As filed with the Securities and Exchange Commission on April 4, 2003
Registration No. 333-86078
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2/A
AMENDMENT NO. 3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Conscious Intention, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Nevada 94-3409449
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7372
(Primary Standard Industrial
(Classification Code Number)
6620 Lake Washington Blvd NE
Suite 301
Kirkland, WA 98033
(425) 822-3040
(425) 822-1007 Fax
(Address, including zip code, and telephone
number, including area code, of
registrant's principal executive
offices)
Sylva Leduc
6620 Lake Washington Blvd NE
Suite 301
Kirkland, WA 98033
(425) 822-3040
(425) 822-1007 Fax
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With a copy to:
Jonathan Dariyanani, Esq.
101 Hiller Street
Belmont, CA 94002
(310) 849-4576 Tel
(415) 358-5548 Fax
2
Approximate date of commencement 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
under Rule 462(b)of 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 under Rule 462(c) of 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 under Rule 462(d) of 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 under Rule 434, please
check the following box [ ].
Calculation of registration fee
Title of
each class
of Amount of
securities shares to Proposed maximum Proposed maximum Amount of
to be be offering price aggregate registration
registered registered per unit offering price fee (1)
- --------------- ----------- ---------------- ----------------- ------------
Common shares 500,000 $ 0.50 $ 250,000 $ 67.00
to be sold by
company
Common shares 353,000 $ 0.50 $ 189,000 $ 47.30
to be sold by
selling
shareholders
(1) Estimated solely for the purpose of computing the amount of the
registration fee under Rule 457(o) of the Securities Act of 1933. 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
or until the registration statement shall become effective on such date as the
commission, acting according to such Section 8(a), may determine.
3
Prospectus (subject to completion)
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Issued [to be dated upon printing of prospectus] 2003
853,000 Shares
CONSCIOUS INTENTION, INC.
COMMON STOCK
NEITHER THE EITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This prospectus relates to our offering of 500,000 shares of our common
stock at a price of $0.50 per share and the offering by certain selling
shareholders of 353,000 shares of our common stock at a price of $0.50 per
share. We will not receive any proceeds from the sale of any of the shares by
selling shareholders. We will be selling all of the 500,000 shares of common
stock we are offering in a direct participation offering and will not use an
underwriter or pay a commission for the sale of the shares. This is our initial
public offering, and no public market currently exists for any of our
securities. No arrangements have been made to place funds in escrow, trust or
any similar account. There is no minimum amount we are required to raise in this
offering and any funds received will be immediately available to us.
This is a highly risky investment.
WE HAVE DESCRIBED THESE RISKS UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE
7.
These securities are not listed on any national securities exchange or the
Nasdaq Stock Market.
Concluding date of the offering:
August 31, 2003
4
Table of contents Page
Front of registration statement 1-2
Inside front and outside back cover pages of prospectus 3
Summary information 5
Risk Factors 7
Use of proceeds 11
Determination of offering price 13
Plan of distribution 14
Selling security holders 15
Legal proceedings 16
Directors, executive officers, promoters and control persons 16
Executive compensation 17
Security ownership of certain beneficial owners and management 18
Description of securities 20
Interest of named experts and counsel 21
Changes in and disagreements with accountants on accounting 21
and financial disclosure
Disclosure of commission position on indemnification for 22
securities act liabilities
Description of business 23
Management's discussion and analysis 28
Description of property 35
Certain relationships and related transactions 36
Market for common equity and related stockholder matters 37
Financial statements 40
Indemnification of directors and officers 41
Other expenses of issuance and distribution 41
Recent sales of unregistered securities 42
Undertakings 43
Exhibits index 45
5
Summary information and risk factors
Prospectus summary
You should read the following summary together with the more detailed
information regarding Conscious Intention and the common stock being sold in
this offering and our financial statements and notes appearing elsewhere in this
prospectus.
Conscious Intention, Inc.
Principal Executive Offices
6620 Lake Washington Blvd NE
Suite 301
Kirkland, WA 98033
(425) 822-3040
(425) 822-1007 Fax
www.consciousintention.com
Conscious Intention, Inc. is a development stage company that was organized
under Nevada law on October 12, 2001. We are engaged in the business of
providing materials, tools and on-line, Internet support services and resources
for individuals wishing to open a business as an executive coach or career
counselor. These materials and resources have not yet been fully developed. To
date, we have derived no revenue, have no customers and are not yet offering our
products and services for sale.
Key Terms of the Primary Offering
We are offering for sale 500,000 common shares to the public at a price of $0.50
per share. This offering is being conducted without an underwriter on a direct
participation basis. There can be no assurance that we will be able to sell any
of the shares we are offering. We have determined the initial offering price of
the shares arbitrarily. The per share price bears no relationship to our assets,
earnings, book value or any other set of traditional valuation criteria. If the
offering is fully subscribed, we will raise $250,000, before expenses of the
offering. The offering will end on August 31, 2003. Officer and director Sylva
Leduc will conduct the offering and the sales.
The Primary offering:
Common stock offered.............................................500,000 shares
Common stock to be
outstanding
after this
offering...................................................... 4,500,000 shares
Use of proceeds..................... For general corporate purposes, including
working capital and development of print and Internet based coaching resources,
staffing, advertising, marketing and sales expenses.
Key Terms of the Secondary Offering
We are also registering 353,000 shares for sale by certain of our selling
shareholders at a price of $0.50 per share. We will not receive any of the
proceeds of any of the sales of the shares sold by the selling shareholders. We
are paying the expenses for the registration of these shares.
6
The foregoing information is based on the number of shares of common stock
outstanding as of December 31, 2002. No option shares have been authorized,
issued or granted to date.
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 Conscious Intention's Financial Statements included
elsewhere in this Prospectus. These statements include all adjustments that
Conscious Intention considers necessary for a fair presentation of the financial
position and results of operations at that date and for such periods.
Balance Sheet Data
December 31,
-------------------------------
2002 2001
------------- -------------
Cash $ 13 $ 2,615
Receivable from a related party 1,690 --
Deferred Offering Costs 23,844 23,844
Total Assets $ 25,547 $ 26,459
Accounts payable $ 30,553 $ 25,441
Payable to related party -- 810
Common stock - $0.001 par value; 10,000,000 shares
authorized; 4,000,000 shares issued and outstanding 4,000 4,000
Deficit accumulated during the development stage (9,006) (3,792)
Total Liabilities and Stockholders' Equity (Deficit) $ 25,547 $ 26,459
Statement of Operations Data
For the Periods
October 12, 2001
For the Year (Date of Inception)
Ended through
December 31, December 31,
2002 2001 2002
------------------ ------------------ ------------------
Revenue $ -- $ -- $ --
General administrative expenses 5,214 3,792 9,006
Net Loss $ (5,214) $ (3,792) $(9,006)
7
Risk factors
You should carefully consider the following risk factors and all other
information contained in this prospectus before purchasing our common stock.
Investing in our common stock involves a high degree of risk. Risks and
uncertainties, in addition to those we describe below, that are not presently
known to us, or that we currently believe are immaterial may also impair our
business operations. If any of the following risks occur, our business could be
harmed, the price of our common stock could decline and you may lose all or part
of your investment.
Risks related to our business
We currently have no complete products to offer and may never successfully
complete a product, causing our business to fail.
We have planned three primary products for development and delivery on the
Internet:
o a series of texts and on-line materials providing aspiring executive coaches
with resources to open their own coaching business;
o an on-line coaching club which provides community, interaction and client
referrals for coaches; and
o a software product which helps coaches to manage their practice and clients.
All of these products are in the very early stages of development and
require substantial time and resources to complete them. We do not currently
have the resources or staff to complete the products and may, therefore, never
have a product offering. Without a product offering, we will fail.
We are not currently profitable and may not become profitable. If we never
become profitable, our stock price would decline.
As of December 31, 2002, we had accumulated deficits of $9,006 since
inception on October 12, 2001. We have never made any sales or profits. The
revenue and income potential of our business and the market for coaching support
services through non-traditional on-line means such as ours have not been
proven. We will encounter risks and difficulties commonly faced by early-stage
companies in new and rapidly evolving markets. We intend to make significant
investments in our systems, infrastructure and product. As a result, we
anticipate having a net loss from operations in fiscal 2003 and may not be able
to reach or sustain profitability in the future.
8
We might not successfully implement strategies to establish and increase
adoption of our coaching support services by executive coaches. If we fail to
establish and increase adoption of our coaching support services, our financial
results and growth prospects would be affected significantly and negatively.
Our future profitability will depend, entirely, on our ability to
implement successfully our strategy to establish and increase adoption of our
online coaching support services. We cannot assure you that the relatively new
market for coaching support services will remain viable. We expect that customer
adoption will be dependent on our ability to:
o Drive executive coach awareness of the value of on-line support services in
general;
o Encourage coaches to sign up for and use our on-line support services;
o Establish and enhance our infrastructure to handle seamless providing of
support services;
o Continue to develop easy-to-use technology; and
o Diversify our product offering to appeal to a more diverse range of
executive coaches.
Our investment in these programs will require substantial amounts of
cash, which may not be available. Such expenditures will affect adversely our
short-term profitability. Additionally, we may fail to implement successfully
these programs or to establish or increase substantially adoption of our on-line
coaching support services. Such a failure would impact revenues adversely, and
cause our business to suffer.
Sylva Leduc serves as sole officer, sole director and sole employee and may
leave the company at any time. If Ms. Leduc leaves prior to securing a
replacement, the company will be left without management or employees and its
business operations would cease.
Our sole director, Chief Executive Officer and sole employee, Sylva Leduc,
is entirely responsible for the development and execution of our business. She
is under no contractual obligation to remain employed by us. If she should
choose to leave us for any reason before we have hired additional personnel, we
will fail. Even if we are able to find additional personnel, it is uncertain
whether we could find someone who could develop the required materials and
solicit potential customers. We will fail without Ms. Leduc or an appropriate
replacement.
Conflicts of interest exist between Ms. Sylva Leduc's role as CEO of Conscious
Intention and other business interests which may result in self-dealing and
diminished corporate opportunities.
9
As Turning Point and Conscious Intention both provide coaching support
services, it is possible that a conflict of interest exists between Ms. Leduc's
management of Conscious Intention and her management of Turning Point. There can
be no assurance that Ms. Leduc will resolve this conflict in a way that is
satisfactory for the shareholders of Conscious Intention. Ms. Leduc currently
spends less than 25% of her full-time efforts on business matters related to
Conscious Intention. It is not anticipated that Ms. Leduc will materially
increase her work hours at Conscious Intention unless the company is successful
in raising sufficient proceeds in this offering to build and complete a website
with a reasonable volume of traffic. At this time, Ms. Leduc would still spend
less than 50% of her full time efforts on Conscious Intention once the website
is built and the core product offering established. It is possible that Ms.
