As filed with the Securities and Exchange Commission May 22, 2001
File No. ___________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Cach Foods, Inc.
(Exact name of registrant as specified in its charter)
Nevada 82-0505220
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
P.O. Box 4669
Pocatello, ID 83205-4669
(Address and telephone number of registrant's principal offices)
Cornelius A. Hofman
216 South Sixteenth Avenue
Pocatello ID 83201
(866) 922-8073
(866) 922-8074 fax
(Name, address and telephone number of agent for service)
Copies to:
Cletha A. Walstrand, Esq.
Lehman Walstrand & Associates
8 East Broadway, Suite 620
Salt Lake City, UT 84111-2204
(801) 532-7858
(801) 363-1715 fax
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the Registration Statement becomes
effective.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, check the following box: [ ]
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. [ ]
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 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 to be Proposed offering Proposed maximum Amount of
of securities to registered price per share aggregate offering registration
be registered price fee
Common Stock 250,000 shares $0.50 per share $125,000 $37.50
The number of shares to be registered is estimated solely for
the purpose of calculating the registration fee.
Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
2
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
PROSPECTUS Subject to completion, May 22, 2001
$75,000 Minimum/$125,000 Maximum
CACH FOODS, INC.
COMMON STOCK
This is Cach's initial public offering. We are offering a
minimum of 150,000 shares and a maximum of 250,000 shares of
common stock. The public offering price is $0.50 per share. No
public market currently exists for our shares.
See "Risk Factors" beginning on page 2 for certain
information you should consider before you purchase the shares.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the
securities or passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal
offense.
The shares are offered on a minimum/maximum, best efforts
basis directly through our officers and directors. No commission
or other compensation related to the sale of the shares will be
paid to any of our officers or directors. The proceeds of the
offering will be placed and held in an escrow account at
Professional Escrow Services, located at 920 Deon Drive,
Pocatello, Idaho, 83201, until a minimum of $75,000 in cash has
been received as proceeds from sale of shares. If we do not
receive the minimum proceeds within 90 days from the date of this
prospectus, unless extended by us for up to an additional 30
days, your investment will be promptly returned to you without
interest and without any deductions. We may terminate this
offering prior to the expiration date.
Price to Public Commissions Proceeds to Company
Per Share $0.50 $-0- $0.50
Minimum $75,000 $-0- $75,000
Maximum $125,000 $-0- $125,000
The date of this Prospectus is ________________, 2001.
PROSPECTUS SUMMARY
Summary of our company
We formed as a Nevada corporation on May 4, 1998 originally
as Llebpmac, Inc. We changed our name to Cach Foods, Inc. on
November 1, 2000 with the intent to engage in the export and
distribution of snack food products for resale in Asian markets.
Initially, we will focus on selling a kettle style Idaho potato
chip with the brand name Idaho Chips (TM). Our first target
market will be Japanese convenience stores. If our Idaho Chips
(TM) are successful, we intend to increase the variety of snack
foods we offer and expand to other Asian markets.
We will be competing with a large number of other snack food
merchandisers. The snack food industry is highly competitive
with some very large snack food merchandisers like Frito-Lay,
Inc., as well as a large number of smaller independent businesses
that fill niches in the Japanese and other Asian markets. We
also intend to focus on a small niche with our gourmet Idaho
Chips (TM).
We have not commenced operations and are considered a
development stage company. These factors raise substantial
doubts about our ability to continue as a going concern. We
intend to use the proceeds from this offering to begin operations
and implement our growth and marketing plan. We further intend
to act as a wholesale merchandiser by sub contracting the actual
manufacturing, packaging, distributing and selling of our snack
food products in Asian markets.
Our principal executive offices and mailing address is 216
South 16th Avenue Pocatello ID 83201. Our telephone number is
(866) 922-8073.
About our offering
We are offering a minimum of 150,000 and a maximum of
250,000 shares of common stock. Upon completion of the offering,
we will have 12,152,000 shares outstanding if we sell the minimum
number of shares or 12,252,000 shares outstanding if we sell the
maximum number of shares. We will use the offering proceeds over
the next twelve months to implement our business plan and
initiate operations, which will consist of the following:
* Purchase necessary equipment;
* Establish production and distribution relationships;
* Market and advertise our products; and
* Provide working capital for the next twelve to eighteeen months.
RISK FACTORS
Investing in our stock is very risky and you should be able
to bear a complete loss of your investment. Please read the
following risk factors closely.
We are a new business and our Management has very limited
experience in marketing snack foods, making an investment in our
company risky. It will be difficult for you to evaluate an
investment in our stock since our operating history is limited to
developing a business plan, contacting potential sub contractors,
and establishing foreign contacts. With exception of one
director, Brian Kramer, we have no experience marketing or
selling snack foods. As a young company, we are especially
vulnerable to the problems, delays, expenses and difficulties
encountered by any company in the development stage. We cannot
assure that we will ever be profitable. Since we have not proven
the
2
essential elements of profitable operations, you will be
furnishing venture capital to us and will bear the risk of
complete loss of your investment in the event we are not
successful.
If we do not raise money through this offering, it is
unlikely we can commence operations. We have extremely limited
assets and need the proceeds from this offering to commence
operations. If we cannot raise at least the minimum in this
offering within 90 days from the date of this prospectus we will
have to seek other sources of funding. If no other source is
available, we may be forced to abandon our business plan.
We cannot assure the completion of the offering. The shares
are offered on a minimum-maximum best efforts basis by our
officers and directors. No individual or firm is committed to
purchase or take down any of the shares. There is no assurance
we will sell any portion of the shares. The offering will be
open for 90 days from the date of this prospectus. We may in our
discretion extend that time an additional 30 days if the minimum
of $75,000 has not been reached. If we do not reach the minimum,
we will promptly return your entire investment without interest.
Anytime after the minimum is received prior to termination of the
offering, the escrowed funds will be transmitted to us, shares
will be issued, and no refunds will be made.
Our independent auditor has expressed doubts about our
ability to continue as a going concern. We are a development
stage company as defined in Financial Accounting Standards Board
Statement No. 7. We are devoting substantially all of our
present efforts in establishing a new business. Our operations
to date have been limited to defining our business plan,
contacting potential sub contractors, and establishing foreign
contacts. We also have a working capital deficit at March 31,
2001 of $37. These factors raise substantial doubt about our
ability to continue as a going concern.
We will depend upon independent suppliers to provide high
quality potatoes at market prices. We have not entered into any
contracts, but intend to sub contract with independent third
parties to supply potatoes to selected manufacturers. Since we
will not supply our own potatoes, we will be limited in our
ability to ensure availability, price and quality. If
availability becomes limited, we will have to find other
suppliers, who may charge higher prices. In addition, we must
also depend on these suppliers to monitor the quality of the
potatoes used in Idaho Chips (TM). The suppliers, however, may
not act in our best interest and deliver a substandard potato.
This would affect the ultimate quality of our product, which in
turn could have a material adverse affect on our sales and
revenues.
We will depend upon independent manufacturers to produce and
package high quality kettle style potato chips. We have not
entered into any contracts, but intend to sub contract with
independent third parties to manufacturer and package kettle
style potato chips under the Idaho Chips (TM) brand name. Since
we will not manufacture and package our own potato chips, we will
be limited in our ability to ensure constant availability, price
and quality. If the availability of our manufacturers becomes
limited, we will have to find other independent manufacturers,
who may charge higher prices. In addition, we must also depend
on these manufacturers to monitor the quality of the potato chip
packaged as Idaho Chips (TM). The manufacturers, however, may
not act in our best interest and manufacture and package
substandard potato chips. This would affect the ultimate quality
of our product and have a material adverse affect on our
revenues.
Our manufacturing costs are subject to fluctuations in the
prices of potatoes and oil. Idaho Chips (TM) will consist of two
major ingredients, potatoes and oil. Potatoes are widely
available year-round, either freshly harvested or from storage
during winter months. Different types of oils may be used in
preparing Idaho Chips (TM). We will be dependent on suppliers to
provide our manufacturers with products and ingredients in
adequate supply and on a timely basis. Although we believe such
products and ingredients are readily available, the failure of a
supplier to meet delivery schedules could have a
3
material adverse effect on our operations. In particular, the
sudden scarcity, substantial price increase, or unavailability of
product ingredients could have a materially adverse affect on our
operations. There can be no assurance alternative ingredients
would be available on commercially attractive terms, if at all.
We will depend upon the sales efforts of independent
importers and distributors. The success of our business will
depend, in large part, upon the establishment of a strong
distribution network of international importers and distributors.
These importers and distributors will receive the Idaho Chips
(TM) directly from the manufacturer and deliver them to Japanese
wholesale distributors or convenience stores. We will further
depend on these importers and distributors to negotiate favorable
shelf space and placement. There is no assurance we can
establish a strong distribution network, if any. The subsequent
loss of an established importer or distributor may have a
material adverse affect on our operations since there is no
assurance we could obtain alternative arrangements on
satisfactory terms or in a timely manner.
