As filed with the Securities and Exchange Commission on June 19, 2007
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
YOUR DIGITAL MEMORIES, INC.
(Exact name of Registrant as specified in its charter)
Nevada 7372 98-0507522
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code) Identification No.)
15 Zichron Ya'akov, Suite 23 Entrance B.
Jerusalem 94421
Israel
Tel: + 1-877-651-2236
(Address and telephone number of Registrant's principal executive offices)
EastBiz.com, Inc.
5348 Vegas Dr.
Las Vegas, NV 89108
Phone: (702) 871-8678
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all Correspondence to:
SRK Law Offices
Rabin Science Park
Rehovot, Israel
Telephone No.: (718) 360-5351
Facsimile No.: (011) (972) 8-936-6000
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this registration statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, 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
==========================================================================================================
Title of Class of Proposed Maximum Proposed Maximum
Securities to be Amount to be Aggregate Price Aggregate Offering Amount of
Registered Registered Per Share(1) Price(2) Registration Fee
- ----------------------------------------------------------------------------------------------------------
Common Stock, $0.0001 1,410,600 $0.05 $70,530 $6.49
per share
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(1) The price of $0.05 is a fixed price at which the selling stockholders may
sell their shares until our common stock is quoted on the OTC Bulletin
Board at which time the shares may be sold at prevailing market prices or
privately negotiated prices.
(2) Estimated solely for the purpose of computing the amount of the
registration fee in accordance with Rule 457(a) under the Securities Act of
1933, as amended (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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS
SUBJECT TO COMPLETION
DATED JUNE 18, 2007
Your Digital Memories, Inc.
A MAXIMUM OF 1,410,600 SHARES OF COMMON STOCK
OFFERING PRICE $0.05 PER SHARE
The selling stockholders named in this prospectus are offering for resale
1,410,600 shares of our common stock. The selling stockholders have advised us
that they may sell the shares of common stock from time to time after this
prospectus is declared effective and they have set an offering price for these
securities of $0.05 per share of common stock offered through this prospectus
until our shares are quoted on the OTC Bulletin Board, or listed for trading or
quoted on any other public market, and thereafter at prevailing market prices or
privately negotiated prices. Our common stock is presently not traded on any
market or securities exchange, and we have not applied for listing or quotation
on any public market. Further, there is no assurance that our common stock will
ever trade on any market or securities exchange. We will pay all expenses
incurred in this offering. There is no assurance that an active trading market
for our shares will develop, or, if developed, that it will be sustained.
OUR BUSINESS IS SUBJECT TO MANY RISKS AND AN INVESTMENT IN OUR COMMON STOCK WILL
ALSO INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS
DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 5 BEFORE INVESTING
IN 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 THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INFORMATION IN THIS REGISTRATION STATEMENT IS NOT COMPLETE AND MAY BE
AMENDED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this Prospectus is ________, 2007.
The following table of contents has been designed to help you find information
contained in this prospectus. We encourage you to read the entire prospectus.
TABLE OF CONTENTS
Page
----
SUMMARY INFORMATION 3
RISK FACTORS 5
FORWARD LOOKING STATEMENTS 14
USE OF PROCEEDS 15
DETERMINATION OF OFFERING PRICE 15
DILUTION 15
SELLING STOCKHOLDERS 15
PLAN OF DISTRIBUTION 17
LEGAL PROCEEDINGS 20
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 21
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 22
DESCRIPTION OF SECURITIES 23
INTEREST OF NAMED EXPERTS AND COUNSEL 24
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION OF SECURITIES
ACT LIABILITIES 25
DESCRIPTION OF BUSINESS 25
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 31
DESCRIPTION OF PROPERTY 35
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 35
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 36
EXECUTIVE COMPENSATION 37
FINANCIAL STATEMENTS F-1
PART II
INDEMNIFICATION OF DIRECTORS AND OFFICERS II-1
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION II-1
RECENT SALES OF UNREGISTERED SECURITIES II-2
EXHIBITS II-3
UNDERTAKINGS II-4
SIGNATURES II-6
2
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS CERTAIN INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING OUR
FINANCIAL STATEMENTS AND RELATED NOTES, AND ESPECIALLY THE RISKS DESCRIBED UNDER
"RISK FACTORS" BEGINNING ON PAGE 8. ALL REFERENCES TO "WE," "US," "OUR," OR
SIMILAR TERMS USED IN THIS PROSPECTUS REFER TO YOUR DIGITAL MEMORIES, INC.
CORPORATE BACKGROUND
We were incorporated on June 27, 2006. We are a development stage company that
has not generated any revenue to date. We are focused on developing and offering
software products for the creation of interactive photo slideshow products for
pre-school and school-aged children.
Our offices are currently located at 15 Zichron Ya'akov, Suite 23 Entrance B.
Jerusalem 94421 Israel. Our telephone number is +1-877-651-2236. We have secured
a domain name - www.interactiveslideshow.com but do not yet have an operating
website.
Our auditors have issued an audit opinion which includes a statement describing
their doubts about whether we will continue as a going concern. In addition, our
financial status creates substantial doubt whether we will continue as a going
concern.
SUMMARY OF THE OFFERING
The Issuer: Your Digital Memories, Inc.
Total Shares of Common Stock
Outstanding Prior to the Offering: 9,022,600 Shares
Shares of Common Stock Being
Offered by the Selling Stockholders: 1,410,600 Shares
Total Shares of Common Stock
Outstanding After the Offering: 9,022,600 Shares
Offering Price: $0.05 per share
Use of Proceeds: We will not receive any proceeds from the
sale of shares by the selling
stockholders.
Market for the Shares: There is no public market for our shares
of common stock. We intend to have a
market maker file an application on our
behalf with the NASD to have our common
stock quoted on the OTC Bulletin Board.
There is no assurance that a trading
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market will develop, or, if developed,
that it will be sustained. Consequently,
a purchaser of our common stock may find
it difficult to resell the securities
offered herein should the purchaser
desire to do so when eligible for public
resale.
Risk Factors: See "Risk Factors" and the other
information in this prospectus for a
discussion of the factors you should
consider before deciding to invest in
shares of our common stock.
SUMMARY FINANCIAL DATA
The following summary financial information for the period from June 27, 2006
(inception) to May 31, 2007 includes balance sheet and statement of operations
data from our audited financial statements. The information contained in this
table should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition or Plan of Operation" and the financial statements and
accompanying notes included in this prospectus.
Statement of
Operations
For the period
June 27, 2006
(inception)
through
May 31, 2007
------------
Total Expenses $(28,079)
Net loss $(28,079)
Net loss per common share:
Basic and diluted (less than ($0.01) per share $ (0)
Balance Sheet Data
May 31, 2007
------------
Working capital $ 50,063
Total assets $ 50,063
Total liabilities --
Total Liabilities and Stockholders' Equity $ 50,063
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RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the following factors and other information in this
prospectus before deciding to invest in our company. If any of the following
risks actually occur, our business, financial condition, results of operations
and prospects for growth would likely suffer. As a result, you could lose all or
part of your investment.
RISKS RELATING TO OUR BUSINESS
1. WE HAVE A GOING CONCERN OPINION FROM OUR AUDITORS, INDICATING THE POSSIBILITY
THAT WE MAY NOT BE ABLE TO CONTINUE TO OPERATE.
The Company has incurred net losses of $28,079 for the period from June 27, 2006
(inception) to May 31, 2007. At May 31, 2007 we had working capital of
approximately $50,000 and stockholders' equity of approximately $50,063.
We anticipate generating losses for at least the next 12 months. Therefore, we
may be unable to continue operations in the future as a going concern. No
adjustment has been made in the accompanying financial statements to the amounts
and classification of assets and liabilities which adjustment may have to be
made should we be unable to continue as a going concern. If we cannot continue
as a viable entity, our shareholders may lose some or all of their investment in
the Company.
2. WE ARE A DEVELOPMENT STAGE COMPANY AND MAY NEVER BE ABLE TO EXECUTE OUR
BUSINESS PLAN.
We were incorporated on June 27, 2006. We have never had any products, customers
or revenues. Although we have begun initial planning for the development of our
interactive photo slideshow software and have retained a consultant to assist us
in attaining the milestones set forth in our business plan, we may not be able
to execute our business plan unless and until we are successful in raising
additional funds. In addition, our independent auditors included an explanatory
paragraph in their report on the accompanying financial statements regarding
concerns about our ability to continue as a going concern. As a result, we may
not be able to obtain additional necessary funding. There can be no assurance
that we will ever achieve any revenues or profitability. The revenue and income
potential of our proposed business and operations are unproven, and the lack of
an operating history makes it difficult to evaluate the future prospects of our
business.
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3. OUR BUSINESS PLAN MAY BE UNSUCCESSFUL AND WE MAY NOT BE ABLE TO CONTINUE
OPERATIONS AS A GOING CONCERN.
The success of our business plan is dependent on our developing and offering
interactive photo slideshow SOFTWARE. Our ability to develop such software is
unproven, and the lack of an operating history makes it difficult to validate
our business plan.
Our ability to continue as a going concern is dependent upon our generating cash
flow sufficient to fund operations and reduce operating expenses. Our business
plans may not be successful in addressing these issues. If we cannot continue as
a going concern, our stockholders may lose their entire investment in our
company.
4. WE EXPECT OUR LOSSES TO CONTINUE IN THE FUTURE AND AS A RESULT, WE MAY NOT BE
ABLE TO CONTINUE OPERATIONS. UNLESS WE ARE ABLE TO GENERATE REVENUE AND MAKE A
PROFIT, OUR STOCKHOLDERS MAY LOSE THEIR ENTIRE INVESTMENT IN US.
We expect to incur losses over the next 12 months because we do not yet have any
revenues to offset the expenses associated with the development and the
marketing of our proposed software. We cannot guarantee that we will ever be
successful in generating revenues in the future. We recognize that if we are
unable to generate revenues, we will not be able to earn profits or continue
operations and as a result our stockholders may lose their entire investment in
us. There is no history upon which to base any assumption as to the likelihood
that we will prove successful, and we can provide investors with no assurance
that we will generate any operating revenues or ever achieve profitable
operations.
5. WE HAVE NO OPERATING HISTORY AND HAVE MAINTAINED LOSSES SINCE INCEPTION,
WHICH WE EXPECT TO CONTINUE IN THE FUTURE. THERE IS NO ASSURANCE THAT OUR FUTURE
OPERATIONS WILL RESULT IN PROFITABLE REVENUES. THESE FACTORS RAISE SUBSTANTIAL
DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN. IF WE CANNOT GENERATE
SUFFICIENT REVENUE TO OPERATE PROFITABLY, WE WILL LIKELY SUSPEND OR CEASE
OPERATIONS AND INVESTORS COULD LOSE THEIR ENTIRE INVESTMENT IN OUR COMPANY.
We incurred net losses of $28,079 for the period from June 27, 2006 (inception)
to May 31, 2007. We expect to continue to incur operating losses in future
periods. These losses will occur because we do not yet have any revenues to
offset the expenses associated with the development and the marketing and sales
of our software. We cannot guarantee that we will ever be successful in
generating revenues in the future. We recognize that if we are unable to
generate revenues, we will not be able to earn profits or continue operations.
There is no history upon which to base any assumption as to the likelihood that
we will prove successful, and we can provide investors with no assurance that we
will generate any operating revenues or ever achieve profitable operations. If
we are unsuccessful in addressing these risks, our business will most likely
fail.
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6. WE HAVE NEVER GENERATED ANY REVENUE FROM OUR BUSINESS AND WE WILL NEED TO
RAISE FUNDS IN THE NEAR FUTURE. IF WE ARE NOT ABLE TO OBTAIN FUTURE FINANCING
WHEN REQUIRED, WE MIGHT BE FORCED TO DISCONTINUE OUR BUSINESS.
