made:
Name: Mr. Evan Lee Name: Ms. Rebecca Flowers
Address: 7858 East Long Place Address: 1289 Xanadu Street
Centennial, Colorado 80112 Aurora, Colorado 80111
Telephone No.: (303) 918-2333 Telephone No.: (303) 887-3558
25. If this offering is limited to a special group, such as employees of
The Dealer Sheet, or is limited to a certain number of individuals (as required
to qualify under Subchapter S of the Internal Revenue Code) or is subject to any
other limitations, describe the limitations and any restrictions on resale that
apply:
There are no limitations on the types of persons who may invest.
Will the certificates bear a legend notifying holders of such restrictions?
[ ] Yes [X] No Not applicable.
26.(a) Name, address and telephone number of independent bank or savings
and loan association or other similar depository institution acting as escrow
agent if proceeds are escrowed until minimum proceeds are raised:
Not applicable. Proceeds will not be escrowed until minimum proceeds are
raised.
(b) Date at which funds will be returned by escrow agent if minimum
proceeds are not raised:
See the response to Item 26.(a) above regarding the fact that the minimum
proceeds of the offering will not be escrowed. However, if we do not receive
41
subscriptions for at least 1,000,000 shares of common stock within ninety days
from the date of this prospectus (unless extended for up to an additional ninety
days by us in our sole discretion), we will refund the funds promptly to
subscribers, without deduction or interest.
Will interest on proceeds during escrow period be paid to investors?
[ ] Yes [X] No
27. Explain the nature of any resale restrictions on presently outstanding
shares, and when those restrictions will terminate, if this can be determined:
Of the 2,070,000 shares of common stock of The Dealer Sheet presently
outstanding, (i) 1,000,000 shares of common stock are owned by each of Mr. Evan
Lee and Ms. Rebecca Flowers, our executive officers and directors; and (ii)
70,000 shares are owned by two shareholders, including Messrs. Mark A. Bogani
and Stephen Slater. The shares of common stock described in (i) and (ii) of the
previous sentence are "restricted securities" because of their issuance and sale
in reliance upon the exemptions from registration provided under Section 4(2) of
the Securities Act of 1933 and Section 11-51-308(1)(p) of the Colorado
Securities Act. As such, these shares of common stock are subject to the resale
restrictions under Rule 144 of Section 4(1) under the Securities Act. Rule 144
of the Securities Act provides, in essence, that holders of restricted
securities for a period of one year after the acquisition of the securities from
us or an affiliate of ours, may, every three months, sell to a market maker or
in ordinary brokerage transactions an amount equal to one per cent of our then
outstanding securities. Nonaffiliates of The Dealer Sheet who hold restricted
securities for a period of two years may sell their securities without regard to
volume limitations or other restriction. Accordingly, the aggregate 2,000,000
shares of common stock owned by Mr. Lee and Ms. Flowers will become available
for resale under Rule 144 commencing March 28, 2003, and the aggregate 70,000
shares owned by each of Messrs. Bogani and Slater will become available for
resale under Rule 144 commencing June 3, 2003. In each instance, the date on
which the shares of common stock become available for resale under Rule 144 is a
period of one year from the date of purchase of the shares from The Dealer
Sheet. Following the expiration of two years from the date of purchase, these
shareholders may sell their securities without regard to volume limitations or
other restriction if they are not then affiliates of The Dealer Sheet and have
not been affiliates for the preceding three months. Sales of these shares of
common stock under Rule 144 may have a depressive effect on the market price of
our common stock, should a public market develop for the stock. Transfers and
resales of the shares of common stock will be subject, in addition to the
federal securities laws, to the "Blue Sky" laws of each state in which the
transfer or resale occurs.
Note: Equity investors should be aware that unless The Dealer Sheet is able
to complete a further public offering or The Dealer Sheet is able to be sold for
cash or merged with a public company that their investment in The Dealer Sheet
may be illiquid indefinitely.
If a secondary trading market develops in our common stock, the common
stock is expected to come within the meaning of the term "penny stock" under 17
CFR 240.3a51-1 because the shares are issued by a small company; are low-priced
(under five dollars); and are not traded on NASDAQ or on a national stock
exchange. The Securities and Exchange Commission has established risk disclosure
requirements for broker-dealers participating in penny stock transactions as a
42
part of a system of disclosure and regulatory oversight for the operation of the
penny stock market. The Securities Enforcement Remedies and Penny Stock Reform
Act of 1990 requires additional disclosure, related to the market for penny
stocks and for trades in any stock defined as a penny stock. Rule 15g-9 under
the Securities Exchange Act of 1934 obligates a broker-dealer to satisfy special
sales practice requirements that are described below. Prior to a transaction in
a penny stock, the broker-dealer is required to deliver a standardized risk
disclosure document that provides information about penny stocks and the risks
in the penny stock market. Additionally, the broker-dealer must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. For so long as our common stock is considered penny
stock, the penny stock regulations can be expected to have an adverse effect on
the liquidity of the common stock in the secondary market, if any, that
develops.
DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS
----------------------------------------
28. If The Dealer Sheet has within the last five years paid dividends,
made distributions upon its stock or redeemed any securities, explain how much
and when:
Not applicable. We have not, since our inception on March 27, 2002, paid
dividends, made distributions upon our stock or redeemed any securities.
OFFICERS AND KEY PERSONNEL OF THE COMPANY
-----------------------------------------
29. Chief executive officer: Title: President and Chief
Executive Officer
Name: Mr. Evan Lee Age: 37
Office Street Address: Telephone No.: (303) 918-2333
7858 East Long Place
Centennial, Colorado 80112.
Name of employers, titles and dates of positions held during past five years
with an indication of job responsibilities.
Evan Lee has served as the President, the Chief Executive Officer and a
--------
director of The Dealer Sheet since the date of our on March 27, 2002. He has
been employed in the position of Internet marketing and print catalog editor by
Slater Numismatics, LLC, Englewood, Colorado, a national retailer and wholesaler
of rare coins and currency, since January 2002. Since October 2001, Mr. Lee has
been employed by DPW Worldwide Media, Denver, Colorado, the publisher of Element
and Diverse City magazines, as a copy editor and staff writer. He was employed,
from June 1998 through January 2002, as the President and Chief Executive
43
Officer of Corporate Security Solutions, LLC, Englewood, Colorado, the industry
liaison for Independent Rare Coin Auditors, LLC. From November 1996 through June
1998, Mr. Lee was employed as a senior SGML editor and validator by Jeppesen
Sanderson, Englewood, Colorado, a company engaged in aeronautical charting and
navigation.
