As filed with the Securities and Exchange Commission on September 11, 2006
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2/A
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
(Name of Small Business Issuer in its Charter)
Florida 2511 and 2590 16-1630359
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number)Identification No.)
(Address, including zip code, telephone number, including area code
of registrant's principal executive offices)
400 S. Pointe Drive, #1704
Miami Beach, Florida 33139
(754) 234-9455, fax (954) 321-9118
Website: www.patiobahia.com
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Agent for Service:
Ms. Jeannot McCarthy, President
400 S. Pointe Drive, #1704
Miami Beach, Florida 33139
(754) 234-9455, fax (954) 321-9118
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
================================================================================
Title of each
class of
Proposed Amount Proposed Proposed
Securities to be Offering Price Aggregate
to be Registered Registered Per Share Offering Price
Common stock, Maximum
par value $0.001 5,000,000 $0.20 $1,000,000
per share Minimum
250,000 $0.20 50,000
Amount of
Registration
Fee
$107.00
================================================================================
*This registration fee is calculated at $.0000107 per 1,000,000 shares, i.e.
5,000,000 shares of common stock at the offering price of $.20 based on the
maximum aggregate offering price of the securities being registered in
accordance with Rule 457(o) under the Securities Act of 1933.
Note: Specific details relation to the fee calculation shall be furnished in a
note to the table, including references to provisions of Rule 457 (ss. 230.457
of this chapter) relied upon, if the basis of the calculation is not otherwise
evident from the information presented in the table. If the filing fee is
calculated pursuant to Rule 457 (o) under the Securities Act of 1933, only the
title of the class of securities to be registered, the proposed maximum
aggregate offering price for that class of securities and the amount of
registration fee needed to appear in the Calculation of Registration Fee table.
Any difference between the dollar amount of securities registered for such
offerings and the dollar amount of securities sold may be carried forward on a
future registration statement pursuant to Rule 429 under the Securities Act of
1933.
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 this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
September 11, 2006
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
"Jeannot's" or the "Company"
================================================================================
Title of each Proposed Proposed
Class of Securities Amount to Offering Price Aggregate
to be Registered be Registered Per Share Offering Price
-----------------------------------------------------------------------
Maximum:
Common Stock 5,000,000 $0.20 $1,000,000.
Minimum
250,000 $0.20 $50,000
===============================================================================
The information in this prospectus is not complete and may be changed. The
Company 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. o This is a
self-underwritten "best efforts" minimum/maximum offering, which is not
underwritten by a registered
broker/dealer, of a minimum of 250,000 and a maximum of 5,000,000
shares of the Company's Common stock, at an offering price of $0.20 per
share of common stock.
o The Company's President, Vice President and Secretary will be the
officers and directors selling these shares of Common stock, pursuant
to Rule 3(a) 4-1. The Company will receive all of the proceeds from the
sale of up to 5,000,000 shares. There is no selling commission
associated with the sale of these shares of common stock.. See "Plan of
Distribution", page 23.
o All funds derived from this Offering will be held by the Company, in
an account entitled "Jeannot's Furnishings of Florida, Inc., Special
Account", and under control of the Company's President, Ms. Jeannot
McCarthy, until the minimum proceeds are received and accepted by
the Company This account is a non-interest bearing account and has
no escrow or trust provisions. In the event that the minimum amount
of shares of common stock has not been sold by the Termination Date
of December 31, 2006, then all funds will be promptly returned to
the investor(s) without interest or deduction on or before ten
days following the Termination Date. In the event that the minimum
amount of shares of common stock is sold, then all subsequent
sales of common stock will be deposited to the "Jeannot's Furnishings
of Florida, Inc. Special account" and transferred to
the general account once the share certificates are issued to the
investor. The termination date may be extended an
additional 180 days at the sole discretion of the Company.
o An investor is not limited to a minimum or maximum amount of shares of common
stock to be purchased, pending availability. o No officer, director, affiliates
or any related party of the Company may purchase these securities offered to
meet the
minimum of shares offered.
o There is currently no market for the Company's shares of common stock.
The Company intends to apply through a registered broker/dealer to list
its shares on the OTC Bulletin Board or a regional stock exchange under
the symbol assigned by the NASD.
o Neither the SEC nor any state securities commission has approved or
disapproved of these securities or passed upon the adequacy or accuracy
of this Prospectus. Any representation to the contrary is a criminal
offense. An investor should only rely on the information contained in
this document. The Company has not authorized anyone to provide any
investor that is different. This document may only be used where it is
legal to sell these securities. THIS INVESTMENT INVOLVES A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 9.
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TABLE OF CONTENTS
Part I - Prospectus
Prospectus Summary ........................................................5
The Offering...............................................................8
Risk Factors...............................................................9
Use of Proceeds............................................................20
Dilution...................................................................22
Determination of Offering Price............................................23
Plan of Distribution.......................................................23
Dividends..................................................................25
Legal Proceedings..........................................................25
Directors, Executive Officers, Promoters and Control Persons...............25
Executive Compensation.....................................................27
Security Ownership of Officers, Directors and Certain Beneficial Owners....29
Description of Securities .................................................29
Description of Business....................................................31
Management's Discussion and Analysis or Plan of Operation..................35
Description of Property....................................................40
Certain Relationships and Related Transactions.............................40
Market for Common Equity and Related Stockholder Matters...................40
Disclosure of Commission Position on Indemnification for Securities
Act Liabilities.......................................................41
Available Information and Reports to Securities Holders....................41
Transfer Agent.............................................................42
Interest of Named Experts and Counsel......................................42
Investors May Only Rely Upon the Information in This Prospectus............42
Financial Statements ......................................................43
Part II - Information Not Required in Prospectus
Indemnification of Directors and Officers..................................58
Other Expenses of Issuance and Distribution................................58
Recent Sales of Unregistered Securities....................................59
Exhibits...................................................................60
Undertakings...............................................................60
Signatures.................................................................S-1
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PROSPECTUS SUMMARY
This prospectus summary highlights selected information contained elsewhere in
this prospectus. An investor should read the following summary in conjunction
with the more detailed financial information together with the more detailed
information regarding Jeannot's Furnishings of Florida, Inc. and the shares of
common stock being sold in this offering, which information appears elsewhere in
this prospectus.
Jeannot's Furnishings of Florida, Inc.
Jeannot's Furnishings of Florida, Inc., ("Jeannot's" or the "Company") is a
corporation formed under the laws of the State of Florida, whose principal
executive offices are located in Miami Beach, Florida. The Company was
incorporated on November 25, 2002 as Patio-Bahia, Inc. The Company filed an
Amendment to the Articles of Incorporation on December 29, 2004 to change the
Company's name to Jeannot's Furnishings of Florida, Inc. and to change the
authorized share capital to 100,000,000 shares of common stock authorized at a
par value of $0.001 and 10,000,000 preferred shares at a par value of $0.001 and
to cease as a Sub-Chapter S corporation. The Company has been in the outdoor
furniture design and outdoor furniture import business since inception.
Jeannot's Furnishings of Florida, Inc. is a company specializing in outdoor and
casual furniture destined for a high-end and sophisticated sector of the market.
The Company uses only top quality tropical hardwoods from Brazil. Because the
Company is concerned about ecological impact on the rain forest, the Company
contracts with only wood suppliers who are supervised by IBAMA, the regulatory
agency responsible for management of Brazil's natural resources. The Company's
customers and potential customers can be assured that the Company's products are
made with ecologically sound and far superior to woods such as teak. The
Company's products will keep their deep, rich and vibrant colors. Brazilian
tropical hardwoods are the most impervious to the ravages of time and weathering
and require minimal maintenance while avoiding the "graying" associated with
teak.
The Company uses only 100% handmade furniture. The Company's contracted skilled
and dedicated artisans are from the region of Bahia, Brazil. This area is known
for its quality and craftsmanship.
The Company has targeted a small segment of the multi-billion casual market in
the U.S. and elsewhere. The Company is seeking that part of the market that is
tasteful and
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discrimination. Since the late 90's, there has been a trend called
"cocooning". A huge segment of the U.S. population and elsewhere is spending
more time on living well at home. There are more and more dollars spent on
quality of life. Management of the Company believes that the quality products
will create satisfied customers. The Company's products occupy a unique niche
for customers who are willing to spend for top quality in order to partake in a
certain lifestyle.
The primary objective of the business is to import exclusive custom designed,
high quality patio and yacht outdoor furniture, exclusively manufactured with
the hardwoods of Brazil. The Company's handcrafted outdoor furniture pieces are
manufactured in Bahia, Brazil, the center of the hardwood manufacturing in
Brazil. Furniture artisans craft each furniture piece with intent on comfort and
unique design. The choices of hardwoods are determined by esthetic, ecological
and durability considerations. The Company is committed to protect the
environment and the need to sustain a long-term supply of forests and only
represents manufacturers who are supervised by Instituto Brasileiro do Meio
Ambiente e dos Recursos Naturais "IBAMA". The IBAMA regulations and policies may
be found at www.IBAMA.gov.br. IBAMA insures that the forest resource is manages
in a sustainable manner and the rainforest is preserved.
Since the Company's inception in November 2002, the Company has been working
with the outdoor furniture designers, attaining minimal sales of product and
purchasing various outdoor furniture samples for consumers in Florida and
elsewhere. The Company has developed the website, www.patiobahia.com with over
20 designs made from three types of Brazilian woods. These three types are: (1)
TATAJUBA - A beautiful wood that is golden brown and turns a lovely maroon with
exposure to the sun. This is a high-density wood that can be easily worked with
manual and mechanical tools. Tatajuba is a premier wood used for naval
construction and withstands outdoor conditions beautifully. The grain is
frequently but slightly interlocked. Technological characteristics: Specific
gravity at 12% MC: 795 kg/m3 (medium to heavy density). Tangential shrinkage
(T%): 5.2 Radial shrinkage (R%): 3.7 Tatajuba is one of the most resistant woods
against insects and fungus; JATOBA - Also known as Brazilian Cherry is a
plentiful hardwood found in various regions throughout South America. It is one
of the most high-density woods available on the market today. The heartwood of
Jatoba is salmon red to orange brown becoming russet to reddish brown when
seasoned. Texture is medium to rather coarse; grain mostly interlocked. Jatoba
is used for fine furniture making and used extensively for outdoor construction,
naval construction and casual outdoor furniture. Technological characteristics:
Specific gravity at 12% MC: 955 kg/m3 (high density) Tangential shrinkage (T%):
7.2 Radial shrinkage (T%) 3.1 Jatoba is also very resistant to all insects and
fungus; and ANGELIM PEDRA - This wood is a wonderful highly resistant wood found
abundantly in the northeast of Brazil. The heartwood is a light orange tan
turning pale brown on exposure. The texture is rather coarse and the grain
straight to interlocked. In laboratory tests the heartwood was rated very
durable upon exposure. Technological characteristics: Specific gravity at 12%
MC: 770 kg/m3 (medium to heavy density) Tangential shrinkage (T%): 5.1 Radial
shrinkage (R%): 3.6. All of the Company's hardwoods used are high density and
far superior to teak and can handle any outdoor exposure with minimum wear. The
Company offers a three year guarantee on the wood used by the Company's
6
manufacturers of outdoor furniture. During this period of guarantee, the Company
offers to replace all wood pieces that can no longer be used due to the rotting
of the wood or to wood bores. Replacement will be made with the exact same piece
of furniture. The Company's guarantee covers the wood and not the fixtures and
fitting or the workmanship. The item damages will be replaced free of charge.
Also, pursuant to the Company's guarantee, the wood must have been maintained
and treated on a regular basis. The proof of purchase of maintenance products is
required. The discoloration of the wood is a natural process and is not subject
to the guarantee as well as the "natural wear and tear". The Company's guarantee
does not apply to damage from misuse, neglect, alteration, loss or damage due to
transportation of the goods.
The Company intends to market its fine outdoor furniture for patios and yachts
initially in the State of Florida and then elsewhere. The demographics of the
Florida marketplace is conducive to the Company's further implementation of its
business plan. The Company's ordering and pricing policies are as follows: (1)
The outdoor furniture prices are FOB, Miami; (2) the prices are listed in US
Dollars and are subject to change without notice; (3) the stock availability
and/or lead times can change depending on the amount of the order; (4) verbal or
written stock checks and price quotes do not constitute a "hold" on in-stock
items; (5) the outdoor furniture may be held with a 50% deposit on the order;
(6) a 50% deposit is required of the total balance due to initiate any order;
(7) the full balance is due prior to items being shipped from the Company's
warehouse; and (8) the outdoor furniture remains the property of the Company
until the order is paid in full. The Company intends to keep the more popular
items in stock, as much as possible, in order to satisfy the customer's demand.
The existing outdoor furniture designs are ready to be ordered from samples and
the Company can also manufacture outdoor furniture from custom designs from
interior and furniture designers and manufacture the furniture as per the
customer's design. The Company's outdoor furniture is shipped fully assembled
from Brazil. Each handcrafted piece is inspected independently, by the Brazilian
government for export.
Business Background
The Company was founded in November 2002 and is in its development stage with a
"going concern" qualification from the Company's auditor. The Company has
minimal operating revenues to date. The Company incurred operating losses of
$35,721 from Inception to December 31, 2005, the end of its latest fiscal year
and an additional $3,536 for the six-month period ending June 30, 2006. Since
inception, the Company has incurred a deficit of $39,256 to June 30, 2006. The
Company expects its accumulated deficit to increase in the near future until the
Company can realize significant sales from its outdoor furniture. The Company is
in the outdoor furniture import business, specifically in the importing of
handcrafted Brazilian hardwood outdoor furniture, suitable for patios and
yachts. See "DESCRIPTION OF BUSINESS", page 31.