The market for salty snack foods, primarily potato chips, is
large and intensely competitive. In order to successfully
compete in the snack food industry, a company must capitalize on
certain competitive factors, which are:
* product quality and taste;
* brand awareness and name recognition;
* access to shelf space;
* price;
* advertising and promotion;
* varieties offered;
* nutritional content; and
* product packaging and design.
We expect to compete in the snack food industry by
capitalizing on the name recognition of Idaho potatoes as well as
product quality and taste. The snack food industry in Japan is
primarily dominated by large companies such as Calbee, Proctor &
Gamble, and Frito-Lay, Inc., which have substantially greater
resources and sell brands more widely recognized than other
companies. There are also numerous other actual and potential
competitors that have greater resources than we do. While we
believe our Idaho Chips (TM) will compete successfully by filling
a niche in the market, there can be no assurance of the ability
to do so.
Successful marketing of Idaho Chips (TM) will depend on our
ability to obtain adequate retail shelf space for product
display. Food manufacturers and distributors generally incur
additional costs in order to obtain additional shelf space.
Whether or not we incur such costs will depend on a number of
factors, including whether Asian markets charge such costs,
demand for our products, relative availability of shelf space and
general competitive conditions. There can be no assurance that
we will not incur costs associated with shelf space or other
promotional costs as a necessary condition for competing in
particular markets or stores. Such costs may materially affect
our financial performance.
Consumer preferences for snack foods are continually
changing and extremely difficult to predict. Initial success
will depend on customer acceptance of Idaho Chips (TM). There
can be no assurance Idaho Chips (TM) will achieve a significant
degree of market acceptance, and if accepted, sustained for any
significant period. There is no assurance that product life
cycles will be sufficient to recover our start-up and other
associated costs. In addition, there is no assurance we will
succeed in developing products other than Idaho Chips (TM) or
that such products will achieve market acceptance or generate
meaningful revenue.
4
As members of the snack food industry, we are subject to
numerous risks outside our control. Profitability in the snack
food industry is subject to numerous external risk factors such
as:
* adverse changes in general business and economic conditions;
* oversupply of certain snack food products at the wholesale
and retail levels;
* seasonality of raw materials;
* products banned, limited or declared unhealthful;
* product tampering that requires a recall of certain products;
* decline in sales due to perceived health concerns; and
* changes in consumer tastes.
We depend on our exclusive license to use the trademark of
Idaho Chips (TM). We currently have an exclusive worldwide
license to use the trademark of Idaho Chips (TM). If, by April
10, 2003, we do not generate a threshold amount of $500,000 in
gross revenue, we will lose exclusivity under the license. If we
generate the threshold amount, the agreement is automatically
renewed for an additional 12-month period, and will be extended
for each successive 12-month period if we generate gross revenue
of $300,000 in the prior 12-month period. There is no assurance
we will satisfy the terms of the license agreement. As a result,
we could lose our exclusive right to use the trademark of Idaho
Chips (TM), which could have a material adverse effect on our
sales and revenues.
As a distributor of packaged food we will be subject to
national and international governmental regulation. The
manufacturing, marketing, exporting, distribution and sale of
Idaho Chips (TM) will be subject to various international,
federal, state and local laws and regulations which govern
production, sale, safety, advertising, labeling and ingredients.
There is no assurance that we or our suppliers, manufacturers,
importers and distributors will be able to comply with all such
laws and regulations. New governmental laws and regulations may
be introduced which could result in additional compliance costs,
seizures, confiscation, recall or monetary fines. Any such
regulation could inhibit or prevent the development, distribution
and sale of Idaho Chips (TM) in the Japanese market causing a
material adverse effect on our business, operating results and
financial condition.
As a wholesaler of food products we may be subjected to
various product liability claims. Packaging, marketing and
distributing food products has the inherent risk of product
liability, recall and the resultant adverse publicity. We may be
subject to significant liability if the consumption of our
product causes injury, illness or death. We could be required to
recall certain of our products in the event of contamination or
damage. We intend to carry product liability insurance on terms
we deem acceptable, which may not fully cover loss or exposure
for product liability. Any product liability claim not fully
covered by insurance, as well as any adverse publicity from a
product liability claim, could have a material adverse effect on
our financial condition or results of operation. We are
currently investigating the availability and terms of product
liability insurance.
We arbitrarily determined our offering price. The offering
price bears no relationship to our assets, book value, net worth
or other economic or recognized criteria of value. In no event
should the offering price be regarded as an indicator of any
future market price of our securities. In determining the
offering price, we considered such factors as the prospects for
our products, our management's previous experience, our
historical and anticipated results of operations and our present
financial resources.
5
It is likely our stock will become subject to the Penny
Stock rules which impose significant restrictions on the Broker-
Dealers and may affect the resale of our stock. A penny stock
is generally a stock that:
- is not listed on a national securities exchange or Nasdaq;
- is listed in "pink sheets" or on the NASD OTC Bulletin Board;
- has a price per share of less than $5.00; and
- is issued by a company with net tangible assets less than
$5 million.
The penny stock trading rules impose additional duties and
responsibilities upon broker-dealers and salespersons effecting
purchase and sale transactions in common stock and other equity
securities, including:
- determination of the purchaser's investment suitability;
- delivery of certain information and disclosures to the
purchaser; and
- receipt of a specific purchase agreement from the purchaser
prior to effecting the purchase transaction.
Due to the Penny stock rules, many broker-dealers will not
effect transactions in penny stocks except on an unsolicited
basis. In the event our common stock becomes subject to the
penny stock trading rules,
- such rules may materially limit or restrict the ability to
resell our common stock, and
- the liquidity typically associated with other publicly
traded equity securities may not exist.
Shares of stock that are eligible for sale by our
stockholders may decrease the price of our stock. Upon
completion of the offering and if we sell the minimum number of
shares, we will have 12,152,000 shares outstanding with 150,000
of those shares freely tradable. If we sell the maximum number
of shares, we will have 12,252,000 shares outstanding with
250,000 of those shares freely tradable. Regardless of the
number of shares we sell, we will have 12,002,000 shares that are
restricted but may be sold under Rule 144. If the holders sell
substantial amounts of our restricted stock, then the market
price, if any, of our common stock could decrease.
FORWARD-LOOKING STATEMENTS
You should carefully consider the risk factors set forth
above, as well as the other information contained in this
prospectus. This prospectus contains forward-looking statements
regarding events, conditions, and financial trends that may
affect our plan of operation, business strategy, operating
results, and financial position. You are cautioned that any
forward-looking statements are not guarantees of future
performance and are subject to risks and uncertainties. Actual
results may differ materially from those included within the
forward-looking statements as a result of various factors.
Cautionary statements in this "Risk Factors" section and
elsewhere in this prospectus identify important risks and
uncertainties affecting our future, which could cause actual
results to differ materially from the forward-looking statements
made in this prospectus.
6
DILUTION AND COMPARATIVE DATA
As of March 31, 2001, we had an unaudited net tangible book
value, which is the total tangible assets less total liabilities,
of a negative $37, or a net tangible book value per share of
approximately ($0.00). The following table shows the dilution to
your equity interest without taking into account any changes in
our net tangible book value after March 31, 2001, except the sale
of the minimum and maximum number of shares offered.
Assuming Minimum Assuming Maximum
Shares Sold Shares Sold
Shares Outstanding 12,152,000 12,252,000
Public offering net $50,000 $100,000
proceeds
at $0.50 per share
Net tangible book value ($37) ($37)
before offering ($0.00) ($0.00)
Pro forma net tangible $49,963 $99,963
book value after offering $0.0041 $0.0082
Increase attributable to $0.0041 $0.0082
purchase of shares by new
investors
Dilution per share to new $0.4959 $0.4918
investors
Percent dilution 99.18% 98.36%
The following table summarizes the comparative ownership and
capital contributions of existing common stock shareholders and
investors in this offering as of March 31, 2001:
Shares Owned Total Consideration Average Price
Number % Amount % Per Share
Present 12,002,000 100% $6,000 100% $0.0005
Shareholders
New Investors
Minimum Offering 150,000 1.23% $75,000 92.59% $.50
Maximum Offering 250,000 2.04% $125,000 95.42% $.50
The numbers used for Present Shareholders assumes that none
of the Present Shareholders will purchase additional shares in
this offering. However, it is possible that our Present
Shareholders will purchase additional shares in the offering.
The above table illustrates that as an investor in this
offering, you will pay a price per share that substantially
exceeds the price per share paid by current shareholders. You
will also contribute a significantly higher percentage of the
total amount to fund Cach Foods, Inc., but will own a small
percentage of our shares. Investors will have contributed
$75,000 if the minimum is raised and $125,000 if the maximum is
raised, compared to $6,000 contributed by current shareholders.
Further, investors will own 1.23% of the total shares if the
minimum is raised, and 2.04% of the total shares if the maximum
is raised.
7
USE OF PROCEEDS
The net proceeds to be realized by us from this offering,
after deducting $25,000 in estimated expenses related to this
offering is:
* $50,000 if the minimum number of shares is sold; and
* $100,000 if the maximum number of shares is sold.