Education (degrees, schools, and dates):
Mr. Lee received a Bachelor of Arts degree in English from Metropolitan
State College of Denver, Denver, Colorado, in 1995.
Also a director of the Company [X] Yes [ ]
Indicate amount of time to be spent on The Dealer Sheet matters if less than
full time: Mr. Lee will spend approximately 50% of his time and effort on The
Dealer Sheet's matters.
30. Chief operating officer:
See the response to Item 29. above.
31. Chief financial officer: Title: Secretary/Treasurer
Name: Ms. Rebecca Flowers Age: 33
Office Street Address: Telephone No.: (303) 918-2333
7858 East Long Place, Centennial,
Colorado 80112
Name of employers, titles and dates of positions held during past five years
with an indication of job responsibilities.
Rebecca Flowers has served as the Secretary, the Treasurer and a director
----------------
of The Dealer Sheet since the date of the company's inception on March 27, 2002.
She has been employed, since June 2001, as the office manager for Slater
Numismatics, LLC. From August 2000 through June 2001, Ms. Flowers was employed
by Trinidad Benham, Denver, Colorado, a food brokerage company, in accounts
receivable. Ms. Flowers was employed in the position of office and account
manager by Med-Tek Group, Aurora, Colorado, a medical billing company, from
September 1999 through July 2000. She was employed by Partners in Womens Health,
Denver, Colorado, an obstetrics/gynecology clinic, as the front office medical
receptionist from March through May 1999.
Education (degrees, schools, and dates):
Ms. Flowers has no advanced degree past high school.
Also a director of the Company [X] Yes [ ]
44
Indicate amount of time to be spent on The Dealer Sheet matters if less than
full time: Ms. Flowers will spend approximately 50% of her time and effort on
The Dealer Sheet's matters.
32. Other key personnel: None.
DIRECTORS OF THE COMPANY
------------------------
33. Number of directors: two. If directors are not elected annually, or
are elected under a voting trust or other arrangement, explain:
Not applicable. Directors are elected annually.
34. Information concerning outside or other directors (i.e., those not
described above):
Not applicable. We have no outside directors or directors other than Mr.
Evan Lee and Ms. Rebecca Flowers.
35.(a) Have any of the officers or directors ever worked for or
managed a company (including a separate subsidiary or division of a larger
enterprise) in the same business as The Dealer Sheet:
[X] Yes [ ] No Explain:
(b) If any of the officers, directors or other key personnel have ever
worked for or managed a company in the same business or industry as The Dealer
Sheet or in a related business or industry, describe what precautions, if any
(including the obtaining of releases or consents from prior employers), have
been taken to preclude claims by prior employers for conversion or theft of
trade secrets, know-how or other proprietary information.
Mr. Lee and Ms. Flowers, our executive officers, directors and key
employees, have been employed by Slater Numismatics, LLC, Englewood, Colorado, a
national retailer and wholesaler of rare coins and currency, since January 2002
and June 2001, respectively. Mr. Lee was employed, from June 1998 through
January 2002, as the President and Chief Executive Officer of Corporate Security
Solutions, LLC, Englewood, Colorado, the industry liaison for Independent Rare
Coin Auditors, LLC. No precautions have been taken to preclude claims by either
company for conversion or theft of trade secrets, know-how or other proprietary
information. However, we do not anticipate that any such claims will arise.
(c) If The Dealer Sheet has never conducted operations or is otherwise in
the development stage, indicate whether any of the officers or directors has
ever managed any other company in the start-up or development stage and describe
the circumstances, including relevant dates.
Not applicable. Neither Mr. Lee nor Ms. Flowers, our executive officers and
directors, has ever managed any other company in the start-up or development
stage.
45
(d) If any of The Dealer Sheet's key personnel are not employees but are
consultants or other independent contractors, state the details of their
engagement by The Dealer Sheet.
Not applicable. Mr. Evan Lee and Ms. Rebecca Flowers, our executive
officers and directors, are employees although they have received no cash or
other remuneration from us, except that we issued 1,000,000 shares of common
stock to each of them in consideration for the sum of $6,000 in cash paid by
each at the rate of $.006 per share.
(e) If The Dealer Sheet has key man life insurance policies on any of its
officers, directors or key personnel, explain, including the names of the
persons insured, the amount of insurance, whether the insurance proceeds are
payable to The Dealer Sheet and whether there are arrangements that require the
proceeds to be used to redeem securities or pay benefits to the estate of the
insured person or a surviving spouse.
Not applicable. We have no key man life insurance policy on Mr. Evan Lee or
Ms. Rebecca Flowers, our executive officers, directors and key employees.
36. If a petition under the Bankruptcy Act or any State insolvency law was
filed by or against The Dealer Sheet or its officers, directors or other key
personnel or a receiver, fiscal agent or similar officer was appointed by a
court for the business or property of any such persons, or any partnership in
which any of such persons was a general partner at or within the past five
years, or any corporation or business association of which any such person was
an executive officer at or within the past five years, set forth below the name
of such persons, and the nature and date of such actions.
Not applicable. No petition under the Bankruptcy Act or any State
insolvency law has been filed by or against The Dealer Sheet, Mr. Evan Lee or
Ms. Rebecca Flowers, our executive officers, directors and key employees, and no
receiver, fiscal agent or similar officer has been appointed by a court for the
business or property of The Dealer Sheet, Mr. Lee or Ms. Flowers, or any
partnership in which Mr. Lee or Ms. Flowers was a general partner at or within
the past five years, or any corporation or business association of which Mr. Lee
or Ms. Flowers was an executive officer at or within the past five years.
Note: After reviewing the information concerning the background of The Dealer
Sheet's officers, directors and other key personnel, potential investors should
consider whether or not these persons have adequate background and experience to
develop and operate The Dealer Sheet and to make it successful. In this regard,
the experience and ability of management are often considered the most
significant factors in the success of a business.
PRINCIPAL STOCKHOLDERS
----------------------
37. Principal owners of The Dealer Sheet (those who beneficially own
directly or indirectly 10% or more of the common and preferred stock presently
outstanding) starting with the largest common stockholder. Include separately
46
all common stock issuable upon conversion of convertible securities (identifying
them by asterisk) and show average price per share as if conversion has
occurred. Indicate by footnote if the price paid was for a consideration other
than cash and the nature of any such consideration.
