As filed with the Securities and Exchange Commission on June 6, 2002
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
Commission File No. 333-83318
(Amendment No. 2)
Callingcard Industries, Inc.
----------------------------
(Exact name of small business issuer in its charter)
Nevada 4813 80-0032377
(State or other jurisdiction of (primary standard I.R.S. Employer
incorporation or organization) industrial code) Identification Number)
3550 National Avenue
San Diego, California 92113
(619) 234-2156, Fax (619) 234-5406
----------------------------------
(Address and telephone number of principal executive offices)
Agent for Service:
Tolan S. Furuscho
Attorney At Law
Callingcard Industries, Inc.
2200 112th Street NE, Suite 200
Bellevue, Washington 98006
(425) 452-8622, Fax (425) 452-8639
----------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check this box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
Title of
each Proposed Proposed
Class of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
registered Registered Per Unit Price Fee
---------------------------------------------------------------------
Common Stock Maximum: $1.00 $2,000,000.00 $478.00
2,000,000
Minimum: $1.00 $20,000.00
20,000
---------------------------------------------------------------------
</Table>
- ---------------------------------------------------------------------------
*This registration fee is calculated at $.000239 for the 2,000,000
shares of common stock offered based on the maximum aggregate offering
price of the securities being registered in accordance with Rule 457 (o)."
- ---------------------------------------------------------------------------
Note: Specific details relating to the fee calculation shall be
furnished in notes to the table, including references to provisions of
Rule 457 (ss. 230.457 of this chapter) relied upon, if the basis of the
calculation is not otherwise evident from the information presented in
the table. If the filing fee is calculated pursuant to Rule 457(o) under
the Securities Act, only the title of the class of securities to be
registered, the proposed maximum aggregate offering price for that
class of securities and the amount of registration fee needed to appear
in the Calculation of Registration Fee table. Any difference between the
dollar amount of securities registered for such offerings and the dollar
amount of securities sold may be carried forward on a future registration
statement pursuant to Rule 429 under the Securities Act.
The registration hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
2
PROSPECTUS
June 6, 2002
CALLINGCARD INDUSTRIES, INC.
"Callingcard"
3550 National Avenue
San Diego, California 92113
(619) 234-2156, Fax (619) 234-5406
<Table>
<Caption>
--------------------------------------------------------------------
Title of each Proposed Proposed
Class of Amount Maximum Maximum
Securities to to be Offering Price Aggregate
be Registered Registered Per Unit Offering Price
--------------------------------------------------------------------
Maximum: $1.00 $2,000,000.00
Common Stock 2,000,000
Minimum: $1.00 $20,000.00
20,000
--------------------------------------------------------------------
</Table>
This is a self underwritten, best efforts offering on a
minimum/maximum basis. This is not an underwritten offering by a registered
broker/dealer. This offering will end on June 1, 2003. Funds derived from
this offering will be deposited in a segregated account entitled
"Callingcard Industries, Inc. Special Account", until the minimum of 20,000
shares of common stock at $1.00 per share ($20,000) is sold. If only the
minimum number of shares of common stock are sold (20,000), then
Callingcard will only have a surplus of $5,000 after the costs of this
registration statement are paid.
An investor is not limited to a minimum or maximum amount of shares of
common stock allowed to be purchased, pending availability. In the event
that the minimum amount of 20,000 shares of common stock is not sold by the
completion date of June 1, 2003, all funds shall be returned to the
investor(s) in its entirely, without interest, on or before ten days
after the completion date of June 1, 2003. No officer, director,
affiliates or any related party may purchase the securities offered to
meet the minimum of shares of common stock offered. Callingcard's stock is
not listed on any national securities exchange or the NASDAQ Stock
Market. Shortly after Callingcard may receive the minimum amount of
proceeds sought in this prospectus, Callingcard intends to apply to have
its shares of common stock traded on a regional exchange and/or the OTC
Bulletin Board under the symbol "CALL"; no assurance is given that
Callingcard will receive such symbol.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 9
Neither the SEC nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy
or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
You should rely only on the information contained in this document.
Callingcard has not authorized anyone to provide you with information
that is different. This document may only be used where it is legal to sell
these securities.
3
TABLE OF CONTENTS
PART I - Prospectus
Page
- ----
Prospectus Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Callingcard Is In Its Earliest Stages Of Development,
Has No Operating History, May Never Become Profitable,
And Is Subject To A"Going Concern"Qualification . . . . . . . . . . . .9
Callingcard Has Entered Into A "Non-Arms Length"
Telephone Calling Card Technology Purchase And Sale
Agreement With An Officer And Director Of Callingcard
Which Could Possibly Affect The Objectivity Of Callingcard
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Callingcard's Dependence On National Telephone Companies
For The Purchase Of Long Distance Calling Time Could Cause
Callingcard Delays In Their Business Objectives . . . . . . . . . . . 11
Callingcard's Dependence On Regional Distributors
Could Cause Delays In The Sales Of The Callingcard
Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Callingcard's Dependence On Suitable Callingcard Unit
Manufacturers Could Cause Business Delays or Business
Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Callingcard Is Materially Dependent Upon Key Management
Who Will Devote Less Than Full Time And Attention To
Callingcard's Business And Operations Could Result In Delays
In Fully Implementing The Business Plan Or Business Failure . . . . . 12
Callingcard's Heavy Dependence On Outside Sales Consultants
And Marketing Professionals Could Result In Delays Of
Callingcard's Business Objectives . . . . . . . . . . . . . . . . . . 12
Callingcard May Have Overestimated The Marketability Of The
Callingcard Concept Which Could Result In Minimum Product
Sales Or Business Failure . . . . . . . . . . . . . . . . . . . . . . 13
Callingcard May Enter Into A Business Combination Which Could Be
Difficult To Integrate, May Dilute Stockholder Value, And May
Disrupt Business Operations, Resulting In Delays Or Business
Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Callingcard's Proceeds From The Minimum Offering Will Not Be
Sufficient To Enable Callingcard To Further Implement Its
Business Plan In Any Meaningful Way . . . . . . . . . . . . . . . . . 13
Callingcard May Need Additional Financing Which May Not Be
Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Callingcard's Common Stock Has No Prior Market, No Assurances of
a Market Being Created or Sustained, And Could Result In An
Investor Losing All Or Part Of The Investment. . . . . . . . . . . . 14
Callingcard's Board of Directors Has The Ability To
Designate The Rights, Preferences And Privileges Of The
Authorized Preferred Shares Which Could Cause Significant
Common Share Dilution To The Investor . . . . . . . . . . . . . . . . 15
4
Use Of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Dilution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Determination Of Offering Price . . . . . . . . . . . . . . . . . . . . 16
Plan Of Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . 19
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Directors, Executive Officers, Promoters And Control Persons. . . . . . 20
Security Ownership Of Certain Beneficial Owners And Management. . . . . 20
Description Of Securities . . . . . . . . . . . . . . . . . . . . . . . 23
Interest Of Named Experts And Counsel . . . . . . . . . . . . . . . . . 23
Disclosure Of Commission Position On Indemnification For24
Securities Act Liabilities . . . . . . . . . . . . . . . . . . . . . . 25
Description Of Business . . . . . . . . . . . . . . . . . . . . . . . . 25
Management's Discussion And Analysis Or Plan Of Operation . . . . . . . 28
Description Of Property . . . . . . . . . . . . . . . . . . . . . . . . 31
Certain Relationships And Related Transactions. . . . . . . . . . . . . 31
Market For Common Equity And Related Stockholder Matters33
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . 34
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . 35
PART II - Information Not Required in Prospectus
Indemnification Of Directors And Officers . . . . . . . . . . . . . . . 42
Other Expenses Of Issuance And Distribution . . . . . . . . . . . . . . 43
Recent Sales Of Unregistered Securities . . . . . . . . . . . . . . . . 43
Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Undertakings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5
Part I - Prospectus
- -------------------
PROSPECTUS SUMMARY
-------------------
The following summary of Callingcard is qualified in its entirety by
and should be read in conjunction with the more detailed information
and the Callingcard and the predecessor company, Tver Acquisition Corp.'s
Financial Statements and notes appearing elsewhere in this Prospectus.
Callingcard is a development stage company with no income and is
entirely dependent upon this offering to commence meaningful business
operations.
There is a minimum amount of 20,000 shares of common stock and a
maximum amount of 2,000,000 shares of common stock offered for sale at
$1.00 per share. There will be no commission charged for the sale of the
shares of common stock sold in this offering. This offering is on a best-
efforts, self-underwritten basis, and not underwritten by a registered
broker/dealer. Only Mr. Daniel Najor, Callingcard's President and Board
Chairman, is allowed to sell these shares of common stock.
An investor is not limited to a minimum or maximum amount of shares of
common stock allowed to be purchased, pending availability.
All funds will be deposited into a segregated account entitled
"Callingcard Industries, Inc. Special Account", under the control of
Callingcard, until the minimum amount of 20,000 shares of common stock
@$1.00 per share ($20,000) may be sold. In the event that the minimum
amount of 20,000 shares of common stock @$1.00 per share is not sold by the
Termination Date of June 1, 2003, all funds will be returned to investors
promptly, without deduction and without interest, on or before ten days
after the Termination Date of June 1, 2003.
There will be no affiliates of Callingcard allowed to purchase shares
of common stock to achieve the minimum amount of the offering.
The proceeds to Callingcard from the sale of shares of common stock
will be used to further develop the business plan of Callingcard, less the
$15,000 in costs to register this offering. See "Use of Proceeds". All
investors are subject to the provisions of the Subscription Agreement
and completion of the Prospective Purchaser Questionnaire, which includes
the amount of shares of common stock purchased, the price of the shares of
common stock, the provisions of receiving the share certificate(s),
and representations and warranties that the purchaser is a qualified
investor who must have a minimum net worth of $250,000 and annual
individual income of $100,000 for each of the two predecessor years or a
combined household income with spouse of $150,000 per year for the two
predecessor years, or other substantial "sophisticated investor"
indicators. The purchaser must complete a Prospective Purchaser
Questionnaire and must comply with the minimum income and net worth
provisions to be a qualified investor.
Investment Risks
An investment in this offering involves a high degree of risk.
Callingcard, and its predecessor company, Tver Acquisition Corp. is a
development stage company. The coupon market for Callingcard's
products is highly competitive, and the "Callingcard" concept is not well
known. Callingcard has not developed its potential market and, as such,
has no market acceptance. Callingcard, and its predecessor company, Tver
Acquisition Corp., has a limited operating history and a history of
6
operating losses. Callingcard's predecessor corporation, Tver Acquisition
Corp., loss for the 12 months period ending December 31, 2001 was $0.00.
Callingcard's loss for the period ending March 31, 2002 was $(6.571).
Since inception as a development stage company on April 21, 1998,
Callingcard has accumulated a deficit of $(7,751). Callingcard may
continue to incur net losses in the future and there is no assurance that
Callingcard will ever be profitable.
Callingcard Industries, Inc.
Callingcard, formerly known as Tver Acquisition Corp., is a
development stage company which was incorporated in the State of
Delaware on April 21, 1998, under the name of Tver Acquisition Corp. Tver
Acquisition Corp. then entered into an agreement of merger and plan of
reorganization with Callingcard Industries, Inc., organized in Nevada on
January 23, 2002, to effect a change of domicile to the State of Nevada and
a name change to Callingcard Industries, Inc. The date of the merger
between Tver Acquisition Corp. and Callingcard Industries, Inc. was January
25, 2002. Callingcard has a share capitalization of 100,000,000 shares of
common stock, at a par value of $.001 and 20,000,000 preferred shares of
stock, at a par value of $.001. Callingcard's executive offices are
located at 3550 National Avenue, San Diego, California 92113, telephone
(619) 234-2156 and fax (619) 234-5406. Callingcard does not pay rent or
other office expense and is not expected or required to pay rent or office
expenses until significant sales have been achieved.
These 2002 rent and other office expenses have been prepaid to December 31,
2002, by a share distribution of 300,000 shares of common stock to its
officers and directors in January, 2002. Callingcard's offices are within
Daniel Najor's Food Palace grocery business at 3550 National Avenue, San
Diego, California 92113.
