SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CIAO CACAO
(Name of small business issuer in its charter)
California 5810 91-2110130
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.:
827 State Street, Suite 14
Santa Barbara, CA 93101
(805) 965-1602 (PHONE)
(Address and telephone number of principal executive offices)
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827 State Street, Suite 14
Santa Barbara, CA 93109
(805) 965-1602 (PHONE)
(Address of principal place of business or intended principal place of
business)
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KENNETH G. EADE
Attorney at Law
827 State Street, Suite 12
Santa Barbara, CA 93101
(805)560-9828 (PHONE)
(805) 560-3608 (TELECOPY)
(Name, address and telephone number of agent for service)
--------------------------
COPIES TO:
KENNETH G. EADE
Attorney at Law
827 State Street, Suite 12
Santa Barbara, CA 93101
(805)560-9828 (PHONE)
(805) 560-3608 (TELECOPY)
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this registration statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
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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: / /
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THE REGISTRANT 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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
CALCULATION OF REGISTRATION FEE
TITLE OF EACH DOLLAR PROPOSED PROPOSED AMOUNT OF
CLASS OF SECURITIES AMOUNT TO MAXIMUM AGGREGATE MAX. AGGREGATE REGISTRATION FEE
- -------------------------- ---------- --------- -------------- ----------------
Common Stock, .001 par $ 1,000,000 $1.00 $1,000,000 $264.00
Total $1,000,000 $1.00 $1,000,000 $264.00
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Prospectus
CIAO CACAO
1,000,000 shares of common stock Up to 1,000,000 of the shares of common stock
offered are being sold by CIAO CACAO. There is no minimum offering and no
escrow. There is no established public market for Ciao's common stock, and the
offering price has been arbitrarily determined. Ciao's Common Stock is not
currently listed or quoted on any quotation service. This offering is self-
underwritten. Shares will be sold by Ciao's president, Jeffrey Volpe, without
the use of an underwriter. This offer will terminate twelve months after the
date of this prospectus.
------------------------
The Common Stock offered is speculative and involves a high degree of risk
and substantial dilution. See "RISK FACTORS" on page 4 of this prospectus.
------------------------
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission, nor has the Commission
or any state securities commission passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
PRICE UNDERWRITING PROCEEDS
TO DISCOUNTS AND TO
PUBLIC COMMISSIONS(2) Company(1)
------ -------------- ----------
Per Share................$ $1.00 $0 $ 1.00
Total .................. $1,000,000 $0
$1,000,000
____________, 2002
TABLE OF CONTENTS
PAGE
---------
Prospectus Summary.............................. 1
Risk Factors.................................... 3
We are subject to intense competition from
others who may implement the same business
plan before us and thus cause our business
to fail.................................... 4
Ciao's plan of operations is based on
its trade name, and it may not be possible to
register the trade name. This may result in
us not being able to accomplish our business plan 4
If we receive only nominal funding, we will not
be able to implement our plan of operations,
Which may result in the failure of our business 4
Our accountant has expressed doubt as to whether
we may continue as a going concern. If we do not,
then investors in this offering may lose their
entire investment........................... 4
We rely upon our current officers, and the loss
of any of them would seriously impair our ability
to implement our plan of operations, and result
in the failure of our business................. 5
Our Secretary/Treasurer devotes his efforts to
several other businesses, and lives outside the
country in which we are located, which may result
in less of an effort made to promote our plan of
operations, which in turn may result in the
failure of our business......................... 5
Our Secretary/Treasurer is also an officer of
a similar company, which could create a conflict
of interest.................................... 5
We have no experience in the coffee bar business.
This may affect our ability to operate
successfully, and result in the failure of
our business................................... 5
There is no established market for our
stock, and investors may not be able to
sell their shares in the future................ 6
The survival of our business depends upon changes
in current trends, tastes, and perceived
effects on health.............................. 6
The current instability in coffee growing
countries could make us unable to price our
products competitively, resulting in the failure
of our business............................... 7
The coffee bar market may be heavily saturated,
And, unless our concept of differentiating
ourselves from the other coffee bars succeeds,
our business may fail......................... 7
Use of Proceeds................................. 7
Dividend Policy................................. 8
Price Range of Securities....................... 8
Dilution........................................ 9
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 11
Business........................................ 14
Management...................................... 22
Principal Stockholders.......................... 23
Certain Transactions............................ 24
Description of Securities....................... 25
Shares Eligible for Future Sale................. 26
Plan of Distribution............................ 27
Legal Matters................................... 27
Experts......................................... 28
Index to Financial Statements................... 30
------------------------
PROSPECTUS SUMMARY
CORPORATE BACKGROUND
Ciao is a development stage company, with no assets, revenue, experience
in the proposed line of business, or capital, and a deficit of $14,570 since
its inception. Its plan of operations is to establish a nationwide chain of
coffee stores, using the Ciao trade name as a marketing and advertising tool.
In order to effectuate this plan of operations, we must first build a
prototype coffee store, and these efforts may not be successful. There can be
no assurance that Ciao's common stock will ever develop a market. Our
principal executive offices are located at 827 State Street, Suite 14, Santa
Barbara, California 93101, and our telephone number is 805-730-1798.
THE OFFERING
common stock Offered......................... Up to 1,000,000 shares
common stock Outstanding after the
Offering................................... 4,100,000 shares
Use of Proceeds.............................. Working capital
Symbol....................................... None
Risk Factors................................. The shares of common stock
offered involve a high degree
of risk and immediate
substantial dilution
See"Risk Factors"and "Dilution"
Term of offering............................. Until the December 31, 2002,
or until all shares are sold
-------------------------------------
SUMMARY FINANCIAL DATA
The following summary financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements, including Notes,
included elsewhere in this Prospectus. The statement of operations data for
the period inception to December 31, 2001 and the consolidated balance sheet
data at December 31, 2001 come from Ciao's audited Consolidated Financial
Statements included elsewhere in this Prospectus. The consolidated statement
of operations data for the period inception to December 31, 2001 come from
Ciao's audited financial statements for those years, which are included in
this Prospectus. These statements include all adjustments that Ciao considers
necessary for a fair presentation of the financial position and results of
operations at that date and for such periods. The operating results for the
period ended December 31, 2001 do not necessarily indicate the results to be
expected for the full year or for any future period.
BALANCE SHEET DATA:
December 31, 2001
---------------------
Assets: ............................................ $ --
=======
-------
Total current liabilities $ 10,820
-------
Stockholders' Equity:
common stock, Par value $.001
Authorized 100,000,000 shares,
Issued 3,100,000 shares at December 31,
2001 .................................. 1,950
Paid in capital .......................... 1,800
Accumulated Deficit.. ......................... (14,570)
-------
Total Stockholders' Equity .................... (10,820)
-------
Total Liabilities and
Stockholders' Equity ........................ $
=======
STATEMENT OF OPERATIONS DATA:
Period December 28,
2000(inception)
through
December 31, 2001
----------------
Revenues: .................................. $ --
General and administrative Expenses: ........ (14,570)
--------
Net Loss .............................. $(14,570)
--------
Loss per share ............................ $ (.01)
=======
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RISK FACTORS
Prospective investors in the shares offered should carefully consider the
following risk factors, in addition to the other information appearing in the
prospectus.
We are subject to intense competition from others who may implement the
same business concept before us and thus cause our business to fail.
There are several large companies, such as Starbucks Coffee and The Coffee
Bean, which have greater financial resources and more established brand names
than ours. These companies are in a better position to implement a business
plan similar to ours, which may result in the failure of our business and plan
of operations.
Ciao's plan of operations is based on its trade name, and it may not be
possible to register the trade name. This may result in us not being able to
accomplish our business plan and the failure of our business.
Ciao's application for trademark registration has been accepted by the United
States Patent and Office, which has indicated that the mark appears to be
entitled to registration, and if no opposition is filed to the mark, it has
indicated that it may issue a notice of allowance of the mark. This does not
mean that the registration process has concluded, and there is no assurance
that the mark will be granted registration.
If we receive only nominal funding, we will not be able to implement our
plan of operations, which may result in the failure of our business.
If we receive only nominal funding from this offering, we may have to attempt
to raise capital privately and, if we fail to raise the minimum amount of
capital required to implement our plan of operations, our business may fail
and the investors may lose their entire investment.
Our accountant has expressed a doubt as to whether we may continue as a going
concern. If we do not, then investor's in this offering may lose their entire
investment.
In order to continue as a going concern, we need operating capital. We have
nominal assets and no current operations with which to create operating
capital. We are seeking to raise capital through this offering, but, since
there is no minimum amount of capital which must be raised in this offering,
there can be no assurance that we will be successful in raising operating
capital. If we are not able to raise operating capital, we may not be able to
put our plan of operations into play, and investors participating in this
offering may lose their entire investment.
We rely upon our current officers, and the loss of any of them would
seriously impair our ability to implement our plan of operations, and result
in the failure of our business.
We are dependent upon our president, Jeffrey Volpe, and our
Secretary/Treasurer, Artem Gotov. The loss of either one of them may result
in our failure to implement our plan of operations. As a result, investors
may lose their entire investment.
Our Secretary/Treasurer devotes his efforts to several other businesses,
and lives outside of the country in which we are located, which may result in
less of an effort made to promote our plan of operations, which in turn may
result in the failure of our business.
Our Secretary/Treasurer, and founder of the our business concept, Artem
Gotov, devotes only about 25% of his time on our business and lives in Russia.
Since we rely upon Mr. Gotov for his technical expertise in the implementation
of our plan of operations, his lack of full time dedication to us may affect
our ability to put the plan of operations into place effectively.
Our Secretary/Treasurer is also the officer of a similar company, which
could create a conflict of interest.
Our Secretary/Treasurer, Artem Gotov, is also the president and Director
of McSmoothie's Inc., which is a company whose business plan is to develop a
nationwide chain of smoothie and drink stores. Since the two businesses are
similar in nature, Mr. Gotov may have conflicts of interest that he may
resolve in favor of McSmoothie's. Mr. Gotov is also in negotiations on behalf
of himself and his partners in Moscow with The Coffee Bean on establishing a
chain of Coffee Bean stores in Russia.
We have no experience in the coffee bar business. This may affect our
ability to operate successfully, and result in the failure of our business.
The management of Ciao, although familiar with the restaurant business, has
never established or managed a coffee bar before, and has no experience.
There is no established market for our stock and investors may not be able to
sell their shares in the future.
If we are unsuccessful in developing a market for our stock, then it will be
difficult for investors to establish a value for their stock and to eventually
sell their shares and recover their investment.
The survival of our business depends upon changes in current trends,
tastes, and perceived effects on health.
Coffee bars are popular at this time, but, if this trend does not continue, if
people's tastes change, or if the health effects of consumption of amounts of
coffee affect consumers' attitudes toward our industry, our business could
fail.
The current instability in coffee growing countries could make us unable
to price our products competitively, resulting in the failure of our business.
The cancellation of the International Coffee Agreement in 1989, coupled with
political instability in the coffee growing regions of South America, and the
current economic uncertainty in Latin America may result in further
restrictions on the supply of coffee and a continuation of price increases.
This may result in our inability to price our products competitively due to
our less advantageous buying power compared to our competitors.
The coffee bar market may be heavily saturated, and, unless our concept of
differentiating ourselves from the other coffee bars succeeds, our business
may fail.
The coffee bar market has become saturated with national coffee bar chains
with high brand name recognition, such as "Starbucks Coffee" and "The Coffee
Bean," regional coffee bar chains and local "mom and pop" coffee bar
operations. Therefore, if we fail to develop brand name recognition as a
result of our concept of a relaxed atmosphere European style coffee bar, our
business may fail.
USE OF PROCEEDS
The estimated net proceeds of this offering, after deduction of estimated
offering expenses, are $985,000. The following table shows Ciao's use of
proceeds if 25%, 50%, 75%, and/or 100% of the shares are sold. Further,
there can be no assurance that any shares will be sold in this offering.
10% 25% 50% 75% 100%
--- --- --- ---- ----
Gross offering proceeds 100,000 250,000 500,000 750,000 1000000
Offering expenses 15,000 15,000 15,000 15,000 15000
------- ------- ------- ------- -------
Net offering proceeds 85,000 235,000 485,000 740,000 850,000
Principal uses of net proceeds:
Construction of
prototype coffee bars 50,000 150,000 200,000 250,000 250,000
Advertising 20,000 125,000 150,000 250,000 250,000
Salaries 13,000 39,000 52,000 65,000 65,000
Working capital 2,000 113,500 83,000 175,000 285,000
---------- ------- ------- ------- -------
Totals 83,000 235,000 485,000 740,000 850,000
The construction of prototype coffee bars is based upon an estimate of $50,000
per prototype store. This is broken down as follows:
Plans and Permits $ 5,000
Leasehold improvements $30,000
Equipment $10,000
Initial stock and staffing $ 5,000
Salaries are based on the assumption that the stores will be staffed by 2
workers, paid at minimum wage, along with a worker/manager, who will receive
an additional $1.00-2.00 per hour for supervising, opening and closing the
stores, in addition to his or her regular work duties.
If the proceeds of this offering are less than 10%, we believe that we will
not be able to implement our business plan, and will be forced to use other
financing, such as private placements of our securities or bank borrowing, or
a business combination with a more financially able ally in the same or
similar industry, in order to accomplish our plan of operations. In this
event, the proceeds of the offering will be spent on general and
administrative costs and the remainder will be reserved for working capital.