Leduc's outside business interest and her lack of full-time commitment to
Conscious Intention may materially damage our financial prospects and prospects
for commercial success with our product offering.
We may not be able to compete effectively against dominant companies in
executive coaching and professional coaching support because we lack the
equipment, staff, strategic alliances and experience.
There are numerous, well-financed competitors who offer management
consultancy services which indirectly compete with coaching as well as
individuals and firms that offer support to coaches, many of whom have larger
staffs, more resources, more strategic alliances, more sophisticated equipment
and more experience in the field of providing services to coaches than Conscious
Intention does. These competitors include:
o Korn/Ferry Executive Coaching offered by Korn/Ferry
o Coachville.com operated by Thomas Leonard
o Ccui.com operated by Corporate Coach U International
o Personalcoaching.com operated by Franklin Covey
o Executivecochcollege.com operated by the College of Executive Coaching
We have not demonstrated that we can compete successfully against these
competitors and we may not be able to in the future. If we are unable to
effectively compete in the coaching field, our results would be negatively
affected, we may be unable to implement our plan and we might ultimately fail.
10
Risks related to this offering
We will have broad discretion in how we use the proceeds of this offering, and
we may not use these proceeds effectively. This could affect our profitability
and cause our stock price to decline.
Our management will have total discretion in the application of the net
proceeds of this offering, and you will not have the opportunity, as part of
your investment decision, to assess whether we are using the proceeds
appropriately. We currently intend to use the net proceeds of this offering to
continue to develop our product offering and to establish a sales and marketing
capability. We have not finalized yet the amount of net proceeds that we will
use specifically for each of these purposes. We may use the net proceeds for
corporate purposes that do not result in our profitability or increase our
market value.
As a new investor, you will incur substantial dilution as a result of this
offering and future equity issuances, and as a result, our stock price could
decline.
The offering price is substantially higher than the pro forma, net
tangible book value per share of our outstanding common stock. As a result,
investors purchasing common stock in this offering will incur immediate dilution
of $0.50 per share. This dilution is due in large part to earlier investors in
our company having paid substantially less than the initial public offering
price when they purchased their shares. The exercise of outstanding options and
warrants and future equity issuances, including any additional shares issued in
connection with acquisitions, will result in further dilution to investors.
We do not plan to pay dividends in the foreseeable future.
We do not anticipate paying cash dividends to our stockholders in the
foreseeable future. Accordingly, investors must rely on sales of their common
stock after price appreciation, which may never occur, as the only way to
realize on their investment. Investors seeking cash dividends should not
purchase our common stock.
Insiders who hold 91% of our outstanding stock have substantial control over
Conscious Intention that could delay or prevent a beneficial change in corporate
control
We anticipate our executive officers, directors and entities affiliated with
them, in the aggregate, beneficially own approximately 91% of our outstanding
common stock. If these stockholders acted together, they would be able to
exercise significant control over all matters requiring approval by our
stockholders, including the election of directors and the approval of mergers or
other business combination transactions, which may have the effect of delaying
or preventing a third party from acquiring control over us, even if such a
transaction would be beneficial to the shareholders.
11
The report of our independent auditors expresses substantial doubt about our
ability to continue as a going concern
The report of our independent auditors located in this filing indicates a
substantial doubt about our ability to continue as a going concern due to lack
of sufficient working capital and historical losses. Our working capital is
severely limited and we have sustained large losses. We may not have enough
working capital to survive or to sustain further losses and our business might
fail as a result.
Special note regarding forward-looking statements
Some of the statements under "Prospectus summary," "Risk factors," "Plan of
operation," "Business," and elsewhere in this prospectus constitute
forward-looking statements. These statements involve known and unknown risks,
uncertainties, and other factors that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," "continue" or the negative of these terms or other
comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of these statements. We
are under no duty to update any of the forward-looking statements after the date
of this prospectus to conform these statements to actual results.
Use of proceeds
The proceeds from the sale of shares of our common stock by selling shareholders
will be received directly by the selling stockholders. We will receive no
proceeds from the sale of the common stock offered by selling shareholders under
this prospectus. We estimate our net proceeds from the sale of 500,000 shares of
common stock in this offering will total $225,000 based on an assumed offering
price of $0.50 per share and after deducting offering expenses, which are
payable by us. The principal purposes of this offering are to establish a public
market for our common stock, increase our visibility in the marketplace and
facilitate our future access to public capital markets. We intend to use the net
proceeds from this offering as follows:
o $50,000 to complete development of the Internet website, associated
coaching materials and software product;
o $100,000 for advertising and marketing of the product offering,
including the hiring of a full-time, sales person o the balance for
other general corporate purposes, including development of additional
product features and additional sales channels for the product.
12
We indicate in the table below how we intend to use proceeds of the
offering assuming the sale of various percentages of securities offered for sale
by the company. Pending these uses, we will invest the net proceeds of this
offering in short-term money market and money market equivalent securities.
In the event that the proceeds of the offering are insufficient to pay
offering expenses, we will be forced to defer payment of offering expenses until
either:
o Revenues are derived from product sales; or
o We are able to borrow sufficient amounts from our chief executive officer,
shareholders or others to pay the offering expenses; or
o We are able to conduct another offering with sufficient proceeds to pay the
expenses.
No proceeds of the offering will be used to pay any debts to related
parties.
Use of Proceeds Table
The following table presents the uses of proceeds assuming the sale of 25%,
50%, 70% and 100% of the securities offered for sale in this offering by the
company.
- ------------- ------------- ----------- ------------ ------------- ------------------------------------------------------------
Percent Sold Shares Gross Offering Net Proceeds Principal Uses
Proceeds Expenses
- ------------- ------------- ----------- ------------ ------------- ------------------------------------------------------------
- ------------- ------------- ----------- ------------ ------------- ------------------------------------------------------------
100 500,000 250,000 25,000 225,000 $100,000 sales and marketing
$60,000 chief executive salary
$50,000 website, materials and software development
$10,000 telecomunications
$5,000 office supplies and stationary
- ------------- ------------- ----------- ------------ ------------- ------------------------------------------------------------
- ------------- ------------- ----------- ------------ ------------- ------------------------------------------------------------
75 375,000 187,500 25,000 162,500 $70,000 sales and marketing
$50,000 website, materials and software development
$27,500 chief executive salary
$10,000 telecomunications
$5,000 office supplies and stationary
- ------------- ------------- ----------- ------------ ------------- ------------------------------------------------------------
- ------------- ------------- ----------- ------------ ------------- ------------------------------------------------------------
50 250,000 125,000 25,000 100,000 $40,000 sales and marketing
$50,000 website, materials and software development
$5,000 telecomunications
$5,000 office supplies and stationary
- ------------- ------------- ----------- ------------ ------------- ------------------------------------------------------------
- ------------- ------------- ----------- ------------ ------------- ------------------------------------------------------------
25 125,000 62,500 25,000 37,500 $10,000 sales and marketing
$25,000 website, materials and software development
$2,000 telecomunications
$500 office supplies and stationary
- ------------- ------------- ----------- ------------ ------------- ------------------------------------------------------------
13
Determination of the offering price
The selling shareholders may offer their stock through privately negotiated
transactions at a per share price of $0.50. After our shares are quoted on the
OTC Bulletin Board, selling shareholders may sell their shares on the OTC
Bulletin Board at prevailing market prices, or in private transactions at
privately negotiated prices. There can be no assurance that these prices will
bear any relation to traditionally recognized criteria of value, book value, or
other objective measure of the value of the shares. The company will offer
shares for sale at $0.50 per share directly to the public through the efforts of
its chief executive officer Sylva Leduc.
We have arbitrarily determined the offering price of $0.50 per share. This
price bears no relation to our assets, book value, or any other customary
investment criteria, including our prior operating history. The price per share
in this offering is substantially above its net tangible book value, and we
cannot assure you that the price will accurately reflect a market price for the
shares. Among factors considered by us in determining the offering price were:
o Estimates of our business potential;
o Our limited financial resources;
o The amount of equity desired to be retained by present stockholders;
o The amount of dilution to the public; and
o The general condition of the securities markets.
Nevada law and certain provisions of our articles of incorporation and bylaws
Nevada law and our articles of incorporation and bylaws could make it more
difficult to acquire us by means of a tender offer, a proxy contest or otherwise
and the removal of incumbent officers and directors by virtue of the fact that
the board of directors has the ability, without shareholder approval, to issue
preferred stock and specify the rights and preferences of such stock. Such an
issuance by the board of directors could discourage certain types of coercive
takeover practices and inadequate takeover bids and to encourage persons seeking
to acquire control of us to first negotiate with us. We believe that the
benefits of increased protection of our potential ability to negotiate with the
proponent of an unfriendly or unsolicited proposal to acquire or restructure us
outweigh the disadvantages of discouraging takeover or acquisition proposals
because, among other things, negotiation of their proposals could result in an
improvement of their terms.
14
Transfer agent and registrar
The company currently acts as its own transfer agent and registrar.
Plan of distribution
This prospectus covers the sale of new shares issued by us directly to the
public and the resale by selling stockholders of shares of our common stock that
they have already purchased from us. Shares sold by the company will be offered
and sold directly by officer and director Sylva Leduc at a price per share of
$0.50 and will be sold to acquaintances of our officer and director, Sylva
Leduc, who will receive no additional compensation from such sales. These sales
by Sylva Leduc should qualify for exemption from broker dealer registration
requirements as provided in Rule 3a4-1 of the Exchange Act. Under the rule,
Sylva Leduc would not be considered a broker dealer in this case because there
would be no general solicitation for the shares and they would only be sold to
acquaintances of hers with whom she already has a pre-existing business
relationship. Sylva Leduc:
o is not subject to statutory disqualification or otherwise prohibited from
assisting us in the offer and sale of the shares;
o is not compensated based directly or indirectly on transactions in securities;
o is not an associated person of a broker dealer and has not ever been such;
o performs and is expected to perform substantial duties for us not related to
transactions for securities; and
o has not been involved with in any way the issuance of securities from any
issuer during the last 12 months.