On December 10, 1998, Tver Acquisition Corp., now known as
Callingcard Industries, Inc., entered into a purchase and sale agreement
with Daniel Najor, Callingcard's President and Board Chairman, to develop a
technology for telephone calling cards units,suitable to patent protection,
for use in the United States and elsewhere. Callingcard issued 3,000,000
of its shares of common stock to Daniel Najor (or his assignees) who were
instrumental in the development of the calling card unit technology. On
December 18, 1998, Callingcard issued 965,000 shares of common stock to
Daniel Najor (or his assignees) for management services pertaining to the
development and marketing of the Callingcard concept and system. On
February 6, 2001, patent # 6,183,917 was issued for this telephone calling
card technology to Daniel Najor.
On February 8, 2001, Daniel Najor irrevocably assigned this patent to
CallingCard. It is the intention of Callingcard to further implement its
business plan by having major national telephone services, such as AT&T,
Sprint and MCI provide the long distance service for the calling card units
and Callingcard will market these unique calling card units to consumers
along with national product brands such as beverage companies and other
nationally known product corporations. Callingcard's unique technology
provides that the calling card unit can be used as a coupon to purchase
other products, such as beverages, after the life of the calling card unit
has expired. When the calling card unit user calls the "800" number to
give the PIN, the caller will hear an advertisement from the advertising
sponsor of that card. The calling card unit can be saved as a coupon to be
redeemed for merchandise goods and discount on merchandise of the
advertising sponsor, much in the same manner as a grocery coupon.
7
Callingcard's business plans is conducive to joint ventures and other
business combinations with other corporations for various advertising
promotions and combinations with national telephone companies and national
brands to create consumer purchases. Callingcard could place the calling
card unit as a "free standing insert" as a "gift with purchase" or
"purchase with purchase" promotion by various manufacturers. The calling
card units could also be sold directly to consumers by way of retail
locations, direct mail and over the Internet. The calling card unit sales
can also be achieved through distributors of advertising promotions or
other territorial distributors. Callingcard received the patent rights to
the Callingcard technology, US Patent #6,183,017 from Daniel Najor on
February 8, 2001, after the patent was issued to Daniel Najor on February
6, 2001 as agreed to in the Purchase and Sale Agreement
Market Opportunity
Management of Callingcard believes that the patented technology and
unique design of the calling card unit makes it a practical and unique
marketing tool to be used by national telephone companies, national product
advertisers and other advertising sources. As Callingcard is solely
dependent upon this offering to further develop the business plan and
commence and sustain their business operations, it is highly unlikely
that Callingcard will be able to further develop the business plan and
sustain business operations unless the maximum amount, or at least 25% of
the amount of shares of common stock, is sold to investors by way of this
offering by June 1, 2003. Further, it is hereby stated that time is of the
essence in the obtaining of financing to enable Callingcard to further
develop the business plan and sustain their business objectives.
Callingcard intends to further implement its business plan by entering
into a number of advertising agreements with nationally and regionally
known product companies and distributors and nationally and regionally
known telephone long distance providers, such as AT&T, Sprint and MCI. In
some instances, the Callingcard "free standing unit" (FSI) will be sold to
consumers by certain mass market merchandisers in counter displays and in
other instances the Callingcard FSI is placed within another product as a
"gift with purchase" or "purchase with purchase". It could also be sold
directly to the consumer, via direct sales promotions through publications,
or on the Internet. The calling card unit would contain a pre-determined
advertising message, such as "Drink XYZ Cola, enter your PIN" when the user
calls the "800" access number for long distance service. The expired
calling card unit is now an advertising coupon which could be redeemed at a
later date for goods and services. Instead of a calling card unit being
thrown away after its life has expired, this calling card unit will be
saved as a merchandise coupon.
The telephone calling card system is well established and profitable
for a number of competitors. Callingcard management has developed a number
of programs for national telephone companies as long distance carriers and
possible advertising customers and national product corporations for the
promotional possibilities of the calling card unit. At the present time,
Callingcard has not entered into any agreements with national telephone
companies or any national product corporations and has no agreements in
progress. Callingcard owns a patented telephone calling card technology
and a marketing concept and a system for the sale of these long distance
calling cards into main stream advertising. In the event that only the
minimum amount of the offering is achieved, or if only a small portion of
the offering is achieved, then Callingcard will only be able to develop the
Callingcard program as permitted by the funds available.
8
Name, Address, and Telephone Number of Registrant
Callingcard Industries, Inc.
3550 National Avenue
San Diego, California 92113
(619) 234-2156 phone; (619) 234-5406 fax
The Offering
Callingcard is offering up to 2,000,000 shares of its common stock at
$1.00 per share. Callingcard intends to
have a licensed broker/dealer apply to the OTC Bulletin Board and/or a
regional stock exchange, such as the Boston Stock Exchange (BSE), providing
that Callingcard meets the listing criteria of the BSE, following the
clearance of this filing with the Securities and Exchange Commission.
RISK FACTORS
You should carefully consider the following risk factors and all
other information contained in this prospectus before purchasing the
shares of common stock of Callingcard. Investing in Callingcard's shares
of common stock involves a high degree of risk. Any of the following risks
could materially adversely affect the business of Callingcard, it's
financial condition and operating results. These risks factors could result
in a complete loss of your investment.
Investment Risks
An investment in this offering involves a high degree of risk.
Callingcard is a development stage company. The market for its products
and services is not yet established, and Callingcard has not achieved
market exposure and therefore, there is no market acceptance.
Callingcard has a limited operating history and a history of operating
losses. Callingcard's loss for the twelves months ended December 31, 2001
was $0.00. Callingcard's loss as of March 31, 2002, was $(6571).
Callingcard incurred losses of $(7,751). since their development stage
inception period commencing April 21, 1998 until March 31, 2002.
Callingcard may continue to and is most likely to incur net losses in the
future.
Risks Related to Callingcard Industries, Inc.'s Business:
Callingcard Is In Its Earliest Stages Of Development, Has No Operating
- ----------------------------------------------------------------------
History, May Never Become Profitable, And Is Subject To A "Going
- -------------------------------------------------------------------
Concern" Qualification .
- ------------------------
Callingcard is in the early stages of development, with unproven
management, in a marketing company which plans to sell telephone long
distance calling card on which is printed an advertising coupon for future
benefit to the consumer, and the "Callingcard" concept is not yet known in
the marketplace. The "Callingcard" concept and business requires
further exposure and development before it can be a marketable and
recognized alternative to standard coupon promotions. Further, even if
the "Callingcard" concept and business become fully developed and
marketable, Callingcard could fail before fully implementing its business
plan. It is a "start up" venture, which may incur net losses for the
foreseeable future. Callingcard has no financial operating history, and
it may face unforeseen costs, expenses, and problems that will prevent
9
it from becoming profitable. Callingcard's success is dependent on a
number of factors, which should be considered by prospective investors.
Callingcard has only recently commenced its business in the acquiring the
asset of the Callingcard technology and the development of the business
plan. There is no assurance that Callingcard will ever operate
profitably in the future and that it will be able to fully implement its
business plan of creating a viable calling card unit which is also a coupon
to be redeemed at a later date for good and services. Even if Callingcard
is successful in the further implementation of its business plan by
obtaining the necessary financing to commence the manufacturing of the
calling card product (the long distance telephone calling card) and the
marketing of sales and general business operations, there is no assurance
that Callingcard will be able to continue as a going concern.
Callingcard's auditor, Andersen, Andersen and Strong has stated in its
report to the Board of Directors of Callingcard, issued with the January
31, 2002 financial statements, "The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern.
The Company will need additional working capital for its planned activity,
which raises substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are described in
Note 4. These financial statements do not include any adjustments that
might result from the outcome of this uncertainty." In the March 31, 2002
financial statements, which are attached as a part of this prospectus, Note
4 of Callingcard's financial statements state that: "The Company intends
to further develop its interest in the patent outlined in Note 3, however,
the Company does not have the working capital necessary to be successful in
this effort. Continuation of the Company as a going concern is dependent
upon obtaining additional working capital and the management of the Company
has developed a strategy, which it believes will accomplish this objective
through additional equity funding and long term financing which will enable
the Company to operate for the coming year." Specifically, the auditor of
Callingcard has stated that there is substantial doubt that Callingcard
will be able to continue as a "going concern".
Callingcard Has Entered Into A "Non Arms Length" Telephone Calling Card
- -----------------------------------------------------------------------
Technology Purchase And Sale Agreement With An Officer And Director Of
- ----------------------------------------------------------------------
Callingcard Which Could Possibly Affect The Objectivity Of Callingcard
- ----------------------------------------------------------------------
Management.
- -----------
Callingcard's President, Daniel Najor is the seller of the telephone
calling card technology to Callingcard. Even though the telephone calling
card technology is now owned outright by Callingcard, it is possible that
Daniel Najor as the inventor and founder of the calling card technology may
not be as objective about its business potential and merits as someone who
is not as closely involved with its development. Such potential lack of
objectivity could be a determining factor in corporate decisions pertaining
to the corporate development of the calling card units in the marketplace.
Even though Callingcard plans to employ various advertising consultants and
other marketing experts, it is conceivable that the Board of Directors of
Callingcard would not adhere to the advice of outside consultants and
experts. The "Callingcard" name remains the property of Callingcard
pursuant to the Purchase And Sale Agreement with Daniel Najor, however
there is no tradename currently registered, however Callingcard intends to
file a tradename registration on a suitable tradename, such tradename is
yet to be determined, shortly after this registration statement, of which
this prospectus is a part, may be declared effective .
10
Callingcard's Dependence On National Telephone Companies For The
- -------------------------------------------------------------------
Purchase Of Long Distance Calling Time Could Cause Callingcard Delays In
- ------------------------------------------------------------------------
Their Business Objectives.
- --------------------------
Callingcard is dependent upon the national telephone companies, such
as AT & T, Sprint and MCI, or their spur providers, to create the calling
card unit credit to be placed on the calling card unit. If Callingcard is
unable to purchase the long distance time, then the Callingcard system
could not be marketed. Also, these national telephone companies have
divisions which co-venture advertising promotions with other national brand
product distributors and coupon programs, if any, are already in effect.
Callingcard needs to be able to purchase long distance calling time to be
able to have a product to sell.and if Callingcard encounters resistance to
the selling of this long distance calling time to Callingcard, then
Callingcard would encounter significant delays or business failure.
Callingcard's Dependence On Regional Distributors Could Cause Delays In
- -------------------------------------------------------------------------
The Sales Of The Callingcard Product.
- -------------------------------------
Callingcard will rely heavily upon its ability to enter into a
number of advertising agreements, both nationally and regionally.
Management of Callingcard believes that to further develop and to sustain
its business, it is imperative to establish a viable regional distribution
program for the calling card unit purchaser. If Callingcard is not able to
establish a successful and sustained regional distribution program, due to
lack of product interest, funding requirements mandated by such regional
distributors, or otherwise, then Callingcard may encounter delays and may
materially and adversely effect Callingcard's business and operations.
Callingcard's Dependence On Suitable Callingcard Product Manufacturers
- -----------------------------------------------------------------------
Could Cause Business Delays Or Business Failure.
- ------------------------------------------------
The inability or unwillingness of any third-party manufacturer to
provide Callingcard with suitable calling card product could significantly
limit Callingcard's ability to initiate and service new markets and expand
to other markets.
While management is of the belief, based upon initial inquiries made of
several manufacturers, that procurement of product should generally not be
an issue, no assurance can be given that this will continue to be the case.
If Callingcard were to experience such inability or unwillingness of any
third party manufacturer, this may have a material adverse effect on its
business, financial condition and operating results and could cause
business delays or business failure.
11
Callingcard Is Materially Dependent Upon Key Management Who Will Devote
- -----------------------------------------------------------------------
Less Than Full Time And Attention To Callingcard's Business And Operations
- --------------------------------------------------------------------------
Could Result In Delays In Fully Implementing The Business Plan Or Business
- --------------------------------------------------------------------------
Failure.
- --------
Mr. Daniel Najor is serving as Callingcard's President and Board
Chairman, and Mr. Nazar Najor is serving as Callingcard's
Secretary/Treasurer and Director with no set compensation. Mr. Daniel
Najor has received 250,000 shares of Callingcard's common stock as
incentive to organize and develop the Callingcard's business plan. Mr.
Nazar Najor has received 250,000 shares of Callingcard's common stock as
incentive to help organize and implement Callingcard's business plan. The
loss of Mr. Daniel Najor's services and Mr. Nazar Najor's services would
significantly hamper Callingcard's ability to implement its business plan,
and could cause Callingcard's shares of common stock to be devalued.
