As filed with the Securities and Exchange Commission
on November 24, 2003.
REGISTRATION NO. 333-106637
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 5 TO FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
CI SELL CARS INC.
(Name of Small Business Issuer in its Charter)
TEXAS 16 1644353
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
309A EAST MAIN
TOMBALL, TEXAS 77375
(281)255-6256
(Address, including zip code, and telephone
number, including area code, of
registrant's principal executive
offices)
CURTIS HUNSINGER
PRESIDENT
CI SELL CARS INC.
309A EAST MAIN
TOMBALL, TEXAS 77375
(281)255-6256
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies of communications to:
GREGG E. JACLIN, ESQ.
ANSLOW & JACLIN, LLP
4400 ROUTE 9, 2ND FLOOR
FREEHOLD, NEW JERSEY
TELEPHONE NO.: (732) 409-1212
FACSIMILE NO.: (732) 577-1188
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.|_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.|_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARES AGGREGATE OFFERING PRICE REGISTRATION FEE
Common Stock, par value $.001 per share 567,000 $.10 $56,700 $5.22
The offering price has been estimated solely for the purpose of computing the
amount of the registration fee in accordance with Rule 457(c). Our common stock
is not traded and any national exchange and in accordance with Rule 457, the
offering price was determined by the price shareholders were sold to CI Sell
Cars Inc. shareholders in a private placement memorandum. This price of $.10 is
a fixed price at which the selling security holders may sell their shares until
our common stock is quoted on the OTC Bulletin Board at which time the shares
may be sold at prevailing market prices or privately negotiated prices.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SHAREHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED November 24, 2003
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
CI SELL CARS INC.
567,000 SHARES OF COMMON STOCK
Our selling stockholders are offering to sell 567,000 shares of our common
stock. Currently, our common stock is not trading on any public market. Although
there is no established public trading market for our securities we intend to
seek a market maker to apply for a quotation on the OTC Electronic Bulletin
Board once this registration statement is deemed effective. The 567,000 shares
of our common stock can be sold by selling security holders at a fixed price of
$.10 per share until our shares are quoted on the OTC Bulletin Board and
thereafter at prevailing market prices or privately negotiated prices. The
offering price was determined by the price shareholders were sold to CI Sell
Cars Inc. shareholders in a private placement memorandum. The offering will
terminate twelve months after commencement of the offering.
THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING "RISK FACTORS"
BEGINNING ON PAGE 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is November 24, 2003
Currently, our common stock is not trading on any public market. It is our
intention to retain a market maker to apply for trading on the Over the Counter
Bulletin Board ("OTC BB") following the effectiveness of this registration
statement.
TABLE OF CONTENTS
ABOUT OUR COMPANY 1
SUMMARY FINANCIAL DATA. 1
RISK FACTORS. 2
SPECIAL INFORMATION REGARDING FORWARD LOOKING STATEMENTS 6
LACK OF MARKET FOR OUR COMMON STOCK 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OR OPERATION. 7
BUSINESS 8
MANAGEMENT 11
PRINCIPAL STOCKHOLDERS 13
SELLING STOCKHOLDERS 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 17
DESCRIPTION OF SECURITIES. 17
WHERE YOU CAN FIND MORE INFORMATION. 18
TRANSFER AGENT. 19
LEGAL MATTERS 19
EXPERTS. 19
INDEX TO FINANCIAL STATEMENTS f-1
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's obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
i
About Our Company
CI Sell Cars, Inc. is a Texas corporation that was formed in December 2002 to
become a car dealer and to obtain a license to sell cars in the state of Texas.
Our operations actually commenced in September 2002 when we operated as a sole
proprietorship doing business as CI Sell cars until incorporating in December
2002. From the time we commenced operations in September 2002 until early 2003,
Curtis Hunsinger, our sole officer and director, applied for a used car dealer
license, researched the used car market and sold cars but not at the wholesale
or dealer level. In February 2003, Mr. Hunsinger was successful in obtaining a
Texas Used Car License. . This license was issued to us by the Texas Department
of Transportation, Motor Vehicle Division, and permits us to sell used cars in
the State of Texas. Since initiating our business we have been successful in
selling nine used cars. At the same time, we conducted research to determine if
there are any web sites that offered to sell used cars, and, whether there were
public companies that sold used cars on the web.
Based on our research, we decided to develop three areas in the used car selling
market to determine in which manner to focus our business plan. The first area
that we are trying to develop is the traditional manner of selling used cars by
establishing a used car lot, obtaining a state license, becoming approved at
auto auctions and establishing relationships with vendors needed to quickly buy,
`fix-up' and then sell cars for a profit. The next market we intend to pursue is
to establish a web site that will list not only our cars for sale, but will
allow others to list their cars also and it will become a revenue source by
charging for advertising as well as a small fee for listing the cars for sale.
The final market we intend to pursue is the creation of a web page for new
dealers to assist them in becoming used car dealers. We intend to pursue the
development of all three avenues and as one becomes more profitable than the
others, that will be the area to receive the major thrust of our investment in
terms of financial support and time.
As of November 24, 2003, we have 26,812,000 shares of common stock outstanding.
We are not a "blank check company" as the term is defined in Rule 405 of
Regulation C under the Securities Act of 1933 and we have no present intent to
merge with or acquire another company. We presently maintain our principal
offices at our used car dealership at 309A East Main, Tomball, Texas 77375. Our
telephone number is (281)255-6256. Our website is located at
http:/usedcarsinhouston.net.
How Our Company Is Organized
We were incorporated under the name CI Sell Cars, Inc. in the State of Texas on
December 13, 2002.
We have not been involved in any bankruptcy, receivership or similar proceeding.
We have not been involved in any material reclassification, merger,
consolidation, or purchase or sale of a significant amount of assets not in the
ordinary course of business.
Where You Can Find Us
We presently maintain our principal offices at 309A East Main, Tomball, Texas
77375. Our telephone number is (281)255-6256.
Summary Financial Data
The following summary financial data should be read in conjunction with
"Management's Discussion and Analysis or Plan of Operation" and the Financial
Statements and Notes thereto, included elsewhere in this Prospectus.
The following summary financial data should be read in conjunction with
"Management's Discussion and Analysis or Plan of Operation" and the Financial
Statements and Notes thereto, included elsewhere in this Prospectus.
1
The statement of operations data for the period from September 6, 2002
(inception) to April 30, 2003 are derived from our audited Financial Statements.
Balance sheet data at April 30, 2003 are derived from our audited financial
statements. The statement of operations data for the period from September 6,
2002 (inception) to July 31, 2003 are derived from our unaudited financial
statements. Balance sheet data at July 31, 2003 are derived from our un audited
financial statements. The operating results for the period ended July 31 are not
necessarily indicative of the results to be expected for the full year or for
any future period.
(Date of Three Months Date of Inception
Inception Ended July 31 September 6, 2002)
September 6, 2002 2003 July 31, 2003
To April 30, 2003
-----------------
Statement of Operations:
Revenue $ 12,710 $7,650 $20,360
Net Losses (68,604) ($5,413) ($74,017)
Total Operating Expenses 67,825 $5,633 $73,458
Research and Development - - -
General and administrative 67,825 $5,633 $73,458
As of April 30, 2003 As of July 31, 2003
-------------------- -------------------
Balance Sheet Data:
Cash $ 20,298 $24,935
Total Current Assets 31,446 31,083
Total Assets 31,446 31,083
Total Liabilities 0 0
Stockholders Equity 31,446 31,083
Risk Factors
The common shares offered are highly speculative in nature, involve a high
degree of risk and should be purchased only by persons who can afford to lose
their entire investment. Accordingly, prospective investors should carefully
consider, along with other matters referred to herein, the following risk
factors in evaluating us and our business before purchasing any common shares.
We Lack A Significant Operating History And Have Losses Which We Expect To
Continue Into The Future; Therefore, We Must Limit Our Development And As A
Result May Not Being Able To Pursue Our Business Plan.
We were incorporated in December 2002 and we have recently commenced our
proposed business operations and have begun to realize revenues. We have a
limited operating history upon which an evaluation of our future success or
failure can be made. Our net loss since inception is $68,604. Our ability to
achieve and maintain profitability and positive cash flow is dependent upon:
- our ability to market and advertise our used car business
- our ability to generate revenues
- our ability to raise the capital necessary to continue the development
of our websites and business plan.
2
Based upon current plans, we expect to incur operating losses in future periods.
This will happen because there are expenses associated with operations of our
used car lot and website. We cannot guarantee that we will be successful in
generating additional revenues in the future. Failure to generate additional
revenues may cause us to go out of business.
At this time, we have no definitive source of revenues except from the sale of
used cars. Therefore, we must limit the development of our business. Because we
may have to limit the development of our operations, we may not be successful in
determining which marketing arena is best suited for our company. In addition,
based on our lack of capital and revenues we may not be able to properly develop
and market our website.
We Will Require Additional Funds To Achieve Our Current Business Strategy And
Our Inability To Obtain Additional Financing Will Interfere With Our Ability To
Expand Our Current Business Operations.
We may need to raise additional funds through public or private debt or sale of
equity to expand our current business operation as a used car dealer. We also
need to raise additional capital to complete our website. This financing may not
be available when needed. Even if this financing is available, it may be on
terms that we deem unacceptable or are materially adverse to your interests with
respect to dilution of book value, dividend preferences, liquidation
preferences, or other terms. Our inability to obtain financing would have an
adverse effect on our ability to implement our acquisition and growth strategy,
and as a result, could require us to diminish or suspend our acquisition
strategy and possibly cease our operations.