7
Market Opportunity
The general custom-made, specialty furniture industry and specialty outdoor
furniture business is projected to increase due to the general population
increasing and becoming more aware of quality hardwood outdoor furniture. The
State of Florida has one of the largest incomes per capita in the world and the
largest yacht dockage in the world. Florida has over 3,000 luxury yachts that
are either moored or travel to the Florida waterways. Between Miami and Palm
Beach, there are 3,000 luxury yachts per year traveling on the Florida
waterways. Additionally, Florida provides a significant amount of mega-yacht
refurbishing and has over 11,000 miles of waterway, river and stream yacht
moorage. Florida also has one of the largest luxury residence markets in the
world. According to the PR Newswire in 2005, the Florida Association of Realtors
said there is an 11% increase in sales from the year before. Between 1999 and
2003 there was a 70.6% increase in prices. Buyers are coming from the United
States, Canada, Europe and Latin America. The number of people moving to Florida
is more than a 1000 per day. The Florida population growth rate from 1990 to
2000 is 23.5%. Florida is the 4th largest populated state in the United States,
behind California, Texas and New York. The Company's management relies upon
these demographics for the implementation of its business plan. The sources for
the statistics above are as follows:
Florida Department of State
Visit Florida
US Bureau of Economic and Business Research
State of Florida.com research
Name, Address and Telephone Number of the Registrant
Jeannot's Furnishings of Florida, Inc.
400 S. Pointe Drive, #1704
Miami Beach, Florida 33139
(754) 234-9455, fax (954) 321-9118
The Offering
Shares offered by the Company: a minimum of 250,000 shares of common stock and a
maximum of 5,000,000 shares of common stock @$0.20 per share. This offering is
self-underwritten and not underwritten by a registered broker/dealer and is on a
"best efforts" basis. However, if a licensed broker/dealer is interested in
selling the shares of common stock to an investor, an amendment will be filed
with this SB-2 registration statement. The Company would pay a ten percent (10%)
commission of the amount sold through a broker/dealer, when as and if a
broker/dealer became involved with this offering. At this time, the Company has
no agreement with any broker/dealer to sell the shares of common stock offered.
An investor is not limited to a minimum or maximum
8
amount of shares to be
purchased, pending availability. All funds will be deposited into a non-interest
bearing, segregated account entitled "Jeannot's Furnishings of Florida, Inc.
Special Account", under control of the Company's President, Ms. Jeannot
McCarthy, until the minimum amount of the offering has been received and
accepted by the Company. In the event that the minimum amount of 250,000 shares
of common stock is not sold by the termination date of December 31, 2006 or
extended 180 days from December 31, 2006, if extended by the Company, all funds
will be returned to the investor(s), without interest or deduction, promptly
within ten days following the termination date. The termination date will not be
extended. The only persons allowed to sell this offering are Ms. Jeannot
McCarthy, the Company's President and Board Chairman and Zlatuse Jerabkova, the
Company's Secretary and Director. See "PLAN OF DISTRIBUTION", page 23. There are
no commissions being charged to the Company in connection with this offering.
Shares issued and outstanding as of June 30, 2006 and September 8, 2006:
7,650,000 shares of common stock; no shares of preferred stock issued and
outstanding.
There will be no affiliates of the Company allowed to purchase shares of common
stock to achieve the minimum amount of the offering.
Use of Proceeds - The Company will utilize the proceeds from the sale of the
shares of common stock for business development. See "Use of Proceeds", page 20.
Trading Symbol - There is currently no market for the Company's shares of common
stock, however the Company's intends to apply through a registered broker/dealer
to trade its shares on the OTC Bulletin Board or a regional stock exchange under
the symbol to be determined by NASD.
RISK FACTORS
An investment in the shares of the Company's common stock is highly speculative
and involves a high degree of risk. Therefore, an investor should consider all
of the risk factors discussed below, as well as the other information contained
in this document. An investor should not invest in the Company's shares of
common stock unless he or she can afford to lose all or part of the entire
investment.
Risk Factors Related to the Company's Operations:
The Company is a "development stage" company, has minimal revenues, an
accumulated deficit and may have continued losses for the near future. The
Company is in the development stage and, to date, has only earned minimal
revenues from operations since its inception on November 2002. The Company has
continued to incur losses of $39,256 since November 2002. The Company's
principal activities have been organizational and developmental in nature. As of
June 30, 2006, the Company had an accumulated deficit of $39,256 as a result of
an accumulated deficit of $35,721 from inception to December 31, 2005 and an
additional $3,536 for
9
the six month period from January 1, 2006 to June 30,
2006, resulting in a total of $39,256. The Company has generated $32,393 from
operations since inception and has incurred expenses and has sustained losses.
In addition, the Company expects to continue to incur operating expenses in the
near future until the Company can obtain significant sales from its outdoor
furniture. As a result, the Company will need to generate significant revenues
to achieve profitability, which may not occur. The Company expects its operating
expenses to increase significantly as a result of the further implementation of
the Company's business plan. The Company's website, www.patiobahia.com, has been
in operation since 2003. As the Company has no significant operating history of
marketing and distribution of hardwood outdoor furniture to the specialty
outdoor furniture market, the Company's business may never generate sufficient
revenues to meet its expenses or achieve profitability. Even if the Company does
achieve profitability, the Company may be unable to sustain or increase
profitability on a quarterly or annual basis in the future. It is possible that
the Company will never achieve profitability or continue as an operating
business.
The Company's auditor's report has a "going concern" qualification.
The Company's independent auditor's report on the Company's financial statements
includes an explanatory paragraph in that states: "5. GOING CONCERN. The Company
does not have the necessary working capital to service its debt and for its
planned activity, which raises substantial doubt about its ability to continue
as a going concern.
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed a
strategy, which it believes will accomplish this objective through additional
loans from an officer and others, and equity funding, which will enable the
Company to conduct operations for the coming year. "
The Company is solely dependent upon this offering to commence meaningful
business operations. The Company is solely dependent upon obtaining a minimum of
25% of the proceeds ($250,000.) from this offering to commence any meaningful
business operations. The Company must have sufficient working capital to be able
to commence and sustain its business operations for the first 24 months. It is
highly unlikely that the Company will be able to continue any meaningful
business operations unless the Company is successful in financing of operations
by way of the minimum sale of 25% of the shares of common stock in this
offering.
The Company may incur problems in the Brazilian manufacturing sector which could
result in lack of product sales, business delays and the future economic
viability of the Company. Potential investors should be aware of the problems,
delays, expenses, difficulties, and risks encountered by an off-shore
manufacturing company, particularly in a rapidly growing sector of the
manufacturing industry, dependent on weather, other forces of nature and the
environment, all of which are beyond the control of the Company. These risks are
the anticipated and unanticipated problems relating to the harvesting of the
10
hardwoods and the handcrafted manufacturing of the outdoor furniture. The risks
are as follows:
(1) availability of selected hardwoods in a seasonal market. (2)
quality and availability of product due to adverse weather
conditions.
(3) pricing of raw materials (primarily the hardwoods) in a
competitive market resulting in poor or lower than
anticipated profit margins.
(4) outdoor furniture is not manufactured properly whereby the
end product is now known to have incurred defects until
delivery several weeks following manufacturing.
(5) outdoor furniture is not manufactured to design and market
specifications.
(6) the hardwoods are not graded properly and the finished product
is not to customer's specifications.
(7) less than premier qualities of hardwoods being used that
would make end product not to the perceived quality of
finished product.
(8) difficulty in the communication with a foreign manufacturer who
is thousand of miles from the Company's operations office and
point of entry for the outdoor furniture.
(9) the expensive shipping cost of returning outdoor furniture if
the end product is not to the customer specifications or
acceptance could be prohibitive to the overall profitability of
the Company.
(10) Potential hardwood price increases that could be
spontaneous and without proper notice for the Company to
adjust it's wholesale and retail prices.
(11) difficulty in sourcing competent artisans who can handcraft the
outdoor furniture.
(12) the Brazilian government and/or IBAMA could change governmental
policy without sufficient notice to the Company which would
cause the hardwoods and/or the manufacturers to cease
operations and/or expensive export tariffs to the detriment of
the Company.
All or some of these risks are inherent in the natural hardwood, handcrafted
furniture manufacturing that could result in the lack of sales and the overall
potential success of the Company's business plan and business operations.
The Company may encounter marketing resistance for its product or product
components in the up-scale outdoor furniture market which could result in lack
of product sales and business losses for the Company. The Company's outdoor
furniture is suitable for sales to end-users, interior designers, and other
furnishing wholesalers. The Company may encounter resistance in the developing
and marketing of the Company's outdoor furniture to the patio and yacht outdoor
furniture purchaser. The custom hardwood outdoor furniture market is relatively
new and is presently confined mainly to a few interior and furniture designers
and specialty retail outlets. The Company could experience a lack of product
sales to retail customers, and/or interior designers for retail customers, if
the price is prohibitive and not competitive with other outdoor furniture. The
company may sell their products through distributors that encounter market
resistance and would be unable to
11
successfully sell the outdoor furniture in the
marketplace. The Company may also fail to develop an acceptable level of
furniture sales to individual via the Internet.
The Company is in the early stages of market development which could result in a
lack of product sales and have a material adverse affect on the overall business
operations. The general outdoor furniture industry is well established with
several dominant leaders, however the specialty, upscale outdoor furniture
market for patios and yachts, suitable for sales of the Company's products, is
at an early stage of development, is evolving rapidly, and is characterized by
an increasing number of market entrants who have introduced, or are developing
similar or competing products. As is typical of a new and rapidly evolving
industry, the demand and market acceptance for recently introduced outdoor
furniture products is subject to a certain level of consumer trends which are
reflected in the market acceptance of the finished product. In the initial
phases of the Company's business plan, the Company intends to have approximately
40% of its total sales to interior designers and increasing to over 60% of its
total sales in the course of five years. The balance of sales is projected to be
sold directly to the end user, by way of magazine ads, Internet site and other
means of exposure, such as home shows, boat shows, etc. If the Company's retail
(direct to consumer) market fails to develop or develops more slowly than
expected, or if the Company's products do not achieve market acceptance by a
significant number of end-user purchasers, the Company's projected sales will
not be realized which will materially adversely affect the overall Company's
business plan and project profitability.
The Company is subject to rapid and significant design changes in the outdoor
furniture industry, the market acceptance of certain products and the
continuation of certain existing products which could result in lack of sales
which would materially adversely affect the Company's business.
The general outdoor furniture industry is subject to change in consumer tastes,
design trends, improved manufacturing techniques, which may render the Company's
products not competitive. Further, up-scale consumer acceptance and up-scale
consumer trends of outdoor furniture and outdoor furniture design is changing
continually. Such rapid change in design may, in a very short period of time,
impose additional, unforeseen costs to the Company in that the Company may be
required to modify its outdoor furniture designs to adapt to such changes. The
Company may not be able to successfully modify its designs of outdoor furniture
in a timely manner, or at all.
The Company's compliance with industry standards may not be sufficient to
achieve market acceptance which could result in lack of product sales which
would result in the overall viability of the business. Even if the Company's
products are compatible with industry standards, it is possible that the
Company's products will not achieve market acceptance to the up-scale consumer
or the interior designers. The potential inability of the Company to respond to
changing market conditions, new design developments and trends, evolving
industry standards or changing customer requirements, would have a material
adverse effect on the Company's overall viability of the business, its financial
condition, and operating results.
12
The Company expects to have quarter-to-quarter fluctuations in revenues,
expenses, losses and cash flow, some of which could be significant and could
adversely materially affect the business and future operations. Results of
operations will depend upon certain hardwood harvest and manufacturing factors,
some of which are beyond the Company's control, including market acceptance of
the Company's up-scale outdoor furniture, new outdoor furniture designs and
competition. Therefore, the Company may have significant fluctuations in revenue
from quarter to quarter based on several issues, which are: (1) contract basis
of obtaining orders as there are two methods for obtaining sales contracts. The
first and most common is the
direct sale to the consumer from advertisements and/or the Internet;
the second is through interior designers and/or other distributors.
While the Company will pay not realize the full potential profit from
working with distributors, the advantage is that the amount of sales
should be significantly higher. This will have a great effect on which
quarters will reflect sales and which quarters will not reflect sales,
particularly in a warm weather seasonal market.
(2) the seasonal nature of availability of hardwood products for the
manufacturing and delivery of the outdoor furniture finished product.
This will have a great effect on which quarters will have more
profitable sales and which quarters will have less profitable sales, if
at all.
(3) the possibility of inadequate quality of products to meet order
specifications and the inadequate quantity of products to meet order
specifications. The weather and other conditions of nature will
contribute to the quality and quantity of the product that the Company
intends to sell and in which quarter of the Company's business year
that the sale is consummated.
(4) the sourcing of sales opportunities (the identification and finding of
suitable customers). In the event that the Company is not able to find
suitable customers for the up-scale outdoor furniture, and at certain
times of the year, the Company will not be able to obtain sales
contracts or to sell its outdoor furniture in a particular quarter or
quarters of the Company's business year.
The Company is materially dependent upon its key personnel and the loss of such
key personnel could result in business delays in the further implementation of
its business plan or business failure. The Company depends upon the continued
involvement of Ms. Jeannot McCarthy, the Company's President, Chief Executive
Officer and Board Chairman, and Zlatuse Jerabkova, the Company's Secretary and
Director. As the Company is a "start-up" or development stage company, the
further implementation of the Company's business plan is dependent on the
entrepreneurial skills and direction of management. The position of the
president and secretary of the Company is to guide and direct the activity and
vision of the Company. This direction requires an awareness of the market, the
competition, current and future markets and design trends that would allow the
Company to continue its operations. The loss or lack of availability of these
individuals would significantly and materially adversely affect the Company's
business and operations. The Company does not carry "key person" life insurance
for either of these officers and directors and the Company would be adversely
affected by the loss of
13
either of these two key employees. Presently there are
no employment agreements with either Ms. Jeannot McCarthy or Zlatuse Jerabkova.