Callingcard is also dependent upon Mr. Daniel Najor's and Mr. Nazar Najor's
entrepreneurial skills and experience to further implement the business
plan and his services would be difficult to replace. Both Daniel and Nazar
Najor's time is not solely dedicated to Callingcard and this fact may
result in delay(s) in the completion of potential market development and
the further implementation of the business plan. Upon Callingcard
obtaining the minimum proceeds, Mr. Daniel Najor plans to dedicate
approximately 8 hours per week to the Callingcard business. In the event
that 25% of the maximum proceeds are received by Callingcard ($500,000),
Daniel Najor plans to spend at least 8 hours per week to the Callingcard
business. Mr. Nazar Najor plans to devote 5 hours per month to the officer
and director duties of Callingcard whether the minimum or maximum proceeds
are received. Callingcard has no employment agreements with management,
and there is no assurance these individuals will continue to manage
Callingcard's affairs in the future. Callingcard has not obtained key man
life insurance on Mr. Daniel Najor or Mr. Nazar Najor, and there are no
present plans to obtain such insurance. As Callingcard has not yet
commenced any meaningful operations, investors do not have any financial
history to evaluate the merits of Callingcard's business activity;
therefore, investors should carefully and critically assess the
backgrounds of Mr. Daniel Najor and Mr. Nazar Najor. Daniel and Nazar
Najor are brothers and have been in various businesses both together and
solely prior to this offering. The possible lack of time and attention to
Callingcard could result in delays in fully implementing the business plan
or business failure.
Callingcard's Heavy Dependence On Outside Sales Consultants And Marketing
- ---------------------------------------------------------------------------
Professionals Could Result In Delays Of Callingcard's Business Objectives.
- --------------------------------------------------------------------------
Mr. Daniel Najor, Chairman and CEO of Callingcard, and the senior
officer group, have had no direct experience in the sales of calling card
units or co-advertising ventures with calling card units. However, both
Daniel and Nazar Najor, Callingcard's officers and directors, are in the
retail grocery business and are familiar with the coupon segment of the
grocery advertising industry. Further, Daniel and Nazar Najor have general
sales and marketing experience in real estate, insurance, real estate
development and other non-grocery businesses. These two officers and
directors of Callingcard do not have direct experience in the marketing and
sales of calling card units and will rely heavily on experienced marketing
and advertising consultants to assist in the development, sales and
marketing decisions of the Callingcard business, primarily in the initial
12
stages of meaningful business operations. Callingcard must rely on
outside consultants and hired marketing professionals to assist in
the development, sales and marketing decisions of the "Callingcard"
business. The failure to obtain knowledgeable outside sales consultants
and marketing professionals, or their inability for any reason to
successfully assist Callingcard in their successfully implementing the
sales and marketing portion of its business plan could result in delays in
Callingcard's business objectives.
Callingcard May Have Overestimated The Marketability Of The Callingcard
- -----------------------------------------------------------------------
Concept Which Could Result In Minimum Product Sales Or Business Failure.
- ------------------------------------------------------------------------
There can be no assurance that unique advertising promotions or
calling card unit industry growth will occur or continue. Callingcard has
not conducted any formal market study. The underlying market conditions
are subject to change based on economic conditions, consumer preferences
and other factors beyond Callingcard's control. An adverse change in
management's perceived size or potential growth rate of the telephone
calling card unit market is likely to have an adverse effect on
Callingcard's business, financial condition and operating results,
resulting in a significant decline of the value of Callingcard's stock
and could cause the investor to lose all or part of the investment.
Callingcard May Enter A Business Combination Which Could Be Difficult To
- ------------------------------------------------------------------------
Intregrate, May Dilute Stockholder Value, And May Be Disruptive To Business
- ---------------------------------------------------------------------------
Operations.
- -----------
Management believes that the synergistic nature of Callingcard's
product and business plan may be conducive to business combinations and
joint ventures with the advertiser entities which may use the Callingcard
product or other advertising companies. Due to the perceived synergies of
marketing both products in such fashion, there may be a number of joint
venture possibilities or business combinations for the Callingcard product
and marketing system. Such business combination(s) to market the
Callingcard product could be difficult to integrate and could cause
business delays and interruptions. If Callingcard seeks to acquire any
advertising entity to market the Callingcard product, such acquisition most
likely would result in the issuance of Callingcard's shares of common
stock, which would result in a dilution of ownership interest of the
shareholders. Further, Callingcard may not be successful in integrating
any acquisition into its then current business operations. As such, such
business acquisition may ultimately result in disruptions in business
operations and may have a material adverse effect on Callingcard's
operations.
Financial Risks
Proceeds From The Minimum Offering Will Not Be Sufficient to Enable
- -------------------------------------------------------------------
Callingcard To Further Implement Its Business Plan In Any Meaningful Way.
- -------------------------------------------------------------------------
Should Callingcard on receive the minimum proceeds from this offering
of $20,000, Callingcard would only be able to pay the costs of the offering
of $15,000, leaving a balance of $5,000 to apply for a listing on the OTC
Bulletin Board and for general corporate expense. Callingcard would not be
able to further implement its business plan or to commence meaningful
operations if only the minimum proceeds are received.
13
Callingcard May Need Additional Financing Which May Not Be Available
- ------------------------------------------------------------------------
Callingcard's success will materially depend in part on its ability to
raise capital through this offering in order for Callingcard to further
implement its business plan and achieve product sales. The minimum
proceeds, if received, will only enable Callingcard to make application for
a listing on the OTC Bulletin Board, pay for the cost of the offering, but
will not enable Callingcard to proceed in any meaningful way with its
business plan. Management believes that Callingcard will require
approximately $500,000 from this offering in order to further implement
meaningful business operations, which will include the launching of the
Callincard product in Southern California from Santa Barbara, California to
San Diego, California only; $1,000,000 will allow Callingcard to market the
Callingcard units in all of California and Arizona market; $2,000,000 will
allow Callingcard to market its products in the heavily populated area of
the Western United States. However, if Callingcard decides to accelerate
any element of its business plan, including but not limited to sale and
marketing, Callingcard may require additional capital to effectually
accelerate its business plan. In that event, Callingcard may need
additional financing and there are no commitments to provide
additional funds. If additional capital is needed, there is no assurance
that funds will be available from any source or, if available, that funds
can be obtained on terms acceptable to Callingcard. Callingcard has not
investigated the availability, source or terms which might govern the
acquisition of additional financing.
Risks Related to the Securities Market
Callingcard's Common Stock Has No Prior Market, No Assurances Of A
- ----------------------------------------------------------------------
Market Being Created Or Sustained, And Could Result In An Investor Losing
- -------------------------------------------------------------------------
All Or Part Of The Investment.
- ------------------------------
There is no public market for Callingcard's shares of common stock and
no assurance can be given that a market will develop or be sustained if
developed, or that any shareholder will be able to liquidate its
investment without considerable delay, if at all. The trading market
price of Callingcard's shares of common stock may decline below the
offering price. If a market should develop, the price may be highly
volatile. Factors such as those discussed in this "Risk Factors" section
may have a significant impact on the market price of Callingcard's
securities. Due to the low price of the securities, many brokerage firms
may not be willing to effect transactions in the securities. Even if a
purchaser finds a broker willing to effect a transaction in
Callingcard's shares of common stock, the combination of brokerage
commissions, state transfer taxes, if any, and other selling costs may
exceed the selling price. Further, many lending institutions will not
permit the use of such securities as collateral for loans. Thus, a
purchaser may be unable to sell or otherwise realize the value invested in
Callingcard and could lose all or part of the investment.
14
Callingcard's Board Of Directors Has The Ability To Designate The Rights,
- -------------------------------------------------------------------------
Preferences And Privileges Of The Authorized Preferred Shares Which Could
- ---------------------------------------------------------------------------
Cause Significant Common Share Dilution To The Investor.
- --------------------------------------------------------
Callingcard's Articles of Incorporation and Bylaws allow the Board of
Directors to issue Preferred Shares and to designate what those preferences
are as opposed to the common shareholders. Callingcard could issue
preferred shares for assets or financing and Callingcard's Board of
Directors would have the sole authority to designate the rights related
to the preferred shares, including but not limited to voting, dividends,
other distributions and liquidation rights. Such preferred shares may have
a conversion feature into a pre-determined amount of shares of common stock
which could affect the control of management of Callingcard. This
conversion from preferred shares to shares of common stock would cause
dilution to the investors' shares of common stock. Such rights of
preferred shareholders could substantially dilute shareholder value.
USE OF PROCEEDS
The net proceeds to Callingcard from the sale of the 2,000,000 shares
of common stock offered by Callingcard, at the public offering price of
$1.00. per share, is $2,000,000, less the cost of the offering which is
estimated to be $15,000 or $1,985,000. This offering is a self-
underwriting and Mr. Daniel Najor, President and Board Chairman is solely
responsible for the sale of the stock. There is no commission being paid to
Mr. Daniel Najor for the sale of the shares of common stock in this
offering and Callingcard does not have commissioned sales people
selling these shares of common stock. If only the minimum amount of
20,000 shares of common stock is sold, then $15,000 shall be used to pay
for the offering fees and Callingcard would have a surplus of $5,000 for
the application to trade its shares of common stock on the OTC Bulletin
Board and for general corporate purposes. Investors should be aware that
if Callingcard is only able to sell the minimum amount of shares of
common stock registered for sale in this offering ,there is no assurance
that Callingcard will be able to obtain any additional financing which
would possibly make Callingcard's shares of common stock decrease
substantially or to become worthless. If the maximum amount of shares of
common stock are sold by way of this offering, if 50% of the shares of
common stock are sold by way of this offering and if 25% of the shares of
common stock are sold by way of this offering, then Callingcard expects to
use the net proceeds in the following manner:
Net Proceeds if all shares of common stock are sold by Callingcard:
$2,000,000
$500,000 - Telephone Long Distance Service Purchase
250,000 - Calling Card Unit Manufacturing
250,000 - Advertising and Marketing
500,000 - Co-advertising Programs
485,000 - General Working Capital
15,000 - Offering Expense
Total Use of Proceeds: $2,000,000
Net Proceeds if 50% of the shares of common stock are sold by
Callingcard: $1,000,000
$,250,000 - Telephone Long Distance Service Purchase
250,000 - Calling Card Unit Manufacturing
250,000 - Advertising and Marketing
235,000 - Working Capital
15,000 - Offering Expense
Total Use of Proceeds: $1,000,000
15
Net Proceeds if 25% of the shares of common stock are sold by
Callingcard: $500,000
$100,000 - Telephone Long Distance Service Purchase
100,000 - Calling Card Unit Manufacturing
200,000 - Advertising and Marketing
85,000 - Working Capital
15,000 - Offering Expense
Total Use of Proceeds: $500,000
Net Proceeds if the minimum amount of shares of common stock are
sold by Callingcard: $20,000
These funds will be used for the expenses of the offering,
application to the OTC Bulletin Board and general corporate expenses.
The first priority in the use of proceeds is to implement the
marketing and manufacturing program for the Callingcard units to be placed
in certain market locations. The advertising expense is the next priority
to achieve a customer base for calling card unit sales. The amount of the
shares of common stock sold in the offering will determine how many markets
(cities) the Callingcard business plan will be implemented. If the maximum
amount of shares of common stock are sold, then Callingcard will seek to
implement its plan in the heavily populated areas of the Western region of
the United States.
In the event that only 25% or 500,000 shares of common stock are sold,
then Callincard would concentrate its business plan on a limited and local
basis only, specifically the Southern from Santa Barbara, California to the
San Diego, California area. In the event that 50% or 1,000,000 shares of
common stock are sold, then Callingcard would initiate its plan to include
the marketing areas of Southern California, Northern California and
Arizona. In the event that 100% or 2,000,000 shares of common stock are
sold then Callingcard would concentrate its business plan to the heavily
populated areas of the Western United States and potentially expand
regionally and/or nationally if Callingcard is able to achieve sales.
There is no assurance that Callingcard will be able to initiate or sustain
sales.
If Callingcard is not successful in their first sales and advertising
market, the second sales and advertising market or subsequent sales and
advertising markets, if any, and if Callingcard has exhausted all
possibility of continuing with the Callingcard concept, then management
will seek other related potentially profitable business opportunities,
within the same general industry. At this time, there is no plan to
dedicate any funds to any other business than the Callingcard concept.
Callingcard has not yet determined the specific amounts of "net
proceeds" to be used specifically in the general categories as described
herein. Accordingly, Callingcard's management will have significant
flexibility in applying the net proceeds of the offering.