The allocation of the net proceeds of the Offering set forth above represents
Ciao's best estimates based upon its current plans and certain assumptions
regarding industry and general economic conditions and Ciao's future revenues
and expenditures.
If any of these factors change, Ciao may find it necessary or advisable to
reallocate some of the proceeds within the above-described categories. Working
capital includes payroll, office expenses and supplies, insurance, and other
general expenses. None of the proceeds are allocated to officer's salaries,
or payments to any directors or affiliates.
Proceeds not immediately required for the purposes described above will be
invested temporarily, pending their application as described above, in short-
term United States government securities, short-term bank certificates of
deposit, money market funds or other investment grade, short-term, interest-
bearing instruments.
DIVIDEND POLICY
Ciao has never declared or paid cash dividends on its capital stock. Ciao
currently intends to retain earnings, if any, to finance the growth and
development of its business and does not anticipate paying any cash dividends
in the foreseeable future.
PRICE RANGE OF SECURITIES
Ciao's common stock is not listed or quoted at the present time, and there is
no present public market for Ciao's common stock. Ciao has obtained a market
maker who has agreed to file an application for Ciao's securities to be quoted
on the NASD OTC Bulletin Board(Bulletin Board), upon the effectiveness of
this Registration Statement, but the obtaining of a quotation is subject to
NASD approval, and there can be no assurance that Ciao's stock will be quoted
on the Bulletin Board. Thus, there can be no assurance that the NASD will
accept Ciao's market maker's application on Form 211. Therefore, there can be
no assurance that a public market for Ciao's common stock will ever develop.
DILUTION
As of December 31, 2001, Ciao's net tangible book value was $0, or $0 per
share of common stock. Net tangible book value is the aggregate amount of
Ciao's tangible assets less its total liabilities. Net tangible book value per
share represents Ciao's total tangible assets less its total liabilities,
divided by the number of shares of common stock outstanding. After giving
effect to the sale of 1,000,000 shares at an offering price of $1.00 per share
of common stock, application of the estimated net sale proceeds (after
deducting offering expenses of $15,500), Ciao's net tangible book value as of
the closing of this offering would increase from $0 to $.24 per share. This
represents an immediate increase in the net tangible book value of $.24 per
share to current shareholders, and immediate dilution of $.76 per share to new
investors, as illustrated in the following table:
Public offering price per
share of common stock $ 1.00
Net tangible book value per share before offering.................$ 0
Increase per share attributable to new investors..................$ .24
Net tangible book value per share after offering..................$ .24
Dilution per share to new investors...............................$ 0.76
Percentage dilution................................................ 76%
The following table summarizes, both before the offering and after the
offering, assuming the sale of all 1,000,000 shares in this offering, a
comparison of the number of shares purchased, the percentage of shares
purchased, the total consideration paid, the percentage of total consideration
paid, and the average price per share paid by the existing stockholders and by
new investors.
Number Total Percentage Percentage Average
of Shares Consideration of Shares of Total price
Purchased Paid Purchased Consideration per
share
--------- --------------- --------- ------------- --------
- -
Existing Investors 3,100,000 $ 3,100 75.60% .3% $.001
New Investors 1,000,000 $ 1,000,000 24.4% 99.7% $ 1.00
The following table shows the estimated dilution if only 25% of gross proceeds
of this offering are received. As of December 31, 2001, Ciao's net tangible
book value was $0, or $0 per share of common stock. Net tangible book value
is the aggregate amount of Ciao's tangible assets less its total liabilities.
Net tangible book value per share represents Ciao's total tangible assets less
its total liabilities, divided by the number of shares of common stock
outstanding. After giving effect to the sale of 250,000 shares at an offering
price of $1.00 per share of common stock, application of the estimated net
sale proceeds (after deducting offering expenses of $15,500), Ciao's net
tangible book value as of the closing of this offering would increase from $0
to $.07 per share. This represents an immediate increase in the net tangible
book value of $.07 per share to current shareholders, and immediate dilution
of $.93 per share to new investors, as illustrated in the following table:
Public offering price per
share of common stock $ 1.00
Net tangible book value per share before offering.................$ 0
Increase per share attributable to new investors..................$ .07
Net tangible book value per share after offering..................$ .07
Dilution per share to new investors...............................$ 0.93
Percentage dilution................................................ 93%
The following table summarizes, both before the offering and after the
offering, assuming the sale of only 250,000 shares in this offering, a
comparison of the number of shares purchased, the percentage of shares
purchased, the total consideration paid, the percentage of total consideration
paid, and the average price per share paid by the existing stockholders and by
new investors.
Number Total Percentage Percentage Average
of Shares Consideration of Shares of Total price
Purchased Paid Purchased Consideration per
share
--------- --------------- --------- ------------- --------
- -
Existing Investors 3,100,000 $ 3,100 92.5% 1% $.001
New Investors 250,000 $ 250,000 7.5% 99% $1.00
The following table shows the estimated dilution if only 10% of gross
proceeds of this offering are received. As of December 31, 2001, Ciao's net
tangible book value was $0, or $0 per share of common stock. Net tangible
book value is the aggregate amount of Ciao's tangible assets less its total
liabilities. Net tangible book value per share represents Ciao's total
tangible assets less its total liabilities, divided by the number of shares of
common stock outstanding. After giving effect to the sale of 100,000 shares
at an offering price of $1.00 per share of common stock, application of the
estimated net sale proceeds (after deducting offering expenses of $15,500),
Ciao's net tangible book value as of the closing of this offering would
increase from $0 to $.02 per share. This represents an immediate increase in
the net tangible book value of $.02 per share to current shareholders, and
immediate dilution of $.98 per share to new investors, as illustrated in the
following table:
Public offering price per
share of common stock $ 1.00
Net tangible book value per share before offering.................$ 0
Increase per share attributable to new investors..................$ .02
Net tangible book value per share after offering..................$ .02
Dilution per share to new investors...............................$ 0.98
Percentage dilution................................................ 98%
The following table summarizes, both before the offering and after the
offering, assuming the sale of only 100,000 shares in this offering, a
comparison of the number of shares purchased, the percentage of shares
purchased, the total consideration paid, the percentage of total consideration
paid, and the average price per share paid by the existing stockholders and by
new investors.
Number Total Percentage Percentage Average
of Shares Consideration of Shares of Total price
Purchased Paid Purchased Consideration per
share
--------- --------------- --------- ------------- --------
- -
Existing Investors 3,100,000 $ 3,100 96.9% 3% $.001
New Investors 100,000 $ 100,000 3.1% 97% $1.00
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND PLAN OF OPERATIONS
The following discussion should be read in conjunction with Ciao's
Consolidated Financial Statements, including the Notes, appearing
elsewhere in this Prospectus.
OVERVIEW
Ciao was organized on December 28, 2000. Ciao is in the business of marketing
the concept of a national coffee bar in the European style, with a menu of
whole bean coffees, Italian style espresso beverages, and a variety of
European style pastries purchased from other sources. Each store and all
products will bear the trade name, "Ciao Cacao." Ciao has applied for
trademark registration of this trade name with the U.S. Patent and Trademark
Office. Ciao's common stock is not listed on any recognized exchange or quoted
on any quotation medium. There can be no assurance that its common stock will
ever develop a market.
STRATEGY
Our objective is to become a leading specialty coffee retailer. We intend to
achieve this goal by consistently selling only the highest quality whole-bean
specialty coffees and coffee beverages, providing a superior level of customer
service, and utilizing a marketing strategy emphasizing the differences
between the Company's products and those of its competitors. The Company
believes that its commitment to quality will establish a high degree of
customer loyalty and repeat business. So far, we have limited our operations
to startup and development activities.
PLAN OF OPERATIONS-IN GENERAL
Ciao presently has no cash with which to satisfy any future cash
requirements, and we have not taken any affirmative steps in furtherance of
developing our first prototype store. Ciao will need a minimum of $85,000 from
this offering to satisfy its cash requirements for the next 12 months. With
this minimum capital, Ciao intends to establish its first prototype coffee
bar, using the Ciao theme. Ciao will not be able to operate if it does not
obtain equity financing. If we do not receive the minimum financing required
to put our business plan into operation, we will first seek to obtain a
market for our common stock, and then attempt to raise the minimum capital
required through private placements of our common stock or borrowing from our
principals. We will also delay the commencement of operations until
sufficient capital has been raised. Ciaohas no current material commitments.
Ciao depends upon capital to be derived from this offering and future
financing activities such as subsequent offerings of its stock. There can be
no assurance that Ciao will be successful in raising the capital it requires.
Management believes that, if this offering and the subsequent private
placements are successful,Ciao will be able to generate revenue from coffee
sales and achieve liquidity within the next twelve months, and estimates that
this liquidity will continue, unless it goes over budget in development of new
coffee bar locations.
Ciao's operations during the next twelve months are dependent upon
receiving adequate financing in this offering. If we do not receive at least
$85,000 in net proceeds from this offering, our operations will be limited to
arranging additional financing by private placements of our securities,
borrowing from our principals, or bank financing. If we receive at least
$85,000 in net proceeds, our operations will be limited to the construction,
opening and running of our first prototype store.
Ciao anticipates that the cost of development of a prototype coffee bar will
be at least $50,000, and intends to develop at least four additional stores
after the prototype store, at an expected cost of $250,000. The cost of
construction of each store was estimated as follows, based upon research
conducted by our management in discussions with competitors:
- Plans and permits: $5,000
- leasehold improvements: $30,000
- equipment: $10,000
- initial stock and staffing: $5,000
We expect that the cost of renting facilities, which is included in our
leasehold improvements estimate, will run at premium prices, in major
metropolitan areas with high pedestrian traffic. An example of rent prices is
approximately $3.00 to $4.00 per square foot.
We do not expect any additional research and development of any products, nor
do we expect to incur any research and development costs. Ciao does not expect
the purchase or sale of plant or any significant equipment, except for the
initial purchase of coffee makers, refrigerators and display cases for the
prototype and following stores, and it does anticipate hiring at least 30
minimum wage employees and five full time managers to run the stores. Ciao has
generated no revenue since its inception.
Ciao is still considered to be a development stage company, with no
significant revenue, and is dependent upon the raising of capital through
placement of its common stock. There can be no assurance that Ciaowill be
successful in raising the capital it requires through the sale of its common
stock.
MILESTONES
-First Phase: The first phase of our plan of operations is to develop our
first prototype coffee bar store, at an anticipated cost of $50,000. This
first phase is dependent upon our receiving a minimum of $85,000 in net
proceeds from this offering. If we do not receive at least $85,000 in net
proceeds, there can be no assurance that we will ever reach this first
milestone, as to do so, we will have to seek alternative financing, such as
private placements of our securities after the closing of this offering, bank
borrowing, or borrowing from our principals. None of these forms of
alternative financing have been implemented or arranged. If we are able to
raise the required capital for this milestone, we anticipate that it will be
completed approximately three months after the close of this offering. At the
end of this milestone, we anticipate receiving our first revenues.
- -Second phase: The second phase of our plan of operations is to develop our
second and third coffee bar stores, at an anticipated cost of $150,000, plus
an advertising budget of $125,000, and $39,000 in salaries. This second phase
is dependent upon our receiving a minimum of $235,000 in net proceeds from
this offering. If we do not receive at least $235,000 in net proceeds, our
operations will be limited to the operation of our first prototype store. We
anticipate achieving this milestone by the end of the ninth month following
the closing of our offering.
- -Third phase: The third phase of our plan of operations is to develop our
fourth coffee bar store, at an anticipated cost of $50,000, plus to increase
our advertising budget to $250,000 and our salaries to $65,000. This third
phase is dependent upon our receiving a minimum of $740,000 in net proceeds
from this offering. If we do not receive at least $235,000 in net proceeds,
our operations will be limited to the operation of our first prototype store.
We anticipate achieving this milestone by the end of the twelfth month after
the closing of our offering.
CONSTRUCTION
We plan to use local construction firms and architects to develop the first
prototype stores. The basic design has been made by Artem Gotov, and includes
coffee brewers, an espresso/cappuccino machine, a pastry case, and a
comfortable European style seating area. We have not yet contracted with any
construction firms, and have only made arrangements with our architect, Jerry
Dohn, to draw the designs once we have received funding. We have received
estimates on construction and the purchase of equipment which indicate that
our leasehold improvements on a typical small 1000 square foot store would run
approximately $5,000 for plans and permits, $30,000 for leasehold
improvements, $10,000 for equipment, and $5,000 for initial staffing, for a
total of approximately $50,000. We have not yet secured a location for the
first store, which will be on State Street in Santa Barbara, as we have not
yet received our funding and are dependent on this offering for this funding.
BUSINESS
Organization
Ciao was organized on December 28, 2000. Ciao is in the business of
marketing the concept of a national coffee bar in the European style, with a
menu of whole bean coffees, Italian style espresso beverages, and a variety of
European style pastries purchased from other sources. Ciao has no current
operations at the present time. It was originally organized for Mr. Jeffrey
Volpe, who was interested in formulating a business plan to open a chain of
coffee bars, and who was introduced to Artem Gotov by our counsel, Kenneth G.