The following table sets forth our best estimate of the use
of proceeds from the sale of the minimum and maximum amount of
shares offered. Since the dollar amounts shown in the table are
estimates, actual use of proceeds may vary from the estimates
shown.
Description Assuming Sale of Assuming Sale of
Minimum Offering Maximum Offering
Total Proceeds $75,000 $125,000
Less Estimated Offering 25,000 25,000
Expenses
Net Proceeds Available $50,000 $100,000
Use of Net Proceeds
Initial Operating Expenses
Establish Japanese $6,000 $6,000
Contracts $1,600 $1,600
Establish Potato $4,000 $4,000
Suppliers $11,600 $11,600
Establish Potato Chip
Manufacturers $7,500 $7,500
TOTAL
$5,000 $5,000
Supplies
Marketing
Working Capital $25,900 $75,900
TOTAL NET PROCEEDS $50,000 $100,000
The initial operating expense is an estimate of the amount
necessary to establish contacts, contracts and agreements with
importers and distributors in Japan, Idaho potato suppliers, and
potato chip manufacturers.
The supplies expense is an estimate of the amount necessary
to purchase computer software, letterhead, copy paper, toner
cartridges, business cards and other miscellaneous supplies
specific to our needs.
The amount designated for marketing is an estimate of the
amount necessary to design an Idaho Chips web page, develop in-
store displays, compile market research, design product packaging
and literature as well as other miscellaneous marketing
activities.
The working capital reserve may be used for general
corporate purposes to operate, manage and maintain the current
and proposed operations including employee wages, professional
fees, expenses and other administrative costs.
8
If less than the entire offering is received, we will apply
the proceeds according to the priorities outlined above, with top
priorities listed first.
Pending the expenditure of proceeds of this offering, we may
make temporary investments in short-term, investment grade,
interest-bearing securities, money market accounts, and insured
certificates of deposit and/or in insured banking accounts.
We do not intend to use any of the proceeds from this
offering to purchase key man insurance. Costs associated with
being a public company, including compliance and audits of our
financial statements will be paid from working capital and
revenues generated from our operations.
DETERMINATION OF OFFERING PRICE
Our management arbitrarily determined the offering price of
the shares. The offering price bears no relationship to our
assets, book value, net worth or other economic or recognized
criteria of value. In no event should the offering price be
regarded as an indicator of any future market price of our
securities. In determining the offering price, we considered
such factors as the prospects for our products, our management's
previous experience, our anticipated results of operations and
our present financial resources.
DESCRIPTION OF BUSINESS
Our History and Business
We were formed as a Nevada corporation on May 4, 1998
originally as Llebpmac, Inc., for the purpose of becoming a
restaurant. Before our plan for Llebpmac to operate as a
restaurant was inaugurated, we changed the company's name to Cach
Foods, Inc. and we changed the purpose of the company to be a
snack food wholesale merchandiser in direct response to our
research and perceived demand for American snack foods in Japan.
On October 2, 2000, the shareholders approved a two for one
forward split of its outstanding common stock. On November 1,
2000, we changed our name to Cach Foods, Inc. and we changed our
purpose to be a snack food wholesale merchandiser. Our initial
focus will be on selling Idaho Chips (TM) in the Japanese market
through convenience stores. If demand permits, we will expand
production and sell Idaho Chips (TM) to larger supermarkets as
well other Asian countries. We intend to act as a wholesale
merchandiser by sub contracting the actual supplying,
manufacturing, packaging, exporting and selling of Idaho Chips
(TM). If successful in the Japanese market, we will increase the
variety of snack foods we offer and expand to other Asian
consumers.
Target Market Overview
Convenience stores have proliferated in Japan over the past
25 years since their debut in 1969, according to an article in
the Nikkei Weekly titled "The Little Stores with the Big
Ambitions: Convenience Store Chains Expand Into Services for
Urban Lifestyle," and that more than 1,000 new outlets have
opened every year since the 1980s. In "The Changing Face of
Japanese Retail," The Japan Trade Organization states that from
1984 to 1993, the number of convenience stores in Japan grew from
25,500 stores to 43,510 stores - a 70 percent increase. As of
April 1999, there were over 50,000 convenience stores throughout
Japan according to the Nikkei Weekly.
Japanese eating patterns are clearly shifting toward Western-
style foods and habits. Much can be attributed to the economic
and social advances made by women in Japan, which is leading more
and more
9
people to purchase ready-to-eat foods. According to the Japan
Statistics Bureau, Management and Coordination Agency:
* annual rice purchased per household in 1980 was over
Y70,000, but under Y50,000 in 1996;
* Japanese people spent 7 percent less time in 1996 preparing
meals in the home than in 1981; and
* the average Japanese household, from 1987 to 1996, increased
its spending on ready-to-eat foods by 43 percent.
Consistent with this shift toward Western-style foods, the
South African Food & Beverage Manufacturing Review reports that
the volume of snack consumption in Japan increased 16.6 percent
from 1988 through 1993. And according to the Euromonitor, Japan
is second only behind the United States in per capita expenditure
on snack foods.
The U.S. potato chip has emerged as a favorite snack food in
Japan. In "Export Markets Respond to Crispy Appeal of US Potato
Chips," the AgExporter states that U.S. potato chip exports to
Japan surged from $5 million in 1993 to $62 million in 1995,
making Japan the largest U.S. export market for potato chips.
This rapid growth has been fueled by moving U.S. potato chips
from specialty stores to mainstream supermarkets and convenience
stores. Frito-Lay is the leading U.S. snack food supplier in
Japan, according to Seymour-Cooke Food Research International,
but accounts for only 3 percent of the annual $1.5 to $2 billion
potato chip market in Japan. Accordingly, U.S. potato chip
exports represent a small portion of the Japanese potato chip
market.
Frito-Lay and Procter & Gamble are two major U.S. potato
chip manufacturers, according to the AgExporter, that are reaping
the benefits of blazing a trail into Japanese distribution
channels and making U.S. potato chips mainstream throughout
Japan. The AgExporter also states that many smaller U.S.
companies are getting a "tasty" piece of the action in the
Japanese potato chip market. We intend to follow this blazed
trail by selling Idaho Chips (TM) in Japanese convenience stores.
We further believe there is a niche in the Japanese market for a
high quality kettle style potato chip made from world famous
Idaho potatoes.
Business Strategy
Our objective is to become a leading U.S. exporter to the
Asia Pacific of branded premium potato chips and other salty
snack foods by providing high quality products at competitive
prices that are superior in taste to comparable products. We
will use a distribution channel comprised of intermediaries such
as suppliers, manufacturers, wholesalers, importers and
distributors to bring our products to market. The use of these
intermediaries along with our contacts, experience,
specialization, and scale of operations will enable us to be more
efficient in making our goods available to target markets.
Initially, we plan to penetrate the existing Japanese market
with Idaho Chips (TM), a kettle-fried potato chip made from real
Idaho potatoes. If successful in Japan, we will expand Idaho
Chips (TM) into other Asian markets. Our strategy for market
penetration and expansion will consist of creating consumer trial
and acceptance of Idaho Chips (TM). We believe the key elements
of creating consumer trial and acceptance to be packaging,
placement, taste, and price.
Packaging
Getting consumers to try Idaho Chips (TM) will be important
to our success. The Snack Food Association reports that
approximately 70 percent of salty snack food purchases are made
on impulse. We intend to expend a percent of the proceeds from
this offering to research the best package design and color to
trigger this impulse to buy Idaho Chips (TM). We believe that
this may be accomplished, in part,
10
by clearly displaying the kettle-fried process and the Idaho
origin on the package of Idaho Chips (TM). We also intend to
create a unique brand image for Idaho Chips (TM) by further
developing a package that communicates to consumers that we are a
gourmet snack food company, which we believe will appeal to
Japanese consumers.
Placement
Favorable shelf placement of Idaho Chips (TM) in relation to
our competitors will be essential to capitalize on the impulse
buyer. We will attempt to negotiate with Japanese retailers the
placement of Idaho Chips (TM) in strategic locations. We believe
such locations are at eye level and close to high traffic areas
like the check out stand. We further believe that an
aesthetically pleasing package promoting the kettle fried style
and Idaho origin of our potato chip will distinguish Idaho Chips
(TM) from the nearly placed products of our competitors.
Accordingly, we increase the probability that Japanese consumers,
when acting on impulse, will purchase Idaho Chips (TM).
Taste
We intend to sell only great tasting potato chips as Idaho
Chips (TM) in order to achieve consumer acceptance and loyalty.
We will accomplish this by using real Idaho potatoes and the
kettle frying process. Potatoes are native to Peru. We believe
the Idaho climate and soil to be similar to certain areas of Peru
where potatoes are grown. As a result, Idaho grows great tasting
potatoes. We also believe that kettle frying produces a potato
chip that is thicker and crisper than other potato chips. These
two elements combined with the careful selection of a potato chip
manufacturer will provide, as we believe, a great tasting potato
chip.
