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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Bonfire Productions Inc.
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(Name of small business issuer as specified in its charter)
Nevada 2844 Pending
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(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
2018 156th Avenue NE, Building F, Suite 100
Bellevue, WA 98007
Phone: (425) 748-5041
Fax: (425) 644-2185
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(Address and Telephone Number of Principal Executive Offices and Principal
Place of Business)
State Agent and Transfer Syndicate, Inc.
112 North Curry Street
Carson City, NV 89703
(775) 882-1013
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(Name, Address and Telephone Number of Agent for Service)
With Copies to:
Batcher, Zarcone & Baker, LLP
4190 Bonita Road, Suite 205
Bonita, California 91902
Telephone: (619)475-7882
Fax: (619)789-6262
Approximate Date of Commencement of Proposed Sale to Public:
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, 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, 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, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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Proposed
Maximum Proposed Maximum
Class of Securities to be Amount to be Offering Price Aggregate Offering Amount of
Registered Registered per Share Price Registration Fee
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Common Stock 20,000,000 $0.015 $300,000.00 $9.21
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The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<page>
PROSPECTUS
Bonfire Productions Inc.
3,000,000 SHARES MINIMUM - 20,000,000 SHARES MAXIMUM
COMMON STOCK
There is no public market for our common stock.
We are offering a minimum of 3,000,000 and a maximum of 20,000,000 shares of our
common stock on a direct public offering, without any involvement of
underwriters or broker-dealers. The offering price is $0.015 per share. In the
event that 3,000,000 shares are not sold within 180 days, at our sole
discretion, we may extend the offering for an additional 90 days. In the event
that 3,000,000 shares are not sold within the 180 days, or within the additional
90 days if extended, all money received by us will be returned to you within
three days of the termination date of the offering without interest or deduction
of any kind. If at least 3,000,000 shares are sold within 180 days, or within
the additional 90 days, if extended, all money received by us will be
retained by us and there will be no refund. Funds will be held in a separate
bank account. The foregoing account is not an escrow, trust or similar account.
It is merely a separate account under our control where we will segregate your
funds.
There are no arrangements to place the funds in an escrow, trust or similar
account.
Our common stock will be sold by Alexander Kulyashov, our director.
Investing in our common stock involves risks. See "Risk Factors" starting at
page 8.
Offering Price Expenses Proceeds to Us
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Per Share - Minimum $ 0.015 $ 0.0046 $ 0.0104
Per Share - Maximum $ 0.015 $ 0.0005 $ 0.0145
Minimum $ 45,000 $ 13,710 $ 31,290
Maximum $ 300,000 $ 13,710 $ 286,290
The difference between the "Offering Price" and the "Proceeds to Us" is $13,710.
The $13,710 reflects the expenses of the offering. The expenses per share would
be adjusted according to the offering amounts between the minimum and maximum.
The $13,710 will be paid to unaffiliated third parties for expenses connected
with this offering. The $13,710 will be paid from current funds that we have and
the first proceeds of this offering once the minimum subscription has been
completed.
Our common stock is presently not traded on any market or securities exchange.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Neither the US Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is August 24, 2007.
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Dealer Prospectus Delivery Obligation
Until 180 days after the effective date of this Prospectus, all dealers that
effect transactions in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the
dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
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Table of Contents
<table>
<caption>
PART I -- INFORMATION REQUIRED IN PROSPECTUS Page
<s> <c>
Summary of Prospectus
Our Company 7
The Offering 8
Financial Summary Information 9
Risk Factors 9
1. There is substantial uncertainty as to whether we will continue operations. If we discontinue 10
operations, you could lose your investment.
2. We lack operating history and have losses which we expect to continue into the future. 10
3. We are mainly dependent upon the funds to be raised in this offering to advance our business. 10
4. Foreign currency exchange rate fluctuations may adversely affect our business 10
5. We may not be able to obtain permissions from publishing houses to produce audio recordings 10
of copyrighted material.
6. We face significant competition from major publishing houses that produce and sell audio 11
books online and in brick and mortar locations.
7. Our future success is dependent on our existing management team, and hiring and assimilating 11
new key employees.
8. Our operating results may prove unpredictable which could negatively affect our operating 10
results.
9. Because our management does not have prior experience in the recording industry, or product 11
marketing and brand development , our business has a higher risk of failure.
10. Because we are small and do not have much capital, we must limit our efforts in marketing of 12
our services and products.
11. Because there is no public trading market for our common stock, you may not be able to resell 12
your stock.
12. Because the SEC imposes additional sales practice requirements on brokers who deal in our 12
shares which are penny stocks, some brokers may be unwilling to trade them.
13. We do not intend to pay dividends. 13
14. There is a lack of shareholder control. 13
Use of Proceeds 13
Determination of Offering Price 14
Dilution of the Price per Share 14
Plan of Distribution; Terms of the Offering 16
Section 15(g) of the Exchange Act 17
Offering Period and Expiration Date 17
Procedures for Subscribing 17
Right to Reject Subscriptions 18
Description of Business 18
General 18
Industry Overview 18
Our Services 18
Competition 19
Marketing 20
Trademarks and Copyrights 21
Management's Discussion and Analysis or Plan of Operation 21
Plan of Operation 21
Need for Additional Capital 23
Results of Operations 23
Liquidity and Capital Resources 24
Known Material Trends and Uncertainties 24
Legal Proceedings 24
Directors and Officers 24
Compensation 25
Certain relationships and related transactions 26
Audit Committee 26
Security Ownership of Certain Beneficial Owners and Management 26
Changes in Control 27
Description of Securities 27
Common Stock 27
Voting Rights 27
Dividend Policy 28
Stock Transfer Agent 28
Shares Eligible for Future Sale 28
Interests of Named Experts and Counsel 28
Reports to Security Holders 29
Market for Common Equity and Related Stockholder Matters 29
Financial Statements 30
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 41
PART II - INFORMATION NOT REQUIRED IN THE PROSPECTUS 41
Indemnification of Officers and Directors 41
Other Expenses of Issuance and Distribution 42
Recent Sales of Unregistered Securities 42
Exhibits 43
Undertakings 43
Signatures 45
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PART I -- INFORMATION REQUIRED IN PROSPECTUS
PROSPECTUS SUMMARY
The following summary highlights selected information contained in this
prospectus. This summary does not contain all the information that may be
important to you. You should read the more detailed information contained in
this prospectus, including but not limited to, the risk factors beginning on
page 4. References to "we," "us," "our," "Bonfire Productions," or the "company"
mean Bonfire Productions, Inc..
Forward-Looking Statements
This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results may differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described in the "Risk Factors" section and elsewhere in this prospectus.
Our Company
Bonfire Productions, Inc. is a development stage company that will
produce, market and sell audio recordings of folk tales, fairy tales and other
children's stories under the brand name "Bonfire Tales". Bonfire Productions
will specialize in audio recordings of multicultural content and will source
children's stories from different cultural origins. The Company's objective is
to establish itself as a major provider of downloadable children's multicultural
audio and video content over the Internet. The Company intends to continue to
acquire its content from, among others, public domain folk tales, licensing
published works for audio production from major publishing houses, and licensing
unpublished works for audio production from international writers and
translators.
Bonfire Productions will sell audio recordings under the brand name
"Bonfire Tales" in the popular mp3 format on our website: www.bonfiretales.com.
We will also produce and sell audio CDs featuring audio recordings of
multicultural stories under our brand name "Bonfire Tales". We will develop a
website where consumers will be able to purchase and download audio files for
their personal use. We will market our website via print and web advertising to
generate traffic and attract customers.
To date, we have launched the first version of our website,
www.bonfiretales.com, which does not have any shopping features or downloadable
content. We have sourced a total of 12 public domain stories to be included in
the first recordings to be featured on our website.
As at August 27, 2007, the Company incurred $3,000 in website
development costs.
We have no revenues, have incurred losses since our inception on August
25, 2006, and have relied upon the sale of our securities in unregistered
private placement transactions and cash advances from our sole director, Mr.
Alexander Kulyashov, to fund our operations. We will not generate revenues until
we complete the first recordings of three collections of fairy tales, building
and launching the full version of our website that will allow customers to
purchase audio files and effectively market our products. Accordingly, for the
foreseeable future, we will continue to be dependent on additional financing in
order to maintain our operations and continue with our corporate
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activities. Due to the uncertainty of our ability to meet our financial
obligations and to pay our liabilities as they become due, in their report on
our financial statements for the period from inception (August 25, 2006) to June
30, 2007, our independent auditors included additional comments indicating
concerns about our ability to continue as a going concern. Our financial
statements contain additional note disclosures describing the circumstances that
led to this disclosure by our independent auditors. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
This offering and any investment in our common stock involves a high degree of
risk. If we are unable to generate significant revenue, we may be obliged to
cease business operations due to lack of funds. We face many challenges to
continue operations, including our lack of operating history, lack of revenues
to date, and the losses we have incurred to date. Please review the "Risk
Factors" on page 7 of this offering.
Our principal business office is located at 2018 156th Avenue NE, Building F,
Suite 100, Bellevue, WA 98007. Our fiscal year end is June 30.
The Offering
Following is a brief summary of this offering:
Securities being offered
3,000,000 shares of common stock minimum and 20,000,000 shares of
common stock maximum, par value $0.001
Offering price per share: $ 0.015
Offering period
The shares are being offered for a period not to exceed 180 days,
unless extended by our Board of Directors for an additional 90
days.
Net proceeds to us
Approximately $31,000 assuming the minimum number of shares is
sold.
Approximately $286,000 assuming the maximum number of shares is
sold.
Use of proceeds
We will use the proceeds to pay for administrative expenses, the
implementation of our business plan, and general working capital.