Selling stockholders may sell their shares of common stock either directly
or through a broker-dealer in one or more of the following kinds of
transactions:
o Transactions in the OTC Bulletin Board; or
o Transactions negotiated between selling stockholders and purchasers, or
otherwise.
The company intends to sell the shares in the states listed below, relying on
registration or an exemption from registration as listed below:
Florida Exempt from registration under the limited offering exemption 517.061
(11)
Nevada Exempt from registration under the limited offering exemption NRS
90.530 (11)
Broker-dealers may purchase shares directly from a selling stockholder or
sell shares to someone else on behalf of a selling shareholder. Broker-dealers
may charge commissions to both selling stockholders selling common stock, and
purchasers buying shares sold by a selling stockholder. If a broker buys shares
directly from a selling stockholder, the broker may resell the shares through
another broker, and the other broker may receive compensation from the selling
stockholder for the resale. To the extent required by laws, regulations or
agreements we have made, we will file a prospectus supplement during the time
the selling stockholders are offering or selling shares covered by this
prospectus in order to add or correct important information about the plan of
distribution for the shares and in accordance with our obligation to file
post-effective amendments to the prospectus as required by Item 512 of
Regulation S-B. We will also file a post-effective amendment to the registration
statement to amend the prospectus to disclose pledges, donees, transferees and
other successors in interest. In addition to any other applicable laws or
regulations, selling stockholders must comply with regulations relating to
distributions by selling stockholders, including Regulation M under the
Securities Exchange Act of 1934. Regulation M prohibits selling stockholders
from offering to purchase and purchasing our common stock at certain periods of
time surrounding their sales of shares of our common stock under this
prospectus. Some states may require that registration, exemption from
registration or notification requirements be met before selling stockholders may
sell their common stock. Some states may also require selling stockholders to
sell their common stock only through broker-dealers.
15
Selling shareholders
Percentage
Name and address Number of of shares
of beneficial owner shares beneficially Number of Percentage of
beneficially owned shares shares
owned before Number of beneficially beneficially
before offering shares to owned after owned after
offering (%) be sold offering offering (%)
Vance Walle 150000 3.75% 150000 0 0.0%
- --------------------------------
Jonathan Dariyanani 100000 2.50% 100000 0 0.0%
- --------------------------------
Sean Rice 50000 1.25% 50000 0 0.0%
- --------------------------------
Kirk Roberts 25000 0.63% 25000 0 0.0%
- --------------------------------
Monica Pulver 5000 0.13% 5000 0 0.0%
- --------------------------------
Richelle Roberts 5000 0.13% 5000 0 0.0%
- --------------------------------
Brad Froehler 1000 0.03% 1000 0 0.0%
- --------------------------------
Crystal Yarych 1000 0.03% 1000 0 0.0%
- --------------------------------
Dalaine Haverty 1000 0.03% 1000 0 0.0%
- --------------------------------
David Brown 1000 0.03% 1000 0 0.0%
- --------------------------------
Garry Haverty 1000 0.03% 1000 0 0.0%
- --------------------------------
Greg Phoenix 1000 0.03% 1000 0 0.0%
- --------------------------------
Ken Roberts 1000 0.03% 1000 0 0.0%
- --------------------------------
Kerby Helliwell 1000 0.03% 1000 0 0.0%
- --------------------------------
Kerry Phoenix 1000 0.03% 1000 0 0.0%
- --------------------------------
Kirsten Thompson 1000 0.03% 1000 0 0.0%
- --------------------------------
Kristine Ponte 1000 0.03% 1000 0 0.0%
- --------------------------------
Lisa Farquharson 1000 0.03% 1000 0 0.0%
- --------------------------------
Nairne Kincade 1000 0.03% 1000 0 0.0%
- --------------------------------
Paul Thompson 1000 0.03% 1000 0 0.0%
- --------------------------------
Richard S. Arnold, Jr. 1000 0.03% 1000 0 0.0%
- --------------------------------
Rod Farquharson 1000 0.03% 1000 0 0.0%
- --------------------------------
Rod Froehler 1000 0.03% 1000 0 0.0%
- --------------------------------
Thomas Schroeder 1000 0.03% 1000 0 0.0%
- --------------------------------
Selling shareholder Jonathan Dariyanani acts as corporate counsel for Conscious
Intention on a consulting basis. No other selling shareholder has or has had a
material relationship with Conscious Intention.
16
Legal proceedings
We are not a party to any legal proceedings.
Executive officers and directors
Our executive officers and directors and their ages, as of April 1, 2003, are
as follows:
Executive officer and director:
Sylva Leduc 50 years old
Executive officer and directors:
Sylva Leduc, chief executive officer, principal accounting officer and
director. Ms. Leduc currently serves as president of her own executive coaching
and leadership development firm, TurningPoint NW LLC, located in Kirkland,
Washington, through which she provides coaching services directly for executives
and teams. She has served in this capacity since June of 2000. From May of 1997
until June of 2000, Ms. Leduc was a change management consultant for Ernst &
Young, LLP in Seattle, Washington where she provided consulting services to
clients in human resources, business improvement and organizational development.
From May of 1995 until May of 1997, Ms. Leduc served as a senior consultant for
Princeton/Masters International Corporation of Bellevue, Washington where she
provided coaching services to executives, senior managers, managers, and
technical professionals. From 1991 until 1995, Ms. Leduc was a director at
Mainstream Access Corporation of Bellevue, Washington, where she provided group
and individual consulting and coaching. From 1986 until 1991, Ms. Leduc served
as group services director, among other positions, at Career Development &
Employment of Calgary, Alberta, Canada, a governmental department where Ms.
Leduc provided delivery of group programs and one-on-one career planning. Ms.
Leduc is a graduate of the University of Calgary, Alberta with a Masters Degree
in Educational Psychology in 1989 and a Bachelor of Arts degree in Psychology in
1986.
Sylva Leduc is also president of Turning Point NW, LLC, a limited liability
company engaged in providing executive coaching to individuals and teams.
Turning Point also owns a software product, Client Compass, which provides
client management support to individual coaches. It is intended that, if
Conscious Intention is successful in raising sufficient proceeds in this
offering to build and complete a website with a reasonable volume of traffic,
Ms. Leduc would offer Conscious Intention the ability to resell this software
product to executive coaches under a commercially reasonable arrangement. No
such arrangement has yet been reached and there can be no assurance that such an
arrangement will ever be reached.
As Turning Point and Conscious Intention both provide coaching support
services, it is possible that a conflict of interest exists between Ms. Leduc's
management of Conscious Intention and her management of Turning Point. There can
be no assurance that Ms. Leduc will resolve this conflict in a way that is
satisfactory for the shareholders of Conscious Intention. Ms. Leduc currently
spends less than 25% of her full-time efforts on business matters related to
Conscious Intention. It is not anticipated that Ms. Leduc will materially
increase her work hours at Conscious Intention unless the company is successful
in raising sufficient proceeds in this offering to build and complete a website
with a reasonable volume of traffic. At this time, Ms. Leduc would still spend
less than 50% of her full time efforts on Conscious Intention once the website
is built and the core product offering established. It is possible that Ms.
Leduc's outside business interest and her lack of full-time commitment to
Conscious Intention may materially damage our financial prospects and prospects
for commercial success with our product offering.
17
Board of directors
Our board of directors currently consists of 1 member. Each director holds
office until his or her term expires or until his or her successor is duly
elected and qualified.
Board committees
None.
Director compensation.
Our director does not currently receive any cash compensation for services
on the board of directors or any committee thereof, but directors may be
reimbursed for expenses in connection with attendance at board and committee
meetings.
Executive compensation
The following table presents the compensation earned, awarded or paid for
services rendered to us in all capacities since the commencement of our
operations by our chief executive officer, there are no other executive officers
that earned more than $100,000 in salary and bonus since commencement of
operations.
Summary compensation table for Fiscal Year 2001-2002
Annual compensation Long-term compensation awards
------------------------------ -----------------------------
Name, Other Restricted Securities
Principal annual stock underlying All other
Position Salary($) Bonus($) compensation($) award(s)($) options(#) compensation
Sylva Leduc,
CEO/Director $0 * 0 0 0 0 0
*Sylva Leduc has not drawn any salary from Conscious Intention. It is
anticipated that Ms. Leduc will begin taking a salary of $60,000 beginning March
31, 2003. Ms. Leduc is not entitled to any reimbursement for any salary she has
elected to forego. During the period ended December 31, 2001, Sylva Leduc
advanced $4,700 to the Company. At December 31, 2001 amounts still due her were
$810. During the year ended December 31, 2002 the Company repaid this
$810 and advanced $1,690 to Turning Point NW, LLC, a related party commonly
controlled by Ms. Leduc. The advance bears interest at 8% and is due June 1,
2003.
Option grants since inception and aggregate option exercises during last fiscal
year and fiscal year-end option values.
Since inception, we have not granted any stock options to any individual,
including our chief executive officer. We anticipate granting options to various
employees, directors and consultants. Any such grants will be made at an
exercise price equal to the fair market value of our common stock as determined
by our board of directors.
We have no employment agreements with any of our employees.
Employee benefit plans
We do not currently have any employee benefit plans.
18
Security ownership of certain beneficial owners and management
The following table sets forth information regarding the beneficial ownership of
our common stock as of April 1, 2003, by:
o each named executive officer;
o each of our directors;
o all current directors and executive officers as a group; and
o each person or group of affiliated persons who is
known by us to own beneficially 5% or more of our common stock;
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options held by that person that are currently
exercisable or exercisable within 60 days of April 1, 2003, are deemed
outstanding. These shares, however, are not deemed outstanding for purposes of
computing percentage ownership of each other person. As of April 1, 2003, no
individual listed in the table below owned any options or warrants to purchase
any of our common or preferred stock.
Except as indicated in the footnotes to this table and as required under
applicable community property laws, each stockholder named in the table has sole
voting and investment power with respect to the shares shown as beneficially
owned by them. This table also includes shares owned by a spouse as community
property. Percentage of ownership is based on 4,000,000 shares of common stock
outstanding on April 1, 2003. Unless otherwise indicated, the address of each
of the individuals named below is 6620 Lake Washington Blvd NE, Suite 301,
Kirkland, WA 98033.
The following table also includes information with respect to the
common stock beneficially owned by officers, directors and 5% or greater
shareholders as of April 1, 2003. The stockholders provided us the
information included in the table below. To our knowledge, each of the
stockholders has sole voting and investment power over the shares of common
stock listed in the table below.
