As filed with the SEC on August 30, 2001
SEC Registration No. ______*
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DONAR ENTERPRISES, INC.
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(Name of small business issuer in its charter)
Delaware 4822 23-3083371
---------------- ---------------------------- ----------------
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification
incorporation Code Number)
or organization)
1735 Market Street, Suite A #261
Philadelphia, Pennsylvania 19103
(215) 893-3662
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(Address and telephone number of registrant's principal executive offices
and principal place of business)
William Tay
President and Chief Executive Officer
1735 Market Street, Suite A #261
Philadelphia, Pennsylvania 19103
Telephone / Fax: (215) 893-3662
E-mail: info@DonarEnterprises.com
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(Name, address, and telephone number of agent for service)
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes
effective.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for
the same offering. [__]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [__]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [__]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [__]
CALCULATION OF REGISTRATION FEE
===============================================================================================================
| Amount | Proposed Maximum | Proposed Maximum |
Title of | to be | Offering Price | Aggregate | Amount of
Shares to be Registered | Registered | Per Share(1) | Offering Price | Registration Fee
- ---------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par | | | |
value.................. | 2,000,000 shares | $0.05 | $100,000 | $25.00
- ---------------------------------------------------------------------------------------------------------------
Total................... | 2,000,000 shares | $0.05 | $100,000 | $25.00
===============================================================================================================
1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(o) under the Securities Act.
The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically
states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933 or until this registration statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant
to said Section 8(a), may determine.
-2-
The information in this prospectus is not complete and may be
changed. We may not sell our shares until the registration statement
filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell our shares, and it is not
soliciting an offer to buy our shares in any state where the offer
or sale is not permitted.
SUBJECT TO COMPLETION, DATED AUGUST 30, 2001
PRELIMINARY PROSPECTUS
DONAR ENTERPRISES, INC.
2,000,000 Shares of Common Stock
Price per share: $0.05
Total cash proceeds if all shares are sold: $100,000
This is our initial public offering. We are offering up to
2,000,000 shares of our common stock at a price of $0.05 per share.
We will offer the shares ourselves and do not plan to use
underwriters or pay any commissions. The shares will be offered and
sold by William Tay, our sole executive officer and director. No one
has agreed to buy any of our shares. There is no minimum amount of
shares we must sell and no money raised from the sale of our stock
will go into escrow, trust or any other similar arrangement. This
means that we will use the proceeds for the purposes described in
this prospectus, as we receive them.
There is no trading market for our common stock. If a market
were to develop, it would most likely be on the NASD OTCBB or the
"pink sheets." We would not satisfy the listing criteria of any
national securities exchange or the Nasdaq Stock Market.
The offering will remain open until 180 days from the date of
this prospectus.
The purchase of our shares involves substantial risk. See
"Risk Factors" beginning on page 6 for a discussion of risks to
consider before purchasing our common stock.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of the
prospectus. Any representation to the contrary is a criminal offense.
=======================================================================
| Price | Underwriting | Proceeds
| to | Discounts and | To
| Public | Commissions | Donar
- -----------------------------------------------------------------------
Per Share .......... | $ 0.05 | $0 | $ 0.05
- -----------------------------------------------------------------------
Total .............. | $100,000 | $0 | $100,000
=======================================================================
DONAR ENTERPRISES, INC.
1735 Market Street, Suite A #261
Philadelphia, PA 19103
Telephone / Fax: (215) 893-3662
The date of this prospectus is August 30, 2001.
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TABLE OF CONTENTS
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PAGE
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PROSPECTUS SUMMARY ....................................... 5
RISK FACTORS ............................................. 6
We are a development stage company, with no
significant history of operations, which creates
uncertainty about our chances of success............... 6
Our auditors' "going concern" opinion in our financial
statements creates additional doubt about our ability
to stay in business.................................... 6
Since this is a direct public offering and there is no
underwriter, we may not be able to sell any shares
ourselves, and as a result, we will have to delay our
entire business plan................................... 6
Failure to effectively manage growth could have a
material adverse affect on our business ............... 6
Our failure to maintain an acceptable level of service
could harm our reputation, which may hamper our chances
of maintaining future clients and or generate new
clients................................................ 6
You will suffer immediate and substantial dilution of
the purchase price you will pay in the offering ....... 7
Our sole officer and director, William Tay, has
significant control over stockholder matters, which
will restrict the ability of minority stockholders to
influence our activities............................... 7
Because we have issued shares that may become eligible
for resale under Rule 144, a large amount of our stock
could be sold, potentially depressing our stock price.. 7
Because we do not expect to pay dividends on our common
stock in the foreseeable future, shareholders may have
no way to recoup any of their investment............... 7
There is no public market for our shares and should be
considered an illiquid investment...................... 7
USE OF PROCEEDS .......................................... 8
DETERMINATION OF OFFERING PRICE .......................... 9
DILUTION ................................................. 10
SELLING SECURITY HOLDERS ................................. 10
PLAN OF DISTRIBUTION ..................................... 11
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS ........ 12
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS ................................................. 13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT .............................................. 14
DESCRIPTION OF SECURITIES ................................ 14
RELATED PARTY TRANSACTIONS ............................... 16
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES .............................. 17
BUSINESS ................................................. 19
MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION .. 23
LEGAL PROCEEDINGS ........................................ 25
LEGAL MATTERS ............................................ 25
EXPERTS .................................................. 25
REPORTS TO SECURITY HOLDERS .............................. 25
INDEX TO FINANCIAL STATEMENTS ............................ 28
SUBSCRIPTION AGREEMENT ................................... 38
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PROSPECTUS SUMMARY
You should read the following summary together with the more
detailed information about our company and the common stock being
sold in this offering and our financial statements and the notes to
those statements included elsewhere in this prospectus. References
in this prospectus to "we," "our" and "us" refer to Donar
Enterprises, Inc.
Donar Enterprises, Inc.
Our Business
We were organized to offer document formatting and electronic
filing services for companies and individuals that desire to submit
filings, such as reports, prospectuses, registration statements,
and other documents pursuant to the federal securities laws, to the
Securities and Exchange Commission ("SEC" or "Commission"), via the
SEC's Electronic Data Gathering Analysis and Retrieval ("EDGAR")
system.
Our Market
We seek to provide EDGAR filing services primarily to small
public corporations traded on the Over-the Counter Bulletin Board
and certain individuals by marketing our services to these groups
directly or through legal and accounting firms specializing in
securities practices.
Our Name and Address
Donar Enterprises, Inc. was incorporated in the State of
Delaware in May 25, 2001 and has recently begun implementing phases
of its business plan. Our address is at 1735 Market Street, Suite A
#261, Philadelphia, Pennsylvania 19103. Our telephone and fax number
is (215) 893-3662. Our registered statutory office is located at 25
Greystone Manor, Lewes, Delaware 19958. Our web site is located at
http://www.DonarEnterprises.com. The information contained in our
website is not a part of this prospectus.
The Offering
Common Stock Offered
for Sale ................. Up to a maximum of 2,000,000 shares.
Price to the Public ........ $0.05 per share in cash.
Use of Proceeds
Primarily for ............ Sales and marketing, employee
salaries and web site development.
Number of Shares
Outstanding Prior
to the Offering .......... 4,750,000
Number of Shares
Outstanding After
the Offering ............. Maximum of 6,750,000
Plan of Distribution ....... This is a direct public offering,
with no commitment by anyone to
purchase any shares. Our shares
will be offered and sold by
William Tay, our sole executive
officer and director. There is a
2000 share minimum investment
required from individual investors.
Terms of the Offering ...... This is a no minimum offering.
Accordingly, as shares are sold, we
will use the money raised for our
activities. The offering will
remain open until 180 days from the
date of this prospectus. We cannot
be certain that we will be able to
sell sufficient shares to fund our
operations adequately.
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RISK FACTORS
You should carefully consider the possibility that your entire
investment may be lost. As such, you are encouraged to evaluate the
following risk factors and all other information contained in this
prospectus before purchasing our common stock. Our common stock
involves a high degree of risk. Any of the following risks could
adversely affect our business, financial condition and results of
operations, and could result in complete loss of your investment.
We are a development stage company, with no significant history of
operations, which creates uncertainty about our chances of success.
We were recently organized on May 25, 2001 and we are a
start-up company. We have no operating history and we do not have
any business prior to our organization. There is nothing at this
time on which to base an assumption that our business plans will
prove successful, and there is no assurance that we will be able to
operate profitably. You should not invest in this offering unless
you can afford to lose your entire investment.
Our auditors' "going concern" opinion in our financial statements
creates additional doubt about our ability to stay in business.
Our independent certified public accountants have pointed out
that we have incurred losses since our inception and had not yet
been successful in establishing profitable operations, raising
substantial doubt about our ability to continue as a going concern.
Therefore, our ability to continue as a going concern is highly
dependent upon obtaining additional financing for our planned
operations. If we are unable to raise additional capital then you
may lose your entire investment.
Since this is a direct public offering and there is no underwriter,
we may not be able to sell any shares ourselves, and as a result, we
will have to delay our entire business plan.
We have not retained an underwriter to sell these securities.
We will conduct this offering as a direct public offering, meaning
there is no guarantee as to how much money we will be able to raise
through the sale of our stock. Our sole officer and director,
William Tay will be selling shares himself and has extremely limited
experience in selling securities. If we fail to sell all the stock
we are trying to sell, our ability to complete our business plan
will be materially affected, and you may lose all or substantially
all of your investment.
Failure to effectively manage growth could have a material adverse
affect on our business.
At present, we have one employee, our president William Tay,
who has basic training in formatting and filing EDGAR documents and
will be responsible for all of our service offerings. Any expansion
of our operations would place a significant strain on our limited
personnel, management and other resources. Depending on the success
of our planned operations, we may be required to attract, train,
motivate and manage new employees successfully and to develop
operational, management and information systems and controls. There
can be no assurance that our systems, procedures or controls will be
adequate to support our operations or that management will be able
to achieve the rapid execution necessary to exploit the market for
our business model. The failure to effectively manage growth could
have a material adverse effect on our business, financial condition,
results of operation and prospects.
Our failure to maintain an acceptable level of service could harm
our reputation, which may hamper our chances of maintaining future
clients and or generate new clients.