Because we have not generated any revenue from our business and we cannot
anticipate when we will be able to generate revenue from our business, we will
need to raise additional funds for the future development of our business and to
respond to unanticipated requirements or expenses.
Although we currently have approximately $50,000 in working capital, we
anticipate incurring costs of at least $58,200 within the next 12 months. We
will need to raise additional funds if we do not generate any revenues within
the next 12 months. We do not currently have any arrangements for financing and
we can provide no assurance to investors that we will be able to find such
financing if required. The most likely source of future funds presently
available to us will be through the sale of equity capital. Any sale of share
capital will result in dilution to existing shareholders. Furthermore, there is
no assurance that we will not incur debt in the future, that we will have
sufficient funds to repay our future indebtedness or that we will not default on
our future debts, jeopardizing our business viability. Finally, we may not be
able to borrow or raise additional capital in the future to meet our needs or to
otherwise provide the capital necessary to conduct business, which might result
in the loss of some or all of your investment in our common stock. There can be
no assurance that additional financing will be available to us on terms that are
acceptable. Consequently, we may not be able to proceed with our intended
business plans. Substantial additional funds will still be required if we are to
reach our goals that are outlined in this Registration Statement. Without
additional funding, we may not commence our planned business operations.
7. FUTURE LEGISLATION OR REGULATION OF THE INTERNET AND/OR INTERNET COMMERCE
SERVICES COULD RESTRICT OUR BUSINESS, PREVENT US FROM OFFERING OUR SOFTWARE
PRODUCTS AND SERVICES OR INCREASE OUR COST OF DOING BUSINESS, WHICH COULD RESULT
IN A LOSS OF REVENUE.
At present there are few laws, regulations or rulings that specifically address
access to or commerce on the internet. We are unable to predict the impact, if
any, that future legislation, legal decisions or regulations concerning the
internet may have on our business, financial condition, and results of
operations. Regulation may be targeted towards, among other things, assessing
access or settlement charges, imposing taxes related to internet commerce,
imposing tariffs or regulations based on encryption concerns or the
characteristics and quality of software products and services. Any such
regulation could restrict our business or increase our cost of doing business
and consequently a loss of future revenue.
8. WE WILL BE HEAVILY DEPENDENT ON CONTRACTING WITH THIRD PARTY FIRM(S) TO
DEVELOP AND MAINTAIN OUR SOFTWARE FOR US. IF WE ARE UNABLE TO LOCATE, HIRE AND
RETAIN THESE FIRM(S), OUR BUSINESS WILL FAIL.
We intend to hire a software development firm(s) to develop and maintain our
interactive photo slideshow software. We budgeted $30,000 for this purpose.
Should we be unable to contract qualified third parties firm(s) to develop and
maintain our software, whether because we cannot find them, cannot attract them
7
to our company, or cannot afford them, we will never become profitable and our
business will fail.
RISK RELATED TO OUR COMPANY
9. BECAUSE OUR EXECUTIVE OFFICERS CONTROL A LARGE PERCENTAGE OF OUR COMMON
STOCK, THEY HAVE THE ABILITY TO INFLUENCE MATTERS AFFECTING OUR SHAREHOLDERS.
Our executive officers beneficially own approximately 83.2% of the issued and
outstanding shares of our common stock. As a result, they have the ability to
influence matters affecting our shareholders, including the election of our
directors, the acquisition or disposition of our assets, and the future issuance
of our shares. Because our executive officers control such shares, investors may
find it difficult to replace our management if they disagree with the way our
business is being operated.
10. BECAUSE OUR EXECUTIVE OFFICERS AND DIRECTORS LIVE OUTSIDE OF THE UNITED
STATES, YOU MAY HAVE NO EFFECTIVE RECOURSE AGAINST THEM FOR MISCONDUCT AND MAY
NOT BE ABLE TO ENFORCE JUDGMENT AND CIVIL LIABILITIES AGAINST THEM. INVESTORS
MAY NOT BE ABLE TO RECEIVE COMPENSATION FOR DAMAGES TO THE VALUE OF THEIR
INVESTMENT CAUSED BY WRONGFUL ACTIONS BY OUR DIRECTORS AND OFFICERS.
Both of our directors and officers live outside of the United States. Mr. Aaron
Bard, our President and director is a citizen and a resident of Israel, and all
or a substantial portion of his assets are located outside of the United States.
Mr. Alan Sacks, our Secretary, Treasurer and a director is a citizen and a
resident of Canada, and all or a substantial portion of his assets are located
outside of the United States. As a result, it may be difficult for investors to
enforce within the United States any judgments obtained against our directors or
officers, or obtain judgments against them outside of the United States that are
predicated upon the civil liability provisions of the securities laws of the
United States or any state thereof. Investors may not be able to receive
compensation for damages to the value of their investment caused by wrongful
actions by our directors and officers.
11. BECAUSE WE HAVE TWO DIRECTORS, DEADLOCKS MAY OCCUR IN OUR BOARD'S
DECISION-MAKING PROCESS, WHICH MAY DELAY OR PREVENT CRITICAL DECISIONS FROM
BEING MADE.
Since we currently have an even number of directors, deadlocks may occur when
such directors disagree on a particular decision or course of action. Our
Articles of Incorporation and By-Laws do not contain any mechanisms for
resolving potential deadlocks. While our directors are under a duty to act in
the best interest of our company, any deadlocks may impede the further
development of our business in that such deadlocks may delay or prevent critical
decisions regarding our development.
8
12. BECAUSE OUR EXECUTIVE OFFICERS ARE UNABLE TO DEVOTE THEIR SERVICES TO OUR
COMPANY ON A FULL TIME BASIS, THE PERFORMANCE OF OUR BUSINESS MAY SUFFER, OUR
BUSINESS COULD FAIL AND INVESTORS COULD LOSE THEIR ENTIRE INVESTMENT.
Mr. Aaron Bard, our President and a director, currently devotes approximately 10
to 20 hours per week to our company. Similarly, Mr. Alan Sacks, our Secretary,
Treasurer and a director, is semi-retired and currently devotes 10 to 20 hours a
week to our company. As discussed below, we depend heavily on the services of
Messrs. Bard and Sacks. As a result, the management of our company could
under-perform, our business could fail and investors could lose their entire
investment.
13. OUR EXECUTIVE OFFICERS HAVE NO EXPERIENCE OR TECHNICAL TRAINING IN THE
DEVELOPMENT, MAINTENANCE AND MARKETING OF INTERNET WEBSITES OR IN OPERATING
BUSINESSES THAT LICENSE SOFTWARE OR SERVICES OVER THE INTERNET. THIS COULD CAUSE
THEM TO MAKE INEXPERIENCED OR UNINFORMED DECISIONS THAT HAVE BAD RESULTS FOR US.
AS A RESULT, OUR OPERATIONS COULD SUFFER IRREPARABLE HARM AND MAY CAUSE US TO
SUSPEND OR CEASE OPERATIONS, WHICH COULD CAUSE INVESTORS TO LOSE THEIR ENTIRE
INVESTMENT.
Mr. Aaron Bard and Mr. Alan Sacks, have no experience or technical training in
the development, maintenance and marketing of internet websites or in operating
businesses that market software or services over the internet. Due to their lack
of experience and knowledge in these areas, our executive officers could make
the wrong decisions regarding the development, operation and marketing of our
website and the operation of our business, which could lead to irreparable
damage to our business. Consequently, our operations could suffer irreparable
harm from mistakes made by our executive officers and we may have to suspend or
cease operations, which could cause investors to lose their entire investment.
14. WE DEPEND HEAVILY ON MR. ALAN SACKS AND MR. AARON BARD. THE LOSS OF EITHER
PERSON WILL HAVE A SUBSTANTIAL NEGATIVE EFFECT ON OUR BUSINESS AND MAY CAUSE OUR
BUSINESS TO FAIL.
We depend entirely on Mr. Sacks and Mr. Bard for all of our operations. The loss
of either person will have a substantial negative effect on us and may cause our
business to fail. Our officers did not receive any compensation for their
services and it is highly unlikely that they will receive any compensation
unless and until we generate substantial revenues.
We do not have any employment agreements or maintain key person life insurance
policies on our officers. If our officers do not devote sufficient time towards
our business, we may never be able to effectuate our business plan.
15. WE MAY NOT BE SUCCESSFUL IN DEVELOPING INTERACTIVE PHOTO SLIDESHOW SOFTWARE
THAT ACHIEVE MARKET ACCEPTANCE.
The success or failure of developing interactive photo slideshow software
depends in large part on their desirability and ease of application in the
target market. We cannot be sure that our development efforts will produce
software that will fulfill the needs and appeal to the tastes of pre-school and
school-aged children, or their parents.
9
The computer-based interactive photo imaging industry is characterized by
technological change, frequent product introductions and evolving industry
standards. Our success will depend, to a significant extent, on our ability to
develop software and introduce new software products to satisfy an expanded
range of customer needs and achieve market acceptance. There can be no assurance
that we will have sufficient resources to make the necessary investments or that
we will be able to develop and implement the technological advances required to
maintain a competitive position.
16. WE MAY NEVER BE ABLE TO ACHIEVE SALES REVENUES SUFFICIENT TO BECOME
PROFITABLE.
We believe that the acceptance of our software products will depend on our
ability to:
* Effectively market our software products and develop brand
recognition;
* Develop user-friendly software products that appeal to children and
their caretakers;
* Price and license the software products in a manner that is appealing
to potential customers and to partners that would promote our software
products;
* Develop and maintain a favorable reputation among our customers; and
* Have the financial ability to withstand downturns in the general
economic environment or conditions that would slow the licensing of
our software products.
There can be no assurance that our software will achieve a level of market
acceptance that will make us profitable.
17. WE FACE INTENSE COMPETITION FROM OTHER BUSINESSES THAT CURRENTLY MARKET
INTERACTIVE PHOTO SLIDESHOW SOFTWARE FOR PRE-SCHOOL AND SCHOOL-AGED CHILDREN.
Competition will come not only from those who deliver their products through
traditional retail establishments but also from those who deliver their products
and software through the internet. Our competitors have longer operating
histories, greater brand recognition, larger marketing budgets and installed
customer bases. In addition, these companies are able to field full-time,
directly employed sales personnel to better cover certain markets and customers.
They can also invest greater resources in the development of technology, content
and research which will allow them to react to market changes faster, putting us
at a possible competitive disadvantage.
18. MANY OF OUR COMPETITORS AND POTENTIAL COMPETITORS HAVE SIGNIFICANTLY MORE
FINANCIAL RESOURCES, WHICH COULD ALLOW THEM TO DEVELOP SOFTWARE THAT COULD
RENDER OUR PROPOSED SOFTWARE INFERIOR.
Our competition, including Ulead, Photodex and Wondershare Software, may have
software or may develop software that will render our proposed software
inferior. We will likely need to obtain and maintain certain advantages over our
competitors in order to be competitive, which require resources. There can be no
10
assurance that we will have sufficient financial resources to maintain our R&D,
marketing, sales and customer support efforts on a competitive basis, or that we
will be able to make the improvements necessary to maintain a competitive
advantage with respect to our software products.
19. MARKETING AND MAKING OUR SOFTWARE PRODUCTS AVAILABLE ON THE INTERNET EXPOSE
US TO REGULATORY AND LEGAL ISSUES.