Price
We intend to offer Idaho Chips (TM) at a fair everyday price
to maintain the initial impulse of the buyer. Our prices will be
based upon a combination of manufacturing, packaging,
distribution and marketing costs as well as the prices of closely
related products of our competitors.
Assuming we establish a level of market penetration and
acceptance with Idaho Chips (TM), we intend, if needed, to
increase brand awareness and acceptance through advertising and
distribution efforts in existing and key regional markets. We
may also add direct sales people to these targeted geographies to
manage sales and promotional activities, which may include joint
advertising with convenience stores and supermarkets, in-store
product sampling, coupon distribution and in-store advertisements
and displays of Idaho Chips (TM).
Suppliers
The principal raw materials used in our Idaho Chips (TM) are
potatoes and oil. We will not supply our own raw materials, but
depend on independent suppliers. We believe, however, that
potatoes and oil are readily available from numerous suppliers on
commercially reasonable terms. Idaho potatoes are widely
available year-round, either freshly harvested or from storage
during the winter months. Many manufacturers use sunflower oil
to produce kettle style potato chips. We believe that sunflower
oil is widely available year-round and that alternative cooking
oils are abundant and readily available. We will choose our
suppliers primarily on price, availability and quality and do not
anticipate having any long-term arrangements with any one
supplier.
11
Manufacturing
We intend to sub contract with independent manufacturers to
produce and package kettle-fried potato chips made from real
Idaho potatoes. We will evaluate potential candidates thoroughly
in our selection process. To be considered, candidates must be
in compliance with all federal, state, and local government
regulations. The candidate must also be well capitalized,
possess the necessary production and packaging capacity, and have
a strong reputation for quality production. We will expect
selected manufacturers to maintain a lab staffed with trained
quality control personnel, capable of performing any tests we may
establish.
Distribution
We intend to sell Idaho Chips (TM) primarily in convenience
stores in Japan. We plan to distribute our products through a
select group of independent international importers and
distributors since we believe it is the most efficient method for
reaching our target market. Importers and distributors will be
selected primarily on the basis of:
* quality of service;
* financial capability; and
* established network of convenience stores.
We intend to service both large convenience store chains and
smaller independent convenience stores. Assuming Idaho Chips
(TM) achieves a level of market penetration and customer
acceptance among Japanese convenience stores, we intend to use
our established distribution networks and/or sub contract with
other international distributors to distribute Idaho Chips (TM)
to super markets, delicatessens, and retailers as well as other
Asian countries.
Marketing
We will target convenience store chains in markets that show
a need and demand for snack foods. Product packaging, word-of-
mouth, and shelf placement will be our marketing tools. We
intend to position our product as a high quality specialty item
with packaging, color, and name designed to capitalize on the
impulse buyer. Word-of-mouth is a fast and cost-effective
marketing tool. We believe consumers are willing to share with
their personal acquaintances a satisfying experience with Idaho
Chips (TM), and the recommendation of a personal acquaintance is
credible. We will also attempt, if possible, to negotiate
favorable shelf space in convenience stores, which may require
additional marketing costs. As an additional marketing tool, we
intend to use a variety of websites to promote our company and
products. If Idaho Chips (TM) achieves a substantial level of
consumer acceptance, and funding is available, we may launch a
more aggressive marketing campaign, which might include
advertising through all forms of media, coupons, in-store
displays and sampling, and the hiring of regional
representatives.
License
We do not own the trademark Idaho Chips (TM). On October
30, 2000, we entered into a license agreement with the owner of
the trademark Idaho Chips (TM), Cornelius A. Hofman, our
president and director. The license gives us the exclusive
worldwide use of the brand name Idaho Chips (TM) for a 30-month
period. In return, we pay five percent of our gross revenue to
Mr. Hofman. If, by April 10, 2003, we do not generate a
threshold amount of $500,000 in gross revenue, we will lose
exclusivity under the license. If we generate the threshold
amount, the agreement is automatically renewed for an additional
12-month period, and will be extended for each successive 12-
month period if we generate gross revenue
12
of $300,000 in the prior 12-month period. There is no assurance
we will satisfy the terms of the license agreement. As a result,
we could lose our exclusive right to use the trademark of Idaho
Chips (TM), which could have a material adverse effect on our
sales and revenues.
Competition
Our Idaho Chips (TM) will compete against other salty snack
foods, including potato chips, tortilla chips, popcorn and
pretzels. The industry of exporting salty U.S. snack foods to
Japan is highly competitive and dominated primarily by Calbee,
Proctor & Gamble, and Frito-Lay, Inc., which is a subsidiary of
PepsiCo, Inc. Calbee, Proctor & Gamble, and Frito-Lay possess
substantially greater financial, production, marketing,
distribution and other resources than many other companies.
Calbee, Proctor & Gamble, and Frito-Lay brands are more widely
recognized than the brands of other companies. Numerous other
companies that are our actual or potential competitors have
greater financial and other resources, including more employees
and more extensive facilities, than we do. In addition, local or
regional Japanese markets often have a significant number of
smaller competitors, many of whom may offer products similar to
our Idaho Chips (TM).
If successful in Japan, we intend to expand our Idaho Chips
(TM) into other areas of the Asia Pacific and will encounter
significant competition from foreign, national, regional and
local competitors that may be greater than that encountered in
the Japanese market. While we believe that our Idaho Chips (TM)
will fill a niche and compete successfully, there can be no
assurance of the ability to do so. The principal competitive
factors affecting the market of our Idaho Chips (TM) will include
product quality and taste, brand awareness among Japanese
consumers, supermarket shelf space, price, advertising and
promotion, variety of snacks offered, nutritional content,
product packaging and package design. We believe that our Idaho
Chips (TM) will compete primarily upon their taste, kettle
cooking method and real Idaho origin.
Governmental Regulation
Our operations are subject to various governmental regulations,
such as those governing:
* minimum wage regulations;
* employment;
* environmental protection; and
* human health and safety.
Although we intend to comply with all applicable laws and
regulations, we cannot assure you that we are in compliance or
that we will be able to comply with any future laws and
regulations. Additional federal or state legislation, or changes
in regulatory implementation, may limit our activities in the
future or significantly increase the cost of regulatory
compliance. If we fail to comply with applicable laws and
regulations, criminal sanctions or civil remedies, including
fines, injunctions, recalls, or seizures, could be imposed on us.
This could have a material adverse effect on our operations.
The United States Food and Drug Administration may regulate
and inspect our products, suppliers and manufacturers. Every
food manufacturer in the United States must meet the FDA's
minimum standards relating to the preparation and packaging of
food. Food manufacturers must also comply with state, local and
federal laws regarding the disposition of property and leftover
foodstuffs. We cannot assure you that our suppliers and
manufacturers are in compliance with all applicable laws and
13
regulations or that they will be able to comply with any future
laws and regulations. Furthermore, additional or amended
regulations by the FDA may inhibit or prevent the development,
distribution and sale of Idaho Chips (TM) in the Japanese market
causing a material adverse effect on our business, operating
results and financial condition.
Employees
We have no employees and no formal employment agreements
with our officers. Nor do we intend to hire employees until our
operations require expansion. Our officers have agreed to devote
such time as necessary for the development of our business. It
is anticipated that upon completion of the offering and prior to
the commencement of production, Kelly McBride will devote
approximately 20 hours per week as a part-time employee while
maintaining outside employment. It is further anticipated that
all other officers will maintain outside employment and devote a
portion of their time to our business as needed. None of our
officers will receive a regular salary or wage until operations
have been developed to a point where such can be paid. However,
officers and directors are entitled to reimbursement for
reasonable out of pocket expenses incurred on our behalf.
Facilities
We own no real property, nor do we currently lease any
office space or facilities. We use the home office of our
President, Cornelius A. Hofman, rent free, as our principal
executive offices. We intend to maintain our current office
situation for the next twelve months, unless our operations
require an upgrade, at which time we will relocate to a more
suitable facility.
Legal proceedings
We are not a party to any bankruptcy, receivership or other
legal proceeding, and to the best of our knowledge, no such
proceedings by or against us have been threatened.
PLAN OF OPERATION
We will research and design the packaging for Idaho Chips
(TM). We will also determine who will supply, manufacture and
package our products, what products will be offered, how prices
will be set, which convenience stores to target and how to
promote our products to importers and/or distributors. Idaho
Chips (TM) will be our first snack food product. If Idaho Chips
(TM) are successful, we will investigate adding other snack foods
to our product line. We also anticipate entering additional
Asian markets as Idaho Chips (TM) are accepted in the Japanese
market.
Our plan of operation for the next 12 months consists of the
following:
* Select and design packaging and determine pricing for Idaho
Chips (TM), including:
o Purchase samples of chips sold in Japan of all varieties
and packaging types;
o Research packaging color and design to capitalize on impulse
buying;
o Determine shelf life of available packaging options; and
o Investigate retail prices of potato chips in Japan's
convenience stores.