The Company must achieve a minimum of 25% of the proceeds from this offering for
key personnel to be able to devote full time and attention to the further
implementation of the Company's business plan. In the event that the Company
does not achieve a minimum of 25% of the proceeds of this offering, the
president and secretary will not be able to devote full time to the Company's
business and operations. If the minimum amount of proceeds is achieved, i.e. the
sale of 250,000 shares of common stock at $0.20 per share, then the president
will be able to devote approximately 10 hours per week on the Company's business
and operations and the secretary will be able to devote approximately 8 hours
per week on the Company's business and operations.
The Company's competition are medium to large sized companies which may be able
to use their financial strength to dominate the market which would materially
adversely affect the Company's ability to compete effectively . The outdoor
furniture market highly competitive and rapidly evolving, resulting in a dynamic
competitive environment with several dominant national and multi-national
leaders, both in up-scale and mass market outdoor furniture suppliers that have
a limited up-scale outdoor furniture product line. The Company will have to
compete with companies that have substantially greater financial, marketing and
human resources capabilities. In addition, new companies may enter the market
with new designer products that may be competitive with the handcrafted outdoor
furniture products to be marketed by the Company. Because there are potential
entrants to the outdoor furniture manufacturing and distribution, it is
extremely difficult to assess which companies are likely to offer competitive
products and services in the future, and in some cases it is difficult to
discern whether an existing product is competitive with the Company's outdoor
furniture products. Competitive factors in the outdoor furniture manufacturing
and distributing segments, include product quality, marketing and distribution
resources, customer service and support and price of product. The Company
expects competition to persist and intensify in the future.
Most of the Company's competitors are much larger corporations than the Company,
which are very well capitalized and can utilize their strong market share for
further growth that may impede the Company's ability to generate enough sales to
cover the costs of marketing the outdoor furniture products. Several of the
Company's competitors have longer operating histories, greater name recognition,
larger client bases and significantly greater financial and marketing resources
than the Company. Such competitors may be able to undertake more extensive
marketing campaigns, adopt more aggressive pricing policies and make more
attractive offers to potential clients. In addition, many of the Company's
current or potential competitors, such as Tropitone, Brown Jordan, Tidelli,
Artisan House and others have broad recognition and distribution channels that
may be used to distribute competing handcrafted outdoor furniture products
directly to end-users or purchasers. It is possible that the Company will not be
able to compete effectively with current or future competitors resulting in a
loss of business or entire business failure.
14
The Company is subject to risks of defects and manufacturing delays in the
business operations. The Company has only ordered a minimum of handcrafted
outdoor furniture from the manufacturer to be used as "floor samples" and has
only sold only a minimum amount of outdoor furniture to consumers as a "market
test". In this small quantity of outdoor furniture delivered to the Company,
there have been no defects or delays in the business operation. However, as the
Company implements its business plan and there are larger orders, the Company is
subject to the risks of defects and manufacturing delays, particularly due to
the fact that each piece is handcrafted by the artisan. If the artisans for any
reason do not produce the outdoor furniture piece, then the Company will not be
able to deliver its outdoor furniture delaying its business operations. As a
result, the Company may experience delays in the business objective of the
Company and the further sale of the Company's outdoor furniture products which
could have a material adverse effect on the overall viability of the Company's
business and operating results.
The Company's need for additional personnel could cause delays in the further
implementation of the Company's business plan. The ability to further implement
the Company's business plan, of which the essential elements are design, sales
and marketing activities, will depend upon the Company's ability to hire and
retain senior and middle level, highly-skilled individuals. Such individuals
must be experienced in the operation of the Company's business. The additional
personnel required will include sales and marketing personnel and accounting and
business development personnel. Competition for such personnel is intense and it
is possible that the Company will not be successful in attracting and retaining
qualified personnel. The Company's potential failure to attract and retain such
additional personnel would impede the further implementation of the Company's
business plan and strategies that the Company intends to develop.
The Company may not be able to manage growth which could result in delays in
business operations. In the event that there is market acceptance for the
handcrafted hardwood outdoor furniture by end-users and interior designers,
management of the Company anticipates that it will potentially be required to
expand its operations to address such market demand. In that event, the Company
anticipates significantly increasing the size of its sales and marketing staff
following the completion of the Company receiving and accepting a minimum of 25%
of the proceeds of this offering. It is possible that such internal expansion
will not be successfully completed, that such expansion will not enable the
Company to generate sufficient revenues, or that the Company will not be able to
compete successfully against the significantly more extensive and well-funded
sales and marketing operations of the Company's existing and potential
competitors. The Company's potential growth and the integration of operations
are expected to place a significant strain on the Company's managerial,
operational and financial resources. The inability of the Company to promptly
address and respond to these circumstances could have a material adverse effect
on the Company's overall business and profitability.
15
The Company may enter into potential business combinations that could be
difficult to integrate and may disrupt business operations. The Company's
management believes that the business plan is ideal and conducive to business
combinations such as joint venture partnerships and other potential business
combinations in the interior designer and yacht designer businesses. The Company
may also seek foreign entities for the distribution of the product in Europe and
other specific locations outside of North America. There may be potential
business combinations with general up-scale furniture distributors and interior
design operations. The Company may wish to acquire an interior design firm or a
specialty yacht design firm or certain hardwood manufacturers in Brazil. In the
event of an acquisition in the interior design business or manufacturing
business, any business combination may be difficult to integrate into the
Company's day to day operations. If the Company does enter into a business
combination, it is possible that the key personnel of such business will not
want to integrate with the Company's management and/or business operations.
The Company may need additional capital to further finance its business plan and
such financing may be unavailable or too costly and could reduce the current
stockholders ownership. The Company may need additional capital to expand its
operations and the Company may need to secure financing to allocate sufficient
funds required to support the Company's marketing activity of the handcrafted
hardwood outdoor furniture. Additional financing may not be available on
favorable terms or even at all. If the Company raises additional funds by
selling shares of common or preferred stock, the percentage ownership of the
Company's then current stockholders will be reduced. If the Company cannot raise
adequate funds to satisfy its capital requirements, the Company may have to
limit its operations significantly. The Company's ability to raise additional
funds may diminish if the public equity markets become less supportive of the
outdoor furniture industry and other outdoor furniture industry factors.
The Company's sub-contracted manufacturers are located in Brazil, which may be
difficult to effect service of process for lawsuits and to enforce any judgments
from United States courts in the event that the Company has to file a lawsuit
for damages against the manufacturer.
As the Company is a Florida corporation and has its principal office in the
jurisdiction of the State of Florida, United States of America, it is possible
that if the Company has to file a lawsuit against the sub-contracted
manufacturer of the Company's outdoor furniture products, it may be difficult to
file an action, effect a service of process or to enforce a judgment granted in
the United States of America courts. Such potential legal service or
notification and enforcement of judgment must be represented by the Company as a
United States entity to affect such process of service and notification and
enforcement of judgment. The costs to retain Brazilian legal counsel to effect
service of process and to enforce any judgment from the United States courts may
be too excessive for the Company to initiate any such action.
16
Risks Related to Offering:
The Company's proceeds from the minimum offering will not be sufficient to
enable the Company to further implement its business plan in any meaningful way.
Should the Company only receive the minimum proceeds from this offering of
$50,000 which would be the sale of 250,000 shares of common stock at $0.20 per
share, The Company would only be able to pay the offering costs of $15,000,
apply for a listing through a registered broker/dealer on the OTC Bulletin Board
and have the balance for general corporate expense. The Company could not
further implement its business plan and commence operations in a meaningful way.
The Company does not have any escrow or trust provisions in the depository bank
account which could cause the investor to lose all or part of the investment.
The depository account in which the investors will be depositing their funds
does not have any trust or escrow provisions and is under control of the
Company's President and Board Chairman, Ms. Jeannot McCarthy. There is no
responsible or bonded unrelated third party that is providing a guarantee for
those funds to be returned to the investor if the minimum amount of the sale of
the offering, i.e. 25,000 shares of common stock at an offering price of $0.20
is not achieved by the termination date of December 31, 2006. The investor can
only rely upon Ms. Jeannot McCarthy to return their funds in the event that the
minimum amount of the offering is not achieved.
The Company's management presently owns 100% (percent) of the shares of common
stock and their interest could conflict with the investors which could cause the
investor to lose all or part of the investment. The Company's directors and
executive officers and other family members and/or affiliates beneficially own
100% of the shares of the Company's outstanding common stock. As a result, the
directors and executive officers collectively are able to substantially
influence all matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions. Such concentration
of ownership may also have the effect of delaying or preventing a change in
control, which may be to the benefit of the directors and executive officers but
not in the interest of the shareholders. This beneficial ownership and potential
effective control on all matters relating to the business and operations of the
Company could eliminate the possibility of shareholders changing the management
in the event that the shareholders did not agree with the conduct of the
officers and directors. Additionally, the shareholders would potentially not be
able to obtain the necessary shareholder vote to affect any change in the course
of business of the Company. This lack of shareholder control could cause the
investor to lose all or part of the investment.
The Company's offering of the shares of common stock will cause immediate
substantial dilution to the current shareholders. Upon completion of this
offering, purchasers of the shares of common stock offered hereby will
experience immediate and substantial dilution of the net tangible book value of
their investment in the Company as additional shares offered are sold. For
example, if an investor purchases shares in the beginning of the sale of the
shares of common stock he or she will own a greater percentage of the issued and
outstanding shares of common stock in the Company than when more investors
purchase shares of
17
common stock. As more shares of common stock are purchased
that dilution is increased as there are then more shares of common stock issued
and outstanding. See "Dilution Table" on page 22.
The Company has the ability to issue preferred stock which could adversely
materially affect the rights of the common shareholder. The Company's Board of
Directors have the ability to potentially issue up to 10,000,000 shares of
preferred stock, with a par value of $0.001, in one or more series and to
determine the number of shares in each series, as well as the designations,
preferences, rights and qualifications or restrictions of those shares without
any further vote or action by the stockholders. The rights of the holders of
common stock will be subject to, and may be adversely affected by, the rights of
the holders of any shares of preferred stock that may be issued in the future.
The issuance of shares of preferred stock could have the effect of making it
more difficult for a third party to acquire a majority of the outstanding voting
stock of the Company. The issuance of shares of preferred stock could carry a
conversion value to convert to a substantial amount of shares of common stock
that could substantially dilute the investors share position in the Company.
The Company expects to issue additional shares of common stock and these future
sales of shares of common stock by the Company's existing stockholders could
adversely affect the Company's stock price and dilution of an investor's stock
position. As of the date of the filing, the Company has 7,650,000 issued and
outstanding shares of common stock. The Company is offering a maximum of
5,000,000 shares of common stock at a purchase price of $0.20 per share. Even if
the Company received the maximum proceeds from the sale of the 5,000,000 shares
of common stock, the Company may need to raise additional capital, which may
result in the issuance of additional shares of common stock, or debt
instruments. Shares of common stock may be issued under an available exemption,
a latter registration statement, or both. When, as and if additional shares of
common stock are issued, it may cause dilution in the value of shares purchased
in this offering and may cause the price of the Company's shares of common stock
to drop. These factors could also make it more difficult to raise funds through
future offerings of the Company's shares of common stock.
The remaining shares of common stock, which are not being registered hereby, are
"restricted securities" as defined under Rule 144 or 144(k), a substantial
amount of which are available for sale in the public market, subject to the
provisions of Rule 144 or 144(k) under the Securities Act. See "MARKET FOR
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS, page 40. Sales of substantial
amounts of shares of common stock in the public market, or the perception that
such sales will occur, could have a material negative effect on the potential
market price of the Company's shares of common stock. This potential problem
would be exacerbated if the Company further issues restricted shares of common
stock in exchange for equipment and services, which would cause further
dilution. The issuance of restricted shares of common stock is determined solely
by the Company's Board of Directors and does not need shareholder approval. The
potential issuance of additional shares of
18
common stock could adversely affect
the price of the Company's shares of common stock and cause further dilution of
the investor's stock position.
The Company's directors have limited liability and therefore cannot be held
liable for monetary damages.
Under the laws of the State of Florida and the Company's Articles of
Incorporation and Bylaws, the directors cannot be held liable to the Company or
to the stockholders for monetary damages for breach of fiduciary duties except
under certain circumstances. These circumstances would include any unlawful acts
under the laws of the State of Florida or unlawful or fraudulent acts conducted
in the normal course of business. In the event that the officers and directors
have committed any unlawful securities violations then the officers and
directors are subject to civil and/or criminal enforcement.
The Company may not be able to list or maintain a trading market for its shares
of common stock which could materially adversely affect the shareholders. The
trading in the Company's shares of common stock is dependent upon the
sponsorship of a licensed NASD broker/dealer and submission and acceptance by
the NASD and a listing on the OTC Bulletin Board, operated by the NASD. Said
trading is dependent upon the Company continuing to be able to comply with Rule
6530 of the NASD, which requires us to file reports as set forth in the
Securities Exchange Act of 1934. Because the Company may not be able to obtain
or maintain a listing on the OTC Bulletin Board, the Company's shares of common
stock may be difficult or impossible to sell.
The Company's shares of common stock are a "penny stock," and compliance with
requirements for dealing in "penny stocks" may make it difficult for holders of
the Company's shares of common stock to resell their shares of common stock.