19
Name and address of beneficial owner
Executive Officers and Directors as a group as of April 1, 2003
Title of class Name and address of Amount and nature of Percent of class
beneficial owner beneficial owner
Common Sylva Leduc (1) (2) 3,647,000 91.2 %
(1) Includes 25,000 shares held by Ms. Leduc's spouse, Robert Rican.
(2) Ms. Leduc is the only officer, director and the sole person to own 5% or
more of the outstanding shares.
Executive Officers, Directors & 5% beneficial owners as of April 1, 2003
Title of class Name and address of Amount and nature of Percent of class
beneficial owner beneficial owner
Common Sylva Leduc (1) (2) 3,647,000 91.2 %
(1) Includes 25,000 shares held by Ms. Leduc's spouse, Robert Rican.
(2) Ms. Leduc is the only officer, director and the sole person to own 5% or
more of the outstanding shares.
20
Description of securities
Current capital structure
As of the date of this prospectus, we have 10,000,000 shares of common
stock, par value $0.001, authorized, with 4,000,000 shares outstanding held of
record by 26 stockholders.
Description of capital stock
Upon the closing of this offering, we will be authorized to issue 10,000,000
shares of common stock, $0.001 par value. The following description of our
capital stock does not purport to be complete and is subject to and qualified by
our articles of incorporation and bylaws, which are included as exhibits to the
registration statement of which this prospectus forms a part.
Common stock
As of April 1, 2003, there were 4,000,000 shares of common stock
outstanding. The holders of common stock are entitled to one vote per share on
all matters to be voted upon by the stockholders. Subject to preferences that
may be applicable to any outstanding preferred stock, the holders of common
stock are entitled to receive ratably dividends, if any, as may be declared from
time to time by the board of directors out of funds legally available for that
purpose. See "Dividend policy." In the event of a liquidation, dissolution or
winding up of Conscious Intention, the holders of common stock are entitled to
share ratably in all assets remaining after payment of liabilities, subject to
prior distribution rights of preferred stock, if any, then outstanding. There is
no cumulative voting with respect to the election of directors, with the result
that the holders of more than 50 percent of the shares voted for the election of
directors can elect all of the directors. The common stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the common stock.
Preferred stock
The board of directors has the authority, without action by our
stockholders, to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, any or all
of which may be greater than the rights of the common stock. The effect of the
issuance of any shares of preferred stock upon the rights of holders of the
common stock might include, among other things, restricting dividends on the
common stock, diluting the voting power of the common stock, impairing the
liquidation rights of the common stock and delaying or preventing a change in
control of Conscious Intention without further action by the stockholders.
We have yet to authorize any preferred stock. Our board of directors is
empowered, without stockholder approval, to issue series of preferred stock with
any designations, rights and preferences as they may from time to time
determine. Thus, preferred stock, if issued, could have dividend, liquidation,
conversion, voting or other rights that could adversely affect the voting power
or other rights of the common stock. Preferred stock, if issued, could be
utilized, under special circumstances, as a method of discouraging, delaying or
preventing a change in control of our business.
Registration rights
None.
Options
We currently have no options exercisable for our common stock available for
grant. We do not presently have any warrants authorized. Our board of directors
may later determine to grant such options and authorize warrants.
Dividend policy
We have not paid any cash dividends since our inception and do not intend to
pay any cash dividends in the foreseeable future.
21
Interest of named experts and counsel
The validity of the common stock offered in this registration statement
will be passed upon for us by Jonathan Ram Dariyanani Esq., Santa Monica, CA.
Mr. Dariyanani is the beneficial owner of 100,000 common shares of stock.
The balance sheets as of December 31, 2002 and 2001, and statements of
operations, stockholders equity (deficit), and cash flows for the year ended
December 31, 2002 and the period from October 12, 2001 (date of inception)
through December 31, 2002, included in this prospectus, have been included
herein in reliance on the report of Hansen, Barnett & Maxwell, independent
certified public accountants, dated March 27, 2003, given on the authority of
that firm as experts in auditing and accounting.
Changes in and disagreements with accounts on accounting and financial
disclosure
There have been no disagreements with the accountants on accounting policies
or financial disclosure.
22
Disclosure of commission position on indemnification for securities act
Our bylaws provide that we shall indemnify our directors and executive
officers and may indemnify our other officers and employees to the fullest
extent permitted by law. We believe that indemnification under our bylaws covers
at least negligence and gross negligence on the part of indemnified parties. Our
bylaws also permit us to secure insurance on behalf of any officer, director,
employee or other agent for any liability arising out of his or her actions in
such capacity, regardless of whether our bylaws would permit indemnification.
We are entering into indemnification agreements with each of our officers
and directors containing provisions that require us to, among other things,
indemnify our officers and directors against liabilities that may arise by
reason of their status or service as directors or officers, other than
liabilities arising from willful misconduct of a culpable nature, to advance
their expenses incurred as a result of any proceeding against them for which
they could be indemnified, and to cover our directors and officers under any of
our liability insurance policies applicable to our directors and officers. We
believe that these provisions and agreements are necessary to attract and retain
qualified persons as directors and executive officers.
The limitation on liability and indemnification provisions in our articles
of incorporation and bylaws may discourage stockholders from bringing a lawsuit
against our directors for breach of their fiduciary duty and may reduce the
likelihood of derivative litigation against our directors and officers, even
though a derivative action, if successful, might otherwise benefit us and our
stockholders. A stockholder's investment in us may be adversely affected to the
extent we pay the costs of settlement or damage awards against our directors and
officers under these indemnification provisions.
At present, there is no pending litigation or proceeding involving any of
our directors, officers or employees in which indemnification is sought, nor are
we aware of any threatened litigation that may result in claims for
indemnification.
The limitation of our director's liability does not apply to liabilities
arising under the federal securities laws and does not affect the availability
of equitable remedies such as injunctive relief or rescission.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of Conscious Intention pursuant to the foregoing provisions, or
otherwise, Conscious Intention 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.
23
Description of business
Overview
Conscious Intention is a development stage executive coaching support
company. Executive coaching consists of rendering professional development
advice, guidance, leadership, organizational development, communication and
human resources advice to individual professionals, groups and organizations.
Conscious Intention plans to offer support services to executive coaches which
consist of:
o a series of texts and on-line materials providing aspiring executive coaches
with resources to open their own coaching business;
o an on-line coaching club which provides community, interaction and client
referrals for coaches; and
o a software product which helps coaches to manage their practice and clients.
We intend to develop these texts, materials, communities, referral systems
and software products ourselves, through the efforts of our Chief Executive
Officer, Sylva Leduc, through materials that she has already prepared and via
the use of consultants. These services will be offered to coaches directly
through the Internet. We intend to charge a monthly or yearly subscription fee
payable by coaches for unlimited use of the basic site resources. We intend to
derive additional revenue by eventually adding premium services to our basic
product offering. We plan to advertise our products at industry trade shows, in
trade publications and on-line at various existing websites for executive
coaches.
History and form of organization
Conscious Intention, Inc. is a development stage Nevada corporation formed
on October 12, 2001 for the purpose of developing and commercializing on-line
products and support systems for executive coaches. To date, the product
offering remains incomplete, the website is not yet operational and we have no
customers.
Conscious Intention's principal products and services
Conscious Intention is not currently providing any products or services.
Conscious Intention plans to offer support services to executive coaches which
consist of:
o a series of texts and on-line materials providing aspiring executive coaches
with resources to open their own coaching business;
o an on-line coaching club which provides community, interaction and client
referrals for coaches; and
o a software product which helps coaches to manage their practice and clients.
Provided that we derive sufficient financing proceeds, we intend to begin
offering our services in July of 2003.
24
Conscious Intention intends to price all of its basic product offering on a
monthly or yearly subscription basis to executive coaches worldwide, though no
product offering is contemplated outside of the English language. We have not
yet determined how much we will charge for this monthly or yearly subscription
service. We intend to offer additional, premium services to our subscribers on a
fee-for-services basis, but have not yet determined the nature of such services,
how specifically they might be priced or how they might be provided.
Distribution and marketing methods
Presently, Conscious Intention has no salespeople or distributors of its
products. We intend that our Chief Executive Officer, Sylva Leduc, will use her
network of professional and business contacts in the field of executive coaching
to reach our first subscribers through a direct email and telephone campaign. We
intend to distribute the services themselves exclusively by means of our
website, www.consciousintention.com. We intend to market our product via
industry trade shows, in trade publications and on-line at various existing
websites for executive coaches.
Status of products and services
Currently, we have not done any development on the Conscious Intention
website itself. We anticipate that 50% of the materials that will be offered for
viewing on the site have already been created by Ms. Leduc in the course of her
experience in executive coaching. We anticipate that the rest will be completed
by the time the website should launch, in July of 2003. We intend to have most
of the technological and hosting aspects of the site developed by consultants.
While no final software product for use on the site has been identified, Ms.
Leduc owns a product that would be suitable for the purpose, though she has not
decided under what terms or conditions she would license it to Conscious
Intention. If Ms. Leduc does not license her product to us, we estimate a
suitable replacement product can be purchased for between $25,000 and $50,000.
The architecture of the coaching club and client referral network for coaches
has been developed by Ms. Leduc and awaits technical implementation on the
website.
25
Business Combination
We have no plan to seek a business combination in the near future. It is our
intention to seek funding for the business of Conscious Intention as articulated
in this section. If, however, we are either unable to raise sufficient proceeds
from the offering to conduct our business as currently contemplated or are able
to raise sufficient proceeds but do not succeed in attracting a critical mass of
customers with our contemplated product offering, we will evaluate other
options, including acquiring an existing business within the coaching space with
established customers and proven products. Sufficient proceeds to conduct our
business without an acquisition is estimated to be minimum net proceeds to the
Company of $37,500. A critical mass of customers would be at least 100 paying
members. We have no intention of pursuing any business combination outside of
the coaching industry or unrelated to our growth as a coaching support company.
There can be no assurance that, even if we desired such a business combination,
it would be available under suitable terms and conditions.
Revenues
Conscious Intention has derived no revenue to date. It is contemplated that
the earliest revenues would be derived in July of 2003, when the site launches.
Competitive conditions, competitive position and methods of competition
The executive coaching support services market in which we compete is
relatively new and our services are highly specialized. Intense competition
exists for our service offerings. The number of companies with which we compete
is estimated in the hundreds and expanding. We expect competition with our
services to increase over time as the market for our services grows. Competition
may also increase as a result of industry consolidation.
