As filed with the Securities and Exchange Commission on September 19, 2007
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BLUE PENGUIN ENTERPRISES, INC.
(Exact name of Registrant as specified in its charter)
Nevada 5944 26-0715342
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code) Identification No.)
199 Omega Batim Ha'chamim St.
P.O.Box 199
Rosh Ha'ain 48101, Israel
Tel: + 1 (866) 857-8148.
Fax: + 1 (866) 857-8147.
(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)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the registration statement becomes effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box: [ ]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
================================================================================
Title of Each Proposed Proposed
Class of Maximum Maximum
Securities Aggregate Aggregate Amount of
to be Amount to be Price Per Offering Registration
Registered Registered Share Price Fee
- --------------------------------------------------------------------------------
Common Stock to
be offered by
direct offering 3,000,000 $0.03 (1) $90,000 $2.76
- --------------------------------------------------------------------------------
Total 3,000,000 (2) $90,000 $2.76
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) and (o) under the Securities Act of 1933.
(2) In the event of a stock split, stock dividend or similar transaction
involving our common stock, the number of shares registered shall
automatically be increased to cover the additional shares of common stock
issuable pursuant to Rule 416 under the Securities Act of 1933, as amended.
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.
================================================================================
PROSPECTUS
Subject to Completion Dated September __, 2007
Blue Penguin Enterprises, Inc.
A MAXIMUM OF 3,000,000 SHARES OF COMMON STOCK
OFFERING PRICE $0.03 PER SHARE
This prospectus relates to our offering of 3,000,000 new shares of our common
stock at an offering price of $0.03 per share. The offering will commence
promptly after the date of this prospectus and close no later than 180 days
after the date of this prospectus. However, we may extend the offering for up to
90 days following the 180-day offering period. We will pay all expenses incurred
in this offering. The common shares are being offered by us on a no-minimum
basis. Since there are no minimum purchase requirements, we may not receive any
proceeds or we may receive only minimal proceeds from this offering. To the
extent that we receive funds in this offering, they will be immediately
available for our use since we have no arrangements to place funds in escrow,
trust or similar account. We may receive up to $90,000 in proceeds from the
offering.
The offering is a self-underwritten offering; there will be no underwriter
involved in the sale of these securities. We intend to offer the securities
through our officers and directors, who will not be paid any commission for such
sales.
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 6 BEFORE INVESTING
IN OUR COMMON STOCK.
There is currently no public market for the securities being offered and no
national securities exchange or the NASDAQ Stock Market lists the securities
being offered. Our common stock is not now, nor has ever been, traded on any
market or securities exchange, and we have not applied for listing or quotation
on any public market. The purchaser in this offering may be receiving an
illiquid security. We have not applied for listing or quotation on any public
market. We have arbitrarily determined the offering price of $0.03 per share
offered hereby. The offering price bears no relationship to our assets, book
value, earnings or any other customary investment criteria. After the effective
date of the registration statement, we intend to have a market maker file an
application with the National Association of Securities Dealers, Inc. to have
our common stock quoted on the OTC Bulletin Board. We currently have no market
maker who is willing to list quotations for our stock. There is no assurance
that an active trading market for our shares will develop, or, if developed,
that it will be sustained.
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 PROSPECTUS 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 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
----
PART I
PROSPECTUS SUMMARY 3
RISK FACTORS 6
RISKS RELATING TO OUR BUSINESS 6
RISKS RELATING TO OUR STRATEGY AND INDUSTRY 7
RISKS RELATING TO THIS OFFERING 9
FORWARD-LOOKING STATEMENTS 11
USE OF PROCEEEDS 12
DETERMINATION OF THE OFFERING PRICE 13
CAPITALIZATION 13
DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES 14
PLAN OF DISTRIBUTION, TERMS OF THE OFFERING 14
LEGAL PROCEEDINGS 16
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 18
DESCRIPTION OF SECURITIES 19
INTEREST OF NAMED EXPERTS AND COUNSEL 20
DISCLOSURE OF SEC POSITION OF INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES 21
DESCRIPTION OF BUSINESS 21
DESCRIPTION OF PROPERTY 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 27
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 30
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS 31
EXECUTIVE COMPENSATION 32
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 33
FINANCIAL STATEMENTS 34
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 BLUE PENGUIN ENTERPRISES, INC.
CORPORATE BACKGROUND
We were incorporated on August 10, 2007. We have not generated any revenue to
date and we are a development stage company. We plan to operate an e-Commerce
website which will be focused on the sale of quality diamonds and diamonds
jewelry. On our website we will be selling diamonds and diamonds jewelry which
meet certain criteria including Carat, Clarity, Color, Cut and a grading report.
Clients will be able to purchase our products directly online and the purchase
will be charged to the client credit card, prior to shipping.
Our website is near completion and we plan on having a commercial product
available for sale with order fulfillment by April 2008. When we complete the
development of our website, we plan to focus our marketing efforts in the United
States and Canada.
Our offices are currently located at 199 Omega Batim Ha'chamim St., P.O.Box 199,
Rosh Ha'ain 48101 Israel. Our telephone number is + 1 (866) 857-8148. Our
website is www.bluepenguindiamonds.com.
Our auditors have issued an audit opinion which includes a statement describing
their doubts about whether we will be able to continue as a going concern. In
addition, our financial status creates substantial doubt whether we will be able
to continue as a going concern. Investors should note that to date we have no
products available for sale.
THE OFFERING
Shares being offered Up to 3,000,000 shares of our common stock.
Offering price $0.03 per share of common stock.
Terms of the offering The offering will commence when the Securities
and Exchange Commission declares this
prospectus effective. The offering will
terminate upon the earlier of the sale of all
the 3,000,000 shares of common stock being
offered or 180 days unless it is extended for
an additional 90 days.
Number of shares outstanding
before the offering 5,500,000
Number of shares outstanding
after the offering if all the
shares are sold 8,500,000
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Our executive officers currently hold 91% of
our shares, and, as a result, they will
exercise control over our direction. After the
offering, our officers will hold approximately
58.8% if we are successful at selling all the
shares offered.
Market for the common shares There is no public market for our common
shares. After the effective date of the
registration statement, 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. We currently have
no market maker who is willing to list
quotations for our stock. There is no
assurance that a trading 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.
Use of proceeds If we are successful at selling all the shares
we are offering, our net proceeds from this
offering will be approximately $69,990. We
intend to use these proceeds to execute our
business plan.
4
Summary Financial Data
The following summary financial information for the period August 10, 2007
(inception) to August 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 Operations" and the financial
statements and accompanying notes included in this prospectus.
Results of
Operations
For the period
August 10, 2007
(inception)
through
August 31,
2007
-----------
Costs and expenses $ 10
Loss from operations (10)
Other expense - interest 0
Net loss (10)
Net loss per common share:
Basic and diluted (less than ($0.01) per share (0.00)
Weighted average number of
Common shares outstanding: 5,095,238
Basic and diluted
Balance Sheet
Data
August 31,
2007
-----------
Working capital $ 15,490
Total assets $ 15,490
Total liabilities --
Total Liabilities and Stockholders' Equity $ 15,490
5
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 $10 for the period from August 10, 2007
(inception) to August 31, 2007. We anticipate generating losses for 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
could result 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 August 31, 2007. We currently have no products,
customers or revenues. We may not be able to execute our business plan. 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 is unproven, and the lack of operating history makes it difficult to
evaluate the future prospects of our business.
3. OUR BUSINESS PLAN MAY BE UNSUCCESSFUL.
The success of our business plan is dependent on our website development and
offering diamond jewelry products. Our ability to develop such website is
unproven, and the lack of operating history makes it difficult to validate our
business plan.
4. WE HAVE NO OPERATING HISTORY AND HAVE MAINTAINED LOSSES SINCE INCEPTION,
WHICH WE EXPECT TO CONTINUE IN THE FUTURE. If we are unsuccessful in generating
revenues in the future, our business will most likely fail.
We incurred net losses of $10 for the period from August 10, 2007 (inception) to
August 31, 2007. Management believes that the gross proceeds of $90,000
generated from this offering will be sufficient to continue our planned
activities for no more than 12 months after the offering. However, 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 products. 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.
6
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.
5. OUR EXECUTIVE OFFICERS AND DIRECTORS HAVE SIGNIFICANT VOTING POWER AND MAY
TAKE ACTIONS THAT MAY BE DIFFERENT THAN ACTIONS SOUGHT BY OUR OTHER
SHAREHOLDERS.
If we are successful in selling all 3,000,000 shares being offered in this
prospectus, our officers and directors will own approximately 58.8% of the
outstanding shares of our common stock.
These shareholders will be able to exercise significant influence over all
matters requiring shareholder approval. This influence over our affairs might be
adverse to the interest of our other stockholders. In addition, this
concentration of ownership could delay or prevent a change in control and might
have an adverse effect on the market price of our common stock.