Our ability to maintain future client relationships and
generate new clients will depend to a significant degree on the
quality of our services and our reputation among our clients and
potential clients, compared with the quality of our services
provided by, and the reputations of, our competitors. To the extent
we loses clients to our competitors because of dissatisfaction with
our services or our reputation is adversely affected for any other
reason, our business, result of operations, financial conditions and
prospects could be materially adversely affected.
-6-
You will suffer immediate and substantial dilution of the purchase
price you will pay in the offering.
The public offering price is substantially higher than the net
tangible book value per share of the currently outstanding common
stock. Immediately after this offering the book value of your shares
will be approximately $0.02 per share. This represents an immediate
and substantial dilution of $0.03, or 60%, from the purchase price
you will pay in the offering assuming all the shares are sold. See
"dilution."
Our sole officer and director, William Tay, has significant control
over stockholder matters, which will restrict the ability of
minority stockholders to influence our activities.
Our sole officer and director, William Tay, controls the
outcome of all matters submitted to a vote of the holders of common
stock, including the election of directors, amendments to our
certificate of incorporation and approval of significant corporate
transactions. After the closing of this offering, William Tay will
beneficially own, in the aggregate, approximately 70% of our
outstanding common stock. This consolidation of voting power could
also have the effect of delaying, deterring or preventing a change
in control of Donar Enterprises, Inc. that might be beneficial to
other stockholders. In addition, if a takeover is delayed, deterred
or prevented, shareholders may be prevented from receiving a premium
price for their shares.
Because we have issued shares that may become eligible for resale
under Rule 144, a large amount of our stock could be sold,
potentially depressing our stock price.
All of our presently outstanding shares of common stock
aggregating 4,750,000 shares of common stock, are "restricted
securities"; as defined under Rule 144 promulgated under the
Securities Act and may only be sold pursuant thereto or otherwise
pursuant to an effective registration statement or an exemption from
registration, if available. Rule 144, as amended, generally provides
that a person who has satisfied a one year holding period for such
restricted securities may sell, within any three-month period
(provided we are current in our reporting obligations under the
Exchange Act) subject to certain manner of resale provisions, an
amount of restricted securities which does not exceed the greater of
1% of a company's outstanding common stock or the average weekly
trading volume in such securities during the four calendar weeks
prior to such sale. William Tay, our sole executive officer and
director, owns an aggregate of 4,750,000 restricted shares for which
the one-year holding period expires on May 26, 2002. A sale of
shares by such security holders, whether pursuant to Rule 144 or
otherwise, may have a depressing effect upon the price of our common
stock in any market that might develop.
Because we do not expect to pay dividends on our common stock in the
foreseeable future, shareholders may have no way to recoup any of
their investment.
We intend for the foreseeable future to retain earnings, if
any, for the future operation and expansion of our business and do
not anticipate paying dividends on our shares of common stock for
the foreseeable future. See "dividend policy."
There is no public market for our shares and should be considered an
illiquid investment.
There is no public market for our securities. Although we
intend to submit for a quotation of our common stock on the OTC
Bulletin Board of the NASD, we cannot guarantee that any public
market will develop for our securities or that, if any such market
develops, it will be maintained. As a result, stockholders may not
be able to sell their shares readily, if at all. See "plan of
distribution - no public market for our common stock."
-7-
USE OF PROCEEDS
The net proceeds to us from the sale of the 2,000,000 shares
offered hereby at a public offering price of $0.05 per share will
vary depending upon the total number of shares sold. Regardless of
the number of shares sold, we expect to incur offering expenses
estimated at $15,500 for legal, accounting, printing and other costs
in connection with the offering. In the event we fail to raise
enough cash in the offering to offset offering expenses, we will
have to find another source of funding, such as borrowings from our
sole officer and director, and we cannot assure you that we will
have any success in this regard.
The table below shows how proceeds from this offering would be
used for scenarios where we sell various amounts of the shares and
the priority of the use of net proceeds in the event actual proceeds
are not sufficient to accomplish the uses set forth.
Percent of total shares offered 25% 50% 75% 100%
($) ($) ($) ($)
--------- --------- --------- ---------
Shares sold............................. 500,000 1,000,000 1,500,000 2,000,000
Gross proceeds from offering............ 25,000 50,000 75,000 100,000
Less: offering expenses................. 15,500 15,500 15,500 15,500
Net proceeds from offering.............. 9,500 34,500 59,500 84,500
Use of net proceeds
Sales and marketing................... 4,000 8,000 12,000 15,000
Employee salaries..................... 3,000 15,000 28,000 42,000
Web site development.................. 1,500 2,500 4,500 5,000
Rent.................................. 0 3,000 6,000 10,000
Utilities............................. 1,000 2,000 3,000 4,000
Professional fees..................... 0 4,000 6,000 8,500
--------- --------- --------- ---------
Total use of proceeds................... 9,500 34,500 59,500 84,500
========= ========= ========= =========
It is possible that no proceeds may be raised from this
offering. It is also possible that some, but not all, of the
2,000,000 shares offered will be sold. If fewer than all of the
shares are sold, we will have to delay or modify our plan. There can
be no assurance that any delay or modification will not adversely
affect our development. If we require additional funds to develop
our plan, such funds may not be available on terms acceptable to us.
Any funds not used for the purposes indicated will be used for
general working capital. If less than the entire offering is
received, funds will be applied according to the priorities outlined
above. For example, if $7,500 in net proceeds from the offering is
received, $4,000 will be used for sales and marketing, $3,000 will
be spent on employee salaries, and the remaining $500 will be used
to pay for further development of our corporate web site. If less
than $4,000 is received the entire amount will be applied toward
sales and marketing.
In general, the more shares we are able to sell, the more
quickly we will be able to begin our sales and marketing efforts and
pay salaries to our employees. The numbers above do not include any
deductions for selling commissions since we will be selling the
shares through the efforts of our sole officer and director who will
not receive any commissions.
There is no minimum amount that must be sold in this offering.
There is a 2000 share minimum but no maximum amount that must be
purchased by each investor. We may not be able to raise the
additional funds we need to operate our business. If we receive no
or nominal proceeds we will not remain as a viable going concern and
you may lose your entire investment.
-8-
Our sole officer and director will have broad discretion in
allocating a substantial portion of the proceeds of this offering.
We will invest proceeds not immediately required for the purposes
described above principally in United States government securities,
short-term certificates of deposit, money market funds or other
short-term interest bearing investments.
DETERMINATION OF OFFERING PRICE
There is no established public market for the shares of common
stock being registered. As a result, the offering price and other
terms and conditions relative to our shares have been arbitrarily
determined by us and do not necessarily bear any relationship to
assets, earnings, book value or any other objective criteria of
value. In addition, no investment banker, appraiser or other
independent, third party has been consulted concerning the offering
price for the shares or the fairness of the price used for the shares.
[The balance of this page is intentionally left blank]
-9-
DILUTION
You will suffer substantial dilution in the purchase price of
your stock compared to the net tangible book value per share
immediately after the purchase.
Dilution is the difference between the public offering price
of $0.05 per share for the common stock offered herein, and the net
tangible book value per share of the common stock immediately after
its purchase. Subtracting our total liabilities from our total
assets less any intangible assets, and then dividing by the number
of shares then outstanding calculate our net tangible book value per
share.
Our net tangible book value prior to the offering, based on
the July 31, 2001 financial statements, was $0 or $0 per common
share. Prior to selling any shares in this offering, we had
4,750,000 shares of common stock outstanding. We are now offering up
to 2,000,000 shares at $0.05 per share. If all shares offered herein
are sold, we will have 6,750,000 shares outstanding upon completion
of the offering. Our post offering pro forma net tangible book
value, which gives effect to receipt of the net proceeds from the
offering on all shares sold and payment and issuance of the
additional shares of common stock in the offering, but does not take
into consideration any other changes in our net tangible book value,
will be $84,500 or approximately $0.02 per share. This would result
in dilution to investors in this offering of $0.03 per share, or 60%
from the public offering price of $0.05 per share. Net tangible book
value per share would increase to the benefit of our present
stockholders from $0 prior to the offering to $0.02 after the
offering, or an increase of $0.02 per share attributable to purchase
of the shares by investors in this offering.
Dilution Table
The following table sets forth the estimated net tangible book
value ("NTBV") per share after the offering and the dilution to
persons purchasing shares based upon various levels of sales achieved:
500,000 1,000,000 1,500,000 2,000,000
shares sold shares sold shares sold shares sold
----------- ----------- ----------- -----------
Public offering price/share............... $0.05 $0.05 $0.05 $0.05
NTBV/share prior to offering.............. $0.00 $0.00 $0.00 $0.00
Increase attributable to new investors.... $0.00 $0.01 $0.02 $0.02
Post offering pro forma NTBV/share........ $0.00 $0.01 $0.02 $0.02
Dilution to new investors................. $0.05 $0.04 $0.03 $0.03
Percentage dilution....................... 100% 80% 60% 60%
- -----
* It is possible we may not sell any of the shares, in which case
our proceeds will be $0.
SELLING SECURITY HOLDERS
None of our security holders is offering any securities under
this offering. We are selling all of the shares under this offering.
-10-
PLAN OF DISTRIBUTION
General
The following discussion addresses the material terms of the
plan of distribution.
We are offering up to 2,000,000 shares of our common stock at
a price of $0.05 per share. We are offering the shares directly on a
best efforts, no minimum basis and no compensation is to be paid to
any person for the offer and sale of the shares. Since this offering
is conducted as a direct public offering, there is no assurance that
any of the shares will be sold.
The offering will remain open until 180 days from the date of
this prospectus, unless the maximum proceeds are received earlier or
we decide to stop selling our shares. Our sole officer and director,
William Tay, existing stockholders and affiliates may purchase
shares in this offering under the same terms as public investors
would, and if purchased, they intent to hold the shares for
investment purposes, and not with a view to further resale or
distribution. There is no limit to the number of shares they may
purchase.
No Public Market for Common Stock
There is presently no public market for our common stock. We
anticipate applying for trading of our common stock on the over the
counter bulletin board, maintained by the National Association of
Securities Dealers (the "NASD"), upon the effectiveness of the
registration statement of which this prospectus forms a part.