DILUTION
Callingcard is authorized to issue a substantial number of shares
of common stock, up to the authorized share capital of 100,000,000 shares
of common stock and 10,000,000 preferred shares of stock, in addition to
the shares of common stock comprising the shares of common stock in this
offering. The preferred stock can be issued in such series and with such
designating rights and preferences as may be determined by the Board of
Directors at its sole discretion. In the event that Callingcard does not
achieve the maximum by way of this offering, Callingcard will require
significant additional financing to fully implement its business plan, and
such funding could entail the issuance of a substantial number of
additional shares of common stock which could cause a material dilution to
investors in this offering.
16
As of March 31, 2002, Callingcard had a net tangible book value of
$(2,729). The following table sets forth the dilution to persons
purchasing shares of common stock of in this offering without taking
into account any changes in Callingcard's net tangible book value, except
for the sale of the shares of common stock in this offering at a price of
$1.00 per share. The net tangible book value per share is determined by
subtracting the total liabilities from the tangible assets, divided by
the total number of shares of common stock outstanding. The following
tables reflect the dilution if (1) the minimum amount of 20,000 shares of
common stock are sold in this offering; (2) the midpoint amount of
1,000,000 shares of common stock are sold in this offering; and (3) the
maximum amount of 2,000,000 shares of common stock are sold in this
offering.
<Table>
<Caption>
Prior to After Prior to After
Sale Sale of Sale Sale of
(Mar. 31, 20,000 Mar. 31, 1,000,000
2002) Shares 2002) Shares
- ------------------ ----------- ---------- ----------------- ---------- ----------
Number of Shares 4,480,000 4,500,000 Number of Shares 4,480,000 5,480,000
- ------------------ ----------- ---------- ----------------- ---------- ----------
Public offering Public offering
price per share n/a 1.00 price per share n/a 1.00
- ------------------ ----------- ---------- ----------------- ---------- ----------
Net tangible book Net tangible book
value per share value per share
of common stock of common stock
before the before the
offering 0 0 offering 0 0
- ------------------ ----------- ---------- ----------------- ---------- ----------
Pro forma net Pro forma net
tangible book tangible book
value per share value per share
of common stock Of common stock
after the offering 0 .0038 after the offering 0 .182
- ------------------ ----------- ---------- ----------------- ---------- ----------
Increase to net Increase to net
tangible book tangible book
value per share value per share
attributable to attributable to
purchase of common purchase of common
stock by new stock by new
investors .0038 investors .182
- ------------------ ----------- ---------- ----------------- ---------- ----------
Dilution to new Dilution to new
investors n/a .9962 investors n/a .818
- ------------------ ----------- ---------- ----------------- ---------- ----------
</Table>
17
<Table>
<Caption>
Prior to After
Sale Sale of
(Mar. 31, 2,000,000
2002) Shares
- ------------------ ----------- ----------
Number of Shares 4,480,000 6,480,000
- ------------------ ----------- ----------
Public offering
price per share n/a 1.00
- ------------------ ----------- ----------
Net tangible book
value per share
of common stock
before the
offering 0 0
- ------------------ ----------- ----------
Pro forma net
tangible book
value per share
of common stock
after the offering 0 .308
- ------------------ ----------- ----------
Increase to net
tangible book
value per share
attributable to
purchase of common
stock by new
investors .308
- ------------------ ----------- ----------
Dilution to new
investors n/a .692
- ------------------ ----------- ----------
</Table>
Callingcard's net tangible book value per share is determined by
dividing the number of shares of common stock outstanding into the net
tangible book value.
On May 3, 1998, 200,000 shares of common stock were issued to the
officers and directors of Callingcard; 100,000 to Daniel Najor and 100,000
to Nazar Najor for organizational and management services from April 21,
1998 to December 31, 2001. On January 24, 2002, 300,000 shares of common
stock were issued to the officers and directors of Callingcard; 100,000 to
Daniel Najor and 100,000 to Nazar Najor for management services from
January 1, 2002 to December 31, 2002. There is no plan to further
compensate the officers and directors until the business is fully
implemented and sales are achieved. At that time, the officers and
directors services will be assessed.
On December 10, 1998, 3,000,000 shares of common stock were issued to
Daniel Najor, the President and Board Chairman of Callingcard (or
assignees) in exchange for the "Callingcard" telephone technology. On
December 18, 1998, 965,000 shares of common stock were issued to Daniel
Najor, the President and Board Chairman of Callingcard (or assignees), in
exchange for management services pertaining to the purchase and sale
agreement pursuant to the development of the "Callingcard" concept. These
issuances are to be considered as a "non-arms length" transaction.
18
This offering itself involves immediate and substantial dilution
to investors. Any shares of common stock issued or shares of preferred
stock issued in the future, including issuances to management, could reduce
the proportionate ownership, economic interests and voting rights of any
holders of the shares of common stock purchased in this offering.
DETERMINATION OF OFFERING PRICE
Callingcard arbitrarily determined the price of the shares of
common stock in this offering. The offering price is not an indication of
and is not based upon the actual value of Callingcard. The offering price
bears no relationship to the book value, assets or earnings of Callingcard
or any other recognized criteria of value. The offering price should not
be regarded as an indicator of the future market price of the securities
PLAN OF DISTRIBUTION
Callingcard intends to sell a minimum of 20,000 shares of common
stock and a maximum of 2,000,000 shares of its common stock to
the public on a self-underwriting "best efforts" basis. There can be
no assurance that any of these shares of common stock will be sold. This
offering may only be sold by Daniel Najor, Callingcard's President and
Board Chairman. There is no commission being charged to Callingcard. The
gross proceeds to Callingcard will be $2,000,000, less the $15,000 in
offering costs, netting Callingcard $1,985,000, if all the shares of common
stock offered are sold by Callingcard. The gross proceeds to Callingcard
will be $20,000 if only the minimum amount of shares of common stock
offered is sold by Callingcard and in that event, Callingcard will be able
to pay the offering costs of $15,000 and obtain a surplus of $5,000 which
will be used for general corporate expense. No public market currently
exists for the shares of Callingcard's common stock. Callingcard intends
to have a licensed broker/dealer apply to have its shares of common stock
traded on the OTC Bulletin Board under the symbol "CALL"; however, no
assurances are given that Callingcard will be assigned the symbol "Call" .
All prospective purchasers will be subject to the provisions of the
Subscription Agreement and Prospective Purchaser Questionnaire. The
Subscription Agreement will have the amount of shares of common stock to be
purchased, the price of the shares of common stock, how to send funds and
other provisions and information of the purchaser. In the Prospective
Purchaser Questionnaire, the prospective purchaser of shares of common
stock of this offering needs to meet the minimum income and net worth
requirements in order to be deemed as a qualified investor. If the
prospective purchaser of shares of common stock in this offering does not
meet the income and net worth requirement, then Callingcard will
reject such Subscription Agreement and return all funds, if received. A
"Qualified Investor" for this offering is one who has a minimum net worth
of $250,000 and an annual individual income of $100,000 for each of the two
predecessor years or a combined income with spouse of $150,000 for each of
the two predecessor years, or other "sophisticated investor" indicators.
There is no escrow agreement for the funds and all funds will be deposited
into the "Callingcard Industries, Inc. Special Account", a segregated
account, controlled by Callingcard, until the minimum amount of the
offering has been received and accepted by Callingcard. If the minimum
amount of the offering is not received and accepted by the Termination Date
of June 1, 2003, then all funds will be promptly return to the investors,
without deduction or interest, within ten day following the Termination
Date of June 1, 2003.
19
LEGAL PROCEEDINGS
Callingcard is not a party to any pending legal proceeding or
litigation and none of its property is the subject of a pending legal
proceeding. Further, the officers and directors know of no legal
proceedings threatened or anticipated against Callingcard or its
property by any entity or individual or any legal proceedings
contemplated by any governmental authority.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, SIGNIFICANT
EMPLOYEES AND CONTROL PERSONS
The following table sets forth the name, age and position of each
director and executive officer and control person of Callingcard.
<Table>
<Caption>
NAME AGE POSITION
------------------ -------- -----------------------------------
Daniel Najor 48 President, Board Chairman
Nazor Najor 57 Secretary/Treasurer and Director
</Table>
On April 24,1998, the Board of Directors was elected and
installed. Nazar Najor was President and Board Chairman and Daniel Najor
was Secretary/Treasurer and Director. In January, 2002 when the
predecessor corporation, Tver Acquisition Corp., a Delaware corporation,
facilitated a merger and change of domicile and name to the state of
Nevada. At that time, Mr. Daniel Najor became President and Board Chairman
and Mr. Nazar Najor became Secretary/Treasurer and Director. Callingcard's
Bylaws provide for their officers and directors to serve for a term of 2
years, Unless otherwise notified by way of a Board of Directors
Meeting. Shareholders can elect new directors at an annual general
shareholders meeting or extraordinary or special shareholders meeting
which would take precedence over the 2 year term provision in the
Callingcard Bylaws. Therefore, the officers and directors will be elected
for one-year terms at the annual shareholders' meeting. The officers
will hold their positions at the pleasure of the Board of Directors.
Daniel Najor, President and Board Chairman:
- -------------------------------------------
Originally from Detroit, Michigan, Daniel Najor started his business
career in the grocery business. In 1974, at the age of 21, purchased his
first supermarket, Great Scott Supermarket in Lakeside, California, with
his brothers. Great Scott Supermarket was over 14,000 square feet and had
gross sales of approximately $7,000,000 per annum. Mr. Daniel Najor owned
25% of that store and sold it two years later. Mr. Najor has over 25 years
of experience in the grocery business and has experience in food retailing,
food manufacturing, cost controls, and all facets of grocery and fresh food
preparations. Mr. Daniel Najor is the Co-Founder, President and Director
of Contexual Trading Company, Inc. Mr. Najor presently operates the day to
day activity of the "Food Palace Supermarket" grocery store, owned by
Contexual Trading Company, Inc. Mr. Najor also has a substantial interest
in the development of new technology and developed the Callingcard concept
and system due to his experience in selling calling cards and redeeming
coupons in the normal course of business of operating a grocery business.
20
Mr. Najor has been involved in the financing business since 1984 and
has completed over $200 million dollars in financing pertaining to real
estate and corporate finance. Daniel Najor is President of DLN Financial,
Inc. since its inception in 1986. Mr. Najor also served as a director of
Cypress Financial Services, Inc., a publicly held company from 1996 to
1997; Cypress Financial Services, Inc. was in the financial services and
financial collection industry.
Mr. Najor is an experienced business executive and is the co-founder
of Callingcard and the co-inventor of the patent of the calling card unit
which is now the asset of Callingcard. Daniel Najor is the founder and
former Board Chairman of Virtual Gaming Technologies, Inc. "VGTI", a
publicly held company which developed gaming software for the gaming
industry. Mr. Najor is also the founder, President and Board Chairman of
Food Palace International, Inc., which is the franchisor for a specialty
grocery market and the founder and Board Chairman of Tierra Telecom, Inc.
Summary of Professional Experience of Daniel Najor within the last five
years:
Current positions:
President/Board Chairman January, 2002 to present - Callingcard
Industries, Inc. Duties include setting policy for
The further implementation of the Callingcard business plan, the
financing of the business plan and all other aspects of day to
day activity.
Secretary/Treasurer/Director April, 1998 to January, 2002 Tver
Acquisition Corp., predecessor company to Callingcard Industries,
Inc. Duties included the development of the Callingcard
technology and system and all other secretary /treasurer and
director duties.
Board Chairman 1996 to present - Virtural Gaming Technologies, Inc.,
a public company which developed gaming software. Duties include
setting policy for management and other board related
responsibilities.
President/Director 1986 to present - DLN Financial, Inc., mortgage
brokerage firm and mortgage loan originators. Duties include
setting policy for management and other board related
responsibilities.
Founder/ Board Chairman 1999 to present - Tierra Telecom, Inc., a
company which manufactures telephone Switches. Duties include
setting policy for management and other board related
responsibilities
President/ Board Chairman 1998 to present - Food Palace
International, Inc. Co-Founder, President/Director 1976 to
present - Contexual Trading Company, owner of Food Palace grocery
store and related Food Palace fresh food and grocery products.
Duties include overseeing day to day activity of the retail
grocery business and its related services and other board related
responsibilities.
Daniel Najor has been married for 19 years with 3 children, ages 17,
15 and 4. Daniel Najor is a licensed pilot, enjoys business and travel,
founding technology and other business projects and golf.