Curtis Hunsinger Owns More Than 50% Of Our Outstanding Common Shares And His
Ownership Of A Majority Of Our Common Stock Prevents You From Causing A Change
In The Course Of Our Operations.
Curtis Hunsinger owns 20,000,000 shares (74.59%) of our outstanding common
stock. Therefore, 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 common shares you own because
of the ineffective voting power. As a result, Curtis Hunsinger will be able to
elect all of our directors and control our operations.
As A Company Involved With The Internet, We Are In An Intensely Competitive
Industry And Any Failure To Timely Implement Our Business Plan Could Diminish Or
Suspend Our Development And Possibly Cause Us To Cease Our Operations.
The internet industry is highly competitive, and has few barriers to entry.
Although there are few competitors who offer the same or similar services of the
type we offer, we can provide no assurance that additional competitors will not
enter markets that we intend to serve. If we are unable to efficiently and
effectively institute our business plan as a result of intense competition or a
saturated market, we may not be able to continue the development and enhancement
of our web site and become profitable.
3
If We Are Unable To Establish A Large User Base We May Have Difficulty
Attracting Advertisers To Our Web Site, Which May Affect Our Ability To Expand
Our Business Operations And Product Line.
An integral part of our business plan and marketing strategy requires us to
establish a large user base. Once we are able to establish a large user base and
a demand for our online services, we will be able to attract advertisers to our
web site and possibly begin to generate advertising revenues. If for any reason
our web site is ineffective at attracting consumers or if we are unable to
continue to develop and update our web site to keep consumers satisfied with our
service, our user base may decrease and our ability to generate advertising
revenues may decline.
Our Market Is Characterized By Rapid Technological Change, And If We Fail To
Develop And Market New Technologies Rapidly, We May Not Become Profitable In The
Future.
In addition, the internet industry are characterized by rapid technological
change that could render our existing web site obsolete. The development of our
web site entails significant technical and business risks. We can give no
assurance that we will successfully use new technologies effectively or adapt
our web site to customer requirements or emerging industry standards. If our
management is unable, for technical, legal, financial, or other reasons, to
adapt in a timely manner in response to changing market conditions or customer
requirements, we may never become profitable which may result in the loss of all
or part of your investment.
We Face Intense Competition From Other Used Car Dealers Which Are Larger And
Have Greater Resources Which Could Result In A Failure To Maintain Our Existing
Clients As Well As Obtaining New Clients.
The used car dealer market and the internet marketing is intensely competitive,
highly fragmented and subject to rapid change. We may be unable to compete
successfully with our existing competitors or with any new competitors. We
compete with many large used car dealer which have significantly greater
personnel, financial, managerial, technical and marketing resources than we do.
This competition from other companies with greater resources and reputations may
result in our failure to maintain expand our business.
We May Not Be Able To Liquidate Our Cars In A Timely Manner And We May Incur
Unforeseen Events Such As Unexpected Repairs And Changes In The Local Market
Which Could Cause Us To Delay Or Suspend Operations.
If we fail to liquidate our used cars in a timely manner, our inventory may
become stale and we may not be able to sell our used cars. In addition, we may
face unforeseen events such as unexpected repairs and changes in the local
market. If we are unable to liquidate our cars or there is a change in the local
market we may have to suspend or cease our operations.
4
There Is No Public Trading Market For Our Common Stock And You May Not Be Able
To Resell Your Common Stock.
There is currently no public trading market for our common stock. Therefore,
there is no central place, such as a stock exchange or electronic trading
system, to resell your common shares. If you do want to resell your common
shares, you will have to locate a buyer and negotiate your own sale.
Loss Of Our Key Management Staff, Curtis Hunsinger, Could Be Detrimental To Our
Business.
We are presently dependent to a great extent upon the experience, abilities and
continued services of Curtis Hunsinger, our sole officer and director. The loss
of services of Curtis could have a material adverse effect on our business,
financial condition or results of operation.
Our sole officer and director has the ability to be employed by or consult for
other companies which may prevent him from devoting full-time to our operations.
Our sole officer and director, Curtis Hunsinger is not required to work
exclusively for us. Therefore, it is possible that a conflict of interest with
regard to Curtis' time may arise if he is employed by another company. His other
activities may prevent him from devoting full-time to our operations which could
slow our operations and may reduce our financial results because of the slow
down in operations.
Our Common Shares Sold To Investors Are Restricted Securities And Are Not
Eligible For Sale.
Our common shares offered are "restricted securities" as defined under the
Securities Act. The resale of such securities may not be made without
registration under the Securities Act and state securities laws or the existence
of an exemption from such registration requirements.
Certain States May Not Allow Sales Of Our Common Shares And Investors May Be
Required To Hold Their Common Shares Indefinitely
The common shares offered are intended to be qualified or exempt for sale only
in a limited number of states. Purchasers of the common shares may move to
jurisdictions in which the common shares are not qualified or exempt. No
assurances can be given that we will be able to effect any required
qualification or that any exemption will be available permitting a purchaser to
sell his common shares, and, as a result, such common shares may be required to
be held indefinitely.
5
NO DIVIDENDS AND NONE ANTICIPATED
To date, we have paid no cash dividends on our common shares. For the
foreseeable future, earnings generated from our operations will be retained for
use in our business and not to pay dividends.
SPECIAL INFORMATION REGARDING FORWARD LOOKING STATEMENTS
Some of the statements in this prospectus under "Risk Factors," Plan of
Operation," "Business," and elsewhere are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. These
statements involve known and unknown risks, uncertainties and other factors
which may cause our or our industry's actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by these forward-looking statements. These
factors include, among others, the factors set forth above under "Risk Factors."
In some cases, you can identify forward-looking statements by the words
"believe," "expect," "anticipate," "intend" and "plan" and similar expressions
or the negative of these terms or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, events, levels of
activity, performance or achievements. We caution you not to place undue
reliance on these forward- looking statements.
USE OF PROCEEDS
The selling stockholders are selling shares of common stock covered by this
prospectus for their own account. We will not receive any of the proceeds from
the resale of these shares. We have agreed to bear the expenses relating to the
registration of the shares for the selling security holders.
LACK OF MARKET FOR OUR COMMON STOCK
There is no established public trading market for our securities. We intend to
seek a market maker to apply for a listing on the OTC Electronic Bulletin Board
in the United States. Our shares are not and have not been listed or quoted on
any exchange or quotation system.
DETERMINATION OF OFFERING PRICE
Since our shares are not listed or quoted on any exchange or quotation system,
the offering price of the shares of common stock was arbitrarily determined. The
offering price was determined by the price shares were sold to our shareholders
in our Regulation D Rule 506 private placement in March 2003. The factors
considered in determining the offering price were the receipt of our used car
license, obtaining a surety bond, leasing of the used car lot, development of
the website, the initial sale of some used cars and the development of our
relationships with auto auctions and wholesalers. The offering price should not
be regarded as an indicator of the future market price of the securities.
6
DIVIDENDS
To date, we have not declared or paid any dividends on our common stock. We
currently do not anticipate paying any cash dividends in the foreseeable future
on our common stock, when issued pursuant to this offering. Although we intend
to retain our earnings, if any, to finance the development and growth of our
business, our Board of Directors will have the discretion to declare and pay
dividends in the future. Payment of dividends in the future will depend upon our
earnings, capital requirements, and other factors, which our Board of Directors
may deem relevant.
PENNY STOCK CONSIDERATIONS
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks generally are equity securities with a price of less
than $5.00. Penny stock rules require a broker-dealer, prior to a transaction in
a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document that provides information about penny stocks and the
risks in the penny stock market. The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker-dealer 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.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of our results of
operations and financial condition. The discussion should be read in conjunction
with our financial statements and notes thereto appearing in this prospectus.
The following discussion and analysis contains forward-looking statements, which
involve risks and uncertainties. Our actual results may differ significantly
from the results, expectations and plans discussed in these forward-looking
statements.
Overview
Since our inception, our operations have been devoted to car sales and to a
lesser degree the other two areas of our operations. We are focusing on selling
cars through a used car lot, establishing a web site to sell use cars and
finally to establish another website that assists prospective car dealers in
becoming successful dealers. These three areas will be tracked and CI Sell Cars
will increasingly invest time and funds into the strongest business. We have
started the advertising web site, but need an estimated $25,000 and twelve
months to fully develop the site. We have not started the development of the
dealer training web site; however, we estimate the development will be $50,000
and will require twelve months once we are funded. We also need an advertising
budget to promote the web sites and our ability to fully promote the web sites
will be limited by our ability to raise capital.
7
In order to raise the capital to develop the two planned web sites we will need
to either receive a substantial increase from our revenue stream, receive loans
from our management or third parties and/or sell additional shares of our common
stock which may cause significant dilution to existing shareholders.
Plan of Operation
The business was started in 2002 and since then we have received an auto dealer
license in the State of Texas, established a small used car lot, successfully
sold a number of cars and started the development of a an advertising website
for the local Houston market.