There are several requirements for listing our shares on the
NASD Bulletin Board, including:
* we must make filings pursuant to Sections 13 and 15(d) of
the Securities Exchange Act of 1934;
* we must remain current in our filings;
* we must find a member of the NASD to file a Form 211 on
our behalf. The information contained within Form 211
includes comprehensive data about our company and our
shares. Form 211 and our prospectus are filed with the
NASD so that they can determine if there is sufficient
publicly available information about us and whether our
shares should be listed for trading.
We can provide no assurance that our shares will be traded on
the bulletin board or, if traded, that a public market will
materialize.
No Broker Is Being Utilized In This Offering
This offering is self-underwritten, which means that it does
not involve the participation of an underwriter or broker, and as a
result, no broker for the sale of our securities will be used.
Our President Will Be Selling Our Securities On Our Behalf
Although our president is an associated person of us as that
term is defined in Rule 3a4-1 under the Exchange Act, he is deemed
not to be a broker for the following reasons:
* He is not subject to a statutory disqualification as that
term is defined in Section 3(a)(39) of the Exchange Act at
the time of his participation in the sale of our securities.
* He will not be compensated for his participation in the sale
of our securities by the payment of commission or other
remuneration based either directly or indirectly on
transactions in securities.
* He is not an associated person of a broker or dealers at the
time of his participation in the sale of our securities.
He will restrict his participation to the following activities:
A. Preparing any written communication or delivering any
communication through the mails or other means that does not
involve oral solicitation by him of a potential purchaser;
B. Responding to inquiries of potential purchasers in a
communication initiated by the potential purchasers,
-11-
provided however, that the content of responses are limited
to information contained in a registration statement filed
under the Securities Act or other offering document;
C. Performing ministerial and clerical work involved in
effecting any transaction.
No Escrow of Proceeds
There will be no escrow of any of the proceeds of this
offering. Accordingly, we will have use of all funds raised as soon
as we accept a subscription and funds have cleared. These funds
shall be non-refundable to subscribers except as may be required by
applicable law.
Penny Stock Reform Act of 1990
The Securities Enforcement and Penny Stock Reform Act of 1990
require additional disclosure for trades in any stock defined as a
penny stock. The Securities and Exchange Commission has adopted
regulations that generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share,
subject to exceptions. Under this rule, broker/dealers who recommend
these securities to persons other than established customers and
accredited investors must make a special written suitability
determination for the purchaser and receive the purchaser's written
agreement to a transaction before sale. Our shares will probably be
subject to the Penny Stock Reform Act, thus potentially decreasing
the ability to easily transfer our shares.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under the "Prospectus Summary," "Risk
Factors," "Management Discussion and Analysis or Plan of Operation,"
"Business" and elsewhere in this prospectus constitute
forward-looking statements. The "safe harbor" for forward-looking
statements does not apply to this offering since it is an initial
public offering of our securities. These statements involve known
and unknown risks, uncertainties and other factors that may cause
our actual results, levels of activity, performance, or achievements
to be materially different from any future results, levels of
activity, performance, or achievement expressed or implied by such
forward-looking statements. Such factors include, among other
things, those listed under "Risk Factors" and elsewhere in this
prospectus.
In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "could," "intend",
"expects," "plan," "anticipates," "believes," "estimates,"
"predicts," "potential," or "continue" or the negative of such terms
or other comparable terminology.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance, or achievements.
Moreover, neither we nor any other person assumes responsibility for
the accuracy and completeness of such statements. We are under no
duty to update any of the forward-looking statements after the date
of this prospectus.
-12-
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Executive Officers and Directors
The following table and subsequent discussion contains
information concerning our directors and executive officers, their
ages, term served and all of our officers and their positions, who
will serve in the same capacity with us upon completion of the offering.
Name Age Term Served Title / Position
- ----------- --- --------------- ----------------------
William Tay 30 Since inception President, Secretary,
Treasurer and Director
There are no other persons nominated or chosen to become
directors or executive officers nor do we have any employees other
than above.
William Tay, is the founder of Donar Enterprises, Inc. Mr. Tay
has been the president, secretary, treasurer and director since our
inception on May 25, 2001. For the last five years, Mr. Tay was
self-employed where he designed and programmed web sites for
searching the Internet, such as TotalSeek.com, and assists companies
in complying with securities regulations. Mr. Tay is currently
devoting his full time managing his own investments.
Mr. Tay initially will devote up to approximately 20 hours per
week of his time to our affairs. If and when our business operations
increase and a more extensive time commitment is needed, he is
prepared to devote more time even on a full-time basis.
Our directors hold office until the next annual meeting of
shareholders and the election and qualification of their successors.
Directors receive no compensation for serving on the board of
directors other than reimbursement of reasonable expenses incurred
in attending meetings. Officers are appointed by the board of
directors and serve at the discretion of the board.
No officer, director, or persons nominated for such positions
and no promoters or significant employee of Donar has been involved
in legal proceedings that would be material to an evaluation of our
management.
Executive Compensation
We have made no provisions for cash compensation to our
officers and directors. Our management received 4,750,000 shares or
restricted stock as a retainer for future services and in exchange
for the development of our business plan. These 4,750,000 shares
have been accepted as full compensation for management's services
for the first year of operation. No salaries are being paid at the
present time, and will not be paid unless and until there is
available cash flow from operations to pay salaries. There are no
grants of options or SAR grants given to any of our executive
officers during the last completed fiscal year since we were only
recently incorporated on May 25, 2001.
We do not presently have a stock option plan but intend to
develop an incentive based stock option plan for our officers and
directors in the future and may reserve up to ten percent of our
outstanding shares of common stock for that purpose.
Employment Agreements
We have not entered into any employment agreements with any of
our employees, and employment arrangements are all subject to the
discretion of our board of directors.
Conflict of Interest - Management's Fiduciary Duties
Our director and officer is or may become, in his individual
capacity, officer, director, controlling shareholder and/or partner
of other entities engaged in a variety of businesses. There exist
potential conflicts of interest including allocation of time between
Donar and his other business activities.
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No proceeds from this offering will be used to purchase
directly or indirectly any shares of the common stock owned by any
present shareholder, officer, director or promoter. No proceeds from
this offering will be loaned to our sole officer and director, and
any of his affiliates. We also will not use proceeds of this
offering purchase the assets of any company, which is beneficially
owned by any of our current or future officers, directors, promoters
or affiliates.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with
respect to the beneficial ownership of our common stock, with
respect to each of our named director and executive officer, each
person known to us to be the beneficial owner of more than five
percent (5%) of said securities, and all of our directors and
executive officers as a group:
Percent Percent
Title Amount and Nature of Before After
Name and Address of Class Beneficial Ownership Offering(1) Offering(2)
- ------------------------ -------- -------------------- ----------- -----------
William Tay Common 4,750,000 shares, 100% 70%
1735 Market Street direct ownership
Suite A #261
Philadelphia, PA 19103
All officer & director Common 4,750,000 shares, 100% 70%
as a group (1 person) direct ownership
- --------------
(1) Based on current outstanding common shares of 4,750,000.
(2) Assuming all 2,000,000 shares of common stock offered hereby are
sold.
There are currently no arrangements that would result in a
change of control of us.
DESCRIPTION OF SECURITIES
The following statements are qualified in their entirety by
reference to the detailed provisions of our Certificate of
Incorporation and Bylaws. The shares registered pursuant to the
registration statement of which this prospectus is a part are shares
of common stock, all of the same class and entitled to the same
rights and privileges as all other shares of common stock.
Common Stock
We are presently authorized to issue 100,000,000 shares of
$.001 par value common stock. The holders of our common stock,
including the shares offered hereby, are entitled to equal dividends
and distributions, per share, with respect to the common stock when,
as and if declared by the Board of Directors from funds legally
available therefor. No holder of any shares of our common stock has
a pre-emptive right to subscribe for any of our securities nor are
any common shares subject to redemption or convertible into other
securities. Upon our liquidation, dissolution or winding up, and
after payment of creditors and preferred stockholders, if any, the
assets will be divided pro-rata on a share-for-share basis among the
holders of the shares of common stock. All shares of common stock
now outstanding are fully paid, validly issued and non-assessable.
Each share of common stock is entitled to one vote with respect to
the election of any director or any other matter upon which
shareholders are required or permitted to vote. Holders of our
common stock do not have cumulative voting rights, so that the
holders of more than 50% of the combined shares voting for the
election of directors may elect all of the directors, if they choose
to do so and, in that event, the holders of the remaining shares
will not be able to elect any members to the Board of Directors.
We have reserved from our authorized but unissued shares a
sufficient number of shares of common stock for issuance of the
shares offered hereby. The shares of common stock issuable on
completion of the offering will be, when issued in accordance with
the terms of the offering, fully paid and non-assessable. During the
pendency of the offering, subscribers will have no rights as
stockholders until the offering has been completed and the shares
have been issued to them.
-14-
Preferred Stock
We are also presently authorized to issue 20,000,000 shares of
$.001 par value preferred stock. Under our Certificate of
Incorporation, as amended, the Board of Directors has the power,
without further action by the holders of the common stock, to
designate the relative rights and preferences of the preferred
stock, and issue the preferred stock in such one or more series as
designated by the Board of Directors. The designation of rights and
preferences could include preferences as to liquidation, redemption
and conversion rights, voting rights, dividends or other
preferences, any of which may be dilutive of the interest of the
holders of the common stock or the preferred stock of any other
series. The issuance of preferred stock may have the effect of
delaying or preventing a change in control without further
shareholder action and may adversely effect the rights and powers,
including voting rights, of the holders of common stock. In certain
circumstances, the issuance of preferred stock could depress the
market price of the common stock. The Board of Directors effects a
designation of each series of preferred stock by filing with the
Delaware Secretary of State a Certificate of Designation defining
the rights and preferences of each such series. Documents so filed
are matters of public record and may be examined in accordance with
procedures of the Delaware Secretary of State, or copies thereof may
be obtained from us.
Options and Warrants
We do not presently have any options or warrants authorized or
any securities that may be convertible into common stock. However,
our board of directors may later determine to authorize options and
warrants for our company.
Dividend Policy
We have not previously paid any cash dividends on our common
stock and do not anticipate or contemplate paying dividends on our
common stock in the foreseeable future. Our present intention is to
utilize all available funds for the development of our business.
There is no assurance that we will ever have excess funds available
for the payment of dividends. The only legal restrictions that limit
the ability to pay dividends on common equity or that are likely to
do so in the future, are those restrictions imposed by State laws.