Currently there is no public market for the Company's shares of common stock. If
the shares of common stock are listed in the public market in what is known as
the over-the-counter market and at least for the foreseeable future, the
Company's shares of common stock, if traded, will be deemed to be a "penny
stock" as that term is defined in Rule 3a51-1 under the Securities Exchange Act
of 1934. Rule 15g-2 under the Exchange Act requires broker/dealers dealing in
penny stocks to provide potential investors with a document disclosing the risks
of penny stocks and to obtain from these inventors a manually signed and dated
written acknowledgement of receipt of the document before effecting a
transaction in a penny stock for the investor's account. Compliance with these
requirements may make it more difficult for holders of the Company's shares of
common stock to resell their shares to third parties or otherwise, which could
have a material adverse effect on the liquidity and market price of the
Company's shares of common stock.
"Penny stocks" are stocks with a price of less than $5.00 per share unless
traded on NASDAQ or a national securities exchange; Penny stocks are also stocks
that are issued by companies with: net tangible assets of less than $2.0 million
(if the issuer has been in continuous operation for at least three years); or
$5.0 million (if in continuous operation
19
for less than three years); or average
revenue of less than $6.0 million for the last three years.
The Company's shareholders may find it more difficult to sell their shares of
common stock because the Company is not, and may never be, eligible for NASDAQ
or any National Stock Exchange. The Company is not presently, and it is likely
that for the foreseeable future the Company will not be, eligible for inclusion
in NASDAQ or for listing on any United States national stock exchange. To be
eligible to be included in NASDAQ, a company is required to have not less than
$4,000,000 in net tangible assets, a public float with a market value of not
less than $5,000,000, and a minimum bid of price of $4.00 per share. At the
present time, management of the Company is unable to state when, if ever, the
Company will meet the NASDAQ application standards. Unless the Company is able
to increase its net worth and market valuation substantially, either through the
accumulation of surplus out of earned income or successful capital raising
financing activities, the Company will never be able to meet the eligibility
requirements of NASDAQ. As a result, it will be more difficult for holders of
the Company's shares of common stock to resell their shares to third parties or
otherwise, which could have a material adverse effect on the liquidity and
market price of the Company's shares of common stock
This Prospectus contains forward-looking statements, which involve risks and
uncertainties. Such forward-looking statements include statements regarding
future events and the Company's plans and expectations. The Company's actual
results could differ materially from those anticipated in these forward looking
statements as a result of certain factors, including those set forth in the
above risk factors and elsewhere in this Prospectus. In addition to the other
information in this Prospectus,
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 5,000,000 shares of common
stock at the offering price of $0.20 per share is $1,000,000, less the cost of
the offering which is estimated to be $15,000, or $985,000. As Ms. Jeannot
McCarthy, the Company's President and Board Chairman and Zlatuse Jebrabkova,
Secretary and Director of the Company are the only persons allowed to sell this
offering, there is no commission being charged to the Company in connection with
this offering.
Net proceeds - if 100% of the shares of common stock (5,000,000 @$0.20) are
sold by the Company: $1,000,000*
$250,000 - Inventory
100,000 Executive Salaries
100,000 Employees Salaries
150,000 Marketing Costs
385,000 Working Capital
15,000 Offering Expense
20
Total Use of Proceeds: $1,000,000
*In the event that the offering is sold by its officers and directors; in the
event that there is a 10% commission charge on all or part of the proceeds if
broker/dealers participate, then the amount of "Inventory" and "Working Capital"
would be adjusted to accommodate the commission charged to the Company.
Net proceeds - if 50% of the shares of common stock (2,500,000 @$0.20) are
sold by the Company: $500,000*
150,000 Inventory -
100,000 Executive Salaries
25,000 Employee Salaries
75,000 Marketing Costs
135,000 Working Capital
15,000 Offering Expense
Total Use of Proceeds: $500,000
*In the event that the offering is sold by its officers and directors; in the
event that there is a 10% commission charge on all or part of the proceeds if
broker/dealers participate, then the amount of "Inventory" and "Working Capital"
would be adjusted to accommodate the commission charged to the Company.
Net proceeds - if 25% of the shares of common stock (1,250,000 @$0.20) are
sold by the Company: $250,000*
$100,000 Inventory
50,000 Executive Salaries
50,000 Marketing Costs
35,000 Working Capital
15,000 Offering Expense
Total Use of Proceeds: $250,000
*In the event that the offering is sold by its officers and directors; in the
event that there is a 10% commission charge on all or part of the proceeds if
broker/dealers participate, then the amount of "Inventory" and "Working Capital"
would be adjusted to accommodate the commission charged to the Company.
Net proceeds if the minimum amount of shares of common stock (250,000 @$0.20),
are sold by the Company: $50,000
The $50,000 will be used for the offering expense, the listing of the Company's
shares of common stock on the OTC Bulletin Board, through a registered
broker/dealer, and the balance for general corporate purposes.
Company Salaries:
In the event that only $250,000 is raised by selling 25% of the shares of common
stock are sold by the Company, the Company will not be able to pay the proposed
salaries of its officers and directors. In that event, the salaries of $60,000
per year for the
21
President and Board Chairman and the $40,000 per year for the
Secretary and Director shall be reduced to $30,000 and $20,000 per year
respectively.
In the event that the minimum of 250,000 shares @$.20 is sold by the Company
resulting in $50,000, then the $30,000 per year for the President and Board
Chairman and $20,000 for the Secretary and Director shall be accrued. Until such
time as the offering is effective, there will not be any accrual for salaries
owed to the Company's officers and directors. There will be no salaries paid
until 25% of the proceeds derived from this offering are received and accepted
by the Company, enabling the Company to commence meaningful operations.
DILUTION
The Company is authorized to issue a substantial number of shares of common
stock, in addition to the shares of common stock comprising the shares of common
stock in this offering, up to the authorized share capital of 100,000,000 shares
of common stock, with a par value of $0.001 and 10,000,000 shares of preferred
stock, with a par value of $0.001. The shares of preferred stock can be issued
in such series and with such designated rights and preferences, as may be
determined by the Board of Directors, at its sole discretion. In the event that
the Company does not achieve the maximum proceeds by way of this offering, the
Company will require significant additional financing to fully implement its
business plan, and such funding could entail the issuance of a substantial
number of additional shares of common stock which could cause material dilution
to the investors in this offering.
As of June 30, 2006 the Company had a stockholders deficiency of $(10,606).
The following table sets forth the dilution to persons purchasing shares of
common stock in this offering, without considering any changes in the Company's
net tangible book value, except for the sale of the shares of common stock in
this offering at a price of $0.20 per share. The net tangible book value per
share is determined by subtracting the total liabilities from the tangible
assets, divided by the total number of shares of common stock outstanding. The
following table reflects the dilution if (1) the minimum amount of 250,000
shares of common stock being sold in this offering; (2) 25% of the shares of
common stock (1,250,000 shares of common stock) are sold in this offering. (3)
50% of the shares of common stock (2,500,000 shares of common stock) are sold
in this offering; (4) the maximum amount of 5,000,000 shares of common stock
are sold in this offering
22
Dilution Table
- --------------------------------------------------------------------------------
(1)
Prior to Sale After sale of
June 30, 2006 250,000 shares
Number os Shares 7,650,000 7,900,000
Public offering price
per share na $0.20
Net tangible book
value per share of
common stock before
the offering (.001386) (.001386)
Net tnagible and
Pro Forma net tangible
book value (deficiency) $(39.394) $(39.394)
(2) (3)
Prior to sale After sale After sale of
June 30, 2006 of 1,250,000 2,500,000
Shares
Number of shares 7,650,000 8,900,000 10,150,000
Public offering price
per sahre na $0.20 $0.20
Net tangible book
value per sahre of
commom stock before
the offering $(.00138) $(.001386) $(.001386)
net tangible and
Pro forma net tangible
book value (deficiency)
after sales (39.394) $239,394 489,394
Increase to net tangible
book value per share
attributed to purchase
of share of common
stock by new investors $.0269 $.048
Dilution to new investors na (.173) 0.(.152)
After sale of
5,000,000 shares
12,650,000
$0.20
(.001386)
989,394
0.78
(.122)
This offering itself involves immediate and substantial dilution to investors.
Any shares of common stock issued or shares of preferred stock issued in the
future, including issuances to management, could reduce the proportionate
ownership, economic interests and voting rights of any holders of shares of
common stock purchased in this offering.
DETERMINATION OF OFFERING PRICE
The Company arbitrarily determined the price of the shares of common stock in
this offering. The offering price is not an indication of and is not based upon
the actual value of the Company. The offering price bears no relationship to the
book value, assets or earnings of the Company or any other recognized criteria
of value. Management determined the amount of funds that were needed to fully
implement the Company's business plan and the dilution factor that management
believed would be acceptable to the Company's current and prospective
shareholders. The offering price should not be regarded as an indicator of the
future market price of the securities.
PLAN OF DISTRIBUTION
The Company intends to sell a minimum of 250,000 shares of common stock and a
maximum of 5,000,000 shares of common stock to the public on a
self-underwriting, not underwritten by a registered broker/dealer, on a"best
efforts" basis. This offering may only be sold by Ms. Jeannot McCarthyy, the
Company's President and Board Chairman, and Zlatuse Jerabkova, the Company's
Secretary and Director. Ms. Jeannot McCarthy and Zlatuse Jerabkova are eligible
to sell this offering under Rule 3(a)4-1 of the Securities Act of 1933 which
states, in part, that: (a) An associated person of an issuer of securities shall
not be deemed to be a broker solely by reason of his
23
participation in the sale
of the securities if 1. the person or persons are not subject to statutory
disqualification; 2. is not compensated in connection with his participation by
the payment of commissions or other remuneration based either directly or
indirectly on transactions in securities; 3. is not at the time of the
participation an associated person of a broker or dealer; and 4. meets the
conditions of any one of paragraph (a)4(i)(ii) or (iii) of this section. Jeannot
McCarthy and Zlatuse Jerabkova both meet the requirements in (a)4(ii) which
states that the associated person meets all of the following conditions: A. The
associated person primarily performs, or is intended primarily to perform at the
end of the offering, substantial duties for or on behalf of the issuer otherwise
than in connection with transactions in securities; and B. The associated person
was not a broker or dealer, or an associated person of a broker or dealer,
within the preceding 12 months; and C. The associated person does not
participate in the selling of an offering of securities for any issuer more than
once every 12 months.
There is no commission being charged to the Company, either directly or
indirectly by the Company's officers and directors or any persons or firm in
connection with solicitation of sales of the shares of common stock. No public
market currently exists for the shares of common stock of the Company, however
the Company intends to have a registered broker/dealer apply to the National
Association of Securities Dealers to have its shares of common stock listed
under the symbol as designated by NASD on the OTC Bulletin Board or a regional
stock exchange if the Company meets the listing criteria.
If all of the shares of common stock are sold in this offering, the Company will
receive gross proceeds of $1,000,000 less the $15,000 in offering costs, netting
the Company $985,000. If only the minimum amount of shares of common stock are
sold by the Company, then the Company will receive $50,000, less the offering
expense of $15,000, netting the Company $35,000 which will be used for general
corporate expense and to have a registered broker/dealer apply for a listing on
the OTC Bulletin Board, operated by the National Association of Securities
Dealers or apply for listing on the Boston Stock Exchange upon the completion of
the Form 8A being filed by the Issuer.
24
All of the funds received and accepted by the Company for the sale of its shares
of common stock will be deposited in a segregated, non-interest bearing
corporate account known as "Jeannot's Furnishings of Florida, Inc. Special
Account." This account does not have any escrow or trust provisions associated
with the deposit of funds to achieve the minimum amount of this offering. The
signatory on this account is Jeannot McCarthy, President and Board Chairman and
one of the two officers and directors who will be selling the shares of common
stock in this offering. These officers and directors are Ms. Jeannot McCarthy,
President and Board Chairman and Ms. Zlatuse Jerabkova, Secretary and Director.
In the event that the minimum amount of the offering is not achieved, then all
funds will be returned to the investors, without interest or deduction, within
10 days of the termination date of December 31, 2006 or before. The termination
date may be extended and additional 180 days at the sole discretion of the
Issuer.
In the event that the minimum amount of proceeds are received and accepted by
the Company, then all subsequent funds will be deposited into the segregated
account or "special account" and held in that account until the appropriate
amount of shares of common stock are issued by the Company's transfer agent to
the investor. At that time, the funds will be transferred to the Company's
general corporate account for use according to the "Use of Proceeds."
DIVIDENDS
The Company has minimal operating revenues, no profits and no dividends accrued
for shareholders. At the present time, management does not believe that the
Company will be able to issue a dividend to its shareholders in the foreseeable
future or at all. Should the Company have any retained earnings, the Company
will use these retained earning to further and fully develop its business plan.
LEGAL PROCEEDINGS
The Company is not currently nor has ever been a party to any legal proceedings.
Further, the officers and directors do not know of any legal proceedings
threatened or anticipated against the Company or its property by any entity or
individual or any legal proceedings contemplated by any governmental authority.
DIRECTORS, OFFICERS, PROMOTERS, SIGNIFICANT EMPLOYEES AND CONTROL PERSONS
The Company's employees are the Company's President and Board Chairman, Jeannot
McCarthy and Secretary and Director, Zlatuse Jerabkova. As of the date of this
prospectus, the Company does not have any promoters.