(i)
Number of shares outstanding before the offering: 3,500,000
Number of shares outstanding after the offering if all of shares are sold
6,500,000 (if minimum number ) of the shares are sold
23,500,000 (if maximum number of shares are sold)
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(i) If the minimum amount of the shares is sold we will use the proceeds to pay
for our outstanding, as of June 30, 2007, liabilities of $2,205, which represent
the following amounts: office rent of $1,200, incorporation costs of $355, and
office and miscellaneous expenses of $650. As of the date of this offering we
have paid $6,000 of our liabilities outstanding as of June 30, 2007 as follows:
$3,000 for professional fees and $3,000 for website development. In addition we
will pay for offering expenses. Total offering expenses are $13,710. Of the
$13,710, the amounts to be paid from the proceeds for expenses of the offering
are: $6,000 for legal fees; $1,200 for filing fees; $5,500 for accounting fees
and expenses; $1,000 for transfer agent fees; and $10 for registration fee. We
will use the rest of the funds (net of offering expenses and outstanding
liabilities) for financing of website development ($5,000), recording of the
first three collections of Bonfire Tales ($10,000), execution of the marketing
and advertising plan ($6,000) and for general working capital ($4,000).
Financial Summary Information
All of the references to currency in this Prospectus are to US Dollars, unless
otherwise noted. The following financial information summarizes the more
complete historical financial information at the end of this Prospectus.
Income Statement Data
From August 25, 2006
(inception)
to June 30, 2007
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Revenue $ 0
Expenses $ 10,211
Net Profits (Losses) $ (10,211)
Balance Sheet Data
As of
June 30, 2007
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Working Capital (deficit) $ (6,711)
Total Assets $ 16,523
Total Liabilities $ 23,234
As of June 30, 2007, we have a working capital deficit of $6,711 and accumulated
losses of $10,211 since inception.
Risk Factors
Please consider the following risk factors before deciding to invest in our
common stock.
This offering and any investment in our common stock involves a high degree of
risk. You should carefully consider the risks described below and all of the
information contained in this prospectus before deciding whether to purchase our
common stock.
If any of the following risks actually occur, our business, financial condition
and results of operations could be harmed. The trading price of our common stock
could decline, and you may lose all or part of your investment in our common
stock.
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1. There is substantial uncertainty as to whether we will continue operations.
If we discontinue operations, you could lose your investment. Our auditors have
discussed their uncertainty regarding our business operations in their audit
report dated August 2, 2007. This means that there is substantial doubt that we
can continue as an ongoing business for the next 12 months. The financial
statements do not include any adjustments that might result from the uncertainty
about our ability to continue in business. As such, we may have to cease
operations and you could lose your entire investment.
2. We lack an operating history and have losses which we expect to continue into
the future. There is no assurance our future operations will result in
profitable revenues. If we cannot generate sufficient revenues to operate
profitably, our business will fail.
We were incorporated on August 25, 2006 and we have not realized any revenues.
We have very little operating history upon which an evaluation of our future
success or failure can be made. Our net loss since inception on August 25, 2006
to June 30, 2007 is $10,211. Based upon current plans, we expect to incur
operating losses in future periods because we will be incurring expenses and not
generating revenues. We cannot guarantee that we will be successful in
generating revenues in the future. Failure to generate revenues will cause us to
go out of business.
3. We are mainly dependent upon the funds to be raised in this offering to
advance our business, the proceeds of which may be insufficient to achieve
adequate revenues to remain in business and our business will fail.
We have limited operations. We need the proceeds from this offering to pay for
marketing and continued development of our website. We may need additional funds
to complete further development of our business plan to achieve a sustainable
sales level where ongoing operations can be funded out of revenues. There is no
assurance that any additional financing will be available, or if available, on
terms that will be acceptable to us. If we are not able to obtain needed
financing, we may have to cease operations and investors will lose all of their
investment.
4.Foreign currency exchange rate fluctuations may adversely affect our business.
Since we intend to market and sell our products in many different countries,
changes in exchange rates can adversely affect our cash flows and results of
operations. Furthermore, reported sales and purchases made in non-U.S.
currencies, when translated into U.S. dollars for financial reporting purposes,
fluctuate due to exchange rate movement. Due to the number of currencies
involved, the variability of currency exposures and the potential volatility of
currency exchange rates, we cannot predict the effect of exchange rate
fluctuations on future sales and operating results.
5. We may not be able to obtain permissions from publishing houses to produce
audio recordings of copyrighted material.
Our business involves obtaining rights to record audio productions of
copyrighted materials. We have to obtain permission from established publishing
houses that are in the business of selling printed books. We may not be
successful in obtaining permission from the publishers, which will significantly
reduce our ability to obtain content for our productions.
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6. We face significant competition from major publishing houses that produce and
sell audio books online and in brick and mortar locations.
All major publishing houses also produce audio books, which are audio recordings
of printed material. The publishing houses are better established and
significantly better funded than us. If we are unable to create products that
can compete with traditional audio books created by publishing houses, we may
not be able to generate revenues and will have to cease operations.
7. Our future success is dependent on our existing management team, and hiring
and assimilating new key employees, and our inability to attract or retain key
personnel in the future would materially harm our business and results of
operations.
Our future success depends on the continuing efforts and abilities of our
current management team. In addition, our future success will depend, in part,
on our ability to attract and retain highly skilled employees, including
management, technical and sales personnel. The loss of services of any of our
key personnel, the inability to attract or retain key personnel in the future,
or delays in hiring required personnel could materially harm our business and
results of operations. We may be unable to identify and attract highly qualified
employees in the future. In addition, we may not be able to successfully
assimilate these employees or hire qualified personnel to replace them.
8. Our operating results may prove unpredictable which could negatively affect
our operating results.
Our operating results are likely to fluctuate significantly in the future due to
a variety of factors, many of which are outside of our control. Factors that may
cause our operating results to fluctuate significantly include the following:
o our ability to generate enough working capital from future equity sales;
o the level of acceptance by general public and industry insiders of Bonfire
Tales products;
o the amount and timing of operating costs and capital expenditures relating
to expansion of our business, operations and infrastructure; and
o general economic conditions
If realized, any of these risks could have a material adverse effect on our
business, financial condition and operating results.
9. Because our management does not have prior experience in the recording
industry, or product marketing and brand development, our business has a higher
risk of failure.
Our director does not have experience in the recording industry, or brand
development and marketing of products. As a result, we may not be able to
recognize and take advantage of opportunities without the aid of qualified
marketing and business development consultants. Our director's decisions and
choices may not be well thought out and our operations, earnings and ultimate
financial success may suffer irreparable harm as a result.
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10. Because we are small and do not have much capital, we must limit our efforts
in marketing of our services and products. As a result, opportunities for us to
attract new customers who purchase products from our website and generate profit
will be severely limited. If we do not make a profit, we may have to suspend or
cease operations.
Because we are small and do not have much capital, we must limit our efforts in
marketing of our products. Because we will be limiting our marketing activities,
we may not be able to attract customers to purchase audio recordings from our
website and we may not be able to operate profitably. If we cannot operate
profitably, we may have to suspend or cease operations.
11. Because there is no public trading market for our common stock, you may not
be able to resell your stock.
There is currently no public trading market for our common stock. Therefore
there is no central place, such as stock exchange or electronic trading system,
to resell your shares. If no market is ever developed for our shares, it will be
difficult for shareholders to sell their stock. In such a case, shareholders may
find that they are unable to achieve benefits from their investment.
12. Because the SEC imposes additional sales practice requirements on brokers
who deal in our shares which are penny stocks, some brokers may be unwilling to
trade them. This means that you may have difficulty reselling your shares and
this may cause the price of the shares to decline.
The shares offered by this prospectus constitute penny stock under the Exchange
Act. The shares will remain penny stock for the foreseeable future. "Penny
stock" rules impose additional sales practice requirements on broker-dealers who
sell such securities to persons other than established customers and accredited
investors, that is, generally those with assets in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 together with a spouse. For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of broker-dealers to sell our shares of
common stock. The market price of our shares would likely suffer as a result.
There is no established market for the common stock being registered. We intend
to apply to the OTC Bulletin Board for the trading of our common stock. This
process takes at least three months and the application must be made on our
behalf by a market maker, but we have not yet engaged a market maker to make the
application on our behalf. If our common stock becomes quoted and a market for
the stock develops, the actual price of the shares will be determined by
prevailing market prices at the time of sale. Trading of securities on the OTC
Bulletin Board is often sporadic and investors may have difficulty buying and
selling or obtaining market quotations, which may have a depressive effect on
the market price for our common stock. Accordingly, you may have difficulty
reselling any shares your purchase from Bonfire Productions, Inc.
13. We do not intend to pay dividends and there will be less ways in which you
can make a gain on any investment in Bonfire Productions.
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We have never paid any cash dividends and currently do not intend to pay any
dividends for the foreseeable future. To the extent that we require additional
funding currently not provided for in our financing plan, our funding sources
may likely prohibit the payment of a dividend. Because we do not intend to
declare dividends, any gain on an investment in Bonfire Productions will need to
come through appreciation of the stock's price.
14. Because our director will own 53.85 % of our outstanding common stock, if
minimum amount of the offering will be sold, he could make and control corporate
decisions that may be disadvantageous to other minority shareholders.
Our sole director, Alexander Kulyashov, owns 100% of the outstanding shares of
our common stock as of the date of this offering. If minimum amount of the
shares will be sold, our director will own 53.85% of our outstanding common
stock. Accordingly, he will have a significant influence in determining the
outcome of all corporate transactions or other matters, including mergers,
consolidations, and the sale of all or substantially all of our assets. He will
also have the power to prevent or cause a change in control. The interests of
our director may differ from the interests of the other stockholders and thus
result in corporate decisions that are disadvantageous to other shareholders.