Under Delaware corporate law, no dividends or other distributions
may be made which would render a company insolvent or reduce assets
to less than the sum of its liabilities plus the amount needed to
satisfy any outstanding liquidation preferences.
Transfer Agent
The transfer agent for our common stock will be Holladay Stock
Transfer, Inc. upon completion of the offering. Its address and
telephone number is 2939 North 67th Place, Scottsdale, Arizona
85251, (480) 481-3940. Up until the present time, we have acted as
our own transfer agent and registrar.
Shares Eligible For Future Sale
Upon completion of this offering, we will have 6,750,000
shares of common stock outstanding, if we sell all of the shares in
this offering. Of these shares, the 2,000,000 shares to be sold in
this offering will be freely tradable without restriction or further
registration under the Securities Act of 1933, except that any
shares purchased by our affiliates, as that term is defined in Rule
144 under the Securities Act, may generally only be sold in
compliance with the limitations of Rule 144 described below.
The remaining 4,750,000 of common stock held by existing
stockholder were issued and sold by us in reliance on exemptions
from the registration requirements of the Securities Act. These
shares will become eligible for sale a year from their date of
initial issuance, subject to the limitations of Rule 144. We cannot
predict the effect, if any, that offers or sales of these shares
would have on the market price. Nevertheless, sales of significant
amounts of restricted securities in the public markets could
adversely affect the fair market price of the shares, as well as
impair our ability to raise capital through the issuance of
additional equity shares.
In general, under Rule 144, a person who has beneficially
owned shares for at least one year is entitled to sell, within any
three-month period, a number of shares that does not exceed the
greater of (1) one percent of the then outstanding shares of common
stock or (2) the average weekly trading volume in the common stock
-15-
in the over-the-counter market during the four calendar weeks
preceding the date on which notice of the sale is filed, provided
several requirements concerning availability of public information,
manner of sale and notice of sale are satisfied. In addition, our
affiliates must comply with the restrictions and requirements of
Rule 144, other than the one-year holding period requirement, in
order to sell shares of common stock, which are not restricted
securities.
Under Rule 144(k), a person who is not an affiliate and has
not been an affiliate for at least three months prior to the sale
and who has beneficially owned shares for at least two years may
resell their shares without compliance with the foregoing
requirements. In meeting the one-and two-year holding periods
described above, a holder of shares can include the holding periods
of a prior owner who was not an affiliate. The one-and two-year
holding periods described above do not begin to run until the full
purchase price or other consideration is paid by the person
acquiring the shares from the issuer or an affiliate. Rule 701
provides that currently outstanding shares of common stock acquired
under our employee compensation plans, and shares of common stock
acquired upon exercise of presently outstanding options granted
under these plans, may be resold beginning 90 days after the date of
this prospectus:
* by persons, other than affiliates, subject only to the
manner of sale provisions of Rule 144, and
* by affiliates under Rule 144 without compliance with its
one-year minimum holding period, subject to some limitations.
There is presently no agreement by any holder, including our
"affiliates", of "restricted" shares not to sell their shares.
Penny Stock Regulation
Broker-dealer practices in connection with transactions in
"penny stocks" are regulated by certain penny stock rules adopted by
the Securities and Exchange Commission. Penny stocks generally are
equity securities with a price of less than $5.00. The penny stock
rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document that provides information about penny
stocks and the risks in the penny stock market. The broker-dealer
also must provide the customer with current bid and offer quotations
for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements
showing the market value of each penny stock held in the customer's
account. In addition, the penny stock rules generally require that
prior to a transaction in a penny stock, the broker-dealer make a
special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have
the effect of reducing the level of trading activity in the
secondary market for a stock that becomes subject to the penny stock
rules. As our shares immediately following this offering will likely
be subject to such penny stock rules, investors in this offering
will in all likelihood find it more difficult to sell their securities.
RELATED PARTY TRANSACTIONS
Since inception, the following transactions were entered into
with our sole officer and director.
Our sole officer and director, William Tay, acquired his
shares with the intent to hold the shares for investment purposes,
and not with a view to further resale or distribution, except as
permitted under exemptions from registration requirements under
applicable securities laws. That means that he may not sell such
securities unless they are either registered with the SEC and
comparable agencies in the states or other jurisdictions where the
purchasers reside, or are exempted from registration. The most
widely used exemption from registration requirements is provided by
SEC Rule 144, which requires a one year holding period prior to
resale, and limits the quantities of securities that can be sold
during any 90 day periods.
The certificate has been issued with a restrictive legend
required with respect to issuance of securities pursuant to
exemptions from registration requirements under the Securities Act
and the recipient acknowledged his understanding that the shares are
restricted from resale unless they were either registered under the
Securities Act and comparable state laws, or the transaction was
effected in compliance with available exemptions from such
registration requirements.
-16-
In connection with our organization, on May 25, 2001, William
Tay, our president, was issued 4,750,000 shares of our restricted
common stock in exchange for services, the business plan of Donar,
and Donar's web site and domain name.
It is contemplated that we may enter into certain transactions
with our sole officer and director, William Tay, or affiliates which
may involve conflicts of interest in that they will not be arms'
length transactions. These transactions include the following:
We presently have no office facilities but for the time being
we will use as our business address the office of William Tay, our
president, on a rent free basis, until such time as our business
operations may require more extensive facilities and we have the
financial ability to rent commercial office space. There is
presently no formal written agreement for the use of such
facilities, and no assurance that such facilities will be available
to us on such a basis for any specific length of time.
We have no formal written employment agreement or other
contracts with our sole officer, William Tay, and there is no
assurance that the services to be provided by him, and facilities to
be provided by William Tay, will be available for any specific
length of time in the future. William Tay anticipates initially
devoting up to approximately 20% of his time to our affairs. If and
when our business operations increase and a more extensive time
commitment is needed, William Tay is prepared to devote more time to
our affairs, in the event that becomes necessary. The amounts of
compensation and other terms of any full time employment
arrangements would be determined if and when such arrangements
become necessary.
All future transactions between us and our officers, directors
or 5% shareholders, and their respective affiliates, will be on
terms no less favorable than could be obtained from unaffiliated
third parties and will be approved by a majority of any independent,
disinterested directors.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
Our certificate of incorporation contains provisions permitted
under the General Corporation Law of Delaware relating to the
liability of directors. The provisions eliminate a director's
liability to stockholders for monetary damages for a breach of
fiduciary duty, except in circumstances involving wrongful acts,
including the breach of a director's duty of loyalty or acts or
omissions, which involve intentional misconduct, or a knowing
violation of law. Our certificate of incorporation also contains
provisions obligating us to indemnify our directors and officers to
the fullest extent permitted by the General Corporation Law of
Delaware. We believe that these provisions will assist us in
attracting and retaining qualified individuals to serve as directors.
Following the close of this offering, we will be subject to
the State of Delaware's business combination statute. In general,
the statute prohibits a publicly held Delaware corporation from
engaging in a business combination with a person who is an
interested stockholder for a period of three years after the date of
the transaction in which that person became an interested
stockholder, unless the business combination is approved in a
prescribed manner. A business combination includes a merger, asset
sale or other transaction resulting in a financial benefit to the
interested stockholder. An interested stockholder is a person who,
together with affiliates, owns, or, within three years prior to the
proposed business combination, did own 15% or more of our voting
stock. The statute could prohibit or delay mergers or other
takeovers or change in control attempts and accordingly, may
discourage attempts to acquire us.
As permitted by Delaware law, we intend to eliminate the
personal liability of our directors for monetary damages for breach
or alleged breach of their fiduciary duties as directors, subject to
exceptions. In addition, our bylaws provide that we are required to
indemnify our officers and directors, employees and agents under
circumstances, including those circumstances in which
indemnification would otherwise be discretionary, and we would be
required to advance expenses to our officers and directors as
incurred in proceedings against them for which they may be
indemnified. The bylaws provide that we, among other things, will
indemnify officers and directors, employees and agents against
liabilities that may arise by reason of their status or service as
directors, officers, or employees, other than liabilities arising
from willful misconduct, and to advance their expenses incurred as a
result of any proceeding against them as to which they could be
indemnified. At present, we are not aware of any pending or
threatened litigation or proceeding involving a director, officer,
-17-
employee or agent of ours in which indemnification would be required
or permitted. We believe that our charter provisions and
indemnification agreements are necessary to attract and retain
qualified persons as directors and officers.
We have agreed to the fullest extent permitted by applicable
law, to indemnify all our officers and directors.
We undertake the following:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to our
directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable.
[The balance of this page is intentionally left blank]
-18-
BUSINESS
General
Donar Enterprises, Inc. was incorporated on May 25, 2001 in
the State of Delaware. We are a start-up enterprise in the
development stage and had no revenues to date. We were organized to
offer document formatting and electronic filing services for
companies and individuals that desire to submit filings, such as
reports, prospectuses, registration statements, and other documents
pursuant to the federal securities laws, to the Securities and
Exchange Commission ("SEC" or "Commission"), via the SEC's
Electronic Data Gathering Analysis and Retrieval ("EDGAR") system.
The SEC requires participants or their agents to file most
disclosure information in an electronic format through EDGAR rather
than by traditional paper filing package. This electronic format,
usually in ASCII or plain text, but most recently in HTML (HyperText
Markup Language), includes additional submission information and
coding "tags" within the document for aid in the SEC's analysis of
the document and retrieval by the public. This electronic format is
generally delivered by direct telecommunications, but may be
delivered on magnetic computer tape or by diskette. In essence,
EDGAR allows companies and individuals to file, and the public to
retrieve, disclosure information electronically, primarily through
the SEC's EDGAR archive web site found at http://www.sec.gov. We
convert SEC forms and exhibit documents in standard word processing
and other computer formats to the EDGAR format and assembles these
documents on behalf of our clients for electronic filing with the SEC.
Our mailing address is at 1735 Market Street, Suite A #261,
Philadelphia, PA 19103. Our telephone and fax number is (215) 893-3662.
Our web site is located at http://www.DonarEnterprises.com and our
e-mail at that Internet address is info@DonarEnterprises.com. The
information at our web site is not part of this prospectus.