Eade, because Mr. Eade felt that Mr. Gotov had the requisite experience to
help with the business plan. Mr. Gotov came up with the trade name and
concept, and further defined the business plan. Its business plan is to
establish a national chain of coffee drink stores, featuring fresh brewed
freshly ground coffee of different types and flavors, and the popular Italian
style espresso coffee drinks. Our main focus will be on developing company-
owned and franchised retail coffee bar locations selling brewed coffee,
espresso-based beverages, such as cappuccinos, lattes, mochas and espressos,
Italian sodas, and various blended drinks. To complement beverage sales, the
company plans to sell pastries, cookies, light food items, whole bean coffee,
and accessories.
Industry
The specialty coffee retail business in the United States is growing rapidly
and is undergoing substantial change. Industry sources estimate that total
retail sales of specialty coffee 1 5 will reach $5.0 billion in 2000 from $1.5
billion in 1990. It is estimated that the number of coffee cafes, espresso
bars and espresso carts will increase to 15,000 by 2000 from less than 1,000
in 1990. Due to ease of entry into the business and the growing popularity of
specialty coffee nationwide, there has been a proliferation of single unit
operators and small, regional coffee companies, many having fewer than 50
stores. Industry studies suggest that a high proportion of consumers in the
United States now recognize and appreciate the difference in quality between
instant and canned coffees and specialty coffees, which are made from higher
quality coffee beans roasted to specifications that produce coffee with more
flavor and consumer appeal.
Coffee is the world's second largest traded commodity. Supply and price can be
volatile. The supply and price can be affected by multiple factors, such as
weather, politics, labor and economics in the Producing Countries. The
International Coffee Organization, through the imposition of export quotas
agreed upon by consumer and producer member nations, has in the past attempted
to maintain the commodity prices of green coffees. The specific effect the
cartel has had on coffee prices is difficult to determine in light of other
occurrences such as weather problems, labor problems and political and
currency instability in coffee producing countries. From time to time, the
coffee cartel members have met and determined to withhold some percentage of
their exportable green coffee bean crop in an effort to raise and sustain
green coffee bean prices. This happened in 1994, 1995 and 1996. In January
1997, the ACPC agreed to extend its current limitations through 1998. We are
unable to predict whether the ACPC will be successful in achieving its goals;
however, the supplies of green coffees held by coffee roasters and buyers are
currently at historical low levels. Brazil experienced frosts in 1994. The
announcement of the Brazilian frost damage caused a substantial increase in
green coffee bean prices and other coffee-product related prices worldwide.
Source: Industry filings with the Securities and Exchange Commission.
Coffee Store Development
We plan to locate the coffee stores in major metropolitan areas with high
pedestrian traffic, beginning with tourist areas. Our initial store will be
located in Santa Barbara, and we hope to locate stores in the New York,
Chicago, Miami, Orlando, Dallas, Denver, Los Angeles and Honolulu areas. The
stores will be located in areas of these cities which have street pedestrian
traffic, as opposed to malls and shopping centers, in order to give the stores
a "cafe" type feel. The size of each store will be approximately 1,000 to
1,500 square feet, and will have a counter, seating area, outdoor cafe type
seating area, a small kitchen area with cash register, refrigerator/freezer,
coffee makers and an espresso/capuccino machine. We intend to compete against
other coffee store chains by establishing name recognition and providing
better than average customer service. We also plan to compete by creating a
European ambience to our coffee stores, and by locating the stores only in
areas that will allow outside seating, to give the stores that European "cafe"
feeling. We have no proprietary formulas for our coffee drinks. The core of
our business will be coffee drinks, but we will also offer European pastries
purchased from local bakeries in the area in which our stores will be located.
Ciao's plan of operations includes the intention to offer quality products
with high perceived value; fast and friendly customer service; to develop a
strong brand image behind the trademark, "Ciao Cacao" and to target an
attractive demographic segment of adults, ages 25 through 50. All of these
operations are planned operations at the present time, as Ciao has no actual
business, other than the formation of its business plan and this offering.
The planning and development of the stores will be performed by our
management, in conjunction with qualified architects and construction firms.
The planning of each store will be relatively simple, as we plan to offer
limited products, and we will rely on the experience of Artem Gotov in
planning and designing restaurants and coffee shops. We will staff each store
with minimum wage employees with experience in the fast food industry, who
will be trained by Mr. Gotov, and we will hire managers, who will perform the
work of our regular employees, plus supervision, opening and closing, for
which they will be compensated with extra pay per hour. Eventually, we plan
to offer an incentive program to manager employees, which may include options
on our common stock, in order to attract and retain trustworthy managers. The
first step of the development will be the development of a prototype store in
Santa Barbara, California. Products, including coffee beans and pastries,
will be obtained from local sources, and all product testing will take place
in the prototype store. We have not yet obtained a lease or option on the
space for the prototype store, which will not be obtained until sufficient
funds have been raised in this offering to secure the space and begin
development, but we anticipate that the space will be on State Street in Santa
Barbara or on Coast Village Road in Montecito, which are two areas of high
pedestrian and tourist traffic, and areas whose ambiance fits with the
ambiance of our planned store. We plan to open our prototype store within
three months after the closing of this offering, which, depending upon the
proceeds generated in this offering, will be followed by the opening of four
more initial stores in Los Angeles, New York, Miami and Chicago. The
expansion of our operations will require the hiring of additional experienced
management and personnel. Each store will be given a trial period of one year
to reach profitability, or it will be closed and another location will be
sought for the store. We plan to have all five stores in operation by the end
of the twelve month period following the closing of this offering.
Coffee Store Operations
All of the planned operations described in this prospectus depend on Ciao
raising a sufficient amount of capital to dedicate financial resources to each
element of its business plan. There can be no assurance that any capital at
all will be raised from this offering, but if significant capital is raised,
resources will be devoted to ensure that all Ciaocoffee bars which Ciaoplans
to develop will offer the highest quality food and service. Emphasis will be
placed on delivering quality ingredients to all coffee bars, that restaurant
food production systems will be continuously developed and improved, and all
employees will be dedicated to delivering consistently high quality food and
service. Ciao will standardize the specifications for the preparation and
service of its food, the conduct and appearance of its employees, and the
maintenance and repair of its premises. Each Ciao store will be operated by a
company-employed manager who normally will receive a minimum of eight weeks of
management training, which will include classroom training and on-the- job
training in a Ciao store.
The store manager will be responsible for the operation of the coffee bars,
including product quality, food handling safety, cleanliness, service,
inventory, cash control and the conduct and appearance of employees.
Restaurant managers will be supervised by regional managers, who will report
directly to Ciao management. Ciao will establish a performance bonus system to
award managers at all levels with bonus compensation based on profit
achievement. Ciao will employ a point of sale computerized reporting and cash
register system for its coffee bars, which provides points of sale transaction
data and accumulates marketing information. Sales data will be collected and
analyzed on a weekly basis by management.
We believe that our primary customers will be middle aged Americans, from ages
30 through 50, and tourists from ages 20 through 50. This belief is based on
two factors. One is the recent trend for consumers and tourists to pay
attention to "theme" restaurants, and the other is the unique ambiance we
intend to create in our stores, which will make them a comfortable place for
our customers to relax, converse, and meet with other people. We have not yet
identified any suppliers for our stores, and we plan to supply each store with
staples and supplies from local sources, including national suppliers such as
Sysco and Smart and Final, and pastries from local bakeries, until such time
as our expansion plans justify more centralized bulk buying from larger
national suppliers.
We will price our coffees and retail goods at or above the prevailing high-end
prices for these items in its markets. The products offered by us will be of
the highest quality and would command a premium price based on value alone. We
believe that specialty coffee consumers expect to pay a higher price for
specialty food and beverage products and look with suspicion at products that
are priced below the market. This strategy will differentiate the Company from
many of its competitors that compete on a "price only" basis.
Our beliefs are based upon our research of the specialty beverage industry,
and the experience of our management.
Planned advertising and promotion
As part of its plan of operations, which is dependent upon the raising of
sufficient capital, Ciao plans to engage in a marketing program, both in
conjunction with before and after the opening of new restaurant locations, and
on an ongoing basis, to build the brand name,"Ciao Cacao" Ciao will
emphasize local, low cost advertising on cable television and radio in the
areas in which new coffee bars are planned to be developed. This will be
combined with a direct mail campaign in the area. This cable and radio
advertising will be supplemented by advertising in the local newspapers,
including coupons advertising "two for one" specials. The first day of the
opening of each store will be promoted by offering free beverages to all
customers, in order to attract new customers, and to familiarize them with our
store and its concepts. This advertising campaign is constructed to create
the most exposure and awareness of our stores in the local areas where they
will be operated. We anticipate costs of our grand opening campaign, which
will last approximately one month, to be about $3,000 per week. After that,
we plan to continue advertising on a regular basis on cable television and
local newspapers and journals, at an approximate cost of $1,000 per week.
We will also rely on the high visibility of its retail locations, word-of-
mouth, public relations, local store marketing, and the inviting atmosphere of
its kiosks to drive growth. We also plan to conduct in-store coffee tastings,
provide brewed coffee at local neighborhood events, donate coffee to local
charities, and mail periodic announcements to neighborhood residents to
announce a store opening or the introduction of a new product.
Description of Property
Ciao subleases offices at 827 State Street Suite 14, Santa Barbara,
California, from its president, Jeffrey Volpe, who in turn rents it on an oral
agreement from Rametto Corporation, pursuant to an oral agreement, on a month
to month basis, at no charge to Ciao, until such time as Ciao, for
approximately 150 square feet of office space, which is adequate for Ciao's
needs at the present time. These offices are located in downtown Santa
Barbara, and are used for offices only. There is no plan to renovate the
property. There are no competitive conditions with respect to the property
that affect us. The property is not adequately covered by renter's insurance.
The occupancy rate of the property is about 90%. Our suite is occupied by Mr.
Volpe. No other tenants occupy the suite at this time. The principal
businesses, occupations and professions in the building are legal and
professional, video production, advertising, and investments. The average
effective annual rental per square foot is approximately $32 per square foot
per year.
Ciao has filed an application for service mark registration with the U.S.
Patent and Trademark Office trademark protection of the mark, "Ciao Cacao." We
cannot predict whether or not the mark will be granted trademark protection,
as the application process has not yet been completed, and the mark has not
yet been examined by an attorney with the U.S. patent and Trademark Office.
Ciao has no patents.
Employees
As of June 6, 2001, Ciao has two employees. Jeffrey Volpe, Ciao's
president, devotes approximately 20 hours per week to the business of Ciao and
Ciao's Secretary/Treasurer, Artem Gotov, devotes approximately 20 hours per
week to the company. Ciao has no written employment contracts. None of Ciao's
employees are covered by a collective bargaining agreement. Ciao has never
experienced an employment related work stoppage and considers its employee
relations to be satisfactory.
Competition.
The coffee bar industry is highly competitive with respect to price, service,
location and food quality, and there are many well-established competitors.
Certain factors, such as substantial price discounting, increased food, labor
and benefits costs and the availability of experienced management and hourly
employees may adversely affect the fast food restaurant industry in general
and Ciao in particular. We will compete against all restaurant and beverage
outlets that sell speciality coffees and a growing number of espresso stands,
carts and stores. We believe that our customers will choose among retailers
primarily on the basis of product quality, service and convenience, and, to a
lesser extent, on price. Ciao will compete with a large number of national
and regional coffee store chains, most of which are franchises. In virtually
every major metropolitan area where we plan to operate, there are local or
regional competitors with substantial market presence in the specialty coffee
business. Our primary competitors for coffee beverage sales are restaurants,
shops, and street carts. In almost all markets in which we plan to do
business there has been a significant increase in competition in the specialty
coffee beverage business and management expects this trend to continue.
Although competition in the beverage market is currently fragmented, a major
competitor with substantially greater financial, marketing and operating
resources than us could enter this market at any time and compete directly
against us. Most of the potential competitors which own coffee bar chains
have financial resources superior to us, so there can be no assurance that
Ciao's projected income will not be affected by its competition. Ciao expects
this competition to increase. We plan to strategically locate each store away
from close proximity of our competitors, and to develop an ambiance for each
store which will differentiate it from the take-out, fast food mentality, in
order to differentiate the stores from those of our competitors.
A number of nationwide coffee manufacturers, such as Kraft General Foods,
Proctor & Gamble, and Nestle, distribute coffee products in supermarkets and
convenience stores, which may serve as substitutes for the Company's coffees.
Other specialty coffee companies including Starbucks, Seattle's Best Coffee,
Bucks County, Brothers Gourmet Coffees, and Green Mountain Coffee Roasters,
and America's Coffee Cup, who sell whole bean coffees in supermarkets and
variety and discount stores. Thus, both the Company's whole bean coffees and
coffee beverages compete indirectly against all coffees on the market. Our
potential competitors include all national and regional specialty coffee
retailers, including:
- Starbucks Corp: The largest competitor in the specialty coffee market
is Starbucks, based in Seattle, Washington, whose company owned national
locations number over 2,000, and which also has expanded to the international
market. In addition, Starbucks sells its branded coffees and coffee blends in
major retail locations throughout the United States, and is featured as a
brand coffee on major U.S. airlines.
- International Coffee and Tea, LLC This company operates under The
Coffee Bean and Tea Leaf brand, and is a leading franchiser, and has retail
locations in most major metropolitan areas in the United States.