Use of Proceeds
Our offering is being made on a self underwritten basis - with a minimum of
$45,000 in gross proceeds. The table below sets forth the use of proceeds if
$45,000 (i.e. gross proceeds of the minimum offering) or $300,000 (i.e. gross
proceeds of the maximum offering) of our common stock is sold.
$45,000 $300,000
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Gross proceeds $ 45,000 $ 300,000
Offering expenses 13,710 13,710
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Net proceeds $ 31,290 $ 286,290
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The net proceeds will be used as follows:
Outstanding liabilities $ 2,205 $ 19,220
Website development 5,000 13,500
Audio recording expenses 10,000 30,000
CD Production - 35,000
Marketing and advertising 10,014 54,014
Employees - 100,800
General and Administrative 4,071 33,756
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TOTAL $ 31,290 $ 286,290
============= ===============
Total offering expenses are $13,710. Of the $13,710, the amounts to be paid from
the proceeds for expenses of the offering are: $6,000 for legal fees; $1,200 for
filing fees; $5,500 for accounting fees and expenses; $1,000 for transfer agent
fees; and $10 for registration fee.
If the minimum amount of the shares is sold we will use the proceeds to pay for
our outstanding, as of June 30, 2007, liabilities of $1,986, which represent
amounts incurred with our director as follows: $1,200 for office rent, $355 for
incorporation costs, $431 for office, travel and miscellaneous expenses. In
addition we will pay $219 for filing and postage fees. Therefore the total debts
to be paid are $2,205.
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If the maximum amount of the shares is sold we will pay all of our outstanding
liabilities as of June 30, 2007, representing the amounts owed to our director
for expenses incurred on behalf of the company in the amount of $1,986, and loan
with $15,000 in principal and $29 in accrued interest. The loan is payable on
demand, unsecured, and bears interest at 6.45% per annum.
Our sole director has provided funds for general working capital to the date of
this prospectus. We may rely on loans from our sole executive officer and
director, Alexander Kulyashov to continue our operations; however, there are no
assurances that Mr. Kulyashov will provide us with any additional funds.
Currently, we do not have any arrangements for additional financing. If we are
not able to obtain needed financing, we may have to cease operations.
"General and Administrative Costs" include costs related to operating our
office. These costs include rent, telephone service, mail, stationery,
accounting, acquisition of office equipment and supplies, costs of paying an
administrative assistant, expenses of filing reports with the Securities and
Exchange Commission, travel, and general working capital.
Determination of Offering Price
The price of the shares we are offering was arbitrarily determined in order for
us to raise up to a total of $300,000 in this offering. The offering price bears
no relationship whatsoever to our assets, earnings, book value or other criteria
of value. Among the factors considered were:
o our lack of operating history
o the proceeds to be raised by the offering
o the amount of capital to be contributed by purchasers in this offering in
proportion to the amount of stock to be retained by our existing
shareholder, and
o our cash requirements
Dilution of the Price per Share
Dilution represents the difference between the offering price and the net
tangible book value per share immediately after completion of this offering. Net
tangible book value is the amount that results from subtracting total
liabilities and intangible assets from total assets.
As of June 30, 2007, the net tangible book value of our shares of common stock
was a deficit of $(6,711) or approximately $(0.0019) per share based upon
3,500,000 shares outstanding.
If 100% of the shares are sold:
Upon completion of this offering, in the event all of the shares are sold, the
net tangible book value of the 23,500,000 shares to be outstanding will be
$293,289, or approximately $0.0125 per share. The amount of dilution to the
shareholders acquiring shares in this offering will be $0.0025 per share. The
net tangible book value of the shares held by our existing shareholder will be
increased by $0.0115 per share without any additional investment on their part.
The shareholders acquiring shares in this offering will incur an immediate
dilution from $0.015 per share to $0.0125 per share.
After completion of this offering, if 20,000,000 shares are sold, the
shareholders acquiring shares in this offering will own approximately 85.11% of
the total number of shares then outstanding shares for which the shareholders
acquiring shares will have made a cash investment of $300,000, or $0.015 per
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share. Our existing shareholders will own approximately 14.89% of the total
number of shares then outstanding, for which they have made contributions of
cash of $3,500, or $0.001 per share.
If the minimum number of the shares is sold:
Upon completion of this offering, in the event 15% or the minimum amount of the
shares are sold, the net tangible book value of the 6,500,000 shares to be
outstanding will be $38,289 or approximately $ 0.0059 per share. The amount of
dilution to the shareholders acquiring shares in this offering will be $ 0.0091
per share. The net tangible book value of the shares held by our existing
stockholders will be increased by $0.0049 per share without any additional
investment on their part. The shareholders acquiring shares in this offering
will incur an immediate dilution from $0.015 per share to $ 0.0059 per share.
After completion of this offering, if 3,000,000 shares are sold, the
shareholders acquiring shares in this offering will own approximately 46.15% of
the total number of shares then outstanding shares for which the shareholders
acquiring shares will have made a cash investment of $45,000, or $0.015 per
share. Our existing stockholders will own approximately 53.85% of the total
number of shares then outstanding, for which they have made contributions of
cash, totaling $3,500, or $0.001 per share.
The following table compares the differences of investment in our shares to the
shareholders acquiring shares in this offering with investment in our shares of
our existing stockholders.
<table>
<caption>
Existing stockholders if all of the shares are sold:
<s> <c>
Price per share $ 0.001
Net tangible book value per share before offering $ (0.0013)
Net tangible book value per share after offering $ 0.0125
Increase to present stockholders in net tangible book value per share after offering $ 0.0115
Capital contributions $ 3,500
Number of shares outstanding before the offering 3,500,000
Number of shares after offering held by existing stockholders 3,500,000
Percentage of ownership after offering 14.89%
Purchasers of shares in this offering if all shares sold
Price per share $ 0.015
Dilution per share $ 0.0025
Capital contributions $ 300,000
Number of shares after offering held by public investors 20,000,000
Percentage of ownership after offering 85.11%
Purchasers of shares in this offering if the minimum number of shares sold
Price per share $ 0.015
Dilution per share $ 0.0091
Capital contributions $ 45,000
Number of shares after offering held by public investors 3,000,000
Percentage of ownership after offering 46.15%
</table>
15
<page>
Plan of Distribution; Terms of the Offering
We are offering a minimum of 3,000,000 and up to a maximum of 20,000,000 shares
of common stock on a direct public offering basis, without any involvement of
underwriters or broker-dealers. The offering price is $0.015 per share. Funds
from this offering will be placed in a separate bank account. We will hold the
funds in the account until we receive a minimum of $45,000, at which time we
will appropriate the funds for the purposes we have described above. Any funds
received by us thereafter will be immediately available for our use. If we do
not receive the minimum amount of $45,000 within 180 days of the effective date
of our Prospectus, or within an additional 90 days if we so choose, all funds
will be promptly returned to the shareholders acquiring shares in this offering
without a deduction of any kind. During the 180 day period and possible
additional 90 day period, no funds will be returned to the shareholders
acquiring shares in this offering. The shareholders acquiring shares in this
offering will only receive a refund of the subscription if we do not raise a
minimum of $45,000 within the 180 day period referred to above, which could be
expanded by an additional 90 days at our discretion for a total of 270 days.
There are no finders involved in our distribution.
We will sell the shares in this offering through our sole director Mr.Kulyashov.
He will receive no commission from the sale of any shares. Mr.Kulyashov is
restricted from purchasing the shares in this offering. He will not register as
a broker-dealer under Section 15 of the Exchange Act in reliance upon Rule
3a4-1. Rule 3a4-1 sets forth those conditions under which a person associated
with an issuer may participate in the offering of the issuer's securities and
not be deemed to be a broker-dealer. The conditions are that:
1. The person is not statutorily disqualified, as that term is defined in
Section 3(a)(39) of the Act, at the time of his participation; and,
2. The person is not compensated in connection with her participation by the
payment of commissions or other remuneration based either directly or
indirectly on transactions in securities;
3. The person is not at the time of their participation, an associated person
of a broker-dealer; and,
4. The person meets the conditions of Paragraph (a)(4)(ii) of Rule 3a4-1 of
the Securities Exchange Act 1934, as amended (the "Exchange Act"), in that
she (A) primarily performs, or is intended primarily to perform at the end
of the offering, substantial duties for or on behalf of the issuer
otherwise than in connection with transactions in securities; and (B) is
not a broker or dealer, or an associated person of a broker or dealer,
within the preceding twelve (12) months; and (C) does not participate in
selling and offering of securities for any issuer more than once every
twelve (12) months other than in reliance on Paragraphs (a)(4)(i) or
(a)(4)(iii).
Our sole director and officer is not statutorily disqualified, is not being
compensated, and is not associated with a broker-dealer. He is and will continue
to be our officer and director at the end of the offering and has not been
during the last twelve months and is currently not broker-dealers or associated
with a broker-dealer. He has not during the last twelve months and will not in
the next twelve months offer or sell securities for another corporation.
Only after our Prospectus is declared effective by the Securities and Exchange
Commission (the "Commission"), we intend to distribute this Prospectus to
potential investors at meetings and to our friends, business associates and
relatives who are interested in us and a possible investment in the offering. We
will not utilize the Internet to advertise our offering.
16
<page>
Section 15(g) of the Exchange Act
Our shares are covered by Section 15(g) of the Exchange Act, and Rules 15g-1
through 15g-6 promulgated thereunder. They impose additional sales practice
requirements on broker-dealers who sell our securities to persons other than
established customers and accredited investors (generally institutions with
assets in excess of $5,000,000 or individuals with net worth in excess of
$1,000,000 or annual income exceeding $160,000 or $300,000 jointly with their
spouses).
Rule 15g-1 exempts a number of specific transactions from the scope of the penny
stock rules.