6. SINCE OUR OFFICERS CAN WORK OR CONSULT FOR OTHER COMPANIES, THEIR OTHER
ACTIVITIES COULD SLOW DOWN OUR OPERATIONS.
Our officers and directors are not required to work exclusively for us and do
not devote all of their time to our operations. Therefore, it is possible that
their pursuit of other activities may slow our operations and reduce our
financial results because of the slowdown in operations. It is expected that our
officers and directors will devote between 5 and 30 hours per week to our
operations on an ongoing basis, and will devote whole days and even multiple
days at a stretch when required.
7. OUR OFFICERS HAVE NO TECHNICAL TRAINING OR EXPERIENCE IN MARKETING AND
DEVELOPING A WEBSITE TO SELL DIAMOND JEWELRY ONLINE. WE MAY SUFFER IRREPARABLE
HARM DUE TO THIS LACK OF EXPERIENCE, WHICH IN TURN MAY RESULT IN THE LOSS OF
YOUR INVESTMENT.
Due to their lack of experience, our officers may make flawed decisions and
choices regarding website development as well as the on-line sales and marketing
of diamond jewelry products. Consequently our operations, earnings and ultimate
financial success could suffer irreparable harm due to our officer's lack of
experience in this industry. As a result we may have to suspend or cease
operations which will result in the loss of your investment.
RISKS RELATING TO OUR STRATEGY AND INDUSTRY
8. PURCHASERS OF DIAMONDS AND FINE JEWELRY MAY NOT CHOOSE TO SHOP ONLINE, WHICH
WOULD PREVENT US FROM SELLING OUR PRODUCTS.
The online market for diamonds and fine jewelry is significantly less developed
than the online market for books, music, toys and other consumer products. If
this market does not gain widespread acceptance, our business may suffer. Our
success will depend, in part, on our ability to attract consumers who have
historically purchased diamonds and fine jewelry through traditional retailers.
Furthermore, we may have to incur significantly higher and more sustained
advertising and promotional expenditures or price our products more
competitively than we currently anticipate in order to attract additional online
consumers to our websites and convert them into purchasing customers. Specific
factors that could prevent consumers from purchasing diamonds and fine jewelry
from us include:
* concerns about buying luxury products such as diamonds and fine
jewelry without a physical storefront, face-to-face interaction with
sales personnel and the ability to physically handle and examine
products;
* delivery time associated with Internet orders;
* product offerings that do not reflect consumer tastes and preferences;
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* pricing that does not meet consumer expectations;
* concerns about the security of online transactions and the privacy of
personal information;
* delayed shipments or shipments of incorrect or damaged products;
* inconvenience associated with returning or exchanging Internet
purchased items; and
* usability, functions and features of our websites.
9. WE RELY EXCLUSIVELY ON THE SALE OF DIAMOND JEWELRY FOR OUR NET SALES, AND
DEMAND FOR THESE PRODUCTS COULD DECLINE.
Luxury products, such as diamonds and fine jewelry, are discretionary purchases
for consumers. The volume and dollar value of such purchases may significantly
decrease during economic downturns. The success of our business depends in part
on many macroeconomic factors, including employment levels, salary levels, tax
rates and credit availability, all of which affect consumer spending and
disposable income. Any reduction in consumer spending or disposable income may
affect us more significantly than companies in other industries.
Our future net sales and results of operations are highly dependent on the
demand for diamond jewelry, particularly engagement rings. Should prevailing
consumer tastes for diamonds decline or customs with respect to engagement shift
away from the presentation of diamond jewelry, demand for our products would
decline and our business and results of operations would be substantially
harmed.
10. WE MAY NOT BE SUCCESSFUL IN DEVELOPING WEBSITE TO SELL DIAMOND JEWELRY THAT
ACHIEVES MARKET ACCEPTANCE.
The success or failure of a website that sells diamonds 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 any website that will fulfill the
needs and appeal to the tastes of the consumers.
11. WE MAY NEVER BE ABLE TO ACHIEVE SALES REVENUES SUFFICIENT TO BECOME
PROFITABLE.
There can be no assurance that our products will achieve a level of market
acceptance that will make us profitable.
We believe that the acceptance of our products will depend on our ability to:
* Effectively market our products;
* Provide high-quality customer support;
* Price and sell the products in a manner that is appealing to potential
customers and to businesses that would promote our 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 otherwise slow sales of
our products.
12. WE FACE INTENSE COMPETITION FROM OTHER BUSINESSES THAT CURRENTLY MARKET AND
SELL DIAMOND JEWELRY.
Competition will come not only from those who deliver their products through
traditional retail establishments but also from those who deliver their products
through the internet. Our competitors have longer operating histories, greater
8
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.
13. MANY OF OUR COMPETITORS AND POTENTIAL COMPETITORS HAVE SIGNIFICANTLY MORE
FINANCIAL RESOURCES, WHICH COULD ALLOW THEM TO DEVELOP PRODUCTS THAT COULD
RENDER OUR PROPOSED PRODUCTS INFERIOR.
Our competition, including Tiffany & Co., BlueNile.com and amazon.com, may have
products or may develop products that will render our proposed products
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
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 products.
14. MARKETING AND MAKING OUR 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 and sell our
products. If we utilize our web site, as we plan to do, online access through
company-operated web sites 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 sites. This may require extensive legal services that may
become an increased cost component when considering the development of our
products and technologies.
RISKS RELATING TO THIS OFFERING
15. THE SHARES ARE BEING OFFERED DIRECTLY BY US WITHOUT ANY MINIMUM AMOUNT OF
SHARES NECESSARY TO BE SOLD. ACCORDINGLY, THERE IS NO GUARANTEE THAT WE WILL BE
SUCCESSFUL AT RAISING ENOUGH FUNDS TO EXECUTE OUR BUSINESS PLAN FROM THE
PROCEEDS OF THIS OFFERING.
There is no assurance that we will be successful at raising the maximum amount
of this offering. This is especially true in light of the fact that no
underwriter is being utilized, and that we are not experienced in the sale of
securities. If we only raise a portion of the offering, we will be limited in
our ability to achieve our objectives. Furthermore, there will be a greater
likelihood that investors will lose their entire investment because of the lack
of sufficient funding.
16. NASD SALES PRACTICE REQUIREMENTS MAY LIMIT A STOCKHOLDERS' ABILITY TO BUY
AND SELL OUR STOCK.
In addition to the "penny stock" rules described below, 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 have the effect
of reducing the level of trading activity in our common stock. As a result,
fewer broker-dealers may be willing to make a market in our common stock,
reducing a stockholder's ability to resell shares of our common stock.
9
17. THERE IS NO PUBLIC MARKET FOR THE SECURITIES AND EVEN IF A MARKET IS
CREATED, THE MARKET PRICE OF OUR COMMON STOCK WILL BE SUBJECT TO VOLATILITY.
Prior to this offering, there has been no public market for our securities and
there can be no assurance that an active trading market for the securities
offered herein will develop after this offering, or, if developed, be sustained.
We anticipate that, upon completion of this offering, the common stock will be
eligible for quotation on the OTC Bulletin Board. If for any reason, however,
our securities are not eligible for initial or continued quotation on the OTC
Bulletin Board or a public trading market does not develop, purchasers of the
common stock may have difficulty selling their securities should they desire to
do so and purchasers of our common stock may lose their entire investment if
they are unable to sell our securities.
18. THE PRICE OF OUR SHARES IN THIS OFFERING WAS ARBITRARILY DETERMINED BY US
AND MAY NOT REFLECT THE ACTUAL MARKET PRICE FOR THE SECURITIES.
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 stock
market has experienced extreme price and volume fluctuations. In the past,
securities class action litigation has often been instituted against various
companies following periods of volatility in the market price of their
securities. If instituted against us, regardless of the outcome, such litigation
would result in substantial costs and a diversion of management's attention and
resources, which would increase our operating expenses and affect our financial
condition and business operations.
19. 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.
20. 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
10
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,
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.
21. SECURITIES PURCHASED IN THIS OFFERING MAY BE SUBJECT TO FUTURE DILUTION.
Our Board of Directors is authorized to issue up to 100,000,000 shares of common
stock and 50,000,000 shares of preferred stock without further shareholder
approval. The Board of Directors has the discretion to determine the terms of
the preferred stock upon issuance. Presently, there are 5,500,000 shares of
common stock issued and outstanding. If the maximum offering is successfully
completed, there will be 8,500,000 shares of common stock issued and
outstanding. Accordingly, we can issue, at any time(s), up to an additional
91,500,000 shares of common stock, possibly for nominal consideration, without
shareholder approval. This would result in the proportionate dilution of the
equity and voting positions of the then existing shareholders.
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 section entitled
"Description of Business" beginning on page 23, the Management's Discussion and
Analysis or Plan of Operation section beginning on page 29 and as well as those
discussed elsewhere in this prospectus.
11
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.