A range of exposures may exist due to how we intend to market our software
products. If we create and utilize a web site, as we plan to do, online access
through a company-operated web site requires careful consideration of legal and
regulatory compliance requirements and issues. We will need sufficient security
measures to protect information and preserve the privacy of our customers and
monitor the use of the site. This may require extensive legal services that may
become an increased cost component when considering the development of our
software and technologies.
20. IF A THIRD PARTY ASSERTS THAT WE INFRINGE UPON ITS PROPRIETARY RIGHTS, WE
COULD BE REQUIRED TO REDESIGN OUR SOFTWARE, PAY SIGNIFICANT ROYALTIES OR ENTER
INTO LICENSE AGREEMENTS.
Although presently we are not aware of any such claims, a third party may assert
that our technology or technologies of entities we acquire violates its
intellectual property rights. As the number of software products in our markets
increases and the functionality of these software products further overlap, we
believe that infringement claims will become more common. Any claims against us,
regardless of their merit, could:
- be expensive and time consuming to defend;
- result in negative publicity;
- force us to stop licensing our software products that incorporate the
challenged intellectual property;
- require us to redesign our software products;
- divert management's attention and our other resources; or
- require us to enter into royalty or licensing agreements in order to
obtain the right to use necessary technologies, which may not be
available on terms acceptable to us, if at all.
We believe that any successful challenge to our use of a trademark or domain
name could substantially diminish our ability to conduct business in a
particular market or jurisdiction and thus decrease our revenues and result in
possible losses to our business.
11
RISKS RELATED TO THE OFFERING
21. OUR STOCK PRICE AFTER THE OFFERING COULD BE BELOW THE OFFERING PRICE.
The offering price of our common stock was arbitrarily determined by us and does
not necessarily bear any relationship to our book value, assets, financial
condition, or to any other established criteria of value. Our common stock price
after the offering could be below the offering price.
22. THERE IS NO PUBLIC MARKET FOR OUR COMMON STOCK AND OUR STOCKHOLDERS MAY NOT
BE ABLE TO RESELL THEIR SHARES AT OR ABOVE THE PRICE AT WHICH THEY PURCHASED
THEIR SHARES, OR AT ALL.
There is currently no market for our common stock and we can provide no
assurance that a market will develop. We intend to have a market maker file an
application on our behalf with the NASD to have our common stock quoted on the
OTC Bulletin Board after the registration statement is declared effective by the
SEC. We do not yet have a market maker who has agreed to file such application.
If for any reason our common stock is not quoted on the OTC Bulletin Board or a
public trading market does not otherwise develop, purchasers of the shares may
have difficulty selling their common stock should they desire to do so. No
market makers have committed to becoming market makers for our common stock and
none may do so.
Even if a trading market develops, we cannot predict how liquid that market
might become. The initial public offering price may not be indicative of prices
that will prevail in the trading market. The initial public offering price of
the common stock was determined by us arbitrarily. The price is not based on our
financial condition and prospects, market prices of similar securities of
comparable publicly traded companies, certain financial and operating
information of companies engaged in similar activities to ours, or general
conditions of the securities market. The price may not be indicative of the
market price, if any, for the common stock in the trading market after this
offering. The market price of the securities offered herein, if any, may decline
below the initial public offering price. The trading price of our common stock
following the offering is therefore likely to be highly volatile and could be
subject to wide fluctuations in price in response to various factors, some of
which are beyond our control. These factors include:
- Quarterly variations in our results of operations or those of our
competitors;
- Announcements by us or our competitors of acquisitions, new software
products, significant contracts, commercial relationships or capital
commitments;
- Disruption to our operations;
- Commencement of, or our involvement in, litigation;
- Any major change in our board or management;
- Changes in governmental regulations or in the status of our regulatory
approvals; and
- General market conditions and other factors, including factors
unrelated to our own operating performance.
12
In addition, the stock market in general has experienced extreme price and
volume fluctuations that have often been unrelated or disproportionate to the
operating performance of such public companies. Such fluctuations may be even
more pronounced in the trading market shortly following this offering. These
broad market and industry factors may seriously harm the market price of our
common stock, regardless of our actual operating performance. In addition, in
the past, following periods of volatility in the overall market and the market
price of a company's securities, securities class action litigation has often
been instituted against these companies. This litigation, if instituted against
us, could result in substantial costs and a diversion of our management's
attention and resources.
23. FUTURE SALES BY OUR STOCKHOLDERS COULD CAUSE THE STOCK PRICE TO DECLINE.
No predictions can be made of the effect, if any, that market sales of shares of
our common stock or the availability of such shares for sale will have on the
market price prevailing from time to time. Nevertheless, sales of significant
amounts of our common stock could adversely affect the prevailing market price
of the common stock, as well as impair our ability to raise capital through the
issuance of additional equity securities.
24. STATE SECURITIES LAWS MAY LIMIT SECONDARY TRADING, WHICH MAY RESTRICT THE
STATES IN WHICH YOU CAN SELL THE SHARES OFFERED BY THIS PROSPECTUS.
If you purchase shares of our common stock sold in this offering, you may not be
able to resell the shares in any state unless and until the shares of our common
stock are qualified for secondary trading under the applicable securities laws
of such state or there is confirmation that an exemption, such as listing in
certain recognized securities manuals, is available for secondary trading in
such state. There can be no assurance that we will be successful in registering
or qualifying our common stock for secondary trading, or identifying an
available exemption for secondary trading in our common stock in every state. If
we fail to register or qualify, or to obtain or verify an exemption for the
secondary trading of, our common stock in any particular state, the shares of
common stock could not be offered or sold to, or purchased by, a resident of
that state. In the event that a significant number of states refuse to permit
secondary trading in our common stock, the market for the common stock will be
limited which could drive down the market price of our common stock and reduce
the liquidity of the shares of our common stock and a stockholder's ability to
resell shares of our common stock at all or at current market prices, which
could increase a stockholder's risk of losing some or all of his investment.
25. OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE
SEC'S PENNY STOCK REGULATIONS AND THE NASD'S SALES PRACTICE REQUIREMENTS, WHICH
MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
If a trading market does develop for our stock, it is likely we will be subject
to the regulations applicable to "Penny Stock." The regulations of the SEC
promulgated under the Exchange Act that require additional disclosure relating
to the market for penny stocks in connection with trades in any stock defined as
a penny stock. The SEC regulations define penny stocks to be any non-NASDAQ
equity security that has a market price of less than $5.00 per share, subject to
certain exceptions. Unless an exception is available, those regulations require
the broker-dealer to deliver, prior to any transaction involving a penny stock,
13
a standardized risk disclosure schedule prepared by the SEC, to 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,
monthly account statements showing the market value of each penny stock held in
the purchaser's account, to 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, if any, in the secondary
market for a stock that becomes subject to the penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage market investor
interest in and limit the marketability of our common stock.
In addition to the "penny stock" rules promulgated by the Securities and
Exchange Commission, the NASD has adopted rules that require that in
recommending an investment to a customer, a broker-dealer must have reasonable
grounds for believing that the investment is suitable for that customer. Prior
to recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer's financial status, tax status, investment objectives and
other information. Under interpretations of these rules, the NASD believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. The NASD requirements make it more
difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy and sell our stock.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Some discussions in this prospectus may contain forward-looking statements that
involve risks and uncertainties. These statements relate to future events or
future financial performance. A number of important factors could cause our
actual results to differ materially from those expressed in any forward-looking
statements made by us in this prospectus. Forward-looking statements are often
identified by words like: "believe", "expect", "estimate", "anticipate",
"intend", "project" and similar expressions or words which, by their nature,
refer to future events. In some cases, you can also identify forward-looking
statements by terminology such as "may", "will", "should", "plans", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled Risk Factors beginning on page 8, that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. In
addition, you are directed to factors discussed in the Business section
beginning on page 28, the Management's Discussion and Analysis or Plan of
Operation section beginning on page 34 and as well as factors discussed
elsewhere in this prospectus.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity or achievements. Except as required by applicable law, including the
securities laws of the United States, we do not intend to update any of the
forward-looking statements to conform these statements to actual results.
14
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
USE OF PROCEEDS
The selling stockholders are selling shares of common stock covered by this
prospectus for their own account. We will not receive any of the proceeds from
the resale of these shares. We have agreed to bear the expenses relating to the
registration of the shares for the selling stockholders.
DETERMINATION OF OFFERING PRICE
There has been no public market for our common shares. The price of the shares
was arbitrarily determined at $0.05 per share. We believe that this price
reflects the appropriate price that a potential investor would be willing to
invest in us at this initial stage of our development.
The price we arbitrarily determined bears no relationship whatsoever to our
business plan, the price paid for our shares by our founders, our assets,
earnings, book value or any other criteria of value. The offering price should
not be regarded as an indicator of the future market price of the securities,
which is likely to fluctuate.
DILUTION
The common stock to be sold by the selling stockholders is common stock that is
currently issued and outstanding. Accordingly, there will be no dilution to our
existing stockholders.
SELLING STOCKHOLDERS
The selling stockholders named in this prospectus are offering all of the
1,410,600 shares of common stock offered through this prospectus. The selling
stockholders are all non-U.S. persons who acquired the 1,410,600 shares of
common stock from us in a series of Regulation S private placement transactions
made between January 2007 and April 2007. None of the selling stockholders are
affiliates or controlled by our affiliates and none of the selling stockholders
are now or were at any time in the past an officer or director of ours or any of
any of our predecessors or affiliates.
The following table provides as of June 15, 2007 information regarding the
beneficial ownership of our common stock held by each of the selling
stockholders, including:
1. the number of shares beneficially owned by each prior to this
offering;
2. the total number of shares that are to be offered by each;
3. the total number of shares that will be beneficially owned by each
upon completion of the offering; and
4. the percentage owned by each upon completion of the offering.
15
Beneficial Ownership Beneficial Ownership
Before Offering(1) Number of After Offering(1)
-------------------- Being --------------------
Name of Number of Shares Number of
Selling Stockholder(1) Shares Percent(2) Offered Shares Percent(2)
- ---------------------- ------ ---------- ------- ------ ----------
Abraham David Karniol 5,000 * 5,000 0 0
Asher Karniol 5,000 * 5,000 0 0
Malka Karniol 5,000 * 5,000 0 0
Isaac Friedman 5,000 * 5,000 0 0
Gita Gross 5,000 * 5,000 0 0
Avraham Ya'akov Baum 6,000 * 6,000 0 0
Inbar Kuta 19,000 * 19,000 0 0
Rachel Langnoier 10,000 * 10,000 0 0
Jeshyahey Lanegnoier 10,000 * 10,000 0 0
Israel Eli Wiess 6,000 * 6,000 0 0
Rachel Pines 199,600 2.21 199,600 0 0
Aron Meirovich 6,000 * 6,000 0 0
Arie Friedman 10,000 * 10,000 0 0
Golda Friedman 10,000 * 10,000 0 0
Hadas David 300,000 3.32 300,000 0 0
Alfred Eliazer Fuchs 6,000 * 6,000 0 0
Issac Philip 5,000 * 5,000 0 0
Oded Ofarim 160,000 1.77 160,000 0 0
Moshe Dirnfeld 6,000 * 6,000 0 0
Anat Ofarim 140,000 1.55 140,000 0 0
Israel Fink 8,000 * 8,000 0 0
Baruch Zehev Feder 6,000 * 6,000 0 0
Dov Behar Richman 5,000 * 5,000 0 0
Shalom Porgesz 7,000 * 7,000 0 0
Betzalel Glandor 5,000 * 5,000 0 0
16
Pinchas Yechezkel Babad 6,000 * 6,000 0 0
Hinde Klein 5,000 * 5,000 0 0
Joseph Ringel 6,000 * 6,000 0 0
Chava Ausch 5,000 * 5,000 0 0
Efraim Sharf 8,000 * 8,000 0 0
Moshe Brown 5,000 * 5,000 0 0
D'vori Manheim 6,000 * 6,000 0 0
Shalom Lemberger 10,000 * 10,000 0 0
Nachman Rutner 5,000 * 5,000 0 0
Nisan Ringel 5,000 * 5,000 0 0
Akiva Pines 400,000 4.43 400,000 0 0
TOTAL 1,410,600 15.63% 1,410,600 NIL *
NOTES
* Represents less than 1%
(1) The named party beneficially owns and has sole voting and investment power
over all shares or rights to these shares, unless otherwise shown in the
table. The numbers in this table assume that none of the selling
stockholders sells shares of common stock not being offered in this
prospectus or purchases additional shares of common stock, and assumes that
all shares offered are sold.
