U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
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TO
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FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Reel Staff, Inc.
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(Exact name of registrant as specified in its charter)
Nevada 7363 95-4863690
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(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation Classification Code Number) Identification No.)
or organization)
1402 Veteran Avenue, Suite B, Los Angeles, California 90024
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(Address of registrant's principal executive offices) (Zip Code)
(323) 359-1531
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(Registrant's Telephone Number, Including Area Code)
Michael J. Muellerleile
Stepp Law Group
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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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. [ ]
CALCULATION OF REGISTRATION FEE
================================ =================== ==================== ====================== ================
Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price aggregate registration
to be registered registered per share offering price fee
-------------------------------- ------------------- -------------------- ---------------------- ----------------
Common Stock, $.001 par value 2,423,750 $0.05 $121,187.50 $31.99
================================ =================== ==================== ====================== ================
The offering price per share for the selling security holders was estimated
solely for the purpose of calculating the registration fee pursuant to Rule 457
of Regulation C.
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, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
1
Preliminary Prospectus
Reel Staff, Inc.
a Nevada corporation
2,423,750 Shares of Common Stock
This prospectus relates to 2,423,750 shares of common stock of Reel Staff, Inc.,
which are issued and outstanding shares of our common stock, acquired by the
selling security holders in private placement transactions which were exempt
from the registration and prospectus delivery requirements of the Securities Act
of 1933. The selling holders may offer and sell the shares at $0.05 per share.
Our common stock is presently not traded on any market or securities exchange,
and we have not applied for listing or quotation on any public market. The
offering will terminate two years after the effective date of this registration
statement.
See "Risk Factors" on pages 4 to 7 for factors to be considered before investing
in the shares of our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed. The
selling security holders 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.
The date of this prospectus is October 15, 2001
Subject to completion.
2
TABLE OF CONTENTS
Prospectus Summary .......................................................4
Risk Factors..............................................................4
Use of Proceeds...........................................................8
Determination of Offering Price...........................................8
Dilution..................................................................8
Selling Security Holders..................................................8
Plan of Distribution......................................................9
Legal Proceedings........................................................10
Directors, Executive Officers, Promoters and Control Persons.............11
Security Ownership of Certain Beneficial Owners and Management...........11
Description of Our Securities............................................12
Interest of Named Experts and Counsel....................................12
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities...........................................12
Organization Within Last Five Years......................................12
Description of Business..................................................12
Management's Discussion and Analysis of Financial Condition and
Results of Operations....................................................15
Description of Property..................................................17
Certain Relationships and Related Transactions...........................17
Market for Common Equity and Related Stockholder Matters.................17
Executive Compensation...................................................18
Financial Statements.....................................................18
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.....................................................29
Legal Matters............................................................29
Experts..................................................................29
Additional Information...................................................29
Indemnification of Directors and Officers................................29
Other Expenses of Issuance and Distribution..............................30
Recent Sales of Unregistered Securities..................................30
Exhibits.................................................................31
Undertakings.............................................................32
Signatures...............................................................33
3
Prospectus Summary
------------------
Our business: We incorporated in Nevada on May 21, 2001. Our
principal business address is 1402 Veteran Avenue,
Suite B, Los Angeles, California 90024. Our
telephone number is 323.359.1531.
We provide staffing services to film, video and
television production companies. Our staffing
services consist of production services but we
intend to expand those services to include
postproduction work as well as talent and casting
services. The services, skills and labor offered
by us will generally include production assistants
and film and video crews, such as back line
technicians, carpenters, lighting designers,
lighting technicians, riggers, sound designers,
stage and scenery designers and other skilled
laborers.
Number of shares The selling security holders want to sell
being offered: 2,423,750 shares of our common stock. The offered
shares were acquired by the selling security
holders in private placement transactions, which
were exempt from the registration and prospectus
delivery requirements of the Securities Act of
1933. The selling holders may offer and sell the
shares at $0.05 per share.
Number of shares 6,113,750 shares of our common stock are issued
outstanding: and outstanding. We have no other securities
issued.
Estimated use of proceeds: We will not receive any of the proceeds from the
sale of those shares being offered.
RISK FACTORS
In addition to the other information in this prospectus, the following risk
factors should be considered carefully in evaluating our business before
purchasing any of our shares of common stock. A purchase of our common stock is
speculative and involves a significant and substantial number of risks. Any
person who is not in a position to lose the entire amount of his investment
should forego purchasing our common stock.
Risks related to our business:
We are a new company with losses since our formation and we anticipate that we
will lose money in the foreseeable future. Therefore, we may not be able to
achieve profitable operations.
We were formed on May 21, 2001 and have a limited operating history. Our losses
since inception are $9,837 as of June 30, 2001. We expect to encounter
difficulties as an early stage company in our industry. Our business strategy is
unproven, and we may not be successful in addressing early stage challenges,
such as establishing our position in the market and expanding our presence and
capabilities. To implement our business plan, we must increase our marketing
initiatives and identify and enter into additional strategic relationships with
film production companies.
Our prospects must be considered speculative, considering the risks, expenses,
and difficulties frequently encountered in the establishment of a new business,
specifically the risks inherent in developmental stage companies. We expect
that, in the near term, our operating expenses will increase by approximately
$1,000 per month, which will be used for marketing and promotional expenses as
well as developing relationships with companies in the entertainment industry.
As a result, we expect significant net losses in the future. We will need to
generate significant revenues to achieve and maintain profitability. We may not
be able to achieve profitable operations.
We depend on a limited pool of qualified temporary employees. Our failure to
retain qualified temporary employees will significantly hinder our ability to
generate revenues.
4
We provided temporary employment of technical production personnel to the film,
television and video industry. We depend on a pool of qualified temporary
employees willing and able to accept assignments for our clients. Our ability to
succeed will be significantly impaired if we are unable to provide our clients
with qualified temporary employees. Our clients require personnel that are
available on short notice and for periods of varying durations. Many of our
clients require employees on a temporary basis, and typically do not require
those employees' services for periods in excess of three months. Furthermore,
our clients require employees with specialized skills and training in the
entertainment production field. We are materially dependent upon the continued
availability of such qualified temporary personnel. Our failure to secure
temporary personnel will significantly hinder our ability to conduct business
and generate revenues.
Our services cater exclusively to the film, television and movie industries and
therefore are affected by changes or trends occurring within those industries.
The film, television and movie industries, and entertainment industry in general
is a speculative venture which involves substantial risks. There is no certainty
that the efforts and expenditures we make will result in commercially profitable
business. The marketability of our services will be affected by numerous factors
which affect the motion picture industry and are beyond our control. These
factors include market fluctuations, and the general state of the economy,
including the rate of inflation, and local economic conditions, which can affect
peoples' discretionary spending. These factors or any combination of these
factors may hinder our ability to generate revenues consistently.
Our success is dependent on the acceptance of our services by industry
professionals. Rejection of our staffing services will hinder or foreclose our
ability to expand our operations and establish additional service areas.
Our business model assumes that there is an untapped market for technical
production staffing. Our assumption is not based upon any independent market
research. Rather, it is based upon the experience of our management, their
knowledge of the film, television and video production markets and the growth of
the numbers of entities engaged in activities dependent on technical production
personnel. Our success depends on acceptance of our staffing services. If
customers do not embrace our services, our ability to generate revenues will be
adversely affected and we will be forced to revise our business plan. In such
event, we may not be able to develop or execute a revised business plan.
Our operating results will fluctuate due to a number of factors, including but
not limited to, risks associated with the development, production, and
completion of film, television or video projects.
Due to the numerous factors that affect how a film is developed and produced, we
cannot be certain as to how successful our services will be at any given time.
Additional variables that will affect our success include location and timing of
film production. Typically, project production dates for larger scale endeavors
are well in advance of film or television release dates. Smaller scale
production endeavors are usually scheduled closer to their release date.
We anticipate that our operating results will fluctuate as a result of these and
other factors, including overall trends in the economy and customer hiring
patterns, which are characterized by individual orders from customers rather
than long-term contracts. As such, we may not be able to anticipate, for more
than a few months in advance, the number, size and profitability of product
orders in a given period. Consequently, the operating results for one quarter
are not necessarily indicative of the operating results for future quarters.
Our future financial results are uncertain due to unforeseen marketing expenses.
We currently market our services through the relationships and contacts of our
president. However, we may be forced to spend funds on unforeseen marketing and
promotional expenses. Any proposed marketing activities will be limited and to
pay for more sophisticated marketing activities we need to generate revenues.
Our inability to generate revenues may significantly hinder our ability to
market our services.
We may be subject to litigation in connection with the employment services we
offer and our operations will be adversely affected as a consequence of such
litigation.
5
We may be engaged in litigation from time to time, during the ordinary course of
business, in connection with employee suits, workers' compensation and other
matters. We may not be able to adequately forecast the effect such litigation
will have on us. Any litigation we are involved in may hinder our ability to
conduct operations. We do not currently maintain any insurance policies.
