SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DURA TRACK ENTERPRISES, INC.
(Name of small business issuer in its charter)
Nevada 2591 80-0106888
(State or Other (Primary Standard (IRS Employer
Jurisdiction of Industrial Identification #)
Organization) Classification Code)
DURA TRACK ENTERPRISES, INC. CAPITAL CORPORATE SERVICES, INC.
3638 North Rancho Drive, Suite 6-D 202 S. Minnesota Street
Las Vegas, NV 89130 Carson City, NV 89703
(702) 839-2573 (775) 884-0490
(Address and telephone of registrant (Name, address and telephone number
executive office) of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional common stock for an offering
under Rule 462(b) of the Securities Act, please check the following box and
list the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same offering. [ ]
If this Form is a post-effective amendment filed 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. [ ]
INVESTING IN THE COMPANY'S COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING AT PAGE 9 OF THIS PROSPECTUS.
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CALCULATION OF REGISTRATION FEE
Securities
to be Amount To Be Offering Price Aggregate Registration
Registered Registered Per Share[1] Offering Price Fee[2]
- ---------- ------------ -------------- -------------- ------------
Common Stock 4,000,000 $ 0.025 $ 100,000 $ 11.76
Common Stock by
Selling Shareholders 3,200,000 $ 0.025 $ 80,000 $ 9.42
(1) The Offering price has been arbitrarily determined by Dura Track
Enterprises, Inc. ("Dura Track") and bears no relationship to assets,
earnings, or any other valuation criteria. No assurance can be given that
the shares offered hereby will have a market value or that they may be
sold at this, or at any price.
(2) The portion of the shares which are being offered by the Selling
Shareholders has been calculated based upon Rule 457(c) under the
Securities Act.
(3) Dura Track will not receive any of the proceeds from the sale of common
stock by Selling Shareholders.
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON 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 DATES AS THE COMMISSION, ACTING UNDER SAID SECTION 8(a), MAY
DETERMINE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
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PROSPECTUS
DURA TRACK ENTERPRISES, INC.
COMMON STOCK
UP TO 7,200,000 SHARES
Dura Track Enterprises, Inc. ("Dura Track," "Company," "we") is registering
up to 4,000,000 shares of its common stock, and up to 3,200,000 shares on
behalf of certain Selling Shareholders, at a price of $0.025 per share.
We will not receive any proceeds from the sale of the shares being offered by
the Selling Shareholders. However, we will receive the net sales price of any
of the shares being offered by the Company.
The Company's shares are being offered through its sole officer and director,
no underwriter or broker/dealer is involved. No underwriting discounts,
discounts, or commissions will be paid from the proceeds of these shares. The
Company's shares are being offered on a best-efforts basis, with no minimum
purchase requirement. There will be no escrow or trust account arrangements,
any proceeds will be placed directly into the Company's corporate account.
The Selling Shareholders may sell their shares through broker-dealers who may
receive compensation from the Selling Shareholders in the form of discounts
or commissions.
The Offering will be for a maximum period of 90 days from ___________ and may
be extended for an additional 90 days, if the Company so chooses to do so.
THERE HAS BEEN NO PUBLIC TRADING MARKET FOR THE COMMON STOCK. DURA TRACK
COMMON STOCK IS PRESENTLY NOT TRADED ON ANY MARKET OR SECURITIES EXCHANGE.
THE QUOTED PRICE IS THE INITIAL ASKING PRICE BY THE SELLING SHAREHOLDERS AND
COMPANY IN THEIR OFFERING OF SHARES. IN THE EVENT THAT A MARKET IS CREATED TO
TRADE THESE SHARES, THE SHARES WILL BE OFFERED AT THE FIXED PRICE OF $0.025
PER SHARE FOR THE DURATION OF THE OFFERING. AT PRESENT, THE SELLING
SHAREHOLDERS HAVE NO AGREEMENTS WITH ANY BROKER/DEALER TO SELL THESE SHARES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION, NOR ANY STATE SECURITIES
COMMISSION, HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ___________________.
INVESTING IN THE COMPANY'S COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING AT PAGE 8 OF THIS PROSPECTUS.
PLEASE READ THIS PROSPECTUS CAREFULLY.
The information in this Prospectus is not complete and may be changed. We
may not sell these securities until this Registration Statement being 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.
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TABLE OF CONTENTS
SUMMARY OF OUR PROSPECTUS
RISK FACTORS
USE OF PROCEEDS
DETERMINATION OF OFFERING PRICE
DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES
SELLING SECURITY HOLDERS
PLAN OF DISTRIBUTION
LEGAL PROCEEDINGS
DESCRIPTION OF PROPERTY
BUSINESS
COMPANY HISTORY
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
MANAGEMENT
EXECUTIVE COMPENSATION
PRINCIPAL SHAREHOLDERS
DESCRIPTION OF SECURITIES
CERTAIN TRANSACTIONS
LITIGATION
EXPERTS
FINANCIAL STATEMENTS F-1 thru F-
Part II. INFORMATION NOT REQUIRED IN THE PROSPECTUS
EXHIBITS
UNDERTAKINGS
SIGNATURES
DEALER PROSPECTUS DELIVERY OBLIGATION
"Until ______________________, all dealers that effect transactions in these
securities, whether or not participating in this Offering, may be required to
deliver a Prospectus. This is in addition to the dealer obligation to deliver
a Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions."
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SUMMARY OF OUR PROSPECTUS
This summary provides an overview of selected information contained elsewhere
in this Prospectus. It does not contain all the information you should
consider before making a decision to purchase the shares we are Offering. You
should very carefully and thoroughly read the more detailed information in
this Prospectus and review our financial statements contained herein.
Summary Information About Dura Track Enterprises, Inc.
Dura Track Enterprises, Inc. was incorporated in the State of Nevada as a
for-profit company on March 19, 2004 and established a fiscal year end of
December 31. The Company is a development-stage company organized to
manufacture and distribute drapery hardware, primarily composed of
engineering plastics. The Company intends to offer more competitive pricing
for its drapery components as compared to the traditional metal components
currently available in the market. The Company will focus on providing its
products in bulk to companies that are involved in the contract drapery
business, known as "soft window treatments" in the industry. The Company has
entered into an exclusive global License Agreement with the owner of the
product line for the next 36 months, with a 36-month extension at the
Company's option.
Under the terms of the License Agreement, the Company has the global rights
to manufacture and distribute the Dura Track product line and use any and all
trademarks. The Company has agreed to pay a minimum royalty of $50,000 per
annum for these product rights, based on a 20% royalty of gross revenues
generated by the licensed products. On February 22, 2004 the Company signed
an amendment to its License Agreement that waives the Company's obligation to
begin paying royalties until May 1, 2006. The company has no retroactive
financial obligations for royalties. Under the amended Agreement the Company
does not have to begin paying any royalties prior to May 1, 2006. After May
1, 2006 the Company must pay royalties equal to twenty percent of its gross
proceeds earned from the sale of its licensed products with a minimum annual
royalty of $50,000.
The Company may also choose to develop its own product line within the 72-
month license period in order to further reduce costs and increase profit.
Dura Track's core focus will be to manufacture and provide low-cost,
wholesale drapery hardware components to the commercial drapery industry that
specialize in providing soft window coverings for new construction and
renovations of apartment buildings and condominiums. Dura Track products will
be packaged and shipped in bulk.
Our business office is located at 3638 North Rancho Drive, Suite 6-D, Las
Vegas, NV 89130. Our telephone number is (702)243-6896. Our United States and
registered statutory office is located at 202 S. Minnesota Street, Carson
City, NV 89703, telephone number is (775) 884-0490, and the fax number is
(775)884-0493. Our fiscal year end is December 31st.
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As of December 31, 2005, the end of the most recent fiscal quarter, Dura
Track had raised $23,000 through the sale of its common stock. There is
presently $3,921 of cash on hand in the corporate bank account. The Company
currently has liabilities of $5,210, representing expenses accrued during its
start-up to date. In addition, the Company anticipates it will incur costs
associated with this Offering totaling approximately $4,427. As of the date
of this Prospectus, we have not yet generated or realized any revenues from
business operations.
At present, there is no established public market for the Company's shares.
There is no assurance that a public market for the company's shares will ever
be established. If no public market is established for the Company's shares
it may be difficult or impossible for shareholders to sell their shares in
the Company.
The following financial information summarizes the more complete historical
financial information as indicated on the audited financial statements of the
Company filed with this Prospectus.
Concurrent Offering By Selling Shareholders
Certain Selling Shareholders may endeavor to sell their shares of common
stock at the same time Dura Track is conducting this Offering. The percentage
of total outstanding common stock being offered by these Selling Shareholders
is 31.3%. The price at which the Selling Shareholders offer their shares is a
fixed price of $0.025 per share for the duration of the Offering. There is no
arrangement to address the possible effect of the concurrent primary and
secondary Offerings on the price of the stock. Dura Track will not receive
any proceeds from the sale of the common stock by the Selling Shareholders.
Summary Information About The Offering
Securities being Offered Up to 7,200,000 shares of common stock are being
by Selling Shareholders, offered, 3,200,000 common shares are being
and the Company are offered by Selling Shareholders and 4,000,000
Common Stock, with a shares of common stock are being offered by
Par value of $0.001 Dura Track
Offering Price Per Share $0.025 per share for the duration of the
by Dura Track and Selling Offering
Shareholders
Number of Shares 10,200,000 common shares are currently issued
Outstanding and outstanding. 3,200,000 of the issued and
Before the Offering outstanding shares are being offered for sale
of Common Shares under this Prospectus by certain Selling
Shareholders.
Number of Shares 14,200,000 common shares (if maximum is sold).
Outstanding After the
Offering
Minimum Number of None
Shares to be Sold
in this Offering
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Use of Proceeds Dura Track will not receive any proceeds from the
sale of the common stock by the Selling
Shareholders. If all 4,000,000 common shares
being offered by Dura Track are sold, the total
gross proceeds to Dura Track would be $100,000.
The Company intends to use the proceeds of this
Offering (i) to continue to develop its current
products and manufacture initial inventory; (ii)
for the expansion of the Company's marketing and
sales capabilities; (iii) for other general
corporate and working capital purposes. The
Company anticipates administrative expenses of
approximately $4,427 over the next twelve months
associated with this Offering, including legal,
accounting, and SEC filing ($2,077);
printing/mail ($250); and transfer agent fees
($2,100). The remaining proceeds will be
allocated as described above.
Offering Period The shares are being offered for a period not to
exceed 90 days from the date this Prospectus is
effective with the Securities and Exchange
Commission, unless extended by the Company for an
additional 90 days.
Terms of the Offering The Selling Shareholders will determine when and
how they will sell the common stock offered in
this Prospectus.
Summary of Financial Information
As of March 19, 2004
(inception) to
Balance Sheet September 30, 2005
------------- --------------------
Total Assets $ 7,856
Total Liabilities $ 3,755
Shareholder's Equity $ 4,101
March 19, 2004
(inception) through
Operating Data September 30, 2005
-------------- --------------------
Revenue $ 0
Net Loss ($ 18,899)
Net Loss Per Share ($ 0.00)
Dura Track has had no revenues to date and has incurred only losses since its
inception. The Company has had no operations and has been issued a "going
concern" opinion from their accountants, based upon the sole reliance of the
Company on the sale of its common stock to fund future operations.
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RISK FACTORS
Please consider the following risk factors before deciding to invest in our
common stock.
1. AS THE COMPANY LACKS AN OPERATING HISTORY, IT FACES A HIGH RISK OF
BUSINESS FAILURE, WHICH MAY RESULT IN THE LOSS OF YOUR INVESTMENT.
The Company was recently formed to carry out the activities described in this
Prospectus and has only a limited operating history upon which an evaluation
of its prospects can be made. The Company's prospects must be considered
keeping in mind the risks, expenses, and difficulties frequently encountered
during the development stage of a business in an ever-changing industry and
the research, development, manufacture, commercialization, distribution, and
commercialization of technology, procedures, products, and related
technologies. There can be no assurance that unanticipated technical or other
problems will not occur which would result in material delays in product
commercialization or that the efforts of the Company will result in
successful product commercialization. There can be no assurance that the
Company will be able to achieve profitable operations.
2. KEY MANAGEMENT PERSONNEL MAY LEAVE THE COMPANY, WHICH COULD ADVERSELY
AFFECT THE ABILITY OF THE COMPANY TO CONTINUE OPERATIONS.
The Company is dependent on the efforts and abilities of its senior
management. The loss of any member of that management could have a material
adverse effect on the Company's business and its prospects. The Company
believes that all commercially reasonable efforts have been made to minimize
the risks attendant with the departure by key personnel from service;
however, there can be no assurances that replacement personnel, if any, will
cause the Company to operate profitably. All decisions regarding management
of the Company's affairs will be made exclusively by its sole officer and
director. Purchasers of the offered shares may not participate in the
management of the Company and, therefore, are dependent upon the management
abilities of the Company's sole officer and director. The only assurance that
the shareholders of the Company (including purchasers of the offered shares)
have that the Company's sole officer and director will not abuse his
discretion in making decisions with respect to its affairs and other business
decisions is the fiduciary obligations and business integrity of the
Company's sole officer and director. Accordingly, no person should purchase
offered shares unless that person is willing to entrust all aspects of
management to the Company's sole officer and director, or his successors.
Potential purchasers of the offered shares must carefully evaluate the
personal experience and business performance of the Company's sole officer
and director. The Company's sole officer and director may retain independent
contractors to provide services to the Company. Those contractors have no
fiduciary duty to the shareholders of the Company and may not perform as
expected. The Company does not maintain key person life insurance on any of
its senior management.