Directors and Executive Officers:
The Company's officers and directors and control persons are listed below with
information about their respective backgrounds:
- -------------------------------------------------------------------------------
NAME AGE POSITION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Jeannot McCarthy (1) 43 CEO/Chairman/President
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Zlatuese Jerabkova (2) 33 Secretary/Director
- -------------------------------------------------------------------------------
(1) Jeannot McCarthy was appointed as a member of the Company's Board of
Directors in November 2002 . (2) Zlatuse Jerabkova was appointed as a member of
the Company's Board of Directors in November 2002.
25
All current directors were duly appointed and will hold office until the next
annual stockholders' meeting and until their successors have been elected or
qualified or until their death, resignation, retirement, removal, or
disqualification. Vacancies on the board will be filled by a majority vote of
the remaining directors. Officers of the Company serve at the discretion of the
Board of Directors.
None of the directors holds other directorships in other public corporations,
either reporting or non-reporting companies.
The Company's officers, directors and significant employees are:
Jeannot McCarthy, President, CEO and Board Chairman
Ms. McCarthy attended Georgetown University from 1982-1984, pursuing a degree in
Biology. In 1985, Ms. McCarthy returned to Florida and set sail for the
Caribbean where she managed a small resort "Silver Star" and chartered her
future husband's yacht to small groups of tourists. During that time, Ms.
McCarthy traveled extensively to Mexico and founded "Final Touch, Inc.", a
company that manufactured cowboy boots. Final Touch Inc. was quite successful,
appearing in the German edition of Vogue, with a large market in Europe and
Canada. Ms. McCarthy sold her interest to her German partner to be able to
devote herself to motherhood. In 1988, Ms. McCarthy moved to Porto Seguro,
Brazil to raise her daughter and became acquainted with and admired the unique
craftsmanship in the region. She studied with various artists and wood craftsmen
and began to design and produce various pieces of furniture that were readily
bought up by homeowners and hotels in the area.
In 1991, Ms. McCarthy returned to South Florida and managed Miami Beach's most
successful nightclub, Le Loft. She was responsible for the day to day operation
of the club, working with and organizing promoters. In 1993, Ms McCarthy became
Editor in Chief of Riveria Magazine, the first bilingual (French-English)
magazine in Miami Beach Florida. Ms. McCarthy continued with the magazine until
the French investor decided to return to Europe. In the beginning of 1995, Ms.
McCarthy joined Wimbish Realty and worked in concert with Ester Percal,one of
the most successful realtors in Miami.
Ms McCarthy has traveled extensively over the past decade throughout South
America, Asia, and Europe with a yearning desire to learn as much as she could
about artisan crafts and artisan woodwork. It was her intention to start her own
manufacturing company and distribution company for hardwood outdoor furniture.
In November 2002, Ms. McCarthy teamed up with her partner Ms. Jerobkova to form
their company, Patio Bahia Inc., now known as Jeannot's Furnishings of Florida,
Inc.
26
Ms. McCarthy's father, Judge Giles McCarthy, now deceased, was a United States
Federal Judge in Puerto Rico and retired as Chief Administrative Law U.S. Judge,
Ft. Lauderdale, Florida.
Ms. McCarthy speaks English, French, Spanish, Portuguese fluently and Italian
and German semi-fluently.
Zlatuse Jerabkova, Secretary and Director
Ms. Jerabkova is a native of the Czech Republic. In 1990, as a very young woman,
she owned a small supermarket in her village of Celedna. She sold her share of
the supermarket to her partner in the end of 1991. From 1990 to 1993, Ms.
Jerabkova graduated from the Electro University, acquiring a degree in
Electrical Engineering. From 1992-1993, Ms. Jarobkova was a partner in The Miva
Model Agency in the Republic. At the end of 1993, Ms. Jarobkova worked for two
years in the marketing department of Phillip Morris. In 1995, Ms. Jarobkova
decided to pursue a modeling career and went on to be crowned Miss Morivea and
was then signed by Metropolitan Models in Paris. Ms. Jerobkova had a successful
career modeling throughout Europe and the United States. By 1997, Ms. Jerobkova
decided to study acting and appeared in numerous movies such as "Any Given
Sunday" and commercials such as "7-UP". In 2001, Ms. Jerobkova was a founder of
Farenheit, Inc., a lingerie company, she is involved with today. After meeting
Ms. McCarthy, she decided to join forces and became an officer and director in
Patio Bahia, Inc. now known as Jeannot's Furnishings of Florida, Inc.
Ms. Jerabkova speaks Czech, English and Russian fluently.
EXECUTIVE COMPENSATION
Currently, the officers and directors receive no cash compensation and provide
services to the Company on an ad hoc basis.
If the Company is successful in the sale of at least twenty five percent (25%)
of the shares of common stock by way of this offering, the Company plans on
compensating Jeannot McCarthy, President, CEO and Board Chairman, a yearly
salary of $30,000; and Zlatuse Jerabkova, Secretary and Director, a yearly
salary of $20,000. In the event that the Company receives and accepts a minimum
of 50% of the proceeds from this offering then the Company will pay a yearly
salary to the President and Board Chairman of $60,000 per year and $40,000 per
year to the Secretary and Director. There will be no salaries paid or accrued
until 25% of the proceeds derived from this offering are received and accepted
by the Company. There are no employment agreements with either Jeannot McCarthy
or Zlatuse Jerabkova. When, as and if the Company becomes profitable and
produces commensurate cash flow from operations, then the Company's Board of
Directors will decide the level of reasonable salary for the
27
Company's
executives and other employees, commensurate with their time and services.
The Company issued shares of common stock to compensate the officers and
directors for their services from inception to December 31, 2005 and March 31,
2006 and June 30, 2006 on the following basis:
100,000 shares of common stock to Jeannot McCarthy 50,000 shares of
common stock to Zlatuse Jerabkova.
There are no provisions for the issuance of shares of common stock for officers'
and directors' future services.
- -------------------------------------------- ----------------------------------
Jeannot Mccarthy President & Board Chairman 100,000 shares
- ------------------------------------- -----------------------------------------
- ------------------------------------- -----------------------------------------
- ------------------------------------- -----------------------------------------
- ------------------------------------- -----------------------------------------
Zlatuse Jerabkova Secretary & Director 50,000 shares
- ------------------------------------- -----------------------------------------
- ------------------------------------- -----------------------------------------
SUMMARY COMPENSATION TABLE OF SHARES ISSUED FOR SERVICES
--------------------------------------------------
Name & Other
Principal Annual
Position Year Salary Bonus Expenses
Jeannot McCarthy 2002-05 None None $100.*
President/Chairman
Zlatuse Jerabkova 2002-05 None None $50.*
Secretary/Director
*This amount represents the amount of shares of common stock issued
to each of the above, valued at the par value of $.001 for
accounting purposes.
The Company currently has no employee stock option, annuity, or pension plans in
place although the Company does intend to provide all or a portion of these
benefits at some future date if the Company can establish sales and positive
cash flow.
28
SECURITY OWNERSHIP OF OFFICERS, DIRECTORS, AND CERTAIN BENEFICIAL OWNERS
The Company's officers and directors have been issued a total of 150,000 shares
of common stock in exchange for their services. Ms. Jeannot McCarthy owns a
total of 7,600,000 shares of the Company's common stock; 100,000 shares of
common stock for officers and directors services. Ms. Zlatuse Jerabkova owns a
total of 50,000 shares of common stock that were issued for officers and
directors services.
The following table sets forth, as of June 30, 2006 and September 8, 2006, the
Company's shares of common stock issued and outstanding owned of record or
beneficially owned by each executive officer and director and by each person who
owned of record, or was known by the Company to own beneficially, more than 5%
of its shares of common stock, and the share holdings of all executive officers,
directors and significant employees as a group. Each person has sole voting
power with respect to the shares of common stock shown.
As of the date of this prospectus, there are 7,650,000 shares of common stock,
duly authorized and validly issued and outstanding among 2 shareholders of
record; there are no shares of preferred stock issued and outstanding.
- ------------------------------------------------------------------------
Name Shares of Common Percentage of
Stock Owned Shares Owned
- ------------------------------------------------------------------------
Jeannot McCarthy 7,600,000 99.35
Zlatuse 50,000 .65
ALL OFFICERS, DIRECTORS
AND CERTAIN BENEFICIAL
OWNERS AS A GROUP 100%* *These figures are "rounded up" to the next digit as
some of the digits are significantly extended.
- -----------------------------------------------------------------------
DESCRIPTION OF SECURITIES
The following is a summary description of the Company's capital stock and
certain provisions of the Company's Articles 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.
29
General
The following description of the Company's capital stock is a summary of the
material terms of its capital stock. This summary is subject to and qualified in
its entirety by the Company's Articles of Incorporation and Bylaws, which are
included as exhibits to the registration statement of which this prospectus
forms a part.
As of the date of this prospectus, there are 7,650,000 shares of common stock,
duly authorized and validly issued among 2 shareholders of record. There are no
warrants or options issued as of this date. There are no stock option plans in
effect for officers, directors and significant employees.
Common Stock
The Company's authorized capital common stock consists of 100,000,000 shares of
common stock, with a par value $.001 per share of common stock.
The holders of the shares of common stock are entitled to one vote for each
share held of record on all matters submitted to a vote of stockholders. The
Company's Articles 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. In the event of the Company's liquidation or
dissolution, 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
The Company's authorized capital preferred stock consists of 10,000,000 shares
of preferred stock, with a par value of $0.001 per share of preferred stock. No
preferred shares were issued and outstanding as of June 30, 2006 and September
8, 2006. Each share of preferred stock is entitled to dividends when, and if,
declared by the Board of Directors. There are currently no voting, conversion
and liquidation rights, nor redemption or sinking fund provisions for the
preferred stock.
The holders of shares of common stock of the Company do not have cumulative
voting rights in connection with the election of the Board of Directors, which
means that the holders of more than 50% of such outstanding shares, voting for
the election of directors, can elect all of the directors to be elected, if they
so choose, and in such event, the holders of the remaining shares will not be
able to elect any of the Company's directors.
Liquidation or Dissolution of the Corporation
The Company's preferred shareholder shareholders are entitled to receive,
ratably, the net assets of the Company available to shareholders after payment
to all creditors. In
30
the event that the assets exceed the amount owing, then the
holders of common stock shall receive, ratably the remaining assets of the
Company.
DESCRIPTION OF BUSINESS
The Company is in the custom-made patio and yacht fine furniture distribution
business, specifically purchasing the product from manufacturers and (i) selling
at wholesale prices to retail outlets and interior designers; and (ii) selling
at retail from the Company's website. Jeannot's Furnishings of Florida, Inc. has
been selling natural wood patio and yacht furnishings made in Brail since its
inception in November 2002. The Company and its furnishings has been featured in
several magazine and periodicals including the cover of Florida Architecture,
Volume 11, a feature story in Vogue of Spain and Vogue of Brazil.
In November 2002, the Company called and held a Board of Directors meeting where
Ms. Jeannot McCarthy and Zlatuse Jerabkove were nominated and appointed as
President and Secretary respectively and both of these two officers comprised
the entire Board of Directors.
On December 23, 2004, the Company amended it Articles of Incorporation as
follows:
"Article I is hereby amended as follows:
The name of the corporation is:
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
Article IV is hereby amended as follows:
The aggregate number of shares which the corporation shall have
authority to issue, including the classes thereof and special provisions, are as
follows: 110,000,000 shares; 100,000,000 shares of voting, common stock, with a
par value of $0.001, and 10,000,000 shares of non-voting preferred stock, with a
par value of $0.001. The shareholders shall not have the right to accumulate
votes in the election of directors with respect to shares of common stock in the
corporation. Each share of common stock shall be entitled to one vote. The
holders of the shares of preferred stock are entitled to receive the net assets
of the corporation upon dissolution. The Board of Directors are entitled to
restructure the issued and outstanding shares of stock with respect to a forward
or reverse split, without a shareholders meeting, general or special meeting,
providing that fifty percent (50%) of the shareholders agree to the share
reorganization within the limits of the share capitalization of 100,000,000
shares of voting, common stock and 10,000,000 shares of non-voting preferred
stock.
Article IX SEC. 1244 Stock
Article IX is hereby deleted and shall cease to exist.
31
Article XI - Sub-Chapter S Corporation
Article XI is hereby deleted and shall cease to exist.
The maximum number of shares of common stock of the corporation issued and
outstanding and entitled to vote on an amendment to the Articles of
Incorporation is 7,500. The said changes and amendment have been consented to
and approved by a majority of the stockholders, specifically 7,500 or 100%. The
vote was sufficient for approval."
The Company's business plan focuses on an integrated business of purchasing
custom designed, natural wood patio and yacht furniture and then marketing that
furniture through interior designers, retail distributors and to the
end-consumer by way of the Company's website. This business plan allows the
Company the flexibility to take advantage of various related business situations
as these business situations are presented. See "Overview of the Market" to
follow.
The Company is in its development stage and has had no operating revenues to
date. The Company incurred operating losses of $XX from Inception to December
31, 2005 and $xx from inception to June 30, 2006. The Company expects its
accumulated deficit to grow for the foreseeable future.
Overview of the Market
The Company plans to achieve its goals by targeting new, high margin product
niches, including upscale residences and yachts. These high margin market niches
are for those products that are custom made, of natural woods and are quality
patio and deck furnishings. The Company's goal is to maintain and nurture the
potential alliances with established interior designers, upscale retailers and
other sources of referral to keep the standards and prestige of the product line
at the optimum level.
The Company will aggressively target markets, target distributors and
established interior designers in North and South America, Europe and the Far
East. Management of the Company will attend major national and international
trade shows and exhibitions including furniture, outdoor living and boat and
yacht shows and exhibitions. The Company's competitive advantage is that the
Company is operating directly with the Brazilian artisans who create the patio
and yacht furnishings.