We compete with several temporary employment services providers for qualified
candidates and may not succeed in obtain qualified individuals at profitable
wage and benefits.
We believe that there are approximately five firms that compete with us in the
film, television and video markets, and numerous small or single-office firms.
Among those competitors, we rank near the bottom of the small or single-office
firms because we are a new business. Some of our competitors, such as Media
Central and Maslow Media, are larger than we are and have nationwide operations
with substantially greater resources than we do. As a result, those competitors
are able to maintain or increase their market share by negotiating more
favorable terms with an employer and obtaining a greater pool of qualified
temporary employees at a profitable wage. We expect ongoing competition and
pricing pressure from those competitors. We cannot guaranty that we will be able
to obtain market share or profitability.
We anticipate that we may need to raise additional capital to expand our
operations. Our failure to raise additional capital will significantly limit our
ability to conduct marketing activities and generate revenues.
To conduct marketing activities and generate revenues, we may be required to
raise additional funds. We may not be able to obtain additional financing at
commercially reasonable rates. Our failure to obtain additional funds would
significantly limit or eliminate our ability to conduct marketing activities.
This would have a material adverse effect on our ability to continue our
business operations and compete with other providers. We anticipate that we may
seek additional funding through public or private sales of our securities. That
could include equity securities, or through commercial or private financing
arrangements. Adequate funds may not be available when needed or on terms
acceptable to us. In the event that we are not able to obtain additional funding
on a timely basis, we may be required to limit any proposed operations or
expansion.
Our ability to raise additional capital through the sale of our stock may be
harmed by competing resales of our common stock by the selling security holders.
The price of our common stock could fall if the selling security holders sell
substantial amounts of our common stock. These sales would make it more
difficult for us to sell equity or equity-related securities in the future at a
time and price that we deem appropriate because the selling security holders may
offer to sell their shares of common stock to potential investors for less than
we do. Moreover, potential investors may not be interested in purchasing shares
of our common stock if the selling security holders are selling their shares of
common stock.
Risks related to owning our common stock:
Our officers, directors and principal security holders own approximately 78.19%
of our outstanding shares of common stock, allowing these shareholders control
matters requiring approval of our shareholders.
Our directors, officers and principal security holders, taken as a group
beneficially own, in the aggregate, approximately 78.19% of our outstanding
shares of common stock. Such concentrated control of the company may adversely
affect the price of our common stock. Our principal security holders control
matters requiring approval by our security holders, including the election of
directors. Such concentrated control may also make it difficult for our
shareholders to receive a premium for their shares of our common stock in the
event we merge with a third party or enter into different transactions which
require shareholder approval. In addition, certain provisions of Nevada law
could have the effect of making it more difficult or more expensive for a third
party to acquire, or of discouraging a third party from attempting to acquire,
control of us.
Because we will be subject to the "penny stock" rules, the level of trading
activity in our stock may be reduced, which may make it difficult for investors
in our common stock to sell their shares.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks, like shares of our common stock, generally are equity
securities with a price of less than $5.00, other than securities registered on
6
certain national securities exchanges or quoted on Nasdaq. The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market, and monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, broker-dealers who sell these securities to persons other than
established customers and "accredited investors" must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. Consequently,
these requirements may have the effect of reducing the level of trading
activity, if any, in the secondary market for a security subject to the penny
stock rules, and investors in our common stock may find it difficult to sell
their shares.
We lack a public market for shares of our common stock, which may make it
difficult for investors to sell their shares.
There is no public market for shares of our common stock. An active public
market may not develop or be sustained. Therefore, investors may not be able to
find purchasers for their shares of our common stock. The selling security
holders may offer and sell the shares at $0.05 per share. Should there develop a
significant market for our shares, the price for shares of our common stock. may
be significantly affected by such factors as our financial results and
introduction of new services. Factors such as announcements of new or enhanced
products by us or our competitors and quarter-to-quarter variations in our
results of operations, as well as market conditions in our sector may have a
significant impact on the market price of our shares. Moreover, the stock market
has experienced extreme volatility that has particularly affected the market
prices of stock of many companies and that often has been unrelated or
disproportionate to the operating performance of those companies.
(material omitted)
We are registering 210,000 shares of common stock owned by our officers and
directors. Our officers and directors may sell those shares as soon as possible,
which could significantly decrease the price of our common stock and reduce
their desire to see us succeed.
Our officers and directors may sell those 210,000 shares immediately after they
are registered. In the event that our officers and directors sell those shares,
the price of our common stock could decrease significantly. Also, a conflict of
interest will occur between their duties to us and their personal interest in
selling their shares. We cannot assure you that our officers and directors will
not sell those shares as soon as they are registered.
Information in this prospectus contains "forward looking statements" which can
be identified by the use of forward-looking words such as "believes",
"estimates", "could", "possibly", "probably", "anticipates", "estimates",
"projects", "expects", "may", "will", or "should" or other variations or similar
words. No assurances can be given that the future results anticipated by the
forward-looking statements will be achieved. The following matters constitute
cautionary statements identifying important factors with respect to those
forward-looking statements, including certain risks and uncertainties that could
cause actual results to vary materially from the future results anticipated by
those forward-looking statements. Among the key factors that have a direct
bearing on our results of operations are the effects of various governmental
regulations, the fluctuation of our direct costs and the costs and effectiveness
of our operating strategy. Other factors could also cause actual results to vary
materially from the future results anticipated by those forward-looking
statements.
7
Use of Proceeds
---------------
We will not receive any proceeds from the sale of shares of our common stock
being offered by the selling security holders.
Determination of Offering Price
-------------------------------
The selling security may offer and sell the shares at $0.05 per share. The price
of the offered shares is based on the value of our assets and our management's
belief about the value of our business plan.
Dilution
--------
The shares offered for sale by the selling security holders are already
outstanding and, therefore, do not contribute to dilution.
Selling Security Holders
------------------------
The following table sets forth information concerning the selling security
holders including:
1. the number of shares owned by each selling security holder prior to
this offering;
2. the total number of shares that are to be offered for each selling
security holder; and
3. the total number of shares and the percentage of common stock that will
be owned by each selling security holder upon completion of the
offering.
The shares offered for sale constitute all of the shares known to us to be
beneficially owned by the selling security holders. None of the selling security
holders has held any position or office with us, except as specified in the
following table. Other than the relationships described below, none of the
selling security holders had or have any material relationship with us. None of
the selling security holders is a broker-dealer or an affiliate of a
broker-dealer to our knowledge. Thomas E. Stepp, Jr., Michael J. Muellerleile,
Deron M. Colby, Richard C. Reincke, Amy M. Pontillas, and Lan P. Nguyen are
employees of Stepp Law Group, which serves as our legal counsel.
---------------------------- -------------------------------- ---------------------------- ---------------------------------
Name of Selling Security Amount of Shares of Common Amount of Shares of Common Amount of Shares and the
Holder Stock Owned by Selling Security Stock to be Offered by the Percentage of Common Stock Owned
Holder Before the Offering Selling Security Holder by Selling Security Holder After
the Offering is Complete
---------------------------- -------------------------------- ---------------------------- ---------------------------------
Renee McCracken, president, 3,700,000 200,000 3,500,000 and 57.24%
secretary and a director
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Carol McCracken, treasurer
and a director 205,000 10,000 195,000 and 3.19%
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Thomas E. Stepp, Jr. 440,000 440,000 0
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Michael J. Muellerleile 440,000 440,000 0
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Deron M. Colby 300,000 300,000 0
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Richard C. Reincke 300,000 300,000 0
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Amy M. Pontillas 100,000 100,000 0
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Lan P. Nguyen 20,000 20,000 0
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Renee Close 10,000 10,000 0
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Eric Devaney 5,000 5,000 0
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Christopher Johnson 5,000 5,000 0
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Cota LLC 15,000 15,000 0
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Jill Callanan 10,000 10,000 0
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Rebecca Brauser 5,000 5,000 0
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Liana Schlecht 200,000 200,000 0
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8
Sharon Ramsey 25,000 25,000 0
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Erin Ramsey 50,000 50,000 0
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Sean Connelly 25,000 25,000 0
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Suzanne Muellerleile 10,000 10,000 0
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Cynthia Bergendahl 10,000 10,000 0
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John R. Muellerleile 10,000 10,000 0
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Jason Ortega 40,000 40,000 0
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Shawn Peterson 2,500 2,500 0
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John Shukur 2,500 2,500 0
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Scott Michaels 6,250 6,250 0
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Ryan A. Neely 175,000 175,000 0
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Tim Neely 2,500 2,500 0
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Christopher Cota is the manager and sole member of Cota LLC and therefore has
voting control.