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3. INVESTING IN THE COMPANY IS A HIGHLY SPECULATIVE INVESTMENT AND COULD
RESULT IN THE LOSS OF YOUR ENTIRE INVESTMENT.
A purchase of the offered shares is significantly speculative and involves
significant risks. The offered shares should not be purchased by any person
who cannot afford the loss of his or her entire purchase price. A purchase of
the offered shares would be "unsuitable" for a person who cannot afford to
lose his or her entire purchase price. The business objectives of the Company
must also be considered speculative, and there is no assurance the Company
will satisfy those objectives. No assurance can be given that the
shareholders of the Company will realize a substantial return on their
purchase of the offered shares, or any return whatsoever, or that the
shareholders of the Company will not lose their investments in the Company
completely. For this reason, each prospective purchaser of offered shares
should read this Prospectus and all exhibits to this Prospectus carefully and
consult with that purchaser's attorney, business advisor, and/or investment
advisor.
4. BECAUSE THE SOLE OFFICER AND DIRECTOR OF THE COMPANY HAS OTHER OUTSIDE
BUSINESS INTERESTS AND ACTIVITIES, HE MAY NOT BE IN A POSITION TO DEVOTE AN
ADEQUATE AMOUNT OF HIS TIME TO THE COMPANY'S ACTIVITIES WHICH MAY RESULT IN
BUSINESS FAILURE.
The Company's sole officer and director is employed full time elsewhere. The
Company's sole officer and director may have conflicts of interests in
allocating his time, services, and functions between his full time employment
position and the Company. The Company's sole officer and director has the
flexibility in his current employment to spend approximately 10 hours per
week working on the Company. The Company's sole officer and director has
stated that he is prepared to devote more time to the Company as it becomes
necessary.
5. IF THE COMPANY DOES NOT GENERATE ENOUGH SALES IT MIGHT LOSE THE RIGHT TO
MANUFACTURE AND DISTRIBUTE THE PRODUCT LINE WHICH WOULD MATERIALLY AFFECT THE
ABILITY OF THE BUSINESS TO CONTINUE TO OPERATE.
Under the terms of the exclusive global license agreement with the owner of
the product line, Dura Track has the rights to manufacture and distribute the
Dura Track product line and has the rights to use and control the plastic-
injection molds used in the manufacturing of the product line. The Company
has agreed to pay a royalty of 20% of the Company's gross revenues generated
by the licensed products, with an annual minimum royalty of $50,000 to retain
the product rights. The royalty is payable annually on the anniversary date
of the license agreement (dated May 1, 2004). In the event that the Company
does not generate enough sales to cover the minimum royalty, the Company
could lose its rights to manufacture and distribute the product line. The
term of the agreement is for 36 months with a 36-month renewal, under the
same terms, at the Company's option. The Company may develop its own product
line during the licensing period to increase its profit margins. This does
not conflict with any of the terms and conditions of the existing license
agreement.
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6. THERE IS NO ESTABLISHED MARKET FOR SHARES OF THE COMPANY'S COMMON STOCK,
WHICH COULD MAKE MARKETS FOR THESE SHARES EXTREMELY ILLIQUID.
At present, there is no established public market for the Company's shares.
As a result, the Offering price and other terms and conditions relative to
the Company's shares have been arbitrarily determined by the Company and do
not bear any relationship to assets, earnings, book value, or any other
objective criteria of value. Additionally, because the Company was recently
formed and has only a limited operating history and no earnings, the price of
the offered shares is not based on its past earnings, and no investment
banker, appraiser, or other independent third party has been consulted
concerning the Offering price for the shares or the fairness of the Offering
price used for the shares.
7. IN THE EVENT OF THE DISSOLUTION OF THE COMPANY IT IS UNLIKELY THAT THERE
WILL BE SUFFICIENT ASSETS REMAINING TO DISTRIBUTE TO THE SHAREHOLDERS.
In the event of dissolution of the Company, the proceeds realized from the
liquidation of its assets, if any, will be distributed to the shareholders
only after satisfaction of claims of the Company's creditors. The ability of
a purchaser of the offered shares to recover all or any portion of his or her
purchase price for the offered shares in that case will depend on the amount
of funds realized and the claims to be satisfied therefrom.
8. THE SHARES OF THE COMPANY ARE CONSIDERED "PENNY STOCKS" WHICH MAY IMPACT
ON AN INVESTOR'S ABILITY TO RE-SELL THEIR SHARES ON THE PUBLIC MARKET.
The Securities and Exchange Commission ("Commission") has adopted rules that
regulate broker-dealer practices in connection with transactions in "penny
stocks". Penny stocks generally are equity securities with a price of less
than $5.00 (other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current price and
volume information with respect to transactions in such securities is
provided by the exchange or system). The penny stock rules require a broker-
dealer, prior to a transaction in a penny stock not otherwise exempt from
those rules, deliver a standardized risk disclosure document prepared by the
Commission, which specifies information about penny stocks and the nature and
significance of risks of the penny stock market. The broker-dealer also must
provide the customer with bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements indicating the market value of each penny stock
held in the customer's account. In addition, the penny stock rules require
that, prior to a transaction in a penny stock not otherwise exempt from those
rules, the broker-dealer must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure
requirements may have the effect of reducing the trading activity in the
secondary market for a stock that becomes subject to the penny stock rules.
If any of the Company's securities becomes subject to the penny stock rules,
holders of those securities may have difficulty selling those securities.
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9. THERE IS NO ASSURANCE THAT THE COMPANY WILL RAISE ENOUGH CAPITAL THROUGH
THIS SHARE OFFERING TO MEET ITS OBLIGATIONS.
The offered shares are being offered on a "best efforts" basis and no person,
firm, or corporation has agreed to purchase any of the offered shares. No
assurance can be given that any or all of the offered shares will be sold.
This offering is being conducted on a "best efforts" basis; the Company may
fail to raise enough money to implement its business strategies. There is no
minimum amount of funding the Company must raise before its management can
spend the capital raised. Should the Company fail to raise enough capital to
implement its business strategies, it will fail and its shareholders will
loose their investment.
10. BECAUSE THE COMPANY DOES NOT HAVE AN ESCROW OR TRUST ACCOUNT FOR
INVESTORS SUBSCRIPTIONS, AND ANY FUNDS THE COMPANY RECEIVES MAY BE UTILIZED,
THERE CAN BE NO ASSURANCE THAT THE FUNDS THE COMPANY RECEIVES WILL ALLOW THE
COMPANY TO REMAIN IN BUSINESS AND INVESTORS COULD LOSE THEIR ENTIRE
INVESTMENT.
The terms of this Offering do not establish a minimum amount of funds that
the Company must receive in order to utilize the proceeds from the Offering;
therefore, no provisions have been made to deposit in escrow any of the funds
received from the purchase of the offered shares. Even if the Company is
successful in selling all of the offered shares, the funds available for
operation may not be adequate to carry out its business objectives for an
extended period of time and additional funds may be required. There is no
assurance that additional funds will be available from any source. If
additional funds are not available, the Company may not be able to continue
to operate, in which event purchasers of the offered shares may lose their
entire investment.
11. INVESTORS MAY FIND DECISIONS MADE BY MANAGEMENT CONTRARY TO THEIR
INTERESTS.
The officer of the Company has complete discretion in the allocation of the
proceeds of the Offering; therefore, purchasers of the offered shares must
entrust the ultimate allocation of those proceeds to the judgment of the
officer. While the Company anticipates that the proceeds of the Offering will
be used for working capital, infrastructure development, marketing, and
general corporate purposes, the Company may also utilize the Offering
proceeds for any purpose that it sees fit for its business purpose.
12. EXISTING SHAREHOLDERS COULD LOSE EFFECTIVE CONTROL OF THE COMPANY, AND
MAY NOT BE ABLE TO ELECT A REPRESENTATIVE TO THE BOARD OF DIRECTORS.
Upon consummation of this Offering, if all the shares are sold the post-
Offering shareholders of the Company will beneficially own a majority of the
issued and outstanding shares of the Company's common stock. As shareholders
are entitled to accumulate their votes for the election of directors, or
otherwise, when voting at shareholders meetings, the post-Offering
shareholders may effectively control the election of all members to the Board
of Directors of the Company and will be able to determine all corporate
actions. Hence, as minority shareholders, the pre-Offering shareholders may
not be able to elect any representatives to the Board of Directors.
-11-
13. THE COMPANY DOES NOT EXPECT TO PAY CASH DIVIDENDS, WHICH MAY LOWER
EXPECTED RETURNS FOR INVESTORS.
The Company does not anticipate paying dividends on its common stock in the
foreseeable future, but plans rather to retain earnings, if any, for the
operation and expansion of its business.
14. THE COMPANY MAY NOT BE SUCCESSFUL IN IMPLEMENTING ITS MARKETING STRATEGY
WHICH COULD RESULT IN THE LOSS OF AN INVESTOR'S ENTIRE INVESTMENT.
Although the Company intends to pursue a strategy of aggressively marketing
its products and services, implementation of the Company's marketing strategy
will depend largely on its customers accepting the Company's product line.
Because the Company's drapery hardware line is made entirely of plastic the
Company will face skepticism from consumers. Consumers may feel the plastic
components will not perform as well as their more traditional metal
counterparts. The inability of the Company to overcome any market skepticism
would impair its ability to implement its business strategy successfully,
which could have a material adverse effect on its results of operations and
financial condition.
15. THERE IS NO ASSURANCE THAT THE COMPANY CAN CREATE OR SUSTAIN A MARKET
FOR ITS SHARES.
There is currently no traded public market for the Company's common stock.
There are no assurances that any public market will be established or
maintained for the Company's stock. If no public market is established for
the Company's shares, it may be difficult or impossible for shareholders to
sell their shares in the Company.
16. UNCERTAINTY EXISTS AS TO WHETHER THE COMPANY WILL HAVE SUFFICIENT FUNDS
TO CARRY OUT ITS BUSINESS STRATEGY THEREBY MAKING AN INVESTMENT IN THE
COMPANY EXTREMELY SPECULATIVE.
The Company will likely be required to raise substantial funds in addition to
the proceeds from this Offering. The Company's forecast of the period of time
through which its financial resources will be adequate to support its
operations is a forward-looking statement that involves risks and
uncertainties, and actual results could vary as a result of a number of
factors, including those described in these Risk Factors and elsewhere in
this Prospectus.
The Company may require additional cash to implement its business strategies,
including cash for (i) payment of increased operating expenses and (ii)
further implementation of those business strategies. Such additional capital
may be raised through public or private financings, as well as borrowings
and/or other resources. To the extent that additional capital is raised
through the sale of equity or equity-related securities, the issuance of such
securities could result in a dilution of the Company's stockholders' equity
position. If adequate funds are not available, the Company may be required to
curtail operations significantly or to obtain funds through entering into
arrangements with collaborative partners or others that may require it to
relinquish rights to certain of its technologies or product candidates that
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the Company would not otherwise relinquish. No assurance can be given,
however, that the Company will have access to the capital markets in the
future, or that financing will be available on acceptable terms to satisfy
the cash requirements of the Company to implement its business strategies.
The inability of the Company to access the capital markets or obtain
acceptable financing could have a material adverse effect on its results of
operations and financial conditions.
Risks Related to the Company's Market and Strategy
17. BECAUSE OF THE COMPANY'S DEPENDENCE ON RAW PLASTIC TO MANUFACTURE ITS
PRODUCT, A DISRUPTION IN PLASTIC SUPPLY, AN INCREASE IN THE MARKET PRICE, OR
A SHORTAGE OF CRUDE OIL WOULD AFFECT THE COMPANY'S COSTS OF DOING BUSINESS
AND COULD CAUSE THE BUSINESS TO FAIL.
The Company's success will be dependent in large part on its continued supply
of raw materials, which are comprised mainly of engineering plastics from
major manufacturers such as BASF Corporation and Dow Chemical Company. The
Company is also reliant upon stable raw plastic pricing. Plastics are a
petroleum-based product and market availability of crude oil and market price
fluctuation could have a significant negative impact on the cost of
manufacturing the Company's drapery hardware components.
18. BECAUSE THE COMPANY'S ENTIRE PRODUCT LINE IS MADE USING INJECTION MOLDS,
THE BUSINESS WOULD LIKELY FAIL IF THE MOLDS BECOME LOST, DAMAGED OR
DESTROYED.
The Company's product line is manufactured entirely of engineering plastics,
made through an injection molding process. The Company's injection molds
could be damaged or even destroyed during the manufacturing process. The
Company anticipates making significant efforts in the maintenance and safe
guard of its molds, but there can be no assurances that the Company will be
successful in maintaining the operational status of its molds, the temporary
or permanent loss of which, resulting from physical damage or operating
malfunction, could have a material adverse effect on its business.
19. BECAUSE THE COMPANY'S PRODUCT IS INTENDED FOR USE BY THE CONSTRUCTION
INDUSTRY, A DOWNTURN IN THE HOUSING MARKET WOULD REDUCE THE DEMAND FOR WINDOW
COVERINGS AND COULD MAKE THE BUSINESS UNPROFITABLE.
The majority of the Company's products and services will be provided through
dealers and distributors who provide wholesale products to companies involved
in supplying soft window coverings to the construction industry. The market
for new apartment buildings and condominium construction is heavily tied to
the state of the general economy. Increased interest rates and any other
factors resulting in a drop in the new housing market could have an adverse
effect on the market's demand for the Company's products.