(2) Applicable percentage of ownership is based on 9,022,600 shares of common
stock outstanding as of June 15, 2007.
PLAN OF DISTRIBUTION
This prospectus relates to the registration of 1,410,600 common shares on behalf
of the selling stockholders.
NO CURRENT MARKET FOR OUR SHARES
There is currently no market for our securities. Our common stock is not traded
on any exchange or on the over-the-counter market. After the effective date of
the registration statement relating to this prospectus, we intend to have a
market maker file an application with the National Association of Securities
Dealers, Inc. for our common stock to be eligible for trading on the Over
- -the-Counter Bulletin Board. We do not yet have a market maker who has agreed to
file such application. We cannot give you any assurance that the shares you
purchase will ever have a market value or that if a market for our shares ever
develops, that you actually will be able to sell your shares in this market.
Further, even assuming we do locate such a market maker, it could take several
months before the market maker's listing application for our shares is approved,
17
if such approval is obtained. In addition, even if a public market for our
shares develops, there is no assurance that a secondary public market will be
sustained.
The OTC Bulletin Board is maintained by the National Association of Securities
Dealers. The securities traded on the Bulletin Board are not listed or traded on
the floor of an organized national or regional stock exchange. Instead, these
securities transactions are conducted through a telephone and computer network
connecting dealers in stocks. Over-the-counter stocks are traditionally stocks
of smaller companies that do not meet the financial and other listing
requirements of a regional or national stock exchange.
Even if our shares are quoted on the OTC Bulletin Board, a purchaser of our
shares may not be able to resell the shares. Broker-dealers may be discouraged
from effecting transactions in our shares because they will be considered penny
stocks and will be subject to the penny stock rules. Rules 15g-1 through 15g-9
promulgated under the Securities Exchange Act of 1934, as amended, impose sales
practice and disclosure requirements on NASD brokers-dealers who make a market
in a "penny stock." A penny stock generally includes any non-NASDAQ equity
security that has a market price of less than $5.00 per share. Under the penny
stock regulations, a broker-dealer selling penny stock to anyone other than an
established customer or "accredited investor" (generally, an individual with net
worth in excess of $1,000,000 or an annual income exceeding $200,000, or
$300,000 together with his or her spouse) must make a special suitability
determination for the purchaser and must receive the purchaser's written consent
to the transaction prior to sale, unless the broker-dealer or the transactions
is otherwise exempt. In addition, the penny stock regulations require the
broker-dealer to deliver, prior to any transaction involving a penny stock, a
disclosure schedule prepared by the Commission relating to the penny stock
market, unless the broker-dealer or the transaction is otherwise exempt. A
broker-dealer is also required to disclose commissions payable to the
broker-dealer and the registered representative and current quotations for the
securities. Finally, a broker-dealer is required to send monthly statements
disclosing recent price information with respect to the penny stock held in a
customer's account and information with respect to the limited market in penny
stocks.
The additional sales practice and disclosure requirements imposed upon
broker-dealers may discourage broker-dealers from effecting transactions in our
shares, which could severely limit the market liquidity of the shares and impede
the sale of our shares in the secondary market, assuming one develops.
The selling stockholders may sell some or all of their shares at a fixed price
of $0.05 per share until our shares are quoted on the OTC Bulletin Board and
thereafter at prevailing market prices or privately negotiated prices. Sales by
selling stockholders must be made at the fixed price of $0.05 until a market
develops for the stock.
The shares may be sold or distributed from time to time by the selling
stockholders or by pledgees, donees or transferees of, or successors in interest
to, the selling stockholders, directly to one or more purchasers (including
pledgees) or through brokers or dealers who act solely as agents. The
distribution of the shares may be effected in one or more of the following
methods:
18
* ordinary broker transactions, which may include long or short sales,
* transactions involving cross or block trades on any securities or
market where our common stock is trading,
* purchases by brokers or dealers as principal and resale by such
purchasers for their own accounts pursuant toothis prospectus,
* in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents,
* any combination of the foregoing.
In addition, the selling stockholders may enter into hedging transactions with
broker-dealers who may engage in shares in the course of hedging the positions
they assume with the selling stockholders. The selling stockholders may also
enter into option or other transactions with broker-dealers that require the
delivery by such broker-dealers of the shares, which shares may be resold
thereafter pursuant to this prospectus.
Brokers, dealers, or agents participating in the distribution of the shares may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholders and/or the purchasers of shares for whom such
broker-dealers may act as agent (which compensation as to a particular
broker-dealer may be in excess of customary commissions). Neither the selling
stockholders nor we can presently estimate the amount of such compensation. We
know of no existing arrangements between the selling stockholders and any other
stockholder, broker, dealer or agent relating to the sale or distribution of the
shares. We do not anticipate that either our stockholders or we will engage an
underwriter in the selling or distribution of our shares.
We will not receive any proceeds from the sale of the shares of the selling
stockholders pursuant to this prospectus. We have agreed to bear the expenses of
the registration of the shares, including legal and accounting fees, and such
expenses are estimated to be approximately $15,007.
The selling stockholders named in this prospectus must comply with the
requirements of the Securities Act and the Exchange Act in the offer and sale of
the common stock being offered by them. The selling stockholders and any
broker-dealers who execute sales for the selling stockholders may be deemed to
be an "underwriter" within the meaning of the Securities Act in connection with
such sales. In particular, during such times as the selling stockholders may be
deemed to be engaged in a distribution of the common stock, and therefore be
considered to be an underwriter, they must comply with applicable laws and may
among other things:
1. Not engage in any stabilization activities in connection with our
common stock;
2. Furnish each broker or dealer through which common stock may be
offered, such copies of this prospectus from time to time, as may be
required by such broker or dealer, and
3. Not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities permitted under the Exchange
Act.
19
Any commissions received by broker-dealers and any profit on the resale of
shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act.
REGULATION M
We have informed the selling stockholders that Regulation M promulgated under
the Securities Exchange Act of 1934 may be applicable to them with respect to
any purchase or sale of our common stock. In general, Rule 102 under Regulation
M prohibits any person connected with a distribution of our common stock from
directly or indirectly bidding for, or purchasing for any account in which it
has a beneficial interest, any of the shares or any right to purchase the
shares, for a period of one business day before and after completion of its
participation in the distribution.
During any distribution period, Regulation M prohibits the selling stockholders
and any other persons engaged in the distribution from engaging in any
stabilizing bid or purchasing our common stock except for the purpose of
preventing or retarding a decline in the open market price of the common stock.
None of these persons may effect any stabilizing transaction to facilitate any
offering at the market. As the selling stockholders will be offering and selling
our common stock at the market, Regulation M will prohibit them from effecting
any stabilizing transaction in contravention of Regulation M with respect to the
shares.
We also have advised the selling stockholders that they should be aware that the
anti-manipulation provisions of Regulation M under the Exchange Act will apply
to purchases and sales of shares of common stock by the selling stockholders,
and that there are restrictions on market-making activities by persons engaged
in the distribution of the shares. Under Regulation M, the selling stockholders
or their agents may not bid for, purchase, or attempt to induce any person to
bid for or purchase, shares of our common stock while such selling stockholders
are distributing shares covered by this prospectus. Regulation M may prohibit
the selling stockholders from covering short sales by purchasing shares while
the distribution is taking place, despite any contractual rights to do so under
the Agreement. We have advised the selling stockholders that they should consult
with their own legal counsel to ensure compliance with Regulation M.
LEGAL PROCEEDINGS
We know of no existing or pending legal proceedings against us, nor are we
involved as a plaintiff in any proceeding or pending litigation. There are no
proceedings in which any of our directors, officers or any of their respective
affiliates, or any beneficial shareholder, is an adverse party or has a material
interest adverse to our interests.
20
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our officers and directors and their ages and positions are as follows:
Name Age Position
---- --- --------
Aaron Bard 24 President and Director
Alan Sacks 52 Secretary, Treasurer and Director
MR. AARON BARD
Mr. Aaron Bard has been our President and Director since September 13th 2006.
Over the past five years Mr. Bard has been a full-time instructor, including
computer-related instruction, at the "Bletz" Yeshiva in Jerusalem, Israel. In
this capacity, one of his functions is to interact with children between the
ages of 6 and 18 years. Through instructing children in the use of computers Mr.
Bard identified a need for a user-friendly software package aimed at children
that will enable them to organize and assort personal photographs into an
interactive slide show.
MR. ALAN SACKS
Mr. Alan Sacks, our Secretary, Treasurer and Director since October 31, 2006,
has been involved in the hospitality industry for 30 years. From 1992 to the
present, he has served as the president of A.B.D.M. Enterprises Inc. located in
North Vancouver, B.C. Canada. A.B.D.M. Enterprises Inc. is involved in the
hospitality procurement service industry. Mr. Sacks served as the corporate
director of Food and Beverage for Delta Hotels & Resorts, Canada and as general
manager of several of their properties in Ontario and B.C., Canada. Until 2004,
Mr. Sacks was an instructor in the Department of Hospitality Management (Labour
Relations, Business Law & Facilities Management) at the Vancouver Community
College in Vancouver BC Canada. Mr. Sacks has an Honors Degree in Hotel Catering
from the University of Surrey, Guildford, Surrey, England.
TERM OF OFFICE
Our directors are appointed for one-year terms and hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our Bylaws. Our officers are appointed by our Board of Directors
and hold office until removed by the Board.
The officers and directors listed above will remain in office until the next
annual meeting of our stockholders, and until their successors have been duly
elected and qualified. There are no agreements with respect to the election of
our directors. We have not compensated our directors for service on our Board of
Directors or reimbursed them for expenses incurred for attendance at meetings of
our Board of Directors. Officers are appointed annually by our Board of
Directors and each officer serves at the discretion of our Board of Directors.
21
Our Board of Directors may in the future determine to pay directors' fees and
reimburse directors for expenses related to their activities.
Our officers and directors have not filed any bankruptcy petition, been
convicted of or been the subject of any criminal proceedings or the subject of
any order, judgment or decree involving the violation of any state or federal
securities laws within the past five years.
COMMITTEES OF THE BOARD OF DIRECTORS
We do not presently have a separately constituted audit committee, compensation
committee, nominating committee, executive committee or any other committees of
our Board of Directors. As such, our entire Board of Directors acts as our audit
committee.
AUDIT COMMITTEE FINANCIAL EXPERT
Our Board of Directors does not currently have any members who qualify as "audit
committee financial experts." We believe that the cost related to retaining such
a financial expert at this time is prohibitive.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
No director, nominee for director or executive officer of the Company has
appeared as a party in any legal proceeding that may bear on his ability or
integrity during the past five years.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of our common
stock owned as of June 15, 2007, by all persons (i) known to us who own more
than 5% of the outstanding number of such shares, (ii) by all of our directors,
and (iii) by our officers and directors as a group. Unless otherwise indicated,
each of the stockholders has sole voting and investment power with respect to
the shares beneficially owned.