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 net proceeds to us from the sale of up to 3,000,000 shares offered at a
public offering price of $0.03 per share will vary depending upon the total
number of shares sold. Regardless of the number of shares sold, we expect to
incur offering expenses estimated at approximately $20,003 for legal,
accounting, transfer agent fees, printing and other costs in connection with
this offering.
The table below shows the net proceeds from this offering we expect to receive
for scenarios where we sell various amounts of the shares. Since we are making
this offering without any minimum requirement, there is no guarantee that we
will be successful at selling any of the securities being offered in this
prospectus. Accordingly, the actual amount of proceeds we will raise in this
offering, if any, may differ.
% of total shares offered 20% 60% 100%
- ------------------------- ---------- ---------- ----------
Shares Sold 600,000 1,800,000 3,000,000
Gross Proceeds $ 18,000 $ 54,000 $ 90,000
Less offering expense $ 20,003 $ 20,003 $ 20,003
---------- ---------- ----------
Net offering proceeds $ (2,003) $ 33,997 $ 69,997
========== ========== ==========
The use of proceeds set forth below in this illustrative example how we intend
to use the funds. All amounts listed below are estimates.
USE OF NET PROCEEDS:
Sept- Dec 2007- Apr- July-
Nov 2007 Mar 2008 Jun 2008 Sept 2008 Total
-------- -------- -------- --------- -----
Legal fees $ 1,875 $ 1,875 $ 1,875 $ 1,875 $ 7,500
Audit fees 1,500 750 750 750 3,750
Transfer Agent fees 10,000 10,000
Website Development 15,000 15,000
Marketing 10,000 10,000 20,000
Office Equipment and supplies 500 500 500 500 2,000
Working Capital 1,000 1,000 1,000 1,000 4,000
------- ------- ------- ------- -------
TOTAL $13,875 $ 8,125 $10,625 $10,625 $62,250
======= ======= ======= ======= =======
Our offering expenses are comprised of legal and accounting expenses, SEC and
EDGAR filing fees, printing and transfer agent fees and any necessary state
registration fees. Our officers and directors will not receive any compensation
for their efforts in selling our shares.
We intend to use the proceeds of this offering in the manner and in order of
priority set forth above. We do not intend to use the proceeds to acquire assets
or finance the acquisition of other businesses. At present, no material changes
are contemplated. Should there be any material changes in the projected use of
proceeds in connection with this offering, we will issue an amended prospectus
reflecting the new uses.
12
DETERMINATION OF THE OFFERING PRICE
The price of the shares we are offering was arbitrarily determined at $0.03 per
share. We believe that this price reflects the appropriate price that a
potential investor would be willing to invest in our company 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.
Our common stock is not now, nor has it ever been, traded on any market or
securities exchange and we have not applied for listing or quotation on any
public market.
CAPITALIZATION
The following table sets forth, as of August 31, 2007, the capitalization of the
Company on an actual basis, and the capitalization of the Company as adjusted to
give effect to the sale of 3,000,000 shares of common stock being offered hereby
at the initial public offering price of $0.03 per share and the application of
the estimated net proceeds therefrom as described in "Use of Net Proceeds". This
table should be read in conjunction with the more detailed financial statements
and notes thereto included elsewhere herein.
August 31, 2007
--------------------------
Actual As Adjusted
--------- -----------
Short-term debt $ $
Stockholders' equity :
Preferred Stock $.0001 par value, 50,000,000 shares authorized,
no shares issued and outstanding as adjusted -- --
Common Stock, $0.0001 par value, 100,000,000 shares authorized,
5,500,000 shares issued and outstanding; 8,500,000 shares 550 850
Issued and outstanding as adjusted
Additional paid-in capital 14,950 104,650
Deficit accumulated during the development stage (10) (10)
Total stockholders equity 15,490 104,640
--------- ---------
Total Capitalization $ 15,490 $ 104,640
========= =========
13
DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES
Purchasers of our securities in this offering will experience immediate and
substantial dilution in the net tangible book value of their common stock from
the initial public offering price.
The historical net tangible book value as of August 31, 2007 was $15,490 or
approximately $(0.003) per share. Following the offering, if all 3,000,000
shares are sold and after deducting estimated offering expenses of $20,003, our
net tangible book value will be $0.01. This represents an increase in net
tangible book value per share of $0.007, or approximately 233%, to existing
shareholders and an immediate and substantial dilution of $0.02, or
approximately 67%, to the new investors purchasing our securities in this
offering.
Dilution in pro forma net tangible book value per share represents the
difference between the amount per share paid by purchasers of shares of our
common stock in this offering and the pro forma net tangible book value per
share of our common stock immediately following this offering.
PLAN OF DISTRIBUTION, TERMS OF THE OFFERING
THERE IS NO CURRENT MARKET FOR OUR SHARES
There is not now, nor has there ever been, a market for our shares. 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 will be able to
sell your shares. In addition, even if a public market for our shares develops,
there is no assurance that a secondary public market will be sustained.
The shares you purchase are not traded or listed on any exchange. After the
effective date of the registration statement, we intend to have a market maker
file an application with the National Association of Securities Dealers, Inc. to
have our common stock quoted on the OTC Bulletin Board. We currently have no
market maker who is willing to list quotations for our stock. 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.
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 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
14
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
brokers-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 OFFERING WILL BE SOLD BY OUR OFFICERS
We are offering up to a total of 3,000,000 shares of common stock. The offering
price is $0.03 per share. The offering will be for a period of 180 days from the
effective date and may be extended for an additional 90 days if we choose to do
so. In our sole discretion, we have the right to terminate the offering at any
time, even before we have sold the 3,000,000 shares. There are no specific
events which might trigger our decision to terminate the offering.
We have not established a minimum amount of proceeds that we must receive in the
offering before any proceeds may be accepted. We cannot assure you that all or
any of the shares offered under this prospectus will be sold. No one has
committed to purchase any of the shares offered. Therefore, we may sell only a
nominal amount of shares and receive minimal proceeds from the offering. We
reserve the right to withdraw or cancel this offering and to accept or reject
any subscription in whole or in part, for any reason or for no reason.
Subscriptions will be accepted or rejected promptly. All monies from rejected
subscriptions will be returned immediately by us to the subscriber, without
interest or deductions.
Any accepted subscriptions will be made on a rolling basis. Once accepted, the
funds will be deposited into an account maintained by us and be immediately
available to us. Subscription funds will not be placed into escrow, trust or any
other similar arrangement. There is no investor protections for the return of
subscription funds once accepted. Once we receive the purchase price for the
shares, we will be able to use the funds. Certificates for shares purchased will
be issued and distributed by our transfer agent promptly after a subscription is
accepted and "good funds" are received in our account.
If it turns out that we have not raised enough money to effectuate our business
plan, we will try to raise additional funds from a second public offering, a
private placement or loans. At the present time, we have not made any plans to
raise additional money and there is no assurance that we would be able to raise
additional money in the future. If we need additional money and are not
successful, we will have to suspend or cease operations.
We will sell the shares in this offering through our officers and directors. The
officers and directors engaged in the sale of the securities will receive no
commission from the sale of the shares nor will they register as a broker-dealer
pursuant to Section 15 of the Securities Exchange Act of 1934 in reliance upon
Rule 3(a)4-1. Rule 3(a)4-1 sets forth those conditions under which a person
associated with an issuer may participate in the offering of the issuer's
securities and not be deemed to be a broker-dealer. Our officers and directors
satisfy the requirements of Rule 3(a)4-1 in that:
1. None of such persons is subject to a statutory disqualification, as
that term is defined in Section 3(a)(39) of the Act, at the time of
his participation; and,
2. None of such persons is compensated in connection with his or her
participation by the payment of commissions or other remuneration
based either directly or indirectly on transactions in securities; and
15
3. None of such persons is, at the time of his participation, an
associated person of a broker-dealer; and
4. All of such persons meet the conditions of Paragraph (a)(4)(ii) of
Rule 3(a)4-1 of the Exchange Act, in that they (A) primarily perform,
or are intended primarily to perform at the end of the offering,
substantial duties for or on behalf of the issuer otherwise than in
connection with transactions in securities; and (B) are not a broker
or dealer, or an associated person of a broker or dealer, within the
preceding twelve (12) months; and (C) do not participate in selling
and offering of securities for any issuer more than once every twelve
(12) months other than in reliance on Paragraphs (a)(4)(i) or
(a)(4)(iii).
As long as we satisfy all of these conditions, we are comfortable that we will
be able to satisfy the requirements of Rule 3a4-1 of the Exchange Act
notwithstanding that a portion of the proceeds from this offering will be used
to pay the salaries of our officers.
As our officers and directors will sell the shares being offered pursuant to
this offering, Regulation M prohibits the company and its officers and directors
from certain types of trading activities during the time of distribution of our
securities. Specifically, Regulation M prohibits our officers and directors from
bidding for or purchasing any common stock or attempting to induce any other
person to purchase any common stock, until the distribution of our securities
pursuant to this offering has ended.
We have no intention of inviting broker-dealer participation in this offering.