-13-
20. IF OUR PRODUCTS DO NOT MEET CUSTOMER QUALITY STANDARDS, WE COULD FAIL TO
OBTAIN A SUSTAINABLE SHARE OF THE MARKET AND NOT BE ABLE TO CONTINUE IN
BUSINESS.
There can be no assurance that the Company's line of drapery hardware will
perform as expected in commercial applications. Should certain components
fail in their application, there can be no assurance that the Company will
have the knowledge or financial resources to correct the defective product.
Should the Company's products fail in their commercial application and the
Company is unable to rectify the problem, the Company will fail, and the
Company's shareholders will loose their entire investment.
21. THE COMPANY WOULD BE HARMED, TO THE POINT OF BEING UNABLE TO CONTINUE
DOING BUSINESS, IF LITIGATION OVER COPYRIGHT INFRINGEMENT OR PRODUCT
LIABILITY WERE INITIATED ON ITS OWN ACCOUNT OR IN RESPONSE TO THE CLAIMS OF
OTHERS.
There has been substantial litigation in the construction industry regarding
legislation on new housing warranties, builders' liabilities, and product
defects. There can be no assurance that third parties will not, in the
future, claim infringement by the Company with respect to current or future
products, trademarks, or other proprietary rights. There can also be no
assurance that the Company will not be sued for liability due to product
failure in a commercial application. It is possible that the failure of
certain support brackets that hold drapery tracks and draperies to a wall may
fail thus causing the drapery hardware to fall causing bodily harm. Should
the Company face a claim for liability there can be no assurance that the
Company will have the financial resources to defend such an action or that
any such defense would be successful.
22. BECAUSE THE COMPANY IS NEW IN THE MARKET, THERE IS NO ASSURANCE THAT THE
DURA TRACK PRODUCT LINE WILL BE ACCEPTED OR THAT IT CAN ESTABLISH ANY MARKET
PRESENCE AT ALL. IF THE COMPANY CANNOT CREATE A MARKET FOR ITS PRODUCTS IN
AN EXTREMELY COMPETITIVE INDUSTRY IT WILL FAIL.
The market for window coverings in new construction and renovation market is
rapidly changing and significantly competitive. The Company expects
competition for window covering products to continue to increase, and, if it
cannot compete effectively, its business could be harmed. Moreover, the
Company expects the number of smaller companies competing for the commercial
window covering business to increase due to the low cost of entry in
providing hard window coverings, such as venetian blinds or mini blinds.
Competition will probably increase significantly as new companies enter the
market and current competitors expand their services. Some of the Company's
competitors may enjoy substantial competitive advantages, including (i)
larger number of distributors; (ii) long term, established business
relationships; (iii) greater brand name recognition; (iv) more fully-
developed marketing plans (v) larger production and service staff; and (vi)
substantially greater financial, marketing, technical, and other resources.
If the Company does not compete effectively, or if the Company experiences
any pricing pressures, reduced margins or loss of market share resulting from
-14-
increased competition, its business could be adversely affected. Competition
may include companies that are larger and better capitalized, have superior
expertise, or have more established name recognition, than the Company. There
can be no assurance that competitors will not develop Internet-related
products and services that are superior to, or achieve greater market
acceptance than, the Company's.
Although the Company believes that the diverse segments of the window
covering market will and do provide opportunities for more than one supplier
of window covering products and services similar to those of the Company, it
is possible that a single supplier may dominate one or more market segments.
If competition increases from these and other sources, the Company might have
to respond to competitive pressures by implementing pricing, marketing, and
other programs, or seeking additional strategic alliances or acquisitions,
that may be less favorable than would otherwise be established or obtained.
Any such response to competition could materially affect the Company's
business, results of operations, and financial conditions. The Company also
has significant competition from other competitors in international markets,
including competition from Asian-based competitors, in addition to companies
that are already well established in foreign markets. Many of the existing
competitors, in addition to a number of potential new competitors, have or
may have significantly greater financial, technical, and marketing resources
that the Company.
23. THE COMPANY MAY REQUIRE ADDITIONAL FUNDING TO CARRY OUT THE TECHNICAL
RESEARCH AND DEVELOPMENT OF ITS PRODUCT LINE IN ORDER TO BECOME COMPETITIVE.
THERE IS NO ASSURANCE THAT THIS FUNDING WILL BE SECURED. IF FUNDING IS NOT
PROVIDED, THE COMPANY MAY HAVE TO DISCONTINUE ITS OPERATIONS.
The market for the products and manufacturing technology deployed by the
Company is characterized by rapidly changing technology in the field of
engineering plastics that could result in product obsolescence or short
product life cycles. Each of the Company's products is dependent on specific
engineering plastics with certain characteristics that make them viable in
their shape and use. There can be no assurance that the raw materials the
Company uses to manufacture its products will always be available from its
current suppliers or that a similar type of plastic will be available from
another manufacturer.
The Company may be required to adapt to technological changes in the
injection molding industry and to develop products and technology to satisfy
evolving industry or customer requirements, any of which could require the
expenditure of significant funds and resources. The Company does not have a
source or commitment for any such funds and resources. Development efforts
relating to the technological aspects of the various products to be developed
by the Company are not substantially completed. Accordingly, the Company may
have to continue to refine and improve those products. Continued refinement
and improvement efforts remain subject to the risks inherent in new product
development, including unanticipated technical or other problems that could
result in material delays in product commercialization or significantly
increase costs. In addition, there can be no assurance that those products
and technologies will prove to be sufficiently reliable or durable in wide
-15-
spread commercial application. If the Company has to embark on the
development of new products, such product development may delay its marketing
plans and cause it to incur additional costs. Additional cost would have a
detrimental effect on the Company's earning and financial position.
24. THE COMPANY'S BUSINESS MAY BE NEGATIVELY AFFECTED IF THE COMPANY BECOMES
SUBJECT TO BURDENSOME GOVERNMENT REGULATIONS.
It is possible that certain product standards and safety standards could be
implemented that would require the Company to have its products certified for
use in new construction. For example, governmental safety standards requiring
that soft window coverings be treated with fire retardant could be
implemented. There is no assurance that the Company will have the resources
to meet any such requirements, or that the Company's products will pass any
such testing or certification. Should the Company's products be subjected to
new regulations, it is possible that the Company would be unable to sell its
products for new construction. Should the Company not be able to meet newly
implemented safety standards, such as those regarding fire retardant, or
other possible legislation, the Company would fail.
The Company is not currently subject to direct regulation by any government
agency in the United States, other than regulations applicable to businesses
in general.
25. A SLOWDOWN IN THE ECONOMY COULD EFFECT NEW CONSTRUCTION.
Higher interest rates and other factors may cause a slow down in the North
American construction industry. The Company's main market focus is new
construction of apartments and condominiums. A slow down in new construction
could severely harm the potential demand for the Company's products. If a
recession or other unfavorable economic events strike North America, the
Company's business would be severely harmed.
26. COMPENSATION MAY BE PAID TO OFFICERS, DIRECTORS AND EMPLOYEES REGARDLESS
OF THE COMPANY'S PROFITABILITY.
The officers, directors, and employees of the Company may be entitled to
receive compensation, payments, and reimbursements regardless of whether the
Company operates at a profit or a loss. Any compensation received by
officers, directors, and management personnel will be determined from time to
time by the board of directors. Officers, directors, and management personnel
are expected to be reimbursed for any direct out-of-pocket expenses they have
incurred on behalf of the Company.
The Company is obligated by law to pay all employees, as well as the various
insurance and governmental deductions. The requirement to pay employees may
put a strain on the Company's cash flow and, as a result, the Company may not
be able to finance the ordering or marketing of its products. If payroll
priorities expend our cash on hand, the Company will not be able to continue
operations.
-16-
27. THERE IS A LIMITATION ON THE LIABILITY OF THE SOLE OFFICER AND DIRECTOR
OF THE COMPANY. INVESTORS IN THIS OFFERING MAY NOT FEEL COMFORTABLE INVESTING
IN A COMPANY WHOSE SOLE OFFICER AND DIRECTOR HAS LIMITED OR NO LIABILITY TO
ITS SHAREHOLDERS FOR DAMAGES.
The Articles of Incorporation of the Company include a provision eliminating
or limiting the personal liability of the Company's sole officer and
director, and other shareholders, for damages for breach of fiduciary duty as
an officer or director. Accordingly, our sole officer and director may have
no liability to the shareholders for any mistakes or errors of judgment or
for any act of omission, unless such act or omission involves intentional
misconduct, fraud, or a knowing violation of law or results in unlawful
distributions to the shareholders.
28. THE COMPANY MAY NOT BE ABLE TO CONTINUE OPERATING IF IT IS UNABLE TO
MEET PRODUCT DELIVERY REQUIREMENTS.
The Company once it begins its manufacturing and marketing efforts expects to
experience growth and expects such growth to continue for the foreseeable
future. The Company's growth may place a significant strain on its
management, financial, operating, and technical resources. The Company cannot
estimate when a customer will order products or how many products that
customer may order. The commercial construction industry is a time regulated
environment; contractors are obligated under the threat of severe financial
penalties to finish a new housing project on time. In many circumstances
apartments and condominiums are pre sold with a promised occupancy date.
Should the Company have a contract to supply the required drapery hardware by
a certain date there is no guarantee that the Company will be able to fulfill
the order requirement. The Company could face penalties, law suites and loss
of future business if it fails to deliver its products on time. Severe
failures to deliver could cause the Company to go out of business and the
investors would loose their entire investment.
29. THERE MAY BE ADDITIONAL COSTS THAT WERE NOT ANTICIPATED AND THERE IS NO
CERTAINTY THAT THE COMPANY WILL BE ABLE TO RAISE THE ADDITIONAL FINANCING
NECESSARY TO COVER THESE COSTS.
Management has used reasonable efforts to assess and predict costs and
expenses. However, there can be no assurance that implementing the Company's
business plan may not require more employees, capital equipment, supplies, or
other expenditure items than management has predicted. Similarly, the cost of
compensating additional management, employees, and consultants, or other
operating costs may be more than management's estimates, which could result
in sustained losses. The Company's products are manufactured out of plastic
that is a product of oil. The Company could face and increase in the price of
its raw materials that would effectively make the Company's products too
costly to manufacture and sell. A significant rise in crude oil costs that
would effect the Company's raw material costs would cause the Company to
fail.
-17-
30. THE COMPANY'S INABILITY TO COLLECT ITS ACCOUNTS RECEIVABLE COULD HAVE A
NEGATIVE IMPACT UPON ITS CASH FLOWS
The Company expects that most of its customers will require standard credit
terms of net 30 days. The Company will use reasonable efforts to assess the
credit risks of its customers, which includes engaging the professional
services of companies such as Dunn & Bradstreet. The Company may encounter
customers that default on payment for product orders and such default could
have an adverse effect on the Company's cash flow and net profits. The
commercial construction industry is a volatile market; large housing projects
often go over budget, with the last suppliers being the ones whose invoices
are not paid. In a housing project, the last items to be installed are the
window coverings. As the Company's products will be ordered and paid for
last, we have a higher risk of payment default than other suppliers to a
housing construction project.
31. THE COMPANY CANNOT OFFER ANY ASSURANCES THAT IT WILL RECEIVE REVENUES OR
CAN ACHIEVE OPERATING PROFITS. IF THE COMPANY CANNOT MAKE A PROFIT,
SHAREHOLDERS MAY LOSE THEIR ENTIRE INVESTMENT.
There can be no assurance that the Company will be able to develop consistent
revenue or that its operations will become profitable. If the Company does
not generate revenues it may have to seek further financing in order to stay
in business. There is no assurance that the Company will be successful in
raising additional capital and the Company would fail.
32. THERE IS A RISK THE COMPANY COULD LOSE ITS ABILITY TO MANUFACTURE ITS
PRODUCT LINE.
The Company has to meet certain minimal royalty payments annually to keep its
manufacturing and resale rights to the Dura-Track drapery hardware line.
There is no assurance that the Company will be able to meet its royalty
payments and the Company could loose its rights to its product line.
33. THE COMPANY IS DEPENDANT ON THIRD-PARTY PROVIDERS FOR CERTAIN PRODUCTS
AND SERVICES AND MAY NOT BE ABLE TO CONTINUE OPERATIONS IF THERE IS A
DISRUPTION IN THE SUPPLY OF PRODUCTS AND SERVICES.
The Company may be dependent upon various third parties for significant
services and products, which services and products may be provided pursuant
to agreements with such providers. Inasmuch as the capacity for certain
services and products by certain third parties may be limited, the inability
of those third parties, for economic or other reasons, to provide services or
products could have a material adverse effect. The Company will have to
purchase raw plastic material from companies such as Dow Chemicals and BASF,
should these companies be unable to supply raw materials in a timely manner
the Company's ability to deliver product could be adversely affected. The
Company is also dependant on its preferred manufacturer Leone Industries that
owns the injection molding equipment required to make the Company's products
utilizing the injection molds the Company has licensed. There can be no
assurance that Leone Industries will be able to manufacture the Company's
products in a timely and efficient manner. Should any of the suppliers of raw
materials or the Company's manufacturer fail to supply the Company with their
products or services the Company would experience significant hardship and
would fail.
-18-
Risks Related to this Offering
34. THE COMPANY CANNOT PROVIDE ANY GUIDANCE AS TO THE FEDERAL TAX
IMPLICATIONS OR CONSEQUENCES OF THE PURCHASE OR SALE OF THESE SHARES.
The Company has obtained no ruling from the Internal Revenue Service and no
opinion of counsel with respect to the federal income tax consequences of
this Offering. Consequently, purchasers of the offered shares must evaluate
for themselves the income tax implications that result from their purchase
and possible subsequent sale of the offered shares.