Name and Address of Amount and Nature Percentage of
Title of Class Beneficial Owner(2) of Beneficial Ownership Class(1)
- -------------- ------------------- ----------------------- --------
Common Stock Mr. Alan Sacks 5,012,000 55.5%
Common Stock Mr. Aaron Bard 2,500,000 27.7%
All officers
as a Group 7,512,000 83.2%
- ----------
(1) Based on 9,022,600 shares of our common stock outstanding.
(2) The address for Mr. Sacks is 3625 Blubonnet Road, North Vancouver BC V7R
4C9. The address for Mr. Bard is 15 Zichron Ya'acov, Suite 23 Entrance B.
Jerusalem, Israel 94421.
22
CHANGES IN CONTROL
There are no arrangements which may result in a change in control of us.
DESCRIPTION OF SECURITIES
COMMON STOCK
Our Certificate of Incorporation authorizes us to issue 100,000,000 shares of
common stock at a par value of $0.0001 per share. As of June 15, 2007, 9,022,600
shares of common stock were issued and outstanding. Holders of our common stock
are entitled to one vote for each share on all matters submitted to a
stockholder vote. Holders of common stock do not have cumulative voting rights.
Therefore, holders of a majority of the shares of common stock voting for the
election of directors can elect all of the directors. Holders of our common
stock representing a majority of the voting power of our capital stock issued
and outstanding and entitled to vote, represented in person or by proxy, are
necessary to constitute a quorum at any meeting of our stockholders.
Subject to the terms of any outstanding series of preferred stock, the holders
of common stock are entitled to share in all dividends that the Board of
Directors, in its discretion, declares from legally available funds. In the
event of liquidation, dissolution or winding up, each outstanding share entitles
its holder to participate pro rata in all assets that remain after payment of
liabilities and after providing for each class of stock, if any, having
preference over the common stock. Holders of our common stock have no
pre-emptive rights, no conversion rights and there are no redemption provisions
applicable to our common stock.
PREFERRED STOCK
Our Certificate of Incorporation authorizes us to issue 50,000,000 shares of
preferred stock at a par value of $0.0001 per share. As of June 15, 2007, we
have not issued any shares of preferred stock.
Our Board of Directors has the ability to issue "blank check" preferred stock in
various series, and shares of each series will have such rights, preferences,
and privileges fixed by the Board of Directors in the resolutions authorizing
the issuance of that particular series. The Board of Directors may issue any
such series of blank check preferred stock without action by the holders of the
common stock. Accordingly, the issuance of blank check preferred stock may
adversely affect the rights of the holders of our common stock. In addition, the
issuance of blank check preferred stock may be used as an "anti-takeover" device
without further action on the part of the holders of our common stock. The
issuance of preferred stock may also dilute the voting power of the holders of
common stock, in that a series of preferred stock may be granted enhanced per
23
share voting rights and the right to vote on certain matters separately as a
class, and may render more difficult the removal of current management, even if
such removal may be in the best interests of our common shareholders.
We have no current plans to issue any shares of preferred stock.
WARRANTS
There are no outstanding warrants to purchase our securities.
OPTIONS
There are no options to purchase our securities outstanding. We may in the
future establish an incentive stock option plan for our directors, employees and
consultants.
TRANSFER AGENT
We have appointed the following transfer agent for our shares of common stock:
Island Capital Management, LLC, d/b/a Island Stock Transfer, 100 Second Avenue
S., Suite 300N St. Petersburg, Fl 33701 Phone: (727) 287-0010 Fax: (727)
287-0069. The transfer agent is responsible for all record-keeping and
administrative functions in connection with our issued and outstanding common
stock.
INTEREST OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant or any of its parents or
subsidiaries. Nor was any such person connected with the registrant or any of
its parents or subsidiaries as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee. SRK Law Offices, our independent
legal counsel, has provided an opinion on the validity of our common stock.
Our financial statements for the period from inception to May 31, 2007, included
in this registration statement have been audited by Moore & Associates,
Chartered, as set forth in their report included in this registration statement.
24
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION OF
SECURITIES ACT LIABILITIES
Our directors and officers are indemnified as provided by the Nevada Revised
Statutes. We have been advised that in the opinion of the Securities and
Exchange Commission indemnification for liabilities arising under the Securities
Act is against public policy as expressed in the Securities Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities is asserted by one of our directors, officers, or controlling
persons in connection with the securities being registered, we will, unless in
the opinion of our legal counsel the matter has been settled by controlling
precedent, submit the question of whether such indemnification is against public
policy to a court of appropriate jurisdiction. We will then be governed by the
court's decision.
DESCRIPTION OF BUSINESS
OVERVIEW OF THE COMPANY
We are a development stage company that was formed on June 27, 2006. We have
commenced only limited operations, primarily focused on organizational matters
in connection with this offering and we have retained the services of a
consultant to assist us in reaching the milestones that we have set in our plan
of operation. We have never declared bankruptcy, have never been in
receivership, and have never been involved in any legal action or proceedings.
We have not made any significant purchase or sale of assets, nor has the Company
been involved in any mergers, acquisitions or consolidations. We are not a blank
check registrant as that term is defined in Rule 419(a)(2) of Regulation C of
the Securities Act of 1933, since we have a specific business plan or purpose.
Neither we nor our officers, directors, promoters or affiliates, have had
preliminary contact or discussions with, nor do we have any present plans,
proposals, arrangements or understandings with any representatives of the owners
of any business or company regarding the possibility of an acquisition or
merger.
Our initial board of directors consisted of two members, Mr. Benny Karasik and
Mr. Shlomo Friedman, who also respectively served as our President, Treasurer
and Secretary. On September 12, 2006 and October 31, 2006, Mr. Benny Karasik and
Mr. Shlomo Friedman respectively resigned from all their positions as officers
and directors of the Company and Mr. Aaron Bard and Mr. Alan Sacks were elected
as the new directors and respectively, as President, Treasurer and Secretary of
the Company to serve until their successors are elected and qualified.
OBJECTIVES
We intend to focus on developing user-friendly software that creates interactive
photo slideshows for children to watch and play on a personal computer. Our
software will turn selected family digital photos into interactive slideshows
complete with music, transitions, captions and interactive games. The
traditional photo slideshow is a display of a series of chosen images. We intend
to develop software that will enable parents to turn their family digital photos
into an interactive photo slideshow and game based on their personal family
photos. We plan to develop themes for the interactive photo slideshow specially
designed for children ages 3 to 12 years of age. Our target market is the
25
parents of children who wish to capture their family memories in a fun and
interesting way for their children to watch and play for years to come and
eventually hand down to their children and grandchildren.
Our planned software involves the following three-step process for the creation
and interactive manipulation of photo slideshows:
STEP 1: IMPORT PHOTOS - a parent imports photos from a digital camera,
scanner, hard drive and the internet.
STEP 2: CHOOSE A THEME - a parent chooses a theme and determines the
overall appearance of the interactive photo slideshow by applying corresponding
slideshow and menu elements. These elements include visual styles, motion
effects, and background music. Themes can be selected from specially designed
theme templates in categories such as Holidays, Birthdays, Kindergarten,
Preschool and Elementary school.
STEP 3: BURN & INTERACTIVE PLAY - a parent records the interactive photo
slideshow on a CD or DVD disc that can be played on any domestic CD or DVD
player or personal computer. Our software products will enable parents and
children to manipulate their photo slideshows and play a number of different
interactive games like puzzles and memory match games with the photos.
We plan to develop a software product that will be easy enough for anyone to
use, regardless of his/her level of computer literacy. Our software product will
provide useful features, contain help support and be easy to install. We intend
to concentrate our efforts on:
* EASE OF USE - The set-up of the photo slideshow will be easy to use,
simplifying the task of creating and sharing photos with others.
* SLIDESHOW FUNCTIONALITY - the photo slide-show will contain basic
functions, including:
* Timing Control
* Drag-and-Drop Placement
* Slideshow Preview
* Text and Captions
* HELP/SUPPORT - We will use a variety of sources to provide support to
users, including built-in help manuals and step-by-step tutorials, email support
and frequently asked questions (FAQ) pages.
In the future, after we begin to generate revenues, we plan to add enhanced
features such as:
* Educational content for children ages 3 - 12.
* Audio Synchronization
* Video Clips
* Voice Recording
* Hotkeys
26
Once we set up our website and complete our software development, a parent will
be able to purchase and download our software directly from our website. We plan
to price our software at below $100 for a downloadable version and slightly
higher for a boxed version. According to our business model, the majority of our
revenues will come from online sales of our software.
For additional information, please see "Plan of Operation" below.
We do not currently have sufficient capital to operate our business, and we will
require additional funding in the future to sustain our operations. There is no
assurance that we will have revenue in the future or that we will be able to
secure the necessary funding to develop our business.
Our offices are currently located at 15 Zichron Ya'akov, Suite 23 Entrance B.
Jerusalem 94421 Israel. Our telephone number is +1-877-651-2236. We have secured
a domain name - www.interactiveslideshow.com but do not yet have an operating
website.
THE MARKET OPPORTUNITY
We plan to market our interactive photo slideshow software to parents of
children between the ages of 3 and 12. According to the following surveys in the
United States and Canada, our target market in North America is very large:
The U.S. Census Bureau's 2005 estimate for the number of families residing in
the United States was 74,341,149 (with an average family size of 3.18 people).
Of these 74,341,149 families, 35,083,508 (approximately 47%) had children under
18 years of age.
(http://factfinder.census.gov/servlet/STTable?_bm=y&-geo_id=01000US&-qr_name
=ACS_2005_EST_G00_S1101&-ds_name=ACS_2005_EST_G00_&-redoLog=false)
The Bureau also has estimated the number of children under the age of 15 to be
60,559,408.
(http://factfinder.census.gov/servlet/STTable?_bm=y&-geo_id=
01000US&-qr_name=ACS_2005_EST_G00_S0101&-ds_name=ACS_2005_EST_G00)_
According to Statistics Canada, in 2004 there were approximately 8,701,700
families residing in Canada, with an average family size of three people.
Notably, there was an increase in the number of families between the years 2000
and 2004 of approximately 321,600 (with an average annual increase of about
0.946%), (http://www40.statcan.ca/l01/cst01/famil40.htm).
Also, in 2001, of the 8,371,020 families residing in Canada, 5,311,795
(approximately 63.45%) had children at home
(http://www40.statcan.ca/l01/cst01/famil54a.htm). Furthermore, based on a census
conducted in 2006, the number of children residing in Canada younger than 15
years of age was 5,644,600, (http://www40.statcan.ca/l01/cst01/demo10a.htm).
Based on the foregoing information, we believe that attracting only a small
percentage of our target market in North America will enable us to operate
profitably. There can be no assurance, however, that our software products will
appeal to parents of children between the ages of 3 and 12.
27
OUR COMPETITIVE POSITION IN THE PHOTO SLIDESHOW SOFTWARE INDUSTRY
The photo slideshow software industry is highly competitive. The photo slideshow
software we plan to introduce will encounter strong competition from many other
companies, including many with greater financial resources than ours as well as
from larger and more established companies.
Our competitors include companies such as:
* Ulead - CD & DVD PictureShow (http://www.ulead.com/dps/runme.htm)
* Photodex Corporation - ProShow
(http://www.photodex.com/products/proshow/)
* Wondershare Software - DVD SlideShow Builder
(http://www3.photo2vcd.com/index.html)
These companies currently dominate the photo slideshow market and we expect them
to remain the dominant force for the time being. These companies offer
do-it-yourself photo slideshow software programs which are similar to our future
product.