Renee McCracken and Carol McCracken acquired their shares in a transaction which
we believe satisfies the requirements of the exemption from the registration and
prospectus delivery requirements of the Securities Act of 1933, which is
specified by the provisions of Section 4(2) of the Securities Act of 1933, as
amended. We believe that those shareholders are accredited investors because
they are our officers and directors. The number of shares issued was 3,900,000.
The shares were issued on May 22, 2001, in exchange for services related to the
organization of our business, which were valued at $3,900.
Thomas E. Stepp, Jr., Michael Muellerleile, Deron Colby, Richard Reincke, Amy
Pontillas, and Lan P. Nguyen acquired their shares in a transaction which we
believe satisfies the requirements of that certain exemption from the
registration and prospectus delivery requirements of the Securities Act of 1933,
which exemption is specified by the provisions of Section 4(2) of the Securities
Act of 1933, as amended. We believe that each of those shareholders is either an
accredited investor or a sophisticated investor who has such knowledge and
experience in financial and business matters that they are capable of evaluating
the merits and risks of the prospective investment. In addition, each of those
shareholders had sufficient access to material information about us. The number
of shares issued was 1,600,000. The shares were issued on May 22, 2001, in
exchange for legal services provided to us, which were valued at $1,600.
In June 2001, Renee Close, Eric Devaney, Christopher Johnson, Cota LLC, Jill
Callanan, Rebecca Brauser, Liana Schlecht, Sharon Ramsey, Erin Ramsey, Sean
Connelly, Suzanne Muellerleile, Cynthia Bergendahl, John R. Muellerleile, Jason
Ortega, Shawn Peterson, Carol McCracken, John Shukur, Scott Michaels, Ryan A.
Neely and Tim Neely acquired their shares in a transaction which we believe
satisfies the requirements of that exemption from the registration and
prospectus delivery requirements of the Securities Act of 1933, which exemption
is specified by the provisions of Section 4(2) of that act and Rule 506 of
Regulation D promulgated pursuant to that act by the Securities and Exchange
Commission. Specifically, the offer was made to "accredited investors", as that
term is defined under applicable federal and state securities laws, and no more
than 35 non-accredited investors. Based on the information provided in the
subscription documents, which were completed by all investors, we believe that
each of the non-accredited investors was sophisticated because each
non-accredited investor has such knowledge and experience in financial and
business matters that he or she is capable of evaluating the merits and risks of
the prospective investment. Each investor was given adequate access to
sufficient information about us to make an informed investment decision. The
number of shares issued was 613,750 in exchange for $12,075, or $0.02 per share.
10,000 of those shares were issued to Renee Close in exchange for graphic design
services, which were valued at $200.
Plan of Distribution
--------------------
The selling security holders may offer and sell shares at $0.05 per share. The
selling security holders may sell our common stock in the over-the-counter
market, or on any securities exchange on which our common stock is or becomes
listed or traded, in negotiated transactions or otherwise. The shares will not
be sold in an underwritten public offering.
9
The shares may be sold directly or through brokers or dealers. The methods by
which the shares may be sold include:
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o privately negotiated transactions.
Brokers and dealers engaged by selling security holders may arrange for other
brokers or dealers to participate. Brokers or dealers may receive commissions or
discounts from selling security holders, or, if any such broker-dealer acts as
agent for the purchaser of such shares, from such purchaser, in amounts to be
negotiated. Broker-dealers may agree with the selling security holders to sell a
specified number of such shares at $0.05 per share, and, to the extent such
broker-dealer is unable to do so acting as agent for a selling security holder,
to purchase as principal any unsold shares at $0.05 per share.to fulfill the
broker-dealer commitment to such selling security holder. Broker-dealers who
acquire shares as principal may resell those shares from time to time in the
over-the-counter market or otherwise at prices and on terms then prevailing or
then related to the then-current market price or in negotiated transactions and,
in connection with such resales, may receive or pay commissions.
The selling security holders and any broker-dealers participating in the
distributions of the shares may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933. Any profit on the sale
of shares by the selling security holders and any commissions or discounts given
to any such broker-dealer may be deemed to be underwriting commissions or
discounts. The shares may also be sold pursuant to Rule 144 under the Securities
Act of 1933 beginning one year after the shares were issued.
We have filed the Registration Statement, of which this prospectus forms a part,
with respect to the sale of the shares by the selling security holders. The
selling security holders may not sell any or all of the offered shares.
Under the Securities Exchange Act of 1934 and the regulations thereunder, any
person engaged in a distribution of the shares of our common stock offered by
this prospectus may not simultaneously engage in market making activities with
respect to our common stock during the applicable "cooling off" periods prior to
the commencement of such distribution. Also, the selling security holders are
subject to applicable provisions which limit the timing of purchases and sales
of our common stock by the selling security holders.
We have informed the selling security holders that, during such time as they may
be engaged in a distribution of any of the shares we are registering by this
Registration Statement, they are required to comply with Regulation M. In
general, Regulation M precludes any selling security holder, any affiliated
purchasers and any broker-dealer or other person who participates in a
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase, any security which is the subject of the distribution
until the entire distribution is complete. Regulation M defines a "distribution"
as an offering of securities that is distinguished from ordinary trading
activities by the magnitude of the offering and the presence of special selling
efforts and selling methods. Regulation M also defines a "distribution
participant" as an underwriter, prospective underwriter, broker, dealer, or
other person who has agreed to participate or who is participating in a
distribution.
Regulation M prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security, except
as specifically permitted by Rule 104 of Regulation M. These stabilizing
transactions may cause the price of our common stock to be more than it would
otherwise be in the absence of these transactions. We have informed the selling
security holders that stabilizing transactions permitted by Regulation M allow
bids to purchase our common stock if the stabilizing bids do not exceed a
specified maximum. Regulation M specifically prohibits stabilizing that is the
result of fraudulent, manipulative, or deceptive practices. Selling security
holders and distribution participants are required to consult with their own
legal counsel to ensure compliance with Regulation M.
Legal Proceedings
-----------------
There are no legal actions pending against us nor are any legal actions
contemplated by us at this time.
10
Directors, Executive Officers, Promoters and Control Persons
------------------------------------------------------------
Executive Officers and Directors. We are dependent on the efforts and abilities
of certain of our senior management. The interruption of the services of key
management could significantly hinder our operations, profits and future
development, if suitable replacements are not promptly obtained. We anticipate
that we will enter into an employment agreement with Ms. Renee McCracken if we
generate more significant revenues. Although we do not know the terms of that
proposed agreement, we hope to enter into an employment agreement with Ms. Renee
McCracken with a term of at least one year with compensation contingent on us
becoming profitable. We cannot guaranty that Ms. Renee McCracken will remain
with us during or after the term of her employment agreement. Our officers and
directors will hold office until their resignations or removal.
Our directors and principal executive officers are as specified on the following
table:
========================== ============ ======================================
Name Age Position
-------------------------- ------------ --------------------------------------
Renee McCracken 28 president, secretary, director
-------------------------- ------------ --------------------------------------
Carol McCracken 47 treasurer, director
========================== ============ ======================================
Renee McCracken. Renee McCracken has been our president, secretary and one of
our directors since our inception. Ms. McCracken is our principal executive
officer and is responsible for our day-to-day operations. From June 2000 to May
2001, Ms. McCracken has worked on various video and commercial productions.
From 1995 to 2000, Ms. McCracken attended college and earned her Bachelor of
Arts degree in film and television production from Chapman University in 2000.
From 1991 to 1995, Ms. McCracken was a professional model and, as a result,
has extensive experience in the production of modeling shoots. Ms. McCracken
is not an officer or director of any reporting company.
Carol McCracken. Carol McCracken has been our treasurer and one of our directors
since our inception. Ms. McCracken is our principal financial and accounting
officer and is responsible for all of our financial reporting and record
keeping. From 1999 to the present, Ms McCracken has worked for New Horizons
Computer Learning Centers, Inc. as a sales associate in the corporate sales
department. From 1995 to 1999, Ms McCracken was self-employed as a loan officer
for residential mortgage loans. Ms. McCracken previously filed a petition for
personal bankruptcy, which was granted in March 1997. Ms. McCracken is not an
officer or director of any reporting company.
Renee McCracken is the daughter of Carol McCracken. There are no orders,
judgments, or decrees of any governmental agency or administrator, or of any
court of competent jurisdiction, revoking or suspending for cause any license,
permit or other authority to engage in the securities business or in the sale of
a particular security or temporarily or permanently restraining any of our
officers or directors from engaging in or continuing any conduct, practice or
employment in connection with the purchase or sale of securities, or convicting
such person of any felony or misdemeanor involving a security, or any aspect of
the securities business or of theft or of any felony, nor are any of the
officers or directors of any corporation or entity affiliated with us so
enjoined.
Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of October 15, 2001 by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of
our directors and executive officers as a group.