Our chief competition comes from large executive placement firms which offer
coaching and support services, such as:
o Korn/Ferry Executive Coaching offered by Korn/Ferry
o Coachville.com operated by Thomas Leonard
o Ccui.com operated by Corporate Coach U International
o Personalcoaching.com operated by Franklin Covey
o Executivecochcollege.com operated by the College of Executive Coaching
These companies tend to compete for clients by sales of services to
existing clients, via word of mouth referrals, advertising, trade show presence
and seminars. Our main method of competition is through product differentiation
based on style, philosophical orientation, the culture of our offerings and the
group dynamic of our customers who participate in our club, on-line forum and
referral network. We intend to distinguish our service offering by appealing to
the sole practitioner executive coach, specifically the human resource or high
level executive or therapist without significant experience in executive
coaching and to the well-established practitioner interested in mentoring with,
affiliating with and encouraging new entrants to the profession. The
philosophical orientation of our services and therefore, we hope, the culture
that will surround on-line discussions and referrals on our site, will be one
that is proactive, action centered, focused on primarily on enabling rapid
improvement in clients toward reaching their own lifestyle goals. This
orientation will be reflected in the on-line materials that we offer on the site
and in the focus and direction of the on-line software product, which is a
practice management tool that helps coaches to track clients, progress and focus
on delivering and measuring value.
26
We believe that our competitive position is that of vulnerable, new entrant
and that the success of our service offering will be largely dependent on our
ability to find new executive coaches who are not currently affiliated with an
on-line coaching club or coaching support group or who are dissatisfied with
their current support group or who are looking for a user-friendly, proactive,
results oriented introduction to executive coaching and developing an executive
coaching practice.
To the extent that we do eventually offer premium, fee-for-services
offerings in addition to our basic subscription product, competition for those
services will depend greatly on the nature of those services and the prices that
we desire to charge for them. There is stiff on-line competition for the
provision of testing and assessment services over the internet, though offering
these services as a convenience for our subscribers may be one method of
competition. Another would be to develop a battery of particular industry
specific assessment tools, such as coaching assessments for the software
professional, accounting professional, legal professional, medical professional,
etc. There is less competition in this assessment area than in the general field
of on-line assessments.
Dependence on one customer
While we currently have no customers, we do not contemplate a dependence on
one customer or one referral source for clients. We intend to utilize a wide
variety of mechanisms for securing customers and intend to have a diverse
customer base.
Research and development
We have not spent any money on research and development to date. We
anticipate that we will spend $50,000 on the development of our website,
coaching materials and software product offering. Much of the service offering
development will be undertaken by Sylva Leduc, our chief executive officer,
without additional compensation.
Proprietary rights and licensing
We rely primarily on a combination of copyrights, licenses, trade secret
laws and restrictions on disclosure to protect our intellectual property and
proprietary rights. We intend to enter into confidentiality agreements with our
future employees and consultants, and to generally control access to and
distribution of our internal documentation and other proprietary information. We
intend to offer our on-line assessments, materials and software product subject
to industry standard end user license agreements designed to protect our rights
to our products. Although the contents of our website and products to be built
and as constructed to date have been developed by chief executive officer Sylva
Leduc, all right, title and interest in those products belong to the Company.
27
Regulatory environment
There are two aspects of our business which face significant governmental
regulation or are likely to face such regulation; our services offering via the
internet through our website and regulations which effect executive coaching
generally.
Within the United States, the legal landscape for internet privacy is new
and rapidly evolving. Collectors and users of consumer information over the
internet face potential tort liability for public disclosure of private
information; and liability under federal and state fair trade acts when
information sharing practices do not mirror stated privacy policies. Due to the
increasing popularity and use of the internet, it is likely that a growing
number of laws and regulations will be adopted at the international, federal,
state and local levels relating to the internet covering issues such as user
privacy, pricing, content, copyrights, distribution, antitrust and
characteristics and quality of services. Further, the growth and development of
the market for activity on the internet may prompt calls for more stringent
consumer protection laws that may impose additional burdens on those companies
conducting business online. The adoption of any additional laws or regulations
may impair the growth of the internet, which could, in turn, decrease the demand
for our services and increase our cost of doing business. Moreover, the
applicability to the internet of existing laws in various jurisdictions
governing issues such as property ownership, sales and other taxes, libel and
personal privacy is uncertain and may take years to resolve. Any such new
legislation or regulation, the application of laws and regulations from
jurisdictions whose laws do not currently apply to our business or the
application of existing laws and regulations to the internet could harm our
business.
Executive coaching is a relatively new field that has not yet been subject
to extensive regulation, but exists in a constantly changing regulatory
landscape. States and local governmental authorities will often develop new
licensing and regulatory schema to address emerging professional fields or will
redefine existing licensing and regulatory categories to include new
professional fields. As we do not intend to provide coaching services directly,
but instead to provide support services to executive coaches, regulation of the
executive coaching field itself could effect our service offering in the sense
that any materials we supply to coaches for use in their practice would need to
conform to applicable law. Any such new legislation or regulation, the
application of laws and regulations from jurisdictions whose laws do not
currently apply to our business or the application of existing laws and
regulations to executive coaching could harm our business.
28
Employees and consultants
As of April 1, 2003, we had 1 employee We do not have any written
employment agreement with our employee. We believe that our relations with our
employee are good.
Management's discussion and analysis
The following discussion and analysis of our financial condition and results
of our operations should be read in conjunction with our financial statements
and related notes appearing elsewhere in this prospectus. This discussion and
analysis contains forward-looking statements that involve risks, uncertainties
and assumptions. The actual results may differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including,
but not limited to, those set forth under "Risk factors" and elsewhere in this
prospectus.
Overview
Conscious Intention, Inc. is a development stage Nevada corporation formed
on October 12, 2001 for the purpose of developing and commercializing on-line
products and support systems for executive coaches. Executive coaching consists
of rendering professional development advice, guidance, leadership,
organizational development, communication and human resources advice to
individual professionals, groups and organizations. Conscious Intention plans to
offer support services to executive coaches which consist of the following:
o a series of texts and on-line materials providing aspiring executive coaches
with resources to open their own coaching business;
o an on-line coaching club which provides community, interaction and client
referrals for coaches; and
o a software product which helps coaches to manage their practice and clients.
To date, the product offering remains incomplete, the website is not
yet operational and we have no customers.
We intend to develop these texts, materials, communities, referral systems
and software products ourselves, through the efforts of our Chief Executive
Officer, Sylva Leduc, through materials that she has already prepared and via
the use of consultants. These services will be offered to coaches directly
through the Internet. We intend to charge a monthly or yearly subscription fee
payable by coaches for unlimited use of the basic site resources. We intend to
derive additional revenue by eventually adding premium services to our basic
product offering. We plan to advertise our products at industry trade shows, in
trade publications and on-line at various existing websites for executive
coaches.
29
We intend to launch our website at www.consciousintention.com in July of
2003. At this time, we anticipate offering our contemplated services on-line for
a monthly or yearly subscription fee. We have not determined what this fee will
be, but similar sites charge anywhere from $360 to $600 per year.
While we have the ability and staff presently through our chief executive
officer Sylva Leduc and consultants whom we have identified, to complete our
product offering without hiring any additional full-time employees, we intend to
hire at least one person to act as a full-time sales and marketing director for
our website.
We would also like to develop a premium fee-for-services product offering to
augment our contemplated subscription offering. This offering would likely
consist of on-line assessments that executive coaches can take to assess their
own skills, as well as on-line assessments that they can direct their clients to
take. We would like for certain of these assessments to be industry specific for
a limited number of professional segments, such as technology, finance, legal
and government. We have not determined the scope, exact nature or cost to
produce such assessment tools or what we would charge for such assessments.
Similar assessments cost between $0 and $250 per exam, with an average cost of
approximately $25.
We intend to offer advertising on our website as traffic increases
sufficiently to justify the effort. We have not determined how much we would
charge for such advertising and who we would target as advertisers. Professional
liability insurance firms, accounting firms, law firms, recruitment agencies,
banks and credit card companies are all potential advertisers whom we could
approach regarding advertising on our website.
30
Results of operations for the period ending December 31, 2002.
Revenue
We had no revenue for the period from inception through December 31,
2002.
Operating Expenses
General and administrative expenses are comprised primarily of expenses
related to the initial incorporation of Conscious Intention and preparations for
this registration statement.
General and administrative expenses for the period ended December 31, 2002
were $5,214. These expenses were related to our initial incorporation. We expect
general and administrative expenses to increase substantially over this period
if Conscious Intention is successful in developing and marketing website
offering and in obtaining new customers for its services. We anticipate that
such expenditures could be as high as $75,000 or more depending on the level of
growth.
Research and development expenses were not incurred during the period ended
December 31, 2002, due to the fact that the development of our materials has
been undertaken by our chief executive officer, Sylva Leduc, without
compensation. We anticipate spending approximately $50,000on product development
over the next twelve months.
Financial Condition
For the period from inception through December 31, 2002 Conscious Intention
had accumulated deficits of $9,006.
Conscious Intention has very little in the way of current expenses which it
needs to fund. Development of the website will be conducted by our chief
executive officer without additional compensation until financing proceeds
contemplated in this offering are received. If proceeds are received, then
product development would commence at that point.
The company is in a very tenuous cash position going forward. There are
nominal reserves of $13 in cash. Conscious Intention can survive only by virtue
of continued advances by its officers or by service providers willing to provide
services on credit. Even if the company survives to complete this offering,
there can be no assurance that Conscious Intention will develop any customers,
or that its pricing arrangement with such customers, if located, will be
sufficient to provide Conscious Intention with the financial resources necessary
to continue operation. There can also be no assurance that proceeds raised from
this offering will be sufficient to develop the contemplated offering on the
website.
31
Liquidity and capital resources
We have financed our deficits through the sale of common shares. For the
period from inception through December 31, 2002, net cash used by operating
activities was $2,297. As of December 31, 2002, we had cash of $ 13. The
principal uses of cash were toward accumulated deficits of $9,006 and the
repayment of an advance from Sylva Leduc of $4,700. The principal sources of
cash were an increase in accounts payable of $6,709, advances from officer of
$4,700 and proceeds from the sale of our common stock of $4,000.
We believe that existing cash balances and funds generated from operations
are insufficient to meet our liquidity needs for the foreseeable future until
the proceeds of a financing are received. We will have to rely on advances from
our chief executive officer and credit from technology and service providers in
order to maintain our operations. There can be no assurance that such advances
or credit will be forthcoming. If there are no proceeds from financing within
the next 6-12 months, we will fail, as there is no complete service offering
currently available to customers.