No. of Shares
Shares of Average No. of Shares After Offering if
Common Stock Price Per Share Now Held % of Total(1) All Securities Sold % of Total
- ------------ --------------- ------------- ------------- ------------------- ----------
Name:
Evan Lee $.006 1,000,000 48.3% 1,000,000 24.6%(2)
(maximum)
32.6%(3)
(minimum)
Office Street
Address:
7858 East Long Place
Centennial, Colorado 80112
Telephone No.
(303) 918-2333
Name:
Rebecca Flowers $.006 1,000,000 48.3% 1,000,000 24.6%(2)
(maximum)
32.6%(3)
(minimum)
Office Street
Address:
7858 East Long Place
Centennial, Colorado 80112
Telephone No.
(303) 918-2333
- ------------------
<FN>
(1) Based upon 2,070,000 shares of our common stock issued and outstanding
as of the date of this prospectus.
(2) Based upon 4,070,000 shares of our common stock to be issued and
outstanding if the maximum 2,000,000 shares of common stock are sold.
47
(3) Based upon 3,070,000 shares of our common stock to be issued and
outstanding if the minimum 1,000,000 shares of common stock are sold.
</FN>
38. Number of shares beneficially owned by officers and directors as a
group:
Before offering: 2,000,000 shares of common stock (96.6% of total outstanding)
After offering: a) Assuming minimum securities sold: 2,000,000 shares of common
stock (65.2% of total outstanding)
b) Assuming maximum securities sold: 2,000,000 shares of common
stock (49.1% of total outstanding)
(Assume all options exercised and all convertible securities converted.)
MANAGEMENT RELATIONSHIPS, TRANSACTIONS AND REMUNERATION
-------------------------------------------------------
39.(a) If any of the officers, directors, key personnel or principal
stockholders are related by blood or marriage, please describe.
Not applicable. Mr. Evan Lee and Ms. Rebecca Flowers, our executive
officers, directors, key employees and principal shareholders, are not related
by blood or marriage.
(b) If The Dealer Sheet has made loans to or is doing business with any of
its officers, directors, key personnel or 10% stockholders, or any of their
relatives (or any entity controlled directly or indirectly by any such persons)
within the last two years, or proposes to do so within the future, explain.
(This includes sales or lease of goods, property or services to or from The
Dealer Sheet, employment or stock purchase contracts, etc.) State the principal
terms of any significant loans, agreements, leases, financing or other
arrangements.
On March 28, 2002, we issued 1,000,000 shares of common stock to each of
Mr. Evan Lee and Ms. Rebecca Flowers in consideration for the sum of $6,000 in
cash paid by each at the rate of $.006 per share. On September 29, 2002, each of
Mr. Evan Lee and Rebecca Flowers paid an additional $6,000 as additional
consideration for their shares.
Since the date of our inception on March 27, 2002, Mr. Lee has provided us
with office space located at 7858 East Long Place, Centennial, Colorado 80112,
on a rent-free basis pursuant to a verbal agreement. We expect to continue this
arrangement with Mr. Lee for the foreseeable future.
Except as described above, we have not made loans to or done business with
Mr. Lee or Ms. Flowers, or any of their relatives (or any entity controlled
directly or indirectly by Mr. Lee or Ms. Flowers) since our inception on March
27, 2002, and have no plans to do so in the future.
48
(c) If any of The Dealer Sheet's officers, directors, key personnel or 20%
stockholders has guaranteed or co-signed any of The Dealer Sheet's bank debt or
other obligations, including any indebtedness to be retired from the proceeds of
this offering, explain and state the amounts involved.
Not applicable. We have no bank debt or other obligations.
40.(a) List all remuneration by The Dealer Sheet to officers,
directors and key personnel for the last fiscal year:
Name-Officer, Director and Key Employee Cash Other
- ---------------------------------------- ---- -----------------------------
Evan Lee, President, Chief Executive -0- 1,000,000 shares of common
Officer, Director and Key Employee stock*
Rebecca Flowers, Secretary, Treasurer, -0- 1,000,000 shares of common
Chief Financial and Accounting Officer, stock*
Director and Key Employee
Others:
Not applicable
Total: -0- 2,000,000 shares of common
stock
Directors as a group (number of -0- 2,000,000 shares of common
persons - 2) stock
- ------------------
*The shares of common stock were received in consideration for the sum of
$6,000 in cash at the rate of $.006 per share.
(b) If remuneration is expected to change or has been unpaid in prior
years, explain:
We do not intend to pay Mr. Lee or Ms. Flowers, our executive officers,
directors and key employees, a salary or compensate them with other remuneration
for the foreseeable future.
(c) If any employment agreements exist or are contemplated, describe:
Not applicable. No employment agreements exist or are contemplated.
41.(a) Number of shares subject to issuance under presently outstanding
stock purchase agreements, stock options, warrants or rights: -0- shares (-0-%
of total shares to be outstanding after the completion of the offering if all
securities sold, assuming exercise of options and conversion of convertible
securities). Indicate which have been approved by shareholders. State the
expiration dates, exercise prices and other basic terms for these securities:
49
Not applicable. We have no stock purchase agreements, stock options,
warrants or other convertible securities or rights outstanding.
(b) Number of common shares subject to issuance under existing stock
purchase or option plans but not yet covered by outstanding purchase agreements,
options or warrants: -0- shares.
Not applicable. We have no existing stock purchase, option or similar
plans.
(c) Describe the extent to which future stock purchase agreements, stock
options, warrants or rights must be approved by shareholders.
Our shareholders are not required to approve future stock purchase
agreements, stock options, warrants or rights.
42. If the business is highly dependent on the services of certain key
personnel, describe any arrangements to assure that these persons will remain
with The Dealer Sheet and not compete upon any termination:
Ms. Evan Lee, the President, the Chief Executive Officer, a director and
the owner of 1,000,000 shares, representing approximately 48.3% of the
outstanding shares, and Ms. Rebecca Flowers, the Secretary, the Treasurer, the
Chief Financial and Accounting Officer, a director and the owner of 1,000,000
shares, representing approximately 48.3% of the outstanding shares, of our
common stock, are our only key employees. There are no arrangements to assure
that Mr. Lee or Ms. Flowers will remain with us and not compete upon any
termination.
Note: After reviewing the above, potential investors should consider whether or
not the compensation to management and other key personnel, directly or
indirectly, is reasonable in view of the present stage of The Dealer Sheet's
development.
LITIGATION
----------
43. Describe any past, pending or threatened litigation or administrative
action which has had or may have a material effect upon The Dealer Sheet's
business, financial condition, or operations, including any litigation or action
involving The Dealer Sheet's officers, directors or other key personnel. State
the names of the principal parties, the nature and current status of the
matters, and amounts involved. Give an evaluation by management or counsel, to
the extent feasible, of the merits of the proceedings or litigation and the
potential impact on The Dealer Sheet's business, financial condition, or
operations.