OFFERING PERIOD AND EXPIRATION DATE
This offering will commence on the effective date of this prospectus, as
determined by the Securities and Exchange Commission and continue for a period
of 180 days. We may extend the offering for an additional 90 days unless the
offering is completed or otherwise terminated by us.
PROCEDURES FOR SUBSCRIBING
If you decide to subscribe for any shares in this offering, you must deliver a
check or certified funds for acceptance or rejection. There are no minimum share
purchase requirements for individual investors. All checks for subscriptions
must be made payable to "Blue Penguin Enterprises Inc".
Upon receipt, all funds provided as subscriptions will be immediately deposited
into our account and be available for our use to further the development and
business of the Company.
RIGHT TO REJECT SUBSCRIPTIONS
We maintain the right to accept or reject subscriptions in whole or in part, for
any reason or for no reason. All monies from rejected subscriptions will be
returned immediately by us to the subscriber, without interest or deductions.
Subscriptions for securities will be accepted or rejected within 48 hours of our
having received them.
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 interest.
16
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our officers and directors hold office until the next annual general meeting of
the stockholders or until their successors are elected and qualified. Our
officers are appointed by our board of directors and hold office until the
earlier of their death, retirement, resignation or removal.
Our officers and directors and their ages and positions are as follows:
Name Age Position
---- --- --------
Gabriel Peled 70 President, Chief Executive Officer and Director
Oded Ofarim 58 Treasurer and Secretary and Director
MR. GABRIEL PELED
Mr. Gabriel Peled has been our President, Chief Executive Officer and a Director
since we were incorporated on August 10, 2007. He has been active in the diamond
business since 1984 where he worked with HRA Investments Ltd, one the leading
North American diamond suppliers.
Gabriel Peled was selected in 2004 to be a main supplier of large diamonds to
the Harry Winston company. This was accomplished by becoming a partner in New
York's - J.W.GEM. This continued from 2004 to 2006. At the end of 2006 he became
the manager and buyer for E.R.L. Diamonds Inc, a west coast diamond company in
Canada.
MR. ODED OFARIM
Mr. Oded Ofarim has been our Secretary, Treasurer and a Director since we were
incorporated on August 10, 2007. Mr. Oded Ofarim accumulated many years
experience in starting and running profitable companies.
In 2000 he started Omega Alarms and communications. The company designs, sells
and installs protection systems for corporations and individuals and is
currently active and profitable.
In 2004 he started another company, Omega Smart Homes, which designs, sells and
installs computerized control systems for homes and businesses.
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 that qualify as
"audit committee financial experts." We believe that the cost related to
retaining such a financial expert at this time is prohibitive. Further, because
we are in the start-up stage of our business operations, we believe the services
of an audit committee financial expert are not warranted at this time.
17
INVOLVEMENT IN LEGAL PROCEEDINGS
No director, nominee for director or officer of the Company has appeared as a
party during the past five years in any legal proceedings that may bear on his
ability or integrity to serve as a director or officer of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 17, 2007, certain information
with respect to the beneficial ownership of our common stock by each stockholder
known by us to be the beneficial owner of more than 5% of our common stock and
by each of our current directors and executive officers. Each person has sole
voting and investment power with respect to the shares of common stock, except
as otherwise indicated. Information relating to beneficial ownership of common
stock by our principal stockholders and management is based upon information
furnished by each person using "beneficial ownership" concepts under the rules
of the Securities and Exchange Commission. Under these rules, a person is deemed
to be a beneficial owner of a security if that person has or shares voting
power, which includes the power to vote or direct the voting of the security, or
investment power, which includes the power to vote or direct the disposition of
the shares. The person is also deemed to be a beneficial owner of any security
of which that person has a right to acquire beneficial ownership within 60 days.
Under the Securities and Exchange Commission rules, more than one person may be
deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he or she may not have
any pecuniary beneficial interest.
The percentages below are calculated based on 5,500,000 shares of our common
stock issued and outstanding as of September 17, 2007. We do not have any
outstanding options, warrants or other securities exercisable for or convertible
into shares of our common stock. Unless otherwise indicated, the address of each
person listed is c/o Blue Penguin Enterprises, Inc., 199 Omega Batim Ha'chamim
St., P.O.Box 199, Rosh Ha'ain 48101 Israel.
Amount of
Name and Address Beneficial Percent of
Of Beneficial Owner (2) Title Of Class Ownership Class (1)
- ----------------------- -------------- --------- ---------
Gabriel Peled Common 2,500,000 45.45%
Oded Ofarim Common 2,500,000 45.45%
Shlomo Friedman Common 500,000 9.1%
All officers and directors
as a group (2 persons) 5,000,000 90.9%
- ----------
(1) Based on 5,500,000 shares of our common stock outstanding.
(2) The address for Mr. Gabriel Peled is 10 Zarhin St, P.O.Box 3933 Raanana
43104 Israel.
The address for Mr. Oded Ofarim is 199 Omega Batim Ha'chamim St., P.O.Box
199, Rosh Ha'ain 48101, Israel.
The address for Shlomo Friedman is 2631 Violet Street, North Vancouver, BC
V7H 1H2, Canada.
We are unaware of any contract or other arrangement the operation of which may
at a subsequent date result in a change in control of our company.
18
FUTURE SALES BY EXISTING SHAREHOLDERS
As of the date of this prospectus, there are three (3) shareholders of record
holding shares of our common stock. A total of 5,500,000 shares of common stock
were issued to the existing shareholders, all of which are "restricted
securities", as that term is defined in Rule 144 of the Rules and Regulations of
the SEC promulgated under the Securities Act. Under Rule 144, such shares can be
publicly sold, subject to volume restrictions and certain restrictions on the
manner of sale, commencing one (1) year after their acquisition.
Shares purchased in this offering, which will be immediately resalable, and
sales of all of our other shares after applicable restrictions expire, could
have a depressive effect on the market price, if any, of our common stock and
the shares we are offering. See Dilution of the Price You Pay for Your Shares.
We do not have any issued and outstanding securities that are convertible into
common stock. We have not registered any shares for sale by security holders
under the Securities Act. None of our shareholders are entitled to registration
rights.
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 100,000,000 shares of common stock, par
value $0.0001 per share, and 50,000,000 shares of preferred stock, par value
$0.0001 per share.
The holders of our common stock:
* have equal ratable rights to dividends from funds legally available
therefore, when, as and if declared by our board of directors;
* are entitled to share ratably in all of our assets available for
distribution to holders of common stock upon liquidation, dissolution
or winding up of our affairs;
* do not have pre-emptive, subscription or conversion rights and there
are no redemption or sinking fund provisions or rights; and
* are entitled to one non-cumulative vote per share on all matters on
which shareholders may vote.
The common shares are not subject to any future call or assessment and all have
equal voting rights. There are no special rights or restrictions of any nature
attached to any of the common shares and they all rank at equal rate or " PARI
PASSU" , each with the other, as to all benefits, which might accrue to the
holders of the common shares. All registered shareholders are entitled to
receive a notice of any general annual meeting to be convened by our Board of
Directors.
At any general meeting, subject to the restrictions on joint registered owners
of common shares, on a showing of hands every shareholder who is present in
person and entitled to vote has one vote, and on a poll every shareholder has
one vote for each common share of which he is the registered owner and may
exercise such vote either in person or by proxy. To the knowledge of our
management, at the date hereof, our officers and directors are the only persons
to exercise control, directly or indirectly, over more than 10% of our
outstanding common shares. See Security Ownership of Certain Beneficial Owners
and Management.
19
Our Board of Directors is authorized, at its discretion, to issue preferred
stock in one or more series, from time to time, with each such series to have
such designation, relative rights, preferences or limitations, as shall be
stated and expressed in the resolution or resolutions providing for the issuance
of such series adopted by the Board of Directors, subject to the limitations
prescribed by law and in accordance with the provisions of our Articles of
Incorporation. As of the date hereof, no shares of preferred stock are issued
and outstanding.
We refer you to our Articles of Incorporation and Bylaws which form a part of
this registration statement and to the applicable statutes of the State of
Nevada for a more complete description of the rights and liabilities of holders
of our securities.
There are no outstanding options, warrants, or rights to purchase any of our
securities.
NON-CUMULATIVE VOTING
Holders of shares of our common stock do not have cumulative voting rights,
which means that the holders of more than 50% of the outstanding shares, voting
for the election of directors, can elect all of the directors to be elected, if
they so choose, and, in such event, the holders of the remaining shares will not
be able to elect any of our directors.
CASH DIVIDENDS
As of the date of this registration statement, we have not paid any cash
dividends to shareholders. The declaration of any future cash dividend will be
at the discretion of our Board of Directors and will depend upon our earnings,
if any, our capital requirements and financial position, our general economic
and other pertinent conditions. It is our present intention not to pay any cash
dividends in the foreseeable future, but rather to reinvest earnings, if any, in
our business.