About the Securities and Exchange Commission
The SEC was founded in 1933 to provide safeguards to protect
investors in the American Stock Market from the kinds of practices
that resulted in the crash of 1929. Since its inception, the SEC has
developed regulations for publicly held corporations based on the
premise that full disclosure (including negative factors) of public
companies' business and financial status produces a fluid
non-manipulative market.
Industry Background
Public companies must file certain reports with the SEC. In
the beginning, SEC filings were submitted on paper and available
only by paper copy. In the 1970's, the SEC contracted with an
outside company to create and distribute microfiche copies to
designated SEC public reference rooms. In order to obtain copies of
these documents, individuals had to either make hard copies one page
at a time or order copies from service bureaus such as Disclosure, Inc.
The SEC recognized the need to enhance the speed and
efficiency of the SEC filing process, make corporate and financial
information readily available to investors, and generate more
informed investor participation and securities markets. Hence, the
Commission began developing an electronic disclosure system in 1983.
By fall of 1984, a pilot system was opened for volunteers
filing with both the Division of Corporate Finance and the Division
of Investment Management. On July 15, 1992, the operational EDGAR
system was made available to those filers, still on a voluntary
basis.
On February 23, 1993, the Commission issued four releases
adopting rules, on an interim basis, that required most documents
processed by these divisions to be done so electronically. These
releases contained phase-in schedules to bring filers onto the EDGAR
system, a process that began on April 26, 1993.
After completing the phase-in of a statutorily mandated
significant test group in December 1993, the Commission Staff
evaluated EDGAR's performance during a six-month test period. The
evaluation resulted in a positive assessment of the EDGAR System and
the Commission Staff recommended that the Commission proceed with
full implementation of mandated electronic filing.
-19-
Since May of 1996, the SEC mandates that persons or entities
filing certain documents are required to make such filings
electronically. The SEC will no longer accept any paper filings of
most of its forms. Today, the EDGAR database is the definitive
repository of corporate information.
In May of 1999 the EDGAR system began accepting documents in
HTML and unofficial documents in PDF (Portable Document Format).
This modernization of the EDGAR system was intended to make the
system more user friendly, and give the documents submitted a look
that was closer to that of the original document. At some point in
the future, the SEC will no longer accept the traditional ASCII or
plain text documents, and HTML will become the new standard.
Our Market
There are currently approximately 10,000 public companies
whose securities are quoted and traded on either a national
securities exchange, such as the American or New York Stock
Exchange, or on electronic exchanges such as the National
Association of Securities Dealers ("NASD") Automated Quotation
System ("NASDAQ") and the NASD Over-the-Counter ("OTC") Bulletin
Board ("BB"). At a minimum, each public company must file, through
the SEC's EDGAR system, an annual report on Form 10-K or Form 10-KSB
and three quarterly reports on Form 10-Q or Form 10-QSB. Most
companies make substantially more filings because of registration
statements, reorganizations, mergers and acquisitions, name changes,
material events of importance to security holders and a variety of
other reasons required by the federal securities laws. In addition,
officers and directors of the companies as well as large and/or
influential stockholders are required to make filings on changes in
their status with the companies. Literally hundreds of thousands of
filings are made annually on EDGAR and the number continues to grow
as more companies become new members to the securities markets.
We seek to capture a portion of the electronic filings made by
companies and certain individuals in this market by providing
exceptional service at a price that is at least 25% lower than the
average prices charged by our competitors.
We seek to provide EDGAR filing services primarily to public
corporations and certain individuals by marketing our services to
these groups directly or through legal and accounting firms
specializing in securities practices.
Future Growth Strategy
We believe that the current marketplace of established EDGAR
filing service providers is highly fragmented, with literally dozens
of EDGAR filing service providers located throughout the country. As
such, we believe that there is an opportunity for a publicly traded
EDGAR filing service provider company to acquire several, smaller
and more established EDGAR filing service providers.
We are in the process of designing our corporate web site to
provide our clients with information on our services, including
additional information on the EDGAR filing process and functionality
to search the EDGAR archive database for submitted filings.
Additionally, we plan to select and implement an on-line credit card
payment system, an automated services and fees quotation system for
not standard filings, and standard forms download to further
simplify the overall EDGAR filing process. Other growth strategies
include an aggressive targeted marketing campaign, advertisement in
trade publications, and yearly services agreements with current and
potential clients for their total yearly EDGAR filing needs for a
lump sum price.
Our Services
We are a full-service EDGAR filing service provider that files
EDGAR reports on behalf of public companies and certain individuals.
The scope of work undertaken by a full-service EDGAR filing service
provider includes the following:
1. Filing for EDGAR Access Codes
2. Conversion of documents to an EDGAR acceptable format
3. Client approval of the document to be filed with the SEC
4. Electronic filing or transmission of the document on the
EDGAR system
-20-
Document Preparation and Filing Services
We offer EDGAR filing services utilizing the traditional ASCII
or plain text filing format. Our turnaround time for ASCII based
files is expected to be 36 hours for digital documents and 72 hours
for hard copy or hand-keyed documents. We plan to offer the new HTML
and PDF filing formats in about 3 to 4 months time.
Our services include creating a new client account with us,
making a client's SEC required filings "EDGAR-ready", obtaining
client approval of filing documents, editing client changes,
transmitting filing documents utilizing the EDGAR system and
forwarding final filing documents and SEC notifications of
acceptance to our clients.
To make our client's filing "EDGAR-ready", we convert
documents that have been prepared by the client into ASCII, HTML or
PDF formats. Additionally, we inserts required information, such as
submission header and document data. The documents are then run
through computer based validation programs, such as EDGARLink, a
software program provided for filers and their agents by the SEC, to
check certain required information and conformity to the EDGAR
acceptable format.
Upon client approval of a final draft, complete with required
information, we will "Test" file the document. Upon written
authorization from client, the document will be filed "Live" on the
EDGAR system. We require that written authorizations are provided to
us at least two hours before the document is to be filed or
transmitted Live on the EDGAR system. Shortly after a document is
filed or transmitted, the SEC confirms the acceptance of the
document via e-mail. This confirmation is sent directly to us and we
forward such confirmation to our clients, by e-mail, fax or otherwise.
Most documents will be delivered to us from our clients either
by e-mail or computer disk. For additional charges, we will also
provide typing and data entry services for documents delivered to us
in paper format. However, we do not provide any form of legal or
accounting advice or editing services beyond corrections explicitly
requested by our clients.
We currently charge fees based upon the number of pages being
filed, the number of tables required, such as in financial
statements, in a document, the deadlines imposed by the filer and
the amount of editing required.
Distribution and Marketing Plan
We plan to deliver our services primarily through our web
site. As of the date of this prospectus, we have a fully functional
web site at http://www.DonarEnterprises.com and it is being hosted
and maintained by our president at no charge to us.
We do not currently have any customers. To build our customer
base, we will implement a regular campaign of direct mail to a
database of publicly held companies as well as legal and accounting
firms specializing in securities practices. Additionally, we intend
to further enhance our web site and engage in a regular campaign of
e-mail marketing and other forms of on-line marketing, on the Internet.
Initially, we will focus on targeting smaller public companies
that are not large enough to require a full-time or even part-time
employee to handle their filings and who would thereby benefit from
outsourcing such services to us. As we grow, hire and train
additional personnel and can benefit from certain economies of
scale, we will seek to target larger companies for the purposes of
replacing their in-house EDGAR filing staff.
Because of the nature of the our business and the improvements
in technology, we do not foresee geographical barriers to our
market. We believe that most of our business can be managed by mail,
fax or e-mail and does not require much travel.
We do not believe that we will be affected by seasonal
factors. However, many companies file reports on a calendar year-end
basis. As a result, we believe that a greater percentage of our
business will occur around the deadlines set forth by the SEC for
companies filing on a calendar year-end basis. Such deadlines are
forty-five days after the end of each quarter, and ninety-days after
a company's year-end.
There can be no assurance that we will be able to develop our
marketing plan.
-21-
Sources and Availability of Raw Materials
We are in the service business, and thus we do not use raw
materials or have any significant suppliers.
Customer Base
As of the date of this prospectus, we have no customers. If we
are not able to establish a customer base in the future, we will not
be profitable.
Operations and Administrative Systems
We have limited operations to date. Since May 2001, our
president has spent a minimum of 20 hours per week working for us.
Our operations are based in Philadelphia, Pennsylvania. We are
currently borrowing all of our computers, Internet access line and
software from our president. Our systems include three computers, an
Apple Power Macintosh, a generic personal computer and web server, a
dedicated DSL (Digital Subscriber's Line) Internet access
connection, and several off-the-shelf web site development,
marketing, word processing and accounting software programs.
Research and Development Activities
Although our industry relies on the technical knowledge of
computers and software, we do not believe that our operations will
require research and development in the traditional sense. Other
than initial web site development at www.DonarEnterprises.com, we
have not undergone any research and development activity. Our
president, William Tay, has basic training in formatting and filing
EDGAR documents and will be responsible for all of our service
offerings.
Intellectual Property
We do not have any trademarks, patents, licenses, royalty
agreements, or other proprietary interest. We own the domain name,
www.DonarEnterprises.com.
Competitive Business Conditions
Many filers or issuers file disclosure reports, prospectuses,
registration statements, and other documents with the SEC in-house
without utilizing the services of an outside EDGAR filing service
provider. As a result, we compete in this segment of the market by
offering savings in cost, time and logistics to such companies.
Other filers utilize the services of law firms or outside
EDGAR filing service providers who provide services similar to ours.
We compete in this segment of the market by providing exceptional
service, fast turnaround and by offering, what we believe to be, one
of the lowest pricing structures in the industry.
A majority of our competition comes from law firms and outside
EDGAR filing service providers who have substantially greater
experience, financial and other resources than we do. Additionally,
there is no assurance that we will be able to respond favorably to
competitive pressures from these competitors.
We may also face additional competition in the future as new
technologies increase the simplicity at which filings can be made,
thereby making it more difficult for us to achieve cost savings and
other benefits for our existing clients and potential customers.
The barriers to entry into our industry are very low and can
result in continued competitive pressures, thereby having a
potentially adverse effect on our financial performance.
Governmental Regulations Issues
Other than maintaining our good standing in the State of
Delaware; complying with applicable local business licensing
requirements; complying with all state and federal tax requirements;
preparing our periodic reports under the Securities Exchange Act of
1934, and complying with other applicable securities laws, rules and
regulations, we do not believe that existing or probable
governmental regulations will have a material effect on our operations.