There is no past, pending or threatened litigation or administrative
action, including any litigation or action involving Mr. Evan Lee or Ms. Rebecca
Flowers, our executive officers, directors and key employees, that has had or
may have a material effect upon our business, financial condition or operations.
50
FEDERAL TAX ASPECTS
-------------------
44. If The Dealer Sheet is an S corporation under the Internal Revenue
Code of 1986, and it is anticipated that any significant tax benefits will be
available to investors in this offering, indicate the nature and amount of such
anticipated tax benefits and the material risks of their disallowance. Also,
state the name, address and telephone number of any tax advisor that has passed
upon these tax benefits. Attach any opinion or description of the tax
consequences of an investment in the securities by the tax advisor.
Not applicable. We are a "C" corporation under the Internal Revenue Code of
1986 and no such tax benefits are believed to exist. We have not consulted with
a tax advisor.
Name of tax advisor: not applicable
Address: not applicable
Telephone no.: not applicable
Note: Potential investors are encouraged to have their own personal tax
consultant contact the tax advisor to review details of the tax benefits and the
extent that the benefits would be available and advantageous to the particular
investor.
MISCELLANEOUS FACTORS
---------------------
45. Describe any other material factors, either adverse or favorable, that
will or could affect The Dealer Sheet or its business (for example, discuss any
defaults under major contracts, any breach of bylaw provisions, etc.) or which
are necessary to make any other information in this Prospectus not misleading or
incomplete.
Not applicable.
FINANCIAL STATEMENTS
--------------------
46. The audited Financial Statements of The Dealer Sheet, Inc., commence
on page F-1 hereof in response to Part F/S of this prospectus section of Form
SB-1.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CERTAIN RELEVANT FACTORS
----------------------------------------------------------------
47. If The Dealer Sheet's financial statements show losses from
operations, explain the causes underlying these losses and what steps The Dealer
Sheet has taken or is taking to address these causes.
We have incurred a net loss of $(1,260) during the period from our
inception (March 27, 2002) through September 30, 2002. The causes underlying our
51
operating loss include, primarily, (i) the fact that our numismatic publication
is not yet available either online or in print format; (ii) insufficient capital
available for marketing and sales and development and enhancement of our web
site; (iii) limited sales and marketing activities; (iv) lack of prior
experience as a magazine publisher; (v) an inadequate number of subscribers and
advertisers; (vi) an insufficient number of strategic relationships needed to
help promote our web site; (vii) an insufficient number of personnel; and (viii)
only one product line. We expect our publication to be available in print format
on or about December 1, 2002, and online commencing in May 2003 approximately.
We are conducting this offering to raise additional capital for the activities
listed in (ii) immediately above and, in addition, the purchase of computer
hardware and software and officer furniture, travel, professional fees, working
capital and, in the event of the maximum offering, to retain an independent
contractor to perform data entry services. We are striving to improve our skills
as a magazine publisher, increase our circulation and establish strategic
relationships with other numismatic and related web sites and portals that can
drive customer traffic to our web site.
48. Describe any trends in The Dealer Sheet's historical operating
results. Indicate any changes now occurring in the underlying economics of the
industry of The Dealer Sheet's business which, in the opinion of management,
will have a significant impact (either favorable or adverse) upon The Dealer
Sheet's results of operations within the next 12 months, and give a rough
estimate of the probable extent of the impact, if possible.
We only commenced operations in March 2002 and, as of the date of this
prospectus, we have no subscribers for our numismatic publication. Accordingly,
we believe that we have been operational for a length of time inadequate for us
to discern any significant trends in our historical operating results. However,
in the next twelve months, we intend to increase our costs and expenses
substantially as we purchase computer hardware and software and office
furniture; increase our sales and marketing activities; increase our general and
administrative functions to support our growing operations; and further develop
our Internet web site. The revenue that we expect to generate from subscribers
and advertisers may not be sufficient to offset these costs and expenses and
enable us to operate profitably. Further, our efforts to grow our business may
be more expensive than we currently anticipate or these efforts may not result
in proportional increases in our revenues. Accordingly, the benefit to us from
increased sales may be negated by the expected significant increases in our
costs and expenses. As a result, we believe that we may incur an operating and
net loss for at least the next year, and possibly longer, and that the rate at
which we incur these losses may increase.
Because, to our knowledge, there is only one other publisher of the type of
numismatic magazine we intend to publish, we do not believe that the industry is
well enough established such that the underlying economics are discernable.
49. If The Dealer Sheet sells a product or products and has had
significant sales during its last fiscal year, state the existing gross margin
(net sales less cost of such sales as presented in accordance with generally
accepted accounting principles) as a percentage of sales for the last fiscal
year: __%. What is the anticipated gross margin for next year of operations?
Approximately __%. If this is expected to change, explain. Also, if reasonably
52
current gross margin figures are available for the industry, indicate these
figures and the source or sources from which they are obtained.
We are engaged in the business of publishing a weekly magazine reporting on
the values and the fluctuations in value of rare coins and the market for rare
coins. Accordingly, we do not sell a product(s).
50. Foreign sales as a per cent of total sales for last fiscal year: not
applicable. Domestic government sales as a per cent of total domestic sales for
last fiscal year: not applicable. Explain the nature of these sales, including
any anticipated changes:
We do not anticipate that The Dealer Sheet will consummate any foreign or
government sales.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
------------------------------------------------
Item 1. Indemnification of Directors and Officers.
- ----------------------------------------------------
Sections 7-109-101 through 7-109-110 of the Colorado Business Corporation
Act provide for the indemnification of the officers, directors and controlling
persons of a corporation as follows:
Section 7-109-101 Definitions. As used in this article:
-------------------------------
(1) "Corporation" includes any domestic or foreign entity that is a
predecessor of a corporation by reason of a merger or other transaction in which
the predecessor's existence ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation, is or was
serving at the corporation's request as a director, an officer, an agent, an
associate, an employee, a fiduciary, a manager, a member, a partner, a promoter,
or a trustee of, or to hold any similar position with, another domestic or
foreign corporation or other person or of an employee benefit plan. A director
is considered to be serving an employee benefit plan at the corporation's
request if the director's duties to the corporation also impose duties on, or
otherwise involve services by, the director to the plan or to participants in or
beneficiaries of the plan. "Director" includes, unless the context requires
otherwise, the estate or personal representative of a director.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with respect to a proceeding
to pay a judgment, settlement, penalty, fine, including an excise tax assessed
with respect to an employee benefit plan, or reasonable expenses.