Rule 15g-2 declares unlawful broker-dealer transactions in penny stocks unless
the broker-dealer has first provided to the customer a standardized disclosure
document.
Rule 15g-3 provides that it is unlawful for a broker-dealer to engage in a penny
stock transaction unless the broker-dealer first discloses and subsequently
confirms to the customer current quotation prices or similar market information
concerning the penny stock in question.
Rule 15g-4 prohibits broker-dealers from completing penny stock transactions for
a customer unless the broker-dealer first discloses to the customer the amount
of compensation or other remuneration received as a result of the penny stock
transaction.
Rule 15g-5 requires that a broker-dealer executing a penny stock transaction,
other than one exempt under Rule 15g-1, disclose to its customer, at the time of
or prior to the transaction, information about the sales persons compensation.
Rule 15g-6 requires broker-dealers selling penny stocks to provide their
customers with monthly account statements.
Rule 15g-9 requires broker-dealers to approved the transaction for the
customer's account; obtain a written agreement from the customer setting forth
the identity and quantity of the stock being purchased; obtain from the customer
information regarding his investment experience; make a determination that the
investment is suitable for the investor; deliver to the customer a written
statement for the basis for the suitability determination; notify the customer
of his rights and remedies in cases of fraud in penny stock transactions; and,
the NASD's toll free telephone number and the central number of the North
American Administrators Association, for information on the disciplinary history
of broker-dealers and their associated persons.
The application of the penny stock rules may affect your ability to resell your
shares.
Offering Period and Expiration Date
This offering will start on the date of this prospectus and continue for a
period of up to 180 days, and an additional 90 days, if so elected by our Board
of Directors.
Procedures for Subscribing
If you decide to subscribe for any shares in this offering, you must
1. execute and deliver a subscription agreement; and
2. deliver a check or certified funds to us for acceptance or rejection.
17
<page>
All
checks for subscriptions must be made payable to Bonfire Productions, Inc.
Right to Reject Subscriptions
We have the right to accept or reject subscriptions in whole or in part, for any
reason or for no reason. All monies from rejected subscriptions will be returned
immediately by us to the subscriber, without interest or deductions.
Description of Business
General
We were incorporated in the State of Nevada on August 25,2006. We have commenced
operations by launching the first version of our website
(http://www.bonfiretales.com) and sourcing content for our first audio
recordings. We are a start-up stage corporation with limited operations and no
revenues from our business operations. For the period ended June 30, 2007 we
generated no revenue. Our business office is located at 2018 156th Avenue NE
Suite 100, Bellevue, WA 98007. Our telephone number is (425)748-5041.
We have begun very limited operations and will advance our operations until we
complete this offering. We have applied for a "BONFIRE TALES" trademark with the
U.S. Trademark and Patent Office. Our application is in the preliminary stage
and has not been reviewed. There is no guarantee that our trademark will be
approved for registration. Our plan of operation is forward looking and there is
no assurance that we will ever be successful in our plan of operations.
Industry Overview
Our Services. We plan to produce, market and sell multicultural children's
content in audio and video formats. Our objective is to become a provider of
folk stories, fairy tales and traditional stories from around the world. We plan
to acquire rights to content in either the original language or a translated-to-
English version and produce audio and video recordings that will be sold in the
popular MP3 format online or on CDs and DVDs.
Our business consists of three main areas of activity:
1. Sourcing content:
Our business relies on sourcing unique children's stories from around the
world. We plan to accomplish this by using copyright-free material, and
obtaining permissions to record printed materials in audio format from
publishers and authors of copyrighted content. In order to avoid any
violation of copyright law, we intend on hiring a copyright lawyer on
contract basis to consult us on legal matters pertaining to copyrights,
rights management and to assist us in obtaining the appropriate permissions
for copyrighted content.
2. Audio/Video production:
In order to release the first titles on our website, we intend to begin
recording children's stories in audio format. This is more cost-effective
than producing animated children's stories, which is
18
<page>
something we intend to pursue in the future. To produce audio recordings,
we will hire a recording studio on a contract basis. The recording studio
will source the voice talent, manage the production of the audio recording
and advise us on CD production and audio formatting of the content that
will be sold on our website.
3. Marketing and sales of our products
We will start selling our audio recordings on our website
(www.bonfiretales.com) for use at home and in portable music devices, such
as MP3 players. Parents can download individual stories or entire
collections of stories and play them for their children at home. We will
also sell CD recordings of our stories, both on our website and through
other online retailers. We intend to market the website by placing
advertisements on family oriented websites, parenting magazines and by
attending consumer tradeshows targeted to families.
Our website (www.bonfiretales.com) will serve as a major promotional tool for
our products. It will list all the stories that are currently available for
purchase, as well as stories that are being released soon. Each story will have
its own section on the website, with a short description of the story's origins,
its cultural meaning in the country it originated from and some information on
the country of origin that parents can talk to their children about. Consumers
will be able to listen to a 30-second sample of each story before making the
decision to purchase.
We have secured the content for our first release of stories on our website. The
stories include a collection of 5 fairy tales from Norway, Sweden and Finland,
animal tales from Germany and France, and the "Shanachie collection", which are
stories told in the traditional storytelling style of Ireland. All of the
content is copyright free and ready for audio production. These collections will
be released in MP3 and CD formats on our website.
Competition
We face competition from established children's audio books production
companies, publishing houses that release their content in audio format,
established children's DVD production companies as well as other emerging
companies that specialize in delivering multicultural children's content. These
competitors may be very well established and well funded and may attract our
potential customers with a wider variety of content, which could significantly
reduce our revenue and profitability.
Children's books publishing houses
Some publishing houses that are involved in publishing children's books also
have their own divisions that specialize in production of audio books. The audio
book production divisions of publishing houses represent significant competition
for us, since sometimes they have the exclusive rights to books and other
printed content that is released by that publishing house and is written by
well-known authors. One example is the Random House Audio Publishing
Group (http://www.randomhouse.com/audio/), which produces downloadable recorded
audio books of the major bestsellers published by Random House. Other
publishing houses that are involved in multimedia production of their content
include Scholastic through Scholastic Media, Simon & Schuster,and HarperCollins.
These companies are very well established, known worldwide for their published
content and are well funded. We face serious competition from these companies
that may cause us to cease operations.
Companies that specialize in children's multimedia
We face serious competition from companies that produce educational multimedia
products for
19
<page>
children. They incorporate printed material, audio, video and sometimes computer
software to provide children a more complete learning experience. They advertise
their products using the same channels we will use and they are extremely well
funded. Some examples of such companies include Leapfrog Enterprises
(www.leapfrog.com), Many of our competitors and potential new competitors have:
o longer operating histories;
o greater name recognition in some markets;
o larger customer bases; and
o significantly greater financial, technical and marketing resources.
These competitors may also be able to:
o undertake more extensive marketing campaigns for their brands and services;
o adopt more aggressive advertising pricing policies;
o use superior technology platforms to deliver their products and services;
and
o make more attractive offers to potential employees, distribution partners,
commerce companies, advertisers and third-party content providers.
Our competitors may develop content that is better than ours or that achieves
greater market acceptance. It is also possible that new competitors may emerge
and acquire significant market share. This could have a material and adverse
effect on our business, financial condition and results of operations.
Marketing
We intend to market our products in the United States using our website,
bonfiretales.com, as the focal point of our campaign. If we raise the maximum
amount of the offering, ($286,290 net after anticipated offering expenses), we
plan to allocate $50,000 to the marketing campaign, which will include:
- - launching the fully functional website (www.bonfiretales.com) with shopping
cart features and downloadable content
- - marketing the website by purchasing online advertising and print
advertising on parent- targeted websites and in parenting print magazines
- - exhibiting at family-oriented consumer tradeshows
- - hiring a marketing specialist to create and execute the marketing campaign
If we raise the minimum amount of the offering ($31,290 net after anticipated
offering expenses), the marketing plan will be revised and will include:
- - launching the website (www.bonfiretales.com) with downloadable for-purchase
content only and without some shopping cart features to accommodate CD
purchases
- - marketing the website by getting listed in search engines and creating
cost-effective Cost- Per-Click campaigns, as well as reducing the funding
for online ad buys.
20
<page>
Advertising
Direct-to-consumer promotion will involve media purchases in magazines,
television, and online advertising targeted to parents or caretakers of
children, aged 2-6 years old. Mass-media promotion will include conducting
public relations campaigns, generating press releases, holding or sponsoring
events with the purpose of receiving publicity in the media and creating a press
kit. Bonfire Productions intends to subcontract some of these services to
professionals with more expertise, such as agencies who specialize in public
relations.
Trademarks and Copyrights
We have applied for a U.S. trademark for "Bonfire Tales" with the U.S. Trademark
and Patent Office. The serial number for the application is 77241986. The
application has not been reviewed and there is no guarantee that it will be
registered.
Management's Discussion and Analysis or Plan of Operation
We are a start-up stage corporation with limited operations and no revenues from
our business operations. Our auditors have issued a going concern opinion. This
means that our auditors believe there is substantial doubt that we can continue
as an on-going business for the next twelve months. We do not anticipate that we
will generate significant revenues until we have completed the recording of our
first three collections of children's stories, begin sales of downloadable files
on our website and market the website sufficiently to generate sales through it.
Accordingly, we must raise cash from sources other than operations.
To meet our need for cash we are attempting to raise money from this offering.
If we raise the minimum amount through this offering, we will be able to
continue operations and remain in business for twelve months. If we are unable
to generate revenues after the twelve months for any reason, or if we are unable
to make a reasonable profit after twelve months, we may have to cease
operations. At the present time, we have not made any arrangements to raise
additional cash, other than through this offering.