- Gloria Jean's Coffee Bean: This company is a leading franchiser of over
250 retail coffee specialty stores and kiosks, many of which are located in
shopping malls throughout the United States. The company is now developing an
international presence as well.
- The Coffee Beanery, Ltd.: This company is a major specialty coffee
franchiser, with approximately 175 stores in operation, mostly located in
malls and large office buildings.
- Blue Star Coffee: This company operates on a "kiosk" and drive through
store concept, and has a similar strategy and plan of operations as Ciao.
- America's Coffee Cup: This company operates out of what it perceives to
be a "niche" market, of coffee stands located within Ralph's Grocery Stores in
California.
- Barista Brava Coffee: Headquartered in Washington D.C., Barista Brava
Coffee operates six cafes, two of which are franchised, in downtown and
central business district locations. It is registered to sell franchises in
Rhode Island, Maryland, New York, and Virginia.
- Quick'ava: Quick'ava is one of several coffee retailers that offer a
drive-through concept. Currently, the company operates 12 double-sided drive-
throughs in New England. The average sales per unit are $520,000.00. Started
in 1990 in Bingham, Massachusetts, the company claims to have 54 contractually
committed units in New England.
- Peet's Coffee & Tea: Peet's operates 56 coffee shops mostly in
California.
- Diedrich Coffee: Diedrich roasts and sells specialty coffee beans for
its retail and wholesale customers. Diedrich also sells brewed coffee,
espresso-based beverages, and light food items through company-owned and
franchised retail locations. In addition, the company has over 300 wholesale
accounts with businesses and restaurant chains, such as Ruth's Chris
Steakhouses, El Torito, Claim Jumper, and Islands Restaurants. Diedrich Coffee
acquired Coffee People in March 1999 and became the second largest specialty
coffee company in the United States with annual system-wide sales of more than
$150 million through 363 retail outlets in 38 states and seven countries. -
Java Centrale competes in the cafe niche. The company was founded in 1992 and
operates cafes, kiosks, and carts. Java Centrale has 24 cafes and 16 carts,
half of which are franchised, based in Sacramento, California. It claims to
have 190 franchises under contract in 14 states, primarily on the East and
West coasts.
- Coffee Express is located in Bangor, Maine. They build and franchise
coffee drive-throughs. The company currently has two drive-throughs in Bangor
that are company-owned. In addition, there are franchised units in Brewer,
Maine; Ellsworth, Maine; and Erie, Pennsylvania. They are approved for
franchising in New York, Virginia, New Hampshire, Rhode Island, New Jersey,
and Florida. - Xpresso Coffee Cafe is located in Denver, Colorado and operates
two company-owned and one franchised drive-throughs. However, they no longer
offer franchises. - Caribou Coffee has approximately 137 retail locations in
six states: Michigan, Ohio, North Carolina, Georgia, Illinois, and Minnesota.
Caribou also merchandises beans, equipment, and branded apparel.
Government Regulation.
Each Ciao store will be subject to regulation by federal agencies and to
licensing and regulation by state and local health, sanitation, safety, fire
and other departments. Difficulties or failures in obtaining any required
licensing or approval could result in delays or cancellations in the opening
of new coffee bars. For example, we will apply for permits for leasehold
improvements for each Ciao store, which usually take approximately 30 days.
In addition, we will apply for a permit with the local health department, a
process which usually takes no more than 10-14 days. The steps to obtain
licensing for each store are as follows: First, we must lease the store
location, then apply for a business license in the city in which the store is
located, which will be done within one week after the lease is signed. We
expect to be granted the business license immediately upon application and
payment of the license fee. We will next apply for permits for our leasehold
improvements, which should take approximately 1 month to be approved, after
which time we will construct the improvements, which construction should take
approximately two months. Then we will apply for a health permit, in order to
be permitted to sell food products. This requires an inspection of our
facilities, which we estimate will take approximately 10 days. These time
estimates are based upon the experience of our management, and conversations
of management with local health department and planning department officials.
Ciao will also be subject to the Fair Labor Standards Act and various
state laws governing such matters as minimum wages, overtime and other working
conditions. A significant number of Ciao's employees will be paid at rates
related to the federal and state minimum wage and increases in the minimum
wage will increase Ciao's labor costs.
In addition, various proposals which would require employers to provide health
insurance for all of their employees are being considered from time to time in
the U.S. Congress and various states. The imposition of any such requirement
would have a material adverse impact on the planned operation s of Ciao and
the financial condition of the fast food restaurant industry.
Ciao will be subject to certain guidelines under the Americans with
Disabilities Act of 1990 (ADA), and various state codes and regulations which
require coffee bars to provide full and equal access to persons with physical
disabilities.
FORWARD LOOKING STATEMENTS
This registration statement contains forward-looking statements. Ciao's
expectation of results and other forward-looking statements contained in this
registration statement involve a number of risks and uncertainties. Among the
factors that could cause actual results to differ materially from those
expected are the following: business conditions and general economic
conditions; competitive factors, such as pricing and marketing efforts; and
the pace and success of product research and development. These and other
factors may cause expectations to differ.
LEGAL PROCEEDINGS
Ciao is not subject to any pending litigation, legal proceedings or claims.
MANAGEMENT
EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS
The members of the Board of Directors of Ciao serve until the next annual
meeting of stockholders, or until their successors have been elected.
The officers serve at the pleasure of the Board of Directors.
The current executive officers, key employees and directors of Ciaoa are:
Name Age Position
- ---- --- --------
Jeffrey Volpe 45 President, Treasurer, Director
Artem Gotov 37 Secretary, Director
Jeffrey Volpe. Jeffrey Volpe is the current President and Director of
Ciao and has been since its inception on December 28, 2000. He is the former
president and director of Mercury Software, a software sales store, from
March, 1999 through December, 2000. He acted as president and director of
Innovative Software Technologies, Inc., an online specialty software sales
company, from May 27, 1998 through December, 2000. He was Secretary of
Russian-caviar.com, an online caviar sales store, and Russian Imports.com, an
online imports sales store, from February, 2000 until December, 2000. From
February 1, 2000 to the present time, he has been employed as a part time
consultant and EDGAR filer for Nutra Pharma Corp., which was previously named
Cyber-Vitamin.com, a company engaged in the business of developing botanical
medicinal compounds, and McSmoothie's, Inc., a company with a business plan of
establishing a chain of juice bar/smoothie stores. From August, 1997 through
the present, he has also been self employed as a part time paralegal
assistant. Mr. Volpe has over 20 years' experience in computer programming,
hardware and software. Mr. Volpe has extensive experience in web site design,
, PERL and CGI scripting, development of software macros for legal support
services, as well as legal research and support. He has over three years'
experience in managing publicly held companies. Mr. Volpe also is the 100%
shareholder in two personal corporations named Ecclectric Sound and
Immobilare. These corporations are used by Mr. Volpe to manage investment
portfolios. He was the incorporator of Social Instinct, but has no ownership
and holds no position in the company.
Artem Gotov. Artem Gotov is the current Secretary and director of Ciao
since since February 13, 2001. He is also the founder and current Vice
President, and Director of Mc Smoothie's, Inc., a company with a business plan
of developing a chain of juice bar/smoothie stores, from March 21, 2000 to the
present date. He acted as the president of FBI Fresh Burgers International,
a company with a business plan of establishing a chain of fast food
restaurants, from February 1, 2000 through December, 2001. He was the owner of
"Moliere," a European style restaurant in Las Vegas, Nevada, which never
opened and was in development from March, 1996 through December, 2000, and was
the co-owner of "Uncle Vanya's" restaurant, a bar and grill in Moscow, Russia,
from November, 1996 through May, 2000. From June 1, 1998 through May, 2000, he
developed, established, managed and sold "Moscow Time" restaurant, a European
style luxury restaurant in Moscow, Russia. From June, 1992 through May, 1997,
he owned and operated Luxe Casino, a facility with live gaming, bar and
lounge, restaurant and banquet facilities in Moscow, Russia. He also organized
a corporation by the name of "Larissa," which had no business and holds no
property, and is now defunct.
Potential claims
We have taken no precautions to preclude potential claims from prior or
current employers of management for conversion or theft of trade secrets,
know-how, or other proprietary information.
Relationships
Mr. Gotov was a founder and is the current Vice President of McSmoothie's,
Inc., and the founder and former president of FBI Fresh Burgers International,
and is the brother-in-law of company counsel, Kenneth G. Eade. Jeffrey Volpe
is the former president of Mercury Software and Innovative Software
Technologies, Inc. He also performed clerical services in exchange for stock
for Mc Smoothie's, Inc. and FBI Fresh Burgers International, and has worked as
a paralegal assistant for Kenneth G. Eade since 1998. Kenneth G. Eade
is the incorporator, promoter and shareholder of Ciao Cacao, and was the
incorporator and attorney for Mc Smoothie's, Inc., the incorporator, attorney
and a shareholder of FBI Fresh Burgers International, Mercury Software, and
Innovative Software Technologies, Inc.
EXECUTIVE COMPENSATION
Ciao has made no provisions for cash compensation to its officers and
directors. No salaries are being paid at the present time, and will not be
paid unless and until there is available cash flow from operations to pay
salaries. There were no grants of options or SAR grants given to any executive
officers during the last fiscal year.
Annual Compensation Fiscal year 2001
-------------------
Name and Position Salary Bonus Deferred Salary
------------------ ------- ----- ---------------
Jeffrey Volpe 0 0 0
Artem Gotov 0 0 0
We have no current arrangements pursuant to which we plan to compensate
directors, other than their initial grants of restricted common stock, and
such compensation is up to the board of directors in their discretion.
EMPLOYMENT AGREEMENTS
Ciao has not entered into any employment agreements with any of its employees,
and employment arrangements are all subject to the discretion of Ciao Cacao's
board of directors.
PRINCIPAL STOCKHOLDERS
The following table presents certain information regarding beneficial
ownership of Ciao's common stock as of December 31, 2001, by (I) each person
known by Ciao to be the beneficial owner of more than 5% of the outstanding
shares of common stock, (ii) each director of Ciao Cacao, (iii) each Named
Executive Officer and (iv) all directors and executive officers as a group.
Unless otherwise indicated, each person in the table has sole voting and
investment power as to the shares shown.
Shares Percent Percent
Beneficially Before After
Name and Address of Beneficial Owner Owned Offering Offering
- ------------------------------------ ------------ -------- --------
Artem Gotov
1548 Fairhaven
Las Vegas, NV 10,000 .3% .2%
Jeffrey Volpe 2,890,000 93.22% 70.48%
827 State Street
Santa Barbara, CA 93101
Kenneth G. Eade 200,000 6.45% 4.87%
827 State Street, Suite 12
Santa Barbara, CA 93101
Officers and Directors
as a Group 2,900,000 93.55% 70.73%
- ------------
Table is based on current outstanding shares of 3,100,000.
CERTAIN TRANSACTIONS
In connection with organizing Ciao, on December 28, 2000, Jeffrey Volpe
was issued 2,890,000 shares of restricted common stock, valued at $2890, and
Artem Gotov was issued 10,000 restricted shares of common stock, valued at $10
in exchange for the business plan of Ciao, and Ciao's trade name, pursuant to
Section 4(2) of the Securities Act of 1933, to sophisticated persons (officers
and directors) having superior access to all corporate and financial
information. Under Rule 405 promulgated under the Securities Act of 1933,
Jeffrey Volpe and Artem Gotov may be deemed to be promoters of Ciao.
On December 28, 2000, in exchange for legal services, Ciao issued 200,000
shares to Kenneth G. Eade, counsel to Ciao, in reliance upon section 4(2) of
the Securities Act of 1933, in exchange for legal services rendered of the
value of $200, consisting of initial incorporation and organization, bylaws,
and our registration statement. Mr. Eade is a sophisticated investor who had
access to all corporate information. Under Rule 405 promulgated under the
Securities Act of 1933, Mr. Eade may be deemed to be a promoter of Ciao.
Ciao leases offices at 827 State Street Suite 14, Santa Barbara, California,
pursuant to an oral agreement from its president, Jeffrey Volpe, on a month to
month basis, at no charge to Ciao, until such time as Ciao, for approximately
150 square feet of office space, which is adequate for Ciao's needs at the
present time.
We have not acquired, nor do we have plans to acquire, any assets, other than
the business plan and trade name, from our promoters.
DESCRIPTION OF SECURITIES
The authorized capital stock of Ciaoconsists of 100,000,000 shares of common
stock, $.001 par value per share. Upon consummation of this Offering, there
will be outstanding 4,100,000 shares of Common stock.
Common stock
Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders, including the election of
directors.
Holders of common stock do not have subscription, redemption or conversion
rights, nor do they have any preemptive rights.
Holders of common stock have cumulative voting rights. The Board of Directors
is empowered to fill any vacancies on the Board of Directors created by
resignations, subject to quorum requirements.
Holders of common stock will be entitled to receive such dividends, if any, as
may be declared from time to time by the Board of Directors out of funds
legally available therefor, and will be entitled to receive, pro rata, all
assets of the Company available for distribution to such holders upon
liquidation.
All outstanding shares of common stock are, and the common stock offered,
upon issuance and sale, will be, fully paid and nonassessable.
There are currently three shareholders of record of our common stock.