(5) "Official capacity" means, when used with respect to a director, the
office of director in a corporation and, when used with respect to a person
other than a director as contemplated in section 7-109-107, the office in a
corporation held by the officer or the employment, fiduciary, or agency
53
relationship undertaken by the employee, fiduciary, or agent on behalf of the
corporation. "Official capacity" does not include service for any other domestic
or foreign corporation or other person or employee benefit plan.
(6) "Party" includes a person who was, is, or is threatened to be made a
named defendant or respondent in a proceeding.
(7) "Proceeding" means and threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, or investigative and
whether formal or informal.
7-109-102. Authority to indemnify directors.
---------------------------------------------
(1) Except as provided in subsection (4) of this section, a corporation
may indemnify a person made a party to a proceeding because the person is or was
a director against liability incurred in the proceeding if:
(a) The person conducted himself or herself in good faith; and
(b) The person reasonably believed:
(I) In the case of conduct in an official capacity with the
corporation, that his or her conduct was in the corporation's best
interests; and
(II) In all other cases, that his or her conduct was at least not
opposed to the corporation's best interests; and
(c) In the case of any criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful.
(2) A director's conduct with respect to an employee benefit plan for a
purpose the director reasonably believed to be in the interests of the
participants in or beneficiaries of the plan is conduct that satisfies the
requirement of subparagraph (II) of paragraph (b) of subsection (1) of this
section. A director's conduct with respect to an employee benefit plan for a
purpose that the director did not reasonably believe to be in the interests of
the participants in or beneficiaries of the plan shall be deemed not to satisfy
the requirements of paragraph (a) of subsection (1) of this section.
(3) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
(4) A corporation may not indemnify a director under this section:
54
(a) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation;
or
(b) In connection with any other proceeding charging that the
director derived an improper personal benefit, whether or not involving
action in an official capacity, in which proceeding the director was
adjudged liable on the basis that he or she derived an improper personal
benefit.
(5) Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
7-109-103. Mandatory indemnification of directors. Unless limited by its
----------------------------------------------------
articles of incorporation, a corporation shall indemnify a person who was wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which the person was a party because the person is or was a director, against
reasonable expenses incurred by him or her in connection with the proceeding.
7-109-104. Advance of expenses to directors.
---------------------------------------------
(1) A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of final
disposition of the proceeding if:
(a) The director furnishes to the corporation a written affirmation
of the director's good faith belief that he or she has met the standard of
conduct described in section 7-109-102;
(b) The director furnishes to the corporation a written undertaking,
executed personally or on the director's behalf, to repay the advance if it
is ultimately determined that he or she did not meet the standard of
conduct; and
(c) A determination is made that the facts then known to those making
the determination would not preclude indemnification under this article.
(2) The undertaking required by paragraph (b) of subsection (1) of this
section shall be an unlimited general obligation of the director but need not be
secured and may be accepted without reference to financial ability to make
repayment.
(3) Determinations and authorizations of payments under this section shall
be made in the manner specified in section 7-109-106.
7-109-105. Court-ordered indemnification of directors.
-------------------------------------------------------
(1) Unless otherwise provided in the articles of incorporation, a director
who is or was a party to a proceeding may apply for indemnification to the court
conducting the proceeding or to another court of competent jurisdiction. On
55
receipt of an application, the court, after giving any notice the court
considers necessary, may order indemnification in the following manner:
(a) If it determines that the director is entitled to mandatory
indemnification under section 7-109-103, the court shall order
indemnification, in which case the court shall also order the corporation
to pay the director's reasonable expenses incurred to obtain court-ordered
indemnification.
(b) If it determines that the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances,
whether or not the director met the standard of conduct set forth in
section 7-109-102 (1) or was adjudged liable in the circumstances described
in section 7-109-102 (4), the court may order such indemnification as the
court deems proper; except that the indemnification with respect to any
proceeding in which liability shall have been adjudged in the circumstances
described in section 7-109-102 (4) is limited to reasonable expenses
incurred in connection with the proceeding and reasonable expenses incurred
to obtain court-ordered indemnification.
7-109-106. Determination and authorization of indemnification of directors.
---------------------------------------------------------------------------
(1) A corporation may not indemnify a director under section 7-109-102
unless authorized in the specific case after a determination has been made that
indemnification of the director is permissible in the circumstances because the
director has met the standard of conduct set forth in section 7-109-102. A
corporation shall not advance expenses to a director under section 7-109-104
unless authorized in the specific case after the written affirmation and
undertaking required by section 7-109-104 (1) (a) and (1) (b) are received and
the determination required by section 7-109-104 (1) (c) has been made.
(2) The determinations required by subsection (1) of this section shall be
made:
(a) By the board of directors by a majority vote of those present at
a meeting at which a quorum is present, and only those directors not
parties to the proceeding shall be counted in satisfying the quorum; or
(b) If a quorum cannot be obtained, by a majority vote of a committee
of the board of directors designated by the board of directors, which
committee shall consist of two or more directors not parties to the
proceeding; except that directors who are parties to the proceeding may
participate in the designation of directors for the committee.
(3) If a quorum cannot be obtained as contemplated in paragraph (a) of
subsection (2) of this section, and a committee cannot be established under
paragraph (b) of subsection (2) of this section, or, even if a quorum is
obtained or a committee is designated, if a majority of the directors
constituting the quorum or the committee so directs, the determination required
to be made by subsection (1) of this section shall be made:
56
(a) By independent legal counsel selected by a vote of the board of
directors or the committee in the manner specified in paragraph (a) or (b)
of subsection (2) of this section or, if a quorum of the full board cannot
be obtained and a committee cannot be established, by independent legal
counsel selected by a majority vote of the full board of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and advance of expenses shall be made
in the same manner as the determination that indemnification or advance of
expenses is permissible; except that, if the determination that indemnification
or advance of expenses is permissible is made by independent legal counsel,
authorization of indemnification and advance of expenses shall be made by the
body that selected this counsel.
7-109-107. Indemnification of officers, employees, fiduciaries, and agents.
---------------------------------------------------------------------------
(1) Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification under section
7-109-103, and is entitled to apply for court-ordered indemnification under
section 7-109-105, in each case to the same extent as a director;
(b) A corporation may indemnify and advance expenses to an officer,
employee, fiduciary, or agent of the corporation to the same extent as to a
director; and
(c) A corporation may also indemnify and advance expenses to an
officer, employee, fiduciary, or agent who is not a director to a greater
extent, if not inconsistent with public policy, and if provided for by its
bylaws, general or specific action by its board of directors or
shareholders, or contract.