If we need additional cash and cannot raise it we will either have to suspend
operations until we do raise the cash, or cease operations entirely. If we raise
the minimum amount of money from this offering, it will last for twelve months
but with limited funds available to build and grow our business. If we raise the
maximum amount, we believe the money will last for two years and also provide
funds for growth strategy. If we raise less than the maximum amount and we need
more money we will have to revert to obtaining additional money through a second
public offering, a private placement of securities, or loans. Other than as
described in this paragraph, we have no other financing plans.
Plan of Operation
Assuming that we raise the minimum amount in this offering, we believe we can
satisfy our cash requirements during the next 12 months. We do not expect
significant changes in the number of employees. Currently, we do not have any
employees.
Upon completion of our public offering, our specific goal will be to record our
first three collections of children's stories from around the world and begin
promotion of our website (www.bonfiretales.com), where the stories will be
available for purchase and download. We intend to accomplish the foregoing
through the following milestones:
21
<page>
1. Complete our public offering. We believe that we will raise sufficient
capital to continue our operations.
We believe this could take up to 270 days from the date the Commission declares
our offering effective. We intend to concentrate all of our efforts on raising
as much capital as we can during this period. If we have not raised the maximum
amount of capital during the first 180 days of this offering, our management may
decide to extend this offering by 90 days.
2. If we are successful in raising the maximum amount of this offering ($286,290
net after anticipated offering expenses), we intend to secure new offices. We
expect the cost of a new office will be approximately $600 per month rent, plus
$200 per month for utilities such as telephone, fax and internet. If we do not
raise the maximum proceeds, or close to the maximum, we will continue to use
existing office space.
3. If we raise the minimum amount of this offering ($31,290 net after
anticipated offering expenses), we will focus on releasing the first three
collections on our website in downloadable format. For this purpose, we will
hire a recording studio that will source the voice talent, and manage the
recording process. We estimate the cost of recording 7 stories with an average
duration of 10 minutes with musical effects and casting of at least two voice
talent artists to be approximately $8,000.
In order to record our current collections of stories, we will need to hire
translators to translate our current content into English. We estimate this will
cost approximately $2,000.
4. If we raise the minimum amount of this offering, we will improve our current
website (www.bonfiretales.com) by adding shopping capabilities and adding the
first three collections of recorded stories on expanded sections on the website
for each story. We estimate the cost of these improvements to be approximately
$5,000. We estimate the total monthly cost of website maintenance to be $115 per
month.
If we are successful in raising the maximum amount of this offering, we will
have to add additional shopping cart features so customers are able to purchase
CDs on our website. We estimate that the total cost of all improvements will be
approximately $13,500. We believe we will begin generating revenues within nine
months of completing our offering.
5. If we raise the maximum amount of the offering, we plan to add an additional
2 hours of content to our product offerings on our website. We will achieve this
by sourcing additional multicultural stories, with a focus on Asian and African
stories. We will record the additional stories and release them on our website.
We estimate the cost of recording and releasing of additional stories to be
approximately $20,000.
6. If we raise the maximum amount of the offering ($286,290 net after
anticipated offering expenses), we will produce 5,000 copies of two CDs under
the "Bonfire Tales" name. We will sell the CDs on our website, as well as offer
them to other online retailers, such as Amazon.com, CDUniverse.com,
Barnes and Noble, and HMV.com. We estimate the cost of production to be
approximately $35,000.
7. If we raise the minimum amount of the offering ($31,290 net after anticipated
offering expenses), we will dedicate $10,000 to marketing and promotion of our
website. We will optimize our website for search engines, and get listed in
online directories. As well, we will devote funds to advertisements on parent-
oriented websites such as ivillage.com, parenting.com and todaysparent.com.
22
<page>
If we are successful in raising the maximum amount of the offering, we will
devote an additional $44,000 to our advertising budget. These additional funds
will allow us to create a tradeshow booth and exhibit at family-oriented
consumer tradeshows in the United States. We will hire a marketing specialist
who will work full-time on purchasing online advertising and print advertising
to promote the website, as well as coordinate our tradeshow participation. We
expect the hire will cost us approximately $2,200 per month. Marketing is an
ongoing matter which will continue during the life of our operations.
8. If we raise the maximum amount of our offering, we will hire a technical
support specialist who will field phone calls relating to problems or questions
about our website download features. We expect this hire to cost us $2,000 per
month. If we raise the minimum amount of the offering, we do not anticipate
hiring any employees and will engage people as outside contractors and
consultants for legal, accounting, and audit functions.
Limited Operating History; Need for Additional Capital
There is limited historical financial information about us upon which to base an
evaluation of our performance. We are in a start-up stage operations and have
generated no revenues. We cannot guarantee we will be successful in our business
operations. Our business is subject to risks inherent in the establishment of a
new business enterprise, including limited capital resources and possible cost
overruns, such as increases in administration expenditures associated with daily
operations and support and maintenance of the website, increases in accounting
and audit fees, increases in legal fees related to filings and regulatory
compliance and increases in audio recording studio fees and marketing
expenditures.
To become profitable and competitive, we have to successfully promote and
increase sales of Bonfire Tales multicultural audio stories for children. We
anticipate relying on equity sales of our common stock in order to continue to
fund our business operations. Issuances of additional shares will result in
dilution to our existing stockholders. There is no assurance that we will
achieve any of additional sales of our equity securities or arrange for debt or
other financing for to fund our planned business activities. We may also rely on
loans from our sole executive officer and director, Alexander Kulyashov;
however, there are no assurances that Mr. Kulyashov will provide us with any
additional funds.
Currently, we do not have any arrangements for additional financing. We have no
assurance that future financing will be available to us on acceptable terms. If
financing is not available on satisfactory terms, we may be unable to continue,
develop or expand our operations. Equity financing could result in additional
dilution to existing shareholders.
Results of Operations From Inception on August 25, 2006 to June 30, 2007
During the period from our inception to June 30, 2007, we have completed our
business plan, launched the first version of our website (www.bonfiretales.com),
and secured content for recording of three collections of stories. We hired
consultants in the areas of bookkeeping and accounting. We also retained an
attorney for the preparation of this Registration Statement, and an auditor to
audit our financial statements. Our loss since inception is $10,211 of which
$3,000 for accounting and audit fees; $29 for interest expense; $2,000 for
management fees; $657 for office and administrative expenses; $355 for
organization costs; $1,200 for rent, and $3,000 for website development.
23
<page>
Since inception, we have sold 3,500,000 shares of common stock to our President
for $3,500.
Liquidity and Capital Resources
As of June 30, 2007, our total assets were cash of $16,523 and our total
liabilities were $23,234 for a total working capital deficit of $6,711. During
the period ended June 30, 2007, the President of the Company provided a $17,000
loan to the Company in accordance with loan agreement. The loan is payable on
demand, unsecured, and bears interest at 6.45% per annum.
As at June 30, 2007, Alexander Kulyashov, our President, is owed $17,015 for
cash advances and expenditures incurred on behalf of the company. This amount
consists of the $15,000 loan principal, $29 of accrued interest and $1,986 for
expenses incurred on behalf of the Company.
We expect to incur substantial losses over the next two years.
As of June 30, 2007, we had cash of $16,253, and we believe that we need
approximately an additional $45,000 to meet our capital requirements over the
next 12 months. Our intention is to obtain this money through this offering.
Known Material Trends and Uncertainties
As of June 30, 2007 Bonfire Productions has no off balance sheet transactions
that have or are reasonably likely to have a current or future effect on our
financial condition, changes in our financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources.
We believe that the above discussion contains a number of forward-looking
statements. Our actual results and our actual plan of operations may differ
materially from what is stated above. Factors which may cause our actual results
or our actual plan of operations to vary include, among other things, decision
of the Board of Directors not to pursue a specific course of action based on a
re-assessment of the facts or new facts, or changes in general economic
conditions.
Legal Proceedings
No officer, director, or persons nominated for these positions, and no promoter
or significant employee of our corporation has been involved in legal
proceedings that would be material to an evaluation of our management. We are
not aware of any pending or threatened legal proceedings which involve Bonfire
Productions, Inc. Directors and Officers Our Bylaws provide that we shall have a
minimum of one director. There is no stated maximum number of directors allowed
but such number may be fixed from time to time by action of the stockholders or
of the directors.
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- --------------------------------------------------------------------------------
Name Age Position
- --------------------------------------------------------------------------------
Alexander Kulyashov 45 President, Chief Executive
Officer, Chief Financial
Officer, Director
The directors will serve as directors until our next annual shareholder meeting
or until a successor is elected who accepts the position. Directors are elected
for one-year terms. Officers hold their positions at the will of the Board of
Directors, absent any employment agreement. There are no arrangements,
agreements or understandings between non-management shareholders and management
under which non-management shareholders may directly or indirectly participate
in or influence the management of Bonfire Productions' affairs.
Alexander Kulyashov, Director
Alexander Kulyashov graduated from the Ural State Academy, Yekaterinburg, Russia
with a Diploma in Linguistics (German, English languages) in 1987. He earned a
diploma in Business Administration from Carl Duisberg College, Cologne, Germany
in 1995.
Presently Alexander Kulyashov is involved in publishing of newspapers for
ethnic communities. He also provides translation and interpretation services
on a consulting basis.
Mr.Kulyashov intends to devote approximately 25% of his business time to our
affairs.
COMPENSATION
There are no formal written employment arrangements in place. We do not have any
agreements or understandings that would change the terms of compensation during
the course of the year.
The table below shows what we have paid to our directors since our inception of
August 25, 2006 through June 30, 2007.