PENNY STOCK STATUS
If and when it creates a market for its common stock, Ciao's common stock is a
"penny stock," as the term is defined by Rule 3a51-1 of the Securities
Exchange Act of 1934. This makes it subject to reporting, disclosure and
other rules imposed on broker-dealers by the Securities and Exchange
Commission requiring brokers and dealers to do the following in connection
with transactions in penny stocks:
- Prior to the transaction, to approve the person's account for
transactions in penny stocks by obtaining information from the person
regarding his or her financial situation, investment experience and
objectives, to reasonably determine based on that information that
transactions in penny stocks are suitable for the person, and that the person
has sufficient knowledge and experience in financial matters that the person
or his or her independent advisor reasonably may be expected to be capable of
evaluating the risks of transactions in penny stocks. In addition, the broker
or dealer must deliver to the person a written statement setting forth the
basis for the determination and advising in highlighted format that it is
unlawful for the broker or dealer to effect a transaction in a penny stock
unless the broker or dealer has received, prior to the transaction, a written
agreement from the person. Further, the broker or dealer must receive a
manually signed and dated written agreement from the person in order to
effectuate any transactions is a penny stock.
- Prior to the transaction, the broker or dealer must disclose to the
customer the inside bid quotation for the penny stock and, if there is no
inside bid quotation or inside offer quotation, he or she must disclose the
offer price for the security transacted for a customer on a principal basis
unless exempt from doing so under the rules.
- Prior to the transaction, the broker or dealer must disclose the
aggregate amount of compensation received or to be received by the broker or
dealer in connection with the transaction, and the aggregate amount of cash
compensation received or to be received by any associated person of the broker
dealer, other than a person whose function in solely clerical or ministerial.
- The broker or dealer who has effected sales of penny stock to a
customer, unless exempted by the rules, is required to send to the customer a
written statement containing the identity and number of shares or units of
each such security and the estimated market value of the security.
Imposing these reporting and disclosure requirements on a broker or dealer
make it unlawful for the broker or dealer to effect transactions in penny
stocks on behalf of customers. Brokers or dealers may be discouraged from
dealing in penny stocks, due to the additional time, responsibility involved,
and, as a result, this may have a deleterious effect on the market for Ciao'
stock.
TRANSFER AGENT, WARRANT AGENT AND REGISTRAR
The transfer agent, warrant agent and registrar for the common stock is Atlas
Stock Transfer, 5899 South State Street, Salt Lake City, Utah 84102.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, Ciao will have 4,100,000 shares of
common stock outstanding. All shares sold in this offering will be freely
transferable without restriction or further registration under the Securities
Act of 1933, as amended. However, any share purchased by an affiliate (in
general, a person who is in a control relationship with Ciao), will be subject
to the limitations of Rule 144 promulgated under the Securities Act.
Under Rule 144 as currently in effect, a person (or persons whose shares are
aggregated with those of others) whose restricted shares have been fully paid
for and meet the rule's one year holding provisions, including persons who may
be deemed affiliates of Ciao's, may sell restricted securities in broker's
transactions or directly to market makers, provided the number of shares sold
in any three month period is not more than the greater of 1% of the total
shares of common stock then outstanding or the average weekly trading volume
for the four calendar week period immediately prior to each such sale. After
restricted securities have been fully paid for and held for two years,
restricted securities may be sold by persons who are not affiliates of Ciao
without regard to volume limitations. Restricted securities held by
affiliates must continue, even after the two year holding period, to be sold
in brokers' transactions or directly to market makers subject to the
limitations described above.
Prior to this offering, no public market has existed for Ciao's shares of
common stock. However, Ciao's market maker, National Capital, has filed an
application for a quotation with the National Quotation Bureau's "pink
sheets," which application is still pending. No predictions can be made as to
the effect, if any, that market shares or the availability of shares for sale
will have on the market price prevailing from time to time. The sale, or
availability for sale, of substantial amounts of common stock in the public
market could adversely affect prevailing market prices.
PLAN OF DISTRIBUTION
The Shares shall be offered on a self underwritten basis in the States of
New York, California, Florida and in the District of Columbia.
The offering is self underwritten by the Company, which offers the Shares
directly to investors through officer Jeffrey Volpe, who will offer the Shares
by prospectus and sales literature, to friends, former business associates and
contacts, and by direct mail to investors who have indicated an interest in
the Company. The offering is a self underwritten offering, which means that it
does not involve the participation of an underwriter or broker. Mr. Volpe is
relying on Rule 314-1 promulgated by the Securities and Exchange Commission,
in offering the shares for sale.
There is no minimum offering, no escrow will be used for this offering, and no
funds will be returned to investors. Funds received may used by us in our
discretion.
The offering of the Shares shall terminate on December 31, 2002, or until all
shares have been sold.
The Company reserves the right to reject any subscription in whole or in part,
or to allot to any prospective investor less than the number of Shares
subscribed for by such investor.
LEGAL MATTERS
The validity of the common stock offered will be passed upon for the Company
by Kenneth G. Eade, Santa Barbara, California.
EXPERTS
The Financial Statements of Ciao as of December 31, 2001 included in this
Prospectus and elsewhere in the Registration Statement have been audited by
Rogelio G. Castro, independent public accountant for Ciao, as set forth in his
reports thereon appearing elsewhere herein, and are included in reliance upon
such reports, given upon the authority of such firm as experts in accounting
and auditing.
INTEREST OF NAMED EXPERTS AND COUNSEL
Our counsel, Kenneth G. Eade, has received 200,000 shares of our common stock
in exchange for his legal services.
ADDITIONAL INFORMATION
Ciaohas filed with the Securities and Exchange Commission ("SEC") a
registration statement on Form SB-2 under Securities Act of 1933, as amended,
with respect to the securities. This prospectus, which forms a part of the
registration statements, does not contain all of the information set forth in
the registration statement as permitted by applicable SEC rules and
regulations. Statements in this prospectus about any contract, agreement or
other document are not necessarily complete.
The registration statement may be inspected without charge and copies may be
obtained at prescribed rates at the SEC's public reference facilities at
Judiciary Plaza, 450 Fifth Street NW, Room 1024, Washington, DC 20549, or on
the Internet at http://www.sec.gov.
Ciaowill furnish to its shareholders annual reports containing audited
financial statements reported on by independent public accountants for each
fiscal year and make available quarterly reports containing unaudited
financial information for the first three quarters of each fiscal year.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CIAO CACAO
Independent Auditor's Report ................................... F-1
Balance Sheets
December 31, 2001 ................................................. F-2
Statements of Operations
For the Years Ended December 31, 2001 ............................ F-3
Statements of Changes in Stockholders' Equity
For the Years Ended December 31, 2001 ............................ F-4
Statements of Cash Flows
For the Years Ended December 31, 2001 ............................ F-5
Notes to Consolidated Financial Statements ..................... F-27
AUDITORS' REPORT
Board of Directors
Ciao Cacao
I have audited the accompanying balance sheet of Ciao Cacao (a development
stage company), as of December 31, 2001, and the related statements of
operations, stockholders' equity and cash flows for the period December 28,
2000 (inception)through December 31, 2001. These financial statements are the
responsibility of the company's management. My responsibility is to express
an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe my audit provides a reasonable basis for my
opinion.
The Company has operated at a loss since its inception, and it plans to fund
its plan of operations through this offering and additional funding from
principals or additional equity financing. These factors lead me to express
the opinion that there is substantial doubt about the company's ability to
continue as a going concern.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ciao Cacao as of December 31,
2001 and the results of its operations and its cash flows for the period
December 28, 2000 (inception) through December 31, 2001 in conformity with
generally accepted accounting principles.
Rogelio G. Castro
- ---------------------------
Rogelio G. Castro
Certified Public Accountant
Oxnard, California
March 20, 2001
Ciao Cacao
(A Development State Company)
BALANCE SHEET
As of December 31, 2001
ASSETS
TOTAL ASSETS $ -
==============
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accrued income taxes pay 10,820
Accounts payable -
-------------
Total current liabilities 10,820
-------------
LIABILITIES 10,820
-------------
Stockholders' equity
Common Stock, Par Value $0.001 per share-
authorized shares 100,000,000, issued and
outstanding 3,100,000 shares 1,950
Paid-in Capital 1,800
Accumulated deficit (14,570)
-------------
Total stockholders' equity (10,820)
-------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ -
=============
The accompanying notes are an integral part of these financial statements.
Ciao Cacao
(A Development State Company)
Statement of Operation
For the period December 28, 2000
(inception) through December 31, 2001
Cumulative
During
Development
2000 Stage
------ -----------
Revenue $ - $ -
General and administrative (14,570) (14,570)
------ -----------
Not Loss from operations (14,570) (14,570)
------ -----------
Net Loss (14,570) (14,570)
========== ===========
Net Loss Per Share (Basic and Diluted) (.01) (.01)
========== ===========
Weighted Average Common Shares
Outstanding 3,100,000 3,100,000
The accompanying notes are an integral part of these financial statements.
Ciao Cacao
(A Development State Company)
Statement of Stockholders' Equity
the period December 28, 2000
(inception) through December 31, 2001
Additional
Common Stock Paid-In
Accumulated
Shares Amount Capital Deficit
Total
------ ------ ---------- -------
- ---- -----
Stocks issued for cash
Stocks issued for services 3,100,000 1,950 1,800
3,750
Net loss for the period
(14,570) (14,570)
------ ------ ---------- ------
- ----- --------
Balance at September 31, 2000 3,100,000 1,950 1,800
(14,570) (10,820)
The accompanying notes are an integral part of these financial statements.
Ciao Cacao
(A Development State Company)
Cash Flows
For the period December 28, 2000
(inception) through December 31, 2001
Operating activities
Net Loss
(14,570)
Adjustments to reconcile net loss to
net cash used in operating activities
Stocks issued for services at fair value
3,750
Increase in accounts payable
10,820
-----
- ------
Net cash used in operating activities
- -
-----
- ------
Net increase (decrease) in cash and cash equivalents
- -
Cash and cash equivalents - beginning of year
Cash and cash equivalents - end of year
- -
===========
Non cash activities:
Stocks issued for services at fair value
3,750
The accompanying notes are an integral part of these financial statements.
Ciao Cacao
(A Development State Company)
Notes to Financial Statements
December 31, 2001
NOTE 1 - NATURE OF BUSINESS
Ciao Cacao (the Company) was incorporated under the laws of the state of
California on December 28, 2000. It has developed a business plan to
establish a chain of coffee stores across the United States. The Company has
been in the development state since its formation. Planned principal
operations have not yet commenced.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
A. Basis - The Company uses the accrual method of accounting.
B. Cash and cash equivalents - The Company considers all short term, highly
liquid investments that are readily convertible within three months to known
amounts as cash equivalents. Currently, it has no cash equivalents.
C. Loss per share - Net loss per share is provided in accordance with
Statement of Financial Accounting Standards No. 128 "Earnings Per Share".
Basic loss per share reflects the amount of losses for the period available to
each share of common stock outstanding during the reporting period, while
giving effect to all dilutive potential common shares that were outstanding
during the period, such as stock options and convertible securities. As of
November 30, 2000, the Company had no issuable shares qualified as dilutive to
be included in the earnings per share calculations.
NOTE 3 - INCOME TAXES
The Company has adopted the provision of SFAS No. 109 "Accounting for Income
Taxes". It requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the differences between the
financial statements or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the differences between the
financial statement and tax basis of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
Ciao has incurred losses that can be carried forward to offset future earnings
if conditions of the Internal Revenue codes are met.
There is a provision for income taxes for the period ended November 30, 2000,
to recognize California's minimum income tax. The Company's total deferred
tax assets as of November 30, 2000 is as follows:
Net operating loss carryforward $15,370
Valuation allowance (15,370)
--------
Net deferred tax asset 0
=========
The net operating loss carry forward for federal tax purposes will expire in
year 2020.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company issued a total of 3,100,000 shares of unregistered common stock to
its officers, legal counsel, and consultant in exchange for services rendered.
The stocks issued are recorded at par value of the services received. Legal
counsel of the Company is related to a majority stockholder and officer in the
Company.
NOTE 5 - GOING CONCERN
The Company has nominal assets and no current operations with which to create
operating capital. It seeks to raise operating capital through private
placements of its common stock. However, there can be no assurance that such
offering or negotiations will be successful.
NOTE 6 - SUBSEQUENT EVENTS
The Company's name was changed to Ciao Cacao on February 13, 2001.
NOTE 7 - FISCAL YEAR END
The fiscal year end of the Company is March 31st. Two separate periods are not
presented in the financial statements, because, in the ten day period from
December 28, 2000 to December 31, 2001, the company had no activity and no
transactions.
No dealer, salesperson or other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained in this prospectus and, if given or made, such
information or representations must no be relied upon as having been
authorized by Ciao or its officers or directors. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any security
other than the securities offered by this prospectus, or an offer to sell or a
solicitation of an offer to buy any securities by any person in any
jurisdiction in which such offer or solicitation is not authorized or is
unlawful. The delivery of this prospectus shall not, under any circumstances,
create any implication that the information in this prospectus is correct as
of any time subsequent to the date of this prospectus. Until December 14, 2000
(25 days after the commencement of this offering), all dealers that effect
transactions in these securities, whether or not participating in the
offering, may be required to deliver a prospectus.