* Establish relations with Japanese importers, distributors
and convenience stores, including:
o Investigate and contact Japanese importers and/or
distributors;
o Negotiate contracts with Japanese importers and/or
distributors;
o Investigate, and if possible, negotiate shelf space with
Japanese convenience stores; and
o Establish quality control procedures with Japanese importers
and/or distributors.
14
* Establish relations with suppliers of Idaho potatoes,
including:
o Investigate and negotiate prices with suppliers of Idaho
potatoes; and
o Investigate and negotiate the delivery of Idaho potatoes to
potato chip manufacturers.
* Establish relations with manufacturers to produce and package
kettle style potato chips into Idaho Chips (TM) customized
packaging, including:
o Research possible kettle style chip manufacturers;
o Investigate and negotiate production prices with
manufacturers; and
o Establish quality control procedures with manufacturers.
* Begin manufacturing and distributing Idaho Chips (TM) to
Japan.
Should we receive the minimum offering of $75,000, we will
realize net proceeds of $50,000. This amount will enable us to
begin the above listed operations, plus, purchase necessary
equipment and supplies, and will provide us with sufficient
capital for the next twelve months. Should we receive the
maximum amount of the offering, we will realize net proceeds of
$100,000. Receiving the maximum amount of the offering will
enable us to implement one of two operating strategies: (1)
begin the above listed operations, plus, purchase necessary
equipment and supplies, implement a more aggressive marketing
plan, and operate with sufficient capital for twelve months; or
(2) begin the above listed operations, plus, purchase necessary
equipment and supplies, and operate with sufficient capital for
eighteen months.
If we are unable to raise the offering amount, it will be
necessary for us to find additional funding in order to market
our products and services. In this event, we may seek additional
financing in the form of loans or sales of our stock and there is
no assurance that we will be able to obtain financing on
favorable terms or at all or that we will find qualified
purchasers for the sale of any stock.
We do not intend to staff offices in the markets we sell
Idaho Chips (TM). While we may establish satellite offices in
various locations, we will only staff our main office currently
located in Pocatello, Idaho. Under this arrangement, we will
provide customers with either a local number in the satellite
location or a toll-free number so that all customers may contact
us toll-free. All calls will be automatically forwarded to our
principal office in Pocatello, Idaho.
MANAGEMENT
Our business will be managed by our officers and directors.
Name Age Position Since
Cornelius A. Hofman 33 Chief Executive Officer, May 1998
President & Director
Kelly McBride 26 Secretary/ Treasurer & September
Director 2000
Brian Kramer 32 Director April 2001
Directors hold office until the next annual shareholders
meeting or until their successors are duly elected and qualified.
Officers hold office at the discretion of the Directors.
The following is a brief biography of our officers and
directors.
15
Cornelius A. Hofman. Mr. Hofman received a B.A. in Asian
Studies from Cornell University in 1991, a Masters in Japanese
Studies from the University of Pennsylvania in 1992, and a MBA in
Economics and Finance from the University of Chicago in 1994.
Since 1995, Mr. Hofman has been president and economist for
General Economic Consulting, Inc., which provides economic
valuation services to governments, businesses and individuals.
Mr. Hofman lived in Japan for two years and speaks fluent
Japanese.
Kelly O. McBride. Mr. McBride received his B.A. in
Marketing from Idaho State University in 1999. Since September
2000, Mr. McBride has been working as a research analyst for
General Economic Consulting, Inc., which provides economic
valuation services to governments, businesses and individuals.
From 1996 to 2000, Mr. McBride worked as a marketing research
analyst for Idaho Central Credit Union where he researched,
designed and promoted new products and services. Mr. McBride
lived in Taiwan for two years and speaks fluent Mandarin Chinese.
Brian J. Kramer. Mr. Kramer graduated magna cum laude with
a major in Japanese and East Asian Languages from the University
of Kansas in 1991. He was a Rotary Scholar in 1991 at the center
for Japanese studies through Nanzan University in Nagoya, Japan.
Mr. Kramer also graduated cum laude with a J.D. from the
University of Michigan Law School in 1994. Beginning 2001, Mr.
Kramer is a Managing Partner in a sports agency called Classic
Sports Management. Since 2000, Mr. Kramer has worked as an
attorney at O'Donnell & Shaeffer in Los Angeles, California.
From 1997 to 2000, Mr. Kramer was an associate attorney at
Seyfarth, Shaw, Fairweather & Geraldson. From 1995 to 1997, he
was an associate attorney with Latham & Watkins. From 1993 to
2000, Mr. Kramer served as an officer of Ace Foods, Inc., which
exported American snack foods to Japan. Mr. Kramer also lived in
Japan as a law clerk at the Wakabayashi Law Office in Tokyo, and
speaks fluent Japanese.
Involvement in Certain Legal Proceedings
To our knowledge, we are not a party to any legal proceeding
or litigation and none of our property is the subject of pending
legal proceeding. We do not know of any threatened or
contemplated legal proceedings or litigation.
COMPENSATION
We do not have any formal employment agreements in place for
our officers or directors. It is anticipated that upon
completion of the offering and prior to the commencement of
production, Kelly McBride will devote approximately 20 hours per
week as a part-time employee. Mr. McBride will be compensated at
an hourly rate of $15.00. All other officers will defer their
salaries until such time as we generate sufficient revenue to pay
the identified salary. The directors, Mr. McBride and Brian
Kramer, received 1,000 shares of common stock each for services
rendered on behalf of the Company. Any future compensation for
services rendered by directors has not been determined.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have engaged in certain transactions with Cornelius A.
Hofman, an affiliate of the Company, since its inception. The
following table details the date and nature of each transaction.
Date Transaction
May 1998 In connection with our formation, we issued 2,000,000
shares of common stock to Mr. Hofman for $1,000.
16
September 2000 Mr. Hofman purchased 10,000,000 shares of our common
stock for $5,000.
October 2000 We entered into a 30-month license agreement with
Mr. Hofman, who owns the trademarks Idaho Chips
(TM). The license gives us the exclusive worldwide
use of the brand name Idaho Chips (TM). In return,
we pay five percent of our gross revenue to Mr.
Hofman.
March 2001 Mr. Hofman loaned us $2,000 in exchange for a one-
year promissory note payable in the amount of
$2,000 plus 10% interest.
May 1998 We use the home office of Mr. Hofman, rent free, as
through our principal executive offices. We intend to
April 2000 maintain our current office situation for the next
twelve months, unless our operations require an
upgrade, at which time we will relocate to a more
suitable facility.
In April 2000, we issued 1,000 shares of common stock to
Kelly O. McBride and 1,000 shares of common stock to Brain Kramer
in consideration for services rendered as directors.
Our officer and director Kelly O. McBride is an employee at
General Economic Consulting, Inc., which is owned and controlled
by Cornelius A. Hofman, our president, director, and majority
shareholder.
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of
our common stock as of the date of this prospectus, and as
adjusted to reflect the sale of 150,000 shares should we sell the
minimum amount and 250,000 should we sell maximum number of
shares.
The table includes:
* each person known to us to be the beneficial owner of more than
five percent of the outstanding shares
* each director of Cach Foods
* each named executive officer of Cach Foods
Name & Address # of Shares % Before % After % After
Beneficially Offering Minimum Maximum
Owned
Cornelius A. Hofman (1) 10,000,000 83.33 81.63 81.30
216 South 16th Avenue
Pocatello, ID 83201
Laurilie Madsen 1,000,000 8.33 8.16 8.13
9025 Oakwood Place
West Jordan, UT 84088
Bateman Dynasty, LLC 1,000,000 8.33 8.16 8.13
1065 W. 1150 S.
Provo, UT 84601
17
Kelly McBride (1) 1,000 0.01 0.01 0.1
340 East Whitman Street
Pocatello, ID 83201
Brian Kramer (1) 1,000 0.01 0.01 0.01
3439 Keystone Ave., # 5
Los Angeles, CA 90034
All directors and 10,002,000 83.34 81.64 81.30
executive officers as
a group:
3 persons)
(1) Officer and/or director.
DESCRIPTION OF THE SECURITIES
Common Stock
We are authorized to issue up to 100,000,000 shares of
common stock with a par value of $0.001. As of the date of this
prospectus, there are 12,002,000 shares of common stock issued
and outstanding.
The holders of common stock are entitled to one vote per
share on each matter submitted to a vote of stockholders. In the
event of liquidation, holders of common stock are entitled to
share ratably in the distribution of assets remaining after
payment of liabilities, if any. Holders of common stock have no
cumulative voting rights, and, accordingly, the holders of a
majority of the outstanding shares have the ability to elect all
of the directors. Holders of common stock have no preemptive or
other rights to subscribe for shares. Holders of common stock
are entitled to such dividends as may be declared by the board of
directors out of funds legally available therefor. The
outstanding common stock is, and the common stock to be
outstanding upon completion of this offering will be, validly
issued, fully paid and non-assessable.
We anticipate that we will retain all of our future
earnings, if any, for use in the operation and expansion of our
business. We do not anticipate paying any cash dividends on our
common stock in the foreseeable future.