SUMMARY COMPENSATION TABLE
<table>
<caption>
- -----------------------------------------------------------------------------------------------------------------
| Long Term Compensation |
Annual Compensation ------------------------------
---------------------- | Awards |Payouts|
Other ------------------------------
Annual
Compen- |Restricted| Securities| | All Other
Name and Year sation |Stock | Underlying| LTIP | Compen-
Principal Ended Salary Bonus |Awards | Options/ |Payouts| sation
Position ($) ($) ($) | ($) | SARs (#) | ($) | ($)
- -----------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Alexander 08-25-06 -0- -0- $2,000 (1) -0- -0- -0- -0-
Kulyashov, (inception)
President, to
Chief 06-30-07
Executive
Officer, Chief
Financial
Officer,
Director
- -----------------------------------------------------------------------------------------------------------------
</table>
25
(1) The company's president provides management services to the company as
per unwritten arrangement with the company. During the period ended
June 30, 2007, the company paid $2,000 for management services.
Stock Option Grants
We do not have any stock options outstanding. No stock options or stock
appreciation rights under any stock incentive plans were granted to our sole
director and officer since our inception.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The President of the Company provides management services to the Company. During
the period ended June 30, 2007 management services of $2,000 were charged to
operations.
The President of the Company provides office rent to the Company. The rent is
valued at $200 per month. During the period ended June 30, 2007 office rent of
$1,200 was charged to operations.
During the period ended June 30, 2007, the President of the Company provided a
$15,000 loan to the Company. The loan payable is unsecured, bears interest at
6.45% per annum, and consists of $15,000 of principal due on June 19, 2008, and
$29 of accrued interest payable.
As at June 30, 2007, the Company owed to the President of the Company $1,986 for
expenses incurred on behalf of the Company. We have not entered into any
transactions with our officers, directors, persons nominated for these
positions, beneficial owners of 5% or more of our common stock, or family
members of these persons wherein the amount involved in the transaction or a
series of similar transactions exceeded $60,000.
Audit Committee
The Audit Committee is currently composed of one member, Alexander Kulyashov.
Our Board of Directors has determined that we do not have an audit committee
financial expert serving on its audit committee. The Board of Directors has
determined that the cost of hiring a financial expert to act as a director of
Bonfire Productions and to be a member of the audit committee outweighs the
benefits of having a financial expert on the committee.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the ownership, as of August 27, 2007 of our
common stock by each of our directors, and by all executive officers and
directors as a group, and by each person known to us who is the beneficial owner
of more than 5% of any class of our securities. As of August 27, 2007 there were
3,500,000 common shares issued and outstanding. To the best of our knowledge,
all persons named have sole voting and investment power with respect to the
shares, except as otherwise noted.
26
<page>
<table>
<caption>
- --------------------------------------------------------------------------------------------------------------------
Amount and
Nature of
Title of Class Name of Beneficial Percent of Percent of Percent of
Beneficial Owner Ownership Class Before Class After Class After
Offering Offering with Offering with
Minimum Number of Maximum Number of
Shares Sold Shares Sold
(1) (%) (%) (%)
- --------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Common Alexander Kulyashov 3,500,000 100 53.85 14.89
President, CEO, CFO,
Secretary, Treasurer
and Director
All Officers and 3,500,000 100 53.85 14.89
Directors as a Group
that consists of one
person
- --------------------------------------------------------------------------------------------------------------------
</table>
1 Includes shares that could be obtained by the named individual within the
next 60 days.
Changes in Control
There are currently no arrangements which would result in a change in control of
Bonfire Productions, Inc. Description of Securities The authorized capital stock
of Bonfire Productions, Inc. consists of 75,000,000 common shares, $0.001 par
value. Common Stock Holders of the common stock have no preemptive rights to
purchase additional shares of common stock or other subscription rights. The
common stock carries no conversion rights and is not subject to redemption or to
any sinking fund provisions. All shares of common stock are entitled to share
equally in dividends from sources legally available, therefore, when, as and if
declared by the Board of Directors, and upon liquidation or dissolution of
Bonfire Productions, whether voluntary or involuntary, to share equally in the
assets of Bonfire Productions available for distribution to stockholders.
The Board of Directors is authorized to issue additional shares of common stock
not to exceed the amount authorized by Bonfire Productions' Articles of
Incorporation, on such terms and conditions and for such consideration as the
Board may deem appropriate without further stockholder action.
Voting Rights
Each holder of common stock is entitled to one vote per share on all matters on
which such stockholders are entitled to vote. Since the shares of common stock
do not have cumulative voting
27
<page>
rights, the holders of more than fifty percent of the shares voting for the
election of directors can elect all the directors if they choose to do so and,
in such event, the holders of the remaining shares will not be able to elect any
person to the Board of Directors.
Dividend Policy
Holders of Bonfire Productions' common stock are entitled to dividends if
declared by the Board of Directors out of funds legally available; therefore,
Bonfire Productions does not anticipate the declaration or payment of any
dividends in the foreseeable future. We intend to retain earnings, if any, to
finance the development and expansion of its business. Future dividend policy
will be subject to the discretion of the Board of Directors and will be
contingent upon future earnings, if any, Bonfire Productions' financial
condition, capital requirements, general business conditions and other factors.
Therefore, there can be no assurance that any dividends of any kind will ever be
paid.
Stock Transfer Agent
Upon completion of this offering, we intend to engage an independent stock
transfer agency firm to serve as our registrar and stock transfer agent. Shares
Eligible for Future Sale The 20,000,000 shares of common stock registered in
this offering will be freely tradable without restrictions under the Securities
Act. No shares held by our "affiliates" (officers, directors or 10%
shareholders) are being registered hereunder. Our 3,500,000 issued and
outstanding shares have been held since December, 2006 (and are subject to the
sale limitations imposed by Rule 144 (see below). The eventual availability for
sale of substantial amounts of common stock under Rule 144 could adversely
affect prevailing market prices for our securities.
In general, under Rule 144, as currently in effect, any of our affiliates and
any person or persons whose sales are aggregated who has beneficially owned his
or her restricted shares for at least one year, may be entitled to sell in the
open market within any three-month period a number of shares of common stock
that does not exceed the greater of (i) 1% of the then outstanding shares of our
common stock, or (ii) the average weekly trading volume in the common sock
during the four calendar weeks preceding any sale. Sales under Rule 144 are also
affected by limitations on manner of sale, notice requirements, and availability
of current public information about us. Non-affiliates who have held their
restricted shares for two years may be entitled to sell their shares under Rule
144 without regard to any of the above limitations, provided they have not been
affiliates for the three months preceding any sale.
Interest of Named Experts and Counsel
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant. Nor was any such person
connected with the registrant as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
28
<page>
Batcher Zarcone & Baker, LLP our legal counsel, has provided an opinion on the
validity of our common stock. We retained the counsel solely for the purpose of
providing this opinion and have not received any other legal services from this
firm.
The financial statements included in this prospectus and the registration
statement have been audited by Moore & Associates, Chartered Accountants and
Advisors, to the extent and for the periods set forth in their report appearing
elsewhere in this document and in the registration statement filed with the SEC,
and are included in reliance upon such report given upon the authority of said
firm as experts in auditing and accounting.
Reports to Security Holders
Upon effectiveness of this Prospectus, we will be subject to the reporting and
other requirements of the Exchange Act and we intend to furnish our shareholders
annual reports containing financial statements audited by our independent
auditors and to make available quarterly reports containing unaudited financial
statements for each of the first three quarters of each year. The public may
read and copy any materials that we file with the Commission at the Commission's
Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public
may obtain information on the operation of the Public Reference Room by calling
the Commission at 1-800-SEC-0330. The Commission maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Commission. The address of
that site is http://www.sec.gov. Market for Common Equity and Related
Stockholder Matters Market Information Our common stock is not quoted on any
exchange. We plan to eventually seek listing on the OTC Bulletin Board, once our
Prospectus has been declared effective by the Commission. We cannot guarantee
that we will obtain a listing. There is no trading activity in our securities,
and there can be no assurance that a regular trading market for our common stock
will ever be developed. A market maker sponsoring a company's securities is
required to obtain a listing of the securities on any of the public trading
markets, including the OTC Bulletin Board. If we are unable to obtain a market
maker for our securities, we will be unable to develop a trading market for our
common stock. We may be unable to locate a market maker that will agree to
sponsor our securities. Even if we do locate a market maker, there is no
assurance that our securities will be able to meet the requirements for a
quotation or that the securities will be accepted for listing on the OTC
Bulletin Board.
We intend to apply for listing of the securities on the OTC Bulletin Board, but
there can be no assurance that we will be able to obtain this listing. The OTC
Bulletin Board securities are not quoted and traded on the floor of an organized
national or regional stock exchange. Instead, OTC Bulletin Board securities
transactions are conducted through a telephone and computer network connecting
dealers in stocks. OTC Bulletin Board stocks are traditionally smaller companies
that do not meet the financial and other listing requirements of a regional or
national stock exchange.
29
<page>
BONFIRE PRODUCTIONS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
June 30, 2007
BALANCE SHEET
STATEMENT OF OPERATIONS
STATEMENT OF CASH FLOWS
STATEMENT OF STOCKHOLDERS' EQUITY
NOTES TO FINANCIAL STATEMENTS
<page>
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the Board of Directors
Bonfire Productions Inc
(A Development Stage Company)
2018 156th Avenue NE Suite 100
Bellevue, WA 98007
We have audited the accompanying balance sheet of Bonfire Productions Inc as of
June 30, 2007, and the related statements of operations, stockholders' equity
and cash flows inception August 26, 2006 through June 30, 2007. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bonfire Productions Inc as of
June 30, 2007 and the results of its operations and its cash flows inception
August 26, 2006 through June 30, 2007, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has generated no revenue and has not
established operations which raise substantial doubt about its ability to
continue as a going concern. Management's plans concerning these matters are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Moore & Associates Chartered
Las Vegas, Nevada
August 2, 2007
2675 S. Jones Blvd. Suite 109, Las Vegas, NV 89146 (702) 253-7499
- --------------------------------------------------------------------------------
Fax (702) 253-7501
------------------
<page>
BONFIRE PRODUCTIONS, INC.