TRANSFER AGENT
We have appointed the following transfer agent for our shares of common stock:
Island Capital Management, LLC, dba 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, directly or indirectly, in the registrant or its subsidiary. Nor was
any such person connected with the registrant or any of its parents,
subsidiaries as a promoter, managing or principal underwriter, voting trustee,
director, officer or employee.
Our financial statements for the period from inception to August 31, 2007,
included in this prospectus have been audited by MOORE & ASSOCIATES, CHARTERED,
as set forth in their report included in this prospectus.
20
The legal opinion rendered by Clark Wilson LLP regarding the common stock of
Blue Penguin Enterprises, Inc. registered on Form SB-2 is as set forth in their
opinion letter included as an exhibit to the registration statement of which
this prospectus forms a part.
DISCLOSURE OF SEC POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Articles of Incorporation and our by-laws provide that directors and
officers shall be indemnified by us to the fullest extent authorized by the
Nevada General Corporation Law, against all expenses and liabilities reasonably
incurred in connection with services for us or on our behalf. The by-laws also
authorize the Board of Directors to indemnify any other person who we have the
power to indemnify under the Nevada General Corporation Law, and indemnification
for such a person may be greater or different from that provided in the by-laws.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of our Company under
the provisions described above, we have been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable.
DESCRIPTION OF BUSINESS
OVERVIEW OF THE COMPANY
We are a development stage company that was formed on August 10, 2007. We have
commenced only limited operations, primarily focused on organizational matters
in connection with this offering. 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.
Blue Penguin Enterprises Inc is 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
it has a specific business plan or purpose. Neither Blue Penguin Enterprises Inc
nor its officers, directors, promoters or affiliates, has 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.
We plan to operate a website which will be focused on selling diamonds and
diamonds jewelry. On our website we will be selling diamonds and diamonds
jewelry which meet certain criteria such as Carat, Clarity, Color, Cut and a
grading report. Clients will be able to purchase our products directly online
and the purchase will be charged to the client's credit card, prior to shipping.
We will sell only diamonds of the highest quality that meet the strictest
criterion:
CARAT: Refers to the weight of a diamond. Carat is often confused with size
even though it is actually a measure of weight. One carat is equivalent to 200
milligrams. One carat can also be divided into 100 "points." A .75 carat diamond
is the same as a 75-points or 3/4 carat one.
We will focus on diamonds between 0.5 and 4 carat.
CLARITY: Clarity is a measure of internal defects of a diamond called
inclusions. Inclusions may be crystals of a foreign material or another diamond
crystal, or structural imperfections such as tiny cracks that can appear whitish
or cloudy. The number, size, color, relative location, orientation, and
visibility of inclusions can all affect the relative clarity of a diamond. The
Gemological Institute of America (GIA) and other organizations have developed
systems to grade clarity, which are based on those inclusions which are visible
to a trained professional when a diamond is viewed under 10x magnification.
21
The standard for the clarity scale consists of: FL, IF, VVS1, VVS2, VS1, VS2,
SI1, SI2, I1, I2, I3
FL, Flawless - No internal or external flaws.
IF, Internally Flawless - No internal flaws. Slight external blemishes.
VVS1 & VVS2, very slightly included -Minute inclusions. Difficult for even an
experienced grader to detect.
VS1 & VS2, Very slightly included - Minute inclusions. Not easily seen by an
experienced grader.
SI1 & SI2, Slightly included - Inclusions that are noticeable to an experienced
grader.
I1 & I2 & I3, Included - Obvious inclusions that may affect transparency and
brilliance.
We will sell diamonds and diamonds jewelry from SI2 to FL.
COLOR: A chemically pure and structurally perfect diamond is perfectly
transparent with no hue, or color. However, in reality almost none of the
gem-sized natural diamonds are absolutely perfect. The color of a diamond may be
affected by chemical impurities and/or structural defects in the crystal
lattice. Depending on the hue and intensity of a diamond's coloration, a
diamond's color can either detract from or enhance its value. For example, most
white diamonds are discounted in price as more yellow hue is detectable, while
intense pink or blue diamonds can be more valuable.
CUT: The cut of a diamond is what determines how the light that enters the
diamond is reflected and therefore how much fire and brilliance the diamond will
exude. A diamond that is cut too shallow with respect to its width will allow
too much light to pass straight through the diamond, leaving little light to
reflect. Such a diamond will appear dull and lacking in brilliance. Conversely,
a diamond cut too deeply will allow light to escape from the sides of the
diamond, also appearing dull.
The standard for the diamond cut consist of: Ideal Cut, Premium cut, Good cut,
Fair cut, Poor cut
IDEAL CUT: This is a very rare cut that reflects nearly all light that enters
the diamond and creates the maximum fire and brilliance.
PREMIUM CUT: Reflects almost as much light as the Ideal Cut.
GOOD CUT: Reflects most light that enters the diamond, but not as must as a
Premium Cut diamond.
FAIR CUT: These are a quality diamond, but a Fair Cut diamonds will not be as
brilliant as a Good cut.
POOR CUT: All the diamonds that do not meet the Fair Cut quality standards are
placed in. These diamonds are deep and narrow or shallow and wide and tend to
lose most of the light out the sides and bottom.
We will sell diamonds from "Good" cut up to "Ideal" cut.
We will only sell diamond jewelry that have a grading report from GIA
(Gemological Institute of America), The GIA sets the standard for diamond
grading and gemological identification, and their grading system serves as the
international gem and jewelry industry's benchmark credentials. A grading report
is a "blueprint" of a diamond and it represents the diamond's exact measurements
and weight, as well as the details of its cut and quality. It precisely points
out all the individual characteristics of the stone. Certificates also serve as
proof of the diamond's identity and value.
Our website is not yet completely developed and has not been tested for
commercial use; we are using a free open source shopping cart which is based on
PHP scripting language with Mysql for the database server.
We do not currently have sufficient capital to operate our business and, even
assuming the success of this offering, we may require additional funding in the
future to sustain our operations. There is no assurance that we will have
22
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 199 Omega Batim Ha'chamim St., P.O.Box 199,
Rosh Ha'ain 48101 Israel. Our telephone number is + 1 (866) 857-8148. Our
website is www.bluepenguindiamonds.com.
INDUSTRY OVERVIEW
According to research released by the International Diamond Exchange (IDEX),
online jewelry sales in the U.S. market reached $2.1 billion in 2005, up about
24 percent from the prior year's $1.7 billion. In 2005, online jewelry sales
have a 3.5% market share of total jewelry industry sales of $59.4 billion in
2005 and they are projected to reach a 7.7% share in 2010.
Source: http://idexonline.com/portal_FullNews.asp?TextSearch=&KeyMatch=2&id=
25555
GROWTH OF ONLINE JEWELRY SALES & E-COMMERCE GROWTH
According to Europa Star Magazine based on a Forrester Research an increase in
the number of female shoppers will contribute to 14 percent of jewelry sales
moving online by 2010.
"Thanks to innovations that will make online shopping simpler and moreengaging,
online retail sales will nearly double within five years from $172 billion in
2005 to $329 billion in 2010, according to the report. That increase includes a
14 percent compound annual growth rate over the next five years. "
OTHER HIGHLIGHTS FROM THE FORRESTER REPORT:
- E-commerce will represent 13 percent of total U.S. retail sales in
2010.
- Online sales of health and beauty products will grow at an annual rate
of 22 percent.
- Twenty-nine percent of small appliance sales will migrate to the Web
by the end of the decade, as a generation that grew up with the
Internet marries and attends weddings.
- Categories showing significant growth (i.e., growth outpacing the
overall 14 percent compound annual rate) include: apparel, consumer
electronics, health and beauty, food and beverage, home products and
sporting goods.
Source: http://www.europastar.com/europastar/magazine/article_display.jsp?vnu_
content_id=1001433585
CUSTOMER SERVICE
We provide customer service through our website via e-mail communication to
customerservice@bluepenguindiamonds.com. Order fulfillment is accomplished
through the efforts in in-house personnel and drop shipment from suppliers. All
sales transactions are made on a secure basis to assure consumer confidence.
Due to market fluctuations and changes in vendor inventory, we do not guarantee
a price once a product is ordered. Prices are subject to change without notice
in order to assure the most cost-effective situation for the customer and our
business. If prices do increase due to market changes, we will contact the buyer
to advise them of this change and process their credit information only after
such contact has been established.
23
OUR COMPETITIVE POSITION IN THE ONLINE DIAMOND JEWELRY INDUSTRY
The diamond and diamond jewelry retail market is intensely competitive and
highly fragmented. Our primary competition comes from online and offline
retailers that offer products within the higher value segment of the jewelry
market. In the future, we may also compete with other retailers that move into
the higher value diamond segment. Current or potential competitors include the
following:
* independent jewelry stores;
* retail jewelry store chains, such as Tiffany & Co. and Bailey Banks &
Biddle;
* other online retailers that sell jewelry, such as BlueNile.com and
Amazon.com;
* department stores, chain stores and mass retailers, such as Nordstrom
and Neiman Marcus;
* online auction sites, such as eBay;
* catalog and television shopping retailers, such as Home Shopping
Network and QVC; and
* discount superstores and wholesale clubs, such as Costco Wholesale and
Wal-Mart.