-22-
Employees
As of the date of this prospectus, we have one part-time
employee. From time to time, we will employ additional independent
contractors to support our development, technical, marketing, sales,
support and administrative organizations. Competition for qualified
personnel in the industry in which we compete is intense. We believe
that our future success will depend in part on our continued ability
to attract, hire or acquire, train and retain qualified employees.
Properties
We have our corporate headquarters in Philadelphia,
Pennsylvania. Substantially all of our operating activities are
conducted from 300 square feet of office space provided by our
president at no charge. The office consists of one room and a
telephone, and access to other common areas, which include the use
of a fax machine and several computers. We believe that additional
space will be required as our business expands and believe that we
can obtain suitable space as needed. We do not own any real estate.
MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with
Donar's audited financial statements, including the notes thereto,
appearing elsewhere in this prospectus.
Overview
Donar Enterprises, Inc. was organized on May 25, 2001 and has
just recently commenced operations. Our management believes that in
light of the large number of companies and individuals that are
responsible for filing with the SEC, the size of the potential
market for electronic EDGAR filing services may continue to grow.
Accordingly, the volume of business available to those who can
provide quality and timely service will also increase rapidly over
the next several years. Initially, we will focus on targeting
smaller public companies that are not large enough to require a
full-time or even part-time employee to handle their filings and who
would thereby benefit from outsourcing such services to us.
Plan of Operations
We began implementing phases of our business plan in June
2001. Our plan of operations for the twelve months following the
date of this prospectus is to complete the following objectives,
within the time period specified, subject to the sale of all the
shares offered:
Complete development of our corporate web site to market our services
We have purchased the domain name
www.DonarEnterprises.com and have designed and developed our
initial corporate web site. Our web site presents a variety of
information that we believe will be of interest to clients,
including: information about the services we offer, a description
background of us, news relating to us and the industry in general,
our pricing structure, numerous forms used for the filing of
reports, prospectuses, registration statements and other documents
pursuant to the federal securities laws, and information on how to
contact us. We expect to launch a more comprehensive web site to
provide our clients and potential clients the ability to search the
SEC's EDGAR database and present the results of their searches on
our web site, and implement an online credit card payment system,
during the next 2 to 3 months.
Direct mail marketing campaign
During the next 4 to 5 months, we plan to announce our service
offerings and corporate web site, in a direct mail marketing
campaign, to a database of small publicly held corporations as well
legal and accounting firms specializes in securities practices.
-23-
Build an internal administrative and managerial organization
During the next 6 to 8 months time, we plan to identify,
interview and engage part-time and contract personnel to assist us
in overseeing all areas of our operations.
Providing new services to adapt to current changes in the industry
Initially, we will offer document-formatting services only in
ASCII or plain text format to our clients. During the next 3 to 4
months time, we plan to conform to the SEC's recent modernization of
the EDGAR system by offering HTML filing services for clients who
prefer their documents to appear similar to their original format.
We believe that it is of utmost importance to the growth of our
business to introduce this new service to meet current demands and
help attract new and retain current customers, thereby generating
higher revenues.
Our actual expenditures and business plan may differ from this
plan of operations. Our board of directors may decide not to pursue
this plan, or may decide to modify it based on new information or
limits in the amount of available financing.
Actual results and our actual plan of operations may differ
materially from what is stated above. Factors which may cause our
actual results or our actual plan of operations to vary, include,
among other things, decisions of our board of directors not to
pursue a specific course of action based on its re-assessment of the
facts or new facts, changes in the EDGAR formatting and filing
service business or general economic conditions, and those other
factors identified in this prospectus.
Liquidity and Capital Resources
During the next twelve months, we plan to satisfy our cash
requirements by additional equity financing. This will be in the
form of private placements of restricted common stock. There can be
no assurance that we will be successful in raising additional equity
financing, and, thus, be able to satisfy our cash requirements,
which primarily consist of legal and accounting fees at the present
time. We presently have $0 in cash with which to satisfy any future
cash requirements. We will need a minimum of $25,000 to satisfy our
cash requirements for the next 12 months. We will not be able to
operate if we do not obtain equity financing either from this
offering or subsequent offerings. We have no current material
commitments. We depend upon capital to be derived from future
financing activities such as offerings of our stock. There can be no
assurance that we will be successful in raising the capital we
require. Our management believes that, if this offering and the
subsequent private placements are successful, we will be able to
generate revenues from offering document formatting and EDGAR filing
services for companies and individuals that desire to submit
electronic filings to the SEC's EDGAR system, and achieve liquidity
within the next twelve months. We do not anticipate any further
research and development of any product, nor do we expect to incur
any research and development costs. We do not expect the purchase or
sale of plant or any significant equipment, and we do not anticipate
any change in the number of our employees until we are able to
increase our current client base. We have no current material
commitments. We have generated no revenue since our inception.
We are conducting this offering, in part, because we believe
that an early registration of our equity securities will minimize
some of the barriers to capital formation that otherwise exist. By
having a registration statement in place, we believe that we will be
in a better position, either to conduct a future public offering of
our securities or to undertake a private placement with registration
rights, than if we were a privately held company. Registering our
shares may help minimize the liquidity discounts we may otherwise
have to take in a future financing because investors will have a
high degree of confidence that the Rule 144(c)(1) public information
requirement will be satisfied and a public market will exist to
effect Rule 144(g) broker transactions.
We believe that the cost of registering our securities, and
undertaking the required disclosure obligations will be more than
offset by being able to get better terms for future financing
efforts. No specific investors have been identified, but our
management has general knowledge of an investor class interested in
investing in companies that have some measure of liquidity.
We are still considered to be a development stage company,
with no significant revenue, and is dependent upon the raising of
capital through placement of our common stock. There can be no
-24-
assurance that we will be successful in raising the capital we
require through the sale of our common stock. In the event we fail
to raise enough cash in this offering to implement our business
plan, we will have to find another source of funding, such as
borrowings from our sole officer and director, and we cannot assure
you that we will have any success in this regard. If we are
unsuccessful, investors will have lost their money investing in our
stock, and we will not attempt to pursue further efforts with
respect to such business, and it is unlikely we would have the
financial ability to do so in any event. Instead management will
call a shareholders meeting to decide whether to liquidate the
company or what direction we will pursue, if any. However, we
presently have no plans, commitments or arrangements with respect to
any other potential business venture and there is no assurance we
could become involved with any other business venture, especially
any business venture requiring significant capital.
LEGAL PROCEEDINGS
We are not a party to any pending legal proceeding. To the
knowledge of our management, no federal, state or local governmental
agency is presently contemplating any proceeding against us. No
director, executive officer or affiliate of us or owner of record or
beneficially of more than five percent of our common stock is a
party adverse to us or has a material interest adverse to us in any
proceeding.
LEGAL MATTERS
The validity of the shares offered under this prospectus is
being passed upon for us by Hoge Carter Holmes pllc, Dallas Texas.
EXPERTS
The financial statements of Donar Enterprises, Inc. for the
period from inception on May 25, 2001 through July 31, 2001,
included in this prospectus have been examined by Stark Tinter &
Associates, LLC, Denver, Colorado, independent certified public
accountants, as indicated in their report, and are included in this
prospectus in reliance on the report given upon the authority of
that firm as experts in accounting and auditing.
REPORTS TO SECURITY HOLDERS
Donar Enterprises, Inc. is not a reporting issuer under the
Securities Exchange Act of 1934. As a result of this offering, we
will become subject to the informational requirements of the 1934
Act for a period of at least one fiscal year. As of the calendar
year ending December 31, 2001, we may be required to register the
common stock being offered hereunder, under the 1934 Act, and
continue to file annual and quarterly reports.
The National Association of Securities Dealers, Inc. requires
that all issuers maintaining quotations of their securities on the
OTC Bulletin Board file periodic reports under the 1934 Act. In
order to maintain such a quotation, we will have to register our
securities under the 1934 Act on Form 8-A or Form 10-SB.
We may cease filing periodic reports with the Securities and
Exchange Commission if:
* We have less than 300 stockholders of record; or
* We have less than 500, but more than 300, stockholders of
record, and our total assets did not exceed $10 million on
the last day of each of our three most recent fiscal years.
Because of the requirement that we file periodic reports in
order to have our common stock quoted on the OTC Bulletin Board, we
do not intend to suspend our reporting obligations in the
foreseeable future.
The public may read and copy any materials that we file with
the Commission at the Commission's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling
the Commission at 1-800-SEC-0330. The Commission maintains an
Internet site that contains reports, proxy and information
statements and other information regarding issuers that file
-25-
electronically with the Commission. The address of that site is
http://www.sec.gov.
We intend to furnish to our stockholders annual reports
containing financial statements audited and reported upon by our
independent accounting firm, and such other periodic reports as we
may determine to be appropriate or as may be required by law.
You can also call or fax us at (215) 893-3662, write us at
1735 Market Street, Suite A #261, Philadelphia, Pennsylvania 19103
or email us at info@DonarEnterprises.com anytime with any questions
you may have. We would be pleased to speak with you about any
aspect of this offering.
-26-
DONAR ENTERPRISES, INC.
(A Development Stage Company)
INDEPENDENT AUDITORS' REPORT and
FINANCIAL STATEMENTS
JULY 31, 2001
-------------
F-1
-27-
DONAR ENTERPRISES, INC.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
Page
-------
Independent Auditors' Report ......................................... F-3
Financial Statements
Balance Sheet, as of July 31, 2001 ................................. F-4
Statement of Operations for the period May 25, 2001 (inception)
through July 31, 2001 ............................................ F-5
Statement of Stockholders' Deficit for the period May 25, 2001
(inception) through July 31, 2001 ................................ F-6
Statement of Cash Flows for the period May 25, 2001 (inception)
through July 31, 2001 ............................................ F-7
Notes to Financial Statements ...................................... F-8
F-2
-28-
STARK TINTER & ASSOCIATES, LLC
______________________________________________________________________
Certified Public Accountants
Financial Consultants
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors
Donar Enterprises, Inc.