No dealer, salesperson or other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained in this prospectus and, if given or made, such
information or representations must no be relied upon as having been
authorized by Ciao or its officers or directors. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any security
other than the securities offered by this prospectus, or an offer to sell or a
solicitation of an offer to buy any securities by any person in any
jurisdiction in which such offer or solicitation is not authorized or is
unlawful. The delivery of this prospectus shall not, under any circumstances,
create any implication that the information in this prospectus is correct as
of any time subsequent to the date of this prospectus.
Dealer Prospectus Delivery Obligation: Until ________________, 2002 (90 days
after the commencement of this offering), all dealers that effect transactions
in these securities, whether or not participating in the offering, may be
required to deliver a prospectus. This is in addition to the dealers'
obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
------------------------
TABLE OF CONTENTS
PAGE
---------
Prospectus Summary............................ 1
Risk Factors.................................... 3
We are subject to intense competition from
others who may implement the same business
plan before us and thus cause our business
to fail.................................... 4
Ciao's plan of operations is based on
its trade name, and it may not be possible to
register the trade name. This may result in
us not being able to accomplish our business plan 4
If we receive only nominal funding, we will not
be able to implement our plan of operations,
Which may result in the failure of our business 4
Our accountant has expressed doubt as to whether
we may continue as a going concern. If we do not,
then investors in this offering may lose their
entire investment........................... 4
We rely upon our current officers, and the loss
of any of them would seriously impair our ability
to implement our plan of operations, and result
in the failure of our business................. 5
Our Secretary/Treasurer devotes his efforts to
several other businesses, and lives outside the
country in which we are located, which may result
in less of an effort made to promote our plan of
operations, which in turn may result in the
failure of our business......................... 5
Our Secretary/Treasurer is also an officer of
a similar company, which could create a conflict
of interest.................................... 5
We have no experience in the coffee bar business.
This may affect our ability to operate
successfully, and result in the failure of
our business................................... 5
There is no established market for our
stock, and investors may not be able to
sell their shares in the future................ 6
The survival of our business depends upon changes
in current trends, tastes, and perceived
effects on health.............................. 6
The current instability in coffee growing
countries could make us unable to price our
products competitively, resulting in the failure
of our business............................... 7
The coffee bar market may be heavily saturated,
And, unless our concept of differentiating
ourselves from the other coffee bars succeeds,
our business may fail......................... 7
Use of Proceeds................................. 7
Dividend Policy................................. 8
Price Range of Securities....................... 8
Dilution........................................ 9
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 11
Business........................................ 14
Management...................................... 22
Principal Stockholders.......................... 23
Certain Transactions............................ 24
Description of Securities....................... 25
Shares Eligible for Future Sale................. 26
Plan of Distribution............................ 27
Legal Matters................................... 27
Experts......................................... 28
Index to Financial Statements................... 30
CIAO CACAO
1,000,000 Shares of common stock
-------------
PROSPECTUS
-------------
____________, 2002
----------------------------------------------------------------------------
----------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 317 of the California Corporations Code, as amended, provides for the
indemnification of Ciao's officers, directors, employees and agents under
certain circumstances, for any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative; and
"expenses" includes without limitation attorneys' fees and any expenses,
against expenses, judgments, fines, settlements, and other amounts actually
and reasonably incurred in connection with the proceeding if that person acted
in good faith and in a manner the person reasonably believed to be in the best
interests of the corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of the person was unlawful.
Ciao's Articles of Incorporation provides that the directors of the Company
shall be protected from personal liability to the fullest extent permitted by
law. Ciao's By-laws also contain a provision for the indemnification of Ciao's
directors.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of Internet Services pursuant to the provisions referred to under Item
24 of this Registration Statement, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of
any action, suit or proceeding) is being asserted by such director, officer or
controlling person in connection with the securities being registered, the
small business issuer will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 25. OTHER EXPENSES OF ISSUANCES AND DISTRIBUTION.
The Registrant estimates that expenses payable by it in connection with the
Offering described in this Registration Statement (other than the underwriting
discount and commissions and reasonable expense allowance) will be as follows:
SEC registration fee........................................... $ 264
Printing and engraving expenses................................ $ 500
Accounting fees and expenses................................... $2,736
Blue sky fees and expenses (including legal and filing fees)... $1,000
Transfer agent's fees.......................................... $ 500
Miscellaneous.................................................. $ 500
----------
Total...................................................... $5,500
==========
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
The following securities were issued by Ciao within the past three years and
were not registered under the Securities Act.
In connection with organizing Ciao, on December 28, 2000, Jeffrey Volpe was
issued 2,890,000 shares of restricted common stock, valued at $2890, and Artem
Gotov was issued 10,000 restricted shares of common stock, valued at $10 in
exchange for the business plan of Ciao, and Ciao's trade name, and for
services, pursuant to Section 4(2) of the Securities Act of 1933, to
sophisticated persons (officers and directors) having superior access to all
corporate and financial information. Under Rule 405 promulgated under the
Securities Act of 1933, Jeffrey Volpe and Artem Gotov may be deemed to be
promoters of Ciao.
On December 28, 2000, in exchange for legal services, Ciao issued 200,000
shares to Kenneth G. Eade, counsel to Ciao, in reliance upon section 4(2) of
the Securities Act of 1933, in exchange for legal services rendered of the
value of $200. Mr. Eade is a sophisticated investor who had access to all
corporate information.
ITEM 27. EXHIBITS
(a) The following exhibits are filed as part of this Registration
Statement:
EXHIBIT
NUMBER DESCRIPTION
- ----------- -----------------------------------------
3.1 Articles of Incorporation
3.4 By-Laws
4.1 Form of common stock Certificate
5.1 Opinion of Kenneth G. Eade, Attorney at Law
(including consent)
6.1 Specimen of Stock Certificate
10
23.1 Consent of Independent Accountant
23.2 Consent of Kenneth G. Eade(filed as part of
Exhibit 5.1)
------------------------
ITEM 28. UNDERTAKINGS.
The undersigned Company undertakes to:
(a) (1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(I) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) Include any additional or changed material information on the
plan of distribution. (2) For determining liability under the Securities Act,
treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be
the initial bona fide offering. (3) File a post-effective amendment to
remove from registration any of the securities that remain unsold at the
end of the offering.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of Ciao pursuant to the provisions referred to under Item
24 of this Registration Statement, or otherwise, Ciao has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by Ciao of expenses incurred or paid by a director,
officer or a controlling person of Ciao in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of competent jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(f) (1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by Ciao under Rule 424(b)(1), or (4), or 497(h) under the
Securities Act as part of this Registration Statement as of the time the
Commission declared it effective.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
II-6
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 the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the city of Santa
Barbara, state of California, on March 21, 2002.
CIAO CACAO
Jeffrey Volpe
-----------------------------------
By: Jeffrey Volpe, President and Director
Date: March 21, 2002
Pursuant to the requirements of the Securities of 1933, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Jeffrey Volpe
-----------------------------------
By: Jeffrey Volpe, President, Chief Financial Officer
and Director
Date: March 21, 2002
Artem Gotov
-----------------------------------
By: Artem Gotov, Director
Date: March 21, 2002
Exhibit 3.1
ARTICLES OF INCORPORATION
2188607
ENDORSED-FILED
IN THE OFFICE OF THE
SECRETARY OF STATE
OF THE STATE OF CALIFORNIA
Dec 28- 2000
BILL JONES, SECRETARY OF STATE
ARTICLES OF INCORPORATION OF CIAO CACAO
FIRST: The name of the corporation is: CIAO CACAO.
SECOND: The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust
company business or the practice of a profession permitted to be incorporated
by the California Corporations Code.
THIRD: The name and address in the State of California of this corporation's
initial agent for service of process is:
KENNETH G. EADE, 827 State Street, Suite 26, Santa Barbara, California 93101
FOURTH: The liability of the directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
FIFTH: This corporation is authorized to issue only one class of shares of
stock, all common; and the total number of shares which this corporation is
authorized to issue is 100 Million (100,000,000).
Dated: December 26, 2000
KENNETH G. EADE
------------------------
KENNETH G. EADE
I hereby declare that I am the person who executed the foregoing Articles of
Incorporation which execution is my own act and deed.
Executed December 26, 2000 at Santa Barbara, California.
KENNETH G. EADE
------------------------
KENNETH G. EADE
EXHIBIT 3.3
BY-LAWS OF CIAO CACAO
BYLAWS OF
CIAO CACAO
A California Corporation
OFFICES
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1. PRINCIPAL OFFICE. The principal office for the transaction of the
business of the corporation is hereby fixed and located at 527 Alamar,
Suite 14, Santa Barbara, CA 93101. The Board of Directors is hereby granted
full power and authority to change the place of said principal office.
2. OTHER OFFICES. Branch or subordinate offices may at any time be
established by the Board of Directors at any place or places where the
corporation is qualified to do business.
SHAREHOLDERS
------------
3. PLACE OF MEETINGS. Shareholders' meetings shall be held at the
principal office for the transaction of the business of this corporation in
the
State of California, or at such other place as the Board of Directors shall,
by
resolution, appoint.
4. ANNUAL MEETINGS. The annual meetings of shareholders shall be held
in the month of March in each year. At such meeting Directors shall be
elected;
reports of the affairs of the corporation shall be considered, and any other
business may be transacted which is within the powers of the shareholders. The
first annual meeting of shareholders after incorporation need not be held if
less than nine months have elapsed since incorporation to such meeting date.
Written notice of each annual meeting shall be mailed to each shareholder
entitled to vote, addressed to such shareholder at his address appearing on
the books of the corporation or given by him to the corporation for the
purpose of notice. If a shareholder gives no address, notice shall be deemed
to have been given if sent by mail or other means of written communication
addressed to the place where the principal executive office of the corporation
is situated, or if published at least once in some newspaper of general
circulation in the county in which said office is located. All such notices
shall be mailed, postage prepaid, to each shareholder entitled thereto not
less than ten (10) days nor more than sixty (60) days before each annual
meeting. Such notices shall specify the place, the day, and the hour of such
meeting, the names of the nominees for election as Directors if Directors are
to be elected at the meeting, and those matters which the Board of Directors
intends to present for action by the shareholders, and shall state such other
matters, if any, as may be expressly required by statute.
5. SPECIAL MEETINGS. Special meetings of the shareholders, may be
called at any time by the Chairman of the Board of Directors, if any, the
President or any Vice President, or by the Board of Directors, or by one or
more shareholders holding not less than ten (10%) percent of the voting power
of the corporation. Except in special cases where other express provision is
made by statute, notice of such special meeting shall be given in the same
manner as for an annual meeting of shareholders. Said notice shall specify the
general nature of the business to be transacted at the meeting. No business
shall be transacted at a special meeting except as stated in the notice sent
to shareholders, unless by the unanimous consent of all shareholders
represented at the meeting, either in person or by proxy. Upon written request
to the Chairman of the Board, the President, the Secretary or any Vice
President of the corporation by any person (but not the Board of Directors)
entitled to call a special meeting of shareholders, the person receiving such
request shall cause a notice to be given to the shareholders entitled to vote
that a meeting will be held at a time requested by the person calling the
meeting not less than thirty-five (35) nor more than sixty (60) days after the
receipt of the request.
6. ADJOURNED MEETINGS AND NOTICE THEREOF. Any shareholders'
meeting,
annual or special, whether or not a quorum is present, may be adjourned from
time to time by the vote of a majority of the shares the holders of which are
either present in person or represented by proxy thereat, but in the absence
of a quorum no other business may be transacted at such meeting.
Notice of an adjourned meeting need not be given if (a) the
meeting is adjourned for forty-five (45) days or less, (b) the time and place
of the adjourned meeting are announced at the meeting at which the adjournment
is taken, and (c) no new record date is fixed for the adjourned meeting.
Otherwise, notice of the adjourned meeting shall be given as in the case of an
original meeting
7. VOTING. Except as provided below or as otherwise provided by the
Articles of Incorporation or by law, a shareholder shall be entitled to one
vote for each share held of record on the record date fixed for the
determination of the shareholders entitled to vote at a meeting or if no such
date is fixed, the date determined in accordance with law.
Upon the demand of any shareholder made at a meeting before the voting begins,
the election of Directors shall be by ballot. At every election of Directors,
shareholders may cumulate votes and give one candidate a number of votes equal
to the number of Directors to be elected multiplied by the number of votes to
which the shares are entitled or distribute votes according to the same
principal among as many candidates as desired; however, no shareholder shall
be entitled to cumulate votes for any one or more candidates unless such
candidate or candidates' name has been placed in nomination prior to the
voting and at least one shareholder has given notice at the meeting prior to
the voting of such shareholder's intention to cumulate votes.
8. QUORUM. A majority of the shares entitled to vote, represented in
person or by proxy, constitutes a quorum for the transaction of business. No
business may be transacted at a meeting in the absence of a quorum other than
the adjournment of such meeting, except that if a quorum is present at the
commencement of a meeting, business may be transacted until the meeting is
adjourned even though the withdrawal of shareholders results in less than a
quorum. If a quorum is present at a meeting, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on any
matter shall be the act of the shareholders unless the vote of a larger number
is required by law or the Articles of Incorporation. If a quorum is present at
the commencement of a meeting but the withdrawal of shareholders results in
less than a quorum, the affirmative vote of the majority of shares required to
constitute a quorum shall be the act of the shareholders unless the vote of a
larger number is required by law or the Articles of Incorporation. Any meeting
of shareholders, whether or not a quorum is present, may be adjourned by the
vote of a majority of the shares represented at the meeting.