In addition to these competitors, we may face competition from suppliers of our
products that decide to sell directly to our customers, either through physical
retail outlets or through an online store.
We believe that the principal competitive factors in our market are product
selection and quality, price, customer service and support, reliability and
trust, web site features and functionality, convenience and delivery
performance. We believe that we compete favorably in the market for diamond
jewelry by offering detailed product information, broad product selection and
knowledgeable customer support to our customers.
MARKETING & SALES STRATEGY
As soon as we have completed the development of our website, we will then be in
the preliminary stages of effectuating our marketing plan.
We plan to initially gain a customer base by e-mail campaigns. In addition our
Secretary, Oded Ofarim, will try to obtain reciprocal arrangements with related
internet sites where we each display the other's website link. The purpose of
this arrangement is to get potential customers to visit our website at no cost
to us.
We plan to publish free articles on our website such as "How to purchase a
diamond?" "The Guide to the Four C's", "How to get independent appraising?"
"Engagement ring buying guide and other topics that relate to our business" We
believe that by providing informative and useful information we will attract
customers to our website. We plan to contact webmasters and bloggers that are
looking for new content for their website to link their website to our articles.
Branding: While it is difficult for a startup company to establish a consumer
brand name, we realize the critical importance of making "POWERED BY BLUE
PENGUIN DIAMONDS" a symbol of quality in the marketplace. We will insure
wherever possible that this critical "branding experience" will appear on all of
our products and web pages.
Internet Marketing: such as news forums, web seminars, search engine promotion,
email campaigns, web advertising, e-newsletters, online public relations and
press releases.
We estimated that the marketing expenses for the first year will be
approximately $10,000.
24
SOURCES AND AVAILABILITY OF PRODUCTS AND SUPPLIES
There are no constraints on the sources or availability of products and supplies
related to our business.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We plan on selling our products directly to end use consumers over the internet.
Our intended offering is also 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
Blue Penguin Enterprises has 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 website in house for the foreseeable future from
original content and intend to protect these assets in accordance with copyright
and trade secret laws. Beyond our trade name and our original course content, we
do not hold any other intellectual property.
EXISTING OR PROBABLE GOVERNMENT REGULATIONS
There are no existing government regulations nor are we aware of any regulations
being contemplated that would adversely affect Blue Penguin Enterprises ability
to operate.
Due to the increasing popularity and use of the Internet, it is possible that a
number of laws and regulations may be adopted with respect to the Internet
generally, covering issues such as user privacy, pricing, and characteristics
and quality of products and services. Similarly, the growth and development of
the market for Internet commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on those companies conducting
business over the Internet. The adoption of any such laws or regulations may
decrease the growth of commerce over the Internet, increase our cost of doing
business or otherwise have a harmful effect on our business.
To date, governmental regulations have not materially restricted the use or
expansion of the Internet. However, the legal and regulatory environment that
pertains to the Internet is uncertain and may change. New laws may cover issues
that include:
* Sales and other taxes;
* user privacy;
* pricing controls;
* characteristics and quality of products and services;
* consumer protection;
* libel and defamation;
* copyright, trademark and patent infringement; and
* other claims based on the nature and content of Internet materials.
These new laws may have an impact on our ability to market our products in
accordance with our business plan.
USE OF THE INTERNET FOR SALES OF OUR PRODUCTS
Due to the increasing popularity and use of the Internet, it is possible that a
number of laws and regulations may be adopted with respect to the Internet
generally, covering issues such as user privacy, pricing, and characteristics
and quality of products and services. Similarly, the growth and development of
25
the market for Internet commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on those companies conducting
business over the Internet. The adoption of any such laws or regulations may
decrease the growth of commerce over the Internet, increase our cost of doing
business or otherwise have a harmful effect on our business.
To date, governmental regulations have not materially restricted the use or
expansion of the Internet. However, the legal and regulatory environment that
pertains to the Internet is uncertain and may change. New laws may cover issues
that include:
* sales and other taxes;
* user privacy;
* pricing controls;
* characteristics and quality of products and services;
* consumer protection;
* libel and defamation;
* copyright, trademark and patent infringement; and
* other claims based on the nature and content of Internet materials.
These new laws may impact our ability to market our product and services in
accordance with our business plan.
RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS
We have not incurred any costs to date and have no plans to undertake any
research and development activities during the first year of operation.
FACILITIES
Mr. Gabriel Peled, our Chief Executive Officer 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. Gabriel has contributed web hosting space for our website at no cost to us.
EMPLOYEES
We have commenced only limited operations; therefore, we have no full time
employees. Our officers and directors provide service to us on an as-needed
basis. When we commence full operations, we will need to hire full-time
management and administrative support staff. See "Plan of Operations".
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
REPORTS TO SECURITY HOLDERS
We will voluntarily make available to securities holders 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.
26
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.
DESCRIPTION OF PROPERTY
We do not lease or own any real property. We currently maintain our corporate
office at 199 Omega Batim Ha'chamim St. P.O.Box 199 Rosh Ha'ain 48101, Israel,
in space provided to us by our President. We do not pay any rental fees for use
of this space. This space is sufficient until we commence full operations.
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 9 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 significant revenues until we have completed our website and
marketing plan to generate customers. Accordingly, we must raise cash from
sources other than our operations in order to implement our marketing plan.
In our management opinion there is a need for a fine diamonds and diamond
jewelry online website. Our President, Gabriel Peled, has more than 20 years
experience acting as a buyer and seller of fine diamonds. With his knowledge of
buying and selling diamond jewelry as well as his industry connections, we
believe we can integrate this expertise with the reach and efficiency of the
internet. Using Mr Peled's expertise and assistance, we plan to publish free
articles on our website such as "How to purchase a diamond?" "The Guide to the
Four C's", "How to get independent appraising?" "Engagement ring buying guide
and other topics that relate to our business" We believe that by providing
informative and useful information we will attract customers to our website.
Our business model enables us to eliminate much of the cost associated with
carrying diamond inventory. We do not hold in our inventory the diamonds we
offer for sale until we receive a customer order. Upon receipt of a customer
order for a specific diamond, we purchase that diamond from one of our suppliers
who ships it to us in one business day.
To meet our need for cash, we are attempting to raise money from this offering.
We intend to sell up to a maximum of 3,000,000 shares of our common stock
through this offering, which would generate up to $90,000 in proceeds. We
27
believe that this will allow us to begin our product development, market our
website and remain in business for twelve months. If we are unable to generate
revenues after the twelve months for any reason, or if we are unable to make a
reasonable profit after twelve months, we may have to suspend or cease
operations. At the present time, we have not made any arrangements to raise
additional cash, other than through this offering. If we raise less than the
maximum amount and need additional funds, we may seek to obtain additional funds
through a second public offering, private placement of securities, or loans.
Other than as described in this paragraph, we have no other financing plans at
this time.
PLAN OF OPERATION
Upon completion of our initial public offering, our specific goal is to develop
our interactive English language training courses product and to execute our
marketing plan. We intend to accomplish the foregoing through the following
"Milestones".
EXPENDITURES
The following chart provides an overview of our budgeted expenditures using the
proceeds from this offering, by significant area of activity for each period,
over the next 12 months:
Sept- Dec 2007- Apr- July-
Nov 2007 Mar 2008 Jun 2008 Sept 2008 Total
-------- -------- -------- --------- -----
Legal fees $ 1,875 $ 1,875 $ 1,875 $ 1,875 $ 7,500
Audit fees 1,500 750 750 750 3,750
Transfer Agent fees 10,000 10,000
Website Development 15,000 15,000
Marketing 10,000 10,000 20,000
Office Equipment and supplies 500 500 500 500 2,000
Working Capital 1,000 1,000 1,000 1,000 4,000
------- ------- ------- ------- -------
TOTAL $13,875 $ 8,125 $10,625 $10,625 $62,250
======= ======= ======= ======= =======
These expenditures are described in detail in "Milestones".
MILESTONES
Assuming we raise the full offering amount (approximately $77,000 net after
anticipated offering expenses) in this offering, we believe that we can satisfy
our cash requirements for the next 12 months, but we may have to raise
additional funds thereafter. The following is a chronological itemization of the
milestones we intend to achieve over the next 12 months.
1. COMPLETE OUR INITIAL PUBLIC OFFERING, SEPTEMBER - NOVEMBER 2007
We believe that we will raise sufficient capital to begin our operations. We
believe this could take up to 270 days from the date the Commission declares our
offering effective. We intend to concentrate all of our efforts on raising as
much capital as we can during this period. If we are unable to raise the maximum
amount of capital during the first 180 days of this offering, our management may
decide to extend this offering by 90 days.