We have audited the accompanying balance sheet of Donar Enterprises,
Inc. (a development stage company) as of July 31, 2001, and the
related statements of operations, stockholders' equity, and cash
flows for the period May 25, 2001 (inception) through July 31, 2001.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates by management, as well as
evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Donar
Enterprises, Inc. (a development stage company) as of July 31, 2001,
and the results of its operations, and its cash flows for the period
May 25, 2001 (inception) through July 31, 2001, in conformity with
accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 2 to the financial statements, the Company was recently formed,
has incurred losses since its inception and has not been successful
in establishing profitable operations. These factors raise
substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also
discussed in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Stark Tinter & Associates, LLC
STARK TINTER & ASSOCIATES, LLC
August 17, 2001
Denver, Colorado
7535 East Hampden Avenue, Suite 109 * Denver, Colorado 80231
Tel (303) 694-6700 Fax (303) 694-6761
F-3
-29-
DONAR ENTERPRISES, INC.
[A Development Stage Company]
BALANCE SHEET
July 31, 2001
ASSETS
- ------
CURRENT ASSETS
Total current assets $ --
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Total current liabilities $ --
-------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
20,000,000 shares authorized,
none issued and outstanding --
Common stock, $.001 par value,
100,000,000 shares authorized,
4,750,000 shares issued
and outstanding 4,750
Additional paid-in capital 232,750
Deficit accumulated during the
development stage (237,500)
-------------
Total Stockholders' Equity --
-------------
$ --
=============
The accompanying notes are an integral part of these financial statements.
F-4
-30-
DONAR ENTERPRISES, INC.
[A Development Stage Company]
STATEMENT OF OPERATIONS AND DEFICIT
for the period beginning May 25, 2001
(the date of inception) to July 31, 2001
REVENUE $ --
------------
EXPENSES
Stock based compensation:
-------------------------
Organization costs - related party (237,500)
------------
LOSS BEFORE INCOME TAXES (237,500)
Provision for income taxes --
------------
NET LOSS $ (237,500)
============
WEIGHTED AVERAGE COMMON SHARES - BASIC AND FULLY DILUTED 4,750,000
============
LOSS PER COMMON SHARE $ (0.05)
============
The accompanying notes are an integral part of these financial statements.
F-5
-31-
DONAR ENTERPRISES, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' DEFICIT
for the period beginning May 25, 2001
(the date of inception) to July 31, 2001
Deficit
Accumulated
Preferred Stock Common Stock During the
--------------------- --------------------- Paid-in Development
Shares Amount Shares Amount Capital Stage Total
----------- --------- ----------- --------- ---------- ----------- -----------
BALANCE, May 25, 2001 -- $ -- -- $ -- $ -- $ -- $ --
Shares issued to founder
for organization cost and
services at $0.05 per
share at inception
(May 25, 2001) -- -- 4,750,000 4,750 232,750 -- 237,500
Net loss for the period
ended July 31, 2001 -- -- -- -- -- (237,500) (237,500)
----------- --------- ----------- --------- ---------- ----------- -----------
BALANCE, July 31, 2001 -- $ -- 4,750,000 $ 4,750 $ 232,750 $ (237,500) $ --
=========== ========= =========== ========= ========== =========== ===========
The accompanying notes are an integral part of these financial statements.
F-6
-32-
DONAR ENTERPRISES, INC.
[A Development Stage Company]
STATEMENT OF CASH FLOWS
for the period beginning May 25, 2001
(the date of inception) to July 31, 2001
Cash Flows Provided by Operating Activities:
Net loss $ (237,500)
Adjustments to reconcile net loss to
net cash used by operating activities:
Issuance of stock for services 237,500
------------
Net Cash Provided by Operating Activities --
------------
Cash Flows Provided by Investing Activities --
------------
Net Cash Provided by Investing Activities --
------------
Cash Flows Provided by Financing Activities:
Proceeds from issuance of common stock --
------------
Net Cash Provided by Financing Activities --
------------
Net Increase in Cash --
Cash at Beginning of Period --
------------
Cash at End of Period $ --
============
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ --
Income taxes $ --
The accompanying notes are an integral part of these financial statements.
F-7
-33-
DONAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
July 31, 2001
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Donar Enterprises, Inc. ("Donar" or "the Company") was incorporated
under the laws of the State of Delaware on May 25, 2001. The
Corporation is organized to engage in any lawful act or activity for
which a corporation may be organized under the General Corporation
Law of the State of Delaware including, without limitation, to
provide document formatting and electronic filing services to public
corporations and individuals.
Donar has been in the development stage since its formation on May
25, 2001. Planned principal operations have only recently commenced
since then, but Donar has not generated any significant revenue.
Revenue Recognition
Revenues from document formatting and electronic filing services are
recognized at the time the services are provided to the customer.
Advertising costs
The Company expenses all costs of advertising as incurred. During
the period May 25, 2001 (inception) through June 30, 2001, the
Company did not incur any advertising costs.
Use of Estimates
The preparation of the Company's financial statements in conformity
with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the balance sheet
date and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
Net Loss Per Share
The Company follows Statement of Financial Accounting Standards No.
128, "Earnings Per Share" ("SFAS No. 128"). Basic earnings (loss)
per common share ("EPS") calculations are determined by dividing net
income (loss) by the weighted average number of shares of common
stock outstanding during the period. Diluted earnings (loss) per
common share calculations are determined by dividing net income
(loss) by the weighted average number of common shares and dilutive
common share equivalents outstanding. Common stock equivalents, if
any, are not considered during periods in which they are
anti-dilutive.
Cash and Cash Equivalents
For purposes of balance sheet classification and the statements of
cash flows, the Company considers all highly liquid investments
purchased with an original maturity of three months or less to be
cash equivalents.
F-8
-34-
DONAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
July 31, 2001
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Segment Information
The Company follows SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information". Certain information is
disclosed, per SFAS No. 131, based on the way management organizes
financial information for making operating decisions and assessing
performance. The Company currently operates in one business segment
and will evaluate additional segment disclosure requirements as it
expands operations.
Comprehensive Income
There have been no items of comprehensive income since the Company's
inception on May 25, 2001.
Impairment of Long-Lived Assets
The Company periodically reviews the carrying amount of property,
plant and equipment and its identifiable intangible assets to
determine whether current events or circumstances warrant
adjustments to such carrying amounts. If an impairment adjustment is
deemed necessary, such loss is measured by the amount that the
carrying value of such assets exceeds their fair value.
Considerable management judgement is necessary to estimate the fair
value of assets, accordingly, actual results could vary
significantly from such estimates. Assets to be disposed of are
carried at the lower of their financial statement carrying amount or
fair value less costs to sell. As of July 31, 2001, management does
not believe there is any impairment of the carrying amounts of assets.
Fair Value of Financial Instruments
Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of
July 31, 2001. The respective carrying value of certain
on-balance-sheet financial instruments approximated their fair
values. These financial instruments include cash, accounts payable
and accrued expenses, and notes payable. Fair values were assumed
to approximate carrying values for these financial instruments
because they are short term in nature, their carrying amounts
approximate fair values, or they are payable on demand.
Recent Pronouncements
The FASB recently issued Statement No 137, "Accounting for
Derivative Instruments and Hedging Activities-Deferral of Effective
Date of FASB Statement No. 133". The Statement defers for one year
the effective date of FASB Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities". The rule now will
apply to all fiscal quarters of all fiscal years beginning after
June 15, 2000. In June 1998, the FASB issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". The
Statement will require the Company to recognize all derivatives on
the balance sheet at fair value. Derivatives that are not hedges
must be adjusted to fair value through income. If the derivative is
a hedge, depending on the nature of the hedge, changes in the fair
value of derivatives will either be offset against the change in
fair value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income until
the hedged item is recognized in earnings. The ineffective portion
of a derivative's change in fair value will be immediately
recognized in earnings. The Company has not engaged in any hedging
activities since its inception on May 25, 2001.
F-9
-35-
DONAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
July 31, 2001
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Company has not engaged in any hedging activities since its
inception on May 25, 2001.
During December 1999, the Securities and Exchange Commission
released Staff Accounting Bulletin No. 101, Revenue Recognition in
Financial Statements (SAS No. 101), which provides guidance on the
recognition, presentation and disclosure of revenue in financial
statements. SAB No. 101 did not impact the Company's revenue
recognition policies.
Note 2. GOING CONCERN
The accompanying financial statements have been prepared in
conformity with accounting principles generally accepted in the
United States of America, which contemplates continuation of the
Company as a going concern. The Company has generated losses since
its inception on May 25, 2001, aggregating $237,500 through July 31,
2001. Additionally, the Company was recently formed, and has not
been able to establish operations since the date of inception. The
Company has been reliant on funding from stockholders.
As discussed in Note 5, management's plans include the development
of the Company's operations to a commercial level and pursuing
additional equity financing. The Company plans on issuing up to
2,000,000 shares of voting common stock in exchange for up to $100,000.
The financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification
of assets or the amounts and classification of liabilities that may
result from the possible inability of the Company to continue as a
going concern.
Note 3. RELATED PARTY TRANSACTIONS
The Company issued 4,750,000 shares of unregistered common stock for
$237,500, based on Donar's expected offering price of $0.05 per
share, to its President in exchange for services as President,
Secretary, and Treasurer. These shares were issued under Section
4(2) of the Securities act of 1933, as amended, and are subject to
the resale provisions of Rule 144 and may not be sold or transferred
without registration except in accordance with Rule 144.
Certificates representing the securities bear such a legend.
Note 4. INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
No. 109"), which requires use of the liability method. SFAS No.
109 provides that deferred tax assets and liabilities are recorded
based on the differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes, referred to as temporary differences. Deferred tax assets
and liabilities at the end of each period are determined using the
currently enacted tax rates applied to taxable income in the periods
in which the deferred tax assets and liabilities are expected to be
settled or realized.
F-10
-36-
DONAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
July 31, 2001
Note 4. INCOME TAXES (continued)
The types of temporary differences between the tax basis of assets
and their financial reporting amounts that give rise to a
significant portion of the deferred tax asset are as follows:
Reconciling Tax
Item Effect
----------- ---------
Net operating loss carryforward $237,500 $77,000
=========== =========
The net operating loss carryforward will expire through 2021. The
deferred tax asset has been fully reserved at July 31, 2001.
The provision for income taxes differs from the amount computed by
applying the statutory federal income tax rate of 34% to income
before income taxes due to the effect of the net operating loss.
The net operating loss negates any provision for income taxes.