================= ====================================== ==================================== ======================
Title of Class Name of Beneficial Owner Amount of Beneficial Owner Percent of Class
----------------- -------------------------------------- ------------------------------------ ----------------------
Common Stock Renee McCracken
1402 Veteran Avenue #B 3,700,000 shares, president, 60.52%
Los Angeles, CA 90024 secretary, director
----------------- -------------------------------------- ------------------------------------ ----------------------
Common Stock Carol McCracken
1402 Veteran Avenue #B 200,000 shares, treasurer, director 3.27%
Los Angeles, CA 90024
----------------- -------------------------------------- ------------------------------------ ----------------------
11
Common Stock Thomas E. Stepp, Jr.
1301 Dove Street, Suite 460 Newport 440,000 shares 7.20%
Beach, CA 92660
----------------- -------------------------------------- ------------------------------------ ----------------------
Common Stock Michael Muellerleile
1301 Dove Street, Suite 460 Newport 440,000 shares 7.20%
Beach, CA 92660
----------------- -------------------------------------- ------------------------------------ ----------------------
Common Stock All directors and named executive
officers as a group 3,900,000 shares 63.79%
================= ====================================== ==================================== ======================
Thomas E. Stepp, Jr. and Michael J. Muellerleile are employees of Stepp Law
Group, which serves as our legal counsel.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.
Changes in Control. Our management is not aware of any arrangements which may
result in "changes in control" as that term is defined by the provisions of Item
403(c) of Regulation S-B.
Description Of Our Securities
-----------------------------
Description of Capital Stock We are authorized to issue 50,000,000 shares of
$.001 par value common stock and 5,000,000 shares of $.001 par value preferred
stock. As of October 15, 2001, 6,113,750 shares of our common stock were
issued and outstanding.
Each shareholder of our common stock is entitled to a pro rata share of cash
distributions made to shareholders, including dividend payments. The holders of
our common stock are entitled to one vote for each share of record on all
matters to be voted on by shareholders. There is no cumulative voting with
respect to the election of our directors or any other matter. Therefore, the
holders of more than 50% of the shares voted for the election of those directors
can elect all of the directors. The holders of our common stock are entitled to
receive dividends when, as and if declared by our Board of Directors from funds
legally available therefor. Cash dividends are at the sole discretion of our
Board of Directors. In the event of our liquidation, dissolution or winding up,
the holders of common stock are entitled to share ratably in all assets
remaining available for distribution to them after payment of our liabilities
and after provision has been made for each class of stock, if any, having any
preference in relation to our common stock. Holders of shares of our common
stock have no conversion, preemptive or other subscription rights, and there are
no redemption provisions applicable to our common stock.
Dividend Policy. We have never declared or paid a cash dividend on our capital
stock. We do not expect to pay cash dividends on our common stock in the
foreseeable future. We currently intend to retain our earnings, if any, for use
in our business. Any dividends declared in the future will be at the discretion
of our Board of Directors and subject to any restrictions that may be imposed by
our lenders.
Interest of Named Experts and Counsel
-------------------------------------
No expert or our counsel was hired on a contingent basis, or will receive a
direct or indirect interest in us, except as specified below, or was a promoter,
underwriter, voting trustee, director, officer, or employee of the company, at
any time prior to the filing of this Registration Statement.
Thomas E. Stepp, Jr., Michael J. Muellerleile, Deron M. Colby, Richard C.
Reincke, Amy M. Pontillas and Lan P. Nguyen are selling security holders
and employees of Stepp Law Group, which serves as our legal counsel. Thomas
E. Stepp, Jr. owns 440,000 shares of our common stock. Michael J. Muellerleile
owns 440,000 shares of our common stock. Deron M. Colby owns 300,000 shares
of our common stock. Richard C. Reincke owns 300,000 shares of our common stock.
Amy M. Pontillas owns 100,000 shares of our common stock. Lan P. Nguyen owns
20,000 shares of our common stock.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
-----------------------------------------------------------------------
Article Seventh of our Articles of Incorporation provides, among other things,
that our directors shall not be personally liable to us or our shareholders for
monetary damages for breach of fiduciary duty as a director, except for
liability:
o for any breach of such director's duty of loyalty to us or our
security holders;
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o liability for unlawful payments of dividends or unlawful stock
purchase or redemption by us; or
o for any transaction from which such director derived any improper
personal benefit.
Accordingly, our directors may have no liability to our shareholders for any
mistakes or errors of judgment or for any act of omission, unless the act or
omission involves intentional misconduct, fraud, or a knowing violation of law
or results in unlawful distributions to our shareholders.
Section 10 of our Bylaws also provides that our officers and directors shall be
indemnified and held harmless by us to the fullest extent permitted by the
provisions of Section 78.7502 of the Nevada Revised Statutes.
Indemnification Agreements. We will enter into indemnification agreements with
each of our executive officers. We will agree to indemnify each such person for
all expenses and liabilities, including criminal monetary judgments, penalties
and fines, incurred by such person in connection with any criminal or civil
action brought or threatened against such person by reason of such person being
or having been our officer or director or employee. In order to be entitled to
indemnification by us, such person must have acted in good faith and in a manner
such person believed to be in our best interests. With respect to criminal
actions, such person must have had no reasonable cause to believe his or her
conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
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 that act and is, therefore, unenforceable.
Organization Within Last Five Years
-----------------------------------
Transactions with Promoters. Renee McCracken was issued 3,700,000 shares of our
common stock in exchange for her services as our promoter. The value of the
services performed by Ms. McCracken was approximately $3,700.
Description of Business
-----------------------
Our Background. We were incorporated in Nevada on May 21, 2001.
Our Business. We provide staffing services to film, video and television
production companies. Our staffing services currently consist of providing
production-staffing services including production assistants, coordinators and
managers. Customers for our production-staffing services primarily include large
to mid-sized companies engaged in movie and film production. We have provided
production assistants and coordinators for film projects at Alta Vista Pictures
and Palomar Pictures. We have also provided services to the production of
short-term projects such as documentaries, music videos, films, commercials and
other small-scale assignments. We currently market our services through the
relationships and contacts of our president, Renee McCracken.
Our objective is to provide high quality staff that is skilled and reliable
which we believe will increase the number of projects performed for existing
clients and customers. We are attempting to develop relationships with all types
of entertainment related companies so that we can increase our customer base. We
believe that the entertainment industry is based on relationships and therefore
we intend to develop relationships with as entertainment related companies and
people in the entertainment industry as possible.
12
We have also developed relationships with film and video crews, such as back
line technicians, carpenters, lighting designers, lighting technicians, riggers,
sound designers, stage and scenery designers and other skilled laborers. We are
currently attempting to develop relationships with production companies who need
the services of those types of crewmembers so that we can place them in various
productions. To date, we have not generated any revenues from the placement of
technical production staff, although we hope to generate revenues from the
placement of technical staff in the first quarter of 2002. We intend to
cultivate our existing and prospective relationships with our clients so that we
become one of their sources for technical production staff. We believe that
outsourcing of technical production staff in the entertainment industry
represents a growing trend among film and television businesses that contract
with third parties to provide particularized services, skills or labor at an
agreed price over a designated period.
We are also trying to develop relationships with casting agencies so that we can
increase the size of our customer base. We believe that we can generate revenues
by providing production assistants, coordinators and managers to casting
agencies who need temporary staff on casting calls and other services performed
by casting agencies.
If we generate significant revenues and our operations grow, we anticipate that
we may expand our operations to include staffing services for postproduction
work. We believe that it is difficult to obtain jobs for postproduction work
because there are fewer roles which need to be filled in postproduction work. In
order to obtain jobs for postproduction work, we believe we will have to enhance
our reputation with our current clients by providing staff with high skill
level. It may require a significant period of time to develop the necessary
relationships. Therefore, we do not anticipate that we will be able to expand
our operations to include staffing services for postproduction work until the
fourth quarter of 2002 at the earliest. We do not believe that it will require
any significant amount of funds to expand our services to include postproduction
work other than those funds for marketing expenses which may be necessary to
develop relationships.
Our Target Markets. We will provide our services to the film, television and
video industry as well as to the motion picture industry. The current motion
picture industry in the United States includes the production and theatrical or
television screening of feature-length motion pictures and the subsequent
distribution of such pictures in home video and ancillary markets. The industry
is dominated by the major studios including Universal Pictures, Warner Brothers,
including Turner Pictures, New Line Cinema and Castle Rock Entertainment,
Twentieth Century Fox, Sony Pictures Entertainment, including Columbia Pictures
and Tristar Pictures, Paramount Pictures, The Walt Disney Company, including
Buena Vista, Touchstone and Miramax, and MGM, including Metro Goldwyn Mayer
Pictures, United Artists Pictures, Orion Pictures and Goldwyn Entertainment
Company. These majors have traditionally produced and distributed the majority
of theatrical motion pictures, and made-for-TV movies. However, independent
motion picture production companies have also played an important role in the
production of motion pictures for the worldwide feature film and made-for-TV
markets.