The Company has the flexibility to customize operations and products to suit a
potential strategic alliance partner or joint venture partner and the combined
interest of the potential partnership and market demands.
The Company can potentially create business opportunities with other outdoor
furniture manufacturers to add an additional "high-end" patio and yacht
furniture line to augment their existing product line. The Company can maintain
its office facilities and increase
32
its warehouse facilities as needed. This
potential expansion is cost effective and does not affect the overall
presentation of the product line
The amount of funds generated from the Offering will determine whether the
Company will open show rooms, distribution centers, hire sales teams for
showrooms and retain sales representatives. Additionally, the advertising budget
will be proportionate with the amount of funds received and accepted by the
Company by way of the Offering.
The Company's management believes that there is a large upscale market for
quality, custom made patio and yacht furnishings and that such market has few
competitors.
The Company acquired the business research and contact base of its President and
Director, Jeannot McCarthy. Ms. McCarthy has been in the quality furniture
business since 2002. The Company plans to use these contacts and knowledge of
foreign (export) distributors, corporate interior designers and distributors,
yacht brokers and yacht interior designers.
It is planned that the initial marketing of the Company's products will take
place in area of Southern Florida where the market is better known to
management, taking advantage of the largest yacht population in the United
States, along with one of the highest priced real estate markets in the United
States. The intent is to work with and through business associates to use their
professional skill on a referral basis to eliminate the need for salaried
employees.
The Company anticipates that it will initially derive revenues from the
wholesale sales to interior designers, up-scale retail outlets and retail sales
directly to the consumer by advertising that directs the consumer to the
Company's website.
The Company is not dependent on a few major customers. The potential market for
the Company's product is both domestic and international.
Competition
As stated previously under "RISK FACTORS", beginning on page 7, the market for
all outdoor and yacht furnishings is relatively competitive, rapidly evolving,
resulting in a dynamic competitive environment, with several dominant national
and multi-national leaders. The Company will have to compete with companies that
have substantially greater financial, marketing, technical and human resources
capabilities. In addition, new companies may enter the market with new products
that may be competitive with the product line offered or to be offered by the
Company. Because there are potential entrants to the general furniture
manufacturing and custom furniture manufacturing fields, it is extremely
difficult to assess which companies are likely to offer competitive products and
in the future, and in some cases it is difficult to discern whether an existing
product is competitive with the Company's products. Competitive factors in
33
the
outdoor furniture manufacturing and custom furniture manufacturing include
product quality, marketing and distribution resources, customer service and
support and price of product. The Company expects competition to persist and
intensify in the future.
Some of the Company's competitors are much larger companies than Jeannot's,
which are very well capitalized and can utilize their strong market share for
further growth that may impede the Company's ability to generate enough sales to
cover the costs of acquiring and marketing the product. Several of the Company's
competitors have longer operating histories, greater name recognition, larger
client bases and significantly greater financial, manufacturing and marketing
resources than the Company. Such competitors may be able to undertake more
extensive marketing campaigns, adopt more aggressive pricing policies and make
more attractive offers to potential clients. In addition, many of the Company's
current or potential competitors, such as Tropitone, Brown Jordan, Tidelli,
Artisan House, etc. have broad distribution channels that may be used to
distribute competing products directly to end-users or purchasers. It is
possible that the Company will not be able to compete effectively with current
or future competitors resulting in a loss of business or entire business
failure.
Product Source
The current source of the Company's product is: Marceneria Aracaipe in Porto
Seguro Brazil also available to us at any time is Marceneria Lumaries in
Trancoso Brazil.
Employees
The Company currently has no employees. In the event that 25% of the Company's
shares of common stock are sold by way of this offering, then Ms. Jeannot
McCarthy, the Company's President and Board Chairman and Zlatuse Jerobkova, the
Company's Secretary and Director will be full time employees of the Company. In
the event that a minimum of 50% of the shares of common stock are sold by way of
this offering, Ms. McCarthy will receive a salary of $60,000 per year and
Zlatuse Jerobkova will receive a salary of $40,000 per year. In the event that
only a minimum of 25% of the shares of common stock is sold by way of this
offering, then Ms. McCarthy shall receive a yearly salary of $30,000 and Ms.
Zlatuse Jerobkova will receive a yearly salary of $20,000, both salaries payable
on a monthly basis.
The Company intends to engage a sales force once management of the Company deems
that the volume of activity warrants additional personnel. Initially, the
Company will receive sales support of generating sales by way of the interior
designers that are aware of and support the Company's product line.
Distributors
The Company currently does not have any arrangements or agreements with any
patio or yacht furniture distributors. Until the Company can commence meaningful
operations, there is no basis to engage or negotiate distribution opportunities.
Once the
34
Company has received and accepted the proceeds from the sale of 25% of
the shares of common stock, the Company will negotiate distribution agreements.
A number of established and suitable outdoor furnishing distributors are known
to the management of the Company and additional distributors can be sourced at
product trade shows, trade journals and direct solicitation with chain stores
and institutional buyers.
Government Regulation
The Company will not be subject to any government regulation while acting as a
wholesale purchaser of custom made wood outdoor furniture.
The Company's Operations To Date:
The Company has been developing and implementing its business plan and has sold
its products in the Southern Florida area
Sources of Revenues
Through December 31, 2005 and June 30, 2006 respectively, the Company has
received $32,393 in revenues from operations by the sale of its product line.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following is the Company's plan of operation for the following 12 months,
and should be read in conjunction with the Company's financial statements and
notes thereto appearing in this prospectus.
Plan of Operation for the Next Twelve Months is as Follows:
The Company intends to use the proceeds from this offering to establish its
inventory, sales and marketing business for patio and yacht furnishings
primarily in the Southern Florida marketplace. The Company's philosophy has been
to search for various targets of opportunity and specialty markets that would
provide revenues to the Company. The plan of operation is dependent on the
amount of proceeds realized from the sale of common stock in this offering.
In order for the Company to further implement its initial business plan and to
commence meaningful business operations through the end of December 31, 2006,
the Company must raise at least 25% of the proceeds offered by the sale of
common stock in this offering or $250,000. The Company anticipates that it will
obtain orders for its product that are able to be financed through traditional
methods such as purchase order financing, account receivable financing, or
letters of acceptance and letters of credit.
35
There is no assurance that the
Company will be able to achieve meaningful sales volume or any sales at all.
Jeannot's is a development stage company that is in the business of ordering,
acquiring custom made wood patio and yacht furniture, specifically for the
upscale marketplace. The product and services that the Company intends to offer
are described in the "Description of Business" section beginning on page 31 of
this prospectus. The Company has generated $32,393 of revenues to June 30, 2006.
In the event that only the minimum amount of proceeds of 250,000 shares of
common stock at a purchase price of $0.20 or $50,000 is received and accepted by
the Company, then the Company must seek other means of financing the Company as
$50,000 is not sufficient to commence any meaningful business operations. In the
event that 25% of the proceeds of 1,250,000 shares of common stock at a purchase
price of $.20 is received and accepted by the Company, that $250.000 will be
sufficient to operate the Company for a minimum of one year. In the event that
50% of the proceeds of 5,000,000 shares of common stock at a purchase price of
$.20 is received and accepted by the Company, that $500,000 will be sufficient
to operate the Company for a minimum of two years. In the event that 100% of the
proceeds of 5,000,000 shares of common stock at a purchase price of $.20 is
received and accepted by the Company, that $1,000,000 will be sufficient to
operate the Company for a minimum of 36 months.
General
The Company has developed a business plan that can be further implemented upon
financing. The Company can commence meaningful business operations upon
receiving and accepting funds from the sale of a minimum of 25% of the shares of
common stock offered in this prospectus, resulting in $250,000 in working
capital. In the event that 50% of the shares of common stock are sold in this
offering, then the Company can expand it marketing and acquisition of custom
made wood patio and yacht furnishings. The Company plans to hire additional
employees when it becomes necessary and cost effective. See "DESCRIPTION OF
BUSINESS", page 31
Other Factors
Some of the phases of the Company's operations are subject to influences outside
of the control of the Company. Any one, or a combination, of these factors could
materially affect the results of the Company's operations. These factors include
the weather and other conditions of nature and its results on the quantity and
quality of the custom made wood patio and yacht furniture, competitive
pressures, interest rates fluctuations, inflation, especially on product line
purchases, and other market conditions.
The Company has no knowledge of any material event or any uncertainty in the
mainstream and/or segmented custom furniture market that would adversely affect
the Company's operations or have any effect on the Company's financial
statement. It is not anticipated that labor costs will escalate over the normal
"cost of living" increases
36
or that the cost of equipment or materials be
increased in the Company's day-to-day operations. The Company is not aware of
any information or market condition that would adversely impact the Company's
current business plan or future operation results.
Forward Looking Statements
Forward-looking statements are made by or on behalf of the Company based on
knowledge of its business and the environment in which it operates, but because
of the factors listed above, as well as other commercial, environmental and
business factors over which the Company has no control, actual results may
differ from those in the forward-looking statement. Consequently, all of the
forward-looking statements made are qualified in their entirety by these
cautionary statements and there can be no assurance that the actual results or
developments anticipated by the Company will be realized or, even if
substantially realized, that they will have the expected effect on the business
and/or operations of the Company.
Liquidity and Capital Resources
The Company is in the development stage and since inception has received a total
of $32,393 in revenue from operations. The Company will need additional capital
to carry out its business plan. The Company's only source of financing and
having the ability to commence meaningful operation is to sell shares of common
stock in this offering. In the event that the Company is successful in the sale
of its shares of common stock, the Company will be able to purchase product for
resale and distribution. The Company will depend upon these sales and the
potential profit of these sales to continue as a business operation.
There are currently no capital obligations or agreements with any manufacturers
or distributors.
There are currently no commitments to purchase or lease any equipment or to
purchase or lease any facilities.
Seasonal, Weather and Other Considerations of Purchasing Product from Brazil
There are several considerations buying product from Brazil affected by a
foreign government, weather and other natural elements which have been discussed
more thoroughly in the RISK FACTORS, "The Company may incur problems in the
Brazilian manufacturing sector which could result in lack of product sales,
business delays and the future economic viability of the Company.
Potential investors should be aware of the problems, delays, expenses,
difficulties, and risks encountered by an off-shore manufacturing company,
particularly in a rapidly growing sector of the manufacturing industry,
dependent on weather, other forces of nature and the environment, all of which
are beyond the control of the Company. These risks are the anticipated and
unanticipated problems relating to the harvesting of the
37
hardwoods and the
handcrafted manufacturing of the outdoor furniture. The risks are as follows:
o availability of selected hardwoods in a seasonal market.
o quality and availability of product due to adverse weather conditions.
o pricing of raw materials (primarily the hardwoods) in a
competitive market resulting in poor or lower than
anticipated profit margins.
o outdoor furniture is not manufactured properly whereby
the end product is now known to have incurred defects
until delivery several weeks following manufacturing.
o outdoor furniture is not manufactured to design and market specifications.
o the hardwoods are not graded properly and the finished product is not
to customer's specifications.
o less than premier qualities of hardwoods being used that
would make end product not to the perceived quality of
finished product.
o difficulty in the communication with a foreign
manufacturer who is thousand of miles from the Company's
operations office and point of entry for the outdoor
furniture.
o the expensive shipping cost of returning outdoor
furniture if the end product is not to the customer
specifications or acceptance could be prohibitive to the
overall profitability of the Company.
o Potential hardwood price increases that could be
spontaneous and without proper notice for the Company to
adjust it's wholesale and retail prices.
o difficulty in sourcing competent artisans who can handcraft the
outdoor furniture.
o the Brazilian government and/or IBAMA could change
governmental policy without sufficient notice to the
Company which would cause the hardwoods and/or the
manufacturers to cease operations and/or expensive export
tariffs to the detriment of the Company.
All or some of these risks are inherent in the natural hardwood, handcrafted
furniture manufacturing that could result in the lack of sales and the overall
potential success of the Company's business plan and business operations.
Additionally, the seasonal nature of the sale and redistribution of outdoor
patio and yacht furniture will affect the quarter-to-quarter income and cash
flow of the Company. This seasonal aspect of the Company's business may have a
material effect on the financial condition or results of the Company's business
operations.
Shares of Common Stock Issued for Services
In April 2005, the Company issued the following shares of common stock for
officers and directors services. These issuances were as follows:
38
Jeannot McCarthy, President and Board Chairman - 100,000 shares of common stock
Zlatuse Jerobkova, Secretary and Director - 50,000 shares of common stock
The Board of Directors determined the amount of the shares to be issued to each
of the above considering the knowledge and potential services that will be
derived by the Company in the normal course of business and also the time that
each of the above will dedicate to the business of the Company. There are no
employment agreements for any of the Company's officers and directors. There are
no Company employees at the present time and the Company does not anticipate
hiring employees in the near future.
Operating Results To Date
During the six month period ended June 30, 2006, the Company spent $36,228 in
operational expenses that included inventory, sales commissions, transportation
and business travel.
The Company incurred operating losses of $39,256 from inception to June 30,
2006. For the six months period ending June 30, 2006, operational expenses were
$XX. The Company expects its accumulated deficit to grow for the foreseeable
future as total costs and expenses increase due principally to increased
marketing expense associated with the launch of the Company's products on a
larger scale. There can be no assurances that the Company will be successful in
the further implementation of its business plan or to successfully generate
sales of the product to have sufficient revenues to allow the Company to operate
profitably.
The Company does not expect to generate a positive internal cash flow for at
least the next two years due to expected increase in spending for salaries and
the expected costs of marketing and sales activities.
The Company currently has limited internal and external sources of liquidity.
At of the date of this prospectus, the Company has no material commitment for
capital expenditures.