During the next 12 months we expect to generate substantially all our revenues
from the sale of used cars to individual retail buyers. Our used car lot is
located on Main Street in Tomball, Texas. Tomball is a middle-income suburb of
Houston, Texas. There are several other small used car lots located on Main
Street, within one mile of our location. We believe that the drive buy traffic
generated by the number of used car lots in the area is beneficial in increasing
our potential customers. Our used car lot is approximately 10,000 square feet
and we can park and display a maximum of 15 cars. We can park up to 5 cars on
the first row of our lot and these can be clearly seen from the street. We use
pre-printed self adhesive numbers to display the asking price on the windshield
of all our inventory. The name of our lot, CI Sell Cars and the phone number can
clearly be seen by traffic traveling in both directions on Main Street. We have
prepaid the $1,000 annual lease on our lot, and have an agreement to renew the
lease for another 12 months at the same lease terms in November of 2003. We do
not have any material contracts with any affiliated parties.
We currently have a policy of paying between $1,000 and $5,000 for our cars. We
normally purchase our cars from 3 different auto auction sites in Houston which
are only open to Texas used car dealers and from wholesalers that purchase cars
in bulk sales directly from new car dealers. We will accept trade-ins but to
date this has not been a significant source of inventory. We specialize in cars
that sell for less than $7,500 at the retail level for several reasons. Our
limited financial resources requires us to buy inexpensive cars. We currently
have $23,000 in cash inventory with a wholesale value of approximately $10,000.
Our customers often cannot get financing on the purchase of cars requiring them
to pay cash. The other used car lots in the area also specialize in used cars
priced in this range, and we believe a lot of our drive by traffic is shopping
for cars priced below $7500. We have established a policy of not having more
then $15,000 tied up in inventory, therefore we expect to have no more that 4
cars in inventory at any one time. We estimate our current overhead to be
approximately $1,000 per month, broken down as follows:
Rent $ 85.00
Phone 75.00
Auto Expense 75.00
Surety bond 50.00
Auto repairs 200.00
Advertising 150.00
Web site 50.00
Legal and accounting 150.00
Office expense 50.00
Miscellaneous 190.00
At our current stage of operations we hope to sell one or two cars per month. We
strive to make a gross profit of $500 to $1,500 per car, but we may have to sell
cars for less profit or even at a loss. In order to expand our current level of
operations we will have to raise more money by selling equity, raising debt
capital, or obtaining capital from our principal Mr. Hunsinger. We have no
assurances that any of these sources of capital will be available. If we
continue to operate our used car lot at the current level of sales and inventory
we anticipate to have enough operating capital for the next 12 months.
8
Our business plan provides for the development of two web sites in order to
further expand our business. The first web site will be geared to the retail
selling of used cars. We will list our inventory on the site and allow others to
also list their cars for sale. We plan to have very simple search criteria on
the web site and we feel this will appeal to our target market of customers that
want to purchase cars for less than $7,500. Our plan is to generate enough
traffic to the web site so we can sell advertising to firms related to the used
car market.
Currently, we have created the web site, usedcarsinhouston.net, and began the
initial development of such site. We estimate it will require a minimum of
$25,000 to further develop the web site. We do not have the capital to further
develop the web site at this time and will spend only minimal time and expense
on this web site during the next 12 months unless we are successful in securing
equity financing to pay for the costs of the web site. In order to develop the
web site and have capital for advertising the web site we will need to raise a
minimum of $50,000. The third phase of our business plan calls for the
development of a web site geared to individuals who want to become a used car
dealer. This web site will contain detailed information of the procedures,
costs, and requirements to become a used car dealer. We estimate the initial
costs to develop this web site will be $50,000 or more plus advertising
expenditures. We will need to raise equity capital of $100,000 or more to begin
the development of this web site. During the next 12 months it is not likely we
will develop this web site since we plan to increase the size of our used car
business and develop the retail used car site before starting the dealer site.
Time Period Development Activity Revenue Source Capital Costs
- ----------- -------------------- -------------- -------------
Current-12 months Used car sales profits from car sales cash flow for auto
sales or equity to
increase inventory *
6-18 months development of advertising and profits $25,000 to develop
retail web site from used car sales site, plus $25,000 for
for sale of used marketing*
cars by us and
by third parties
12-24 months develop training advertising and $50,000 to develop site
web site for training course sales plus $100,000 for
individuals to marketing*
train to be used
cars dealers
* these phases of our business plan will require additional equity or debt as
set forth herein.
Capital Resources and Liquidity.
As of July 31, 2003, we have approximately $24,935 in cash. We believe that the
planned expenditures for continuing the car sales business is minimal. Our
general and administrative expenses are expected to average $1,000 per month for
the next 12 month which gives us enough cash to survive for the next 12 months.
We have no plans to pay salaries to our Officers or employees during the next 12
months and we have paid our rent for our offices for the whole year. We believe
we have sufficient cash to meet our minimum costs and operating expenses for our
used car lot during the next 12 months. However, we will need to raise
additional capital to expand our used car lot and its inventory and to further
develop our two planned websites. There is no assurance we will be successful in
raising the needed capital.
9
BUSINESS - OUR COMPANY
Organization
We were organized as a Texas corporation in December 2002 for the purpose of
selling used cars.
Our Business
We are a Texas corporation that was formed in December 2002 to become a car
dealer and to obtain a license to sell cars in the state of Texas. Our
operations actually commenced in September 2002 when we operated as a sole
proprietorship doing business as CI Sell Cars until incorporating in December
2002. From the time we commenced operations in September 2002 until early 2003,
Curtis Hunsinger, our sole officer and director, applied for a used car dealer
license, researched the used car market and sold cars but not at the wholesale
or dealer level. In February 2003, Mr. Hunsinger was successful in obtaining the
license to sell cars. Prior to that time, we had been buying and selling cars
but not at the dealer or wholesale level. At the same time, we conducted
research to determine if there are any web sites that offered to sell cars and
whether there were public companies that sold cars. There are several web sites
listing cars for sale but most are not geared to our local market and the local
sites do not offer simple search criteria such as price only searching. Many
people in our general pricing market have only a certain dollar amount to spend
and are not extremely particular about what brand of car they purchase. Yet of
the existing websites that sell cars except eBay, all of them only allow a
search to be run once the consumer picks a brand or type car. We believe that
searching by price alone will be a great asset to the used car buying market
that we are targeting.
Based on our market research, we decided to develop three areas in the used car
selling market and then to determine in which area to focus our business. The
first area that we are trying to develop is the traditional manner of selling
cars by establishing a used car lot, obtaining a state license, becoming
approved at auto auctions and establishing relationships with vendors needed to
quickly buy, `fix-up' and then sell cars for a profit. In order to receive our
dealer's license we were required to purchase the necessary bond, install a
proper sign which is visible 50 feet away, install phone lines and rent an
office and lot space. We have already registered with four auto auctions and
have made deposits with the two auto auctions that require such deposits.
The next market we intend to pursue is to establish a web site that will list
not only our cars for sale, but will allow others to list their cars for sale
also and this will become a revenue source from the advertising dollars. We have
secured the web site, www.usedcarsinhouston.net, and have commenced the initial
design and development of such site. We estimate it will require a minimum of
$25,000 to further develop the web site and we do not have the capital to
further develop the web site at this time. Therefore we will spend only minimal
time and expense on this web site during the next 12 months unless we are
successful in securing equity financing to pay for the costs of the web site. We
will promote this site by purchasing key domain names, placing banner ads,
listing in search engines and ensuring that all of our magnetic signs have our
website address. As Mr. Hunsinger interacts with his sources for buying, fixing
up and selling cars, he will also promote this websites existence.
The final market we intend to pursue is the creation of a web page for new
dealers to assist them in becoming car dealers. We intend to pursue the funding
and development of all three avenues, and as one becomes more profitable than
the others, that will be the area to get the primary thrust of work and a
majority of our investment in terms of financial support and time.
10
As set forth above, the first market we intend to pursue is the traditional
arena of buying and selling of cars. We have established a used car lot,
obtained a state license, become approved at auto auctions and established a
relationship with vendors that need to quickly buy, `fix-up' and then sale cars
for a profit. We have been successful in selling a number of used cars since Mr.
Hunsinger obtained his dealer's license and contributed it to us.
The second market that we intend to develop is that of a web site that will list
not only our cars for sale, but will allow other to list their cars also. This
will become a source of revenue by charging advertisers for ads on the website.
According to an article in Forbes magazine on April 8, 2002 by Michael Frank,
Ebay had a billion dollars in car sales in 2001 and double that for 2002. We
believe the success of Ebay and other online auction sites proves there is a
market for selling cars on the internet. We will list our cars on Ebay and we
have acquired the rights to the domain name, www.UsedCarsinHouston.net. We are
in the process of creating a database of cars for both purchasers and sellers in
the Houston area. For a limited time this would be free to both the seller and
the purchaser.
Sellers will also be able to send photos to be placed on the website, but for
this there will be a fee; this may generate a small source of revenue to us.
This website will have a simple search capability using such parameters, as
make, year, and price, and a brief description and picture. To the best of our
knowledge, no other web site geared towards the local Houston marker allows a
search by price alone. We plan to design the site to allow individuals or other
dealers to enter their own information of the site, without the need for help
from the company.
To the best of our knowledge, there are no other website that offers this
service at this time. The layout will be very user friendly, therefore
advertisers such as auto parts stores, paintless dent removal, rim resurfacing,
windshield repair, insurance companies, car washes, car aftermarket stores, auto
repair shops, body repair shops, financing companies, will be enticed to place
and pay for ads on the website. This website will offer links to the home pages
of these advertisers. We will need to raise additional capital in order to
expand into other cities. Each city will have its own page name and each will be
either owned or licensed to another individual. Some advertisers will be
national and those advertising dollars will be split unequally in our favor. As
these cities emerge, the impact of each will aid the others. The website is
already linked to/from Car Fax which is generating click-throughs and live
calls.