Nazar Najor, Secretary/Treasurer & Director:
--------------------------------------------
Mr. Nazar Najor is a multi-faceted experienced business executive,
with an extensive retail grocery, restaurant and real estate development
background. Mr. Najor is currently the Chief Executive Officer of Live Oak
Springs Resort in Boulevard, California. Mr. Najor developed the entire
resort and oversees the day to day operation of all departments of the
resort, including the restaurant, market, lodging facilities, mobile home
park, recreational vehicle part and PUC water company.
21
In addition to Mr. Najor's development and overseeing the operations
of the Live Oak Springs Resort, Mr. Najor also acts as an integral members
of the Board of Directors of Contexual Trading Company, Inc., owner of the
Food Palace Supermarket, San Diego, California. Mr. Najor has owned and
managed the Lakeshort Farms Market in Lakeside, California and owned and
managed the Rackhouse Restaurant in Lakeside, California.
Mr. Najor has a diverse educational background in business, law and
communications for a period of over 20 years, including 5 years of
Philosophy and Science. Even though Mr. Najor has not obtained a degree in
any one subject, he acts as a communications coach due to his education and
training in Advanced Communications.
Summary of Professional Experience of Nazar Najor within the last five
years:
Secretary/Treasurer/Director January, 2002 to present Callingcard
Industries, Inc. Duties include all secretary/treasurer and
director duties. Mr. Nazar Najor is not responsible for the day
to day activity of the company.
President/Board Chairman April, 1998 to January, 2002 Tver
Acquisition Corp., predecessor of Callingcard Industries, Inc.
Duties included the acquisition and the development of the
Callingcard technology.
Chief Executive Officer/Director 1984 to Present Live Oak Springs
Resort. Duties include all phases of the resort's operation and
all day to day activity
Director 1996 to present Contexual Trading Co. Duties include
setting policy for management and all other director
responsibilities.
Secretary/Treasurer/Director Food Palace International, Inc.
Duties include developing the Food Palace franchise and marketing
concept and all other secretary and treasurer and director
duties.
Daniel Najor and Nazar Najor have been the only two officers and
directors since the inception of Callingcard on April 21, 1998. Mr. Nazar
Najor was President and Board Chairman of the predecessor company, Tver
Acquisition Corp.; Mr. Daniel Najor was Secretary/Treasurer and Director of
the predecessor company, Tver Acquisition Corp.
Mr. Daniel Najor plans on spending approximately 8 hours per week on
Callingcard's business and operations in the event that Callingcard only
receives the minimum proceeds from this offering. In the event that
Callingcard receives between the minimum and $500,000 from this offering,
Mr. Daniel Najor plans on spending at least 8 hours per week on
Callingcard's business and operations. Mr. Nazar Najor plans on spending 5
hours per month on Callincard's officer and director duties regardless of
the amount of proceeds which may be received. Mr. Daniel Najor and Mr.
Nazar Najor are brothers. There are no formal employment agreements with
Daniel Najor or Nazar Najor and there are no employment agreements planned
or anticipated at this time. Neither Daniel Najor nor Nazar Najor plan to
be compensated with any salary until Callingcard may achieve profitable
operations. In such event, Daniel Najor and Nazar Najor will each
initially be compensated at a salary not to exceed $75,000 per annum.
There will be no compensation accrued for any officer and director services
prior to the time Callingcard may be profitable.
22
ADVISORY BOARD
Mr. Daniel Najor, will act as Advisory Board Chairman for a term
of two years. Mr. Daniel Najor is actively recruiting Callingcard's
first advisors. All advisors shall be compensated with restricted shares
of Callingcard's common stock commensurate with their services.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 2001, Callingcard's
outstanding common stock owned of record or beneficially by each
Executive Officer and Director and by each person who owned of record,
or was known by Callingcard to own beneficially, more than 5% of its
common stock, and the share holdings of all Executive Officers and
Directors and Significant Employees as a group. Each person has sole
voting and investment power with respect to the shares of common stock
shown.
<Table>
<Caption>
- --------------------------------------------------------------------------
Shares Percentage of
Name Owned Shares Owned
- --------------------------------------------------------------------------
Daniel Najor, President and Board Chairman 250,000 5.58%
3550 National Avenue
San Diego, California 92113
Nazar Najor, Secretary/Treasurer & Director 250,000 5.58%
3550 National Avenue
San Diego, California 92113
- --------------------------------------------------------------------------
ALL EXECUTIVE OFFICERS & DIRECTORS
AND SIGNIFICANT EMPLOYEES, AND
BENEFICIAL OWNERS AS A GROUP 11.16%
- --------------------------------------------------------------------------
</Table>
DESCRIPTION OF SECURITIES
The following description of Callingcard's capital stock is a
summary of the material terms of its capital stock. This summary is subject
to and qualified in its entirety by Callingcard's Articles of
Incorporation and Bylaws, which are included as exhibits to the
registration statement of which this prospectus forms a part, and by the
applicable provisions of Nevada law.
The authorized capital stock of Callingcard consists of
100,000,000 shares of common stock: 100,000,000 shares of common stock
having a par value of $0.001 per share of common stock and 10,000,000
shares of Preferred Stock having a par value of $0.01 per share of
preferred stock. The Articles of Incorporation do not permit cumulative
voting for the election of directors, and shareholders do not have any
preemptive rights to purchase shares in any future issuance of
Callingcard's shares of common stock.
The holders of shares of common stock of Callingcard do not have
cumulative voting rights in connection with the election of the Board of
Directors, which means that the holders of more than 50% of such
outstanding shares of common stock, voting for the election of directors,
can elect all of the directors to be elected, if they so choose, and, in
such event, the holders of the remaining shares of common stock will not
be able to elect any of Callingcard's directors.
23
The holders of shares of common stock are entitled to dividends,
out of funds legally available therefore, when and as declared by
the Board of Directors. The Board of Directors has never declared a
dividend and does not anticipate declaring a dividend in the near future.
Each outstanding share of common stock entitles the holder thereof to
one vote per share on all matters. The holders of the shares of common
stock have no preemptive or subscription rights. In the event of
liquidation, dissolution or winding up of the affairs of the corporation,
Callingcard's shareholders are entitled to receive, ratably, the net assets
of Callingcard available to shareholders after payment of all creditors.
Article IV in Callingcard's Articles of Incorporation states that: "The
holders of the preferred shares and common shares of stock are entitled to
receive the net assets of the corporation upon dissolution. The Board of
Directors can restructure the issued and outstanding shares of common
stock with respect to a forward or reverse split, without a
shareholders meeting, general or special meeting, providing that 50% of
the shareholders agree to the share reorganization within the limits of
the share capitalization of 100,000,000 shares of common stock and or
10,000,000 shares of preferred stock. Article V of Callingcard's Articles
of Incorporation states that "Any such change of the Bylaws must be
agreed to by the majority of the shareholders. The Board of Directors
shall not make or alter any By-laws fixing their qualifications,
classifications, terms of office or extraordinary powers without first
securing the approval of the majority (50% or more) of the shareholders.
Such majority approval may be obtained by the Board of Directors without
the necessity of a Special or Extraordinary General Meeting of the
corporation's shareholders. Such majority shareholder approval may be
obtained by written proxy statement or a polling of the shareholders by
telephone or telefax". Callingcard's Bylaws, Article II provides for an
annual shareholders meeting to be held on or before June 30th of each year
at 11:00 AM, at which time the shareholders shall elect a Board of
Directors (every two years or otherwise appropriate) and transact any
other appropriate business. The shareholders have the right to effect a
change of control at the annual meeting. Special meetings of the
shareholders may be called by the Board of Directors or such additional
persons as may be deemed authorized by the Board of Directors provided
in the Articles and Bylaws and amendments.
As of the date of this registration statement, there are 4,480,000
shares of common stock issued and outstanding and 174 shareholders.
There are no warrants or options issued as of this date. There are no
stock option plans in effect for officers, directors and significant
employees. Callingcard's officers and directors have been issued a
total of 500,000 shares of common stock each, representing 250,000
shares of common stock for each of the 2 officers/directors, Daniel Najor
and Nazar Najor. To the extent that additional shares of Callingcard's
common stock are issued, the relative interests of existing shareholders
may be diluted.
INTEREST OF NAMED EXPERTS AND COUNSEL
These experts have been retained in connection with the registration
or this offering of Callingcard's shares of common stock. Mr. Tolan
Furusho, Attorney at Law, 12729 Northup Way, Bellevue, Washington 98005,
(425) 452-8639, was retained to provide the legal opinion regarding the
corporation in connection with this offering. Mr. Furusho does not own
shares of common stock of Callingcard. Andersen, Andersen & Strong, 941
East 3300 South, Salt Lake City, Utah 84106, has been engaged to provide
the audited financial statements in connection with this offering.
24
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Callingcard's Bylaws, filed herewith as Exhibit 3.2, provide in
ByLaw VII that it will indemnify and hold harmless each "corporate
officer, director and agent" who is or is threatened to be made a party
to or is otherwise involved in any threatened proceedings by reason of the
fact that he or she is or was a director or officer of Callingcard or
is or was serving at the request of Callingcard as a director,
officer, partner, trustee, employee, or agent of another entity,
against all losses, claims, damages, liabilities and expenses
actually and reasonably incurred or suffered in connection with such
proceeding.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of Callingcard pursuant to the foregoing
provisions or otherwise, Callingcard has been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in that Act and is, therefore,
unenforceable.
DESCRIPTION OF BUSINESS
Background
----------
Callingcard was formed as Tver Acquisition Corp. under the laws of
the State of Delaware on April 21, 1998. On January 23, 2002, Callingcard
Industries, Inc was incorporated in the State of Nevada. The Delaware
corporation entered into a merger agreement with the Nevada
Corporation, pursuant to an Agreement and Plan of Merger and
Reorganization adopted by the Board of Directors of each corporation. The
effective date was January 25, 2002 and the State of Nevada effected
the merger as of July 7, 1998, when the documents were filed with the State
of Nevada. The Nevada corporation issued its shares of common stock on a
one for one basis with the Delaware corporation. Callingcard is in
its early developmental and promotional stages. To date, Callingcard's
activities have been to evaluate certain business opportunities commencing
with the potential market of a proprietary bicycle lock product in the
United States. That project was abandoned when the opportunity of the
"Callingcard" concept was presented. Callingcard's efforts have been
organizational, directed at the development of the "Callingcard"
distribution business and the raising of its initial capital.
Callingcard has not commenced meaningful commercial operations.
Callingcard has only two part time employees, that being Callingcards's
officers and directors, Daniel Najor and Nazar Najor. Callingcard has no
full time employees and owns no real estate. Callingcard's business
plan is to enter the market with the "Callingcard" concept and system on
the most cost effective basis known to management, i.e. to present
the Callingcard concept to national product manufacturers, such as soft
drink companies, and include their soft drink advertising on the back of
the Callingcard unit which will be used by the consumer for long distance
calling and when the long distance telephone credit is used, then the
Callingcard unit will become a coupon for the advertisers goods and
services. The Callingcard unit can be a free promotion with a product,
such as a $10. Callingcard unit can be included in a 24 package of soft
drinks and the consumer will have $10 in free telephone long distance time
with the purchase of soft drinks. In this case, the soft drink
manufacturer will pay Callingcard for the Callingcard units. In another
circumstance, the Callingcard units can be purchased from convenience,
25
grocery and drug stores. The purchaser is usually a long distance
telephone called who purchased the long distance telephone time cards from
competitors. The difference with the Callingcard concept is that when the
long distance telephone time has been used, the consumer gets a coupon on
the back of the card to be redeemed for goods and services, as opposed to
an empty card with no further value. The co-advertising of national
products with the calling card units is the first projected business
objective which will be implemented upon financing.
There are both common and preferred shares of stock authorized by
Callingcard. Callingcard's has a share capitalization of 100,000,000
shares of common stock at a par value of $.001 per share of common stock
and 10,000,000 shares of preferred stock authorized, at a par value of
$.001. There were 10,000,000 shares of preferred stock authorized in the
predecessor Delaware corporation. Callingcard's principal executive
offices are in San Diego, California within the offices of the telephone
calling card technology, Mr. Daniel Najor, who is also the President and
Board Chairman of Callingcard. The offices are located at 3550 National
Avenue, San Diego, California 92113. Callingcard does not pay rent or
other office expense and is not expected to pay rent or office expenses for
the entire year of 2002 and until significant sales have been completed.