7-109-108. Insurance. A corporation may purchase and maintain insurance on
----------------------
behalf of a person who is or was a director, officer, employee, fiduciary, or
agent of the corporation, is or was serving at the request of the corporation as
a director, officer, partner, trustee, employee, fiduciary, or agent of another
domestic or foreign corporation or other person or of an employee benefit plan,
against liability asserted against or incurred by the person in that capacity or
arising from his or her status as a director, officer, employee, fiduciary, or
agent, whether or not the corporation would have power to indemnify the person
against the same liability under section 7-109-102, 7-109-103, or 7-109-107. Any
such insurance may be procured from any insurance company designated by the
board of directors, whether such insurance company is formed under the laws of
this state or any other jurisdiction of the United States or elsewhere,
including any insurance company in which the corporation has an equity or any
other interest through stock ownership or otherwise.
7-109-109. Limitation of indemnification of directors.
-------------------------------------------------------
57
(1) A provision treating a corporation's indemnification of, or advance of
expenses to, directors that is contained in its articles of incorporation or
bylaws, in a resolution of its shareholders or board of directors, or in a
contract, except an insurance policy, or otherwise, is valid only to the extent
the provision is not inconsistent with sections 7-109-101 to 7-109-108. If the
articles of incorporation limit indemnification or advance of expenses,
indemnification and advance of expenses are valid only to the extent not
inconsistent with the articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation's power to
pay or reimburse expenses incurred by a director in connection with an
appearance as a witness in a proceeding at a time when he or she has not been
made a named defendant or respondent in the proceeding.
7-109-110. Notice to shareholders of indemnification of director. If a
---------------------------------------------------------------------
corporation indemnifies or advances expenses to a director under this article in
connection with a proceeding by or in the right of the corporation, the
corporation shall give written notice of the indemnification or advance to the
shareholders with or before the notice of the next shareholders' meeting. If the
next shareholder action is taken without a meeting at the instigation of the
board of directors, such notice shall be given to the shareholders at or before
the time the first shareholder signs a writing consenting to such action.
Item 2. Other Expenses of Issuance and Distribution.
- ------------------------------------------------------
The following is an itemized statement of the expenses incurred in
connection with this registration statement and the issuance and distribution of
the shares of common stock being registered under this registration statement.
All such expenses will be paid by The Dealer Sheet.
Securities and Exchange Commission registration fee.............. $ 9
Legal fees and expenses.......................................... 20,000(1)
Accounting fees and expenses..................................... 5,000(2)
Blue sky fees and expenses....................................... 200
Transfer agent fees and expenses................................. 500
Printing, electronic filing and engraving expenses............... 1,500
Miscellaneous expenses........................................... 791
---------
TOTAL............................................................ $27,000
- ------------------
(1) The sum of $15,000 has been paid previously.
(2) The sum of $1,500 has been paid previously.
(3) All of the above items except the Securities and Exchange Commission
registration fee are estimates.
58
Item 3. Undertakings.
- -----------------------
(a) The undersigned small business issuer will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement; and 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 the volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) Include any additional or changed material information
on the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
(e) Insofar as indemnification for liabilities arising under the
Securities 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 Securities 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 person 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 its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
59
Item 4. Unregistered Securities Issued or Sold Within One Year.
- -----------------------------------------------------------------
Since March 27, 2002, the date of our inception, we have sold securities in
transactions summarized below.
Number of Shares of
Purchaser Date of Sale Consideration Common Stock Sold
- ------------------- ------------ ------------- ------------------
Evan Lee 3/28/02 $12,000.00 1,000,000
Rebecca Flowers 3/28/02 $12,000.00 1,000,000
Mark A. Bogani 6/3/02 $5,000.00 50,000
Stephen Slater 6/3/02 $2,000.00 20,000
With respect to the sales described above, we relied upon Section 4(2) of
the Securities Act of 1933 for transactions by an issuer not involving any
public offering, as an exemption from the registration requirements of Section 5
of the Securities Act of 1933. As the executive officers, directors and
controlling shareholders of The Dealer Sheet, Mr. Evan Lee and Ms. Rebecca
Flowers had access to information enabling them to evaluate the merits and risks
of the transactions on the date of sale. Messrs. Bogani and Slater are
accredited or sophisticated investors and, accordingly, had access to
information enabling them to evaluate the merits and risks of the transactions
on the date of sale. Messrs. Lee, Bogani and Slater and Ms. Flowers each
represented in writing that he or she acquired the securities for investment for
his or her own account and not with a view to distribution. Stop transfer
instructions have been issued to The Dealer Sheet's transfer agent with respect
to the securities, and the transfer agent has been instructed to issue the
certificates representing the securities bearing a restrictive investment
legend. Each purchaser signed a written agreement stating that the securities
will not be sold except by registration under the Securities Act of 1933 or
pursuant to an exemption from registration.
Item 5. Index to Exhibits
- ---------------------------
(a) An index to the exhibits filed should be presented immediately
following the cover page to Part III.
(b) Each exhibit should be listed in the exhibit index according to the
number assigned to it under Item 6. below.
(c) The index to exhibits should identify the location of the exhibit
under the sequential page numbering system for this Form SB-1.
60
(d) Where exhibits are incorporated by reference, the reference shall be
made in the index of exhibits.
Item 6. Description of Exhibits
- ---------------------------------
The following Exhibits are filed as part of this Registration Statement on
Form SB-1.
Item
Number Description
- ------ ---------------------------------------------------------------------
(2.1)* Articles of Incorporation of The Dealer Sheet, Inc., filed March 27,
2002.
(2.2)* Bylaws of The Dealer Sheet, Inc.
(3)* Form of stock certificate.
(4)* Subscription Agreement.
(10)(a)* Consent of Cudd & Associates (included in Exhibit (11) hereto).
(10)(b)* Consent of Jonathon P. Reuben, CPA, An Accountancy Corporation,
independent auditors.
(11)* Opinion and Consent of Cudd & Associates.
- ------------------
*Filed herewith.
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-1 and authorizes this registration
statement to be signed on its behalf by the undersigned, in the City of
Centennial, State of Colorado, on November 29, 2002.
THE DEALER SHEET, INC.