We also intend to establish a web page for new dealers to assist them in
becoming car dealers. As Mr. Hunsinger was researching for his license, he found
that the lack of information available to new car dealers often creates serious
fines and penalties for a majority of applicants. He also discovered how many
individuals have attempted to buy and sale cars as either a full time or part
time pursuit. One of the great American dreams is to `own a business' and many
believe that selling cars is not only a profit center but a means of obtaining
the freedom to be there own boss. The appeal of being a business owner is
strong. This site will provide information for before the dealer application,
through the application and after the application. Details of who to call, where
to call, classes available, monthly, quarterly and annual taxes due, forms you
need, and who sells surety bonds will all be provided for a fee. As of now,
there is no central location that provides all of this information. There will
be information provided on auto auctions, such as, the amount of registration
fees, purchase and sales fees, deposits required, payment methods accepted and
deadline, dates of auction, times of auctions, types of titles offered - clear
title, flood title, salvaged title.
11
The new dealer web site should appeal to these types of advertisers: windshield
repair, auto detailing services, surety bond insurance, inspection services,
title services, car license printing companies, and sign makers.
We have already developed some simple marketing procedures that no one else in
the Houston auto selling arena has used. All cars for sale by us have magnetic
signs listing the price and phone number. As our management attends auto
auctions, many dealers are impressed that they `never thought of' this simple
idea. This is a much cleaner and appealing look than the usual hand painted
information on cars. We also promote our website on the magnetic signs and are
already receiving hits to this site with no paid advertising or promotion yet.
Our first site will offer used car information for anyone in the Houston market.
If we are successful in the Houston area we plan to set up joint web site
ventures with used car dealers in other Texas cities. Eventually we plan to
venture other states as we have the revenue to hire individuals to learn the
other states regulations and to maintain the additional sites.
At this time, we intend to maintain control of these sites and for our
individual partners or dealers in these cities to be independent contractors.
Many of the partners who obtain a dealers license will not succeed in business
for the same reasons many business fail. We believe that some of these will have
a value and will be potential buy out candidates.
By being the source for a host of information, it is likely when these
individuals decide to sell or give up their business, they will contact us,
putting us in a prime spot to select the locations we want for our own growth.
OFFICES
We presently maintain our principal offices at our used car dealership at 309A
East Main, Tomball, Texas 77375. Our telephone number is (281)255-6256.
EMPLOYEES
As of November 10, 2003, we had one member of our management team, Curtis
Hunsinger, our sole officer and director.
DESCRIPTION OF PROPERTY
Our principal offices are at our used car dealership located at 309A East Main,
Tomball, Texas 77375. Such used car dealership is approximately 100 by 100 feet
of lot space and we sublease approximately 144 square feet of space in a small
office building located on the property. We consider our office space suitable
for both our office and storage needs. We pay an annual lease of $1,000 for use
of this lot and office space.
LEGAL PROCEEDINGS
In the normal course of our business, we may periodically become subject to
various lawsuits. However, there is no current proceeding or litigation
involving us.
MANAGEMENT
12
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information about our executive officers and
directors.
NAME AGE POSITION
- ---- --- --------
Curtis Hunsinger 28 Chief Executive Officer/President/Secretary/Treasurer/ Director
Curtis Hunsinger is our founder, Chief Executive Officer, President, Secretary,
Treasurer and Director. Since 1997, Mr. Hunsinger has been employed in the
sales, service and finance departments at new and used car lots such as Big H
auto auction, Precision Toyota & Kingwood Chrysler Jeep Eagle. From 1995 to 1997
he has employed as a crew leader at United Stationers. In addition, in 1995 he
was employed by Bill Elliott Investigations where he installed real time video
and surveillance equipment in Stop & Go convenience stores around the Houston
area. In his capacity as founder and President, Mr. Hunsinger oversees our
day-to-day operations, and manages our long-term strategic development.
Oversight of our operations involves financial and information systems
management and exploration.
All officers and directors listed above will remain in office until the next
annual meeting of our stockholders, and until their successors have been duly
elected and qualified. There are no agreements with respect to the election of
Directors. We have not compensated our Directors for service on our Board of
Directors, any committee thereof, or reimbursed for expenses incurred for
attendance at meetings of our Board of Directors and/or any committee of our
Board of Directors. Officers are appointed annually by our Board of Directors
and each Executive Officer serves at the discretion of our Board of Directors.
None of our Officers and/or Directors have filed any bankruptcy petition, been
convicted of or been the subject of any criminal proceedings or the subject of
any order, judgment or decree involving the violation of any state or federal
securities laws within the past five (5) years.
BOARD OF DIRECTORS
The board of directors consists of one director.
BOARD COMMITTEES
None
EXECUTIVE COMPENSATION
Our sole director will not receive a fee for attending each board of directors
meeting or meeting of a committee of the board of directors. All directors will
be reimbursed for their reasonable out-of-pocket expenses incurred in connection
with attending board of director and committee meetings.
13
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
NAME AND RESTRICTED SECURITIES OPTIONS
PRINCIPAL FISCAL OTHER ANNUAL STOCK UNDERLYING (NO. OF ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARDS SHARES) COMPENSATION
-------- ---- ------ ----- ------------ ------ ------- ------------
Curtis Hunsinger 2003 $ 0 0 0 0 20,000,000
President and
Secretary
Our shareholders may in the future determine to pay Directors' fees and
reimburse Directors for expenses related to their activities.
STOCK OPTIONS
There is no stock option plan or common shares of our common stock set aside for
any stock option plan.
The following table sets forth information with respect to stock options granted
to the Named Executive Officers during fiscal year 2003:
OPTION GRANTS IN FISCAL 2003
(INDIVIDUAL GRANTS)(1)
NUMBER OF% OF TOTAL OPTIONS
SECURITIES UNDERLYING GRANTED TO EMPLOYEES IN EXERCISE EXPIRATION
NAME OPTIONS GRANTED FISCAL PRICE DATE
2003
----
None
No Executive Officer held options during the 2003 fiscal year. The following
table sets forth information as to the number of shares of common stock
underlying unexercised stock options and the value of unexercised in-the-money
stock options projected at the 2003 fiscal year end:
None
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of November 10, 2003, certain information
with respect to the beneficial ownership of the common stock by (1) each person
known by us to beneficially own more than 5% of our outstanding shares, (2) each
of our directors, (3) each Named Executive Officer and (4) all of our executive
officers and directors as a group. Except as otherwise indicated, each person
listed below has sole voting and investment power with respect to the shares of
common stock set forth opposite such person's name.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING SHARES
- -------------------- -------------------- ------------------
5% STOCKHOLDERS
Curtis Hunsinger 20,000,000 74.59%
25402 Chapel Ridge
Sprint, Texas 77373
Officers and Directors 20,000,000 74.59%
as a Group
14
SELLING STOCKHOLDERS
The shares being offered for resale by the selling stockholders consist of five
(5%) percent of the shares of common stock sold to two shareholders in October
and November 2402. These shares also include five (5%) percent of the shares
sold to a total of nine seed investors in February 2003 pursuant to an exemption
from registration at Section 4(2) of the Securities Act of 1933. In addition the
selling stockholders consist of shares of common stock sold to a total of
thirty-four investors in a Regulation D Rule 506 private placement undertaken by
us in May, 2003 and fourteen investors in a Regulation D Rule 506 private
placement undertaken by us in August 2003. None of the selling stockholders have
had within the past three years any position, office or other material
relationship with us or any of our predecessors or affiliates.
The following table sets forth the name of the selling stockholders, the number
of shares of common stock beneficially owned by each of the selling stockholders
as of November 24, 2003 and the number of shares of common stock being offered
by the selling stockholders.
The shares being offered hereby are being registered to permit public secondary
trading, and the selling stockholders may offer all or part of the shares for
resale from time to time. However, the selling stockholders are under no
obligation to sell all or any portion of such shares nor are the selling
stockholders obligated to sell any shares immediately upon effectiveness of this
prospectus. All information with respect to share ownership has been furnished
by the selling stockholders.
Shares of common Percent of Common Shares of common Shares of common
Stock owned prior Stock owned stock to be Stock owned
Name of selling stockholder to offering(1) prior to offering sold After offering Percent(1)
----------------- ----------------- ---------------- --------------- ---------
Audrey Blythe 3,500 * 3,500 0 0
Faye Boyce 1,500 *% 1,500 0 0
Calynn Brigance 800,000 2.98% 40,000 760,000 2.84%
Glenda Brigance 3,500 * 3,500 0 0
Allison Broadus 3,500 * 3,500 0 0
Cheryl Clark 1,000 * 1,000 0 0
Eileen Cook 3,500 * 3,500 0 0
Jason Cook 500,000 1.86% 25,000 475,000 1.77%
Robert Cook 3,500 * 3,500 0 0
Joseph Delgado 500,000 1.86% 25,000 475,000 1.77%
Flex Financial Group Inc. 500,000 1.86% 25,000 475,000 1.77%
Mark Ford 300,000 1.12% 15,000 285,000 1.06%
Nathan Gain 2,000 * 2,000 0 0
Larry Gaskin, Jr 300,000 1.12% 15,000 285,000 1.06%
David Gregory 2,000 * 2,000 0 0
Danielle Greiner 3,500 * 3,500 0 0
Don Harris 1,500 * 1,500 0 0
Kathy Hemby 15,000 * 15,000 0 0
Houston Vehicles 3,500 * 3,500 0 0
Unlimited Inc.