Our production staffing segment customers will primarily of small to mid-sized
companies engaged in movie and film production. Companies in this market segment
are engaged in the development and production of short-term projects such as
documentaries, videos, films, commercials and other small-scale assignments.
Sales to these businesses are developed either locally or regionally and the
services, skills and labor offered will generally, include film and video crews,
such as back line technicians, carpenters, lighting designers, lighting
technicians, riggers, sound designers, stage and scenery designers and other
skilled laborers.
Growth Strategy. Our ability to generate internal growth will be affected by
a number of factors, including our ability to:
o negotiate acceptable contracts with production companies. We need to
further develop our relationships with our current clients so that we
can negotiate acceptable contracts for our staffing services. We
believe the time frame to accomplish this strategy is three to six
months.
o expand the range of services we offer to customers to address their
evolving needs. In order to accomplish this strategy, we believe it is
necessary to develop additional relationships with production staff
and technical staff and develop new relationships with postproduction
staff. We believe the time frame to accomplish this strategy is six to
eighteen months.
o attract new customers. We need to develop relationships with all types
of entertainment related companies so that we can increase our
customer base. We believe the time frame to accomplish this strategy
is six to twelve months.
13
o increase the number of projects performed for existing customers. If
we perform high quality service and staff for our current clients, we
believe the number of projects will increase. We believe the time
frame to accomplish this strategy is three months.
o hiring, training, and retaining employees. We intend to work only with
staff that possesses experience and training. We believe the time
frame to accomplish this strategy is three to six months.
o expand our service areas. In order to expand our service areas, we
need to generate significant revenues and develop additional
relationships with companies in other areas. We believe the time frame
to accomplish this strategy is twelve to twenty four months.
o maintain low operating and overhead expenses. We intend to continue
using resources provided by our officers and directors, such as office
space. We believe the time frame to accomplish this strategy is three
months.
Many of the factors affecting our ability to generate internal growth may be
beyond our control, and we cannot be certain that our strategies will be
successful or that we will be able to generate cash flow sufficient to fund our
operations and to support internal growth. Our inability to achieve internal
growth could materially and adversely affect our business, financial condition
and results of operations.
Competition. The temporary services industry is highly fragmented and
competitive with limited barriers to entry. We believe that there are
approximately five firms that compete with us in the film, television and video
markets, and numerous small or single-office firms. Among those competitors, we
rank near the bottom of the small or single-office firms because we are a new
business. Existing competitors that engage in staffing technical film production
personnel include Media Central, Maslow Media, and Filcro Media Staffing. Those
competitors have nationwide operations with substantially greater resources than
we do, which among other things could enable them to attempt to maintain or
increase their market share by enabling them to negotiate more favorable terms
with an employer, obtain a greater pool of qualified temporary employees and
engage in more effective advertising and marketing activities. ^ We believe that
our primary competitors include small or single-office firms.
We believe that the most important competitive factors in obtaining and
retaining our targeted clients are an understanding of a customer's specific job
requirements, the ability to provide qualified temporary personnel in a timely
manner and the quality and price of services. The primary competitive factors in
obtaining qualified candidates for temporary employment assignments are wages,
benefits and responsiveness to work schedules. Current and potential competitors
have established or may establish cooperative relationships among themselves or
directly with vendors and potential sponsors to obtain exclusive or
semi-exclusive rights regarding the services or goods that they provide. We
expect ongoing vigorous competition and pricing pressure from national, regional
and local providers. We cannot guaranty that we will be able to obtain market
share or profitability.
Government Regulation. Our services are subject to federal, state and local laws
and regulations concerning business activities generally. We are also subject to
regulation by federal, state and local agencies concerning the payment of
employee taxes, and provision of worker related insurance coverage. We will be
responsible for all employee-related expenses for our staff and temporary
employees, including workers' compensation, unemployment insurance, social
security taxes, state and local taxes and other general payroll expenses. Where
public insurance is unavailable, we plan to privately implement a deductible
workers' compensation program through a qualified insurer, based on actual
payroll. If actual payroll exceeds the estimated amount, we may owe additional
workers' compensation premiums for the policy year. We cannot guaranty that we
will be able to provide this level of coverage however because we are newly
formed and lack the capital to insure at this level.
Our Website www.reelstaff.com. Our current website displays our corporate logo
and contact information and provides a general description of the services that
we provide. Our site is intended as a corporate presence website, which means
that we use the site as a brochure for our services. We launched our website ion
August 2001 and it generated little activity to date.
During the next twelve months, we intend to further develop our website. We
believe that our website can be used as both an informational and marketing tool
to increase our market presence. We propose to post a summary of our services as
well as a list of available jobs and qualified employees on our website to
facilitate the placement process. We believe that we can use our website to sell
our services as well as increase brand awareness. We believe the estimated cost
to expand our website will be approximately $2,500.
14
Our Intellectual Property. We do not presently own any patents, trademarks,
licenses, concessions or royalties, although we have filed a state trademark
application for our corporate logo with the California trademark office. Our
success may depend in part upon our ability to preserve our trade secrets,
obtain and maintain patent protection for our technologies, products and
processes, and operate without infringing the proprietary rights of other
parties. However, we may rely on certain proprietary technologies, trade
secrets, and know-how that are not patentable. Although we may take action to
protect our unpatented trade secrets and our proprietary information, in part,
by the use of confidentiality agreements with our employees, consultants and
certain of our contractors, we cannot guaranty that:
o these agreements will not be breached;
o we would have adequate remedies for any breach; or
o our proprietary trade secrets and know-how will not otherwise become
known or be independently developed or discovered by competitors.
We cannot guaranty that our actions will be sufficient to prevent imitation or
duplication of either our products and services by others or prevent others from
claiming violations of their trade secrets and proprietary rights.
We own the Internet domain name www.reelstaff.com. Under current domain name
registration practices, no one else can obtain an identical domain name, but
someone might obtain a similar name, or the identical name with a different
suffix, such as ".org", or with a country designation. The regulation of domain
names in the United States and in foreign countries is subject to change, and we
could be unable to prevent third parties from acquiring domain names that
infringe upon or otherwise decrease the value of our domain names.
Our Research and Development. We are not currently conducting any research and
development activities other than the development of our website. We do not
anticipate conducting such activities in the near future.
Employees. As of October 15, 2001, we have one full time employee and one part
time employee. We believe that our relations with our employees are good. We are
not a party to any collective bargaining agreements. We anticipate entering into
an employment contract with Renee McCracken if we generate more significant
revenues. Although we do not know the terms of that proposed agreement, we hope
to enter into an employment agreement with Ms. McCracken with a term of at least
one year with compensation contingent on us becoming profitable.
Facilities. Our administrative offices are located at1402 Veteran Avenue, Suite
B, Los Angeles, California 90024. We believe that our facilities are adequate
for our needs. We do not own any real estate.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
--------------------------------------------------------------------------
For the period from May 21, 2001, our date of formation, through June 30, 2001.
-------------------------------------------------------------------------------
Liquidity and Capital Resources. We have cash of $12,603 as of June 30, 2001.
We believe that our available cash is sufficient to pay our day-to-day
expenditures.
Results of Operations.
Revenues. We have realized revenues of approximately $528 from production
staffing services that we provided during the period ended June 30, 2001. We
anticipate that we will generate more revenues as we expand our customer base.
Operating Expenses. For the period ended June 30, 2001, our total expenses were
approximately $10,365. The majority of those expenses were legal and
professional fees of $6,230. For the period ended June 30, 2001, we experienced
a net loss of approximately $9,837.
Our Plan of Operation for the Next Twelve Months. We have only generated
revenues of $528 from operations for the period ended June 30, 2001. In our
management's opinion, to effectuate our business plan in the next twelve months,
the following events should occur or we should reach the following goals in
order for us to become profitable:
15
1. We must continue to provide production-staffing services including
production assistants, coordinators and managers in order to generate
revenues. During the last two months, we have generated approximately
$6,100 in revenues. We have provided services to Alta Vista Pictures,
Palomar Pictures, NBC and various small production companies. We
anticipate that we will generate revenues of approximately $5,000 per
month during the fourth quarter. During the first quarter of 2002, we
expect that we will generate revenues of approximately $8,000 to
$10,000 per month. Any revenues generated will be used to increase our
marketing activities as well as expand our operations.
2. We must also increase the number of projects performed for existing
customers. If we perform high quality service and staff for our current
clients, we believe the number of projects will increase.
3. We must continue to develop relationships and market our staffing
services. We currently market our services through the relationships
and contacts of our president, Renee McCracken. Ms McCracken has
significant contacts in the entertainment industry and we have focused
our marketing activities around those contacts and relationships. We
need to develop relationships with all types of entertainment related
companies so that we can increase our customer base.