General
-------
In addition to the "Callingcard" calling card unit concept of direct
long distance telephone time sales in regional or national retailers, such
as 7-11 and other convenience and grocery and drug stores, Callingcard
intends to implement their main business strategy on joint venture
advertising concepts with regional and national advertisers who will get
several opportunities to advertise their products with the Callingcard
concept and system: (1) when the consumer acquired the card as the
advertiser's name and logo are displayed one side of the card; (2) when the
consumer calls the 800 number provided by the long distance carrier, the
consumer will reach a recording which will say, for example, "Drink XYZ
Cola, enter your PIN and your call will be connected; (3) when the calling
card unit is expired then the consumer can use the calling card unit for a
coupon to exchange for goods and/or services, much in the same manner as a
grocery coupon. Local and regional distributors will distribute and
service the convenience store, grocery and drug store accounts to keep the
Callingcard units in stock. These distributors usually charge a fee
conducive with the retail price of the product. The "Callingcard" concept
is adaptable to all major telephone company long distance providers
throughout the world. This calling card unit can be as an advertising
tool, coupon and long distance calling card throughout the world with many
applicable uses and potential co-advertising partners.
The primary objective of the business of Callingcard is to create a
market for the "Callingcard" calling card units within the United States
with the "roll-out" of product conducive with the available funds to
sustain the business. The proceeds from this offering shall be dedicated
to further implement the initial business plan of Callingcard. If the
maximum amount of shares of common stock are sold by way of this offering,
then the more comprehensive marketing program of Callingcard will be
implemented . See "Use of Proceeds". There is no assurance that
Callingcard will ever be able to sell the "Callingcard" concept to the
potential advertising purchasers or that the "Callingcard" concept will be
accepted by the consumer. Additionally, if Callingcard cannot obtain the
necessary working capital, it is doubtful that Callingcard will be able to
continue to operate as a going concern. Callingcard will only continue to
operate its business as long as it is able to obtain financing.
26
Marketing Approach
------------------
Upon financing and the further development of the business plan,
Callingcard will then initiate the advertising of the "Callingcard" concept
to the general public and to present the Callingcard concept to potential
advertisers. Callingcard will also build a website for direct Internet
and related sales. This marketing strategy, pursuant to Callingcard's
initial market research, is the least costly and most comprehensive
method to advertise at this initial stage of corporate sales development.
Callingcard has not conducted a formal market study in connection with the
further implementation of Callingcard's business plan.
The business approach used by many companies marketing new products
or, in this case, a relatively unique calling card unit, is to establish as
many joint advertising sales agreement as possible. Callingcard, is
limited by working capital so the management of Callingcard elects to
utilize its limited capital to test the market and use those results to
expand the market. Callingcard relies heavily on the knowledge of its
officers and directors and other experts who may from time to time be hired
by Callingcard in their designated target markets.
Competition
-----------
Callingcard has not conducted a market study to specifically
define the competition, however there are large dominant leaders in
the advertising industry, which include newspapers, radio, television.
These advertisers have a large market share of the total advertising
sector. These companies are usually profitable, heavily financed and have
resources to establish many facilities and can providing advertising on a
local and national basis. Management believes that Callingcard may be
able to work on various potential joint advertising campaigns, or at least
a segment of advertising projects with these dominate leaders in the
advertising industry. Regional and national advertising agencies are
competition to Callingcard, but could also be the agent for the Callingcard
concept and system for their advertising clients.
Government Regulations Regarding Telecommunications Systems.
------------------------------------------------------------
All long distance service and telephone companies in the United States
of America are regulated by the Federal Communications Commission.
Management of Callingcard does not perceive to be subjected to these
government regulations as the long distance provider is the subject of any
and all government telecommunication regulations. However, at the time of
this offering, Callingcard has not sought legal counsel to research the
marketing laws nor has Callingcard applied for clearance from any regulator
regarding the proposed marketing program. Callingcard is not aware of any
additional governmental regulations or pending regulations pertaining to
Callingcard's business plan.
Employees
---------
Callingcard is a development stage company and currently has 2
part time employees, that of Callingcard's officers and directors, Daniel
and Nazar Najor. Callingcard has no full time, paid employees.
Callingcard is currently managed by Daniel Najor, its President and
Board Chairman, and Nazar Najor, Secretary/Treasurer and Director, and
the Board of Directors. Callingcard looks to the Board of Directors and
Officers for their entrepreneurial skills and talents. For a complete
discussion of the Officers and Directors and Significant Employees
experience, see "Directors, Executive Officers, Promoters, Significant
Employees And Control Persons." Management plans to use consultants,
27
attorneys and accountants as necessary and does not plan to engage any
full-time employees in the near future. Marketing consultants are
estimated to cost $25,000 to $50,000 per year plus a percentage of sales,
estimated to be between 3% and 10% of the sales achieved by the marketing
consultants or marketing group. Callingcard may hire marketing employees
based on the projected size of the market and the compensation necessary
to retain qualified sales employees. Marketing employees are estimated
to require a salary of $40,000 to $50,000 per year with a percentage of
direct sales, estimated to be between 3% and 10% of sales achieved. A
portion of any employee compensation is likely to include the right to
acquire shares of common stock in Callingcard, which would dilute the
ownership interest of holders of existing shares of its common stock. At
this time, there is no plan for any amount of shares of common stock to be
issued to prospective employees and the prospective employees would have to
work for Callingcard for a minimum of two years to be able to earn the
right to acquire shares of common stock from Callingcard.
Available Information and Reports to Securities Holders
-------------------------------------------------------
Callingcard has filed with the Securities and Exchange Commission a
Form SB-2 Registration Statement with respect to the common stock
offered by this prospectus. This prospectus, which constitutes a
part of the registration statement, does not contain all of the
information set forth in the registration statement or the exhibits and
schedules which are part of the registration statement. For further
information with respect to Callingcard and its common stock, see the
Registration Statement and the exhibits and schedules. Callingcard's
filings with the Commission are available to the public from the
Commission's website at http://www.sec.gov.
Upon completion of this offering, Callingcard will become
subject to the information and periodic reporting requirements of the
Securities Exchange Act and, accordingly, will file periodic reports,
proxy statements and other information with the Commission. Such
periodic reports, proxy statements and other information will be
available for inspection and copying at the website of the Commission
referred to above.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of Callingcard's financial
condition and results of operations should be read in conjunction
with the Financial Statements and accompanying notes and the other
financial information appearing elsewhere in this prospectus.
This prospectus contains forward-looking statements, the accuracy of
which involves risks and uncertainties. Words such as "anticipates,"
"believes," "plans," "expects," "future," "intends" and similar
expressions are used to identify forward-looking statements. This
prospectus also contains forward-looking statements attributed to
certain third parties relating to their estimates regarding the potential
markets for "Callingcard" concept and system. Prospective investors
should not place undue reliance on these forward-looking statements,
which apply only as of the date of this prospectus. Callingcard's actual
results could differ materially from those anticipated in these forward-
looking statements for many reasons, including the risks faced by
Callingcard described in "Risk Factors" and elsewhere in this
prospectus. The following discussion and analysis should be read in
conjunction with Callingcard's Financial Statements and Notes thereto and
other financial information included elsewhere in this prospectus.
28
Plan Of Operation
- -----------------
It is the intention of Callingcard to further develop its business
plan and commence meaningful business operations when the offering is
completed or partially completed by the sale of 25% of the shares of
common stock offered or $500,000. Callingcard does not presently have any
revenues and must further develop their marketing program concepts.
Management of Callingcard will dedicate sufficient time in order to
further implement its business plan once the funds become available.
Callingcard intends to expand the business by advertising and marketing
the Callingcard concept once it is practicable. There is no assurance
that Callingcard will be able to attract distributors or co-advertisers
market the "Callingcard" program.
Callingcard needs sufficient capital to further implement their
business plan. Callingcard is relying upon this offering to provide the
capital needs to further implement their business plan and commence
meaningful business operations to the extent that the offering is sold.
If a minimum of 25% of the offering is sold, Callingcard shall have a
minimum of $500,000 which is a sufficient amount of capital to commence
meaningful business operations and sustain that business for the first
twelve months without the necessity of further financing. This $500,000,
less the $15,000 to pay for this offering expense, would be partially spent
on the purchase of telephone long distance calling time from a major
telephone service provider. This amount is estimated to be $100,000. Once
the telephone long distance calling time is purchased, then Callingcard
will direct its efforts to the national products manufacturers to find a
joint venture participant who wants to place their advertising on the back
of the Callingcard unit. This marketing and the advertising of the
Callingcard unit to the potential national advertisers is estimated to cost
$150,000, leaving another $50,000 to advertising the Callingcard unit to
potential retailers, distributors and consumers. A portion of the $150,000
budgeted for advertising and marketing to potential national advertisers
will be dedicated to the employing of 2 full time advertising employees for
this time period estimated to be $50,000 per employee or marketing
professional for a total of $100,000 out of the $150,000 dedicated to this
category. Callingcard believes that once an advertising sale is made then
the cost of manufacturing the Callingcard units will probably be carried by
the advertiser. However, Callingcard has budgeted $100,000 for Callingcard
unit manufacturing in the event that Callingcard may need to provide the
Callingcard units to the advertiser where Callingcard initially pays for
the Callingcard units, providing there is a bona fide purchase order and
advertising contract from a national product company. In that event,
Callingcard would receive payment on the purchase order and/or contract
once the Callingcard units are delivered to either the national product
company or the national product company's distributor. Callingcard would
have a surplus for general working capital needs of $85,000 for the first
twelve months.
Results of Operations
- ---------------------
During the period from April 21, 1998 through March 31, 2002,
Callingcard has engaged in no significant operations other than
organizational activities to market the "Callingcard" concept and
system, raise initial capital and the preparation for registration of
its securities under the Securities Act of 1933, as amended. No revenues
were received by Callingcard during this period.
29
For the current fiscal year, Callingcard anticipates incurring a
loss as a result of organizational expenses, expenses associated with
registration under the Securities Act of 1933, and expenses associated
with setting up a company structure to further implement its business plan.
Callingcard anticipates that until these procedures are completed, it will
not generate revenues, and may continue to operate at a loss thereafter,
depending upon the performance of the business.
Callingcard's business plan is to complete the development stage
marketing strategy for the "Callingcard" concept and system. Callingcard
will then determine the feasibility of marketing the "Callingcard"
concept and system in various market segments on the most cost effective
basis known to management.
Liquidity and Capital Resources
- -------------------------------
Callingcard remains in the development stage and, since inception, has
experiences no significant change in liquidation or capital resources or
shareholder's equity. Consequently, Callingcard's balance sheet as of
March 31, 2002, reflects total assets of $0.00 and total liabilities of
$2,729.
Callingcard expects to carry out its plan of business as discussed
above. Callingcard has no immediate expenses. Mr. Daniel Najor and the
Officers and Board of Directors will serve in their capacities without
compensation until a market is developed for the "Callingcard" concept and
system. There will be compensation for Officers and Directors once
Callingcard commences sales and can afford to pay its management.
Callingcard is only able to further implement its business plan as
Callingcard is able to finance the business plan. If a minimum of 25% of
the offering or 500,000 shares of common stock are sold, then Callingcard
will have a minimum of $500,000 to further implement its business plan.
That amount of funds will allow Callingcard to further implement its
business plan on a local basis, specifically the Southern California market
from Santa Barbara, California to San Diego, California, and will be able
to sustain operations for the next twelve months without further financing.
In the event that Callingcard is able to achieve the sale of 50% of the
offering or 1,000,000 shares of common stock, then Callingcard can further
implement its business plan on a more expanded basis in the entire
California and Arizona markets and will be able to sustain operations for
the next eighteen months. If Callingcard is able to sell the maximum
amount of the offering or 2,000,000 shares of common stock, Callingcard can
further implement its business plan in the more populated regions of the
Western United States and be able to sustain its operations for 24 months
or longer without the need for further financing.
In addition, Callingcard may engage in a combination with another
business. Callingcard does not have any specific business combination
targeted, but there may be a business which would lend itself to some sort
of combination as Callingcard further implements its business plan and
begins meaningful business operations. Callingcard cannot predict the
extent to which its liquidity and capital resources will be diminished
prior to the consummation of a potential business combination or
whether its capital will be further depleted by the operating losses (if
any) of the business entity with which Callingcard may eventually combine,
if ever. Callingcard has engaged in discussions concerning potential
business combinations concepts, but has not identified any potential
business combination or entered into negotiations or any agreement for such
a combination.