Charles C. Hunsinger(2) 1,000,000 3.73% 50,000 950,000 3.54%
Drew Johnson 1,000 * 1,000 0 0
Nichol Johnson 1,000 * 1,000 0 0
J. Douglas Laughlin 1,500 * 1,500 0 0
Joelyn S. Laughlin 2,500 * 2,500 0 0
Jane Martin 10,000 * 10,000 0 0
Micah Martin 2,000 * 2,000 0 0
Donald C. May 2,500 * 2,000 0 0
Sawitree Monrungsri 2,000 * 2,000 0 0
Tanya Orena 500,000 1.86% 25,000 475,000 1.77%
Alex J. Philips 2,000 * 2,000 0 0
Sarah Philips 2,000 * 2,000 0 0
Yolanda Pilson 1,500 * 1,500 0 0
Maria Raggio 3,500 * 3,500 0 0
Reagan Realy 2,000 * 2,000 0 0
Jorge Rodriquez 1,000 * 1,000 0 0
Ruth Shepley(2) 1,200,000 4.48% 60,000 1,140,000 4.25%
Anabella Smith 3,500 * 3,500 0 0
Irene Smith 500,000 1.86% 50,000 475,000 1.77%
Chasity Tejada 2,000 * 2,000 0 0
Freda Thompson 7,500 * 7,500 0 0
Sherri Treichel 3,500 * 3,500 0 0
Reginald C. Whitfield 600,000 2.24% 30,000 570,000 2.13%
Teresa Yank 1,500 * 1,500 0 0
Erica Zavala 1,000 * 1,000 0 0
* Less than one (1%) percent.
(1) Assumes that all of the shares of common stock offered in this prospectus
are sold and no other shares of common stock are sold or issued during the
offering period.
15
(2) Charles Hunsinger is the father of our President and principal shareholder,
Curtis Hunsinger. Curtis Hunsinger has no direct or indirect beneficial
ownership of the shares held by Charles Hunsinger.
(3) Ruth Shepley is the mother of our President and principal shareholder,
Curtis Hunsinger. Curtis Hunsinger has no direct or indirect beneficial
ownership of the shares held by Ruth Shepley. Ruth Shepley and Charles Hunsinger
are divorced and have no interest in the other parties shares of our common
stock.
PLAN OF DISTRIBUTION
Our shares of common stock can be sold by selling security holders at a fixed
price of $.10 per share until our shares are quoted on the OTC Bulletin Board
and thereafter at prevailing market prices or privately negotiated prices. The
offering price was determined by the price shareholders were sold to our
shareholders in a private placement memorandum. The offering will terminate
twelve months after commencement of the offering.
The shares may be sold or distributed from time to time by the selling
stockholders , directly to one or more purchasers or through brokers or dealers
who may acquire shares as principals, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, at negotiated prices
or at fixed prices, which may be changed. The distribution of the shares may be
effected in one or more of the following methods:
- - ordinary brokers transactions, which may include long or short sales,
- - transactions involving cross or block trades on any securities or market
where our common stock is trading,
- - purchases by brokers or dealers as principal and resale by such purchasers
for their own accounts pursuant to this prospectus
- - in other ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through agents,
- - through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise), or
- - any combination of the foregoing, or by any other legally available means.
Brokers, dealers, or agents participating in the distribution of the shares may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholders and/or the purchasers of shares for whom such
broker-dealers may act as agent or to whom they may sell as principal, or both
(which compensation as to a particular broker-dealer may be in excess of
customary commissions). Neither the selling stockholders nor we can presently
estimate the amount of such compensation. We know of no existing arrangements
between the selling stockholders and any other stockholder, broker, dealer or
agent relating to the sale or distribution of the shares. We do not anticipate
that either our shareholders will engage an underwriter in the selling or
distribution of our shares.
We will not receive any proceeds from the sale of the shares of the selling
security holders pursuant to this prospectus. We have agreed to bear the
expenses of the registration of the shares, including legal and accounting fees,
and such expenses are estimated to be approximately $20,000. In addition, there
will be additional costs to us of around $5,000-$10,000 for the offering
including blue sky fees, printing fees and transfer agent fees.
16
STATE REGULATIONS
In order to comply with the securities laws of certain states, if applicable,
the securities may be sold only through registered or licensed brokers or
dealers. In addition, in certain states, the securities may not be sold unless
they have been registered or qualified for sale in such state or any exemption
from such registration or qualification requirement is available and the sale is
made in compliance with the requirements.
The shares of common stock being offered by the selling security holder have not
been registered for sale under the securities laws of any state as of the date
of this prospectus. Brokers or dealers effecting transactions in the shares of
our common stock should confirm the registration thereof under the securities
laws of the states in which transactions occur or the existence of any exemption
from registration or qualification. The following states have adopted an
exemption from state registration for any isolated non-issuer transaction,
whether or not effected through a broker-dealer: Alabama, Alaska, Colorado,
Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas,
Kentucky, Maine, Maryland, Massachusetts, Mississippi, Missouri, Montana,
Nebraska, Nevada, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon,
Rhode Island, South Carolina, Utah, Vermont, Washington, West Virginia,
Wisconsin, and Wyoming. Therefore, the selling security holders may offer their
shares of common stock promptly in those states in reliance upon a state law
exemption from state registration or qualification. The state exemptions
referred to in the SB-2 are available to these selling security shareholders and
a copy of the prospectus will have to be filed in each of the states to ensure
availability of the exemptions. The State of California provides an exemption
from non-issuer transaction qualification requirements for any offer or sale of
a security by the owner for his or her account if the sale is not accompanied by
the publication of any advertisement and is not effected by or through a
broker-dealer in a public offering. An isolated non-issuer transaction is
defined as a total of no more than two sales during a six month period and not
directly or indirectly for the benefit of the issuer. We do not intend to
register with any such states that we will not qualify for an exemption.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Hunsinger, our sole officer and director contributed his used car dealer
license and the Website, www,usedcarsinhouston.net, to CI Sell Cars for shares
of our common stock. In September 2002, we issued a total of 10,000,000 shares
to Mr. Hunsinger. Such shares were issued at par value $.001 for a total of
$10,000 for the website. We valued this website at $10,000 based on the time and
money spent by Mr. Hunsinger in the purchase of such domain name and the
development of the website and is an estimate of the cost to us if the website
were built by an outside contractor.. In addition, in February 2003,we issued an
additional 9,000,000 shares were issued to Mr. Hunsinger in March 2003. The
shares were issued to Mr. Hunsinger forservices rendered to us as our sole
officer, director and employee and for the contribution of the used car dealer's
license by Mr. Hunsinger to us at a value of $.005 per share, or $45,000. The
services rendered by Mr. Hunsinger included his responsibilities as our sole
officer and director as well as our sole employee. In such capacities he
continued the development of the website, managed the day to day operations of
the used car lot and developed relationships with other used car dealers and
used car auctions. The used car dealer licensed contributed by Mr. Hunsinger
permitted us to commence the sale of used cars in furtherance of our business
plan.
Such related party transactions were on terms that were not more favorable than
if agreed upon by a third party in an arms length transaction.
17
DESCRIPTION OF SECURITIES
The following is a summary description of our capital stock and certain
provisions of our certificate of incorporation and by- laws, copies of which
have been incorporated by reference as exhibits to the registration statement of
which this prospectus forms a part. The following discussion is qualified in its
entirety by reference to such exhibits.
GENERAL
Our Articles of Incorporation authorize us to issue up to 110,000,000 shares of
which 100,000,000 are to be Common Shares and 10,000,000 are to be Preferred
Shares with a par value of $.001. As of November 10, 2003, there were 26,812,000
shares of our common stock outstanding and no shares of preferred stock
outstanding.
COMMON STOCK
The holders of the common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Our certificate of
incorporation and by-laws do not provide for cumulative voting rights in the
election of directors. Accordingly, holders of a majority of the shares of
common stock entitled to vote in any election of directors may elect all of the
directors standing for election. Holders of common stock are entitled to receive
ratably such dividends as may be declared by the Board out of funds legally
available therefore. In the event of our liquidation, dissolution or winding up,
holders of common stock are entitled to share ratably in the assets remaining
after payment of liabilities. Holders of common stock have no preemptive,
conversion or redemption rights. All of the outstanding shares of common stock
are fully-paid and non-assessable.
PREFERRED STOCK
We are authorized to issue up to 10,000,000 shares of preferred stock upon such
terms and conditions as the Board of Directors may determine at the time of
issuance, without further action of the stockholders being required. Such
preferred shares may or may not be: issued in series, convertible into shares of
common stock, redeemable by the corporation and entitled to cumulative
dividends. Other terms and conditions may be imposed at the time of issuance. In
the event that some or all of the preferred stock is issued with a conversion
privilege, any future conversion will cause an increase in the number of issued
and outstanding shares of common stock, and may or may not have a depressive
effect on the market value of the common stock. To date no series of preferred
stock have been designated by our Board of Directors.
Liquidation Rights.
Upon our liquidation or dissolution, each outstanding Common Share will be
entitled to share equally in our assets legally available for distribution to
shareholders after the payment of all debts and other liabilities.
18
Dividend Rights.