While Conscious Intention is optimistic about the company's long-term
prospects, the following issues and uncertainties, among others, should be
considered in evaluating its growth outlook.
Our independent certified public accountants have issued a report on our
audited financial statements with an explanatory paragraph regarding their
substantial doubt about our ability to continue as a going concern. Our
continuation as a going concern is dependent upon our ability to obtain
additional debt or equity financing as may be required, including obtaining
advances from related parties, and ultimately upon our ability to execute our
business plan, products and services, find sources of revenue, and attain
profitability.
We need working capital to execute our business plan and, in the future. .
There can be no assurance that financing will be available in amounts or on
terms acceptable to us, if at all. If financing is not available when required
or is not available on acceptable terms, we may be unable to develop or enhance
our products or services. In addition, we may be unable to take advantage of
business opportunities or respond to competitive pressures. Any of these events
could have a material and adverse effect on our business, results of operations
and financial condition.
32
Cash requirements
Presently, without the sale of additional shares, we do not have sufficient
capital to maintain, grow or continue our operations for the next 12 months. We
do not have sufficient resources to build our internet website at
www.consciousintention.com nor to complete our on-line service offering. Even if
we were to be able to build our service offering and website using the labor of
our chief executive officer, we would be unable to finance marketing or
advertising necessary to attract subscribers. We estimate that we require a
minimum of $37,500 in cash within the next 6 months to cause our website and
service offering to be operational and to attract and retain customers in an
efficient and profitable manner. If we have less than the minimum of $37,500 in
cash, we will still be able to launch a less robust version of our product as
developed by our chief executive officer using a commercially available web
hosting company. However, it is unlikely that such a diminished version of the
product and diminished sales and marketing capability would permit us to pay our
chief executive officer or any other employee a salary until such time as sales
or revenue growth provided sufficient cash to complete the $37,500 in initial
requirements.
Research and development
We intend to develop our service offering over the next three to six months.
In addition, we intend to develop certain fee-for-services on-line assessments
when our initial service offering is complete. The factors we will use to
determine how much money to spend on research and development will include
feedback from our customers, the expenditures of our competitors, the
availability and terms of additional financing that we intend to seek, our
available cash and general market conditions.
Plant and equipment
We currently have offices hosted in the residence of our chief executive
officer, Sylva Leduc, for which we pay no rent. We have no equipment or other
assets.
Employees
We currently have one employee, our chief executive officer, Sylva Leduc. We
intend to hire at least one additional full-time sales and marketing employee
over the next 6 to 12 months, which we estimate will cost us $50,000.
33
Plan of Operation
We have four primary areas of our business that we intend to develop over
the next seven months:
o a series of texts and on-line materials providing aspiring executive coaches
with resources to open their own coaching business;
o an on-line coaching club which provides community, interaction and client
referrals for coaches;
o a software product which helps coaches to manage their practice and clients;
and
o a sales and marketing capability sufficient to provide new leads and customers
for our website.
With respect to product and website development, we have identified $50,000
of proceeds of our offering which will be used for this purpose. We estimate
that: - $20,000 will be used for texts and on-line materials, - $25,000 will be
used for development of the on-line coaching club - $5,000 for integration of
the Client Compass product
Texts and on-line materials are approximately 75% developed to date by our
chief executive officer, Sylva Leduc. We believe that it will cost an additional
$20,000 to complete our offering of texts and on-line materials. We intend to
accomplish this by means of use of outside consultants and by the efforts of
Sylva Leduc. We believe that these materials will be completed within 90 days of
receipt of $20,000 for development. We have no present source for these funds
other than the proceeds of the offering. It is our hope that the materials be
completed no later than July 1, 2003.
We have not yet begun work on our on-line coaching club. We estimate that it
will cost $250,000 to complete and will include within it all of the functional
elements of our website, including the ability to secure membership transactions
on-line, accept credit card payments and provide software products, services and
materials for download over the Internet. Most of the elements that compose the
website an on-line coaching club are available from multiple third party
providers. This item could be complete within 30 days of funds being available
for this purpose. We have no present source for these funds other than the
proceeds of the offering. It is our hope that the website and community be
completed no later than July 1, 2003.
34
We believe that we will be able to offer for sale or use on-line a software
product which helps coaches to manage their practice. Our chief executive
officer, Sylva Leduc has already developed such a product which is currently
being sold by Turning Point NW LLC under the trade name Client Compass. We do
not believe that we will have to pay Ms. Leduc any upfront fees for the use of
this product. We expect that we will spend about $5,000 on outside consultants
to integrate the software into our website presence. It should take no more than
30 days from the time our website is completed to integrate the Client Compass
software. We have not yet reached an understanding with Ms. Leduc regarding the
terms and conditions of licensing Client Compass for use on our site. We believe
that an arrangement with Ms. Leduc, or a similar provider of third party client
management software will be achievable under which such a product would be sold
by us on a revenue share basis, without the need for significant up front
expenditures, except for the $5000 in technical integration. We have no
present source for these funds other than the proceeds of the offering. It is
our hope that software product or a similar software product be available for
sale on our website no later than July 1, 2003.
With respect to sales and marketing, we have identified $100,000 of our
offering which will be used for this purpose. We estimate that the annual
marketing budget will be $85,000. Therefore, we would have approximately 14
months of this budget available if we received the full proceeds of the
offering.
Sales and marketing will be critical to the success of our business. Our
business model relies heavily on our ability to cause executive coaches to visit
our website and become subscribing members at a very low per subscriber
acquisition cost. We intend to accomplish this goal through a combination of
methods. We intend to hire a full-time sales and marketing director as soon as
funding permits. We believe that we can obtain a suitable candidate for an
annual salary of $50,000, without having to offer insurance or other benefits.
We would need to support this individual with a marketing budget of
approximately $35,000. This budget would be used for travel to and attendance at
industry trade shows and for advertisements in trade publications and websites.
We believe that this combination of efforts together with the efforts of our
chief executive officer, Sylva Leduc, in approaching colleagues and leaders in
the field of executive coaching will be sufficient to attract as paying
subscribers, whom we intend to charge an average of $40 per month each for use
of our website and materials. We intend to commence hiring the marketing
director and beginning sales and marketing activities as soon as funds are
available. We have no present source for these funds other than the proceeds of
the offering.
We believe it will take 3 months from the date of our obtaining financing
for us to identify and hire such an individual. We believe it will take another
6 to 8 months for the sales and marketing efforts to yield paying subscribers.
We hope to have hired this individual by July 1, 2003 and to have paying
subscribers by January 2004. As we do not yet have a product, sales force
or subscribers, it is difficult for us to project how many subscribers we might
realize from these efforts.
35
In the event that only a nominal amount of stock is sold during the offering
and there are insufficient proceeds to accomplish our plan of operation as noted
above, then we will seek alternative sources of funding, products, and
customers, including:
o Loans from our chief executive officer or other stockholders;
o Credit from consultants, suppliers, vendors and advertisers;
o A business combination with an organization that has financing and customers
and would like to enter the field of executive coaching.
We believe that we could successfully deploy a product offering on our
website and begin to attract customers with $37,500 in additional cash. If we
were able to spend an additional $10,000 on sales and marketing and $25,000 on
the website and product, we believe that this less robust version of our product
and limited marketing plan could allow us to commence operations. If we cannot
raise at least $37,500, we believe that we could still produce a limited version
of our product and attract some customers, but our plan in this case would be to
rely on uncompensated labor from our chief executive officer and a low cost
commercial web-hosting provider to maintain the limited product on the Internet.
We would rely in this case on direct marketing by our chief executive officer
for new customers.
There can be no assurance that any of the above alternative strategies will
achieve our intended goals. If we are unsuccessful in securing any resources by
any of the above outlined means, then our organization will cease to be able to
carry out any alternative plan of operation and we will cease operations,
resulting in a total loss of investment for all shareholders.
Description of property
We are currently hosted out of the residence of our chief executive officer
in Kirkland, Washington. We believe that these existing facilities are adequate
to meet our current, foreseeable requirements or that suitable additional or
substitute space will be available on commercially reasonable terms.
36
Certain relationships and related party transactions
There has not been, nor is there currently proposed, any transaction or
series of similar transactions to which we were or are to be a party in which
the amount involved exceeds $60,000, and in which any director, executive
officer, holder of more than 5% of our common stock or any member of the
immediate family of any of these people had or will have a direct or indirect
material interest.
Between October 12 and November 1, 2001, Sylva Leduc advanced $4,700 to the
Company. At December 31, 2001 amounts still due her were $810. During the year
ended December 31, 2002 the Company repaid this $810 and advanced $1,690
to Turning Point NW, LLC, a related party commonly controlled by Ms. Leduc. The
advance bears 8% interest and is due June 1, 2003.
Sales of our common stock and preferred stock
Common stock. The following table summarizes the private placement transactions
in which we sold common stock to our directors, executive officers, 5%
stockholders and persons and entities affiliated with them.
Price per Shares of common
Purchaser Dates of purchase share stock
- ------------------ ------------------ ---------- ----------------
Sylva Leduc
director and
executive officer 10/12/01 $0.001 3,622,000
Robert Rican, 11/1/01 $0.001 25,000
Spouse of Sylva Leduc
Totals 3,647,000
1 Affiliates of Sylva Leduc
37
Description of insider sales
Officer and director Sylva Leduc purchased 3,622,000 shares on October 12,
2001 at a per share purchase price of $0.001. Robert Rican, spouse of officer
and director Sylva Leduc, purchased 25,000 shares on November 1, 2001 at a per
share purchase price of $0.001.
Indemnification agreements
We are entering into indemnification agreements with each of our directors
and officers. Such indemnification agreements will require us to indemnify our
directors and officers to the fullest extent permitted by Nevada law. For a
description of the limitation of our directors' and officers' liability and our
indemnification of such directors and officers, see "Limitation on directors'
and officers' Liability and Indemnification."
Conflict of interest policy
We believe that all transactions with affiliates described above were made
on terms no less favorable to us than could have been obtained from unaffiliated
third parties. Our policy is to require that a majority of the independent and
disinterested outside directors on our board of directors approve all future
transactions between us and our officers, directors, principal stockholders and
their affiliates. We intend to begin implementation of this policy as soon as an
independent director is appointed to the board of directors. At the present
time, no such independent director has agreed to serve, nor can there be any
assurance that a suitable candidate will be available and willing to serve under
commercially acceptable terms. Such transactions will continue to be on terms no
less favorable to us than we could obtain from unaffiliated third parties.