30
Callingcard will need additional capital to carry out its business
plan or to engage in a potential business combination if the majority of
the shares of common stock offered by way of this prospectus are not sold.
No commitments to provide additional funds have been made by management or
other shareholders. Accordingly, there can be no assurance that any
additional funds will be available on terms acceptable to Callingcard or at
all.
DESCRIPTION OF PROPERTY
Callingcard currently maintains its office at the office of
Callingcard's President and Board Chairman, Daniel Najor, at 3550 National
Avenue, San Diego, California 92113. Callingcard does not pay rent or
other office expense at this time and does not intend to until this
offering is completed and sales are achieved and these expenses have been
prepaid to December 31, 2002, by a 300,000 common share of stock share
distribution to Callingcard's officers and directors in January, 2002.
Callingcard's management does not believe that it will need to obtain
additional office space at any time in the foreseeable future until its
business plan is more fully implemented.
Callingcard does not intend to rent or purchase separate office
facilities. Callingcard intends to operate its offices from its current
facility, at no charge, until the business becomes profitable or when the
proposed marketing program requires another office location outside the
original "Callingcard" executive office. At the present time, there is no
such office space identified or rented or contemplated being rented.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No director, executive officer or nominee for election as a
director of Callingcard, or the owner of five percent or more of
Callingcard's outstanding shares of common stock or any member of
their immediate family has entered into or proposed any
transaction, other than that as described herein, in which the amount
involved exceeds $1,000. There are no stock options offered to any
officer, director or significant employee or any other remuneration
contracts. The officers and directors have received a total of 500,000
shares of common stock representing 250,000 for each of the two
officers/directors. Callingcard does not intend to have stock options
offered to its officers, directors of significant employees.
There are 4,180,000 shares of common stock issued over two years
ago which could be possibly sold into the marketplace under Rule 144 (k).
These shares were issued in reliance upon the exemption provided in Section
4 (2) of the Securities Act of 1933, as amended based upon the limited
number of offerees, their relationship to Callingcard, Mr. Daniel Najor's
status as an accredited investor, the shareholders being sophisticated
investors, the amount of securities offered in such offering and the manner
in which such offering was effected. These 4,180,000 shares of common
stock were issued in the following transactions pursuant to Section 4 (2)
of the Securities Act of 1933, as amended:
31
200,000 shares of common stock were issued to the officers and
directors of Callingcard for services
15,000 shares of common stock were issued to the shareholders of
Hargate Development Group for the rights to market a proprietary
bicycle lock product in the United States. (This business was
abandoned when Tver Acquisition Corp, now Callingcard, decided to
pursue the calling card technology business.
3,000,000 shares of common stock were issued for the rights to the
Callingcard technology
965,000 shares of common stock were issued for the marketing and
consulting fees related to the marketing of the Callingcard
product.
Of these 4,180,000 shares of common stock, 200,000 shares of common
stock are owned by the officers and directors, Daniel Najor and Nazar
Najor (100,000 shares of common stock each). Out of the 4,180,000 shares
of common stock which could possibly be sold into the marketplace under
Rule 144(k), management of Callingcard does not know of any shareholder or
been notified of any shareholder who will sell their shares of common stock
prior to Callingcard fully implementing its business plan, however
management does not have any assurance that eligible shares of common stock
pursuant to Rule 144(k) will not be sold and Callingcard has no control
over the sale of those shares of common stock. The shareholders which
could possibly sell shares of common stock and the amount of shares of
common stock are:
<Table>
FSI Financial Shelter, Inc. 200,000 shares+;
493-525 BC, Ltd 200,000 shares+;
Tidewater Property Management, Ltd. 200,000 shares+;
Coleman Communications, Ltd. 200,000 shares+;
Peru Imports, LLC 200,000 shares+;
Moshiko Investment Group 200,000 shares+;
Mandarin Gardens Hotels, LLP 200,000 shares+;
Hong Kong Trading Company 100,000 shares+;
Noah Najor* 200,000 shares;
Donna Najor* 200,000 shares;
Mary Ann Heidenreich* 200,000 shares;
Ramsey Najor* 200,000 shares;
Gloria Najor* 200,000 shares;
Spenser Food Group 200,000 shares+;
Asia Pacific Pulp Distributors 200,000 shares+;
Randy Heidenreich 100,000 shares*;
Alder Properties, Ltd. 200,000 shares+;
Shelter Estates, Ltd. 200,000 shares+;
Belevedere Estates, Ltd. 82,500 shares+;
Jamil Kiryakoza 200,000 shares;
Raad Audo 200,000 shares;
Karim Ibrahim - 82,500 shares;
Hargate Development Group Shareholders - 15,000 shares+
Daniel Najor 100,000 shares; and
Nazar Najor 100,000 shares.
</Table>
*These shareholders are related to the officers and directors of
Callingcard in the following manner: Noah Najor is the son of Nazar Najor
and nephew of Daniel Najor; Donna Najor is the sister of Daniel and Nazar
Najor; Mary Ann Heidenreich is the sister of Daniel and Nazar Najor; Ramsey
Najor is the brother of Daniel and Nazar Najor; Gloria Najor is the sister
of Daniel and Nazar Najor; Randy Heidenreich is the brother-in-law of
32
Daniel and Nazar Najor. None of the Najor family members are officers,
directors, shareholders or affiliates of the other shareholders other than
as described in this registration statement. Both Daniel Najor and Nazar
Najor disavow any beneficial ownership in any of the shares of common stock
issued to family members.
+Neither Daniel Najor nor Nazar Najor are officers, directors,
shareholders or affiliates of these other shareholders.
Of the 4,180,000 shares of common stock issued over two years ago,
3,000,000 shares of common stock were issued to Daniel Najor and his
assignees for the development of the Callingcard technology and concept
which was later patented. The cost to develop the Callingcard technology
and system was approximately $30,000. These shares of common stock were
issued by Callingcard at a price of $.01 per share to equal 3,000,000
shares of common stock, although Callingcard's financial statements reflect
a $0.00 asset evaluation for the calling card technology. The price of
$.01 per share of common stock was determined by Callingcard's predecessor
company, Tver Acquisition Corp.'s Board of Directors, Nazar Najor,
President and Board Chairman and Daniel Najor, Secretary/Treasurer and
Director. This is a non " arms length" transaction as the seller of the
Callingcard technology and system is Daniel Najor, Callingcard's former
Secretary/Treasurer and Director and Callingcard's current President and
Board Chairman. However, the Callingcard financial statements do not
place any value on the License on Callingcard's financial statements.
In January, 2002, 300,000 shares of common stock were issued to
Callingcard's officers and directors in exchange for their officers' and
directors' services and for Callingcard's rent free office within the
offices of Daniel Najor, telephone, telefax and other general expense until
December 31, 2002.
There are no parent companies to Callingcard and no other control
persons or entities other than as described in the
Prospectus.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No established public trading market exists for Callingcard's
securities. Callingcard has no common stock equity subject to outstanding
purchase options or warrants. Callingcard has no securities convertible
into its common stock equity. There are 4,480,000 issued and
outstanding shares of common stock that could be sold pursuant to Rule 144
under the Securities Act. Callingcard has not agreed to register
any existing securities under the Securities Act for sale by
shareholders. Except for this offering, there is no common stock equity
that is being, or has been publicly proposed to be publicly offered by
Callingcard.
As of March 31, 2002, there were 4,480,000 shares of common stock
outstanding, held by 174 shareholders of record. Upon effectiveness of
the registration statement that includes this prospectus, a portion of
Callingcard's authorized shares of common stock will be eligible for sale.
There are no shares of common stock subject to any stock option
contract. There are no stock option contracts for any officer, director
or significant employees and there are no stock option contracts
contemplated.
The amount of stock available for sale under the Rule 144 of the
Securities Act is 4,180,000, which includes 2 00,000 shares of common stock
issued to the officers and directors.
33
There are no shares of common stock of Callingcard which are subject
to registration rights. There are no other share agreements that are
subject to registration.
To date, Callingcard has not paid any dividends on its common stock
and does not expect to declare or pay any dividends on its common stock
in the foreseeable future. Payment of any dividends will depend upon
Callingcard's future earnings, if any, its financial condition, and other
factors as deemed relevant by the Board of Directors.
Investors should be aware that, according to the Securities and
Exchange Commission Release No. 34-29093, the market for penny stocks has
suffered in recent years from patterns of fraud and abuse. Such patterns
include:
- control of the market for the security by one or a few broker-
dealers that are often related to the promoter or to the company;
- manipulation of prices through prearranged matching of purchases
and sales and false and misleading press releases;
- "boiler room" practices involving high pressure sales tactics and
unrealistic price projections by inexperienced sales persons;
- excessive and undisclosed bid-ask differentials and markups by
selling broker-dealers; and
- the wholesale dumping of the same securities by promoters and
broker-dealers after prices have been manipulated to a desired
level, along with the inevitable collapse of those prices with
consequent investor losses.
One or more of the above could cause the investor to lose all or part of
his investment.
EXECUTIVE COMPENSATION
No officer or director has received any cash remuneration from
Callingcard. The two officers and directors have received a total of
500,000 (250,000 each) shares of common stock in exchange for their
services and expenses.
The following table sets forth the executive compensation:
SUMMARY COMPENSATION TABLE ISSUED FOR EXPENSES:
<Table>
<Caption>
Name & Other
Principal Annual
Position Year Salary Bonus Compensation
- -------------------------------------------------------------------
Daniel Najor 1998 None None $100*
Board Chairman, CEO 2002 None None $150*
Nazar Najor 1998 None None $100*
Sec./Treas., Director 2002 None None $150*
</Table>
*These amounts represent 100,000 shares of common stock issued to each
of the above, valued at the par value price of $.001 for accounting
purposes.
All of the above officers who each received 250,000 shares of common
stock have no other remuneration, or stock options, promised or agreed
upon for expenses.
34
Callingcard has not entered into any employment stock option contracts
for officers and directors and key management. Callingcard does not plan
to pay or accrue compensation to its officers and directors and key
management for services related to the further implementation of
Callingcard's business plan. Callingcard has no formalized stock option
contracts, no retirement, incentive, defined benefit, actuarial,
pension or profit-sharing programs for the benefit of directors,
officers or other employees, but the Board of Directors may recommend
adoption of one or more such programs in the future once Callingcard has
achieved a profitable level of sales. Callingcard has no employment
stock option contracts with key personnel and has no other incentive
compensatory plan or arrangement with any executive officer or director of
Callingcard. The Officers and Directors currently do not receive any cash
compensation from Callingcard and for their services as members of the
Board of Directors. There is no compensation committee, and no
compensation policies have been adopted. See "Certain Relationships And
Related Transactions."
FINANCIAL STATEMENTS
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
35
CALLINGCARD INDUSTRIES, INC.
(Development Stage Company)
BALANCE SHEETS
March 31, 2002 and December 31, 2001
==========================================================================
<Table>
<Caption>
Mar 31 Dec 31
2001 2000
----------- -----------
ASSETS
CURRENT ASSETS
Cash $ - $ -
----------- -----------
Total Current Assets - -
----------- -----------
PATENT - Note 3 - -
----------- -----------
$ - $ -
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,729 $ -
----------- -----------
Total Current Liabilities 2,729 -
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock
10,000,000 shares authorized at $0.001
par value; no shares outstanding - -
Common stock
100,000,000 shares authorized at $0.001
par value; 4,480,000 shares issued and
outstanding on March 31;
4,180,000 shares on December 31 4,480 4,180
Capital in excess of par value 542 (3,000)
Deficit accumulated during development stage (7,751) (1,180)
----------- -----------
Total Stockholders' Equity (2,729) -
----------- -----------
$ - $ -
=========== ===========
</Table>
The accompanying notes are an integral part of these financial statements.
36
CALLINGCARD INDUSTRIES, INC.
(Development Stage Company)
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2002 and 2000 the
Period April 21, 1998 (date of inception ) to Mach 31, 2002
==========================================================================
<Table>
<Caption>
Mar 31, Mar 31, Apr 21, 1998
2002 2001 to Mar 31, 2002
------------ ------------ ------------
REVENUES $ - $ - $ -
EXPENSES 6,572 - 7,751
------------ ------------ ------------
NET LOSS $ (6,572) $ - $ (7,751)
============ ============ ============
NET LOSS PER COMMON SHARE
Basic $ - $ -
------------ ------------
WEIGHTED AVERAGE
OUTSTANDING SHARES
Basic - (stated in 1,000's) 4,480 4,180
------------ ------------
</Table>
The accompanying notes are an integral part of these financial statements.