We do not have limitations or restrictions upon the rights of our Board of
Directors to declare dividends, and we may pay dividends on our shares of stock
in cash, property, or our own shares, except when we are insolvent or when the
payment thereof would render us insolvent subject to the provisions of the Texas
Statutes. We have not paid dividends to date, and we do not anticipate that we
will pay any dividends in the foreseeable future.
Voting Rights.
Holders of our Common Shares are entitled to cast one vote for each share held
of record at all shareholders meetings for all purposes.
Other Rights.
Common Shares are not redeemable, have no conversion rights and carry no
preemptive or other rights to subscribe to or purchase additional Common Shares
in the event of a subsequent offering.
There are no other material rights of the common shareholders not included
herein. There is no provision in our charter or by-laws that would delay, defer
or prevent a change in control of us. We have not issued debt securities.
WHERE YOU CAN FIND MORE INFORMATION
You may read and copy any report, proxy statement or other information we file
with the Securities and Exchange Commission at the Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Securities and Exchange
Commission's Regional Offices at 75 Park Place, Room 1400, New York, New York
10007 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. You may obtain information on the operation of the Public
Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. In addition, we file electronic versions of these documents on
the Securities and Exchange Commission's Electronic Data Gathering Analysis and
Retrieval, or EDGAR, System. The Securities and Exchange Commission maintains a
web site at http://www.sec.gov that contains reports, proxy statements and other
information filed with the Securities and Exchange Commission.
We have filed a registration statement on Form SB-2 with the Securities and
Exchange Commission to register shares of our common stock to be sold by the
selling stockholders and to register additional shares to be sold. This
prospectus is part of that registration statement and, as permitted by the
Securities and Exchange Commission's rules, does not contain all of the
information set forth in the registration statement. For further information
with respect to us or our common stock, you may refer to the registration
statement and to the exhibits and schedules filed as part of the registration
statement. You can review a copy of the registration statement and its exhibits
and schedules at the public reference room maintained by the Securities and
Exchange Commission, and on the Securities and Exchange Commission's web site,
as described above. You should note that statements contained in this prospectus
that refer to the contents of any contract or other document are not necessarily
complete. Such statements are qualified by reference to the copy of such
contract or other document filed as an exhibit to the registration statement.
19
TRANSFER AGENT
The Transfer Agent and Registrar for our common stock is American Registrar and
Transfer Company, 342 E. 900 South, Salt Lake City, Utah 84111. Its telephone
number is (801) 363-9065.
LEGAL MATTERS
The validity of the shares of common stock offered in this prospectus has been
passed upon for us by Anslow & Jaclin, LLP, 4400 Route 9, 2nd Floor, Freehold,
New Jersey 07728. Its telephone number is (732) 409-1212.
EXPERTS
The financial statements included in this prospectus included elsewhere in the
registration statement have been audited by Malone & Bailey, independent
auditors, as stated in their report appearing herein and elsewhere in the
registration statement (which report expresses an unqualified opinion and have
been so included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
20
CI SELL CARS, INC.
(A Development Stage Company)
BALANCE SHEET
As of July 31, 2003
ASSETS
Cash $ 24,935
Inventory 5,065
Prepaid rent 83
Deposit 1,000
--------
TOTAL ASSETS $ 31,083
========
Liabilities $ 0
Commitments
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par, 10,000,000 shares
authorized, none outstanding
Common stock, $.001 par, 100,000,000 shares
authorized, 26,801,000 shares issued
and outstanding 26,801
Additional paid in capital 78,299
Deficit accumulated during the development stage (74,017)
--------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 31,083
========
CI SELL CARS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS Three
months ended July 31, 2003 and
the Period from September 6, 2002 (Inception)
Through July 31, 2003
Three months Inception
Ended through
July 31, 2003 July 31, 2003
------------- -------------
Sales $ 7,650 $ 20,360
Cost of goods sold 7,430 20,919
-------- --------
Gross profit 220 (559)
Administrative expenses
- paid in cash5,633 18,458
- paid in stock 55,000
-------- --------
Net loss $ (5,413) $(74,017)
========= ========
Basic and diluted net loss per common share $ (0.00)
Weighted average common shares outstanding 26,794,833
CI SELL CARS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS Three
months ended July 31, 2003 and
the Period from September 6, 2003 (Inception)
Through July 31, 2003
Three Months Inception
Ended through
July 31, 2003 July 31, 2003
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (5,413) $(74,017)
Adjustments to reconcile net loss
to cash used in operating activities:
Stock issued for services 55,000
Changes in:
Inventory 4,750 ( 5,065)
Prepaid rent 250 ( 83)
Deposit 0 ( 1000)
- ------- --------
NET CASH USED IN OPERATING ACTIVITIES ( 413) (25,165)
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of stock 5,050 50,100
-------- --------
NET CHANGE IN CASH 4,637 24,935
Cash balance, beginning 20,298 0
-------- --------
Cash balance, ending $ 24,935 $ 24,935
======== ========
CI SELL CARS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of CI Sell Cars, Inc.
("CI") have been prepared in accordance with accounting principles generally
accepted in the United States of America and the rules of the Securities and
Exchange Commission ("SEC"), and should be read in conjunction with the audited
financial statements and notes thereto contained in CI's Annual Report filed
with the SEC on Form SB-2. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim periods
presented have been reflected herein. The results of operations for the interim
periods are not necessarily indicative of the results to be expected for the
full year. Notes to the financial statements which would substantially duplicate
the disclosure contained in the audited financial statements for 2003 as
reported in the Form SB-2 have been omitted.
NOTE 2 - COMMON STOCK
In April 2003, CI sold 50,500 shares of common stock to individuals at $.10 per
share for $5,050.
In May 2003, CI sold 50,500 shares of common stock to individuals at $.10 per
share for $5,050.
NOTE 3 - SUBSEQUENT EVENTS
In August 2003, CI sold 131,000 shares of common stock to individuals at $.10
per share for $13,100.
FINANCIAL STATEMENTS
INDEPENDENT AUDITORS REPORT
To the Board of Directors
CI Sell Cars, Inc.
(A Development Stage Company)
Tomball, Texas
We have audited the accompanying balance sheet of CI Sell Cars, Inc., as of
April 30, 2003 and the related statements of operations, stockholders equity,
and cash flows for the period from September 6, 2002 (Inception) through April
30, 2003. These financial statements are the responsibility of CI Sell Cars'
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CI Sell Cars, Inc., as of April
30, 2003, and the results of its operations and its cash flows for the periods
described in conformity with accounting principles generally accepted in the
United States of America.
MALONE & BAILEY, PLLC
www.malone-bailey.com
Houston, Texas
May 6, 2003
F-1
CI SELL CARS, INC.
(A Development Stage Company)
BALANCE SHEET
April 30, 2003
ASSETS
Cash $ 20,298
Inventory 9,815
Prepaid rent 333
Deposit 1,000
--------
TOTAL ASSETS $ 31,446
========
Liabilities $ 0
Commitments
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par, 10,000,000 shares
authorized, none outstanding
Common stock, $.001 par, 100,000,000 shares
authorized, 26,750,500 shares issued
and outstanding 26,751
Additional paid in capital 73,299
Deficit accumulated during the development stage (68,604)
--------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 31,446
========
See accompanying summary of accounting policies and
notes to financial statements.
F-2
CI SELL CARS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Period from September 6, 2002 (Inception)
Through April 30, 2003
Sales $ 12,710
Cost of Goods Sold 13,489
--------
Gross Profit (779)
Administrative expenses
- paid in cash 12,825
- paid in stock 55,000
--------
Net loss $(68,604)
=========
Basic and diluted net loss per common share $(0.00)
Weighted average common shares outstanding 15,096,906
See accompanying summary of accounting policies and
notes to financial statements.
F-3
CI SELL CARS, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from September 6, 2002
(Inception) Through April 30, 2003
Deficit
Accumulated
Additional During
Common Stock Paid in Development
Shares $ Capital Stage Totals
------ ------- ------- ----- ------
Contribution to capital in
September 2002 $ 5,000 $ 5,000
Shares issued
- - to the founder in
September 2002 as
compensation for website
development services at
$.001 per share 10,000,000 $ 10,000 10,000 10,000
- - for cash in October
2002 at $.0025 per
share 1,200,000 1,200 1,800 3,000
- - for cash in November
2002 at $.004 per share 500,000 500 1,500 2,000
- - for cash in February
2003 at $.005 per share 5,000,000 5,000 20,000 25,000
- - to the founder in March
2003 as compensation
for services at $.005
per share 9,000,000 9,000 36,000 45,000
- - to the founder for cash
in March 2003 at $.005
per share 1,000,000 1,000 4,000 5,000
- - for cash in April 2003
at $.10 per share 50,500 51 4,999 5,050
Net loss $ (68,604) (68,604)
----------- ----------- ----------- ----------- --------
Balances, April 30, 2003 26,750,500 $ 26,751 $ 73,299 $ (68,604) $ 31,446
=========== =========== =========== =========== ========
See accompanying summary of accounting policies and
notes to financial statements.
F-4
CI SELL CARS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Period from September 6, 2002 (Inception)
Through April 30, 2003
CASH FLOWS FROM OPERATING ACTIVITIES
Net deficit accumulated during the
development stage $(68,604)
Adjustments to reconcile net loss
to cash used in operating activities:
Stock issued for services 55,000
Changes in:
Inventory ( 9,815)
Prepaid rent ( 333)
Deposit ( 1,000)
--------
NET CASH USED IN OPERATING ACTIVITIES (24,752)
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of stock 45,050
--------
NET CHANGE IN CASH 20,298
Cash balance, beginning 0
--------
Cash balance, ending $ 20,298
========
SUPPLEMENTAL DISCLOSURES:
Interest paid $ 0
Income taxes paid 0
See accompanying summary of accounting policies and
notes to financial statements.