35. THE COMPANY'S BUSINESS STRATEGY ANTICIPATES INTERNATIONAL SALES. THERE
IS SIGNIFICANT RISK ASSOCIATED WITH DOING BUSINESS IN INTERNATIONAL MARKETS
An aspect of the Company's strategy is to promote and commercially exploit
its products and services in international markets. There can be no assurance
that the Company will be able to market and operate its products and services
in foreign markets successfully. In addition to the uncertainty as to the
Company's ability to generate revenues from foreign operations and create an
international presence, there are certain risks inherent in doing business
internationally, such as unexpected changes in regulatory requirements,
export restrictions, trade barriers, difficulties in staffing and managing
foreign operations, longer payment cycles, problems in collecting accounts
receivable, political instability, fluctuations in currency exchange rates,
seasonal reductions in business activity in certain parts of the world, and
potentially adverse tax consequences, which could adversely impact the
success of the Company's international operations.
The Company may sell its products and services in currencies other than the
United States dollar, which would make the management of currency
fluctuations difficult and expose the Company to risks in this regard. The
Company's results of operations may be subject to fluctuations in the value
of various currencies against the United States dollar. Although management
will monitor the Company's exposure to currency fluctuations, there can be no
assurance that exchange rate fluctuations will not have a material adverse
effect on the Company's results of operations, or financial condition.
The products and services of the Company may be subject to numerous foreign
government standards and regulations that are continually being amended.
Although the Company will endeavor to satisfy foreign technical and
regulatory standards, there can be no assurance that the products of the
Company will be able to comply with foreign government standards and
regulations, or changes thereto, or that it will be cost effective for the
Company to redesign its products or technologies to comply with such
standards or regulations. The inability of the Company to design or redesign
products to comply with foreign standards could have a material adverse
effect on the Company's business, financial condition and results of
operations.
-19-
USE OF PROCEEDS
The Company intends to use the proceeds of this Offering (i) to continue
enhance its current products and technologies, specifically related to the
Company's line of drapery hardware; (ii) for the expansion of the Company's
marketing and sales capabilities; (iii) for other general corporate and
working capital purposes. The Company can give no assurance that its research
and development will provide technologies or products that will be
commercially feasible or acceptable. Although the Company presently intends
to use the proceeds of this Offering as described in this section, the
management of the Company has absolute discretion to adjust the application
and allocation of the net proceeds of this Offering in order to accommodate
various circumstances and opportunities. As a result of the foregoing, the
success of the Company may be affected by the discretion and judgment of the
management of the Company with respect to the application and allocation of
the net proceeds of this Offering. In the event that the Company's plans
change, its assumptions change or prove to be inaccurate, or the proceeds of
the Offering prove to be insufficient, the Company may find it necessary or
advisable to reallocate proceeds within the above-described categories or to
use proceeds for other purposes, or it may be required to seek additional
financing or curtail its operations.
The Company anticipates administrative expenses of approximately $4,427 over
the next twelve months associated with this Offering, including legal,
accounting, and SEC filing ($2,077); printing/mail ($250); and transfer agent
fees ($2,100). The remaining proceeds will be allocated as described in the
preceding paragraph.
The net proceeds of this Offering that are not expended immediately may be
deposited, at the Company's discretion, in interest or non-interest bearing
accounts, or invested in government obligations, certificates of deposit,
commercial paper, money market accounts or similar investments, which may not
be insured.
This Offering is being made on a self-underwritten basis - no minimum of
shares must be sold in order for the Offering to proceed. The Offering price
per share is $0.025. The following table below sets forth the uses of
proceeds assuming the sale of 25%, 50%, 75% and 100% of the securities
offered for sale in this Offering by the Company.
If 25% of If 50% of If 75% of If 100% of
Shares Sold Shares Sold Shares Sold Shares Sold
----------- ----------- ----------- -----------
GROSS PROCEEDS FROM
THIS OFFERING $25,000 $50,000 $75,000 $100,000
======= ======= ======= ========
Less: OFFERING EXPENSES
Legal and Accounting 2,062 2,062 2,062 2,062
SEC Filing 15 15 15 15
Printing 250 250 250 250
Transfer Agent 2,100 2,100 2,100 2,100
------- ------- ------- --------
TOTAL 4,427 4,427 4,427 4,427
-20-
Less: MANUFACTURING EXPENSES
Initial Tooling Charge/Setup 600 600 600 600
Initial Production Run 3,000 7,000 11,000 15,000
Product Packaging 1,000 2,000 4,000 5,000
------- ------- ------- --------
TOTAL 4,600 9,600 15,600 20,600
Less: SALES & MARKETING
Web Site Development 700 2,000 3,000 4,000
Computer Hardware 500 2,000 2,000 2,500
Direct Mail Campaign 300 1,000 2,000 3,000
------- ------- ------- --------
TOTAL 1,500 5,000 7,000 9,500
Less: ADMINISTRATION EXPENSES
Office, Stationery,
Telephone, Internet 500 2,000 3,000 4,000
Legal and Accounting 1,000 2,500 5,000 6,000
Secretary 0 1,000 2,000 5,000
------- ------- ------- --------
TOTAL 1,500 5,500 10,000 15,000
------- ------- ------- --------
TOTAL EXPENSES 12,027 24,527 37,027 49,527
------- ------- ------- --------
NET WORKING CAPITAL $12,973 $25,473 $37,973 $50,473
======= ======= ======= =======
Note: The above figures represent estimated costs.
DETERMINATION OF OFFERING PRICE
The price of the shares we are offering was arbitrarily determined in order
for us to raise up to a total of $100,000 in this Offering. The Offering
price bears no relationship whatsoever to our assets, earnings, book value or
other criteria of value. Among the factors considered were:
- our lack of operating history,
- the proceeds to be raised by the Offering,
- the amount of capital to be contributed by purchasers in this
Offering in proportion to the amount of stock to be retained by
our existing stockholders, and
- our relative cash requirements.
DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES
Dilution represents the difference between the Offering price and the net
tangible book value per share immediately after completion of this Offering.
Net tangible book value is the amount that results from subtracting total
liabilities and intangible assets from total assets. Dilution arises mainly
as a result of our arbitrary determination of the Offering price of the
shares being offered. Dilution of the value of the shares you purchase is
also a result of the lower book value of the shares held by our existing
stockholders.
-21-
Existing Stockholders if All of the Shares are Sold
Price per share $0.025
Net tangible book value per share before the Offering $0.005
Potential gain to existing shareholders $100,000
Net tangible book value per share after the Offering $0.005
Increase to present stockholders in net tangible book
value per share after the Offering $0.00
Capital contributions $23,000
Number of shares outstanding before the Offering 10,200,000
Number of shares after the Offering held by existing
stockholders 7,000,000
Percentage of ownership after the Offering 49.2 %
Purchasers of Shares in this Offering if All the Shares are Sold
Price per share $0.025
Dilution per share $0.018
Capital contributions $100,000
Percentage of Capital Contributions 81 %
Number of shares after Offering held by public investors 7,200,000
Percentage of ownership after the Offering 51.8 %
Purchasers of Shares in this Offering if 75% of Shares Sold
Price per share $0.025
Dilution per share $0.019
Capital contributions $75,000
Percentage of Capital Contributions 76.5 %
Number of shares after Offering held by public investors 6,200,000
Percentage of ownership after the Offering 46.9 %
Purchasers of Shares in this Offering if 50% of Shares Sold
Price per share $0.025
Dilution per share $0.021
Capital contributions $50,000
Percentage of Capital Contributions 68.4 %
Number of shares after Offering held by public investors 5,200,000
Percentage of ownership after the Offering 42.6 %
Purchasers of Shares in this Offering if 25% of Shares Sold
Price per share $0.025
Dilution per share $0.022
Capital contributions $25,000
Percentage of Capital Contributions 52 %
Number of shares after Offering held by public investors 4,200,000
Percentage of ownership after the Offering 37.5 %
SELLING SECURITY HOLDERS
The following table sets forth information, as of the date of this Offering,
with respect to the beneficial ownership of our common stock both before and
after the Offering. The table includes all those who beneficially own any of
our outstanding common stock AND are registering their shares in the
concurrent Offering.
-22-
NOTE: Our sole officer and director, Darrel Crimeni, as of the date of this
Prospectus, owns 7,000,000 common shares, which are subject to Rule 144
restrictions.
There are currently nine shareholders of our common stock. The Company is not
aware of any selling shareholder that has held any position with the Company
or has any other material relationship with the Company in the last three
years.
The percentages determined in these calculations are based upon the
10,200,000 of our common shares issued and outstanding as of the date of this
Prospectus. The following table shows the number of shares and percentage
before and after this Offering:
Total Total
Name of Beneficial Ownership % Before Shares Shares % Owned
Owners of Before Offering Offered After After
Common Stock Offering (1) for Sale Offering Offering
- ------------------ --------- --------- -------- -------- --------
Roy Silver 380,000 3.7% 380,000 0 0%
Robert Weston 420,000 4.1% 420,000 0 0%
Sharon Proudfoot 380,000 3.7% 380,000 0 0%
Tiberio Faedo 420,000 4.1% 420,000 0 0%
Richard A. Haney 400,000 3.9% 400,000 0 0%
Roland Phillips 400,000 3.9% 400,000 0 0%
Joseph J. DeChellis 400,000 3.9% 400,000 0 0%
Naomi Glass 400,000 3.9% 400,000 0 0%
(1) Based on 10,200,000 common shares outstanding prior to the primary
Offering
Except as pursuant to applicable community property laws,
persons named in this table have sole voting and
investment power with respect to all shares of common stock.
PLAN OF DISTRIBUTION
We are Offering 4,000,000 shares on a self-underwritten basis. The Offering
price is $0.025 per share for the duration of the Offering.
In addition, certain Selling Shareholders are concurrently registering shares
of common stock fro possible resale at the same time we are conducting this
Offering. The percentage of the total outstanding common stock being offered
by the Selling Shareholders is approximately 31.3% based upon the 10,200,000
common shares that are issued and outstanding as of the date of this
Prospectus. There is no arrangement to address the possible effect of the
concurrent primary and secondary Offerings on the price of the stock.
-23-
The Company will sell its shares only through Darrel Crimeni, our President
and sole officer and director. Mr. Crimeni will receive no commission from
the sale of any shares. He will not register as a broker/dealer under Section
15 of the Securities Exchange Act of 1934 in reliance upon Rule 3a4-1. Rule
3a4-1 sets forth those conditions under which a person associated with an
issuer may participate in the Offering of the issuer's securities and not be
deemed to be a broker/dealer. The conditions are that:
1. The person is not subject to a statutory disqualification, as that term
is defined in Section 3(a)(39) of the Act, at the time of his participation;
2. The person is not compensated in connection with his participation by
the payment of commissions or other remuneration based either directly or
indirectly on transactions in securities;
3. The person is not at the time of their participation, an associated
person of a broker/-dealer; and,
4. The person meets the conditions of Paragraph (a)(4)(ii) of Rule 3a4-1 of
the Exchange Act, in that he (A) primarily performs, or is intended primarily
to perform at the end of the Offering, substantial duties for or on behalf of
the Issuer otherwise than in connection with transactions in securities; and
(B) is not a broker or dealer, or an associated person of a broker or dealer,
within the preceding twelve (12) months; and (C) does not participate in
selling and offering of securities for any Issuer more than once every twelve
(12) months other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
Mr. Crimeni is not statutorily disqualified, is not being compensated, and is
not associated with a broker/dealer. He will continue to be our President and
sole officer and director at the end of the Offering. Mr. Crimeni is not
currently a broker/dealer, or associated with a broker/dealer. He has not
been a broker/dealer, or associated with a broker/dealer, during the last
twelve months, and will not be a broker/dealer, or associated with a
broker/dealer, in the next twelve months. Further, Mr. Crimeni has not
offered or sold securities for another corporation in the last twelve months,
and will not do so during the next twelve months. Mr. Crimeni is not selling
any of his shares in this Offering and has not sold any during the last
twelve months.
Only after our Prospectus is effective by the SEC, do we intend to advertise
and hold investment meetings in the various states or provinces where the
Offering may be registered. Such meetings may be advertised through
tombstones. We will not use the Internet to advertise our Offering. We may
also distribute the Prospectus to potential investors at the meetings, and to
our friends and relatives who are interested in us and are considering a
possible investment in the Offering.
We confirm that we have not engaged, and will not be engaging, a "finder" in
connection with this Offering.
-24-
Offering Period and Expiration Date
This Offering will start on the effective date of this Prospectus and
continue for a period of 90 days. We may extend the Offering period for an
additional 90 days, unless the Offering is completed or otherwise terminated
by us.
Procedures for Subscribing
No payment for the shares will be accepted until after Dura Track's Form SB-2
Registration Statement for this Offering has been approved and deemed
effective by the Securities and Exchange Commission.
If you decide to subscribe for any shares in this Offering, you must:
1. Execute and deliver a subscription agreement.
2. Deliver a check or certified funds to us for acceptance or rejection, in
our sole discretion.
All checks for subscriptions must be made payable to "Dura Track Enterprises,
Inc."
Right to Reject Subscriptions
We have the right to accept or reject subscriptions in whole or in part, for
any reason or for no reason. All moneys from rejected subscriptions will be
returned immediately by us to the subscriber, without interest or deductions.
Subscriptions for securities will be accepted or rejected within 48 hours
after we receive them.
LEGAL PROCEEDINGS
We are not a party to any material legal proceedings and to our knowledge; no
such proceedings are threatened or contemplated by any party.