(Registrant)
By: /s/ Evan Lee
-----------------------------
Evan Lee, President and Chief
Executive Officer (Principal
Executive, Financial and
Accounting Officer)
61
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
Date: November 29, 2002 /s/ Evan Lee
---------------------------------
Evan Lee, President, Chief
Executive Officer and Director
Date: November 29, 2002 /s/ Rebecca Flowers
---------------------------------
Rebecca Flowers, Secretary, Chief
Financial and Accounting Officer
and Director
62
EXHIBIT INDEX
-------------
The following Exhibits are filed as part of this Registration Statement on
Form SB-1.
Item
Number Description
- ------ ---------------------------------------------------------------------
(2.1)* Articles of Incorporation of The Dealer Sheet, Inc., filed March 27,
2002.
(2.2)* Bylaws of The Dealer Sheet, Inc.
(3)* Form of stock certificate.
(4)* Subscription Agreement.
(10)(a)* Consent of Cudd & Associates (included in Exhibit (11) hereto).
(10)(b)* Consent of Jonathon P. Reuben, CPA, An Accountancy Corporation,
independent auditors.
(11)* Opinion and Consent of Cudd & Associates.
- ------------------
*Filed herewith.
63
THE DEALER SHEET, INC.
FINANCIAL STATEMENTS
Contents
--------
Page
------
Independent Auditors' Report F-2
Balance Sheet F-3
Statement of Operations and Accumulated
Deficit F-4
Statement of Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
F-1
Independent Auditors' Report
Board of Directors
The Deal Sheet, Inc.
Centennial, Colorado
We have audited the accompanying balance sheet of The Dealer Sheet, Inc. (A
Development Stage Company) as of September 30, 2002, and the related statements
of operations and deficit accumulated during the development stage,
stockholders' equity, and cash flows from the Company's inception (March 27,
2002) through September 30, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Dealer Sheet, Inc. as of
September 30, 2002, and the results of its operations and its cash flows for the
period from the Company's inception (March 27, 2002) through September 30, 2002,
in conformity with accounting principles generally accepted in the United States
of America.
/s/ Jonathon P. Reuben CPA
Jonathon P. Reuben, C.P.A.
Accountancy Corporation
Torrance, California
October 31, 2002
F-2
The Dealer Sheet, Inc.
(A Development Staage Company)
Balance Sheet
September 30, 2002
- --------------------------------------------------------------------------------
Assets
Currrent assets
Cash and cash equivalents $ 17,141
----------------
Total current assets 17,141
Property and equipment
Computer equipment (net accumulated
depreciation of $181) 2,539
Other assets
Deferred offering costs 10,000
--------------
Total assets $ 29,680
==============
Liabilities and Stockholders' Equity
Liabilities
Unearned income $ 1,440
--------------
Stockholders' Equity
Common Stock, par value $.001 per share;
authorized 100,000,000 shares; issued and outstanding
2,070,000 shares $ 2,070
Preferred Stock, par value $.01 per share,
authorized 10,000,000 shares; no shares issued and
outstanding -
Additional Paid-in Capital 28,930
Deficit Accumulated During the Development Stage (2,760)
----------------
Total stockholders' equity 28,240
--------------
Total liabilities and stockholders' equity $ 29,680
==============
See accompanying notes F-3
The Dealer Sheet, Inc.
(A Development Stage Company)
Statement of Operations and Accumulated Deficit
- --------------------------------------------------------------------------------
From Inception
(March 27, 2002)
Through
September 30, 2002
------------------
Income $ -
Operating Expenses (2,760)
------------------
Net Loss and Accumulated Deficit $ (2,760)
==================
Basic Loss Per Share $ (0.00)
==================
Weighted Average Common
Shares Outstanding 2,070,000
==================
See accompanying notes F-4
The Dealer Sheet, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
From the Company's Inception (March 27, 2002) Through September 30, 2002
- --------------------------------------------------------------------------------
Deficit
Accumulated
Common Stock During the
--------------------------- Paid-in Development
Shares Amount Capital Stage
------------- ----------- ------------- ---------------
Shares issued for cash - March 28, 2002 2,000,000 $ 2,000 $ 10,000 $ -
Shares issued for cash - June 3, 2002 70,000 70 6,930
Additional contributed capital - September 9, 2002 - - 12,000
Net loss from the Company's inception
(March 27, 2002 ) through September 30, 2002 - - - (2,760)
------------- ----------- ------------- ---------------
Balance - September 30, 2002 2,070,000 $ 2,070 $ 28,930 $ (2,760)
============= =========== ============= ===============
See accompanying notes F-5
The Dealer Sheet, Inc.
(A Development Stage Company)
Statement of Cash Flows
From Inception (March 27, 2002) through September 30, 2002
- --------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net Loss $ (2,760)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 181
Increase in liabilities
Increase in unearned income 1,440
----------------
Net cash use in operating activities (1,139)
----------------
Cash Flows from Investing Activities
Equipment acquisition (2,720)
----------------
Net cash provided (used) in investing activities (2,720)
----------------
Cash Flows from Financing Activities
Gross proceeds from private offerings 31,000
Costs incurred in proposed public offering (10,000)
----------------
Net cash provided by financing activities 21,000
----------------
Net Increase (Decrease) in Cash and Cash
Equivalents 17,141
Beginning Balance - Cash and Cash Equivalents -
----------------
Ending Balance - Cash and Cash Equivalents $ 17,141
================
Supplemental Schedule to Statement of Cash Flows
Cash Paid For:
Interest Expense $ -
Income Taxes $ -
See accompanying notes F-6
The Dealer Sheet, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2002
- --------------------------------------------------------------------------------
Note 1 - Organization
- ---------------------
The Dealer Sheet, Inc. (the "Company") was incorporated in Colorado on
March 27, 2002, for the purpose of producing a publication for coin
dealers.
The Company is in the development stage as defined in FASB Statement 7. The
Company has not paid any dividends and dividends, that may be paid in the
future, will depend on the financial requirements of the Company and other
relevant factors.
Note 2 - Summary of Significant Accounting Policies
- ---------------------------------------------------
a. Basis of Presentation
---------------------
The Company's financial statements are prepared using the accrual
method of accounting in accordance with generally accepted accounting
principles accepted in the United States and have been prepared on a
going concern basis which contemplates the realization of assets and
the settlement of liabilities in the normal course of business.
b. Depreciation
------------
The cost of property and equipment is depreciated over the estimated
useful lives of the related assets. The Company's office equipment is
being depreciated on the straight-line method for both financial
reporting and income tax reporting purposes. Depreciation expense
charged to operations for the period ending September 30, 2002 was
$181.
c. Net Loss Per Share
------------------
The Company adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share" ("EPS")
that established standards for the computation, presentation and
disclosure of earnings per share, replacing the presentation of
Primary EPS with a presentation of Basic EPS.