F-5
CI SELL CARS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business. CI Sell Cars Inc.'s ("CI") founder developed a website and
operated as a sole proprietor from September 6, 2002 (inception) through
December 13, 2002, with the purpose of buying and selling used cars. CI was
incorporated in Texas on December 13, 2002.
CI's fiscal year end is April 30th.
Cash and Cash Equivalents. For purposes of the statement of cash flows, CI
considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents.
Use of Estimates. In preparing financial statements, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities in
the balance sheet and revenue and expenses in the income statement. Actual
results could differ from those estimates.
Revenue recognition. CI recognizes revenue when the earnings process is
complete, generally either at the time of sale to a customer or upon delivery to
a customer. CI does not offer any warranties and accepts no returns when cars
are sold.
Income taxes. CI recognizes deferred tax assets and liabilities based on
differences between the financial reporting and tax bases of assets and
liabilities using the enacted tax rates and laws that are expected to be in
effect when the differences are expected to be recovered. CI provides a
valuation allowance for deferred tax assets for which it does not consider
realization of such assets to be more likely than not.
Stock options and warrants. CI accounts for stock options and warrants issued to
employees under the intrinsic value method. Under this method, CI recognizes no
compensation expense for stock options or warrants granted when the number of
underlying shares is known and exercise price of the option or warrant is
greater than or equal to the fair market value of the stock on the date of
grant. Fair value is used for options and warrants issued to non-employees as
compensation. There were no stock options or warrants outstanding as of April
30, 2003.
Recently issued accounting pronouncements. CI does not expect the adoption of
recently issued accounting pronouncements to have a significant impact on CI
results of operations, financial position or cash flow.
Inventory. Inventory is comprised of vehicles held for sale or for
reconditioning and is stated at the lower of cost or market. Vehicle inventory
cost is determined by specific identification. Parts and labor used to
recondition vehicles, as well as transportation and other incremental expenses
associated with acquiring and reconditioning vehicles, are included in
inventory.
F-6
NOTE 2 - COMMON STOCK
CI's founder contributed $5,000, developed a website and operated as a sole
proprietor from September 6, 2002 (inception) through December 13, 2002. On
December 13, 2002, at Corporate inception, CI's founder contributed the website
in exchange for 10,000,000 shares of CI stock valued at $.001 per share, or
$10,000. The $10,000 website valuation is an estimate of the cost if the website
were built by an outside contractor.
In October 2002, CI sold 1,200,000 shares of common stock to an individual at
$.0025 per share for $3,000.
In November 2402, CI sold 500,000 shares of common stock to an individual at
$.004 per share for $2,000.
In February 2003, CI sold 5,000,000 shares of common stock to individuals at
$.005 per share for $25,000.
In March 2003, CI issued 9,000,000 shares of stock to its founder for services
valued at $.005 per share, or $45,000.
In March 2003, CI sold 1,000,000 shares of common stock to its founder at $.005
per share for $5,000.
In April 2003, CI sold 50,500 shares of common stock to individuals at $.10 per
share for $5,050.
NOTE 3 - INCOME TAXES
Deferred tax assets $ 2,000
Less: valuation allowance (2,000)
--------
Net deferred taxes $ 0
========
CI has net operating loss of approximately $14,000 as of April 30, 2003 which
can be carried forward 20 years.
NOTE 4 - COMMITMENTS
CI leases their office from a shareholder for $1,000 per year or $83 per month
due in equal installments at the beginning of each month. The lease expires
August 31, 2004. At the end of the lease term, CI has the option to renew the
lease for $500 per year for two years. CI paid the first year in full and as of
April 30, 2003 had four months of prepaid rent totaling $333. Rent expense for
fiscal 2003 was $667. Future minimum lease payments under the lease are $667 and
$333 in fiscal 2004 and 2005, respectively.
F-7
NOTE 5 - MAJOR CUSTOMERS AND VENDORS
There were no major customers or vendors from inception through April 30, 2003.
NOTE 6 - SUBSEQUENT EVENTS
In May 2003, CI sold 50,500 shares of common stock to individuals at $.10 per
share for $5,050.
F-8
CI SELL CARS, INC..
567,000 Shares Common Stock
PROSPECTUS
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE
HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON
STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
NOVEMBER , 2003
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.
The General Corporation Law of Texas provides that directors, officers,
employees or agents of Texas corporations are entitled, under certain
circumstances, to be indemnified against expenses (including attorneys' fees)
and other liabilities actually and reasonably incurred by them in connection
with any suit brought against them in their capacity as a director, officer,
employee or agent, if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, if they had no reasonable
cause to believe their conduct was unlawful. This statute provides that
directors, officers, employees and agents may also be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by them in
connection with a derivative suit brought against them in their capacity as a
director, if they acted in good faith and in a manner they reasonably believed
to be in or not opposed to the best interests of the corporation, except that no
indemnification may be made without court approval if such person was adjudged
liable to the corporation.
Our Certificate of Incorporation provides that we shall indemnify any and all
persons whom we shall have power to indemnify to the fullest extent permitted by
the Texas Corporate Law. Article VII of our by-laws provides that we shall
indemnify our authorized representatives to the fullest extent permitted by the
Texas Law. Our by-laws also permit us to purchase insurance on behalf of any
such person against any liability asserted against such person and incurred by
such person in any capacity, or out of such person's status as such, whether or
not we would have the power to indemnify such person against such liability
under the foregoing provision of the by-laws.
II-1
Item 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with the issuance
and distribution of the securities being registered hereby. All such expenses
will be borne by the registrant; none shall be borne by any selling
stockholders.
Securities and Exchange
Commission registration fee $ 100
Legal fees and expenses (1) $ 10,000
Accounting fees and expenses (1) $ 10,000
Miscellaneous (1) $ -
Total (1) $ 25,100
(1) Estimated.
Item 26. RECENT SALES OF UNREGISTERED SECURITIES.
CI Sell Cars, Inc. was incorporated in the State of Texas on December 13, 2002.
In September 2002, Curtis Hunsinger contributed $5,000 to cover start up costs.
Upon our incorporation, 10,000,000 founder shares of our common stock were
issued to Curtis Hunsinger for contribution of the website valued at $10,000. We
valued this website at $10,000 based on the time and money spent by Mr.
Hunsinger in the purchase of such domain name and the development of the website
and is an estimate of the cost to us if the website were built by an outside
contractor. Such shares were issued to Mr. Hunsinger in reliance on the
exemption under Section 4(2) of the Securities Act of 1933, as amended (the
"Act"). In March 2003, 9,000,000 shares of common stock were issued to Curtis
Hunsinger for services valued at $45,000 and 1,000,000 shares of common stock
were sold to Mr. Hunsinger for $5,000. Such shares were issued to Mr. Hunsinger
in reliance on the exemption under Section 4(2) of the Securities Act of 1933.
These shares of our common stock qualified for exemption under Section 4(2) of
the Securities Act of 1933 since the issuance shares by us did not involve a
public offering. The offering was not a "public offering" as defined in Section
4(2) due to the insubstantial number of persons involved in the deal, size of
the offering, manner of the offering and number of shares offered. We did not
undertake an offering in which we sold a high number of shares to a high number
of investors. In addition, Mr. Hunsinger had the necessary investment intent as
required by Section 4(2) since he agreed to and received a share certificate
bearing a legend stating that such shares are restricted pursuant to Rule 144 of
the 1933 Securities Act. This restriction ensures that these shares would not be
immediately redistributed into the market and therefore not be part of a "public
offering." Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of the Securities Act
of 1933 for this transaction. In addition, Mr. Hunsinger completed an officer
and director questionnaire confirming that he was a sophisticated investor.
In October 2002 we sold 1,200,000 shares of our common stock to Ruth Shepley at
$.0025 per share for a total of $3,000. Then in November 2402 we sold 500,000
shares of our common stock to Flex Financial Group, Inc. at $.004 for a total of
$2,000. Then in February 2003, we sold a total of 5,000,000 shares of our common
stock to nine shareholders at a price of $.005 per share. All of the above
referenced shares were sole in reliance on an exemption from registration under
Section 4(2) of the Securities Act of 1933. These shareholders completed
subscription agreements disclosing that they were either accredited or
sophisticated investors.
The following sets forth the identity of the class of persons to whom CI Sell
Cars, Inc. sold these shares in February 2003 and the amount of shares for each
shareholder:
Name # Shares
Calynn Brigance 800,000
Jason Cook 500,000
Joseph Delgado 500,000
Mark Ford 300,000
Larry Gaskin, Jr 300,000
Charles C. Hunsinger 1,000,000
Tanya Orena 500,000
Irene Smith 500,000
Reginald C. Whitfield 600,000
II-2
The shares of our common stock qualified for exemption under Section 4(2) of the
Securities Act of 1933 since the issuance shares by us not involving a public
offering. The offering was not a "public offering" as defined in Section 4(2)
due to the insubstantial number of persons involved in the deal, size of the
offering, manner of the offering and number of shares offered. We did not
undertake an offering in which it sold a high number of shares to a high number
of investors. In addition, these shareholders had the necessary investment
intent as required by Section 4(2) since they agreed to and received a share
certificate bearing a legend stating that such shares are restricted pursuant to
Rule 144 of the 1933 Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and therefore not be part
of a "public offering." Based on an analysis of the above factors, we have met
the requirements to qualify for exemption under Section 4(2) of the Securities
Act of 1933 for this transaction.