We seek to differentiate ourselves by providing our customers with more than the
traditional photo slideshow. Our software will enable parents and children to be
active with their photo slideshows and play a number of different interactive
games like puzzles and memory match games with the photos.
MARKETING & SALES STRATEGY
We plan to market our photo slideshow software with a web-based marketing
campaign; this web-based campaign will include the following:
E-MAIL MARKETING
E-mail marketing is one of the most powerful marketing tools available for
today's small businesses. According to DoubleClick's Email Consumer Study, over
78% of online shoppers have purchased products because of permission-based
e-mails and 59% of e-mail recipients have bought in a retail store as a result
of a merchant's e-mail.
Source: (http://www.doubleclick.com/us/about_doubleclick/
press_releases/default.asp?p=534).
We have budgeted $10,000 from our marketing budget for a mass e-mail campaign
BANNER ADVERTISING
The main vehicle for commercial sector advertising on the Web is called the
"banner ad." These advertisements are the same as you might see in a newspaper,
only they usually appear in the margin or top of a Web page, and they can also
be far more dynamic than a print ad.
28
The effectiveness of these ads is still in question. Given the ease with which
statistics can be collected on the number of times ads have been "clicked" by
users, there is strong evidence that they are often ignored. Nevertheless, it is
difficult to determine whether these Web ads are more or less effective than
other forms of advertising.
We budgeted $5,000 from our marketing campaign for banner advertising. We intend
to place banner ads on websites that specifically target parents of young
children such as www.parents.com.
SUBMISSION TO DIRECTORIES
We plan to submit our website to directories in order to increase our presence
on the Internet, as well as to get better rankings on search results. There are
several directories to which we plan to submit our website for free, such as
(http://www.yahoo.com - regional Yahoos also exist), Google
(http://www.google.com), Altavista (http://www.altavista.com) and Excite
(http://www.excite.com).
The submission of our website to the above directories is at no cost to the
Company.
DISTRIBUTION
We plan to price our software at below $100 for a downloadable version and
slightly higher for a boxed version. According to our business model, the
majority of our revenues will come from online sales of our software.
SOURCES AND AVAILABILITY OF PRODUCTS AND SUPPLIES
There are no constraints on the sources or availability of products and supplies
related to our business. We are producing our own software product and the
distribution of the software product and services will be primarily over the
internet.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We plan on selling our software products and services directly to consumers over
the internet. Our photo slideshow software will be priced for mass market
consumption. Therefore, we do not anticipate dependence on one or a few major
customers for at least the next 12 months or the foreseeable future.
PATENT, TRADEMARK, LICENSE & FRANCHISE RESTRICTIONS AND CONTRACTUAL OBLIGATIONS
& CONCESSIONS
We have not entered into any franchise agreements or other contracts that have
given, or could give rise to obligations or concessions.
We are planning to develop our interactive photo slideshow software. Beyond our
trade name, we currently do not hold any other intellectual property, and except
for the copyright to our software product we do not anticipate any additions in
the foreseeable future. We plan to rely for the most part on trade secrecy laws
29
and contractual proprietary rights and non-disclosure provisions to protect any
intellectual property rights that we create in our photo slideshow software
products.
EXISTING OR PROBABLE GOVERNMENT REGULATIONS
If we create and utilize a web site, as we plan to do, online access through a
company-operated web site requires careful consideration of legal and regulatory
compliance requirements and issues.
RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS
We have not incurred any costs to date and, except for outsourcing the
development of our photo slideshow software, we have no plans to undertake any
research and development activities during the first year of operation.
EMPLOYEES
We have no employees at the present time. Our officers and directors, are
responsible for all planning, developing and operational duties, and will
continue to do so throughout the early stages of our growth.
We have no intention of hiring employees until the business has been
successfully launched and we have sufficient, reliable revenue from our
operations. Since our ongoing operation is not labor intensive, our officers and
directors will do whatever work is required until our business reaches the point
of having positive cash flow. Human resource planning will be part of an ongoing
process that will include regular evaluation of operations and revenue
realization. We do not expect to hire any employees within the first year of
operation. Instead, we plan on outsourcing the necessary tasks.
REPORTS TO STOCKHOLDERS
We will voluntarily make available to stockholders an annual report, including
audited financials, on Form 10-KSB. We are not currently a fully reporting
company, but upon effectiveness of this registration statement, we will be
required to file reports with the SEC pursuant to the Securities Exchange Act of
1934; such as quarterly reports on Form 10-QSB and current reports on Form 8-K.
WHERE YOU CAN GET MORE INFORMATION
In accordance with the Securities Act of 1933, we filed with the SEC a
registration statement on Form SB-2 covering the securities in this offering. As
permitted by rules and regulations of the SEC, this prospectus does not contain
all of the information in the registration statement. For further information
regarding both our Company and the securities in this offering, we refer you to
the registration statement, including all exhibits and schedules, which you may
inspect without charge at the public reference facilities of the SEC's
Washington, D.C. office, 100 F Street, N.E., Washington, D.C. 20549, and on the
SEC Internet site at http:\\www.sec.gov.
30
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
THE FOLLOWING DISCUSSION OF OUR PLAN OF OPERATION SHOULD BE READ IN CONJUNCTION
WITH THE FINANCIAL STATEMENTS AND RELATED NOTES THAT APPEAR ELSEWHERE IN THIS
PROSPECTUS. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS,
INCLUDING THOSE DISCUSSED IN "RISK FACTORS" BEGINNING ON PAGE 8 OF THIS
PROSPECTUS. ALL FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE ON WHICH
THEY ARE MADE. WE UNDERTAKE NO OBLIGATION TO UPDATE SUCH STATEMENTS TO REFLECT
EVENTS THAT OCCUR OR CIRCUMSTANCES THAT EXIST AFTER THE DATE ON WHICH THEY ARE
MADE.
OVERVIEW
We are a development stage company with limited operations and no revenues from
our business operations. Our auditors have issued a going concern opinion. This
means that our auditors believe there is substantial doubt that we can continue
as an on-going business for the next twelve months. We do not anticipate that we
will generate any revenues until we complete the development of our interactive
photo slideshow software. Accordingly, we must raise cash from sources other
than our operations in order to implement our marketing plan.
PLAN OF OPERATION
Our plan of operation is to establish ourselves as a company that will produce
and distribute interactive photo slideshow software. Distribution would
primarily be via download from the Internet directly to consumers. Our target
market is the parents of children who wish to capture their family memories in a
fun and interesting way for their children to watch and engage in interactive
play for years to come and eventually hand down to their children and
grandchildren.
In the opinion of our management, widespread use of digital cameras and scanners
makes it very easy to capture, catalog, distribute and enjoy personal family
photographs. The increasing trend has been to share family photos on-line for
all to see. Examples of this can be seen in the vast popularity of websites such
as Flicker (www.flicker.com), Google Photos (picasaweb.google.com) and Yahoo!
Photos (photos.yahoo.com).
Our concept takes this trend to a new level by using the vast collection of
family photos in an interactive, entertaining and interesting photo slideshow
especially designed to appeal to children.
Our business objectives are:
* To develop the interactive photo slideshow software that will benefit
both parents and children alike.
* To execute our web-based marketing campaign and to create interest in
our product.
* To establish a brand name that will be associated with user-friendly
photo slideshow software that enables interactive play.
Our goals over the next 12 months are:
* To establish a customer data-base from our mass e-mail campaign.
31
* To drive traffic to our website and achieve 250 visitors per day.
* To generate revenue by the first quarter of 2008.
* To achieve break-even results of operations over the next 12 months.
During the first stages of our growth, our officers and directors will provide
all of the labor required to execute our business plan at no charge, except we
do intend to hire a website programmer on a contract basis for two months at an
estimated cost of $6,000 to set up our website and we do plan to outsource
initial software development tasks at an estimated cost of $30,000. Management
has no intention of hiring any employees during the first year of operations.
Due to our limited financial resources, each member of the management team will
dedicate approximately 10 - 20 hours per week in order to execute our plan of
operation.
EXPENDITURES
In our management's opinion, we will incur the following expenses to fund our
plan of operation over the next twelve months:
Legal, Accounting and Transfer Agent fees * $30,000
Software development $30,000
Website programmer + hosting with Yahoo! Shops or similar $ 7,200
Web-Based Marketing $15,000
-------
Total $58,200
=======
- ----------
* Total expenses of approximately $30,000 of which we have prepaid $24,000.
These expenditures are described in detail in the section entitled "Milestones"
below.
ACTIVITIES TO DATE
Our management wrote the software requirements specification (SRS) for our photo
slideshow software in order to reduce the development effort and to estimate the
costs and schedules for developing the software.
The SRS addressed the following:
* FUNCTIONALITY What is the software supposed to do?
* EXTERNAL INTERFACES. How does the software interact with end-users?
* PERFORMANCE. What is the speed, availability, response time,
recovery time of various software functions?
During April 2007 we hired a freelance business consultant to assist our
directors in attaining the following milestones & decisions with respect to our
Plan of Operation. In consideration for this professional advice we paid an
amount of $1,672.
32
We have secured a domain name "www.interactiveslideshow.com" but do not yet have
an operating website.
MILESTONES
The following is a chronological itemization of the milestones that we intend to
achieve over the next 12 months. We are currently in the first period of the
milestones noted below.
JUNE - SEPTEMBER, 2007
During the first 4 months we will be focusing on developing our interactive
photo slideshow software. Our director, Alan Sacks, will be in charge of
engaging a third party software development company to develop our purposed
software product.
OCTOBER - DECEMBER, 2007
We plan to set up an e-commerce website with "Yahoo! Shops" or with a similar
provider to sell our interactive photo slideshow software. Yahoo! Shops is a
turnkey online shopping cart system for merchants who wish to sell their
products online.
The website's main features will include:
* Product Catalog
* Shopping Cart and Checkout
* Customer Service
* Marketing (search engine friendly pages, automatic submission to
Yahoo! and Google)
* Product promotion
* Payment processing (accepting credit, debit, and PayPal payments
online)
* Shipping and Taxes
We plan to retain a website programmer on an independent contractor basis for
two months at the cost of $6,000 to set up our website.
The contractor's main duties will include:
* Custom design of our website.
* Set up our product page with product details and picture.
* Set up custom fields for order info.
* Track site statistics.
* Train our Secretary, Treasurer and director, Alan Sacks, on how to
maintain our online store on a day to day basis.
At this stage we have not budgeted for any extension of the two-month computer
programmer budget.
33
JANURARY, 2008 - JUNE, 2008
We plan to start our web-based marketing campaign and have budgeted $15,000 to
be spent over a six-month period. We will commence our initial marketing plan
using a mass e-mail campaign targeted specifically at parents with children
between the ages of 3 and 12 in the North American market. We hope to gain a
customer base as a result of this campaign. We plan to contact a number of
internet sites that target the same demographic market and we plan to purchase
banner ads on those websites. In parallel, we plan to place a survey on our
website that will gather information on how entrants to our website arrived at
our site. We will then focus our marketing efforts towards the most successful
platform.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not expect to purchase any significant equipment over the twelve months.
EMPLOYEES
Currently our only employees are our directors and officers. We do not expect
any other material changes in the number of employees over the next 12 months.
LIQUIDITY AND CAPITAL RESOURCES
We have raised $ 7,612 from the sale of stock to our officer and directors and
$70,530 through a private placement to 35 non-affiliated investors. Our
financial statements report a net loss of $28,079 for the period from June 27,
2006 (date of inception) to May 31, 2007. Our net loss is primarily due to
$1,646 on general and administrative fees, $1,672 on consulting fees, $807
filing fees and $24,000 for professional fees. On June 15, 2007 we had a working
capital of approximately $50,000.