F-7
The Dealer Sheet, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2002
- --------------------------------------------------------------------------------
d. Cash and Cash Equivalents
-------------------------
For purposes of the statement of cash flows, the Company considers
cash and cash equivalents to include all stable, highly liquid
investments with maturities of three months or less.
e. Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accountings principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
f. Income Taxes
------------
The Company accounts for its income taxes under the provisions of
Statement of Financial Accounting Standards 109 ("SFAS 109"). The
method of accounting for income taxes under SFAS 109 is an asset and
liability method. The asset and liability method requires the
recognition of deferred tax liabilities and assets for the expected
future tax consequences of temporary differences between tax bases and
financial reporting bases of other assets and liabilities.
g. Fair Value of Financial Instruments
-----------------------------------
Pursuant to SFAS No. 107, "Disclosures About Fair Value of Financial
Instruments", the Company is required to estimate the fair value of
all financial instruments included on its balance sheet as of
September 30, 2002. The Company considers the carrying value of such
amounts in the financial statements to approximate their face value.
h. Issuances Involving Non-cash Consideration
------------------------------------------
Issuances of the Company's stock for non-cash consideration will be
assigned a dollar amount equaling either the market value of the
shares issued or the value of consideration received whichever is more
readily determinable.
F-8
The Dealer Sheet, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2002
- --------------------------------------------------------------------------------
i. Deferred Offering Costs
-----------------------
Costs incurred in the Company's public offering (See Note 5) have
been capitalized. These costs are deferred and will either be charged
against the offering proceeds, or charged to operations if the
offering is unsuccessful.
j. Revenue Recognition
-------------------
The Company anticipates that its revenue will be from advertising
which will be recognized as income in the period in which the
respective advertment is included in the Company's publcation.
k. New Accounting Pronouncements
-----------------------------
In June 2001, SFAS No. 141, "Business Combinations," was issued. This
statement eliminates pooling of interests accounting and requires all
business combinations initiated after June 30, 2001 to be accounted
for using the purchase method. The Company has adopted this standard
and its adoption of this standard has no significant effect on the
Company's financial statements.
In June 2001, SFAS No. 142, "Goodwill and Other Intangible Assets,"
was issued establishing accounting and reporting standards that
address how goodwill and intangible assets should be accounted for
within the financial statements. The statement requires companies to
not amortize goodwill and intangible assets with infinite lives, but
to test such assets for impairment on a regular basis. An intangible
asset that has a finite life should be amortized over its useful life
and evaluated for impairment on a regular basis. This statement is
effective for fiscal years beginning after December 15, 2001. The
Company has adopted the standard and its adoption has nosignificant
effect on the Company's financial statements.
In August 2001, SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," was issued establishing new rules and
clarifying implementation issues with SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of, "by allowing a probability-weighted cash flow estimation
approach to measure the impairment loss of a long-lived asset. The
statement also established new standards for accounting for
discontinued operations. Transactions that qualify for reporting in
discontinued operations include the disposal of a component of an
entity's operations that comprises operations and cash flow that can
be clearly distinguished, operationally and for financial reporting
purposes, from the rest of the entity. The statement is effective for
F-9
The Dealer Sheet, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2002
- --------------------------------------------------------------------------------
fiscal years beginning after December 15, 2001. The Company adopted
this standard and its adoption has no significant effect on the
Company's financial statements.
In April 2002, SFAS No. 145, "Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical
Corrections", was issued. This Statement rescinds FASB Statement No.
4, "Reporting Gains and Losses from Extinguishment of Debt", and an
amendment of that Statement, FASB Statement No. 64, "Extinguishments
of Debt Made to Satisfy Sinking-Fund Requirements". This Statement
also rescinds FASB Statement No. 44, "Accounting for Intangible Assets
of Motor Carriers". This Statement amends FASB Statement No. 13,
"Accounting for Leases", to eliminate an inconsistency between the
required accounting for sale-leaseback transactions and the required
accounting for certain lease modifications that have economic effects
that are similar to sale-leaseback transactions. This Statement also
amends other existing authoritative pronouncements to make various
technical corrections, clarify meanings, or describe their
applicability under changed conditions. The adoption of SFAS No. 145
had no effect on the financial position and results of operations of
the Company.
In June 2002, SFAS No. 146, "Accounting for Costs Associated with Exit
or Disposal Activities", was issued which nullifies Emerging Issues
Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit and Activity
(including Certain Costs Incurred in a Restructuring"). The adoption
of SFAS No. 146 had no effect on the financial position and results of
operations of the Company.
Note 3 - Issuance of Common Stock
- ---------------------------------
Upon its formation, the Company issued 2,000,000 shares of its common
stock. 1,000,000 shares were issued each to the Company's President and
Secretary for a total of $24,000. The Company also issued 70,000 shares to
two individuals in exchange for $7,000.
Each share outstanding is entitled to one vote.
Note 4 - Income Taxes
- ---------------------
Income taxes are provided based on earnings reported for financial
statement purposes pursuant to the provisions of Statement of Financial
Accounting Standards No. 109 ("FASB 109").
F-10
The Dealer Sheet, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2002
- --------------------------------------------------------------------------------
FASB 109 uses the asset and liability method to account for income taxes.
That requires recognizing deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between tax basis
and financial reporting basis of assets and liabilities.
An allowance has been provided for by the Company which reduced the tax
benefits accrued by the Company for its net operating losses to zero, as it
cannot be determined when, or if, the tax benefits derived from these
operating losses will materialize. As of September 30, 2002, the Company
has unused operating loss carryforwards, which may provide future tax
benefits in the amount of $2,760 that expires in 2022.
Note 5 - Related Party Transactions
- -----------------------------------
The Company is currently operating from its President's offices at no cost.
Further the President of the Company has committed to fund any shortfalls
necessary to meet the Company's obligations for at least the next twelve
months.
Note 6 - Public Offering
- ------------------------
The Company is in the process of preparing a registration statement to be
filed with the United States Securities and Exchange Commission under which
the Company plans to offer to the general public a minimum of 1,000,000
shares and a maximum of 2,000,000 shares of its common stock at a price of
$.05 per share. Under the proposed offering, all funds received will be
held by the Company. If less than a 1,000,000 shares are sold at the
expiration date of the offering, the funds received from investors prior to
the expiration date will be returned without interest.
F-11