28
2. WEBSITE DEVELOPMENT, DECEMBER 2007 - MARCH 2008
During this time we plan to finish the development of our website, we are using
a free open source shopping cart which is based on PHP scripting language with
Mysql for the database server with no cost to us.
We plan to retain a third party website developer for the completion of our
website.
The third party's main responsibilities:
1. Set up the SSL encryption, SSL protects customer's transaction details as
they are passed back and forth between their browser and our website. The data
encryption happens at one end using a key and is deciphered at the other end
using an equivalent key. The permutations for how data can be encrypted are
astronomical making it virtually theft and interference proof during transit.
2. Set up payment methods such as: PayPal and major credit cards.
3. Quality Assurance, ensure that our website is working and ready for
commercial use.
3. MARKETING, APRIL - JUNE 2008
We plan to gain customer awareness by using a variety of different marketing
initiatives such as: email campaigns, search engine promotions and participation
in forums related to our industry. We will also focus our efforts by adding
useful content to our website. Our management believes that by providing quality
free content we will attract customers to our website.
We plan to conduct the following additional marketing and advertising activities
to build our customer base:
1. General Email Marketing Campaign - we are budgeting $5,000 for the email
campaign.
2. Advertising on related web sites - we are budgeting $5,000 for ads.
4. MARKETING, JULY - SPETEMBER 2008
We will continue our marketing efforts by trying to obtain reciprocal
arrangements with related internet sites where we each display the other's
website link. The purpose of this arrangement is to get potential customers to
visit our website at no cost to us.
We recognize that our current management and Board of Directors do not have
sufficient marketing experience to create and execute an effective marketing
plan. Accordingly, it is our intention to seek out consulting firms that
specialize in this area. We have established a budget of $10,000 for the
consulting firms.
RESULTS OF OPERATIONS
During the period from August 10, 2007 (inception) through August 31, 2007, we
incurred a net loss of $10. This loss consisted primarily of bank charges.
In August 2007, we reserved the domain name www.bluepenguindiamonds.com and
upload an initial website which contains "About us","Contact us" and samples of
our future diamond jewelry.
LIQUIDITY AND CAPITAL RESOURCES
Our balance sheet as of August 31, 2007 reflects assets of $15,490. Cash and
cash equivalents from inception to date have been insufficient to provide the
working capital necessary to operate to date. We have raised $500 from the sale
29
of stock to our officer and directors and $15,000 through a private placement to
one non-affiliated investor.
Since August 10th 2007 (inception) to August 31, 2007 we sold 5,500,000 shares.
Notwithstanding the success of this offering, we anticipate generating losses
and, therefore, may be unable to continue operations in the future. If we
require additional capital, we would have to issue debt or equity or enter into
a strategic arrangement with a third party. There can be no assurance that
additional capital will be available to us. We currently have no agreements,
arrangements or understandings with any person to obtain funds through bank
loans, lines of credit or any other sources.
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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE
Mr. Gabriel Peled, our Chief Executive Officer 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.
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.
Mr. Gabriel Peled and Mr. Oded Ofarim, executive officers and members of our
Board of Directors, each purchased by subscription 2,500,000 shares of our
common stock on August 10, 2007 for $0.0001 share or an aggregate of $500.
Our officers and directors may be considered promoters of Blue Penguin
Enterprises Inc due to their participation in and management of the business of
the Company since its incorporation.
CORPORATE GOVERNANCE
We currently act with two directors: Mr. Gabriel Peled and Mr. Oded Ofarim.
COMMITTEES OF THE BOARD
All proceedings of our board of directors for the period ended August 31, 2007
were conducted by resolutions in writing by our board of directors and filed
with the minutes of the proceedings of our board of directors. Our company
currently does not have nominating, compensation or audit committees or
committees performing similar functions nor does our company have a written
nominating, compensation or audit committee charter. Our board of directors does
not believe that it is necessary to have such committees because he believes
that he can adequately perform the functions of such committees.
Our company does not have any defined policy or procedural requirements for
shareholders to submit recommendations or nominations for directors. Our board
of directors believes that, given the stage of our development, a specific
nominating policy would be premature and of little assistance until our business
30
operations develop to a more advanced level. Our company does not currently have
any specific or minimum criteria for the election of nominees to our board of
directors and we do not have any specific process or procedure for evaluating
such nominees. Our board of directors will assess all candidates, whether
submitted by management or shareholders, and make recommendations for election
or appointment.
A shareholder who wishes to communicate with our board of directors may do so by
directing a written request addressed to our president at the address appearing
on the first page of this prospectus.
AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that we do not have a board member that
qualifies as an "audit committee financial expert" as defined in Item 401(e) of
Regulation S-B, nor do we have a board member that qualifies as "independent" as
the term is used in Rule 4200(a)(15) of the NASDAQ Marketplace Rules.
We believe that our board of directors is capable of analyzing and evaluating
our financial statements and understanding internal controls and procedures for
financial reporting. Our board of directors does not believe that it is
necessary to have an audit committee because he believes that he can adequately
perform the functions of an audit committee. In addition, we believe that
retaining an independent director who would qualify as an "audit committee
financial expert" would be overly costly and burdensome and is not warranted in
our circumstances given the stage of our development and the fact the we have
not generated any positive cash flows from operations to date.
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
MARKET INFORMATION
Currently there is no public trading market for our stock, and we have not
applied to have our common stock listed. We intend to seek out a market maker to
apply to have our common stock quoted on the OTC Bulletin Board upon
effectiveness of this Form SB-2. 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. No trading symbol has yet been assigned.
HOLDERS
Blue Penguin Enterprises, Inc. had three (3) holders of record for its common
shares as of September 17, 2007.
DIVIDENDS
We have not paid any dividends since our incorporation and do not anticipate the
payment of dividends in the foreseeable future. At present, our policy is to
retain earnings, if any, to develop and market our products. The payment of
dividends in the future will depend upon, among other factors, our earnings,
capital requirements and operating financial conditions.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We do not have any compensation plan under which equity securities are
authorized for issuance.
31
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
The following Summary Compensation Table sets forth the total annual
compensation paid or accrued by us to or for the account of our officers,
including our board of directors.
Change in
Pension
Value and
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year Salary($) Bonus($) Awards($) Awards($) sation($) Earnings($) sation($) Total($)
-------- ---- --------- -------- --------- --------- ---------- ----------- --------- --------
Gabriel Peled 2007 Nil Nil Nil Nil Nil Nil Nil Nil
President,
Chief Executive
Officer and
Director
Oded Ofarim, 2007 Nil Nil Nil Nil Nil Nil Nil Nil
Principal
Financial
Officer,
Treasurer,
Secretary and
Director
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.
32
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
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.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Moore & Associates, Chartered are our auditors. There have not been any
disagreements with our auditors on accounting and financial disclosure or any
other matter.
33
FINANCIAL STATEMENTS
Blue Penguin Enterprises, Inc
FINANCIAL STATEMENTS
August 31, 2007
Index
Page
Number
------
Financial Statements
Report of Independent Registered Public Accounting Firm F-1
Balance Sheets F-2
Statements of Operations F-3
Statement of Stockholders' Equity F-4
Statements of Cash Flow F-5
Notes to Financial Statements F-6
34
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Blue Penguin Enterprises Inc
(A Development Stage Company)
We have audited the accompanying balance sheet of Blue Penguin Enterprises Inc
as of August 31, 2007, and the related statements of operations, stockholders'
equity and cash flows from inception August 10, 2007 through August 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 Blue Penguin Enterprises Inc as
of August 31, 2007 and the results of its operations and its cash flows from
inception August 10, 2007 through August 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 3 to the
financial statements, the Company has generated no revenue and has net losses
for the period from inception to August 31, 2007 of $10, which raises
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are also described in Note 3. 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
September 4, 2007
2675 S. Jones Blvd. Suite 109, Las Vegas, NV 89146
(702) 253-7499 Fax (702) 253-7501
F-1
BLUE PENGUIN ENTERPRISES INC
(A Development Stage Company)
BALANCE SHEETS
August 31, 2007
August 31,
2007
--------
ASSETS
Current Assets
Cash and bank accounts $ 15,490
--------
Total Assets $ 15,490
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Total Liabilities --
--------
Stockholders' Equity (Note 4, 5)
Common Stock, authorized 100,000,000 shares, par value
$0.0001, issued and outstanding on August 31, 2007;
is 5,500,000 550
Paid in Capital 14,950
Deficit Accumulated During the
Development Stage (10)
--------
Total Stockholders' Equity 15,490
--------
Total Liabilities and Stockholders' Equity $ 15,490
========
The accompanying notes are an integral part of these financial statements.
F-2
BLUE PENGUIN ENTERPRISES INC
(A Development Stage Company)
STATEMENT OF OPERATIONS
August 10, 2007
(Inception) to
August 31,
2007
-----------
Revenue $ --
Expenses
General and Administrative 10
-----------
Total Expenses 10
-----------
Net (Loss) $ (10)
===========
Basic and Diluted (Loss) per Share a
-----------
Weighted Average Number of Shares 5,095,238
-----------
- ----------
a = Less than ($0.01) per share
The accompanying notes are an integral part of these financial statements.