In May, 2003, we completed a Regulation D, Rule 506 Offering in which we issued
a total of 101,000 shares of our common stock at a price of $.10 per share to 34
shareholders for an aggregate offering price of $10,100. These shareholders also
entered into a registration rights agreement with us pursuant to which these
shareholders received demand registration rights whereby we agreed to register
the common shares purchased in this offering within one year from the date of
issuance of such shares. In addition, pursuant to such agreement, these
shareholders received piggyback registration rights for their common shares. All
of these shareholders completed subscription agreements disclosing that they
were either accredited or sophisticated investors. The following sets forth the
identity of the class of persons to whom we sold these shares and the amount of
shares for each shareholder:
Name # Shares
Audrey Blythe 3,500
Faye Boyce 1,500
Glenda Brigance 3,500
Allison Broadus 3,500
Cheryl Clark 1,000
Eileen Cook 3,500
Robert Cook 3,500
Nathan Gain 2,000
David Gregory 2,000
Danielle Greiner 3,500
Don Harris 1,500
Kathy Hemby 15,000
Houston Vehicles Unlimited Inc. 3,500
Drew Johnson 1,000
Nichol Johnson 1,000
J. Douglas Laughlin 1,500
Joelyn S. Laughlin 2,500
Jane Martin 10,000
Micah Martin 2,000
Donald C. May 2,500
II-3
Sawitree Monrungsri 2,000
Alex J. Philips 2,000
Sarah Philips 2,000
Yolanda Pilson 1,500
Maria Raggio 3,500
Reagan Realy 2,000
Jorge Rodriquez 1,000
Anabella Smith 3,500
Chasity Tejada 2,000
Freda Thompson 7,500
Sherri Treichel 3,500
Teresa Yank 1,500
Erica Zavala 1,000
The Common Stock issued in our Regulation D, Rule 506 offering was issued in a
transaction not involving a public offering in reliance upon an exemption from
registration provided by Rule 564 of Regulation D of the Securities Act of 1933.
In accordance with Section 230.506 (b)(1) of the Securities Act of 1933, these
shares qualified for exemption under the Rule 506 exemption for this offerings
since it met the following requirements set forth in Reg. ss.230.506:
(A) No general solicitation or advertising was conducted by us in connection
with the offering of any of the Shares. The offering was handled by Mr.
Curtis Hunsinger, our sole officer, director and principal shareholder. The
subscribers were all friends or friends of friends and/or acquaintances of
Mr. Hunsinger. The shares were subscribed by word of mouth without any
general solicitation.
(B) At the time of the offering we were not: (1) subject to the reporting
requirements of Section 13 or 15 (d) of the Exchange Act; or (2) an
"investment company" within the meaning of the federal securities laws.
(C) Neither us, nor any predecessor of ours, nor any director of us, nor any
beneficial owner of 10% or more of any class of the our equity securities,
nor any promoter currently connected with us in any capacity has been
convicted within the past ten years of any felony in connection with the
purchase or sale of any security.
(D) The offers and sales of securities by us pursuant to the offerings were not
attempts to evade any registration or resale requirements of the securities
laws of the United States or any of its states.
(E) None of the investors are affiliated with any of our directors, officers or
promoters or any beneficial owner of 10% or more of our securities.
Please note that pursuant to Rule 506, all shares purchased in the Regulation D
Rule 506 offering completed in May 2003 were restricted in accordance with Rule
144 of the Securities Act of 1933.
In August 2003, we completed a Regulation D, Rule 506 Offering in which we
issued a total of 131,000 shares of our common stock at a price of $.10 per
share to 14 shareholders for an aggregate offering price of $13,100. These
shareholders also entered into a registration rights agreement with us pursuant
to which these shareholders received demand registration rights whereby we
agreed to register the common shares purchased in this offering within one year
from the date of issuance of such shares. In addition, pursuant to such
agreement, these shareholders received piggyback registration rights for their
common shares. All of these shareholders completed subscription agreements
disclosing that they were either accredited or sophisticated investors.The
following sets forth the identity of the class of persons to whom we sold these
shares and the amount of shares for each shareholder:
II-4
Name # Shares
David H. Lennox 10,000
Travis Piper 10,000
F.J.M. Gallucci 10,000
Mechellle Pope 10,000
Alan Filson 10,000
Maurice D. Rohleder 10,000
Richard H. Nash 10,000
Clayton K. Bridges 10,000
Jack L. Harris 10,000
Jill Kennedy 10,000
Amy Sirois 10,000
David Parker 10,000
Shandra Rusk 10,000
Ted Schwartz 1,000
The Common Stock issued in our Regulation D, Rule 506 offering was issued in a
transaction not involving a public offering in reliance upon an exemption from
registration provided by Rule 564 of Regulation D of the Securities Act of 1933.
In accordance with Section 230.506 (b)(1) of the Securities Act of 1933, these
shares qualified for exemption under the Rule 506 exemption for this offerings
since it met the following requirements set forth in Reg. ss.230.506:
(A) No general solicitation or advertising was conducted by us in connection
with the offering of any of the Shares. The offering was handled by Mr.
Curtis Hunsinger, our sole officer, director and principal shareholder. The
subscribers were all friends or friends of friends and/or acquaintances of
Mr. Hunsinger. The shares were subscribed by word of mouth without any
general solicitation.
(B) At the time of the offering we were not: (1) subject to the reporting
requirements of Section 13 or 15 (d) of the Exchange Act; or (2) an
"investment company" within the meaning of the federal securities laws.
(C) Neither us, nor any predecessor of ours, nor any director of us, nor any
beneficial owner of 10% or more of any class of the our equity securities,
nor any promoter currently connected with us in any capacity has been
convicted within the past ten years of any felony in connection with the
purchase or sale of any security.
(D) The offers and sales of securities by us pursuant to the offerings were not
attempts to evade any registration or resale requirements of the securities
laws of the United States or any of its states.
(E) None of the investors are affiliated with any of our directors, officers or
promoters or any beneficial owner of 10% or more of our securities.
Please note that pursuant to Rule 506, all shares purchased in the Regulation D
Rule 506 offering completed in August 2003 were restricted in accordance with
Rule 144 of the Securities Act of 1933.
The following sets forth the relevant terms of the registration rights
agreements for these offerings:
(a) These shareholders received "Piggyback Registration Rights" so that
if the Company proposed to register any of its securities under the Securities
Act of 1933 (with certain exceptions), the Company agreed to include the Common
Shares held by these shareholders (the "Registerable Securities") in such
registration.
II-5
(b) These shareholders also received Demand Registration Rights so that
in the event that the Holders have not had all of their shares registered in a
registration statement within one (1) year from the date of the Agreement, the
shareholders had the right to have the Company prepare and file with the
Securities and Exchange Commission, a registration or offering statement, so as
to permit a public offering and sale, by the shareholders.
(c) The shareholders agree cooperate with the Company in all respects in
connection with this Agreement, including, timely supplying all information
reasonably requested by the Company and executing and returning all documents
reasonably requested in connection with the registration and sale of the
Registerable Securities.
We have never utilized an underwriter for an offering of our securities. Other
than the securities mentioned above, we have not issued or sold any securities.
II-4
Item 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
The following exhibits are filed as part of this registration statement:
EXHIBIT DESCRIPTION
3.1 Certificate of Incorporation of CI Sell Cars, Inc.*
3.3 By-laws of CI Sell Cars, Inc.*
4.1 Registration Rights Agreement **
5.1 Opinion of Anslow & Jaclin LLP
7.1 Consent of Malone & Bailey, LLP
23.2 Consent of Anslow & Jaclin LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on page II-6 of the registration
statement)
* Filed with the original Form SB-2 on June 30, 2003 (SEC File No. 333-106637)
** Filed with the Amendment No. 1 to Form SB-2 on June 30, 2003
Item 28. UNDERTAKINGS.
(A) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) 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; and
(iii)Include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
II-6
(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 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.
(B) Undertaking Required by Regulation S-B, Item 512(e).
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or controlling persons 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 Securities Act of 1933 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 a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel that the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue. (C) Undertaking Required by
Regulation S-B, Item 512(f)
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act of 1934 that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be deemed
to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Spring, State of Texas,
on the 20th day of November, 2003.
CI SELL CARS, INC.
By: /s/ Curtis Hunsinger
----------------------------------
Curtis Hunsinger
President, Chief Executive Officer,
Chief Financial Officer, Controller
and Secretary
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POWER OF ATTORNEY
The undersigned directors and officers of CI SELL CARS, INC. hereby constitute
and appoint Curtis Hunsinger, with full power to act without the other and with
full power of substitution and resubstitution, our true and lawful
attorneys-in-fact with full power to execute in our name and behalf in the
capacities indicated below any and all amendments (including post-effective
amendments and amendments thereto) to this registration statement under the
Securities Act of 1933 and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission
and hereby ratify and confirm each and every act and thing that such
attorneys-in-fact, or any them, or their substitutes, shall lawfully do or cause
to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
/s/ Curtis Hunsinger President, Chief Executive November 24, 2003
- ------------------------------ Officer, Chief Financial Officer
Curtis Hunsinger Controller, Secretary and Director
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