DESCRIPTION OF PROPERTY
The Company does not own any real estate or other properties. The Company's
office is located at 3638 North Rancho Drive, Suite 6-D, Las Vegas, NV 89130
and our telephone number is (702) 839-2573 and the fax is (702) 243-6896. The
Company currently rents shared offices in Las Vegas.
BUSINESS
Company History
Dura Track Enterprises, Inc. ("Dura Track") is a development stage Company,
organized on March 19, 2004, in the State of Nevada, to enter into
manufacturing and supply of a line of drapery hardware components, entirely
composed of engineering plastics, used in the commercial window covering
industry.
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On May 1, 2004, the Company signed a 36-month exclusive license to
manufacture and distribute certain drapery hardware components under the Dura
Track name. The license carries a 36-month renewal at the option of Dura
Track. Under the terms of the license, the Company must pay 20% of its gross
revenues generated by the licensed products, with a minimum annual royalty of
$50,000, to retain its exclusivity to the product rights. To date, the
Company has no operating history and has not yet implemented any of its
manufacturing or marketing initiatives. On February 22, 2005, the Company
signed an amendment to the license agreement whereby the minimum annual
royalty payments have been waived until May 1, 2006.
The Company signed a "Consulting Services Agreement" with Altres Group, LLC,
effective April 23, 2004, whereby Altres Group will provide us with
consulting services. Specifically, they will assist the Company in the
creation of the corporate entity, becoming a United States reporting company,
and other related matters regarding the preparation and filing of materials
related to "public company" filings. The Company has agreed to pay Altres
Group a total of $45,000 for its services, of which $5,000 has been paid,
with the remaining $40,000 balance to be payable immediately upon the filing
of a Form 15(c)211 package with a securities broker/dealer and acceptance of
same by the NASD or similar approval authority.
The Company would propose filing a 15c211 within 6 months of this
registration statement becoming effective. A 15c211 filing is an application
filed with a recognized stock exchange on behalf of the Company by a
broker/dealer. The purpose of a 15c211 filing is to seek approval to have the
Company's shares trade on a recognized exchange. There can be no assurance
that the Company can get any broker/dealers interested in listing the
Company's stock.
Dura Track has provided the following information concerning the Company and
its business for inclusion in this Offering. The information contained herein
does not purport to be all-inclusive or to contain all the information that a
prospective investor may desire. Any statements that express or involve
discussions with respect to predictions, business strategy, budgets,
developments, opportunities or projects, the expected timing of transactions
or other expectations, beliefs, plans, objectives, assumptions or future
events or performance are not statements of historical fact and may be
"forward-looking statements". Forward-looking statements are based on
expectations, estimates and projections at the time the statements are made
that involve a number of known and unknown risks and uncertainties which
could cause actual results or events to differ materially from those
anticipated by Dura Track Enterprises, Inc.
Company Description
Dura Track intends to offer plastic drapery hardware components, which
generally are stronger and less expensive than their metal counterparts,
through a network of distributors and dealers. The Company's initial market
focus will be in North America with possible expansion internationally in the
mid term.
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The Company has the exclusive use of seven plastic-injection molds that will
be used to manufacture the six drapery hardware components that the Company
will offer for sale. The molds are located at Leone Industries Inc. in
Burnaby, British Columbia, Canada. Leone Industries has been in the plastic-
injection mold and product assembly business for over 25 years and has a
reputation for quality manufacturing. Some of the Dura Track product line
components will be fully complete after the plastic-injection mold process
and require no assembly. Two of the components (end pulleys and floor
pulleys) require assembly. The end pulleys have two plastic wheels that must
be inserted and the floor pulleys have a wheel and a spring that must be
inserted. Leone Industries has verbally agreed to provide all manufacturing,
assembly, and packaging of the Dura Track product line and warehouse the
product for direct shipping to Dura Track's customers.
Market Opportunity
The commercial window covering industry is influenced by two major factors:
current fashion trends and cost.
From the early 1900's to the early 1980's, the bulk of all commercial window
coverings were soft, comprised mainly of draperies and drapery tracks.
However, in the mid 1980's a shift began towards hard window coverings, such
as venetian blinds and mini blinds. By the end of the 1980's, the majority of
commercial window coverings became hard with mini blinds covering the
majority of new apartment and condominium windows. Mini blinds remained
popular from both a fashion and price point until the late 1990's, when their
installation on a new construction site became regarded as substandard. Over
the past few years, new apartment and condominium construction has been
installing more soft window covering (draperies and track). As more housing
becomes available in urban areas, the competition for buyers and renters has
increased and developers are now seeking ways of differentiating their
products from their competitors and more soft window treatments are currently
being installed. Dura Track, with its stronger lighter and less expensive
drapery hardware components, is poised to take advantage of this trend. The
cost of supplying the hardware components for commercial window coverings can
be 40% of the total price. In a competitive bid circumstances, Dura Track's
plastic components can be installed for approximately 50% less than
traditional metal components - giving bidders a significant cost advantage,
resulting in a very competitive bid. The above industry synopsis is narrated
by the Company's president. The company's president has spent the past 30
years in the window covering industry and is extremely knowledgeable about
the past and current trends within the industry.
Product Description
Dura Track will manufacture up to six separate components that are used in
the assembly of a drapery tracks. A metal "c" channel type of track is still
used, although all of the Company's components are injection molded using the
latest in engineering plastics.
Injection molding is a manufacturing process where hot plastic is injected
into a specific form carved into a piece of metal. Once the hot plastic cools
the form is opened and the finished object is ejected. This process of
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manufacturing is automated using an injection mold machine. The form known as
an injection mould is installed on the injection mold machine. The form
within the mold along with the type of plastic injected determines the final
product the mold will produce. The Company has the rights to use certain
molds that will produce drapery hardware. The Company does not own any
injection molding equipment and will contract a third party to manufacture
the finished product utilizing the Company's licensed molds.
Each of the Company's components has been engineered to out-perform their
metal counter parts while providing significant cost savings. Each of the
components will be packaged in bulk, with minimum quantities between 200 and
500 units per box.
There are two types of drapery hardware used in the commercial industry that
Dura Track products are designed for. One type is called "cord drawn" and
employs a drapery cord to operate the opening and closing of the draperies.
The second type is called "hand drawn", in which an 18-inch rod (called a
fling rod) is attached to the leading edge of the drape and the drape is
closed manually by grasping the rod. Both styles of drapery tracks are
fastened to the wall using a wall bracket.
Dura Track Products:
Item Quantity
Number Per Box Name Description
- ------ -------- ---- -----------
D15 500 End Lock Product is used to snap on to the
end of a hand drawn drapery track
for two purposes. One, to stop the
glides on the drapery track from
slipping off the end and second,
to provide a fastener for the last
pin on the outside edges of each
drape.
D17 200 Wall Bracket Product is used to fasten the
drapery rod to the wall above the
window. Once the bracket is
fastened, a "c" channel drapery
track snaps into the bracket. Used
for both hand drawn and cord drawn
drapery tracks.
D21 200 Pairs End Pulley These components are usually used
in pairs attached to the ends of a
cord drawn drapery track. These
components service two purposes:
they have a set of wheels that
allow the drapery cord to operate
smoothly and they provide a
fastener for the last pin on the
outside edges of each drape.
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D23 200 Floor Pulley This component used for cord drawn
drapery tracks and is either
fastened to the wall or the floor.
It contains a wheel and is spring
loaded to help keep tension on the
operating cord for the drapery
track.
D25 200 Fling Rod This component is used with hand
drawn drapery tracks and is
attached to the leading glide or
fastener of the drapery to allow
hand closing and opening of a
drape.
D27 200 Pairs Master Glides These components are usually used
in pairs for both hand drawn and
cord drawn drapery tracks. The
master glides have overlapping
arms that allow the draperies in
the center of a pair to overlap
for privacy.
Competitive Advantages
As Dura Track components are made entirely of engineering plastics, they have
many competitive advantages over their metal counterparts that are used in
the same commercial application. These advantages include price, strength,
durability, weight and resistance to rust. There is one drapery hardware
line, manufactured in Switzerland, which is produced entirely out of plastic,
but this product line is light duty and not designed for commercial or
industrial applications. Essentially, all of our direct competitors' products
are manufactured from metal.
Price: Unlike their metal counterparts, Dura Track components are
manufactured by an injection molding process and require little assembly and
no painting, as the raw materials are colored prior to manufacturing. This
basic "one-step" manufacturing process requires less physical labor and
machinery than metal stamping, resulting in significant cost saving in
manufacturing.
Strength: With the advancement in polymer technologies, a new class of
plastic materials known as "engineering plastics" has been developed. In many
applications, from aerospace to automobiles, these new materials have proven
to be stronger and less expensive than metal and in some cases perform a
function that metal cannot compete with. Dura Track has taken advantage of
these new space age materials and their physical properties in the design and
manufacturing of its products. The end result is that the Dura Track product
line out performs its metal counterparts in strength and durability in a
commercial application where normal wear and tear is greater than in a
domestic setting.
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Durability: There are three physical factors that make up the durability of
almost every commercial product: impact resistance, flexural modulus, and
creep. Impact resistance is essentially how the product will perform or fail
when hit with a hammer. Metal components do fairly well in this test. Even
though there is some bending and chipping of paint, complete product failure
is rare. Dura Track's components in this test also fare well, except for the
wall mount bracket that is made from a very stiff engineering plastic that
has a tendency to shatter under an impact test. However, impact resistance is
not as an important physical factor required in the use of drapery hardware
components as flexural modulus and creep. Flexural modulus measures how an
item reacts under short-term load or stress when functioning as designed. For
example, a wall bracket holding a drapery track may experience increased load
if tugging the draperies occurs while trying to open or close them.
Traditional wall metal brackets fail when the load becomes between 30 and 50
pounds, while Dura Track wall brackets have proven to perform on loads in
excess of 250 pounds. The failure of wall brackets in commercial
installations is one of the most commonly occurring problems (i.e. brackets
bending and causing draperies to drag on the floor). Dura Track has all but
eliminated this problem by using engineering plastics. Creep measures how a
product performs long-term under load while performing its function. Many of
the traditional metal drapery components suffer from metal fatigue under
constant load. Dura Track's components, especially the overlap masters and
wall brackets, have shown to be superior in retaining their functionality
over a longer period of time under stress.
Product Weight: As Dura Track components are manufactured with plastic, their
weight is a fraction of that of their metal counterparts. This reduction in
weight allows for lower shipping costs for the Company and its distributors
and their customers, which assists in the overall price performance ratio of
the Company's products.
Marketing
The commercial window covering industry is a long-time and well-established
industry, with established marketing channels from distribution to dealers to
wholesalers and retailers. Dura Track's prime focus will be to manufacture
plastic drapery products for various distributors who have already
established relationships with providers of commercial window coverings in
their geographical area.
The Company will likely deploy an exclusive geographical distribution model
on a city-by-city basis throughout North America. Each Dura Track distributor
will likely be required to maintain certain minimum inventory levels while
meeting annual sales volumes with minimum quantity purchase orders.
Initially, the Company plans to use a direct marketing campaign to reach
distributors throughout North America. The Company will produce a price list
and brochure that will accompany shipments of product samples to targeted
distributors identified through telemarketing, the Internet, industry SIC
codes, and related trade shows.
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Direct Competition
There are several large, well-established competitors in the commercial
drapery hardware business globally. Essentially all of the Company's
competitors supply metal components for commercial application. Only one
competitor has a plastic master glide (the component used in the center of a
drapery track that attaches to the draw string allowing the opening and
closing of a drape) that would compete directly with the Company's similar
product.
The largest potential competitor for the Company has global dominance and was
established in 1907 in Germany.
Staffing
As of December 31, 2005, Dura Track has no permanent staff other than its
sole officer and director, Mr. Darrel Crimeni, who is the President and
Chairman of the Company. Mr. Crimeni is employed full time elsewhere, but has
the flexibility to work on Dura Track up to 10 hours per week and is prepared
to devote more time, as may be required. He is not being paid at present. Mr.
Crimeni is currently devoting approximately 5 hours per week to the Company.
Employees and Employment Agreements
At present, Dura Track has no employees other than its current sole officer
and director, Mr. Crimeni, who has not been compensated. There are no
employment agreements in existence. The Company presently does not have
pension, health, annuity, insurance, stock options, profit sharing, or
similar benefit plans; however, the Company may adopt such plans in the
future. There are presently no personal benefits available to the Company's
sole officer and director.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This section of the Prospectus includes a number of forward-looking
statements that reflect our current views with respect to future events and
financial performance. Forward-looking statements are often identified by
words like: believe, expect, estimate, anticipate, intend, project and
similar expressions, or words which, by their nature, refer to future events.
You should not place undue certainty on these forward-looking statements,
which apply only as of the date of this Prospectus. These forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical results or our
predictions.
We are a development-stage Company organized to enter into the manufacturing
and distribution of drapery hardware primarily composed of engineering
plastics. We have not yet generated or realized any revenues from business
operations.
Our auditors have issued a "going concern" opinion. This means that there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. This is
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because we have not generated any revenues and no revenues are anticipated
until we begin manufacturing and selling our products. Accordingly, we must
raise cash from sources other than the sale of our product line. Our only
other source for cash at this time is investments by others in this Offering.
We must raise cash to implement our business strategy and stay in business.
The amount of the Offering will likely allow us to operate for at least one
year. Our success or failure will be determined by our ability to begin the
manufacturing process.