Market Outlook
There are no known trends, events or uncertainties that are expected to have a
material negative impact on the net sales and income from operations of the
Company. The industry and the needs of the market are well established. The
Company believes that it will serve an established patio and yacht furniture
market and specialty niche market with its product line that has yet to be
served adequately. The Company's overall business is not particularly or
completely subject to seasonal aspects and can market its products to tropical
and warmer climate areas on a year-long basis.
39
DESCRIPTION OF PROPERTY
The Company owns no property. The Company's principal office is located at 400
South Point Drive, #1704, Miami Beach, Florida 33139. The Corporation, upon
being successful in this offering memorandum, will relocate to a permanent
facility in due course.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Ms. Jeannot McCarthy has negotiated all of the Company's sales contracts to
date. All of the contracts were researched as to fair market value. There are no
stock options offered to any officer, director or significant employee or any
other remuneration contracts except as otherwise described in this prospectus.
There are no parent companies to the Company and no other control persons or
entities other than as described in the prospectus.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of the date of this prospectus, there are 7,650,000 shares of common stock,
duly authorized and validly issued, to 2 shareholders of record. No established
public market presently exists for the Company's securities. The Company has no
shares of common stock equity subject to outstanding purchase options or
warrants. The Company has no securities convertible into its common stock
equity.
There are no shares of common stock of the Company that are subject to
registration rights. There are no other shares of common stock agreements that
are subject to registration rights.
There are no shares of common stock subject to any stock option contract or any
other contract. There are no stock option contracts for any officer, director of
significant employees and none contemplated.
To date, the Company has not paid any dividends on its shares of common stock
and does not expect to declare or pay any dividends on its shares of common
stock in the foreseeable future. The payment of any dividends will depend upon
the Company's future earnings, if any, its financial condition, and other
factors as deemed relevant by the Company's Board of Directors.
The Company's shares of common stock may be considered a "penny stock" if it is
traded at a price at under $5.00 or other factors. Investors should be aware
that, according to the Securities and Exchange Commission Release No. 34-29093,
the market patterns include:
40
(1) Control of the market for the security by one or a few broker/dealers
that are often related to the promoter or to the Company;
(2) Manipulation of prices through prearranged matching of purchases and
sales and false and misleading press releases; (3) "Boiler room" practices
involving high-pressure sales tactics and unrealistic price projections by
inexperienced sales
persons;
(4) Excessive and undisclosed bid-ask differentials and markups by selling
broker/dealers; and
(5) The wholesale dumping of the same securities by promoters and
broker/dealers after prices have been manipulated to a desired level, along with
the inevitable collapse of those prices with consequent investor losses. One or
more of the above could cause the investor to lose all or part of the
investment.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
The Company's By-Laws provides that no director of the Company shall be
personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director except as limited by the State of Florida
law. The Company's Bylaws provide that the Company shall indemnify to the full
extent authorized by law each of its directors and officers against expenses
incurred in connection with any proceeding arising by reason of the fact that
such person is or was an agent of the corporation.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
Available Reports to Securities Holders
Upon effectiveness of this registration statement the Company will commence
filing reports, proxy statements and other information with the Securities and
Exchange Commission. An investor may read and copy any report, proxy statement
or other information the Company files with the Commission at their website at
http://www.sec.gov that contains reports, proxy statements and other information
filed with the Commission. The public may read and copy any materials the
Company filed with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C., 20549. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at (800)-SEC-0330.
The Company has filed a registration statement on Form SB-2 with the Commission
to register shares of the Company's common stock for sale in a public offering.
This prospectus is part of that registration statement and, as permitted by the
Commission's rules, does not contain all of the information set forth in the
registration statement. For
41
further information with respect to the Company, or
the Company's shares of common stock, an investor may refer to the registration
statement and to the exhibits and schedules filed as part of the registration
statement. An investor can review a copy of the registration statement and its
exhibits and schedules at the Commission's web site, as described above. It
should be noted 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.
TRANSFER AGENT
The Company's transfer agent is National Stock Transfer, Inc., 1512 South
1100 East, Suite B, Salt Lake City, Utah 841151; telephone
(801) 485-7978, fax (801) 466-6877. National Stock Transfer, Inc. is
registered with the Securities and Exchange Commission.
INTEREST OF NAMED EXPERTS AND COUNSEL
These experts have been retained in connection with the registration of this
offering of the Company's shares of common stock. Mr. Rex Andersen, CPA, 684
East Vine Street, #3, Murray, Utah 84107 has been engaged to provide the
audited financial statements of December 31, 2005 and review the management
statement of March 31, 2006 and June 30, 2006 of the Company in connection
with this offering. Mr. Rex Andersen, CPA, does not own any shares of common
stock of the Company.
INVESTORS MAY ONLY RELY UPON THE INFORMATION IN THIS PROSPECTUS
Investors should rely only on the information contained in this document. The
Company has not authorized anyone to provide investors with information that is
different. This prospectus is not an offer to sell shares of common stock in any
state where the offer or sale is not permitted.
42
FINANCIAL STATEMENTS
MADSEN & ASSOCIATES, CPA's INC.
684 East Vine St, # 3
Certified Public Accountants and Business Consultants
Murray, Utah 84107
Telephone 801-268-2632
Fax 801-262-3978
Board of Directors
Jeannot's Furnishings of Florida, Inc.
Miami Beach, Florida
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying balance sheet of Jeannot's Furnishings of
Florida, Inc. (development stage company) at December 31, 2005 and the related
statements of operations, stockholders' equity, and cash flows for the years
ended December 31, 2005 and 2004 and the period November 25, 2002 (date of
inception) to December 31, 2005. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Jeannot's Furnishings of
Florida, Inc. at December 31, 2005 and the results of operations, and cash flows
for the years ended December 31, 2005 and 2004, and the period November 25, 2002
to December 31, 2005 in conformity with accounting principles generally accepted
in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company does not have the
necessary working capital to service its debt and for its planned activity,
which raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in the notes to the
financial statements. These financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Salt Lake City, Utah
May 19, 2006 s/Madsen & Associates, CPA's Inc.
43
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
(Development Stage Company)
BALANCE SHEET
December 31, 2005
ASSETS
CURRENT ASSETS
Cash $ 240
Inventory 7,706
------
Total Current Assets $7,946
=====
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Note payable - related party 14,987
Accrued interest payable - related party 3,030
-----
Total Current Liabilities 18,017
------
STOCKHOLDERS' DEFICIENCY
Preferred stock
10,000,000 shares authorized at $.001 par value;
none outstanding
Common stock
100,000,000 shares authorized at $.001 par value;
7,650,000 shares issued and outstanding 7,650
Capital in excess of par value 18,000
Deficit accumulated during development stage (35,721)
-------
Total Stockholders' Deficiency (10,071)
------
$ 7,946
The accompanying notes are an integral part of these
financial statements.
44
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
(Development Stage Company)
STATEMENT OF OPERATIONS
For the Years Ended December 31, 2005 and 2004 and the period November 25,
2002 (date of inception) to December 31, 2005
Dec 31, Dec 31, Nov 25, 2002
to
2005 2004 Dec 31 , 2005
------- -------- -------------
SALES $ 5,692 $ 7,679 $ 32,393
COST OF SALES 4,404 6,911 31,946
----- ----- ------
Gross profit 1,288 768 447
EXPENSES
Administrative 7,610 10,219 33,138
----- ------- -------
NET OPERATING LOSS (6,322) (9,451) (32,691)
INTEREST EXPENSE (1,012) (900) (3,030)
--------- ------- --------
NET LOSS $ (7,334) $ (10,351) $ (35,721)
======= ======== ========
NET LOSS PER COMMON
SHARE
Basic and diluted $ - $ -
-------- ---------
AVERAGE OUTSTANDING
SHARES - (stated in 1,000's)
Basic 7,650 7,650
----- ------
Diluted 9,451 9,451
---------------------
The accompanying notes are an integral part of
these financial statements.
45
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
(Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period November 25, 2002 (date of inception) to December 31, 2005
Common Stock Excess of
Shares Amount Par Value
Balance November 25, 2002 - $ - $ -$
Issuance of common stock for cash 7,500,000 7,500 -
Net operating loss for the period ended
December 31, 2002 - - -
Contributions to capital - expenses - - 6,000
Net operating loss for year ended
December 31, 2003 - - -
Issuance of common stock for cash 150,000 150 -
Contributions to capital - expenses - - 6,000
Net operating loss for the year ended
December 31, 2004 - - -
Contributions to capital - expenses - - 6,000
Net operating loss for the year ended
December 31, 2005 - -- (7,334)
Balance December 31, 2005 7,650,000 $ 7,650 $18,000
Capital in
Accumulated
Deficit
Balance November 25, 2002 $ -
Issuance of common stock for cash -
Net operating loss for the period ended
December 31, 2002 (1,631)
Contributions to capital - expenses -
Net operating loss for year ended
December 31, 2003 (16,405)
Issuance of common stock for cash -
Contributions to capital - expenses -
Net operating loss for the year ended
December 31, 2004 (10,351)
Contributions to capital - expenses -
Net operating loss for the year ended
December 31, 2005 (7,334)
Balance December 31, 2005 $ (35,721)
The accompanying notes are an integral
part of these financial statements.
46
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
(Development Stage Company)
STATEMENT OF CASH FLOWS
For the Years Ended December 30, 2005 and 2004 and the Period
November 25, 2002 (date of inception) to December 31, 2005
Dec 31, Dec 31, Nov 25, 2002
2005 2004 to Dec 31, 2005
------ ----------- --------------
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) $ (7,334) $ (10,351) $ (35,721)
Adjustments to
reconcile net loss to
net cash provided by
operating activities
Changes in inventory (7,706) 9,500 (7,706)
Contributions to
capital - expenses 6,000 6,000 18,000
Net Change in Cash
from Operations (9,040) (5,149) (25,427)
------- -------- ---------
CASH FLOWS FROM
INVESTING ACTIVITIES - - -
---------- -------------------------
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from issuance
of capital stock - - 7,650
Changes in loans and accrued
interest from related party 2,412 18,449 18,017
------ ------ -------
2,412 18,449 25,667
----- ------ ------
Net Increase (Decrease) in Cash (6,628) (13,300) 240
Cash at Beginning of Period 6,868 20,168 -
------- --------- -------------
Cash at End of Period $ 240 $ 6,868 $ 240
===== ======= =====
The accompanying notes are an integral part of
these financial statements.
47
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
1. ORGANIZATION
The Company was organized in the state of Florida on November 25, 2002, as
Patio-Bahia, Inc. and on December 29, 2004, changed its name to Jeannots'
Furnishings of Florida, Inc.
The Company was incorporated with authorized 7,500 shares of common stock with
par value of $1.00. On December 29, 2004, the Company increased its authorized
common stock to 100,000,000 shares at a par value of $.001 and 10,000,000 shares
of preferred stock at a par value of $.001. On December 30, 2004, the Company
completed a forward stock split of its issued common shares of 1000 shares for
each outstanding share. This report has been prepared showing post split shares
with a par value of $.001 from inception.
There are no preferred shares outstanding and therefore, their terms have not
yet been determined by the board of directors.
The Company is engaged in the design of furniture and the wholesale and retail
sales of its custom made, outdoor patio and yacht furniture designs made
exclusively from Brazilian hardwoods. The Company sub-contracts the
manufacturing to custom furniture makers in Brazil. Product distribution is
direct to interior designers and other retail outlets and also sells through
direct advertising and directly over its website: www.jeannotsfurnishings.com
The Company is in the development stage.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not adopted a policy regarding payment of dividends.
Financial Instruments
The carrying amounts of financial instruments are considered by management to be
their estimated fair values due to their short term maturities.
Revenue Recognition
Revenue is recognized as income on the sale and delivery of a product or the
completion of services provided.
Advertising and Market Development
The company expenses advertising and market development costs as incurred.
Inventory
Inventory consists of furniture and accessories for sale to customers and is
stated at the lower of cost or market, using the first in first out method.
48
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2005
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under
the liability method deferred tax assets and liabilities are determined based on
the differences between financial reporting and the tax bases of the assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect, when the differences are expected to reverse. An allowance against
deferred tax assets is recorded, when it is more likely than not, that such tax
benefits will not be realized.
On December 31, 2005 the Company had a net operating loss available for carry
forward of $35,721. The income tax benefit of approximately $10,700 from the
loss carry forward has been fully offset by a valuation reserve because the use
of the future tax benefit is doubtful since the Company has not started full
operations. The net operating loss expires starting in 2022 through 2026.
Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equivalent shares outstanding as if shares had been issued on the
exercise of any preferred share or common share rights unless the exercise
becomes anti dilutive and then only the basic per share amounts are shown in the
report.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
Financial and Concentrations Risk
The Company does not have any concentration or related financial credit risk.
Recent Accounting Pronouncements
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
49
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2005
3. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Officer - directors have acquired all of the outstanding common stock of the
Company and have made contributions to capital by the payment of expenses as
outlined in the Statement of Changes in Stockholders' Equity.
An affiliate of the Company (by common officers) has a 6% interest bearing,
demand note due it with a remaining balance of $14,987, and accrued interest of
$3,030. The terms of the note includes conversion rights to convert to 1,801,700
of common shares at the option of the note holder.
4. CAPITAL STOCK
During 2002 the Company issued 7,500,000 post split common shares to an officer
- - director and founder of the Company for cash.
During 2003 the Company issued 150,000 post split common shares to an officer
director of the Company for cash.
5. GOING CONCERN
The Company does not have the necessary working capital to service its debt and
for its planned activity, which raises substantial doubt about its ability to
continue as a going concern.