Note 5. SUBSEQUENT EVENTS
Donar is proposing to make a public offering of 2,000,000 shares of
its previously authorized but unissued common stock. Donar plans to
file a registration statement with the United States Securities and
Exchange Commission on Form SB-2 under the Securities Act of 1933.
Donar has arbitrarily determined an offering price of $0.05 per
share. Donar will manage the offering without any underwriter.
Donar plans to have its sole officer sell the shares without any
discounts or other commissions.
F-11
-37-
DONAR ENTERPRISES, INC.
SUBSCRIPTION AGREEMENT
Gentlemen:
The Investor named below, by payment of the purchase price for such
Common Shares, by the delivery of a check payable to Donar
Enterprises, Inc., hereby subscribes for the purchase of the number
of Common Shares indicated below of Donar Enterprises, Inc., at a
purchase of $0.05 per Share as set forth in the Prospectus.
By such payment, the named Investor further acknowledges receipt of
the Prospectus and the Subscription Agreement, the terms of which
govern the investment in the Common Shares being subscribed for hereby.
A. INVESTMENT: (1) Number of Shares ___________________________
(2) Total Contribution ($0.05/Share) $__________
Date of Investor's check ___________
B. REGISTRATION:
(3) Registered owner: __________________________
Co-Owner: __________________________________
(4) Mailing address: ___________________________
City, State & zip: _________________________
(5) Residence Address (if different from above):
============================================
(6) Birth Date: ______/______/______
(7) Employee or Affiliate: Yes ______ No ______
(8) Social Security: #: ______/______/______
U.S. Citizen [ ] Other [ ]
Co-Owner Social Security:
#: ______/______/______
U.S. Citizen [ ] Other [ ]
Corporate or Custodial:
Taxpayer ID #: ______/______/______
U.S. Citizen [ ] Other [ ]
(9) Telephone (H) ( ) ______________________
-38-
C. OWNERSHIP [ ] Individual Ownership [ ] IRA or Keogh
[ ] Joint Tenants with Rights of Survivorship
[ ] Trust/Date Trust Established_______________
[ ] Pension/Trust (S.E.P.)
[ ] Tenants in Common [ ] Tenants by the
Entirety
[ ] Corporate Ownership [ ] Partnership
[ ] Other_____________________
D. SIGNATURES: By signing below, I/we represent that I/we meet the
suitability standards set forth in the prospectus.
Registered Owner: _____________________________
Co-Owner: _____________________________
Print Name of Custodian or Trustee: _____________________________
Authorized Signature: _____________________________
Date: _____________________
Signature: ___________________________________
MAIL TO:
Donar Enterprises, Inc.
1735 Market Street
Suite A #261
Philadelphia, PA 19103
Telephone / Fax: (215) 893-3662
____________________________________________________________________
FOR OFFICE USE ONLY:
Date Received: ________________________________________________
Date Accepted/Rejected ________________________________________
Subscriber's Check Amount: _______________________
Check No. ___________________ Date Check ________________
Deposited ________________________________
MR #________________
____________________________________________________________________
-39-
=====================================================================
We have not authorized any dealer, salesperson or other person to
give any information or represent anything not contained in this
prospectus. You must not rely on any unauthorized information. This
prospectus does not offer to sell or buy any shares in any
jurisdiction where it is unlawful. The information in this
prospectus is current only as of the date of this prospectus.
DONAR ENTERPRISES, INC.
2,000,000 SHARES
COMMON STOCK
----------------
PROSPECTUS
----------------
August 30, 2001
Until , all dealers that effect
transactions in these securities, whether or not participating in
this offering, may be required to deliver a prospectus. This is in
addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments
or subscriptions.
=====================================================================
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PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
The statutes, charter provisions, bylaws, contracts or other
arrangements under which controlling persons, directors or officers
of the issuer are insured or indemnified in any manner against any
liability which they may incur in such capacity are as follows:
1. Section 145 of the Delaware General Corporation Law
provides that each corporation shall have the following powers:
(a) A corporation may indemnify any person who was or is a
party or is threatened to be made party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and
in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself
create a presumption that the person did not act in good faith and
in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and that, with respect to any
criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or
was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been
adjudged liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity
for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections
(a) and (b) of this section, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is
proper in the circumstances because he has met the applicable
standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by majority vote of
directors who were not parties to such action, suit or proceeding,
even though less than a quorum, or (2) if there are no such
directors, or if such directors so direct, by independent legal
counsel in a written opinion, or (3) by the stockholders;
(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal, administrative
or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay the amount if it shall ultimately be
determined that he is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be paid
upon such terms and conditions, if any, as the board of directors
deems appropriate.
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(f) The indemnification and advancement of expenses provided
by, or granted pursuant to, other subsections of this section shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred
by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him
against such liability under this section.
(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent
of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had the power and
authority to indemnify its directors, officers, and employees or
agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand
in the same position under this section with respect to the
resulting or surviving corporation as he would have with respect to
such constituent corporation if its separate existence had continued.
(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer
employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of the employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests
of the corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided
by, or granted pursuant to this section shall, unless otherwise
provided when authorized or ratified, continues as to a person who
has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
2. The Issuer's Certificate of Incorporation limit liability
of its Officers and Directors to the full extent permitted by the
Delaware General Corporation Law. The bylaws provide for
indemnification in accordance with the foregoing statutory provisions.
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Item 25. Other Expenses of Issuance and Distribution*
The following table sets forth all estimated costs and
expenses, other than underwriting discounts, commissions and expense
allowances, payable by the issuer in connection with the maximum
offering for the securities included in this registration statement:
Amount
----------
SEC registration fee ................... $ 25.00
Blue Sky fees and expenses ............. 3,000.00
Printing and shipping expenses ......... 2,000.00
Legal fees and expenses ................ 5,000.00
Accounting fees and expenses ........... 2,000.00
Transfer agent and misc. expenses ...... 3,475.00
----------
Total $15,500.00
* All expenses are estimated except the SEC filing fee.
Item 26. Recent Sales of Unregistered Securities.
The following sets forth information relating to all previous
sales of common stock by the Registrant which sales were not
registered under the Securities Act of 1933.
In connection with organizing Donar, on May 25, 2001, William
Tay was issued 4,750,000 shares of restricted common stock in
exchange for services, the business plan of Donar, and Donar's web
site and domain name. The shares were issued at $0.05 per share,
which Donar believes represents the fair value of the services
performed by William Tay. The foregoing purchase and sale to this
sophisticated person (officer and director) who had superior access
to all corporate and financial information were exempt from
registration under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to Section 4(2) on the basis that the
transaction did not involve a public offering.
The purchaser listed above represented his intention to
acquire the securities for investment only and not with a view
toward distribution. None of the securities were sold through an
underwriter and accordingly, there were no underwriting discounts or
commissions involved.
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Item 27. Exhibits Index.
The following exhibits are filed as part of this Registration
Statement:
Number Exhibit Name
------- ------------------------------------------
1.1 Subscription Agreement
3.1 Certificate of Incorporation
3.2 By-Laws
4.1 Form of Common Stock Certificate
5.1 Opinion of Hoge Carter Holmes pllc
regarding legality*
23.1 Consent of Hoge Carter Holmes pllc
(included in Exhibit 5.1)
23.2 Consent of Stark Tinter & Associates, llc
-------------
* To be filed by amendment.
All other Exhibits called for by Rule 601 of Regulation S-B
are not applicable to this filing. Information pertaining to our
common stock is contained in our Certificate of Incorporation and
By-Laws.
Item 28. Undertakings.
The undersigned registrant undertakes:
(1) To file, during any period in which offer or sales are
being made, a post-effective amendment to this registration statement:
I. To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
II. To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or
the most recent post effective amendment) which, individually or in
the aggregate, represent a fundamental change in the information in
the registration statement;
III. To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to the information in
the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of securities at that time shall be deemed to be
the initial bona fide offering.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned Registrant hereby
undertakes to file with the Securities and Exchange Commission any
supplementary and periodic information, documents, and reports as
may be prescribed by any rule or regulation of the Commission
heretofore or hereafter duly adopted pursuant to authority conferred
to that section.
Insofar as indemnification for liabilities arising under the
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Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to our certificate of
incorporation or provisions of Delaware law, or otherwise, the
Registrant has been advised that in the opinion of the Securities
and Exchange Commission the indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. If a claim
for indemnification against 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 a director, officer
or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of our
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether the
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of the issue.
SIGNATURES
Pursuant to 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
has duly caused this registration statement to be signed on our
behalf by the undersigned, in the City of Philadelphia, State of
Pennsylvania, on August 30, 2001.
Donar Enterprises, Inc.
/s/ William Tay
------------------------------
William Tay,
President and Principal
Financial Officer
In accordance with the requirements of the Securities Act of
1933, this registration statement was signed by the following
persons in the capacities and on the dates stated.
/s/ William Tay
------------------------------
William Tay,
President, Secretary,
Treasurer, Principal Financial
Officer and Director
Date: August 30, 2001
---------------
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As filed with the SEC on August 30, 2001
SEC Registration No. _____________*
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
REGISTRATION STATEMENT
ON FORM SB-2
UNDER
THE SECURITIES ACT OF 1933
DONAR ENTERPRISES, INC.
(Consecutively numbered pages 46 through 63 of this Registration Statement)
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INDEX TO EXHIBITS
-----------------
- ---------------------------------------------------------------------------
SEC REFERENCE TITLE OF DOCUMENT LOCATION
NUMBER
- ---------------------------------------------------------------------------
1.1 Subscription Agreement This Filing
Page 48
- ---------------------------------------------------------------------------
3.1 Certificate of This Filing
Incorporation Page 50
- ---------------------------------------------------------------------------
3.2 By-Laws This Filing
Page 52
- ---------------------------------------------------------------------------
4.1 Form of Common Stock This Filing
Certificate Page 59
- ---------------------------------------------------------------------------
5.1 Opinion of Hoge Carter This Filing
Holmes pllc regarding Page __
legality*
- ---------------------------------------------------------------------------
23.1 Consent of Hoge Carter Included in
Holmes pllc Exhibit 5.1
- ---------------------------------------------------------------------------
23.2 Consent of Stark Tinter & This Filing
Associates, llc Page 62
- ---------------------------------------------------------------------------
- -------------
* To be filed by amendment.
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