(A Development Stage Company)
BALANCE SHEET
June 30, 2007
<table>
<caption>
ASSETS
<s> -------- <c>
Current assets
Cash $ 16,523
----------------
Total Assets $ 16,523
================
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current liabilities
Accounts payable and accrued liabilities $ 6,219
Due to related parties 1,986
Loan payable - related parties 15,029
----------------
Total current liabilities 23,234
Total Liabilities 23,234
----------------
Stockholders' Equity
Capital stock
75,000,000 shares authorized, $0.001 par value
3,500,000 shares issued and outstanding 3,500
Deficit accumulated during the development stage ( 10,211)
----------------
Total Stockholders' Equity ( 6,711)
----------------
Total Liabilities and Stockholders's Equity $ 16,523
================
</table>
The accompanying notes are an integral part of these financial statements
<page>
BONFIRE PRODUCTIONS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
August 25, 2006 (Inception) Through June 30, 2007
<table>
<caption>
<s> <c>
Revenue $ -
--------------
Expenses:
Accounting and audit fees $ 3,000
General and Administrative 627
Management 2,000
Organization costs 355
Rent 1,200
Website development 3,000
--------------
10,182
--------------
Loss from operations ( 10,182)
Other income (expense)
Interest expense ( 29)
--------------
Income (loss) before provision for income tax ( 10,211)
Provision for income tax
-
--------------
Net income (loss) $ ( 10,211)
==============
Net income (loss) per share $ ( 0.01)
==============
Weighted average number of common shares outstanding 2,156,451
==============
</table>
The accompanying notes are an integral part of these financial statements
<page>
BONFIRE PRODUCTIONS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
August 25, 2006 (Inception) Through June 30, 2007
<table>
<caption>
<s> <c>
Cash Flows From Operating Activities:
Net income (loss) $ ( 10,211)
Adjustment to reconcile net income to net cash provided by (used for)
operating activities:
Accounts payable and accrued liabilities 6,219
Accounts payable related parties 1,986
-------------
Net cash provided by (used for) operating
activities ( 2,006)
-------------
Cash Flows From Financing Activities:
Loan payable - related party 15,029
Proceeds from issuance of common stock 3,500
-------------
Net cash provided by (used for) financing 18,529
activities
-------------
Net Increase (Decrease) In Cash 16,523
Cash At The Beginning Of The Period -
-------------
Cash At The End Of The Period $ 16,523
=============
Schedule Of Non-Cash Investing And Financing
Activities
None
Supplemental Disclosure
Cash paid for:
Interest $ -
=============
Income Taxes $ -
=============
</table>
The accompanying notes are an integral part of these financial statements
<page>
BONFIRE PRODUCTIONS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
August 25, 2006 (Inception) Through June 30, 2007
<table>
<caption>
Deficit
Accumulated
During the
Common Shares Development
Number Par Value Stage Total
------ --------- ----- -----
<s> <c> <c> <c> <c>
Balances, August 25, 2006 - $ - $ - $ -
Issued for cash:
Common stock June, 2006 - at $0.001 3,500,000 3,500 - 3,500
Net gain (loss) for the period ended June 30, 2007 - - ( 10,211) ( 10,211)
---------- -------- ----------- -------------
Balances, June 30, 2007 3,500,000 $ 5,000 $ ( 10,211) $ ( 6,711)
========== ======== =========== =============
</table>
The accompanying notes are an integral part of these financial statements
<page>
BONFIRE PRODUCTIONS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2007
(Stated in US Dollars)
Note 1 Nature and Continuance of Operations
------------------------------------
The Company was incorporated in the State of Nevada, United States
of America on August 25, 2006 and its fiscal year end is June 30.
The Company is engaged in recording, publishing and distribution
of the multicultural stories and fairy tales for children through
its website www.bonfiretales.com and other internet retailers.
These financial statements have been prepared on a going concern
basis. The Company has a working capital deficiency of $6,711, and
has accumulated deficit of $10,211 since inception. Its ability to
continue as a going concern is dependent upon the ability of the
Company to generate profitable operations in the future and/or to
obtain the necessary financing to meet its obligations and repay
its liabilities arising from normal business operations when they
come due. The outcome of these matters cannot be predicted with
any certainty at this time. These factors raise substantial doubt
that the company will be able to continue as a going concern.
Management plans to continue to provide for its capital needs by
the issuance of common stock and related party advances. These
financial statements do not include any adjustments to the amounts
and classification of assets and liabilities that may be necessary
should the Company be unable to continue as a going concern.
Note 2 Summary of Significant Accounting Policies
------------------------------------------
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the
United States of America. Because a precise determination of many
assets and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily
involves the use of estimates which have been made using careful
judgement. Actual results may vary from these estimates.
The financial statements have, in management's opinion, been
properly prepared within reasonable limits of materiality and
within the framework of the significant accounting policies
summarized below:
Development Stage Company
-------------------------
The Company complies with Financial Accounting Standard Board
Statement ("FAS") No. 7 and The Securities and Exchange Commission
Act Guide 7 for its characterization of the Company as development
stage.
Revenue Recognition
-------------------
We recognize revenue from product sales when the following four
revenue recognition criteria are met: persuasive evidence of an
arrangement exists, delivery has occurred or services have been
rendered, the selling price is fixed or determinable, and
collectibility is reasonably assured. Product sales and shipping
revenues, net of promotional discounts, rebates, and return
allowances, are recorded when the products are shipped and title
passes to customers.
<page>
Bonfire Productions, Inc.
(A Development Stage Company)
Notes to Financial Statements
June 30, 2007 - Page 2
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Impairment of Long-lived Assets
-------------------------------
Capital assets are reviewed for impairment in accordance with FAS
No. 144, "Accounting for the Impairment or Disposal of Long-lived
Assets", which was adopted effective January 1, 2002. Under FAS
No. 144, these assets are tested for recoverability whenever
events or changes in circumstances indicate that their carrying
amounts may not be recoverable. An impairment charge is recognized
for the amount, if any, which the carrying value of the asset
exceeds the fair value.
Technology and Content
----------------------
Technology and content expenses consist principally of
consultants' fees and expenses related to website development,
editorial content, and systems support. Technology and content
costs are expensed as incurred.
Foreign Currency Translation
----------------------------
The financial statements are presented in United States dollars.
In accordance with Statement of Financial Accounting Standards No.
52, "Foreign Currency Translation", since the functional currency
of the Company is U.S. dollars, the foreign currency financial
statements of the Company's subsidiaries are re-measured into U.S.
dollars. Monetary assets and liabilities are re-measured using the
foreign exchange rate that prevailed at the balance sheet date.
Revenue and expenses are translated at weighted average rates of
exchange during the year and stockholders' equity accounts and
furniture and equipment are translated by using historical
exchange rates. Any re-measurement gain or loss incurred is
reported in the income statement.
Net Loss per Share
------------------
Basic loss per share includes no dilution and is computed by
dividing loss available to common stockholders by the weighted
average number of common shares outstanding for the period.
Dilutive losses per share reflects the potential dilution of
securities that could share in the losses of the Company. Because
the Company does not have any potentially dilutive securities, the
accompanying presentation is only of basic loss per share.
Stock-based Compensation
------------------------
The Company has not adopted a stock option plan and has not
granted any stock options. Accordingly no stock-based compensation
has been recorded to date.
Income Taxes
------------
The Company uses the asset and liability method of accounting for
income taxes in accordance with FAS No. 109 "Accounting for Income
Taxes". Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
temporary differences between the financial statements carrying
amounts of existing assets and liabilities and loss carryforwards
and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
<page>
Bonfire Productions, Inc.
(A Development Stage Company)
Notes to Financial Statements
June 30, 2007 - Page 3
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Fair Value of Financial Instruments
-----------------------------------
The carrying value of the Company's financial instruments
consisting of cash, accounts payable and accrued liabilities,
agreement payable and due to related party approximate their
carrying value due to the short-term maturity of such instruments.
Unless otherwise noted, it is management's opinion that the
Company is not exposed to significant interest, currency or credit
risks arising from these financial instruments.
Recent Accounting Pronouncements
--------------------------------
In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measures". This Statement defines fair value, establishes a
framework for measuring fair value in generally accepted
accounting principles (GAAP), expands disclosures about fair value
measurements, and applies under other accounting pronouncements
that require or permit fair value measurements. SFAS No. 157 does
not require any new fair value measurements. However, the FASB
anticipates that for some entities, the application of SFAS No.
157 will change current practice. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after
November 15, 2007, which for the Company would be the fiscal year
beginning February 1, 2008. The Company is currently evaluating
the impact of SFAS No. 157 but does not expect that it will have a
material impact on its financial statements.
In September 2006, the FASB issued SFAS No. 158, "Employers'
Accounting for Defined Benefit Pension and Other Postretirement
Plans." This Statement requires an employer to recognize the over
funded or under funded status of a defined benefit post retirement
plan (other than a multiemployer plan) as an asset or liability in
its statement of financial position, and to recognize changes in
that funded status in the year in which the changes occur through
comprehensive income. SFAS No. 158 is effective for fiscal years
ending after December 15, 2006 which for the Company would be
February 1, 2007. The Company does not expect that the
implementation of SFAS No. 158 will have any material impact on
its financial position and results of operations.
In September 2006, the SEC issued Staff Accounting Bulletin
("SAB") No. 108, "Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year
Financial Statements." SAB No. 108 addresses how the effects of
prior year uncorrected misstatements should be considered when
quantifying misstatements in current year financial statements.