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed a
strategy, which it believes will accomplish this objective through additional
loans from an officer and others, and equity funding, which will enable the
Company to conduct operations for the coming year.
50
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
(Development Stage Company)
BALANCE SHEET
U.S. Dollars
June 30 December 31
2006 2005
Unaudited
ASSETS
Current
Cash $ - $ 240
Inventory and work in progress 7,706 7,706
----- -----
Total Current Assets $ 7,706 $ 7,946
----- -----
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities
Note payable - related party 14,837 $ 14,987
Accrued interest payable - related party 3,475 3,030
----- -----
Total Current Liabilities 18,312 18,017
------ ------
STOCKHOLDERS' EQUITY
Common Stock
Authorized
100,000,000 shares of common stock with a par
value of $0.001 each
10,000,000 shares of preferred stock with a par
value of $0.001 each
Issued and outstanding
7,650,000 shares of common stock 7,650 7,650
(7,650,000 December 31, 2005)
Additional Paid in Capital 21,000 18,000
Deficit accumulated during development stage (39,256) (35,721)
------ ------
Total Stockholders' Equity (Deficit) (10,606) (10,071)
------ ------
Total Liabilities and Stockholders' Equity $ 7,706 $ 7,946
----- -----
The accompanying notes are an integral part of the financial statements
51
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
(Development Stage Company)
Statements of Operations
For the six month periods ended June 30, 2006 and 2005 and the period
November 25, 2002 (date of inception) to June 30, 2006
Unaudited
U.S. Dollars
Six Months to:
June 30, June 30, Nov 25, 2002 to
2006 2005 June 30, 2006
SALES $ - $ 3,840 $ 32,393
COST OF SALES - 3,455 31,946
----- ----- ------
Gross profit - 385 447
EXPENSES
Administrative 3,090 5,109 36,228
----- ----- ------
NET OPERATING LOSS (3,090) (4,724) (35,781)
INTEREST EXPENSE (445) (450) (3,475)
--- --- -----
NET LOSS $ (3,535) $ (5,174) $(39,256)
===== ===== ======
NET LOSS PER COMMON
SHARE
Basic and diluted $ - $ -
-------- ---------
AVERAGE OUTSTANDING
SHARES - (stated in 1,000's)
Basic 7,650 7,650
----- -----
Diluted 9,451 9,451
----- -----
The accompanying notes are an integral part of these financial statements.
52
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
(Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period November 25, 2002 (date of inception) to June 30, 2006
Unaudited
U.S. Dollars
Common Stock Excess of
Shares Amount Par Value
Balance November 25, 2002 - $ - $ -
Issuance of common stock for cash 7,500,000 7,500 -
Net operating loss for the period
ended December 31, 2002 - - -
Contributions to capital - expenses - - 6,000
Net operating loss for the year
ended December 31, 2003 - - -
Issuance of common stock for cash 150,000 150 -
Contributions to capital - expenses - - 6,000
Net operating loss for the year
ended December 31, 2004 - - -
Contributions to capital for expenses - - 6,000
Net operating loss for the year
ended December 31, 2005 - - -
Contributions to capital for expenses - - 3,000
Net operating loss for the six months
ended June 30, 2006 - - -
Balance June 30, 2006 7,650,000 $ 7,650 $ 21,000
========= ===== ======
Accumulated
deficit
Balance November 25, 2002 $ -
Issuance of common stock for cash -
Net operating loss for the period
ended December 31, 2002 (1,631)
Contributions to capital - expenses -
Net operating loss for the year
ended December 31, 2003 (16,405)
Issuance of common stock for cash -
Contributions to capital - expenses -
Net operating loss for the year
ended December 31, 2004 (10,351)
Contributions to capital for expenses -
Net operating loss for the year
ended December 31, 2005 (7,334)
Contributions to capital for expenses -
Net operating loss for the six months
ended June 30, 2006 (3,535)
Balance June 30, 2006 $(39,256)
The accompanying notes are an integral part of these financial statements.
53
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
(Development Stage Company)
STATEMENT OF CASH FLOWS
For the six month periods ended June 30, 2006 and 2005 and the period
November 25, 2002 (date of inception) to June 30, 2006
Unaudited
U.S. Dollars
June 30, June 30, Nov 25, 2002
2006 2005 to June 30,2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (3,535) $ (5,174) $(39,256)
Adjustments to reconcile
net loss to
net cash provided by
operating activities:
Changes in inventory - - (7,706)
Contributions to capital
for expenses 3,000 3,000 21,000
----- ----- ------
Net Change in Cash
from Operations (535) (5,149) (25,962)
--- ----- ------
CASH FLOWS FROM
INVESTING ACTIVITIES - - -
----- ----- -------
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from issuance
of capital stock - - 7,650
Changes in loans and accrued
interest from related party 535 5,149 18,312
--- ----- ------
535 5,149 25,962
--- ----- ------
Net Increase (Decrease)
in Cash - - -
Cash at Beginning of Period 240 - -
---- ----- -------
Cash at End of Period $ - $ - $ -
==== ===== ======
The accompanying notes are an integral part of these financial statements.
54
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2006
1. ORGANIZATION
The Company was organized in the state of Florida on November 25, 2002, as
Patio-Bahia, Inc. and on December 29, 2004, changed its name to Jeannots'
Furnishings of Florida, Inc.
The Company was incorporated with authorized 7,500 shares of common stock with
par value of $1.00. On December 29, 2004, the Company increased its authorized
common stock to 100,000,000 shares at a par value of $.001 and 10,000,000 shares
of preferred stock at a par value of $.001. On December 30, 2004, the Company
completed a forward stock split of its issued common shares of 1000 shares for
each outstanding share. This report has been prepared showing post split shares
with a par value of $.001 from inception.
There are no preferred shares outstanding and therefore their terms have not yet
been determined by the board of directors.
The Company is engaged in the design of furniture and the wholesale and retail
sales of its custom made, outdoor patio and yacht furniture designs made
exclusively from Brazilian hardwoods. The Company sub-contracts the
manufacturing to custom furniture makers in Brazil. Product distribution is
direct to interior designers and other retail outlets and also sells through
direct advertising and directly over its website: www.jeannotsfurnishings.com
The Company is in the development stage.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not adopted a policy regarding payment of dividends.
Financial Instruments
The carrying amounts of financial instruments are considered by management to be
their estimated fair values due to their short term maturities.
Revenue Recognition
Revenue is recognized as income on the sale and delivery of a product or the
completion of services provided.
Advertising and Market Development
The company expenses advertising and market development costs as incurred.
Inventory
Inventory consists of furniture and accessories for sale to customers and is
stated at the lower of cost or market, using the first in first out method.
Financial and Concentrations Risk
The Company does not have any concentration or related financial credit risk.
Recent Accounting Pronouncements
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
55
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2006
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under
the liability method deferred tax assets and liabilities are determined based on
the differences between financial reporting and the tax bases of the assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect, when the differences are expected to reverse. An allowance against
deferred tax assets is recorded, when it is more likely than not, that such tax
benefits will not be realized.
On December 31, 2005 the Company had a net operating loss available for carry
forward of $35,721. The income tax benefit of approximately $10,700 from the
loss carry forward has been fully offset by a valuation reserve because the use
of the future tax benefit is doubtful since the Company has not started full
operations. The net operating loss expires starting in 2022 through 2026.
Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equivalent shares outstanding as if shares had been issued on the
exercise of any preferred share or common share rights unless the exercise
becomes anti dilutive and then only the basic per share amounts are shown in the
report.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
3. CAPITAL STOCK
During 2002 the Company issued 7,500,000 post split common shares to an
officer - director and founder of the Company for cash.
During 2003 the Company issued 150,000 post split common shares to an
officer - director of the Company for cash.
56
64
JEANNOT'S FURNISHINGS OF FLORIDA, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2006
4. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Officer - directors have acquired all of the outstanding common stock of the
Company and have made contributions to capital by the payment of expenses as
outlined in the Statement of Changes in Stockholders' Equity.
An affiliate of the Company (by common officers) has a 6% interest bearing,
demand note due it with a remaining balance of $14,837 and accrued interest of
$3,475. The terms of the note includes conversion rights to convert to 1,831,200
of common shares at the option of the note holder.
5. GOING CONCERN
These unaudited interim financial statements have been prepared by management in
accordance with accounting principles generally accepted in the United States
for interim financial information, are condensed and do not include all
disclosures required for annual financial statements.
In the opinion of the Company's management, this interim financial information
reflects all adjustments necessary to present fairly the Company's financial
position at June 30, 2006 and the results of operations and the cash flows for
the six months then ended.
The results of operations for the six months ended June 30, 2006 are not
necessarily indicative of the results to be expected for the entire fiscal year.
The Company does not have the necessary working capital to service its debt and
for its planned activity, which raises substantial doubt about its ability to
continue as a going concern.
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed a
strategy, which it believes will accomplish this objective through additional
loans from an officer and others, and equity funding, which will enable the
Company to conduct operations for the coming year.
57
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors, Officers, Employees and Agents.
The Registrant's certificate of incorporation limits the liability of the
Registrant's directors to the maximum extent permitted by the State of Florida
law. Florida law provides that a director of a corporation will not be
personally liable for monetary damages for breach of that individual's fiduciary
duties as a director except for liability for (1) a breach of the director's
duty of loyalty to the corporation or its stockholders, (2) any act or omission
not in good faith or that involves intentional misconduct or a knowing violation
of the law, (3) unlawful payments of dividends or unlawful stock repurchases or
redemptions, or (4) any transaction from which the director derived an improper
personal benefit.
This limitation of liability does not apply to liabilities arising under federal
securities laws and does not affect the availability of equitable remedies such
as injunctive relief or rescission.
The Florida corporation law provides that a corporation may indemnify directors
and officers, as well as other employees and individuals, against attorneys'
fees and other expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with any
threatened, pending or completed actions, suits or proceedings in which such
person was or is a party or is threatened to be made a party by reason of such
person being or having been a director, officer, employee or agent of the
corporation. The Nevada General Corporation Law provides that this is not
exclusive of other rights to which those seeking indemnification may be entitled
under any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise.
The Registrant's certificate of incorporation and bylaws provide that the
Registrant is required to indemnify its directors and officers to the maximum
extent permitted by law. The Registrant's bylaws also require the Registrant to
advance expenses incurred by an officer or director in connection with the
defense of any action or proceeding arising out of that party's status or
service as a director or officer of the Registrant or as a director, officer,
employee benefit plan or other enterprise, if serving as such at the
Registrant's request. The Registrant's bylaws also permit the Registrant to
secure insurance on behalf of any director or officer for any liability arising
out of his or her actions in a representative capacity. The Registrant intends
to enter into indemnification agreements with its directors and some of its
officers containing provisions that (1) indemnify, to the maximum extent
permitted by Florida law, those directors and officers against liabilities that
may arise by reason of their status or service as directors or officers except
liabilities arising from willful misconduct of a culpable nature, (2) to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified, and (3) to obtain directors' and officers' liability
insurance if maintained for other directors or officers.
58
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 $ 107
Print expenses $ 1,250
Legal fees and expenses $ 5,000
Accounting fees and expenses $ 7,000
Transfer agent's fee and expenses $ 500
Miscellaneous (Estimate) $ 1,143
--------
Total $15,000
------------------------------
Item 26. Recent Sales of Unregistered Securities.
In November 2002, 7,500,000 shares of common stock were issued to Jeannot
McCarthy for the business plan of Jeannot's Furnishings of Florida, Inc.
In April 2005, 100,000 shares of common stock were issued to Jeannot Mc Carthy
for officers and directors services to the end of December 31, 2005
In April 2005, 50,000 shares of common stock were issued to Zlatuse Jerabkova
for officers and directors services to the end of December 31, 2005
For all of the above issuances, the Company relied upon Section 4(2) of the Act.
In each instance, such reliance was based upon the fact that (i) the issuance of
the shares did not involve a public offering; (ii) the offers and sales were
made in compliance with Rules 501 and 502; (iii) the securities were subject to
Rule 144 limitation on resale; (iv) the limited number of offerees; (v) the
manner in which it was issued; (vi) the relationship of the shareholder to the
Issuer; (vii) the amount of shares issued; and (viii) each of the parties is a
sophisticated purchaser and had full access to the information of the Company
necessary to make an informed investment decision by virtue of the due diligence
conducted by the purchaser or available to the purchaser prior to the
transaction.
59
Item 27. Exhibits.
(a) Exhibits:
The following exhibits are filed as part of this registration statement:
Exhibit Description
------- -----------
3.1* Articles of Incorporation of Jeannot's Furnishings
of Florida, Inc.
3.2 By-laws of Jeannot's Furnishings of Florida, Inc.
3.3* Certificate of Amendment to the Articles of
Incorporation
4.2 Stock Subscription Agreement
5.1 Opinion of Legal Counsel
23.1 Consent of Auditor
UNDERTAKINGS
The Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the Securities
Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement; and notwithstanding the forgoing, any increase
or decrease in volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospects filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in the volume and price represent no more that a 20% change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii)Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the Offering of the securities of the securities at that time to be
the initial bona fide Offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the Offering.
(4) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act as part of this registration statement as of the time
the Commission declared it effective.
(5) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and the offering of the securities at that time as the initial bona fide
Offering of those securities.
60
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by 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 the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
61
SIGNATURES
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.
Signatures Title Date
- ------------ ----- ----
/s/ Jeannot McCarthy President/Board Chairman September 26, 2006
Jeannot McCarthy
- ---------------------------
/s/ Ms. Zlatuse Jerobkova Secretary/Director September 26, 2006
Zlatuse Jerobkova
S-1