F-3
BLUE PENGUIN ENTERPRISES INC
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Common Stock
------------------- Paid in Accumulated Total
Shares Amount Capital Deficit Equity
------ ------ ------- ------- ------
INCEPTION, AUGUST 10, 2007 -- $ -- $ -- $ -- $ --
Initial capitalization, sale of
common stock to Directors on 5,000,000 500 500
August 10, 2007
Private placement closed 500,000 50 14,950 15,000
August 27, 2007
Net (Loss) -- -- -- (10) (10)
--------- ------ -------- ------ --------
BALANCE, AUGUST 31, 2007 5,500,000 $ 550 $ 14,950 $ -- $ 15,490
========= ====== ======== ====== ========
The accompanying notes are an integral part of these financial statements.
F-4
BLUE PENGUIN ENTERPRISES INC
(A Development Stage Company)
STATEMENT OF CASH FLOWS
August 10, 2007
(Inception) to
August 31,
2007
--------
Operating Activities
Net (Loss) $ (10)
--------
Net Cash (Used) by Operating Activities (10)
--------
Financing Activities
Proceeds from contributed Capital --
Proceeds from sale of Common Stock 15,500
--------
Cash Provided by Financing Activities 15,500
--------
Net Increase in Cash 15,490
Cash, Beginning of Period --
--------
Cash, End of Period $ 15,490
========
Supplemental Information:
Interest Paid $ --
Income Taxes Paid $ --
The accompanying notes are an integral part of these financial statements.
F-5
BLUE PENGUIN ENTERPRISES INC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
NOTE 1. GENERAL ORGANIZATION AND BUSINESS
The Company was originally incorporated under the laws of the state of Nevada on
August 10, 2007. The Company has limited operations and in accordance with SFAS
#7, is considered a development stage company, and has had no revenues from
operations to date.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
The relevant accounting policies and procedures are listed below. The company
has adopted a Dec 31 year end.
ACCOUNTING BASIS
The basis is generally accepted accounting principles.
EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock. SFAS No. 128
supersedes the provisions of APB No. 15, and requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share. The Company has
adopted the provisions of SFAS No. 128 effective its inception.
The basic earnings (loss) per share is calculated by dividing the Company's net
income available to common shareholders by the weighted average number of common
shares during the year. The diluted earnings (loss) per share is 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.
The Company has not issued any options or warrants or similar securities since
inception.
F-6
BLUE PENGUIN ENTERPRISES INC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
NOTE 2. (CONTINUED)
DIVIDENDS
The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three
months or less when purchased to be cash equivalents.
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 carryforwards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities.
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.
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.
F-7
BLUE PENGUIN ENTERPRISES INC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
NOTE 3. 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 August 31, 2007 of $10. 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 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 August 10, 2007 (inception), the Company issued 5,000,000 shares of its
common stock to its Directors for cash of $500. See Note 5.
On August 27, 2007, the Company closed a private placement for 500,000 common
shares at a price of $0.03 per share, or an aggregate of $15,000. The Company
accepted subscription from one offshore non-affiliated investor.
NOTE 5. RELATED PARTY TRANSACTIONS
The Company's neither owns nor leases any real or personal property. The
Company's Directors 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 August 10, 2007 (inception), the Company issued 5,000,000 shares of its
common stock to its Directors for cash of $500. See Note 4.
NOTE 6. INCOME TAXES
Net deferred tax assets are $nil. Realization of deferred tax assets is
dependent upon sufficient future taxable income during the period that
deductible temporary differences and carryforwards are expected to be available
to reduce taxable income. As the achievement of required future taxable income
is uncertain, the Company recorded a valuation allowance.
F-8
BLUE PENGUIN ENTERPRISES INC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
NOTE 7. NET OPERATING LOSSES
As of August 31, 2007, the Company has a net operating loss carry forward of
approximately $10, 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-9
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.
Under the Nevada Revised Statutes, director immunity from liability to a company
or its shareholders for monetary liabilities applies automatically unless it is
specifically limited by a company's Articles of Incorporation. Our Articles of
Incorporation do not specifically limit our directors' immunity. Excepted from
that immunity are: (a) a willful failure to deal fairly with the company or its
stockholders in connection with a matter in which the director has a material
conflict of interest; (b) a violation of criminal law, unless the director had
reasonable cause to believe that his or her conduct was lawful or no reasonable
cause to believe that his or her conduct was unlawful; (c) a transaction from
which the director derived an improper personal profit; and (d) willful
misconduct.
Our Articles of Incorporation and our by-laws provide that we will indemnify our
directors and officers to the fullest extent not prohibited by Nevada law;
provided, however, that we may modify the extent of such indemnification by
individual contracts with our directors and officers; and, provided, further,
that we shall not be required to indemnify any director or officer in connection
with any proceeding, or part thereof, initiated by such person unless such
indemnification: (a) is expressly required to be made by law, (b) the proceeding
was authorized by our board of directors, (c) is provided by us, in our sole
discretion, pursuant to the powers vested in us under Nevada law or (d) is
required to be made pursuant to the 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.
Nevada corporation law provides that a corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with the action, suit or proceeding if he acted in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Nevada corporation law also provides that to the extent that a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding, or in defense of any
claim, issue or matter therein, the corporation shall indemnify him against
expenses, including attorneys' fees, actually and reasonably incurred by him in
connection with the defense.
Our Articles of Incorporation and Bylaws authorize our company to indemnify our
directors and officers to the fullest extent permitted under Nevada law.
Our Bylaws require us to indemnify any present and former directors, officers,
employees, agents, partners, trustees and each person who serves in any such
capacities at our request against all costs, expenses, judgments, penalties,
II-1
fines, liabilities and all amounts paid in settlement reasonably incurred by
such persons in connection with any threatened, pending or completed action,
action, suit or proceeding brought against such person by reason of the fact
that such person was a director, officer, employee, agent, partner or trustees
of our company. Our By-laws specifically except the following from that
immunity: (i) acts or omissions which involve intentional misconduct, fraud or a
knowing violation of the law and (ii) the payment of distributions in violation
of the Revised Statutes of the State of Nevada.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of our company under
Nevada law or otherwise, our company has been advised that the opinion of the
Securities and Exchange Commission is that such indemnification is against
public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable.
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 (1) $ 3
Legal fees 7,500
Transfer Agent fees 10,000
Audit fees 1,500
Edgarizing and Filing fees (1) 500
Miscellaneous (1) 500
-------
Total (1) $20,003
=======
- ----------
(1) Estimated.
RECENT SALES OF UNREGISTERED SECURITIES
On August 31, 2007, we issued a total of 5,000,000 shares of common stock to
Gabriel Peled and Oded Ofarim in a private placement. Mr. Gabriel Peled and Mr.
Oded Ofarim, executive officers and members of our Board of Directors, each
purchased 2,500,000 shares of our common stock for $0.001 share or an aggregate
of $500. The private placement was made pursuant to the exemption from the
registration requirements of the Securities Act provided by Section 4(2) of the
Securities Act.
On August 27, 2007, we issued and sold 500,000 shares of our common stock to one
investor at a purchase price of $0.03 per share, without registering the shares
with the Securities and Exchange Commission. We completed this offering pursuant
to Regulation S of the Securities Act. The purchaser represented to us that he
was 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 Common Stock certificate.
5.1 Opinion of Clark Wilson LLP regarding the legality of the
securities being registered.
23.1 Consent of Moore & Associates, Chartered
23.2 Consent of Legal Counsel (incorporated in Exhibit 5.1)
24.1 Power of Attorney (Contained on the signature page of this
registration statement)
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.
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-4
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 Rosh Ha'ain, Israel on September 17, 2007.
BLUE PENGUIN ENTERPRISES INC
By: /s/ Gabriel Peled
------------------------------------------
Name: Gabriel Peled
Title: President, Chief Executive Officer,
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: September 17, 2007 /s/ Gabriel Peled
---------------------------------------------
Name: Gabriel Peled
Title: President, Chief Executive Officer,
and Director
(Principal Executive Officer)
Date: September 17, 2007 /s/ Oded Ofarim
---------------------------------------------
Oded Ofarim
Secretary, Treasurer and Director
(Principal Financial Officer and Principal
Accounting Officer)
II-5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Gabriel Peled and Oded Ofarim, each or either of them,
his true and lawful attorneys-in-fact, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this registration statement and to sign a registration statement pursuant to
Section 462(b) of the Securities Act of 1933, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Gabriel Peled President
- ------------------------------- Chief Executive Officer, and Director September 17, 2007
Gabriel Peled (Principal Executive Officer)
/s/ Oded Ofarim Secretary and Treasurer
- ------------------------------- (Principal Financial Officer and September 17, 2007
Oded Ofarim Principal Accounting Officer)
II-6