Market for common equity and related stockholder matters
There is no trading market for our common stock at present and there has
been no trading market to date. Management has not undertaken any discussions
with any prospective market maker concerning the participation in the
aftermarket for our securities and management does not intend to initiate any
discussions. We cannot guarantee that a trading market will ever develop or if a
market does develop, that it will continue.
As of April 1, 2003 there are:
o no options outstanding to purchase shares of our common stock;
o no options to purchase our common stock that are authorized and
available for grant;
o no shares that are currently eligible for sale under Rule 144;
o 353,000 common shares which we have agreed to register under
the Securities Act in this offering for sale by current
security holders;
o 26 holders of record of our shares of common stock;
o no dividends that have been paid on our common stock to date; and
o no plans to pay dividends on our common stock in the
foreseeable future.
38
The Securities and Exchange Commission has adopted a rule that established
the definition of a "penny stock," for purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions.
For any transaction involving a penny stock, unless exempt, the rules
require:
- that a broker or dealer approve a person's account for transactions in
penny stocks; and
- the broker or dealer receive from the investor a written agreement
to the transaction, setting forth the identity and quantity of the
penny stock to be purchased.
In order to approve a person's account for transactions in penny stocks,
the broker or dealer must:
- obtain financial information and investment experience and objectives
of the person; and
- make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge
and experience in financial matters to be capable of evaluating the
risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the SEC relating to the penny stock
market, which, in highlight form:
- sets forth the basis on which the broker or dealer made the suitability
determination; and
- indicates that the broker or dealer received a signed, written agreement
from the investor prior to the transaction.
Disclosure also has to be made about:
- the risks of investing in penny stock in both public offering and in
secondary trading; and
- commissions payable to both the broker-dealer and the registered
representative; and
- current quotations for the securities; and
- rights and remedies available to an investor in cases of fraud in
penny stock transactions.
Finally, monthly statements have to be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. As a result, if trading in our common stock is
determined to be subject to the above rules, a stockholder may find it more
difficult to dispose of, or to obtain accurate quotations as to the market value
of, our securities.
39
Where you can find additional information
We filed with the Securities and Exchange Commission a registration
statement on Form SB-2 under the Securities Act for the shares of common stock
in this offering. This prospectus does not contain all of the information in the
registration statement and the exhibits and schedule that were filed with the
registration statement. For further information with respect to us and our
common stock, we refer you to the registration statement and the exhibits and
schedule that were filed with the registration statement. Statements contained
in this prospectus about the contents of any contract or any other document that
is filed as an exhibit to the registration statement are not necessarily
complete, and we refer you to the full text of the contract or other document
filed as an exhibit to the registration statement.
Upon effectiveness of our registration statement on Form SB-2, we will
become subject to the information and periodic reporting requirements of the
Securities Exchange Act of 1934, and, in accordance with the requirements of
the Securities Exchange Act of 1934, will file periodic reports, proxy
statements and other information with the Securities and Exchange
Commission. These periodic reports, proxy statements and other information will
be available for inspection and copying at the regional offices, public
reference facilities and website of the Securities and Exchange Commission
referred to above, at www.sec.gov.
You may read and copy all materials which we file with the Securities and
Exchange Commission at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. You may obtain information about the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
maintains an internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC at http://www.sec.gov. You may also visit our website for further
information at www.consciousintention.com, though such site is not currently
operational, we anticipate that it will be by July of 2003.
40
Financial Statements
CONSCIOUS INTENTION, INC.
(A Development Stage Enterprise)
TABLE OF CONTENTS
Page
Report of Independent Certified Public Accountants F-1
Financial Statements:
Balance Sheets - December 31, 2002 and 2001 F-2
Statements of Operations for the Year Ended December 31, 2002 and
for the Periods from October 12, 2001 (Date of Inception)
through December 31, 2002 and 2001 F-3
Statement of Stockholders' Equity (Deficit) for the Period from October
12, 2001 (Date of Inception) through December 31, 2001
and for the Year Ended December 31, 2002 F-4
Statement of Cash Flows for the Year Ended December 31, 2002
and for the Periods from October 12, 2001 (Date of Inception)
through December 31, 2002 and 2001 F-5
Notes to Financial Statements F-6
F-1
HANSEN, BARNETT & MAXWELL (801) 532-2200
A Professional Corporation Fax (801) 532-7944
CERTIFIED PUBLIC ACCOUNTANTS 5 Triad Center, Suite 750
Salt Lake City, Utah 84180-1128
www.hbmcpas.com
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Conscious Intention, Inc.
We have audited the accompanying balance sheet of Conscious Intention, Inc. (a
development stage enterprise) as of December 31, 2002 and 2001 and the related
statements of operations, stockholders' equity (deficit) and cash flows for the
year ended December 31, 2002 and for the period from October 12, 2001 (date of
inception) through December 31, 2001, for the cumulative period from
October 12, 2001 through December 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conscious Intention, Inc.
as of December 31, 2002 and 2001 and the results of its operations and its cash
flows for the year ended December 31, 2002 and for the period from October 12,
2001 (date of inception) through December 31, 2001, and for the cumulative
period from October 12, 2001 through December 31, 2002 in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's lack of operating history, capital deficit,
operating loss and negative cash flows from operations raise substantial
doubt about its ability to continue as a going concern. Management's plans
regarding those matters are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
March 27, 2003
F-2
CONSCIOUS INTENTION, INC.
(A Development Stage Enterprises)
BALANCE SHEETS
December 31,
-------------------------------
2002 2001
------------- -------------
ASSETS
Current Assets
Cash $ 13 $ 2,615
Receivable from related party 1,690 --
-------------- -------------
Total Current Assets 1,703 2,615
------------- -------------
Deferred Offering Costs 23,844 23,844
------------- -------------
Total Assets $ 25,547 $ 26,459
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable $ 30,553 $ 25,441
Payable to related party -- 810
------------- -------------
Total Current Liabilities 30,553 26,251
------------- -------------
Stockholders' Equity (Deficit)
Common stock - $0.001 par value; 10,000,000 shares
authorized; 4,000,000 shares issued and outstanding 4,000 4,000
Deficit accumulated during the development stage (9,006) (3,792)
------------- -------------
Total Stockholders' Equity (Deficit) (5,006) 208
------------- -------------
Total Liabilities and Stockholders' Equity (Deficit) $ 25,547 $ 26,459
============= =============
The accompanying notes are an integral part of these financial statements.
F-3
CONSCIOUS INTENTION, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
For the Periods From From
October 12, 2001
For the Year (Date of Inception)
Ended through
December 31, December 31,
2002 2001 2002
------------------ ------------------ ------------------
Revenue $ -- $ -- $ --
General and administrative expenses 5,214 3,792 9,006
------------ - -------------- -------------
Net Loss $ (5,214) $ (3,792) $ (9,006)
============== =============== ==============
Basic Loss Per Share $ -- $ --
============== ===============
Weighted Average Number of Shares
Outstanding 4,000,000 3,905,500
============== ===============
The accompanying notes are an integral part of these financial statements.
F-4
CONSCIOUS INTENTION, INC.
(A Development Stage Enterprise)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Deficit
Accumulated Total
Additional During the Stockholders'
Common Stock Paid in Development Equity
Shares Amount Capital Stage (Deficit)
------------ ------------ ------------ ------------ -------------
Balance - October 12, 2001 - $ - $ - $ - $ -
Shares issued for cash 4,000,000 4,000 - - 4,000
Net loss - - - (3,792) (3,792)
------------ ------------ ------------ ------------ -----------
Balance - December 31, 2001 4,000,000 4,000 - (3,792) 208
Net loss - - - (5,214) (5,214)
------------ ------------ ------------ ------------ -----------
Balance - December 31, 2002 4,000,000 $ 4,000 $ - $ (9,006) $ (5,006)
============ ============ ============ ============ ===========
The accompanying notes are an integral part of these financial statements.
F-5
CONSCIOUS INTENTION, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
From
October 12, 2001
For the Year (Date of Inception)
Ended through
December 31, December 31,
2002 2001 2002
------------- ------------- -------------
Cash Flows from Operating Activities
Net loss $ (5,214) $ (3,792) $ (9,006)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Accounts payable 5,112 1,597 6,709
------------- ------------- -------------
Net Cash Used by Operating Activities (102) (2,195) (2,297)
------------- ------------- -------------
Cash Flows From Financing Activities
Increase in receivable from related party (1,690) - (1,690)
Proceeds from payable to related party - 4,700 4,700
Payments on payable to related party (810) (3,890) (4,700)
Proceeds from issuance of common stock - 4,000 4,000
------------- ------------- -------------
Net Cash Flows Provided by (Used in) Financing
Activities (2,500) 4,810 2,310
------------- ------------- -------------
Net Increase (Decrease) in Cash (2,602) 2,615 13
Cash at Beginning of period 2,615 - -
------------- ------------- -------------
Cash at End of Period $ 13 $ 2,615 $ 13
============= ============= =============
Supplemental disclosure of noncash investing and financing activities:
The Company incurred $23,844 of deferred offering costs recorded as accounts
payable during the period from October 12, 2001 (Date of Inception) through
December 31, 2001.
The accompanying notes are an integral part of these financial statements.
F-6
CONSCIOUS INTENTION, INC.
(A Development Stage Enterprises)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS
On October 12, 2001, Conscious Intention, Inc. ("the Company") was organized
under the laws of the State of Nevada. The Company is considered a development
stage enterprise and is in the process of raising capital to fund operations. As
such, the Company has since inception spent most of its efforts in developing
its business plan, constructing core materials for eventual sale to customers
and in raising capital to fund its operations. The Company has relied upon cash
flows from equity issuances and an increase in accounts payable to sustain
operations. The planned operations of the Company consist of selling a business
system of materials, tools and on-line, internet based support services for
individuals wishing to open a business as an executive coach or career
ounselor. The Company has established its year-end as December 31st. The Company
has had no revenues from any source to date.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect certain
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Fair Value of Financial Instruments -- The carrying amounts reported in the
accompanying financial statements for accounts payable approximate fair values.
The fair value estimates were based on estimated future cash flows.
F-7
Business Condition -- The Company has not yet been able to execute its business
plan. As a result, the Company has negative working capital, negative equity,
and recurring operating losses and negative cash flows from operations since
inception. This situation raises substantial doubt about its ability to continue
as a going concern. The Company plans to fund its operations through the
issuance of equity or debt securities, although success is not assured. If these
efforts are not successful, the Company will rely on loans from related parties
to fund its operations.
The financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.
Deferred Offering Costs -- The Company deferred direct and incremental costs
associated with the public offering of its common stock. The deferred costs will
be recognized as a reduction of the proceeds from the offering when the proceeds
are realized. To the extent that the deferred costs exceed the offering
proceeds, those costs will be charged to operations.
Income Taxes -- The Company recognizes an asset or liability for the deferred
tax consequences of all temporary differences between the tax bases of assets or
liabilities and their reported amounts in the financial statements that will
result in taxable or deductible amounts in future years when the reported
amounts of the asset or liabilities are recovered or settled. Deferred tax
assets or liabilities are measured using the enacted tax rates that will be in
effect when the differences are expected to reverse. Deferred tax assets are
reviewed periodically for recoverability and valuation allowances are provided
as necessary.
Basic Loss Per Share -- Basic loss per common share is computed by dividing net
loss by the weighted-average number of common shares outstanding during the
period.
NOTE 3 - RECEIVABLE FROM RELATED PARTY
During the period ended December 31, 2001, the sole officer and director of
the Company advanced $4,700 cash to the Company. At December 31, 2001 amounts
still due to this officer were $810. During the year ended December 31, 2002
the Company repaid this $810 and advanced $1,690 to Turning Point NW, LLC,
a company commonly controlled by the officer and director. The advance
bears 8% interest and is due on June 1, 2003.
NOTE 4 - STOCKHOLDERS' EQUITY
On October 12, 2001, the Company issued 3,622,000 shares of common stock to an
officer and director of the Company for cash. The proceeds from the issuance of
the stock were $3,622 or $0.001 per share. Additionally on November 1, 2001 the
Company issued 378,000 shares of common stock to unrelated purchasers for cash
proceeds of $378 or $0.001 per share.
F-8
NOTE 5 - INCOME TAXES
The Company has paid no federal income taxes since its incorporation. As of
December 31, 2002 and 2001, the Company had net operating loss carry forwards
for federal income tax reporting purposes of $9,006 and $3,792, respectively,
which, if unused, will expire beginning in 2021. The tax effect of the
operating loss carry forwards are as follows at December 31, 2002 and 2001:
2002 2001
------------- -------------
Operating loss carry forwards...................$ 3,062 $ 1,289
Valuation allowance............................. (3,062) (1,289)
------------- -------------
Total Deferred Tax Assets.......................$ -- $ --
============= =============
The following is a reconciliation of the income tax computed using the federal
statutory rate to the provision for income taxes for the year ended December 31,
2002 and for the period October 12, 2001 through December 31, 2001:
2002 2001
------------- -------------
Tax at federal statutory rate (34%)...........$ (1,773) $ (1,289)
Change in valuation allowance.............. 1,773 1,289
------------- -------------
Provision for Income Taxes....................$ -- $ --
============= =============
NOTE 5 - RELATED PARTY TRANSACTIONS
During the period ended December 31, 2001, the sole officer and director of the
Company advanced $4,700 cash to the Company. At December 31, 2001 amounts still
due to this officer were $810. During the year ended December 31, 2002
the Company repaid this $810 and advanced $1,690 to Turning Point NW, LLC, a
company commonly controlled by the officer and director. The advance bears 8%
interest, is unsecured, and is due on June 1, 2003.
41
CONSCIOUS INTENTION, INC.
Conscious Intention, Inc.
Registration statement on form SB-2
Part II
Information not required in prospectus
Indemnification of directors and officers
Article V of our bylaws provides for the indemnification of officers,
directors and third parties acting on behalf of us if such person acted in good
faith and in a manner reasonably believed to be in and not opposed to our best
interest, and, with respect to any criminal action or proceeding, the
indemnified party had no reason to believe his or her conduct was unlawful.
We are entering into indemnification agreements with our directors and
executive officers, in addition to indemnification provided for in our bylaws,
and intend to enter into indemnification agreements with any new directors and
executive officers in the future. The indemnification agreements may require us,
among other things, to indemnify our directors and officers against certain
liability that may arise by reason of their status or service as directors and
officers, other than liabilities arising from willful misconduct of a culpable
nature, to advance their expenses incurred as a result of any proceeding against
them as to which they could be indemnified, and to obtain directors and
officers' insurance, if available on reasonable terms.
Other expenses of issuance and distribution
The following table sets forth the costs and expenses, other than
commissions, payable by us in connection with the sale of common stock being
registered. All amounts are estimates.
SEC registration fee..................................... $ 200
Printing and engraving costs............................. 1,000
Legal fees and expenses.................................. 12,000
Accounting fees and expenses............................. 5,000
Blue sky fees and expenses............................... 5,000
Transfer agent and registrar fees........................ 1,000
Miscellaneous expenses................................... 800
Total.................................................... $25,000
42
Recent sales of unregistered securities
Between October 12, 2001 and December 31, 2001, the registrant sold 4,000,000
shares of common stock. There was no public offering of the shares. The duration
of the offering period was October 12, 2001 to December 31, 2001 at a price per
share of par value of $0.001 per share, for total offering proceeds to the
company of $4000. These issuances are exempt from registration under the
Securities Act in accordance with Regulation D, Rule 505. These shares were
issued to our chief executive officer and sole director and to acquaintances,
associates and consultants of our chief executive officer and sole director. A
total of 26 offers concerning the securities were made during the period of the
offering. There was no general solicitation, public announcement, advertisement
or general offering of the securities. All of the offers were made to
acquaintances and business associates of the officer and director of the company
or its consultants. These 26 offers resulted in sales of 4,000,000 shares to 26
shareholders of record. Of the 26 sales that took place, 18 sales were made to
unaccredited, non-affiliate investors. All non-accredited investors were
sophisticated investors. The remaining 8 sales were made to accredited
investors.
Each individual investor, whether accredited, unaccredited, affiliated or
unaffiliated was provided with the following information:
o the information required to be furnished in Part I of Form SB-2 under the
Securities Act;
o the information required by Item 310 of Regulation S-B;
o the opportunity to ask questions and receive answers concerning the terms and
conditions of the offering and to obtain any additional information which the
issuer possesses or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy of any information furnished in connection
with the offering; and
o written disclosure regarding the limitations and restrictions on resale of the
securities.
The company has relied on Regulation D, Rule 505 of the Securities Act of
1933 for its private placement exemption, such that the sales of the securities
were transactions by an issuer not involving any public offering. All of these
securities have been appropriately marked with a restricted legend and are
"restricted securities" as defined in Rule 144 of the rules and the regulations
of the Securities and Exchange Commission, Washington D.C. 20549. All of these
securities were issued for investment purposes only and not with a view to
redistribution, absent registration. All of the purchasers have been granted
access to the complete books, financial records, contracts, and other business
documents of Conscious Intention. Each has also had the opportunity to ask
questions of the management, employees, advisors, attorneys and accountants for
Conscious Intention. In addition, each was granted physical access to Conscious
Intention's facilities for inspection. Transactions by the registrant involving
the sales of these securities set forth above were issued under the "private
placement" exemptions under the Securities Act of 1933 as transactions by an
issuer not involving any public offering. The registrant has made its own
independent determination, based on its own investigation as to whether each
person is:
o a sophisticated investor capable of assessing the risks inherent in a private
offering;
o able to bear the economic risk of his investment; and
o aware that the securities were not registered under the Securities Act of
1933 and cannot be re-offered or re-sold until they have been so registered
or until the availability of an exemption therefrom.
The transfer agent and registrar of the registrant will be instructed to
mark "stop transfer" on its ledgers to assure that these securities will not be
transferred absent registration or until the availability of an applicable
exemption is determined.
For additional information concerning these equity investment transactions,
reference is made to the information contained under the caption "Related party
transactions" in the form of prospectus included herein.
43
Exhibits
Number description
3.1* Articles of incorporation of the registrant
3.2* Bylaws of the registrant.
4.1* Specimen common stock certificate.
5.1 Opinion of Jonathan Ram Dariyanani, Esq.
10.1* Form of common stock purchase agreement used in private placement
during 2001.
10.2* Common stock purchase agreement by and between
Conscious Intention, Inc. and Sylva Leduc.
23.1 Consent of Hansen, Barnett & Maxwell,
Certified Public Accountants, (see Page II- 48 )
23.2 Consent of Jonathan Ram Dariyanani, Esq.
(included in Exhibit 5.1).
*As filed previously with the Commission on Form SB-2, dated April 12, 2002.
Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
under the foregoing provisions, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by us of expenses incurred or paid by one or more of our directors,
officers or controlling persons in the successful defense of any action, suit or
proceeding) is asserted by one or more of our directors, officers or controlling
persons in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
We hereby undertake:
(1) to file during any period in which we offer or sell securities, a
post-effective amendment to this registration statement: (a) to include any
prospectus required by Section 10(a)(3) of the Securities Act; (b) to 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 a form of prospectus filed
with the Securities and Exchange Commission under Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of the
Registration Fee" table in the effective registration statement; and (c) to
include any additional or changed material information on the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
44
(2) That, for the purpose of determining liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities that remain unsold at the termination of the offering.
(4) For purposes of determining liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance on Rule 430A and contained in the form of
prospectus filed by the registrant under Rule 424(b)(1) or (4) or 497(h)under
the Securities Act shall be deemed to be a part of this registration statement
as of the time it was declared effective.
(5) For the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to the initial bona
fide offering thereof.
Signatures
As required by the Securities Act, the registrant has caused this
registration statement to be signed on its behalf by the undersigned, who is
duly authorized, in Seattle, State of Washington, on the 4th day of April 2003.
By: /s/ Sylva Leduc
Sylva Leduc, chief executive officer
/s/ Sylva Leduc
Sylva Leduc, principal financial and accounting officer
45
EXHIBIT INDEX
Number description
3.1* Articles of incorporation of the registrant
3.2* Bylaws of the registrant.
4.1* Specimen common stock certificate.
5.1 Opinion of Jonathan Ram Dariyanani, Esq.
10.1* Form of common stock purchase agreement used in private placement
during 2001
10.2 * Common stock purchase agreement by and between
Conscious Intention, Inc. and Sylva Leduc.
23.1 Consent of Hansen, Barnett & Maxwell,
Certified Public Accountants, (see Page II- 48 )
23.2 Consent of Jonathan Ram Dariyanani, Esq.
(included in Exhibit 5.1).
*As filed previously with the Commission on Form SB-2, dated April 12, 2002.