From inception to December 31, 2005 the Company's business operations have
primarily been focused on securing its International License Agreement, and
raising its initial capital. The Company has identified a suitable
manufacturer to produce its products and discussed with that manufacturer the
estimated costs to manufacture its products. The Company has been developing
an executive marketing strategy, along with industry market research and
competitive analysis. The Company has also dedicated time to the preparation
of its registration statement, including accounting and auditing.
Over the next 12 months the Company must begin the manufacturing of its
products in order to supply perspective customers with product samples. The
cost of product samples to be mailed or couriered to prospective customers is
estimated to be $12,000. The Company anticipates it will be able to begin
manufacturing within 6 months of this registration statement becoming
effective. The Company will have to negotiate the price and terms of the raw
materials (plastics) required to manufacture its products from its third
party suppliers. These suppliers include G.E Plastics, Dow Plastics, and
Bayer Corporation. The Company will have to finalize its costs with its
manufacturer, Leone Industries, and our final product costs will be directly
related to the volume of products it orders at a single time. Significant
volume discounts are available to the Company from both its suppliers of raw
materials and the injection molding company that will manufacture the
Company's products. The Company anticipates the cost to produce its initial
product order to be $15,000 dollars. The company intends to have its
manufacturer assemble, box, label, warehouse and ships its product orders and
samples orders. By entering a warehousing shipping contract as well as a
manufacturing contract with Leone Industries, the company will initially save
money on warehousing and warehouse staff. The Company anticipates the cost
of packing and warehousing to be $5,000.
The Company will have to produce product literature and price lists for its
distributors and customers, the Company anticipates that it can, within four
months of this registration statement becoming effective, complete its price
lists. The company anticipates the cost to design and produce a brochure and
price list to be $6,000 dollars.
Once the Company has its initial products available and has prepared
brochures and price lists, we have to begin our marketing efforts to identify
distributors and wholesalers who supply non-competitive industry related
products. These industry related suppliers include fabric wholesalers,
suppliers of materials used in the manufacturing of draperies, and companies
that specialize in the commercial installation of draperies for apartment
buildings and condominiums. By utilizing existing wholesalers that have a
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current relationship with the company's potential clients, the company will
be able to reach a greater number of potential customers in a shorter time;
this marketing model is called "leverage distribution". We will identify
these companies through internet searches and industry directories, and
contact them through direct mail, email and telephone solicitation. There are
several trade shows organized for the commercial window covering industry
that the company will attend. The cost of direct marketing and trade show
participation will be $18,000. The company anticipates it will begin its
marketing phase eight months after this registration statement becomes
effective.
The Company will have to create its web site at www.dthardware.com in order
to showcase its product line to perspective customers. The company will hire
and independent contractor to develop its web site. The company anticipates
it will spend $4,000 dollars on its web site and have the site completed
within eight months of this registration statement becoming effective. The
Company would anticipate hiring a salesperson within 7 months of this
registration statement becoming effective.
The Company anticipates being able to begin selling its products within 10
months of this registration statement becoming effective.
The company only has $3,921 of cash on hand as of the company's audited
financial statements dated December 31, 2005. The company will have to raise
additional capital to implement its manufacturing and marketing strategies.
To meet our need for cash we are attempting to raise money from this
Offering. Whatever money we do raise, will be applied to the items set forth
in the Use of Proceeds section of this Prospectus.
OFF BALANCE SHEET ARRANGEMENTS
On April 23, 2004 the Company entered into a Consulting Services Agreement
with the Altres Group LLC ("Altres") to assist in the creation of the
corporate entity, provide consulting services and assist the Company in
becoming a United States reporting company. The Company has agreed to pay
Altres a total of $45,000 for its services of which $5,000 has been paid. The
remaining $40,000 dollars is due and payable upon the Company filing a Form
15 (C) 211 package with a securities broker/dealer and acceptance of the same
by the NASD.
On May 1, 2004 the Company signed a 36 month International Distribution
Agreement with Adele Paulsen whereby the Company can distribute and
manufacture certain drapery hardware components under the Dura Track name.
The Agreement carries a 36 month renewal at the Company's option. Under the
terms of the Agreement the Company must pay a twenty percent royalty on the
gross revenues generated by the licensed products, with a minimum annual
royalty of $50,000 to retain exclusive product rights. On February 22, 2005
an amendment to the Agreement was signed that waived the Company's royalty
payments and minimum annual royalties until May 1, 2006. Minimum royalties
would not become payable until May 1, 2007.
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The company has determined that the financial obligations above constitute an
off balance sheet arrangement because the financial obligations are
contingent upon certain events. The company's liabilities to Altres Group
LLC are only payable upon the company filing a 15c211 with a securities
broker/dealer. The company's financial obligation to Adele Paulsen is
contingent upon the company failing to pay $50,000 in royalties by May 1,
2007.
MANAGEMENT
Officer and Director
Our sole director serves until his successor is elected and qualified. Our
sole officer is elected by the Board of Directors to a term of one (1) year
and serves until his successor is duly elected and qualified, or until he is
removed from office. The Board of Directors has no nominating or compensation
committees. The Company's current Audit Committee consists of our sole
officer and director.
The name, address, age, and position of our present sole officer and director
is set forth below:
Name and Address Age Position(s)
---------------- --- -----------
Darrel Crimeni 55 President, Secretary/ Treasurer, Chief
6505 - 138th Street Financial Officer and Chairman of the
Surrey, BC, Canada V3W 5G5 Board of Directors
The person named above has held his offices/positions since inception of our
Company and is expected to hold his offices/positions at least until the next
annual meeting of our stockholders.
Background of the Company's Sole Officer and Director
Mr. Darrel Crimeni has spent the past 30 years of his professional career in
the contract window covering industry. Throughout his career in commercial
window coverings, Mr. Crimeni has successfully overseen the bidding,
awarding, manufacturing, and installation of window coverings for hundreds of
very large and prestigious construction projects including many Four Seasons
Hotels in Canada, The Pan Pacific Hotel and The Hotel Vancouver located in
Vancouver, British Columbia, Canada. Since 1995 until April 30, 2005, Mr.
Crimeni has been the Manager of Contract Sales for Aftex Products (Western)
Ltd. in Richmond, B.C., one of western Canada's largest suppliers of contract
window coverings. Aftex Products (Western) Ltd. is currently the distributor
of Kirsch drapery hardware components, a competitive product line to Dura
Track's drapery hardware components.
Prior to Aftex, Mr. Crimeni was Manager of Contract Sales for Tritex Fabrics
Ltd. of Vancouver. From 1976 to 1993, Mr. Crimeni was General Manager of
Adrians Interiors Ltd. and Crestwood Draperies Ltd., both located in
Richmond, B.C., where he was responsible for all aspects of their commercial
window covering divisions.
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As of May 1, 2005 to present, Mr. Crimeni is the General Manager of Canadian
Blind Manufacturing, Inc. located in Richmond, B.C.
Conflicts of Interest
At the present time, the Company does not foresee any direct conflict of
interest between Mr. Crimeni's current position with Canadian Blind
Manufacturing, Inc. and his involvement in Dura Track.
EXECUTIVE COMPENSATION
Summary of Compensation
Dura Track has made no provisions for cash compensation or for non-cash
compensation to its officers and directors. No salaries are being paid at the
present time, and will not be paid unless, and until, there is available cash
flow being generated from operations to pay salary.
Employment Agreements
At this time, Dura Track has not entered into any employment agreements with
its sole officer and director. The Company may in the future, if there is
available cash flow from operations, enter into employment agreements with
the Company's sole officer and director or key staff members.
Stock Option Plan
The Board of Directors of Dura Track has not adopted a stock option plan
("Stock Option Plan"). The Company has no plans to adopt a stock option plan
but may choose to do so in the future. If such a plan is adopted, this plan
may be administered by the board or a committee appointed by the board (the
"Committee"). The committee would have the power to modify, extend or renew
outstanding options and to authorize the grant of new options in substitution
therefore, provided that any such action may not, without the written consent
of the optionee, impair any rights under any option previously granted. Dura
Track may develop an incentive based stock option plan for its officers and
directors and may reserve up to 10% of its outstanding shares of common stock
for that purpose.
Stock Awards Plan
The Company has not adopted a Stock Awards Plan, but may do so in the future.
The terms of any such plan have not been determined.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of the date of this Prospectus, the total
number of shares owned beneficially by each of our officers, directors, and
key employees, individually and as a group, and the present owners of 5% or
more of our total outstanding shares. The table also reflects what their
ownership will be assuming completion of the sale of all shares in this
Offering. The stockholder listed below has direct ownership of his shares and
possesses sole voting and disposition power with respect to the shares.
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Number of % of
Shares After Ownership After
Name and Address Number of Offering Assuming Offering Assuming
Beneficial Shares Before All of the All of the
Ownership (1) the Offering Shares are Sold Shares are Sold
- ---------------- ------------ --------------- ---------------
Darrel Crimeni, 7,000,000 7,000,000 62.5%
6505 138th Street
Surrey, British Columbia
Canada V3W 5G5
All Officers and
Directors
as a Group (1 person) 7,000,000 7,000,000 62.5%
(1) The person named above may be deemed to be a "parent" and "promoter" of
our Company, within the meaning of such terms under the Securities Act of
1933, as amended, by virtue of his direct and indirect stock holdings.
Mr. Crimeni is the only "promoter" of our Company.
Future Sales by Existing Stockholders
A total of 7,000,000 shares of common stock were issued to our sole officer
and director, all of which are restricted securities, as defined in Rule 144
of the Rules and Regulations of the SEC promulgated under the Securities Act.
Under Rule 144, the shares can be publicly sold, subject to volume
restrictions and restrictions on the manner of sale, commencing one year
after their acquisition commencing on July 6, 2005. Under Rule 144, a
shareholder can sell up to 1% of total outstanding shares every three months
in brokers' transactions. Shares purchased in this Offering, which will be
immediately resalable, and sales of all of our other shares after applicable
restrictions expire, could have a depressive effect on the market price, if
any, of our common stock and the shares we are Offering.
Because our sole officer and director will continue to retain majority
control of us after the Offering, regardless of the number of shares sold,
your ability to cause a change in the course of our operations is eliminated.
As such, the value attributable to the right to vote is gone. This could
result in a reduction in value to the shares you own because of the
ineffective voting power. No common stock is subject to outstanding options,
warrants, or securities convertible into common stock.
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DESCRIPTION OF SECURITIES
Common Stock
Our authorized capital stock consists of 75,000,000 shares of common stock,
par value $0.001 per share. The holders of our common stock:
- have equal ratable rights to dividends from funds legally available if
and when declared by our Board of Directors;
- are entitled to share ratably in all of our assets available for
distribution to holders of common stock upon liquidation, dissolution or
winding up of our affairs;
- do not have preemptive, subscription or conversion rights and there are
no redemption or sinking fund provisions or rights;
- and are entitled to one non-cumulative vote per share on all matters on
which stockholders may vote.
We refer you to our Articles of Incorporation, Bylaws, and the applicable
statutes of the State of Nevada for a more complete description of the rights
and liabilities of holders of our securities.
Non-cumulative Voting
Holders of shares of our common stock do not have cumulative voting rights,
which means that the holders of more than 50% of the outstanding shares,
voting for the election of directors, can elect all of the directors to be
elected, if they so choose, and, in that event, the holders of the remaining
shares will not be able to elect any of our directors. After this Offering is
completed and if all the shares offered are sold, present stockholders will
own approximately 49.2% of our outstanding shares.
Cash Dividends
As of the date of this Prospectus, we have not declared or paid any cash
dividends to stockholders. The declaration of any future cash dividend will
be at the discretion of our Board of Directors and will depend upon our
earnings, if any, our capital requirements and financial position, our
general economic conditions, and other pertinent conditions. It is our
present intention not to pay any cash dividends in the foreseeable future,
but rather to reinvest earnings, if any, in our business operations.
Anti-Takeover Provisions
There are no Nevada anti-takeover provisions that may have the affect of
delaying or preventing a change in our control. 78.378 through 78.3793 of the
Nevada Revised Statutes relates to control share acquisitions that may delay
to make more difficult acquisitions or changes in our control, however, they
only apply when we have 200 or more stockholders of record, at least 100 of
whom have addresses in the State of Nevada appearing on our stock ledger and
we do business in this state directly or through an affiliated corporation.
Neither of the foregoing events seems likely to occur. Currently, we have no
Nevada shareholders. Further, we do not do business in Nevada directly or
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through an affiliate corporation and we do not intend to do business in the
State of Nevada in the future. Accordingly, there are no anti-takeover
provisions that have the affect of delaying or preventing a change in our
control.
Reporting
After we complete this Offering, we will not be required to furnish you with
an annual report. Further, we will not voluntarily send you an annual report.
We will be required to file reports with the SEC under section 15(d) of the
Securities Act. The reports will be filed electronically. The reports we will
be required to file are Forms 10-KSB, 10-QSB, and 8-K. You may read copies of
any materials we file with the SEC at the SEC's Public Reference Room at 100
F Street, NE. Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet site that will contain copies of the
reports we file electronically. The address for the Internet site is
www.sec.gov.
Stock Transfer Agent
We have not engaged the services of a Transfer Agent at this time, however,
within the next twelve months we anticipate doing so. Until such a time a
Transfer Agent is retained, Dura Track will act as its own Transfer Agent.
CERTAIN TRANSACTIONS
In July 2004, we issued a total of 7,000,000 shares of common stock to Darrel
Crimeni, our sole officer and director, for total cash consideration of
$7,000. This was accounted for as a purchase of common stock. In October and
December 2004, we issued a total of 2,400,000 common shares for consideration
of $12,000, which was accounted for as a purchase of common stock. In January
2005, we issued 800,000 common shares for total consideration of $4,000,
which was accounted for as a purchase of common stock.