Preferred Stock
We are authorized to issue up to 5,000,000 shares of
preferred stock with a par value of $0.001. Our preferred stock
may be issued in series, with such designations, preferences,
stated values, rights, qualifications or limitations as
determined solely by our board of directors. As of the date of
this prospectus, we have issued no shares of our preferred stock
Stock options
We have reserved 2,000,000 shares of common stock for
issuance to key employees, officers, directors and consultants
upon the exercise of options available for grant under our 2001
Long-Term Stock Incentive Plan. The grant of an option under the
Plan entitles the grantee to purchase shares of common stock at
an exercise price established by our board of directors. We have
granted no options under the plan.
18
Transfer Agent
Interwest Transfer Company, Inc., 1981 East 4800 South, Salt
Lake City, Utah 84124, is our transfer agent
SHARES AVAILABLE FOR FUTURE SALE
As of the date of this prospectus, there are 12,002,000
shares of our common stock issued and outstanding. Upon the
effectiveness of this registration statement, 150,000 shares will
be freely tradable if the minimum is sold and 250,000 shares will
be freely tradeable if the maximum number of shares is sold. The
remaining 12,002,000 shares of common stock will be subject to
the resale provisions of Rule 144. Sales of shares of common
stock in the public markets may have an adverse effect on
prevailing market prices for the common stock.
Rule 144 governs resale of restricted securities for the
account of any person, other than an issuer, and restricted and
unrestricted securities for the account of an affiliate of the
issuer. Restricted securities generally include any securities
acquired directly or indirectly from an issuer or its affiliates
which were not issued or sold in connection with a public
offering registered under the Securities Act. An affiliate of
the issuer is any person who directly or indirectly controls, is
controlled by, or is under common control with the issuer.
Affiliates of the company may include its directors, executive
officers, and person directly or indirectly owning 10% or more of
the outstanding common stock. Under Rule 144 unregistered
resales of restricted common stock cannot be made until it has
been held for one year from the later of its acquisition from the
company or an affiliate of the company. Thereafter, shares of
common stock may be resold without registration subject to Rule
144's volume limitation, aggregation, broker transaction, notice
filing requirements, and requirements concerning publicly
available information about the company. Resales by our
affiliates of restricted and unrestricted common stock are
subject to the Applicable Requirements. The volume limitations
provide that a person, or persons who must aggregate their sales,
cannot, within any three-month period, sell more that the greater
of one percent of the then outstanding shares, or the average
weekly reported trading volume during the four calendar weeks
preceding each such sale. A non-affiliate may resell restricted
common stock which has been held for two years free of the
Applicable Requirements.
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
We have 5 shareholders. Currently, there is no public
trading market for our securities and there can be no assurance
that any market will develop. If a market develops for our
securities, it will likely be limited, sporadic and highly
volatile.
Presently, we are privately owned. This is our initial
public offering. Most initial public offerings are underwritten
by a registered broker-dealer firm or an underwriting group.
These underwriters generally will act as market makers in the
stock of a company they underwrite to help insure a public market
for the stock. This offering is to be sold by our officers and
directors. We have no commitment from any brokers to sell shares
in this offering. As a result, we will not have the typical
broker public market interest normally generated with an initial
public offering. Lack of a market for shares of our stock could
adversely affect a shareholder in the event a shareholder desires
to sell his shares. The company does anticipate a market maker
filing for listing on the Over the Counter Bulletin Board should
the offering succeed.
Currently the Shares are subject to Rule 15g-1 through Rule
15g-9, which provides, generally, that for as long as the bid
price for the Shares is less than $5.00, they will be considered
low priced securities under rules promulgated under the Exchange
Act. Under these rules, broker-dealers
19
participating in transactions in low priced securities must first
deliver a risk disclosure document which describes the risks
associated with such stocks, the broker-dealer's duties, the
customer's rights and remedies, and certain market and other
information, and make a suitability determination approving the
customer for low priced stock transactions based on the
customer's financial situation, investment experience and
objectives. Broker-dealers must also disclose these restrictions
in writing to the customer and obtain specific written consent of
the customer, and provide monthly account statements to the
customer. Under certain circumstances, the purchaser may enjoy
the right to rescind the transaction within a certain period of
time. Consequently, so long as the common stock is a designated
security under the Rule, the ability of broker-dealers to effect
certain trades may be affected adversely, thereby impeding the
development of a meaningful market in the common stock. The
likely effect of these restrictions will be a decrease in the
willingness of broker-dealers to make a market in the stock,
decreased liquidity of the stock and increased transaction costs
for sales and purchases of the stock as compared to other
securities.
PLAN OF DISTRIBUTION
We are offering a minimum of 150,000 shares and a maximum of
250,000 shares on a best efforts basis directly to the public
through our officers and directors. If we do not receive the
minimum proceeds within 90 days from the date of this prospectus,
unless extended by us for up to an additional 30 days, your
investment will be promptly returned to you without interest and
without any deductions. This offering will expire 30 days after
the minimum offering is raised. We may terminate this offering
prior to the expiration date.
In order to buy our shares, you must complete and execute
the subscription agreement and make payment of the purchase price
for each share purchased either in cash or by check payable to
the order of Professional Escrow Services, Inc.
Until the minimum 150,000 shares are sold, all funds will be
deposited in a non-interest bearing escrow account at
Professional Escrow Services, located at 920 Deon Drive,
Pocatello, Idaho, 83201. In the event that 150,000 shares are
not sold during the 90-day selling period commencing on the date
of this prospectus, and we have not extended the offering for up
to an additional 30 days, all funds will be promptly returned to
investors without deduction or interest. If 150,000 shares are
sold, we may either continue the offering for the remainder of
the 30-day selling period or close the offering at any time.
Solicitation for purchase of our shares will be made only by
means of this prospectus and communications with our officers and
directors who are employed to perform substantial duties
unrelated to the offering, who will not receive any commission or
compensation for their efforts, and who are not associated with a
broker or dealer.
Our officers and directors will not register as a broker-
dealer pursuant to Section 15 of the Securities Exchange Act of
1934, in reliance upon Rule 3a4-1, which sets forth those
conditions under which a person associated with an issuer may
participate in the offering of the issuer's securities and not be
deemed to be a broker-dealer.
We have the right to accept or reject subscriptions in whole
or in part, for any reason or for no reason. All monies from
rejected subscriptions will be returned immediately by us to the
subscriber, without interest or deductions. Subscriptions for
securities will be accepted or rejected within 48 hours after we
receive them.
20
LEGAL MATTERS
The legality of the issuance of the shares offered hereby
and certain other matters will be passed upon for Cach Foods,
Inc. by the law firm of Lehman Walstrand & Associates, Salt Lake
City, Utah.
EXPERTS
The financial statements of Cach Foods, Inc. as of December
31, 2000 appearing in this Prospectus and Registration Statement
have been audited by Pritchett, Siler & Hardy as set forth in
their report appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of said firm
as experts in accounting and auditing.
ADDITIONAL INFORMATION
We have filed a Registration Statement on Form SB-2 under
the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the shares offered hereby. This Prospectus does
not contain all of the information set forth in the Registration
Statement and exhibits and schedules thereto. For further
information with respect to Cach Foods, Inc. and the shares
offered hereby, reference is made to the Registration Statement
and the exhibits and schedules filed therewith. Statements
contained in this Prospectus as to the contents of any contract
or any other document referred to are not necessarily complete,
and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in
all respects by such reference. A copy of the Registration
Statement, and the exhibits and schedules thereto, may be
inspected without charge at the public reference facilities
maintained by the Securities and Exchange Commission in Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at Seven World Trade
Center, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and copies
of all or any part of the Registration Statement may be obtained
from the Commission upon payment of a prescribed fee. This
information is also available from the Commission's Internet
website, http://www.sec.gov.
21
CACH FOODS, INC.
[A Development Stage Company]
INDEX TO FINANCIAL STATEMENTS
PAGE
- Independent Auditors' Report 23
- Balance Sheet, December 31, 2000 24
- Statement of Operations, for the period from
inception on December 20, 2000 through
December 31, 2000 25
- Statement of Stockholders' Equity, for the period
from inception on December 20, 2000 through
December 31, 2000 26
- Statement of Cash Flows, for the period from
inception on December 20, 2000 through
December 31, 2000 27
- Notes to Financial Statements 28
- Unaudited Balance Sheet, March 31, 2001 32
- Unaudited Statements of Operations, for the three
months ended March 31, 2001 and 2000 and for
the period from inception on May 4, 1998
through March 31, 2001 33
- Unaudited Statement of Stockholders' Equity,
for the period from inception on May 4, 1998 through
March 31, 2001 34
- Unaudited Statements of Cash Flows, for the three
months ended March 31, 2001 and 2000 and for
the period from inception on May 4, 1998 through
March 31, 2001 35
- Notes to Unaudited Financial Statements 36
22
INDEPENDENT AUDITORS' REPORT
Board of Directors
CACH FOODS, INC.