37
CALLINGCARD INDUSTRIES, INC.
(Development Stage Company)
STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 2002 and 2001 and the
Period April 21, 1998 (date of inception ) to March 31, 2002
==========================================================================
<Table>
<Caption>
Mar 31, Mar 31, Apr 21, 1998 to
2002 2001 Mar 31, 2002
------------ ------------ ------------
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (6,571) $ - $ (7,751)
Adjustments to reconcile net
loss to net cash provided by
operating activities
Change in accounts payable 2,729 - 2,729
Issuance common stock for
expenses 300 - 1,480
Contributions to capital
- expenses 3,542 - 3,542
------------ ------------ ------------
Net Change in Cash from
Operations - - -
------------ ------------ ------------
CASH FLOWS FROM INVESTING
ACTIVITIES - - -
------------ ------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES - - -
------------ ------------ ------------
Net Increase (Decrease)
in Cash - - -
------------ ------------ ------------
Cash at Beginning of Period - - -
------------ ------------ ------------
Cash at End of Period $ - $ - $ -
============ ============ ============
</Table>
The accompanying notes are an integral part of these financial statements
38
CALLINGCARD INDUSTRIES, INC.
( Development Stage Company)
STATEMENTS OF CASH FLOWS (Continued)
Period April 21, 1998 (Date of Inception ) to March 31, 2002
================================================================================
<Table>
SCHEDULE OF NONCASH OPERATING ACTIVITIES
Issuance of 1,180,000 common shares for expenses
- related parties - 1998 $ 1,180
------------
Issuance of 3,000,000 common shares for patent
- related parties - 1998 -
------------
Issuance of 300,000 common shares for expenses
- related parties - 2002 300
------------
Contributions to capital - expenses 3,542
------------
</Table>
The accompanying notes are an integral part of these financial statements.
39
CALLINGCARD INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
==========================================================================
1. ORGANIZATION
The Company was incorporated under the laws of the state of Delaware on
April 21, 1998 with authorized common stock of 20,000,000 shares at a par
value of $0.001 and preferred stock of 10,000,000 at a par value of $0.001
with the name "Tver Acquisition Corp.". On January 25, 2002 the domicile
was changed to the state of Nevada with an increase in the authorized
common stock to 100,000,000 with the same par value and a name change to
"Callingcard Industries, Inc." No terms or conditions have been
determined for the preferred stock.
The Company is engaged in the activity of the development and
establishment of a telephone callingcard system and is currently seeking
financing to market the system. The Company is in the development stage.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
- ------------------
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
- ---------------
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
- ------------
On March 31, 2002, the Company had a net operating loss available for carry
forward of $7,751. The income tax benefit of approximately $2,325 from the
loss carry forward has been fully offset by a valuation reserve because the
use of the future tax benefit is undeterminable since the Company has no
operations. The loss carryover will expire in 2023.
Basic and Diluted Net Income (Loss) Per Share
- ---------------------------------------------
Basic net income (loss) per share amounts are computed based on the
weighted average number of shares actually outstanding. Diluted net income
(loss) per share amounts are computed using the weighted average number of
common shares and common equivalent shares outstanding as if shares had
been issued on the exercise of the preferred share rights unless the
exercise becomes antidilutive and then only the basic per share amounts are
shown in the report.
40
CALLINGCARD INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
==========================================================================
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial Instruments
- ---------------------
The carrying amounts of financial instruments, including accounts payable,
are considered by management to be their estimated fair values.
Estimates and Assumptions
- -------------------------
Management uses estimates and assumptions in preparing financial statements
in accordance with generally accepted accounting principles. Those
estimates and assumptions affect the reported amounts of the assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported revenues and expenses. Actual results could vary from the
estimates that were assumed in preparing these financial statements.
Comprehensive Income
- --------------------
The Company adopted Statement of Financial Accounting Standards No. 130.
The adoption of this standard had no impact on the total stockholder's
equity.
Recent Accounting Pronouncements
- --------------------------------
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
3. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
On December 10, 1998 the Company acquired a patent, # 6,183,017, from a
related party, by the issuance of 3,000,000 common shares of the Company.
The patent covers a telephone calling card to be purchased by the user to
make pre-paid telephone calls. No value was recorded for the patent
because a predecessor cost was undeterminable.
29% of the outstanding common capital stock of the Company has been
acquired by Daniel Najor (president and board chairman) and Nazar Najor
(secretary treasure and director) and their families.
The Company has issued common capital stock to the related parties above
as follows:
1,180,000 common shares for expenses - 1998 $ 1,180
----------
3,000,000 common shares for a patent - 1998 -
----------
300,000 common shares for expenses - 2002 300
----------
Officer-directors have made contributions to capital of $3,542 by the
payment of Company expenses
41
CALLINGCARD INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
==========================================================================
4. GOING CONCERN
The Company intends to further develop its interest in the patent outlined
in Note 3, however, the Company does not have the working capital
necessary to be successful in this effort and to service its debt.
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed
a strategy, which it believes will accomplish this objective through
additional equity funding and long term financing which will
enable the Company to operate for the coming year.
Part II - Information Not Required in Prospectus
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Callingcard's Bylaws provide that it indemnify its agents which
includes its directors and officers to the fullest extent permitted under
Nevada law against all liabilities incurred by reason of the fact that
the person is or was a director or officer of Callingcard or a fiduciary
of an employee benefit plan, or is or was serving at the request of
Callingcard as a director or officer, or fiduciary of an employee benefit
plan, of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise.
Liability insurance will be purchased following Callingcard's
proposed financing. The effect of these provisions is potentially to
indemnify Callingcard's Directors and Officers from all costs and expenses
of liability incurred by them in connection with any action, suit or
proceeding in which they are involved by reason of their affiliation with
Callingcard. Pursuant to Nevada law, a corporation may indemnify a
director, provided that such indemnity shall not apply on account of:
(a) acts or omissions of the director finally adjudged to be
intentional misconduct or a knowing violation of law; (b)
unlawful distributions; or (c) any transaction with respect to which
it was finally adjudged that such director personally received a benefit
in money, property, or services to which the director was not legally
entitled.
The Bylaws of Callingcard filed as Exhibit 1.2, provide that it will
indemnify its agents, i.e. officers and directors for costs and
expenses incurred in connection with the defense of actions, suits, or
proceedings against them on account of their being or having been
directors or officers of Callingcard, absent a finding of negligence or
misconduct in office. Callingcard's Bylaws also permit it to maintain
insurance on behalf of its officers, directors, employees and agents
against any liability asserted against and incurred by that person
whether or not Callingcard has the power to indemnify such person against
liability for any of those acts.
42
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Callingcard estimates the expense of this offering is as follows:
SEC registration fee . . . . . . . . . . . . . . . . . . . . . . . . $ 478.
Printing and engraving expenses. . . . . . . . . . . . . . . . . . . 1,250.
Attorneys' fees and expenses . . . . . . . . . . . . . . . . . . . . 5,000.
Accountants' fees and expenses . . . . . . . . . . . . . . . . . . . 5,000.
Transfer agent's and registrar's fees and expenses . . . . . . . . . . 500.
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,772.
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,000.
========
The Registrant will bear all expenses shown above.
RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, Callingcard has sold or issued the
following shares of common stock under Section 4 (2) of the Securities Act
of 1933, as amended due to a limited number of offerees, their relationship
to Callingcard, Mr. Daniel Najor's status as an accredited investor, the
status of the other shareholders as sophisticated investors, the amount of
securities offered in such offering, and the manner in which such offering
was effected.
May 3, 1998 - 200,000 shares of common stock were issued in exchange
for officers and directors services. These shares of common stock
were issued to:
100,000 to Daniel Najor, President and Board Chairman
100,000 to Nazar Najor, Secretary/Treasurer and Director
June 18, 1998 - 15,000 shares of common stock were issued to
shareholders of Hargate Development Group for the marketing rights to
a proprietary design bicycle lock product. Hargate Development Group
distributed these shares of common stock to their 150 shareholders.
December 10, 1998 3,000,000 shares of common stock were issued to
Daniel Najor (or assignees) for the purchase of the Callingcard
concept and system which was later patented.
These 3,000,000 shares of common stock were issued to the following:
<Table>
<Caption>
Compensation
Shareholder Amount of Shares for Issuance
FSI Financial Shelter, Inc.** 200,000 shares Consulting Fees
493-525 B.C., Ltd**. 200,000 shares Consulting Fees
Tidewater Property Management, Ltd.** 200,000 shares Consulting Fees
Coleman Communications, Ltd.** 200,000 shares Consulting Fees
Peru Imports LLC** 200,000 shares Consulting Fees
Moshiko Investment Group** 200,000 shares Consulting Fees
Mandarin Gardens Hotels, LLP** 200,000 shares Consulting Fees
Hong Kong Trading Company** 100,000 shares Consulting Fees
Noah Najor* 200,000 shares Consulting Fees*+
Donna Najor* 200,000 shares Consulting Fees*+
Mary Ann Heidenreich* 200,000 shares Consulting Fees*+
Ramsey Najor* 200,000 shares Consulting Fees*+
Gloria Najor* 200,000 shares Consulting Fees*+
Spencer Food Group** 200,000 shares Consulting Fees
Asia Pacific Pulp Distributors** 200,000 shares Consulting Fees
Randy Heidenreich* 100,000 shares Consulting Fees
</Table>
43
*These shareholders are related to the officers and directors of
Callingcard in the following manner:
Noah Najor is the son of Nazar Najor and nephew of Daniel Najor; Donna
Najor is the sister of Daniel and Nazar Najor; Mary Ann Heidenreich is the
sister of Daniel and Nazar Najor; Ramsey Najor is the brother of Daniel and
Nazar Najor; Gloria Najor is the sister of Daniel and Nazar Najor; and
Randy Heidenreich is the brother-in-law of Daniel and Nazar Najor.
*+These shareholders derived their shares of common stock as a result of
Daniel Najor's consulting services to Callingcard and Daniel Najor gifted
these shares of common stock to family members. Daniel Najor and Nazar
Najor disavows any beneficial ownership of the shares of common stock
issued to family members.
**Neither Daniel Najor nor Nazar Najor are officers, directors,
shareholders or affiliates of these business entities.
December 22, 1998 965,000 shares of common stock were issued to
Daniel Najor (or assignees) for the development and marketing services
pertaining to the Callingcard technology and systems. These 965,000
shares of common stock were issued to the following:
<Table>
Alder Properties, Ltd** 200,000 shares Consulting Fees
Shelter Estates, Ltd.** 200,000 shares Consulting Fees
Belvedere Estates, Ltd.** 82,500 shares Consulting Fees
Jamil Kiryakoza 200,000 shares Consulting Fees
Raad Audo 200,000 shares Consulting Fees
Karim Ibrahim 82,500 shares Consulting Fees
</Table>
**Neither Daniel Najor nor Nazar Najor are officers, directors,
shareholders or affiliates of these business entities.
January 24, 2002, - 300,000 shares of common stock were issued in
exchange for officers and directors services, as well as providing
office space to the company on a rent free basis and telephone and
general office expense.
These shares of common stock were issued in the following manner:
150,000 to Daniel Najor
150,000 to Nazar Najor
Exhibits
The following exhibits are filed as part of this Registration
Statement:
Exhibit
Number Description
------ -----------
2.1 Articles of Merger & Plan of Reorganization & Change of
Domicile
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Stock Certificate
4.2 Stock Subscription
5.1 Opinion Re: Legality
10.1 License Agreement
10.2 Purchase Agreement
23.1 Consent of Auditors
99.1 U.S. Patent
44
UNDERTAKINGS
The Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement
to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in
the registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities of the securities at
that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
45
SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form SB-2 and authorized
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Diego,
California, on May 14, 2002.
CALLINGCARD INDUSTRIES, INC.
By: /s/ Daniel Najor
----------------
Daniel Najor, President
In accordance with the requirements of the Securities Act of 1933,
this registration statement has been signed by the following
persons in the capacities and on the dates stated.
- --------------------------------------------------------------------------
/s/ Daniel Najor May 14, 2002
------------------
Daniel Najor President, Board Chairman,
Principal Executive Officer,
/s/ Nazar Najor May 14, 2002
----------------
Nazar Najor Secretary/Treasurer & Director and
Principal Financial and Accounting Officer
- --------------------------------------------------------------------------
46