9. CONSENT OF ABSENTEES. The transactions of any meeting of
shareholders, however called and noticed and wherever held, are as valid as
though had at a meeting duly held after regular call and notice, if a quorum
is present either in person or by proxy and if, either before or after the
meeting, each of the persons entitled to vote who is not present at the
meeting in person or by proxy signs a written waiver of notice, a consent to
the holding of the meeting or an approval of the minutes of the meeting. For
such purposes a shareholder shall not be considered present at a meeting if,
at the beginning of the meeting, the shareholder objects to the transaction of
any business because the meeting was not properly called or convened or, with
respect to the consideration of a matter required to be included in the notice
for the meeting which was not so included, the shareholder expressly objects
to such consideration at the meeting.
10. ACTION WITHOUT MEETING. Except as provided below or by the
Articles of Incorporation, any action which may be taken at any meeting of
shareholders may be taken without a meeting and without prior notice if a
consent in writing, setting forth the action so taken, is signed by the
holders of outstanding shares having no less than the minimum number of votes
which would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote on such action were present and voted.
Unless the consents of all shareholders entitled to vote have been solicited
in writing, the corporation shall give, to those shareholders entitled to vote
who have not consented in writing, a written notice of (a) any shareholder
approval obtained without a meeting pursuant to those provisions of the
California Corporations Code set forth in Subsection 603(b)(l) of such Code at
least ten (10) days before the consummation of the action authorized by such
approval, and (b) the taking of any other action approved by shareholders
without a meeting, which notice shall be given promptly after such action is
taken.
11. PROXIES. A shareholder may be represented at any meeting of
shareholders by a written proxy signed by the person entitled to vote or by
such person's duly authorized attorney-in-fact. A proxy must bear a date
within eleven (11) months prior to the meeting, unless the proxy specifies a
different length of time. A revocable proxy is revoked by a writing delivered
to the Secretary of the corporation stating that the proxy is revoked or by a
subsequent proxy executed by, or by attendance at the meeting and voting in
person by, the person executing the proxy.
12. ELECTION INSPECTORS. One or three election inspectors may be
appointed by the Board of Directors in advance of a meeting of shareholders or
at the meeting by the Chairman of the meeting. If not previously chosen, one
or three inspectors shall be appointed by the Chairman of the meeting if a
shareholder or proxy holder so requests. When inspectors are appointed at the
request of a shareholder or proxy holder, the majority of shares represented
in person or by proxy shall determine whether one or three inspectors shall be
chosen. The election inspectors shall determine all questions concerning the
existence of a quorum and the right to vote, shall tabulate and determine the
results of voting and shall do all other acts necessary or helpful to the
expeditious and impartial conduct of the vote. If there are three inspectors,
the decision, act or certificate of a majority of the inspectors is effective
as if made by all.
Directors
---------
13. Powers. Subject to limitations of the Articles of Incorporation,
the Bylaws, and the California General Corporation Law as to action to be
authorized or approved by the shareholders, and subject to the duties of
Directors as prescribed by the Bylaws, all corporate powers shall be exercised
by or under the ultimate direction of, and the business and affairs of the
corporation shall be managed by, the Board of Directors. Without prejudice to
such general powers, but subject to the same limitations, it is hereby
expressly declared that the Directors shall have the following powers:
(a) To select and remove all of the other officers, agents
and employees of the corporation, prescribe such powers and duties for them as
may be consistent with law, with the Articles of Incorporation, or the Bylaws,
fix their compensation and require from them security for faithful service.
(b) To conduct, manage and control the affairs and business
of the corporation, and to make such rules and regulations therefor not
inconsistent with law, or with the Articles of Incorporation, or the Bylaws,
as they may deem best.
(c) To change the principal office for the transaction of
the business of the corporation from one location to another within the same
county as provided in Section 1 hereof; to fix and locate from time to time
one or more subsidiary offices of the corporation within or without the State
of California, as provided in Section 2 hereof; to designate any place within
or without the State of California for the holding of any shareholders'
meeting or meetings; and to prescribe the forms of certificates of stock, and
to alter the form of such certificates from time to time, as in their judgment
they may deem best, provided such certificates shall at all times comply with
the provisions of law.
(d) To authorize the issuance of shares of capital stock of
the corporation from time to time, upon such terms as may be lawful.
(e) To borrow money and incur indebtedness for the purposes
of the corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecations, or other evidence of debt and securities
therefor.
14. NUMBER OF Directors. The authorized number of Directors of this
corporation shall be three (3) until changed by amendment of the Articles of
Incorporation or by a By-Law duly adopted by the shareholders amending this
Section 14.
15. ELECTION, TERM OF OFFICE AND VACANCIES. At each annual meeting of
shareholders, Directors shall be elected to hold office until the next annual
meeting. Each Director, including a Director elected to fill a vacancy, shall
hold office until the expiration of the term for which the Director was
elected and until a successor has been elected. The Board of Directors may
declare vacant the office of a Director who has been declared to be of unsound
mind by court order or convicted of a felony. Vacancies on the Board of
Directors not caused by removal may be filled by a majority of the Directors
then in office, regardless of whether they constitute a quorum, or by the sole
remaining Director. The shareholders may elect a Director at any time to fill
any vacancy not filled, or which cannot be filled, by the Board of Directors.
16. REMOVAL. Except as described below, any or all of the Directors
may be removed without cause if such removal is approved by the affirmative
vote of a majority of the outstanding shares entitled to vote. Unless the
entire Board of Directors is so removed no Director may be removed if (a) the
votes cast against removal, or not consenting in writing to such removal,
would be sufficient to elect such Director if voted cumulatively at an
election at which the same total number of votes were cast or, if such action
is taken by written consent, all shares entitled to vote were voted, and (b)
the entire number of Directors authorized at the time of the Director's most
recent election were then being elected.
17. RESIGNATION. Any Director may resign by giving written notice to
the Chairman of the Board, the President, the Secretary or the Board of
Directors. Such resignation shall be effective when given unless the notice
specifies a later time. The resignation shall be effective regardless of
whether it is accepted by the corporation.
18. COMPENSATION. If the Board of Directors so resolves, the
Directors, including the Chairman of the Board, shall receive compensation and
expenses of attendance for meetings of the Board of Directors and of
committees
of the Board. Nothing herein shall preclude any Director from serving the
corporation in another capacity and receiving compensation for such service.
19. COMMITTEES. The Board of Directors may, by resolution adopted by
a
majority of the authorized number of Directors, designate one or more
committees, each consisting of two or more Directors, to serve at the pleasure
of the Board. The Board may designate one or more Directors as alternate
members of a committee who may replace any absent member at any meeting of the
committee. To the extent permitted by resolution of the Board of Directors, a
committee may exercise all of the authority of the Board to the extent
permitted by Section 311 of the California Corporations Code.
20. INSPECTION OF RECORDS AND PROPERTIES. Each Director may inspect
all books, records, documents and physical properties of the corporation and
its subsidiaries at any reasonable time. Inspections may be made either by the
Director or the Director's agent or attorney. The right of inspection includes
the right to copy and make extracts.
21. TIME AND PLACE OF MEETINGS AND TELEPHONE MEETINGS. Immediately
following each annual meeting of shareholders, the Board of Directors shall
hold a regular meeting for the purposes of organizing the Board, election of
officers and the transaction of other business. The Board may establish by
resolution the times, if any, when other regular meetings of the Board shall
be held. All meetings of Directors shall be held at the principal executive
office of the corporation or at such other place, within or without
California, as shall be designated in the notice for the meeting or in a
resolution of the Board of Directors. Directors may participate in a meeting
through use of conference telephone or similar communications equipment so
long as all Directors participating in such meeting can hear each other.
22. CALL. Meetings of the Board of Directors, whether regular or
special, may be called by the Chairman of the Board, the President, the
Secretary, or any Director.
23. NOTICE. Regular meetings of the Board of Directors may be held
without notice if the time of such meetings has been fixed by the Board.
Special meetings shall be held upon four days' notice by mail or 48 hours'
notice delivered personally or by telephone or telegraph, and regular meetings
shall be held upon similar notice if notice is required for such meetings.
Neither a notice nor a waiver of notice need specify the purpose of any
regular or special meeting. If a meeting is adjourned for more than 24 hours,
notice of the adjourned meeting shall be given prior to the time of such
meeting to the Directors who were not present at the time of the adjournment.
24. MEETING WITHOUT REGULAR CALL AND NOTICE. The transactions of any
meeting of the Board of Directors, however called and noticed or wherever
held, are as valid as though had at a meeting duly held after regular call and
notice if a quorum is present and if, either before or after the meeting, each
of the Directors not present signs a written waiver of notice, a consent to
holding the meeting or an approval of the minutes of the meeting.
For such purposes, a Director shall not be considered present at a meeting if,
although in attendance at the meeting, the Director protests the lack of
notice prior to the meeting or at its commencement.
25. ACTION WITHOUT MEETING. Any action required or permitted to be
taken by the Board of Directors may be taken without a meeting, if all the
members of the Board individually or collectively consent in writing to such
action.
26. QUORUM AND REQUIRED VOTE. A majority of the Directors then in
office shall constitute a quorum for the transaction of business, provided
that unless the authorized number of Directors is one, the number constituting
a quorum shall not be less than the greater of one-third of the authorized
number of Directors or two Directors.
Except as otherwise provided by Subsection 307(a)(8) of the California
Corporations Code, the Articles of Incorporation or these Bylaws, every act or
decision done or made by a majority of the Directors present at a meeting duly
held at which a quorum is present is the act of the Board. A meeting at which
a quorum is initially present may continue to transact business
notwithstanding the withdrawal of Directors, if any action taken is approved
by at least a majority of the required quorum for such meeting. A majority of
the Directors present at a meeting whether or not a quorum is present, may
adjourn the meeting to another time and place.
27. COMMITTEE MEETINGS. The principles set forth in Sections 21
through 26 of these Bylaws shall apply to committees of the Board of Directors
and to actions by such committees.
28. LOANS. Except as provided by Section 315 of the California
Corporations Code, the vote or written consent of the holders of a majority of
the shares of all classes, regardless of limitations on voting rights, other
than shares held by the benefitted Director, officer or shareholder, shall be
obtained before this corporation makes any loan of money or property to or
guarantees the obligation of:
(a) Any Director or officer of the corporation, any Director
or officer of any of its parents, or any Director or officer of any of its
subsidiary corporations, directly or indirectly.
(b) Any person upon the security of the shares of the
corporation or the shares of its parent, unless the loan or guaranty is
otherwise adequately secured.
OFFICERS
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29. TITLES AND RELATION TO BOARD OF Directors. The officers of the
corporation shall include a President, a Secretary and a Treasurer. The Board
of Directors may also choose a Chairman of the Board and one or more Vice
Presidents, Assistant Secretaries, Assistant Treasurers or other officers. Any
number of offices may be held by the same person and, unless otherwise
determined by the Board, the Chairman of the Board and President shall be the
same person. Ml officers shall perform their duties and exercise their powers
subject to the direction of the Board of Directors.
30. ELECTION, TERM OF OFFICE AND VACANCIES. At its regular meeting
after each annual meeting of shareholders, the Board of Directors shall choose
the officers of the corporation. No officer need be a member of the Board of
Directors except the Chairman of the Board. The officers shall hold office
until their successors are chosen, except that the Board of Directors may
remove any officer at any me. If an office becomes vacant for any reason, the
vacancy shall be filled by the Board.
31. RESIGNATION. Any officer may resign at any time upon written
notice to the corporation without prejudice to the rights, if any, of the
corporation under any contract to which the officer is a party. Such
resignation shall be effective when given unless the notice specifies a later
time. The resignation shall be effective regardless of whether it is accepted
by the corporation.
32. SALARIES. The Board of Directors shall fix the salaries of the
Chairman of the Board and President and may fix the salaries of other
employees of the corporation including the other officers. If the Board does
not fix the salaries of the other officers, the President shall fix such
salaries.
33. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there shall
be such an officer, shall, if present, preside at all meetings of the Board of
Directors, and exercise and perform such other powers and duties as may be
from time to time assigned to him by the Board of Directors or prescribed by
the Bylaws.
34. PRESIDENT (CHIEF EXECUTIVE OFFICER). Unless otherwise determined
by the Board of Directors, the President shall be the general manager and
chief executive officer of the corporation, shall preside at all meetings of
the Board of Directors and shareholders, shall be ex-officio a member of any
committees of the Board, shall effectuate orders and resolutions of the Board
of Directors and shall exercise such other powers and perform such other
duties as the Board of Directors shall prescribe.
35. VICE PRESIDENT. In the absence or disability of the President,
the Vice President (or if more than one, the Vice Presidents in order of their
rank as fixed by the Board of Directors, or if not so ranked, the Vice
President designated by the Board of Directors) or, if none, the Secretary or
Treasurer, shall perform all the duties of the President, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
President. The Vice President or, if none, the Secretary or Treasurer, shall
have such other powers and perform such other duties as from time to time may
be prescribed for them respectively by the Board of Directors or the Bylaws.