4. We must develop relationships and obtain jobs for our technical
production staff and crewmembers so that we can place them in various
productions. We are currently cultivating our clients to market our
technical production staff services to the film, television and video
industries. We have developed relationships with film and video crews
and we need to develop relationships with production companies who need
technical crewmembers for their productions.
5. We must expand our marketing activities to further develop
relationships with our clients and production companies. We hope to
cultivate our existing and prospective relationships with our clients
so that we become their primary source for production staff. We believe
that we can develop additional relationships with clients by
diversifying our service offering to include casting services for film,
television, and video productions.
We expect that, in the near term, our operating expenses will increase by
approximately $1,000 per month, which will be used for marketing and promotional
expenses as well as developing relationships with companies in the entertainment
We have cash of $12,603 as of June 30, 2001. In the opinion of management,
available funds will satisfy our working capital requirements through December
2001. Our forecast for the period for which our financial resources will be
adequate to support our operations involves risks and uncertainties and actual
results could fail as a result of a number of factors. We anticipate that we may
need to raise additional capital to expand our operations. Such additional
capital may be raised through public or private financing as well as borrowings
and other sources. We cannot guaranty that additional funding will be available
on favorable terms, if at all. If adequate funds are not available, then our
ability to expand our operations may be adversely affected. If adequate funds
are not available, we believe that our officers and directors will contribute
funds to pay for our expenses. Therefore, we have not contemplated any plan of
liquidation in the event that we do not generate revenues.
We are not currently conducting any research and development activities, other
than the development of our website. We do not anticipate conducting such
activities in the near future. We do not anticipate that we will purchase or
sale of any significant equipment. In the event that we generate significant
revenues and expand our operations, then we may need to hire additional
employees or independent contractors as well as purchase or lease additional
equipment.
16
Description of Property
-----------------------
Property held by us. As of the date specified in the following table, we held
the following property:
====================================== =======================================
Property June 30, 2001
-------------------------------------- ---------------------------------------
Cash $12,603
-------------------------------------- ---------------------------------------
Property and Equipment, net $0
====================================== =======================================
Our Facilities. Our headquarters are located at 1402 Veteran Avenue, Suite B,
Los Angeles, California 90024. We believe that our facilities are adequate for
our needs and that additional suitable space will be available on acceptable
terms as required. We do not own any real estate.
Certain Relationships and Related Transactions
----------------------------------------------
Renee McCracken, our president, secretary and one of our directors, currently
provides office space to us at no charge. Ms. McCracken
does not expect to be paid or reimbursed for providing office facilities.
Carol McCracken, our treasurer, director and shareholder, is the mother of Renee
McCracken, our president, secretary, director and shareholder.
With regard to any future related party transaction, we plan to fully disclose
any and all related party transactions, including, but not limited to, the
following:
o disclosing such transactions in prospectus' where required;
o disclose in any and all filings with the Securities and Exchange
Commission, where required;
o obtain uninterested directors consent; and
o obtain shareholder consent where required.
Market for Common Equity and Related Stockholder Matters
--------------------------------------------------------
Reports to Security Holders. Our securities are not listed for trading on any
exchange or quotation service. We are not required to comply with the timely
disclosure policies of any exchange or quotation service. The requirements to
which we would be subject if our securities were so listed typically include the
timely disclosure of a material change or fact with respect to our affairs and
the making of required filings. Although we are not required to deliver an
annual report to security holders, we intend to provide an annual report to our
security holders, which will include audited financial statements.
When this registration statement becomes effective, we will be a reporting
company pursuant to the Securities Exchange Act of 1934. We will be required
file annual, quarterly and periodic reports with the Securities and Exchange
Commission. The public may read and copy any materials filed with the Securities
and Exchange Commission at the Security and Exchange Commission's Public
Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may
also obtain information on the operation of the Public Reference Room by calling
the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Securities and Exchange Commission. The address of that
site is http://www.sec.gov.
There are no shares that can be sold pursuant to Rule 144 promulgated pursuant
to the Securities Act of 1933. There are no outstanding options or warrants to
purchase, or securities convertible into, shares of our common stock. There are
no outstanding shares of our common stock that we have agreed to register under
the Securities Act for sale by security holders. The approximate number of
holders of record of shares of our common stock is twenty-eight.
There have been no cash dividends declared on our common stock. Dividends are
declared at the sole discretion of our Board of Directors.
Penny Stock Regulation. Shares of our common stock are subject to rules adopted
by the Securities and Exchange Commission that regulate broker-dealer practices
in connection with transactions in "penny stocks". Penny stocks are generally
equity securities with a price of less than $5.00, other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in those securities is provided by the exchange or system. The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Securities and Exchange Commission, which
contains the following:
17
o a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading;
o a description of the broker's or dealer's duties to the customer and
of the rights and remedies available to the customer with respect to
violation to such duties or other requirements of securities' laws;
o a brief, clear, narrative description of a dealer market, including
"bid" and "ask" prices for penny stocks and the significance of the
spread between the "bid" and "ask" price;
o a toll-free telephone number for inquiries on disciplinary actions;
o definitions of significant terms in the disclosure document or in the
conduct of trading in penny stocks; and
o such other information and is in such form including language, type,
size and format, as the Securities and Exchange Commission shall
require by rule or regulation.
Prior to effecting any transaction in penny stock, the broker-dealer also must
provide the customer the following:
o the bid and offer quotations for the penny stock;
o the compensation of the broker-dealer and its salesperson in the
transaction;
o the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
o monthly account statements showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
Holders of shares of our common stock may have difficulty selling those shares
because our common stock will probably be subject to the penny stock rules.
Executive Compensation
----------------------
Any compensation received by our officers, directors, and management personnel
will be determined from time to time by our Board of Directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf.
Summary Compensation Table. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to us payable to our Chief
Executive Officer and our other executive officers during the year ending
December 31, 2001. Our Board of Directors may adopt an incentive stock option
plan for our executive officers which would result in additional compensation.
================================ ======== ============ ============= ===================== ==================
Name and Principal Position Year Annual Bonus ($) Other Annual All Other
Salary ($) Compensation ($) Compensation
-------------------------------- -------- ------------ ------------- --------------------- ------------------
Renee McCracken - president, 2001 None None None None
secretary
-------------------------------- -------- ------------ ------------- --------------------- ------------------
Carol McCracken - treasurer 2001 None None None None
================================ ======== ============ ============= ===================== ==================
Compensation of Directors. Our directors who are also our employees receive no
extra compensation for their service on our board of directors.
Employment Contracts. We anticipate that we will enter into an employment
agreement with Renee McCracken if we generate more significant revenues.
Although we do not know the terms of that proposed agreement, we hope to enter
into an employment agreement with Ms. McCracken with a term of at least one year
with compensation contingent on us becoming profitable.
18
Stock Option Plan. We anticipate that we will adopt a stock option plan,
pursuant to which shares of our common stock will be reserved for issuance to
satisfy the exercise of options. The stock option plan will be designed to
retain qualified and competent officers, employees, and directors. Our board of
directors, or a committee thereof, shall administer the stock option plan and
will be authorized, in its sole and absolute discretion, to grant options
thereunder to all of our eligible employees, including officers, and to our
directors, whether or not those directors are also our employees. Options will
be granted pursuant to the provisions of the stock option plan on such terms,
subject to such conditions and at such exercise prices as shall be determined by
our board of directors. Options granted pursuant to the stock option plan shall
not be exercisable after the expiration of ten years from the date of grant.
Financial Statements
--------------------
REEL STAFF, INC.
(A Development Stage Company)
REPORT AND FINANCIAL STATEMENTS
JUNE 30, 2001
19
REEL STAFF, INC.
(a development stage company)
CONTENTS
PAGE
----
Independent Auditor's Report 1
Financial Statements:
Balance Sheet 2
Statement of Operations 3
Statement of Changes in Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6
20
Independent Auditor's Report
To the Stockholders of
Reel Staff, Inc.
I have audited the accompanying balance sheet of Reel Staff, Inc. (a
development stage company) as of June 30, 2001, and the related statements of
operations, changes in stockholders' equity, and cash flows for the period May
21, 2001 (inception) through June 30, 2001. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards in the United States. Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis for
my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Reel Staff, Inc. (a
development stage company) as of June 30, 2001, and the results of its
operations and its cash flows for the period May 21, 2001 (inception) through
June 30, 2001 in conformity with generally accepted accounting principles in the
United States.
/s/ Quintanilla
A Professional Accountancy Corporation
Laguna Niguel, California
August 3, 2001
21
REEL STAFF, INC.