In the opinion of our management, funds currently available will not satisfy our
working capital requirements up to May 31st, 2008. Estimated funding required
during the twelve month period ending May 31st 2008 is $58,200. Given our
current cash position of 50,000 this leaves us with a shortfall of $8,200.
Since June 27th, 2006 (inception) to June 15, 2007 we sold 9,022,600 shares.
We have never had any income from operations. We will require additional funds
to implement our plans. These funds may be raised through equity financing, debt
financing, or other sources, which may result in the dilution in the equity
ownership of our shares. We will also need more funds if the costs of the
development of our website costs greater than we have budgeted. We will also
require additional financing to sustain our business operations if we are not
successful in earning revenues. We currently do not have any arrangements for
further financing and we may not be able to obtain financing when required. Our
future is dependent upon our ability to obtain financing.
34
We have suffered recurring losses from operations. Our continuation is dependent
upon us raising additional capital. In this regard we have raised additional
capital through the private placements noted above but we will still require
additional funds to continue our operations and plans.
The continuation of our business is dependent upon us obtaining further
financing, the successful development of our website, a successful marketing and
promotion program, attracting and, further in the future, achieving a profitable
level of operations. The issuance of additional equity securities by us could
result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required
for our continued operations. We will pursue various financing alternatives to
meet our immediate and long-term financial requirements. There can be no
assurance that additional financing will be available to us when needed or, if
available, that it can be obtained on commercially reasonable terms. If we are
not able to obtain the additional financing on a timely basis, we will be unable
to conduct our operations as planned, and we will not be able to meet our other
obligations as they become due. In such event, we will be forced to scale down
or perhaps even cease our operations.
GOING CONCERN CONSIDERATION
Our independent auditors included an explanatory paragraph in their report on
the accompanying financial statements regarding concerns about our ability to
continue as a going concern. Our financial statements contain additional note
disclosures describing the circumstances that lead to this disclosure by our
independent auditors.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
DESCRIPTION OF PROPERTY
We do not lease or own any real property. We currently maintain our corporate
office at 15 Zichron Ya'akov, Suite 23 Entrance B. Jerusalem 94421 Israel. This
space is sufficient until we commence full operations.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the transactions discussed below, we have not entered into any
transaction nor are there any proposed transactions in which any of our
directors, executive officers, shareholders or any member of the immediate
family of any of the foregoing had or is to have a direct or indirect material
interest.
35
Mr. Aaron Bard, our President and director, has contributed office space for our
use for all periods presented. There is no charge to us for the space since the
value of such space is nominal and covers a limited amount of time.
Mr. Shlomo Friedman our former Secretary, Treasurer and Director purchased by
subscription 100,000 shares of our common stock on June 27, 2006 (inception) for
$0.001 share or an aggregate of $100.
Mr. Aaron Bard, our President and director, purchased by subscription 2,500,000
shares of our common stock on September 13, 2006 for $0.001 share or an
aggregate of $2,500.
Mr. Alan Sacks, our Secretary, Treasurer and director, purchased by subscription
5,012,000 shares of our common stock on October 31, 2006 for $0.001 share or an
aggregate of $5,012.
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
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 upon the
effectiveness of the registration statement of which this prospectus forms a
part. However, we can provide no assurance that our shares will be traded on the
bulletin board or, if traded, that a public market will materialize.
RULE 144
As of June 15, 2007, there are no shares of our common stock which are currently
available for resale to the public and in accordance with the volume and trading
limitations of Rule 144 of the Act. In general, under Rule 144 as currently in
effect, a person who has beneficially owned shares of a company's common stock
for at least one year is entitled to sell within any three month period a number
of shares that does not exceed 1% of the number of shares of the company's
common stock then outstanding which, in our case, would equal 90,220, shares as
of the date of this prospectus.
Sales under Rule 144 are also subject to manner of sale and notice requirements
and to the availability of current public information about the company. Under
Rule 144(k), a person who is not one of the company's affiliates at any time
during the three months preceding a sale, and who has beneficially owned the
shares proposed to be sold for at least two years, is entitled to sell shares
without complying with the manner of sale, public information, volume limitation
or notice provisions of Rule 144.
STOCK OPTION GRANTS
As of June 15, 2007, we have not granted any stock options.
36
REGISTRATION RIGHTS
We have not granted registration rights to the selling shareholders or to any
other persons.
HOLDERS OF OUR COMMON STOCK
As of June 15, 2007, we have 38 registered shareholders.
DIVIDENDS
Since inception we have not paid any dividends on our common stock. We currently
do not anticipate paying any cash dividends in the foreseeable future on our
common stock. Although we intend to retain our earnings, if any, to finance the
expansion and growth of our business, our Board of Directors will have the
discretion to declare and pay dividends in the future.
Payment of dividends in the future will depend upon our earnings, capital
requirements, and other factors that our Board of Directors may deem relevant.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
None.
EXECUTIVE COMPENSATION
We have not paid, nor do we owe, any compensation to our executive officers. We
have not paid any compensation to our officers since inception.
We have no employment agreements with any of our executive officers or
employees.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation(1)
------------------------------ -----------------------------------
Awards Payouts
------ -------
Securities Restricted
Underlying Shares or
Name and Options/ Restricted
Principal SARs Share LTIP
Position Year(6) Salary Bonus Other(1) Granted Units Payouts All Other
- -------- ------- ------ ----- -------- ------- ----- ------- ---------
AARON BARD 2007 Nil Nil Nil Nil Nil Nil Nil
President and 2006 Nil Nil Nil Nil Nil Nil Nil
director(2)
ALAN SACKS
Secretary, 2007 Nil Nil Nil Nil Nil Nil Nil
Treasurer and 2006 Nil Nil Nil Nil Nil Nil Nil
director(3)
37
BENNY KARASIK
Former officer
and director(4) 2006 Nil Nil Nil Nil Nil Nil Nil
SHLOMO FRIEDMAN
Former officer
and director(5) 2006 Nil Nil Nil Nil Nil Nil Nil
- ----------
(1) The value of perquisites and other personal benefits, securities and
property for the executive officers that do not exceed the lesser of
$50,000 or 10% of the total of the annual salary and bonus is not reported
herein.
(2) Aaron Bard became our President and a director of our company, on September
13, 2006.
(3) Alan Sacks became our Secretary and a director of our company, on October
31, 2006.
(4) Benny Karasik resigned as our President and a director of our company on
September 12, 2006.
(5) Shlomo Friedman resigned as our Treasurer, Secretary and director of our
company on October 31, 2006.
(6) We were incorporated on June 27, 2006.
OPTION/SAR GRANTS
We do not currently have a stock option plan. No individual grants of stock
options, whether or not in tandem with stock appreciation rights known as SARs
or freestanding SARs have been made to any executive officer or any director
since our inception; accordingly, no stock options have been granted or
exercised by any of the officers or directors since we were founded.
LONG-TERM INCENTIVE PLANS AND AWARDS
We do not have any long-term incentive plans that provide compensation intended
to serve as incentive for performance. No individual grants or agreements
regarding future payouts under non-stock price-based plans have been made to any
executive officer or any director or any employee or consultant since our
inception; accordingly, no future payouts under non-stock price-based plans or
agreements have been granted or entered into or exercised by any of the officers
or directors or employees or consultants since we were founded.
COMPENSATION OF DIRECTORS
There are no arrangements pursuant to which directors are or will be compensated
in the future for any services provided as a director.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL ARRANGEMENTS
There is currently no employment or other contracts or arrangements with
officers or directors. There are no compensation plans or arrangements,
including payments to be made by us, with respect to our officers, directors or
38
consultants that would result from the resignation, retirement or any other
termination of such directors, officers or consultants from us. There are no
arrangements for directors, officers, employees or consultants that would result
from a change-in-control.
DIRECTOR COMPENSATION
We have paid no compensation to our directors for their services as directors
and we have no agreements with the directors for their services as directors.
The following table sets forth the aggregate compensation paid or accrued by the
Company to the Directors from inception until June 15, 2007.
39
FINANCIAL STATEMENTS
Your Digital Memories, Inc.
FINANCIAL STATEMENTS
May 31, 2007
Index
Page
Number
------
Financial Statements
Report of Independent Registered Public Accounting Firm F-2
Balance Sheets F-3
Statements of Operations F-4
Statement of Stockholders' Equity F-5
Statements of Cash Flow F-6
Notes to audited Financial Statements F-7
F-1
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Your Digital Memories Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Your Digital Memories Inc. as
of May 31, 2007, and the related statements of operations, stockholders' equity
and cash flows (Inception) June 27, 2006 through May 31, 2007. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Your Digital Memories Inc. as
of May 31, 2007 and the results of its operations and its cash flows from
Inception June 27, 2006 through May 31, 2007, 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 6 to the
financial statements, the Company has net losses $28,079 which raise substantial
doubt about its ability to continue as a going concern. Management's plans
concerning these matters are also described in Note 6. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Moore & Associates, Chartered
- ----------------------------------------
Moore & Associates Chartered
Las Vegas, Nevada
June 8, 2007
2675 S. Jones Blvd. Suite 109, Las Vegas, NV 89146
(702) 253-7511 Fax (702) 253-7501
F-2
YOUR DIGITAL MEMORIES, INC.
(A Development Stage Company)
BALANCE SHEETS
May 31,
2007
--------
ASSETS
Current Assets
Cash $ 50,063
--------
Total Assets $ 50,063
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities $ --
--------
Total Liabilities $ --
--------
Stockholders' Equity (Note 4, 5)
Common Stock, authorized
100,000,000 shares, par value $0.0001
Preferred Stock, authorized
50,000,000 shares, par value $0.0001
Issued and outstanding:
9,022,600 common shares 902
Additional paid-in capital 77,240
Deficit accumulated during the development stage (28,079)
--------
Total Stockholders' Equity 50,063
--------
Total Liabilities and Stockholders' Equity $ 50,063
========
The accompanying notes are an integral part of these statements
F-3
YOUR DIGITAL MEMORIES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative Cumulative
Amounts From Amounts From
Date of Date of
Incorporation on Incorporation on
June 27,2006 June 27,2006
to to
May 31, 2007 May 31, 2007
------------ ------------
REVENUE $ -- $ --
OPERATING EXPENSES
General and Administrative 1,646 1,646
Professional Fees 24,000 24,000
Consulting 1,672 1,672
Filing Fees 807 807
----------- -----------
Total Expenses 28,124 28,124
----------- -----------
Loss from operations (28,124) (28,124)
=========== ===========
Interest income 45 45
Loss before income taxes (28,079) (28,079)
----------- -----------
Provision for income taxes -- --
=========== ===========
Net loss $ (28,079) $ (28,079)
Basic and Diluted (Loss) per Share a a
----------- -----------
Weighted Average
Number of Shares (Note 4) 5,061,492 5,061,492
=========== ===========
- ----------
a = Less than ($0.01) per share
The accompanying notes are an integral part of these statements
F-4
YOUR DIGITAL MEMORIES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
JUNE 27, 2006 (INCEPTION) TO MAY 31, 2007
Common Stock
--------------------- Paid in Accumulated Total
Shares Amount Capital Deficit Equity
------ ------ ------- ------- ------
INCEPTION JUNE 27, 2006 -- $ -- $ -- $ -- $ --
Common Shares issued to
director for cash June 27, 2006 100,000 10 90 100
Common Shares issued to
director for cash Sept 12, 2006 2,500,000 250 2,250 2,500
Common Shares issued to
director for cash October 31, 2006 5,012,000 501 4,511 5,012
Private placement closed April 30, 2004 1,410,600 141 70,389 70,530
Net loss for the year (28,079) (28,079)
---------- ------- -------- --------- ---------
BALANCE, MAY 31, 2007 9,022,600 $ 902 $ 7,240 $ (28,079) $ 49,963
========== ======= ======== ========= =========
The accompanying notes are an integral part of these statements
F-5
YOUR DIGITAL MEMORIES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOW
Cumulative
Amounts From
Date of Date of
Incorporation on Incorporation on
June 27,2006 June 27,2006
to to
May 31, 2007 May 31, 2007
------------ ------------
Operating Activities
Net (Loss) for the year $(28,079) $(28,079)
Net Cash (Used) by Operating Activities (28,079) (28,079)
-------- --------
Financing Activities
Proceeds from sale of Common Stock 78,142 78,142
-------- --------
Cash Provided by Financing Activities
78,142 78,142
-------- --------
Net Increase in Cash 50,063 50,063
Cash, Beginning of Period -- --
-------- --------
Cash, End of Period $ 50,063 $ 50,063
======== ========
Supplemental disclosure with respect to cash flows:
Cash paid for income taxes $ -- $ --
Cash paid for interest $ -- $ --
The accompanying notes are an integral part of these statements
F-6
YOUR DIGITAL MEMORIES, INC.