(Formerly Llebpmac, Inc.)
Pocatello, Idaho
We have audited the accompanying balance sheet of Cach Foods,
Inc. (formerly Llebpmac, Inc.) [a development stage company] at
December 31, 2000, and the related statements of operations,
stockholders' equity and cash flows for the years ended December
31, 2000 and 1999 and for the period from inception on May 4,
1998 through December 31, 2000. These financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements audited by us present
fairly, in all material respects, the financial position of Cach
Foods, Inc. (formerly Llebpmac, Inc.) [a development stage
company] as of December 31, 2000 and the results of its
operations and its cash flows for the years ended December 31,
2000 and 1999 and for the period from inception on May 4, 1998
through December 31, 2000, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 5 to the financial statements, the Company has incurred
losses since its inception and has not yet been successful in
establishing profitable operations, raising substantial doubt
about its ability to continue as a going concern. Management's
plans in regards to these matters are also described in Note 5.
The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
PRITCHETT, SILER & HARDY, P.C.
March 14, 2001
Salt Lake City, Utah
23
CACH FOODS, INC.
(Formerly Llebpmac, Inc.)
[A Development Stage Company]
BALANCE SHEET
ASSETS
December 31,
2000
___________
CURRENT ASSETS:
Cash $ 6,046
___________
Total Current Assets 6,046
___________
$ 6,046
___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loan payable - related party $ 1,076
___________
Total Current Liabilities 1,076
___________
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
5,000,000 shares authorized,
no shares issued and outstanding -
Common stock, $.001 par value,
100,000,000 shares authorized,
12,000,000 shares issued and
outstanding 12,000
Capital in excess of par value (6,000)
Deficit accumulated during the
development stage (1,030)
___________
Total Stockholders' Equity 4,970
___________
$ 6,046
___________
The accompanying notes are an integral part of this financial
statement.
24
CACH FOODS, INC.
(Formerly Llebpmac, Inc.)
[A Development Stage Company]
STATEMENTS OF OPERATIONS
For the From Inception
Years Ended on May 4,
December 31, 1998 through
____________________ December 31,
2000 1999 2000
_______________________________
REVENUE $ - $ - $ -
EXPENSES:
General and Administrative (261) (185) (1,076)
_______________________________
LOSS FROM OPERATIONS (261) (185) (1,076)
OTHER INCOME:
Interest Income 18 20 46
_______________________________
LOSS BEFORE INCOME TAXES (243) (165) (1,030)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
_______________________________
NET LOSS $ (243) $ (165) $(1,030)
_______________________________
LOSS PER COMMON SHARE $ (.00) $ (.00) $ (.00)
_______________________________
The accompanying notes are an integral part of these financial
statements.
25
CACH FOODS, INC.
(Formerly Llebpmac, Inc.)
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON MAY 4, 1998
THROUGH DECEMBER 31, 2000
Deficit
Accumulated
Preferred Stock Common Stock Capital in During the
_______________ ________________________ Excess of Development
Shares Amount Shares Amount Par Value Stage
______ ________ __________ ____________ ______________ ___________
BALANCE, May 4,
1998 - $ - - $ - $ - $ -
Issuance of 2,000,000
shares common stock for
cash at $.0005 per share,
August 31, 1998 - - 2,000,000 2,000 (1,000) -
Net loss for the period ended
December 31, 1998 - - - - - (622)
________ ________ ___________ ___________ _____________ ___________
BALANCE, December 31,
1998 - - 2,000,000 2,000 (1,000) (622)
Net loss for the year ended
December 31, 1999 - - - - - (165)
_________ ________ ___________ ___________ ____________ ___________
BALANCE, December 31,
1999 - - 2,000,000 2,000 (1,000) (787)
Issuance of 10,000,000
shares of common stock
for cash at $.0005 per
share, September 20,
2000 - - 10,000,000 10,000 (5,000) -
Net loss for the year ended
December 31, 2000 - - - - - (243)
__________ _______ ____________ ____________ __________ ___________
BALANCE, December 31,
2000 - $ - 12,000,000 $ 12,000 $ (6,000) $ (1,030)
___________ _______ ____________ ____________ __________ ___________
The accompanying notes are an integral part of this financial
statement.
26
CACH FOODS, INC.
(Formerly Llebpmac, Inc.)
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
For the From Inception
Years Ended on May 4,
December 31, 1998 through
_______________________ December 31,
2000 1999 2000
___________ __________ _________
Cash Flows From Operating Activities:
Net loss $ (243) $ (165) $ (1,030)
Adjustments to reconcile net loss to
net cash used by operating activities:
Non-cash expenses 261 185 1,076
___________ __________ _________
Net Cash Provided (Used) by
Operating Activities 18 20 46
___________ __________ _________
Cash Flows From Investing Activities
Net Cash Provided by Investing
Activities - - -
__________ __________ __________
Cash Flows From by Financing
Activities:
Proceeds from issuance of common stock 5,000 - 6,000
__________ __________ __________
Net Cash Provided by Financing
Activities 5,000 - 6,000
__________ __________ __________
Net Increase in Cash 5,018 20 6,046
Cash at Beginning of Period 1,028 1,008 -
__________ __________ __________
Cash at End of Period $ 6,046 $ 1,028 $ 6,046
__________ __________ __________
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing
Activities:
For the year ended December 31, 2000:
An officer/shareholder of the Company paid $261 of expenses
for the Company.
For the year ended December 31, 1999:
An officer/shareholder of the Company paid $185 of expenses for
the Company.
For the period from inception on May 4, 1998 through December 31,
1998:
An officer/shareholder of the Company paid $630 of expenses
for the Company.
The accompanying notes are an integral part of these financial
statements.
27
CACH FOODS, INC.
(Formerly Llebpmac, Inc.)
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Cach Foods, Inc. (the Company) was organized under
the laws of the State of Nevada on May 4, 1998 as Llebpmac, Inc.
Effective November 2, 2000, the Company changed its name from
Llebpmac, Inc. to Cach Foods, Inc. The Company has not commenced
planned principal operations and is considered a development
stage company as defined in SFAS No. 7. The Company plans to be
a merchandiser of wholesale snack foods. The Company has, at the
present time, not paid any dividends and any dividends that may
be paid in the future will depend upon the financial requirements
of the Company and other relevant factors.
Organization Costs - Organization costs, which reflect amounts
expended to organize the Company, amounted to $530 and were
expensed during the period ended December 31, 1998.
Loss Per Share - The computation of loss per share is based on
the weighted average number of shares outstanding during the
period presented in accordance with Statement of Financial
Accounting Standards No. 128, "Earnings Per Share". [See Note 6]
Cash and Cash Equivalents - For purposes of the financial
statements, the Company considers all highly liquid debt
investments purchased with a maturity of three months or less to
be cash equivalents.
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, the disclosures of
contingent assets and liabilities at the date of the financial
statements, and the reported amount of revenues and expenses
during the reported period. Actual results could differ from
those estimated.
Recently Enacted Accounting Standards - Statement of Financial
Accounting Standards (SFAS) No. 136, "Transfers of Assets to a
not for profit organization or charitable trust that raises or
holds contributions for others", SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - deferral of the
effective date of FASB Statement No. 133 (an amendment of FASB
Statement No. 133)", SFAS No. 138 "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - and
Amendment of SFAS No. 133", SFAS No. 139, "Recission of SFAS No.
53 and Amendment to SFAS No. 63, 89 and 21", and SFAS No. 140,
"Accounting to Transfer and Servicing of Financial Assets and
Extinguishment of Liabilities", were recently issued. SFAS No.
136, 137, 138, 139 and 140 have no current applicability to the
Company or their effect on the financial statements would not
have been significant.
28
CACH FOODS, INC.
(Formerly Llebpmac, Inc.)
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - CAPITAL STOCK
Common Stock - On August 31, 1998, in connection with its
organization, the Company issued 2,000,000 shares of its
previously authorized, but unissued common stock. The shares
were issued for cash of $1,000 ($.0005 per share).
On September 20, 2000, the Company issued 10,000,000 shares of
its previously authorized, but unissued common stock. The shares
were issued for cash of $5,000 ($.0005 per share).
On October 2, 2000, the Company effected a 2-for-1 common stock
split. The financial statements for all periods presented have
been restated to reflect the stock split.
Preferred stock - The Company has authorized 5,000,000 shares of
preferred stock, $.001 par value, with such rights, preferences
and designations and to be issued in such series as determined by
the Board of Directors. No shares were issued and outstanding at
December 31, 2000.
NOTE 3 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes". FASB 109 requires the Company to provide a
net deferred tax asset/liability equal to the expected future tax
benefit/expense of temporary reporting differences between book
and tax accounting methods and any available operating loss or
tax credit carryforwards.