SAB No. 108 requires companies to quantify misstatements using a
balance sheet and income statement approach and to evaluate
whether either approach results in quantifying an error that is
material in light of relevant quantitative and qualitative
factors. SAB No. 108 is effective for periods ending after
November 15, 2006 which for the Company would be February 1, 2007.
The Company is currently evaluating the impact of adopting SAB No.
108 but does not expect that it will have a material effect on its
financial statements.
<page>
Bonfire Productions, Inc.
(A Development Stage Company)
Notes to Financial Statements
June 30, 2007 - Page 4
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Recent Accounting Pronouncements - (cont'd)
---------------------------------
In February 2007, the FASB issued SFAS No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities". This
Statement permits entities to choose to measure many financial
assets and financial liabilities at fair value. Unrealized gains
and losses on items for which the fair value option has been
elected are reported in earnings. SFAS No. 159 is effective for
fiscal years beginning after November 15, 2007. The Company is
currently assessing the impact of SFAS No. 159 on its financial
position and results of operations.
Note 3 Capital Stock
-------------
The total number of common shares authorized that may be issued by
the Company is 75,000,000 shares with a par value of one tenth of
one cent ($0.001) per share and no other class of shares is
authorized.
During the period from August 25, 2006 (inception) to June 30,
2007, the Company issued 3,500,000 shares of common stock to its
director for total proceeds of $3,500.
To June 30, 2007, the Company has not granted any stock options
and has not recorded any stock-based compensation.
Note 4 Related Party Transactions
--------------------------
a) The President of the Company provides management services
to the Company. During the period ended June 30, 2007
management services of $2,000 were charged to operations.
b) The President of the Company provides office rent to the
Company. The rent is valued at $200 per month. During the
period ended June 30, 2007 office rent of $1,200 was charged
to operations.
c) During the period ended June 30, 2007, the President of the
Company provided a $15,000 loan to the Company. The loan
payable is unsecured, bears interest at 6.45% per annum, and
consists of $15,000 of principal due on June 19, 2008, and $29
of accrued interest payable.
d) As at June 30, 2007, the Company owed $1,986 to the President
of the Company for expenses incurred on behalf of the Company.
<page>
Bonfire Productions, Inc.
(A Development Stage Company)
Notes to Financial Statements
June 30, 2007 - Page 5
Note 5 Income Taxes
------------
The significant components of the Company's deferred tax assets
are as follows:
2007
-----------
Deferred Tax Assets
Non-capital loss carryforward $ 1,532
Less: valuation allowance for deferred tax asset ( 1,532)
-----------
$ -
===========
There were no temporary differences between the Company's tax and
financial bases that result in deferred tax assets, except for the
Company's net operating loss carryforwards amounting to
approximately $10,211 at June 30, 2007 which may be available to
reduce future year's taxable income.
These carryforwards will expire, if not utilized, commencing in
2027. Management believes that the realization of the benefits
from these deferred tax assets appears uncertain due to the
Company's limited operating history and continuing losses.
Accordingly a full, deferred tax asset valuation allowance has
been provided and no deferred tax asset benefit has been recorded.
<page>
Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure
The accounting firm of Moore & Associates, Chartered Accountants and Advisors
audited our financial statements. Since inception, we have had no changes in or
disagreements with our accountants.
PART II - INFORMATION NOT REQUIRED IN THE PROSPECTUS
Indemnification of Officer and Directors
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes (the "NRS") and our bylaws.
Under the NRS, director immunity from liability to a company or its shareholders
for monetary liabilities applies automatically unless it is specifically limited
by a company's articles of incorporation that is not the case with our articles
of incorporation. Excepted from that immunity are:
(1) a willful failure to deal fairly with the company or its shareholders
in connection with a matter in which the director has a material
conflict of interest;
(2) a violation of criminal law (unless the director had reasonable cause
to believe that his or her conduct was lawful or no reasonable cause
to believe that his or her conduct was unlawful);
(3) a transaction from which the director derived an improper personal
profit; and
(4) willful misconduct.
Our bylaws provide that we will indemnify our directors and officers to the
fullest extent not prohibited by Nevada law; provided, however, that we may
modify the extent of such indemnification by individual contracts with our
directors and officers; and, provided, further, that we shall not be required to
indemnify any director or officer in connection with any proceeding (or part
thereof) initiated by such person unless:
(1) such indemnification is expressly required to be made by law;
(2) the proceeding was authorized by our Board of Directors;
(3) such indemnification is provided by us, in our sole discretion,
pursuant to the powers vested us under placeStateNevada law; or
(4) such indemnification is required to be made pursuant to the bylaws.
Our bylaws provide that we will advance all expenses incurred to any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was our director or
officer, or is or was serving at our request as a director or executive officer
of another company, partnership, joint venture, trust or other enterprise, prior
to the final
41
<page>
disposition of the proceeding, promptly following request. This advanced of
expenses is to be made upon receipt of an undertaking by or on behalf of such
person to repay said amounts should it be ultimately determined that the person
was not entitled to be indemnified under our bylaws or otherwise.
Our bylaws also provide that no advance shall be made by us to any officer in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made: (a) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding; or (b) if such quorum is not obtainable, or,
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to the
decision- making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to our best interests.
Other Expenses of Issuance and Distribution
Our estimated expenses in connection with the issuance and distribution of the
securities being registered are estimated to be as follows:
Filing fees $ 1,200.00
Legal fees and expenses 6,000.00
Accounting fees and expenses 5,500.00
Transfer agent fees 1,000.00
Securities and Exchange Commission registration fee 9.21
--------------
Total $ 13,709.21
==============
All amounts are estimates other than the Commission's registration fee.
Recent Sales of Unregistered Securities
We completed an offering of 3,500,000 shares of our common stock at a price of
$0.001 per share to Mr. Kulyashov on December 22, 2006, for total proceeds of
$3,500. We completed this offering pursuant to Rule 903 of Regulation S under
the Securities Act. This sale of shares was completed as an "offshore
transaction", as defined in Rule 902(h) of Regulation S, on the basis that: (i)
the investor was outside of the United States at the time the offer to purchase
the shares was made; and (ii) at the time the subscription agreement for the
shares was executed, the investor was outside of the United States or we had a
reasonable belief that the investor was outside of the United States. We did not
engage in any directed selling efforts, as defined in Regulation S, in the
United States. The investor represented to us that the investor was not a U.S.
person, as defined in Regulation S, and was not acquiring the shares for the
account or benefit of a U.S. Person. The investor represented their intention to
acquire the securities for investment only and not with a view toward
distribution. Appropriate legends have been affixed to the stock certificate
issued to the purchaser in accordance with Regulation S. The investor was in
possession of sufficient information about us to make an informed investment
decision. None of the securities were sold through an underwriter and
accordingly, there were no underwriting discounts or commissions involved. No
registration rights were granted to the purchaser.
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Exhibits
Exhibit
Number Description
- ------- -----------
3.1 Articles of Incorporation
3.2 Bylaws
5.1 Legal Opinion of Batcher Zarcone & Baker, LLP.
23.1 Consent of Batcher Zarcone & Baker, LLP; contained in Opinion
filed as Exhibit 5.1
23.2 Consent of Moore & Associates Chartered Accountants and Advisors
Undertakings
We hereby undertake:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
i. To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
ii. To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective Registration Statement; and
iii. To include any additional or changed material information
on the plan of distribution.
2. That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
4. 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,
we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by 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, we will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
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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.
5. For determining any liability under the Securities Act of 1933:
i. we shall 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 us under Rule 424(b)(1), or (4)
or 497(h) under the Securities Act as part of this registration statement
as of the time the Commission declared it effective. For determining any
liability under the Securities Act of 1933, we shall treat each post-
effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
ii. we shall treat each prospectus filed by us pursuant to Rule 424(b)(3) as
part of the registration statement as of the date the filed prospectus was
deemed part of and included in the registration statement. Each prospectus
required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part
of a registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose
of providing the information required by section 10(a) of the Securities
Act shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus is first
used after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any person that is at that
date an underwriter, such date shall be deemed to be a new effective date
of the registration statement relating to the securities in the
registration statement to which that prospectus relates, and the offering
of such securities at that time shall be deemed to be the initial bona fide
offering thereof. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of contract of
sale prior to such effective date, supersede or modify any statement that
was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to
such effective date; or
iii. we shall treat each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and included in the
registration statement as of the date it is first used after effectiveness.
Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as
to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made
in any such document immediately prior to such date of first use.
6. For determining liability of the undersigned small business issuer under the
Securities Act to any purchaser in the initial distribution of the securities,
the undersigned small business issuer undertakes that in a primary offering of
securities of the undersigned small business issuer pursuant to this
registration statement, regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned small
business issuer will be a seller to the purchaser and will be considered to
offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned small business
issuer relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned small business issuer or used or referred to by
the undersigned small business issuer;
(iii) The portion of any other free writing prospectus relating to the offering
containing material information about the undersigned small business issuer
or its securities provided by or on behalf of the undersigned small
business issuer; and
(iv) Any other communication that is an offer in the offering made by the
undersigned small business issuer to the purchaser.
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Signatures
In accordance with the requirements of the Securities Act, Bonfire Productions,
Inc. certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form SB-2 and authorized this Prospectus on Form
SB-2 to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Bellevue, Washington State, U.S.A., on the 27th day of August,
2007.
BONFIRE PRODUCTIONS, INC.
By: /s/ Alexander Kulyashov
-----------------------
Alexander Kulyashov
President, CEO and Director
In accordance with the requirements of the Securities Act, this Prospectus has
been signed by the following persons in the capacities and on the dates stated.
SIGNATURES TITLE DATE
- ----------------------- ------------------------ --------------------
/s/ Alexander Kulyashov President, CEO, CFO, August 27, 2007
- ----------------------- Secretary, Treasurer and --------------------
Alexander Kulyashov Director
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