(A Development Stage Company)
NOTES TO AUDITED FINANCIAL STATEMENTS
(MAY 31, 2007)
NOTE 1. GENERAL ORGANIZATION AND BUSINESS
Your Digital Memories, Inc, (A Development Stage Company) was incorporated on
June 27, 2006 under the laws of the State of Nevada. The company has limited
operations and in accordance with SFAS #7 is considered to be in the development
stage, and has had no revenues from operations to date.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
The Company's only significant asset at May 31, 2007 is cash. The relevant
accounting policies and procedures are listed below. The company has adopted a
May 31 year end.
ACCOUNTING BASIS
These financial statements are prepared on the accrual basis of accounting in
conformity with accounting principles generally accepted in the United States of
America.
MANAGEMENT CERTIFICATION
The financial statements herein are certified by the officers of the Company to
present fairly, in all material respects, the financial position, results of
operations and cash flows for the periods presented in conformity with
accounting principles generally accepted in the United States of America,
consistently applied.
CASH AND CASH EQUIVALENTS
For the purpose of the statement of cash flows, cash equivalents include all
highly liquid investments with maturity of three months or less.
EARNINGS (LOSS) PER SHARE
The basic earnings (loss) per share are calculated by dividing the Company's net
income available to common shareholders by the weighted average number of common
shares outstanding during the year. The diluted earnings (loss) per share are
calculated by dividing the Company's net income (loss) available to common
shareholders by the diluted weighted average number of shares outstanding during
the year. The diluted weighted average number of shares outstanding is the basic
weighted number of shares adjusted as of the first of the year for any
potentially dilutive debt or equity. There are no diluted shares outstanding.
F-7
DIVIDENDS
The Company has not adopted any policy regarding payment of dividends. No
dividends have been paid during the period shown.
INCOME TAXES
The Company provides for income taxes under Statement of Financial Accounting
Standards NO. 109, "Accounting for Income Taxes." SFAS No. 109 requires the use
of an asset and liability approach in accounting for income taxes.
SFAS No. 109 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. No
provision for income taxes is included in the statement due to its immaterial
amount, net of the allowance account, based on the likelihood of the Company to
utilize the loss carry-forward
USE OF ESTIMATES
The preparation of 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 date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
NET INCOME PER COMMON SHARE
Net income (loss) per common share is computed based on the weighted average
number of common shares outstanding and common stock equivalents, if not
anti-dilutive. The Company has not issued any potentially dilutive common
shares.
REVENUE AND COST RECOGNITION
The Company has no current source of revenue; therefore the Company has not yet
adopted any policy regarding the recognition of revenue or cost.
NOTE 3. INCOME TAXES:
Income taxes are provided in accordance with Statement of Financial accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting and net operating loss carry forwards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities.
F-8
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion of all of the deferred
tax assets will be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.
NOTE 4. STOCKHOLDERS' EQUITY
AUTHORIZED
The Company is authorized to issue 100,000,000 shares of $0.0001 par value
common stock and 50,000,000 shares of preferred stock, par value $0.0001 per
share. All common stock shares have equal voting rights, are non-assessable and
have one vote per share. Voting rights are not cumulative and, therefore, the
holders of more than 50% of the common stock could, if they choose to do so,
elect all of the directors of the Company.
ISSUED AND OUTSTANDING
On June 27, 2006 (inception) the Company issued 100,000 shares of its common
stock to its Director, Mr. Shlomo Friedman for cash. See Note 5.
On September 13, 2006 (inception), the Company issued 2,500,000 shares of its
common stock to its Director, Mr. Aaron Bard for cash of $2,500. See Note 5.
On October 31, 2006, the Company issued 5,012,000 shares of its common stock to
its Director for cash of $5,012. See Note 5.
On April 30, 2007, the Company accepted subscriptions for 1,410,600 common
shares from 35 investors under a private placement. The private placement was
not subject to any minimum investment and was priced at $0.05 per share. The
Company accepted the subscriptions on various dates throughout inception to
April 30, 2007 from 35 offshore non-affiliates investors.
As of May 31, 2007 the Company had 9,022,600 shares of common stock issued and
outstanding.
NOTE 5. RELATED PARTY TRANSACTIONS
The Company's neither owns nor leases any real or personal property. A Director
of the Company provides office space free of charge. The officers and directors
of the Company are involved in other business activities and may, in the future,
become involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between the Company and their other business interests. The Company has not
formulated a policy for the resolution of such conflicts.
On June 27, 2006 (inception) the Company issued 100,000 shares of its common
stock to its Director, Mr. Shlomo Friedman for cash. See Note 4.
On September 13, 2006, the Company issued 2,500,000 shares of its common stock
to its Director, Mr. Aaron Bard for cash of $2,500. See Note 4.
F-9
On October 31, 2006, the Company issued 5,012,000 shares of its common stock to
its Director for cash of $5,012. See Note 4.
NOTE 6. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has net losses for the
period from inception to May 31, 2007 of $28,079. This condition raises
substantial doubt about the Company's ability to continue as a going concern.
The Company's continuation as a going concern is dependent on its ability to
meet its obligations, to obtain additional financing as may be required and
ultimately to attain profitability. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
NOTE 7. NET OPERATING LOSSES
As of May 31, 2007, the Company has a net operating loss carry forward of
approximately $28,079, which will expire 20 years from the date the loss was
incurred.
NOTE 8. OPERATING LEASES AND OTHER COMMITMENTS:
The Company currently has no operating lease commitments or any other
commitments.
F-10
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes and by our Articles of Incorporation and Bylaws.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and control 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, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than our payment of expenses
incurred or paid by our director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we 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 such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with the issuance and
distribution of the securities being registered hereby. All such expenses will
be borne by the registrant; none shall be borne by any selling stockholders.
Name of Expense Amount
--------------- ------
Securities and Exchange Commission registration fee $ 7
Legal fees and expenses (1) 12,500
Accounting fees and expenses (1) 2,000
Miscellaneous (1) 500
-------
Total (1) $15,007
=======
- ----------
(1) Estimated.
All amounts are estimates other than the Commission's registration fee. We are
paying all expenses of the offering listed above. No portion of these expenses
will be borne by the selling shareholders. The selling shareholders, however,
will pay any other expenses incurred in selling their common stock, including
any brokerage commissions or costs of sale
II-1
RECENT SALES OF UNREGISTERED SECURITIES
The following sets forth information regarding all sales of our unregistered
securities during the past three years. None of the holders of the shares issued
below have subsequently transferred or disposed of their shares and the list is
also a current listing of the Company's stockholders.
During the last three years, we have issued unregistered securities to the
persons, as described below. None of these transactions involved any
underwriters, underwriting discounts or commissions or any public offering, and
we believe that each transaction was exempt from the registration requirements
of the Securities Act of 1933 by virtue of Section 4(2) thereof, or Regulation D
promulgated thereunder. All recipients had adequate access, through their
relationships with us, to information about us.
On June 27, 2006, we sold 100,000 shares of our common stock to Mr. Shlomo
Friedman, our former Secretary, Treasurer and Director, for cash payment to us
of $100. We believe this issuance was deemed to be exempt under Regulation D and
Section 4(2) of the Securities Act. No advertising or general solicitation was
employed in offering the securities. The offerings and sales were made only to
accredited investors, and transfer was restricted by us in accordance with the
requirements of the Securities Act of 1933.
On September 13, 2006, we sold 2,500,000 shares of our common stock to Mr. Aaron
Bard, our President and director, for cash payment to us of $2,500. We believe
this issuance was deemed to be exempt under Regulation D and Section 4(2) of the
Securities Act. No advertising or general solicitation was employed in offering
the securities. The offerings and sales were made only to accredited investors,
and transfer was restricted by us in accordance with the requirements of the
Securities Act of 1933.
On October 31, 2006, we sold 5,012,000 shares of our common stock to Mr. Alan
Sacks, our Secretary, Treasurer and director, for cash payment to us of $5,012.
We believe this issuance was deemed to be exempt under Regulation D and Section
4(2) of the Securities Act. No advertising or general solicitation was employed
in offering the securities. The offerings and sales were made only to accredited
investors, and transfer was restricted by us in accordance with the requirements
of the Securities Act of 1933.
During the time period beginning in January 2007 and ending on April 30, 2007,
we issued and sold 1,410,600 shares of our common stock to our non-US seed
capital investors at a purchase price of $0.05 per share, without registering
the shares with the Securities and Exchange Commission. We completed this
offering pursuant to Regulation S of the Securities Act. Each purchaser
represented to us that they were a non-US person as defined in Regulation S. We
did not engage in distribution of these offerings in the United States.
II-2
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
The following exhibits are filed as part of this registration statement:
Exhibit Description
- ------- -----------
3.1 Articles of Incorporation of Registrant.
3.2 By-Laws of Registrant.
4.1 Specimen Stock Certificate.
5.1 Opinion of Legal Counsel.
10.1 Sample of Subscription Agreement executed by the Selling Stockholders.
23.1 Consent of Moore & Associates, Chartered
23.2 Consent of Legal Counsel (incorporated in Exhibit 5.1)
II-3
UNDERTAKINGS
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(a) Include any prospectus required by Section 10(a)(3) of the Securities
Act;
(b) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in the
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(c) Include any additional or changed material information on the plan of
distribution.
2. To, for the purpose of determining liability under the Securities Act,
treat each post-effective amendment as a new registration statement
relating to the securities offered, and the offering of the securities at
that time to be the initial bona fide offering thereof.
3. To remove from registration, by means of a post-effective amendment, any of
the securities being registered hereby that remains unsold at the
termination of the offering.
4. For purposes of determining any liability under the Securities Act of 1933,
each filing of the Registrant's Annual report pursuant to Section 13(a) or
15(d) of the Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at the time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
SEC such indemnification is against public policy as expressed in the Securities
Act, and is, therefore, unenforceable.
II-4
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
person sin connection with the securities being registered, we will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
II-5
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this Form SB-2 and has authorized this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Jerusalem, Israel on June 18, 2007.
YOUR DIGITAL MEMORIES, INC.
By: /s/ Aaron Bard
-------------------------------------
Name: Aaron Bard
Title: President and Director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
Date: June 18, 2007 /s/ Aaron Bard
----------------------------------------
Name: Aaron Bard
Title: President and Director
(Principal Executive and
Financial Officer)
Date: June 18, 2007 /s/ Alan Sacks
----------------------------------------
Name: Alan Sacks
Title: Secretary, Treasurer and Director
II-6