On May 1, 2004 the Company entered into a licensing agreement with a Mrs.
Adele Paulsen for the global rights to manufacture and distribute a line of
drapery hardware owned by Mrs. Paulsen. Mrs. Paulsen is the mother of the
Company's president Darrel Crimeni. The Company does not feel that the family
relationship between the licensor and the president of the Company creates
any conflicts whatsoever. The company's president worked with Mrs. Paulsen in
the drapery industry between 1973 and 1993 and always had a good working
relationship until Mrs. Paulsen's retirement in 1993. The company believes
that the family relationship between Mr. Crimeni and Mrs. Paulsen is in fact
a positive event rather than creating any conflicts of interest. Mr. Crimeni
was able to successfully negotiate an extension of the company's minimum
royalties for an additional year with minimum royalties not due until May 1,
2007. It is the 20 year professional working relationship that has existed
between Mr. Crimeni and Mrs. Paulsen that leads the company to believe that
no conflict of interest has or will exist.
-39-
The Company has not had any dealings with any outside promoters whatsoever
from inception to December 31, 2005. The company's president and founder is
considered to be a promoter as defined under rule 405 of Regulation C. Mr.
Crimeni has not in any way been compensated for his efforts in founding and
organizing the company. The company has not and is not acquiring any assets
from Mr. Crimeni.
LITIGATION
We are not a party to any pending litigation and none is contemplated or
threatened.
EXPERTS
Our financial statements have been audited for the period from inception to
March 31, 2005. Our Financial statements have been reviewed for the period
ending September 30, 2005 by Dale Matheson Carr-Hilton LaBonte, Chartered
Accountants, 1700 - 1140 West Pender Street, Vancouver, British Columbia,
Canada V6E 4G1 as set forth in their report included in this Prospectus.
Their report is provided on their authority as experts in accounting and
auditing.
Jeffrey Nichols, Attorney at Law, Suite 500, 388 Market Street, San
Francisco, CA 94111 has acted as our legal counsel. Mr. Nichols has provided
his opinion on the legality of the 3,200,000 shares of common stock being
registered on behalf of certain Selling Shareholders and on the legality of
4,000,000 shares of common stock being registered on behalf of the Company by
way of this Prospectus.
-40-
FINANCIAL STATEMENTS
Our fiscal year end is December 31st. We will provide audited financial
statements to our stockholders on an annual basis, as prepared by an
Independent Certified Public Accountant.
Our financial statements immediately follow:
FINANCIAL STATEMENTS - Audited December 31, 2005
Auditors Report
Balance Sheet
Statements of Operations
Statement of Shareholders' Equity
Statements of Cash Flows
Notes to the Financial Statements
-41-
Dura Track Enterprises, Inc.
(A Development Stage Company)
FINANCIAL STATEMENTS
DECEMBER 31, 2005
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
STATEMENTS OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Dura Track Enterprises, Inc.
We have audited the accompanying balance sheets of Dura Track Enterprises, Inc.
(a development stage company) as of December 31, 2005 and 2004, and the
statements of operations, stockholders' equity (deficit) and cash flows for the
year ended December 31, 2005, the period ended December 31, 2004, and from
inception (March 19, 2004) through December 31, 2005. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance 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, these financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2005 and
2004, and the statements of operations, stockholders' equity (deficit) and cash
flows for the year ended December 30, 2005, the period from inception (March
19, 2004) to December 31, 2004, and the period from inception (March 19, 2004)
through December 31, 2005, in accordance with accounting principles generally
accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company is in the development stage and has incurred
losses since inception and has limited working capital available raising
substantial doubt about the Company's ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on
raising capital to fund its business plan and ultimately to attain profitable
operations. Management's plans in regard to these matters are also described
in Note 1. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/Dale Matheson Carr-Hilton Labonte
- ------------------------------------
CHARTERED ACCOUNTANTS
Vancouver, B.C.
January 18, 2006
F-2
DURA TRACK ENTERPRISES, INC.
(A Development Stage Company)
BALANCE SHEETS
December 31, December 31,
2005 2004
- ----------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash $ 3,921 $ 13,091
Prepaid expenses - 175
--------- ----------
$ 3,921 $ 13,266
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 3,955 $ -
Due to related party (Note 7) 1,255 1,255
--------- ----------
5,210 1,255
COMMITMENT (Note 6)
STOCKHOLDERS' EQUITY (DEFICIT )
Capital stock (Note 4)
Authorized
75,000,000 shares of common stock,
$0.001 par value,
Issued and outstanding
10,200,000 shares of common stock
(2004 - 9,400,000 shares) 10,200 9,400
Additional paid-in capital 12,800 9,600
Deficit accumulated during the development stage (24,289) (6,989)
--------- ----------
(1,289) 12,011
--------- ----------
$ 3,921 $ 13,266
========= ==========
The accompanying notes are an integral part of these financial statements
F-3
DURA TRACK ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative
results of
Year March 19, 2004 operations from
Ended (Inception) to March 19, 2004
December 31, December 31, (Inception) to
2005 2004 December 31, 2005
- -----------------------------------------------------------------------------
GENERAL AND ADMINISTRATIVE EXPENSES
Office and general $ 7,035 $ 6,444 $ 13,479
Professional fees 10,265 545 10,810
----------------------------------------------
NET LOSS $ (17,300) $ (6,989) $ (24,289)
============================================
BASIC NET LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00)
============================================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 10,140,822 4,546,597 10,140,822
============================================
The accompanying notes are an integral part of these financial statements
F-4
DURA TRACK ENTERPRISES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION (MARCH 19, 2004) TO DECEMBER 31, 2005
Deficit
Accumulated
---Common Stock--- Additional During
Number of Paid In Development
Shares Amount Capital Stage Total
- -----------------------------------------------------------------------------
Balance, March 19, 2004 - $ - $ - $ - $ -
Common stock issued for cash
at $0.001 per share
July 6, 2004 7,000,000 7,000 - - 7,000
Common stock issued for cash
at $0.005 per share
October 25, 2004 420,000 420 1,680 - 2,100
October 27, 2004 380,000 380 1,520 - 1,900
December 30, 2004 1,600,000 1,600 6,400 - 8,000
Net loss for the period - - - (6,989) (6,989)
-----------------------------------------------------
Balance,
December 31, 2004 9,400,000 9,400 9,600 (6,989) 12,011
-----------------------------------------------------
Common stock issued for cash
at $0.005 per share
January 28, 2005 800,000 800 3,200 - 4,000
Net loss for the period - - - (17,300) (17,300)
-----------------------------------------------------
Balance,
December 31, 2005 10,200,000 $ 10,200 $ 12,800 $ (24,289) $ (1,289)
=====================================================
The accompanying notes are an integral part of these financial statements
F-5
DURA TRACK ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
results of
Year March 19, 2004 operations from
Ended (Inception) to March 19, 2004
December 31, December 31, (Inception) to
2005 2004 December 31, 2005
- -----------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (17,300) $ (6,989) $ (24,289)
Adjustments to reconcile
net loss to net cash used in
operating activities:
- Prepaid expenses 175 (175) -
- accounts payable and
accrued liabilities 3,955 1,255 5,210
------------------------------------------
NET CASH USED IN
OPERATING ACTIVITIES (13,170) (5,909) (19,079)
------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of
common stock 4,000 19,000 23,000
------------------------------------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 4,000 19,000 23,000
------------------------------------------
NET INCREASE (DECREASE)
IN CASH (9,170) 13,091 3,921
CASH, BEGINNING OF PERIOD 13,091 - -
------------------------------------------
CASH, END OF PERIOD $ 3,921 $ 13,091 $ 3,921
==========================================
Supplemental cash flow information:
Cash paid for:
Interest paid $ - $ - $ -
====== ====== ======
Income taxes paid $ - $ - $ -
====== ====== ======
The accompanying notes are an integral part of these financial statements
F-6
DURA TRACK ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31. 2005
NOTE 1 - NATURE OF OPERATIONS NAND BASIS OF PRESENTATION
Dura Track Enterprises, Inc. (the "Company") is in the initial development
stage and has incurred losses since inception totaling $24,289. The Company
was incorporated on March 19, 2004 in the State of Nevada. The Company's
fiscal year end is December 31. The Company was organized to enter into the
manufacturing and supply of a unique line of drapery hardware components,
entirely composed of engineering plastics that are used in the commercial
window covering industry. The Company signed a 36 month exclusive license
agreement to manufacture and distribute certain drapery hardware components
under the Dura Track name. The license carries a 36 month renewal at the
option of The Company. The Company's initial market focus will be in North
America with possible expansion internationally in the mid term. To date the
Company has had no business operations.
The ability of the Company to continue as a going concern is dependent on
raising capital to fund its business plan and ultimately to attain profitable
operations. Accordingly, these factors raise substantial doubt as to the
Company's ability to continue as a going concern. The Company is funding its
initial operations by way of issuing Founders' shares and a Private Placement
Offering Memorandum for 10,000,000 shares at $.005 per share. As of December
31, 2005, the Company had sold 10,200,000 shares and had received $23,000 in
proceeds from the sale of the Company's common stock of which 7,000,000
Founders' shares were issued at $.001 per share for net proceeds of $7,000
and 3,200,000 shares were issued at $.005 per share for net proceeds of
$16,000 pursuant to the Private Placement Offering Memorandum.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These financial statements are presented in United States dollars and have
been prepared in accordance with accounting principles generally accepted in
the United States.
Use of Estimates and Assumptions
Preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
Income Taxes
The Company follows the liability method of accounting for income taxes.
Under this method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
F-7
statement carrying amounts of existing assets and liabilities and their
respective tax balances. Deferred tax assets and liabilities are measured
using enacted or substantially enacted tax rates expected to apply to the
taxable income in the years in which those differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
date of enactment or substantive enactment. As of December 31, 2005, the
Company had net operating loss carryforwards; however, due to the uncertainty
of realization the Company has provided a full valuation allowance for the
deferred tax assets resulting from these loss carryforwards.
Net Loss per Share
Basic loss per share includes no dilution and is computed by dividing loss
available to common stockholders by the weighted average number of common
shares outstanding for the period. Dilutive losses per share reflects the
potential dilution of securities that could share in the losses of the
Company. Because the Company does not have any potentially dilutive
securities, the accompanying presentation is only of basic loss per share.
Foreign Currency Translation
The financial statements are presented in United States dollars. In
accordance with SFAS No. 52, "Foreign Currency Translation", foreign
denominated monetary assets and liabilities are translated to their United
States dollar equivalents using foreign exchange rates which prevailed at the
balance sheet date. Revenue and expenses are translated at average rates of
exchange during the period. Related translation adjustments are reported as
a separate component of stockholders' equity (deficit), whereas gains or
losses resulting from foreign currency transactions are included in results
of operations.
Stock-based Compensation
The Company has not adopted a stock option plan and has not granted any stock
options. Accordingly no stock-based compensation has been recorded to date.
Recent Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary
Assets, an amendment of APB Opinion No. 29, Accounting for Non-monetary
Transactions ("SFAS 153"). SFAS 153 requires that exchanges of non-monetary
assets are to be measured based on fair value and eliminates the exception
for exchanges of non-monetary, similar productive assets, and adds an
exemption for non-monetary exchanges that do not have commercial substance.
SFAS 153 will be effective for fiscal periods beginning after June 15, 2005.
Management does not believe that the adoption of this standard will have a
material impact on the Company's financial condition or results of
operations.
In December 2004, the FASB issued SFAS No. 123R, "Share Based Payment". SFAS
123R is a revision of SFAS No. 123 "Accounting for Stock-Based Compensation",
and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees"
and its related implementation guidance. SFAS 123R establishes standards for
the accounting for transactions in which an entity exchanges its equity
instruments for goods or services. It also addresses transactions in which an
F-8
entity incurs liabilities in exchange for goods or services that are based on
the fair value of the entity's equity instruments or that may be settled by
the issuance of those equity instruments. SFAS 123R focuses primarily on
accounting for transactions in which an entity obtains employee services in
share-based payment transactions. SFAS 123R does not change the accounting
guidance for share-based payment transactions with parties other than
employees provided in SFAS 123 as originally issued and EITF Issue No. 96-18,
"Accounting for Equity Instruments That Are Issued to Other Than Employees
for Acquiring, or in Conjunction with Selling, Goods or Services". SFAS 123R
does not address the accounting for employee share ownership plans, which are
subject to AICPA Statement of Position 93-6, "Employers' Accounting for
Employee Stock Ownership Plans". SFAS 123R requires a public entity to
measure the cost of employee services received in exchange for an award of
equity instruments based on the grant-date fair value of the award (with
limited exceptions). That cost will be recognized over the period during
which an employee is required to provide service in exchange for the award -
the requisite service period (usually the vesting period). SFAS 123R requires
that the compensation cost relating to share-based payment transactions be
recognized in financial statements. That cost will be measured based on the
fair value of the equity or liability instruments issued. The scope of SFAS
123R includes a wide range of share-based compensation arrangements including
share options, restricted share plans, performance-based awards, share
appreciation rights, and employee share purchase plans. Public entities
(other than those filing as small business issuers) will be required to apply
SFAS 123R as of the first interim or annual reporting period that begins
after June 15, 2005. Public entities that file as small business issuers will
be required to apply SFAS 123R in the first interim or annual reporting
period that begins after December 15, 2005. For nonpublic entities, SFAS 123R
must be applied as of the beginning of the first annual reporting period
beginning after December 15, 2005. Management is currently evaluating the
impact, which the adoption of this standard will have on the Company's
results of operations or financial position.
NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance with the requirements of SFAS No. 107, the Company has
determined the estimated fair value of financial instruments using available
market information and appropriate valuation methodologies. The fair value
of financial instruments classified as current assets or liabilities
approximate their carrying value due to the short-term maturity of the
instruments.
NOTE 4 - CAPITAL STOCK
The Company's capitalization is 75,000,000 common shares with a par value of
$0.001 per share. No preferred shares have been authorized or issued.
As of December 31, 2005, the Company has not granted any stock options and
has not recorded any stock-based compensation.
During the period ended December 31, 2004, a director purchased 7,000,000
shares of common stock in the Company at $0.001 per share with proceeds to
the Company totaling $7,000.
F-9
Private Placement
On August 30, 2004, the Company issued a Private Placement Offering
Memorandum offering 10,000,000 shares of common stock at a price of $0.005
per share. The total amount to be raised in this financing is $50,000. As of
December 31, 2005, the Company had sold 3,200,000 shares and had received
$16,000 in proceeds from the sale of the Company's common stock.
NOTE 5 - INTERNATIONAL DISTRIBUTOR AGREEMENT
On May 1, 2004, the Company entered in to a 36-month International
Distributor Agreement (the "AP Agreement") with Adele Paulsen (refer to Note
7) whereby the Company may distribute and manufacture certain drapery
components under the Dura Track name. The AP Agreement carries a 36-month
renewal at the option of the Company. Under the terms of the license, the
Company must pay a twenty percent royalty on its gross revenues generated by
the licensed products, with a minimum annual royalty of $50,000, to retain
its exclusivity to the product rights.
On February 22, 2005, an amendment to the AP Agreement was made whereby both
parties agreed to waive the twenty percent royalty based on the Company's
gross sales amount and the minimum $50,000 royalty payment shall not become
effective until May 1, 2006.
NOTE 6 - COMMITMENT
On April 23, 2004, the Company entered into a Consulting Services Agreement
with the Altres Group LLC ("Altres") to assist in the creation of the
corporate entity, provide consulting services, assistance to become a United
States reporting company and other related matters regarding the preparation
and filings of materials related to a public company filing.
The Company has agreed to pay Altres a total of $45,000 for its services of
which $5,000 has been paid on July 19, 2004 and the remaining $40,000 balance
to be payable immediately upon filing of a Form 15 (C) 211 package with a
securities broker/dealer and acceptance of same by the NASD.
NOTE 7 - RELATED PARTY TRANSACTIONS
A director of the Company is a relative of Adele Paulsen, the Licensor of the
Company. As of December 31, 2005, no payments have been made to Ms. Paulsen.
As of December 31, 2005 and 2004, the Company owed a director of the Company
$1,255. The amounts payable are unsecured and non-interest bearing with no
set terms of repayment.
NOTE 8 - INCOME TAXES
The Company accounts for its income taxes in accordance with FASB No. 109,
"Accounting for Income Taxes." As of December 31, 2005, the Company had net
operating loss carry forwards of approximately $24,300 that may be available
to reduce future years' taxable income and will expire commencing in 2015.
F-10
Availability of loss usage is subject to change of ownership limitations
under Internal Revenue Code 382. Future tax benefits which may arise as a
result of these losses have not been recognized in these financial
statements, as their realization is determined not likely to occur and
accordingly, the Company has recorded a valuation allowance for the deferred
tax asset relating to these tax loss carryforwards.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Dale Matheson Carr-Hilton LaBonte, Chartered Accountants, from their
Vancouver, British Columbia, Canada office, are our auditors. There have not
been any changes in or disagreements with accountants on accounting and
financial disclosure or any other matter.
Part II. INFORMATION NOT REQUIRED IN THE PROSPECTUS
Other Expenses of Issuance and Distribution
The estimated expenses of the Offering, whether or not all shares are sold,
all of which are to be paid by the registrant, are as follows:
Legal and Accounting $ 2,062
SEC Filing Fee 15
Printing 250
Transfer Agent 2,100
-----
TOTAL $ 4,427
Recent Sales of Unregistered Securities
(a) Prior sales of common shares
Dura Track is authorized to issue up to 75,000,000 shares of common stock
with a par value of $0.001. As of September 30, 2005, we had issued 7,000,000
common shares to our sole officer and director for total consideration of
$7,000. In addition, we have issued 3,200,000 common shares for total
consideration of $16,000 to a total of eight registered shareholders, four of
whom reside outside the United States.
Dura Track is not listed for trading on any securities exchange in the United
States and there has been no active market in the United States or elsewhere
for the common shares.
During the past year, the Company has sold the following securities which
were not registered under the Securities Act of 1933, as amended:
On July 6, 2004, we issued 7,000,000 common shares to Darrel Crimeni, the
sole officer and director of the Company, at an offering price of $0.001 per
share for gross offering proceeds of $7,000 in an offshore transaction
pursuant to Rule 903 of Regulation S of the Securities Act of 1933. Darrel
-41-
Crimeni is not a U.S. person as that term is defined in Regulation S. No
directed selling efforts were made in the United States by the Company, any
distributor, any of their respective affiliates or any person acting on
behalf of any of the foregoing. We are subject to Category 3 of Rule 903 of
Regulation S and accordingly we implemented the offering restrictions
required by Category 3 of Rule 903 of Regulation S by including a legend on
all offering materials and documents which stated that the shares have not
been registered under the Securities Act of 1933 and may not be offered or
sold in the United States or to US persons unless the shares are registered
under the Securities Act of 1933, or an exemption from the registration
requirements of the Securities Act of 1933 is available. The offering
materials and documents also contained a statement that hedging transactions
involving the shares may not be conducted unless in compliance with the
Securities Act of 1933.
On the dates listed below, we issued a total of 1,600,000 common shares to
four shareholders at an offering price of $0.005 per share for gross offering
proceeds of $8,000 in offshore transactions pursuant to Rule 903 of
Regulation S of the Securities Act of 1933. None of the shareholders are U.S.
persons as that term is defined in Regulation S. No directed selling efforts
were made in the United States by the Company, any distributor, any of their
respective affiliates or any person acting on behalf of any of the foregoing.
We are subject to Category 3 of Rule 903 of Regulation S and accordingly we
implemented the offering restrictions required by Category 3 of Rule 903 of
Regulation S by including a legend on all offering materials and documents
which stated that the shares have not been registered under the Securities
Act of 1933 and may not be offered or sold in the United States or to US
persons unless the shares are registered under the Securities Act of 1933, or
an exemption from the registration requirements of the Securities Act of 1933
is available. The offering materials and documents also contained a statement
that hedging transactions involving the shares may not be conducted unless in
compliance with the Securities Act of 1933.
October 25, 2004 - 420,000 common shares to one individual investor.
October 27, 2004 - 380,000 common shares to one investor
January 28, 2005 - 800,000 common shares to two individual investors
On December 30, 2004, we issued 1,600,000 common shares to four shareholders
at an offering price of $0.005 per share for gross offering proceeds of
$8,000 pursuant to an exemption from registration under Rule 504 of
Regulation D. The appropriate filings were made at the federal and state
level. The share transactions took place within the United States and were
offered and subject at all times to the restrictions on the sale and resale
of the offered shares specified in WAC 460-44A-504 and California Corporate
Code 25102 (f) and according to Rule 144 promulgated pursuant to the Act by
the Securities and Exchange Commission.
(b) Use of proceeds
We have spent a portion of the above proceeds to pay for costs associated
with this Prospectus and expect the balance of the proceeds to be mainly
applied to further costs of this Prospectus and administrative costs.
-42-
We shall report the use of proceeds on our first periodic report filed
pursuant to sections 13(a) and 15(d) of the Exchange Act after the effective
date of this Registration Statement and thereafter on each of our subsequent
periodic reports through the later of 1) the disclosure of the application of
the Offering proceeds, or 2) disclosure of the termination of this Offering.
EXHIBITS
The following Exhibits are filed as part of this Registration Statement,
pursuant to Item 601 of Regulation K. All Exhibits have been previously filed
unless otherwise noted.
Exhibit No. Document Description
- ---------- --------------------
*3.1 Articles of Incorporation of Dura Track Enterprises, Inc.
*3.2 Bylaws of Dura Track Enterprises, Inc.
*4.1 Specimen Stock Certificate of Dura Track Enterprises, Inc.
*5.1 Opinion of Jeffrey Nichols regarding the legality of the
securities being registered
*10.1 Dura Track Enterprises, Inc. International Distributor
Agreement
*10.2 Amendment to the Dura Track Enterprises International, Inc.
International Distributor Agreement
*10.3 Altres Group, LLC Consulting Services Agreement
23.1 Consent of Dale Matheson Carr-Hilton LaBonte, Chartered
Accountants
*99.1 Subscription Agreement of Dura Track Enterprises, Inc.
Description of Exhibits
*Exhibit 3.1
Articles of Incorporation of Dura Track Enterprises, Inc., dated March 3,
2004.
*Exhibit 3.2
Bylaws of Dura Track Enterprises, Inc., approved and adopted on March 26,
2004.
*Exhibit 4.1
Specimen Stock Certificate of Dura Track Enterprises, Inc.
*Exhibit 5.1
Opinion of Jeffrey Nichols, Attorney at Law, Suite 500, 388 Market Street,
San Francisco, CA 94111, dated August 5, 2005, regarding the legality of the
securities being registered.
-43-
*Exhibit 10.1
Dura Track Enterprises, Inc. International Distributor Agreement, effective
May 1, 2004.
*Exhibit 10.2
Amendment to the Dura Track Enterprises, Inc. International Distributor
Agreement, effective February 22, 2005.
*Exhibit 10.3
Altres Group, LLC Consulting Services Agreement, effective April 23, 2004.
Exhibit 23.1
Consent of Dale Matheson Carr-Hilton LaBonte, Chartered Accountants, 1700 -
1140 West Pender Street, Vancouver, British Columbia, Canada V6E 4G1, dated
February 14, 2006 regarding the use in this Registration Statement of their
report of the auditors and financial statements of Dura Track Enterprises,
Inc. for the period ending December 31, 2005.
*Exhibit 99.1
Subscription Agreement of Dura Track Enterprises, Inc.
* Previously filed with Form SB-2 on August 11, 2005
UNDERTAKINGS
Presently the sole officer and director of Dura Track Enterprises, Inc. is
not covered by liability insurance. However, Dura Track's Articles of
Incorporation state that the Company may indemnify its officers, directors,
employees, and agents to the full extent permitted by the laws of the State
of Nevada. No other statute, charter provision, by-law, contract, or other
arrangement to insure or indemnify a controlling person, officer, or director
of Dura Track exists which would affect his liability in that capacity.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to officers, directors, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities, other than the payment by
the registrant of expenses incurred or paid by an officer, director, or
controlling person of the registrant in the successful defense of any action,
suit or proceeding, is asserted by such officer, director, or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by itself is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
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The undersigned registrant hereby undertakes:
1. To file, during any period in which it offers or sells 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 set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered, if the total dollar value of
securities offered would not exceed that which is registered, any deviation
from the low or high end of the estimated maximum Offering range may be
reflected in the form of Prospectus filed with the Commission pursuant to
Rule 424 (b) if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate Offering price set forth
in the "Calculation of Registration Fee" table in the effective Registration
Statement; and
c. To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
change to such information in the Registration Statement.
2. That, for the purpose of determining any liability under the Securities
Act of 1933, 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 be the initial
bona fide Offering thereof.
3. To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
Offering.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on this Form SB-2 and authorized this Registration
Statement and has duly caused this Form SB-2 Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in
Vancouver, British Columbia, on this 27th day of March, 2006.
Dura Track Enterprises, Inc.
BY: /s/ Darrel Crimeni
-----------------------
Darrel Crimeni,
President and Director
Principal Executive Officer
Principal Accounting Officer
Principal Financial Officer
Know all men by these present, that each person whose signature appears below
constitutes and appoints Darrel Crimeni, as agent, with full power of
substitution, for his and in his name, place, and stead, in any and all
capacities, to sign any and all amendments, including post-effective
amendments, to this Registration Statement, and to file the same, therewith,
with the Securities and Exchange Commission, and to make any and all state
securities law or blue sky filings, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and
thing requisite or necessary to be done in about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying
the confirming all that said attorney-in-fact and agent, or any substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Form SB-2
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Dura Track Enterprises, Inc.
/s/ Darrel Crimeni
- ------------------
President and Director
Principal Executive Officer
Principal Accounting Officer
Principal Financial Officer
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EXHIBIT 23.1 - Auditors' Consent Letter
February 14, 2006
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.,
Washington DC 20549
Re: Dura Track Enterprises, Inc. -Form SB-2/A Registration Statement
Dear Sirs:
As independent registered public accountants, we hereby consent to the
inclusion or incorporation by reference in this Form SB-2 Registration
Statement dated February 14, 2006, of the following:
Our report to the Stockholders and Board of Directors of Dura Track
Enterprises, Inc. dated January 18, 2006 on the financial statements of the
Company as at December 31, 2005 and December 31, 2004 and for the period from
March 19, 2004 (inception) to December 31, 2004, the year ended December 31,
2005 and the period March 19, 2004 (inception) to December 31, 2005.
In addition, we also consent to the reference to our firm included under the
heading "Experts" in this Registration Statement.
Yours truly,
/s/ Dale Matheson Carr-Hilton LaBonte
Dale Matheson Carr-Hilton LaBonte
Chartered Accountants
Vancouver, British Columbia