36. SECRETARY. The Secretary shall have the following powers and
duties:
(a) Record of Corporate Proceedings. The Secretary shall
attend all meetings of the Board of Directors and its committees and shall
record all votes and the minutes of such meetings in a book to be kept for
that purpose at the principal executive office of the corporation or at such
other place as the Board of Directors may determine. The Secretary shall keep
at the corporation's principal executive office, if in California, or at its
principal business office in California, if the principal executive office is
not in California, the original or a copy of the Bylaws, as amended.
(b) Record of Shares. Unless a transfer agent is appointed
by the Board of Directors to keep a share register, the Secretary shall keep
at the principal executive office of the corporation a share register showing
the names of the shareholders and their addresses, the number and class of
shares held by each, the number and date of certificates issued, and the
number and date of cancellation of each certificate surrendered for
cancellation.
(c) Notices. The Secretary shall give such notices as may be
required by law or these Bylaws.
(d) Additional Powers and Duties. The Secretary shall
exercise such other powers and perform such other duties as the Board of
Directors or President shall prescribe.
37. TREASURER (CHIEF FINANCIAL OFFICER). The Treasurer of the
corporation shall be its chief financial officer. Unless otherwise determined
by the Board of Directors, the Treasurer shall have custody of the corporate
funds and securities and shall keep adequate and correct accounts of the
corporation's properties and business transactions. The Treasurer shall
disburse such funds of the corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, shall render to the
President and Directors, at regular meetings of the Board of Directors or
whenever the Board may require, an account of all transactions and the
financial condition of the corporation and shall exercise such other powers
and perform such other duties as the Board of Directors or President shall
prescribe.
38. OTHER OFFICERS. The other officers (if any) of this corporation
shall perform such duties as may be assigned to them by the Board of
Directors.
Shares
------
39. CERTIFICATES. A certificate or certificates for shares of the
capital stock of the corporation shall be issued to each shareholder when any
such shares are fully paid up. All such certificates shall be signed by the
Chairman of the Board, the President or a Vice President and the Secretary or
Assistant Secretary.
40. TRANSFERS OF Shares OF CAPITAL STOCK. Transfers of shares shall
be made only upon the transfer books of this corporation, kept at the office
of the corporation or transfer agent designated to transfer such shares, and
before a new certificate is issued, the old certificate shall be surrendered
for cancellation.
41. REGISTERED SHAREHOLDERS. Registered shareholders only shall be
entitled to be treated by the corporation as the holders in fact of the shares
standing in their respective names and the corporation shall not be bound to
recognize any equitable or other claim to or interest in any share on the part
of any other person, whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of California.
42. LOST OR DESTROYED CERTIFICATES. The corporation may cause a new
stock certificate to be issued in place of any certificate previously issued
by the corporation alleged to have been lost, stolen or destroyed. The
corporation may, at its discretion and as a condition precedent to such
issuance, require the owner of such certificate to deliver an affidavit
stating that such certificate was lost, stolen or destroyed, or to give the
corporation a bond or other security sufficient to indemnify it against any
claim that may be made against it, including any expense or liability, on
account of the alleged loss, theft or destruction or the issuance of a new
certificate.
43. RECORD DATE AND CLOSING OF STOCK BOOKS. The Board of Directors
may fix a time, in the future, not more than sixty (60) nor less than ten (10)
days prior to the date of any meeting of shareholders, or not more than sixty
(60) days prior to the date fixed for the payment of any dividend or
distribution, or for the allotment of rights, or when any change or conversion
or exchange of shares shall go into effect, as a record date for the
determination of the shareholders entitled to notice of and to vote at any
such meeting, or entitled to receive any such dividend or distribution, or any
such allotment of rights, or to exercise the rights in respect to any such
change, conversion, or exchange of shares, and in such case except as provided
by law, only shareholders of record on the date so fixed shall be entitled to
notice of and to vote at such meeting or to receive such dividend,
distribution, or allotment of rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any shares on the books of the
corporation after any record date fixed as aforesaid. A determination of
shareholders of record entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of the meeting unless the Board of
Directors fixes a new record date. The Board of Directors shall fix a new
record date if the adjourned meeting takes place more than 45 days from the
date set for the original meeting.
44. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may
appoint one or more transfer agents or transfer clerks, and one or more
registrars, who shall be appointed at such times and places as the
requirements of the corporation may necessitate and the Board of Directors may
designate.
AMENDMENTS
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45. ADOPTION OF AMENDMENTS. New Bylaws may be adopted or these Bylaws
may be amended or repealed:
(a) At any annual meeting, or other meeting of the
shareholders called for that purpose by the vote of shareholders
holding more than fifty percent (50%) of the issued and outstanding
shares of the corporation; or
(b) Without a meeting, by written consent of shareholders
holding more than fifty percent (50%) of the issued and outstanding
shares of the corporation; or
(c) By a majority of the Directors of the corporation;
provided, however, that a greater vote of shareholders or Directors
shall be necessary if required by law or by the Articles of
Incorporation; and provided, further, that Section 14 (number of
Directors) and this Section 45 shall be amended or repealed only by
the vote or written consent of shareholders holding not less than a
majority of the issued and outstanding voting shares of the
corporation. Section 14 shall not be amended to reduce the number of
Directors below two if the votes cast against its adoption at a
meeting or the shares not consenting in the case of an action by
written consent are equal to more than sixteen and two-thirds percent
(16- 2/3%)of the outstanding shares entitled to vote.
46. RECORD OF AMENDMENTS. Whenever an amendment or new Bylaw is
adopted, it shall be copied in the Book of Bylaws with the original Bylaws, in
the appropriate place. If any Bylaws or Bylaw is repealed, the fact of repeal
with the date of the meeting at which the repeal was enacted or written assent
was filed shall be stated in said book.
CORPORATE SEAL
--------------
47. FORM OF SEAL. The corporation may adopt and use a corporate seal
but shall not be required to do so. If adopted and used, the corporate seal
shall be circular in form, and shall have inscribed thereon the name of the
corporation, the date of its incorporation and the word "California
MISCELLANEOUS
-------------
48. CHECKS DRAFTS, ETC. All checks, drafts, or other orders for
payment
of money, notes, or other evidences of indebtedness, issued in the name of or
payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time shall be determined by
resolution of the Board of Directors.
49. CONTRACT, ETC., HOW EXECUTED. The Board of Directors, except as
otherwise provided in these Bylaws, may authorize any officer or officers, or
agent or agents, to enter into any contract or execute any instrument in the
name of and on behalf of the corporation, and such authority may be general or
confined to specific instances; and unless so authorized by the Board of
Directors, no officer, agent or employee shall have any power or authority to
bind the corporation by any contract or engagement or to pledge its credit or
to
render it liable for any purpose or for any amount.
50. REPRESENTATION OF Shares OF OTHER CORPORATIONS. The Chairman of
the Board, the President or any Vice President and the Secretary or Assistant
Secretary of this corporation are authorized to vote, represent, and exercise
on behalf of this corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of this corporation.
The
authority herein granted to said officers to vote or represent on behalf of
this corporation any and all shares held by this corporation in any other
corporation or corporations may be exercised either by such officers in person
or by any other person authorized so to do by proxy or power of attorney duly
executed by said officers.
51. INSPECTION OF BYLAWS. The corporation shall keep in its principal
office for the transaction of business the original or a copy of these Bylaws
as amended or otherwise altered to date, certified by the Secretary, which
shall be open to inspection by the shareholders at all reasonable times during
office hours.
52. ANNUAL REPORT. The annual report to shareholders specified in Section 1501
of the California Corporations Code is dispensed with except as the Board of
Directors may otherwise determine, so long as there are less than 100 holders
of record of the corporation's shares. Any such annual report sent to
shareholders shall be sent at least 15 days prior to the next annual meeting
of
shareholders.
53. CONSTRUCTION AND DEFINITIONS. Unless the context otherwise requires, the
general provisions, rules and construction, and definitions contained in the
California General Corporation Law shall govern the construction of these
Bylaws. Without limiting the generality of the foregoing, the masculine gender
includes the feminine and neuter, the singular number includes the plural and
the plural number includes the singular, and the term "person" includes a
corporation as well as a natural person.
Exhibit 4
SPECIMEN OF COMMON STOCK CERTIFICATE
[________]NUMBER
Shares[________]
AUTHORIZED common stock; 100,000,000 Shares PAR VALUE $.001 NOT VALID UNLESS
COUNTERSIGNED BY TRANSFER AGENT INCORPORATED UNDER THE LAWS OF THE STATE OF
CALIFORNIA common stock CUSIP
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
THIS CERTIFIES THAT
Is the RECORD HOLDER OF Shares OF CIAO CACAO common stock
TRANSFERABLE ON THE BOOKS OF THE CORPORATION IN PERSON OR BY DULY AUTHORIZED
ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED.
THIS CERTIFICATE IS NOT VALID UNTIL COUNTERSIGNED BY THE TRANSFER AGENT AND
REGISTERED BY THE REGISTRAR.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
[SEAL OF CIAO CACAO]
Jeffrey Volpe
----------------------
Jeffrey Volpe, President
Artem Gotov
-----------------------
Artem Gotov, Secretary
By: Pamela Gray
Atlas Stock Transfer Corporation
Salt Lake City, UT
This Certificate is not valid unless countersigned by the Transfer Agent.
NOTICE: Signature must be guaranteed by a firm which is a member of a
registered national stock exchange, or by a bank (other than a savings bank) ,
or a trust company.
The following abbreviation, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ____Custodian____
TEN ENT - as tenants by the entireties
(Cust) (Minor) JT TEN - as joint tenants with right under Uniform Gifts to
Minors of survivorship and not as
Act
________________________ tenants in common
(State)
Additional abbreviation may also be used though not in above list.
FOR VALUE RECEIVED, _________hereby sell, assign and transfer unto PLEASE
INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE -
- -------------------------------------- - ------------- ---------
- ---------------- ________________________________________________________
______ ___ _________ (Please print or typewrite name and address including
zip code of assignee)
_________________________________________________________________________
_________ ________________________________________________________ ______
___ _________ ___________________________________________________________
______ ___ _________ Shares of the capital stock represented by the within
Certificate, and do hereby irrevocably constitute and appoint
________________________________________________________ ______ ___ _________
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated, ---------------------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement, or any change whatever.
EXHIBIT 5.1 OPINION OF COUNSEL AND CONSENT
June 6, 2001
Board of Directors
CIAO CACAO
527 Alamar
Santa Barbara, CA 93101
Re: CIAO CACAO
Gentlemen:
The undersigned is counsel for CIAO CACAO. I have been requested to render an
opinion on the 1,000,000 shares of Ciao Cacao proposed to be sold pursuant the
Ciao's Registration Statement on Form SB-2. In rendering this opinion, I have
reviewed Ciao's Registration on Form SB-2, company articles of incorporation
and by laws and other corporate documents. All representations made to me in
Ciao Cacao's documents and by company officers and directors are deemed to be
accurate. It is my opinion that the shares to be issued will be free trading
shares. It is further my opinion that:
1. Ciao Cacao is a corporation duly organized, validly existing and in good
standing and is qualified to do business in each jurisdiction in which such
qualification is required.
2. That the shares of Common stock to be issued by Ciao have been reserved and
are duly and properly approved by Ciao's Board of Directors.
3. That the shares of stock, when and as issued, will be fully paid and non-
assessable, and will be a valid and binding obligation of the corporation.
4. That the shares of Common stock have not been but will be registered under
the Securities Act of 1933, as amended (the "Act"), and will be registered by
coordination with or exempt from the securities laws of the state
jurisdictions in which they will be sold.
I hereby consent to the use of this opinion in Ciao's Registration Statement
on Form SB-2. Please feel free to contact the undersigned should you have any
further questions regarding this matter.
Very truly yours,
Kenneth G. Eade
- ------------------
KENNETH G. EADE
EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANT
I hereby consent to the inclusion of my independent accountant's report dated
March 20, 2002 and the related statements of income, stockholder's equity, and
cash flows for the period December 28, 2000 (inception) through December 31,
2001, in the Registration Statement on Form SB-2, and any other references to
me in the Registration Statement.
ROGELIO G. CASTRO
- ---------------------------
Rogelio G. Castro
Certified Public Accountant
Oxnard, California
March 20, 2002
EXHIBIT
SUBSCRIPTION AGREEMENT
CIAO CACAO
827 State Street, Suite 14
Santa Barbara, California 93101
Gentlemen:
The undersigned has read and understands the matters set forth in your
prospectus dated ___________________, 2001. The undersigned represents as set
forth below and subscribes to purchase ________shares at $1.00 per Share, for
$_______________, subject to your acceptance of this subscription. There is
no minimum contingency and proceeds may be utilized upon receipt. The
undersigned, if an individual, is a resident of, or, if a corporation,
partnership or trust, has as its principal place of business:
The State of New York_____
The State of Florida_____
The District of Columbia_____Other State _____________
A State foreign to U.S.A._____
Dated:______________.
_________________________
Signature
__________________________________________________
Name of Corporation, Trust, Print or type name of
or Partnership Signer
__________________________________________________
State where incorporated,P.O. Box or Street Address
organized, or domiciled
__________________________________________________
Print Signer's Capacity, City, State and Zip Code
_________________________
Tax ID Number_________________________
Telefax and Phone Numbers
_________________________
Social Security