(a development stage company)
BALANCE SHEET
JUNE 30, 2001
ASSETS
------
Current assets
Cash $ 12,603
Other current assets ---
----------------
Total current assets 12,603
Other assets ---
----------------
Total assets $ 12,603
================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable and accrued expenses $ 4,665
----------------
Total current liabilities 4,665
----------------
Contingencies
Stockholders' Equity
Preferred stock, $.001 par value;
Authorized shares-- 5,000,000
Issued and outstanding shares-- 0 ---
----------------
Common stock, $.001 par value;
Authorized shares-- 50,000,000
Issued and outstanding shares-- 6,113,750 6,114
Additional paid-in capital 11,661
Deficit accumulated during the development stage (9,837)
----------------
Total stockholders' equity 7,938
----------------
Total liabilities and stockholders' equity $ 12,603
================
See accompanying notes to financial statements.
22
REEL STAFF, INC.
(a development stage company)
STATEMENT OF OPERATIONS
MAY 21, 2001 (INCEPTION) THROUGH JUNE 30, 2001
Revenues
Production staffing $ 528
Post-production staffing ---
Less: returns and allowances ---
-----------------
Net revenues 528
-----------------
Operating expenses
Consulting services 4,100
Legal and professional fees 6,230
Office expense 35
-----------------
Total operating expenses 10,365
-----------------
Loss from operations (9,837)
-----------------
Provision for income tax expense (benefit) ---
-----------------
Net loss/Comprehensive loss $ (9,837)
=================
Net income per common share-- basic and diluted $ ---
=================
Weighted average of common shares-- basic and diluted 5,690,575
=================
See accompanying notes to financial statements.
23
REEL STAFF, INC.
(a development stage company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
MAY 21, 2001 (INCEPTION) THROUGH JUNE 30, 2001
Common Stock Additional
------------ Paid-In Accumulated
Shares Amount Capital deficit Total
------------ ------------ ------------ ------------ ------------
Balance, May 21, 2001 --- $ --- $ --- $ --- $ ---
Issuance of common stock,
May 22, 2001 5,500,000 5,500 --- --- 5,500
Issuance of common stock,
May 28, 2001 10,000 10 190 --- 200
Issuance of common stock,
June 13, 2001 345,000 345 6,555 --- 6,900
Issuance of common stock,
June 17, 2001 30,000 30 570 --- 600
Issuance of common stock,
June 28, 2001 228,750 229 4,346 --- 4,575
Net loss/Comprehensive loss --- --- --- (9,837) (9,837)
------------ ------------ ------------ ------------ ------------
Balance, June 30, 2001 6,113,750 $ 6,114 $ 11,661 $ (9,837) $ 7,938
============ ============ ============ ============ ============
See accompanying notes to financial statements.
24
REEL STAFF, INC.
(a development stage company)
STATEMENT OF CASH FLOWS
MAY 21, 2001 (INCEPTION) THROUGH JUNE 30, 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (9,837)
Adjustments to reconcile net loss to net cash used in
operating activities
Cost of consulting services paid with common stock 4,100
Cost of legal services paid with common stock 1,600
Changes in operating assets and liabilities
Increase in accounts payable and accrued expenses 4,665
-----------------
Net cash provided by operating activities 528
-----------------
CASH FLOWS FROM INVESTING ACTIVITIES ---
-----------------
Net cash provided by investing activities ---
-----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 12,075
-----------------
Net cash provided by financing activities 12,075
-----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 12,603
CASH AND CASH EQUIVALENTS, beginning of period ---
-----------------
CASH AND CASH EQUIVALENTS, end of period $ 12,603
=================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid $ ---
=================
Interest paid $ ---
=================
Non-cash financing activities
During the period May 21, 2000 (inception) through June 30, 2001, the
Company issued 5,510,000 to its President, Secretary and third parties for
Services valued at $5,700.
See accompanying notes to financial statements.
25
REEL STAFF, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
Note 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES
Business Description - Reel Staff, Inc. (the "Company") was
incorporated in the state of Nevada on May 21, 2001. The Company provides
production and post-production staffing services to film, video, and
television production companies. The Company is headquartered in Los Angeles,
California.
Cash and Cash Equivalents - For purposes of the balance sheet and
statement of cash flows, the Company considers all highly liquid debt
instruments purchased with maturity of three months or less to be cash
equivalents.
Fair Value of Financial Instruments - The carrying value of cash and
accounts payable and accrued expenses approximate their fair value due to the
short period to maturity of these instruments.
Recognition of Revenues and Costs of Goods Sold - The Company records
revenues of its services when they are complete and collectibility is reasonably
assured. The Company will also provide an allowance for returns when experience
is established. Cost of goods sold consists of the payroll and related expenses
of personnel used.
Income Taxes - The Company recognizes deferred tax assets and
liabilities based on differences between the financial reporting and tax bases
of assets and liabilities using the enacted tax rates and laws that are expected
to be in effect when the differences are expected to be recovered. The Company
provides a valuation allowance for deferred tax assets for which it does not
consider realization of such assets to be more likely than not.
Net Loss per Common Share - The Company has adopted the provisions of
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). SFAS 128 requires the reporting of basic and diluted earnings/loss per
share. Basic loss per share is calculated by dividing net loss by the weighted
average number of outstanding common shares during the period.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
26
REEL STAFF, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
Note 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
New Accounting Pronouncements - In March 2000, the Emerging Issues Task
Force (EITF) of the FASB reached a consensus on EITF Issue 00-2, "Accounting for
Web Site Development Costs." This consensus provides guidance on what types of
costs incurred to develop Web sites should be capitalized or expensed. The
Company adopted this consensus on during 2000. Such capitalized costs, if
material, are to be included in "Fixed assets, net" and will be depreciated over
a period of two years.
NOTE 2 - CONTINGENCIES
As shown in the accompanying financial statements, the Company has
incurred a net operating loss of $9,837 since inception through June 30, 2001.
The Company is subject to those risks associated with development stage
companies. The Company has sustained losses since inception and additional
financing will be required by the Company to fund its development activities and
to support operations. However, there is no assurance that the Company will be
able to obtain additional financing. Furthermore, there is no assurance that
rapid technological changes, changing customer needs and evolving industry
standards will enable the Company to introduce new products and services on a
continual and timely basis so that profitable operations can be attained.
NOTE 3 - ACCRUED EXPENSES
Accrued Wages and Compensated Absences - The Company currently does not
have any employees. The majority of development costs and services have been
provided to the Company by outside, third party vendors. As such, there is no
accrual for wages or compensated absences as of June 30, 2001.
27
REEL STAFF, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
NOTE 4 - COMMON STOCK
On May 22, 2001, the Company issued 3,900,000 shares of its common
stock to its officers and founders for consulting services and 1,600,000 shares
of its common stock to various individuals for legal services rendered in
connection with the initial organization costs incurred. Since there was no
readily available market value at the time the services were rendered, par value
of $0.001 per share was considered as a reasonable estimate of fair value by all
parties.
On May 28, 2001, the Company issued 10,000 shares of its common stock
to an individual for consulting and design services. Since the Company had
prepared a Private Placement Memorandum Offering (as described in the following
paragraph), the Company utilized the value of its common stock associated with
that offering of $0.02 per share. This amount was considered a reasonable
estimate of fair value between the Company and the individual.
On June 30, 2001, the Company completed a "best efforts" offering of
its common stock pursuant to the provisions of Section 4(2) of the Securities
Act of 1933 and Rule 506 of Regulation D promulgated by the Securities and
Exchange Commission. In accordance with the Private Placement Memorandum
Offering, which was initiated on May 25, 2001, the Company issued 603,750 shares
of its common stock at $0.02 per share for a total of $12,075 from June 13th -
June 30th 2001.
NOTE 5 - INCOME TAXES
At June 30, 2001, the Company has available for federal income tax
purposes a net operating loss carryforward of approximately $9,837, expiring
2016, that may be used to offset future taxable income. Therefore, no provision
for income taxes has been provided.
In addition, the Company has deferred tax assets of approximately
$2,345 at June 30, 2001. The Company has not recorded a benefit from its net
operating loss carryforward because realization of the benefit is uncertain and,
therefore, a valuation allowance of ($2,345) has been provided for the deferred
tax assets.
NOTE 6 - RELATED PARTY TRANSACTIONS
On May 22, 2001, the Company issued 3,900,000 shares of its common
stock to it current officers for services as described in Note 4.
28
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
-------------------------------------------------------------------------
In June 2001, our Board of Directors appointed Quintanilla Accountancy
Corporation, independent accountant, to audit our financial statements for the
period from May 21, 2001, our date of formation, through June 30, 2001. Prior to
our appointment of Quintanilla Accountancy Corporation as our auditor, our
financial statements had not been audited.
There have been no disagreements with our accountant since our formation
required to be disclosed pursuant to Item 304 of Regulation S-B.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered by the
selling security holders has been passed upon by Stepp Law Group, located in
Newport Beach, California.
EXPERTS
Our financial statements for the period from May 21, 2001, our date of
formation, through June 30, 2001, appearing in this prospectus which is part of
a Registration Statement have been reviewed and audited, respectively, by
Quintanilla Accountancy Corporation, and are included in reliance upon such
reports given upon the authority of Quintanilla Accountancy Corporation, as
experts in accounting and auditing.
ADDITIONAL INFORMATION
We have filed a Registration Statement on Form SB-2 with the Securities and
Exchange Commission pursuant to the Securities Act of 1933 with respect to the
common stock offered by the selling security holders. This prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules to the Registration Statement. For further information
regarding us and our common stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules filed as a part of the
Registration Statement.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers
-----------------------------------------
Article Seventh of our Articles of Incorporation provides, among other things,
that our directors shall not be personally liable to us or our shareholders for
monetary damages for breach of fiduciary duty as a director, except for:
o any breach of such director's duty of loyalty to us or our security
holders;
o acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o liability for unlawful payments of dividends or unlawful stock
purchase or redemption by us; or
o any transaction from which such director derived any improper personal
benefit.
29
Accordingly, our directors may have no liability to our shareholders for any
mistakes or errors of judgment or for any act of omission, unless such act or
omission involves intentional misconduct, fraud, or a knowing violation of law
or results in unlawful distributions to our shareholders.
Our Articles of Incorporation provides that we will indemnify our directors to
the extent permitted by Nevada Revised Statutes, including circumstances in
which indemnification is otherwise discretionary under the Nevada Revised
Statutes. Our Articles of Incorporation also provides that to the extent that
Nevada Revised Statutes is amended to permit further indemnification, we will so
indemnify our directors.
Section 78.7502 of the Nevada Revised Statutes provides that a corporation shall
have the power to indemnify any person who was or is a party or is threatened to
be made a party to or is involved in any pending, threatened, or completed
civil, criminal, administrative, or arbitration action, suit, or proceeding, or
any appeal therein or any inquiry or investigation which could result in such
action, suit, or proceeding, because of his or her being or having been our
director, officer, employee, or agent or of any constituent corporation absorbed
by us in a consolidation or merger or by reason of his or her being or having
been a director, officer, trustee, employee, or agent of any other corporation
or of any partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or such enterprise, serving as such at our request or of any such
constituent corporation, or the legal representative of any such director,
officer, trustee, employee, or agent, from and against any and all reasonable
costs, disbursements, and attorney's fees, and any and all amounts paid or
incurred in satisfaction of settlements, judgments, fines, and penalties,
incurred or suffered in connection with any such proceeding.
Section 10 of our Bylaws also provides that our officers and directors shall be
indemnified and held harmless by us to the fullest extent permitted by the
provisions of Section 78.7502 of the Nevada Revised Statutes.
Indemnification Agreements. We anticipate that we will enter into
indemnification agreements with each of our executive officers pursuant to which
we will agree to indemnify each such officer for all expenses and liabilities,
including criminal monetary judgments, penalties and fines, incurred by such
person in connection with any criminal or civil action brought or threatened
against such person by reason of such person being or having been our officer or
director or employee. To be entitled to indemnification by us, such officer must
have acted in good faith and in a manner such officer believed to be in our best
interests and, with respect to criminal actions, such person must have had no
reasonable cause to believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
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 Act and is, therefore, unenforceable.
Other Expenses of Issuance and Distribution
-------------------------------------------
We will pay all expenses in connection with the registration and sale of the
common stock by the selling security holders. The estimated expenses of issuance
and distribution are set forth below.
========================================= ==================== ================
Registration Fees Approximately $31.99
----------------------------------------- -------------------- ----------------
Transfer Agent Fees Approximately $650.00
----------------------------------------- -------------------- ----------------
Costs of Printing and Engraving Approximately $500.00
----------------------------------------- -------------------- ----------------
Legal Fees Approximately $5,000.00
----------------------------------------- -------------------- ----------------
Accounting Fees Approximately $2,500.00
========================================= ==================== ================
30
Recent Sales of Unregistered Securities
---------------------------------------
There have been no sales of unregistered securities within the last three years
which would be required to be disclosed pursuant to Item 701 of Regulation S-B,
except for the following:
In June 2001, we issued 613,750 shares of our common stock to three accredited
investors and seventeen non-accredited investors for $0.02 per share. The shares
were issued in a transaction which we believe satisfies the requirements of that
exemption from the registration and prospectus delivery requirements of the
Securities Act of 1933, which exemption is specified by the provisions of
Section 4(2) of that act and Rule 506 of Regulation D promulgated pursuant to
that act by the Securities and Exchange Commission. Specifically, the offer was
made to "accredited investors", as that term is defined under applicable federal
and state securities laws, and no more than 35 non-accredited investors. Based
on the information provided in the subscription documents, which were completed
by all investors, we believe that each of the non-accredited investors was
sophisticated because each non-accredited investor has such knowledge and
experience in financial and business matters that he or she is capable of
evaluating the merits and risks of the prospective investment. Each investor was
given adequate access to sufficient information about us to make an informed
investment decision. We did not use any public solicitation or general
advertising in connection with this offering. There were no commissions paid on
the sale of these shares. The net proceeds to us were $12,075. 10,000 of those
shares were issued to Renee Close in exchange for graphic design services, which
were valued at $200.
On May 22, 2001, we issued 1,600,000 shares of our common stock to Thomas E.
Stepp, Jr., Michael Muellerleile, Deron Colby, Richard Reincke, Amy Pontillas,
and Lan P. Nguyen, in a transaction which we believe satisfies the requirements
of that certain exemption from the registration and prospectus delivery
requirements of the Securities Act of 1933, which exemption is specified by the
provisions of Section 4(2) of the Securities Act of 1933, as amended. Michael
Muellerleile, Deron Colby, Richard Reincke, Amy Pontillas, and Lan P. Nguyen are
non-accredited investors and were given adequate access to sufficient
information about us to make an informed investment decision. We believe that
each of the non-accredited investors was sophisticated because each
non-accredited investor works for our legal counsel and has such knowledge and
experience in financial and business matters that he or she is capable of
evaluating the merits and risks of the prospective investment. The shares were
issued in exchange for services provided to us, which were valued at $1,600. We
did not use any public solicitation or general advertising in connection with
this offering.
On May 22, 2001, we issued 3,900,000 shares of our common stock to our officers
and directors, both of who are accredited investors. Of this amount Renee
McCracken, our president, secretary, and a director received 3,700,000 shares of
our common stock. Carol McCracken, our treasurer and a director received 200,000
shares of our common stock. The shares were issued in a transaction which we
believe satisfies the requirements of that certain exemption from the
registration and prospectus delivery requirements of the Securities Act of 1933,
which exemption is specified by the provisions of Section 4(2) of the Securities
Act of 1933, as amended. The shares were issued in exchange for services
provided to us, which were valued at $3,900.
Exhibits
--------
Copies of the following documents are filed with this Registration
Statement as exhibits:
Exhibit No.
-----------
1. Underwriting Agreement (not applicable)
3.1 Articles of Incorporation*
3.2 Bylaws*
5. Opinion Re: Legality*
8. Opinion Re: Tax Matters (not applicable)
11. Statement Re: Computation of Per Share Earnings**
15. Letter on unaudited interim financial information
(not applicable)
31
23.1 Consent of Auditors
23.2 Consent of Counsel***
24. Power of Attorney is included on the Signature Page
of the Registration Statement
* Included in Registration Statement on Form SB-2, which was filed on
August 9, 2001.
** Included in Financial Statements
*** Included in Exhibit 5
Undertakings
------------
A. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
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 of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities, other than the payment by us of expenses incurred or paid by
our director, officer or controlling person 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 our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
B. 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 specify in the prospectus any facts or events
arising after the effective date of the Registration
Statement or most recent post-effective amendment
thereof which, individually or in the aggregate,
represent a fundamental change in the information
set forth 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 Securities and Exchange
Commission pursuant to Rule 424(b), Section
230.424(b) of Regulation S-B, if, in
the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective Registration Statement; and
(iii) To include any additional or changed material
information with respect to the plan of distribution
not previously disclosed in the Registration
Statement or any material change to such information
in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
32
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as amended,
we certify that we have reasonable grounds to believe that we meet all of the
requirements of filing on Form SB-2 and authorized this Registration Statement
to be signed on our behalf by the undersigned, in the city of Newport Beach,
California, on October 15, 2001.
Reel Staff, Inc.
a Nevada corporation
By: /s/ Renee McCracken
------------------------------------
Renee McCracken
Its: president, secretary, and a director
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated:
/s/ Renee McCracken October 15, 2001
--------------------------------------------
Renee McCracken
president, secretary and a director
/s/ Renee McCracken October 15, 2001
--------------------------------------------
Carol McCracken
treasurer, principal financial officer and a director