The Company has available at December 31, 2000, unused operating
loss carryforwards of approximately $1,000 which may be applied
against future taxable income and which expire in various years
from 2018 through 2020. The amount of and ultimate realization
of the benefits from the operating loss carryforwards for income
tax purposes is dependent, in part, upon the tax laws in effect,
the future earnings of the Company, and other future events, the
effects of which cannot be determined. Because of the
uncertainty surrounding the realization of the loss carryforwards
the Company has established a valuation allowance equal to the
amount of the loss carryforwards and, therefore, no deferred tax
asset has been recognized for the loss carryforwards. The net
deferred tax assets are approximately $350 and $300 as of
December 31, 2000 and 1999, respectively, with an offsetting
valuation allowance at each year end of the same amount resulting
in a change in the valuation allowance of approximately $50
during 2000.
NOTE 4 - RELATED PARTY TRANSACTIONS
Management Compensation - As of December 31, 2000, the Company
has not paid any compensation to any officer/director of the
Company.
Office Space - The Company has not had a need to rent office
space. An officer/shareholder of the Company is allowing the
Company to use his office as a mailing address, as needed, at no
expense to the Company.
Loan Payable - An officer/shareholder of the Company has paid
expenses totaling $1,076 on behalf of the Company. At December
31, 2000 the Company owed the shareholder $1,076. No interest is
being accrued on the advances.
29
CACH FOODS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern.
However, the Company has incurred losses since its inception and
has not yet been successful in establishing profitable
operations. These factors raise substantial doubt about the
ability of the Company to continue as a going concern. In this
regard, management is proposing to raise any necessary additional
funds not provided by operations through loans or through
additional sales of its common stock. There is no assurance that
the Company will be successful in raising this additional capital
or achieving profitable operations. The financial statements do
not include any adjustments that might result from the outcome of
these uncertainties.
NOTE 6 - LOSS PER SHARE
The following data shows the amounts used in computing loss per
share:
For the From Inception
Years Ended on May 4,
December 31, 1998 through
_______________________December 31,
2000 1999 2000
__________ __________ __________
Loss from continuing operations
available to common shareholders
(numerator) $ (243) $ (165) $(1,030)
___________ __________ __ _______
Weighted average number of
common shares outstanding used
in loss per share for the period
(denominator) 4,786,885 2,000,000 2,804,527
__________ __________ ___ _______
Dilutive loss per share was not presented, as the Company had no
common stock equivalent shares for all periods presented that
would affect the computation of diluted loss per share.
NOTE 7 - CONTRACTS AND COMMITMENTS
On October 10, 2000, the Company entered into a licensing
agreement with an officer/shareholder of the Company for
exclusive rights to use the brand name "Idaho Chips". The
agreement is cancelable after April 10, 2003 by either party
giving three months written notice to the other. The agreement
requires payment of 5% of gross revenues produced from use of the
brand name to the officer/shareholder of the Company for 30
months. At that point, if total gross revenues from use of the
brand name are at least $500,000, the agreement will be renewed
for an additional 12 months. The agreement will then be renewed
for 12 month terms for each successive 12 month period of
$300,000 in gross revenues from use of the brand name. The
agreement is non-assignable and prohibits the Company from
selling or transferring more than 50% of the outstanding stock.
30
CACH FOODS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - SUBSEQUENT EVENTS
Note Payable - On March 5, 2001, the Company borrowed $2,000 from
an officer/shareholder of the company. The underlying note
payable is due March 5, 2002 and accrues interest at 10% per
annum.
Stock Issuance - On April 20, 2001, the Company issued 1,000
shares of previously authorized but unissued common stock to two
directors for their services, totaling 2,000 new shares issued.
Stock Split - On April 26, 2001, the Company amended its Articles
of Incorporation. The amendment changed the par value of common
stock to $.001 per share and the authorized number of shares to
100,000,000. The financial statements for all periods presented
have been restated to reflect the amendment.
Proposed Stock Offering - The Company is proposing to make a
public offering of 250,000 shares of its previously authorized
but unissued common stock. This offering is proposed to be
registered with the Security and Exchange Commission on Form SB-
2. An offering price of $.50 per share has been arbitrarily
determined by the Company. The Company will pay a 15% commission
if brokers are used in the offering, otherwise the offering will
be managed by the Company, who will receive no sales commissions
or other compensation in connection with the offering, except for
reimbursement of expenses actually incurred on behalf of the
Company in connection with the offering. Offering costs are
estimated to be approximately $25,000.
31
CACH FOODS, INC.
[A Development Stage Company]
BALANCE SHEET
[Unaudited]
ASSETS
March 31,
2001
___________
CURRENT ASSETS:
Cash $ 3,046
___________
Total Current Assets 3,046
___________
$ 3,046
____________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Loan payable - related party $ 1,076
Note payable - related party 2,000
Accrued interest payable - related party 7
___________
Total Current Liabilities 3,083
___________
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.001 par value,
5,000,000 shares authorized,
no shares issued and outstanding -
Common stock, $.001 par value,
100,000,000 shares authorized,
12,000,000 shares issued and
outstanding 12,000
Capital in excess of par value (6,000)
Deficit accumulated during the
development stage (6,037)
___________
Total Stockholders' Equity (Deficit) (37)
___________
$ 3,046
____________
The accompanying notes are an integral part of this financial
statement.
32
CACH FOODS, INC.
[A Development Stage Company]
STATEMENTS OF OPERATIONS
[Unaudited]
For the Three From Inception
Months Ended on May 4,
March 31, 1998 Through
_________________________ March 31,
2001 2000 2001
____________ __________ ___________
REVENUE $ - $ - $ -
EXPENSES:
General and Administrative 5,000 - 6,076
____________ __________ ___________
LOSS FROM OPERATIONS (5,000) - (6,076)
_____________ __________ __________
OTHER INCOME (EXPENSE):
Interest income - 5 46
Interest expense (7) - (7)
_____________ __________ __________
TOTAL OTHER INCOME (EXPENSE) (7) 5 39
_____________ __________ __________
INCOME (LOSS) BEFORE INCOME TAXES (5,007) 5 (6,037)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
____________ __________ ___________
NET INCOME (LOSS) $ (5,007) $ 5 $ (6,037)
____________ __________ ___________
INCOME (LOSS) PER COMMON SHARE $ (.00) $ .00 $ (.00)
____________ __________ ___________
The accompanying notes are an integral part of these financial
statements.
33
CACH FOODS, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON MAY 4, 1998
THROUGH MARCH 31, 2001
[Unaudited]
Deficit
Accumulated
Preferred Stock Common Stock Capital in During the
_________________ _____________ Excess of Development
Shares Amount Shares Amount Par Value Stage
________ ________ ________ ________ _________ _____________
BALANCE, May 4, 1998 - $ - - $ - $ - $ -
Issuance of 2,000,000
shares of common stock for
cash at $.0005 per share,
August 31, 1998 - - 2,000,000 2,000 (1,000) -
Net income (loss) for the
period ended December 31,
1998 - - - - - (622)
________ ________ ________ ________ __________ ______________
BALANCE, December 31,
1998 - - 2,000,000 2,000 (1,000) (622)
Net income (loss) for the
year ended December 31,
1999 - - - - - (165)
_________ _________ _________ _________ _________ _____________
BALANCE, December 31,
1999 - - 2,000,000 $ 2,000 $ (1,000) $ (787)
Issuance of 10,000,000
shares of common stock
for cash at $.0005 per share
September 20, 2000 - - 10,000,000 10,000 (5,000) -
Net income (loss) for the
year ended December 31,
2000 - - - - - (243)
_________ _______ _________ ______ ________ ___________
BALANCE, December 31,
2000 - - 12,000,000 12,000 (6,000) (1,030)
Net income (loss ) for the
period ended March 31,
2001 - - - - - (5,007)
_________ ________ _________ _______ _________ ____________
BALANCE, March 31,
2001 - $ - 12,000,000 $12,000 $ (6,000) $ (6,037)
_________ ________ _________ _______ _________ ___________
The accompanying notes are an integral part of this financial
statement.
34
CACH FOODS, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
NET INCREASE (DECREASE) IN CASH
[Unaudited]
For the Three From Inception
Months Ended on May 4,
March 31, 1998 Through
_________________________ March 31,
2001 2000 2001
__________ __________ _____________
Cash Flows Provided by Operating Activities:
Net income (loss) $ (5,007) $ 5 $(6,037)
Adjustments to reconcile net loss to
net cash used by operating activities:
Noncash expenses - - 1,076
Changes in assets and liabilities:
Increase (decrease) in notes payable -
related party 2,000 - 2,000
Increase (decrease) in accrued
interest payable - related party 7 - 7
__________ __________ _____________
Net Cash Provided (Used) by
Operating Activities (3,000) 5 (2,954)
__________ __________ _____________
Cash Flows Provided by Investing Activities - - -
__________ __________ _____________
Net Cash Provided by Investing Activities - - -
__________ __________ _____________
Cash Flows Provided by Financing Activities:
Proceeds from issuance of common stock - - 6,000
__________ __________ _____________
Net Cash Provided by Financing Activities - - 6,000
__________ __________ _____________
Net Increase (Decrease) in Cash (3,000) 5 3,046
Cash at Beginning of Period 6,046 1,028 -
_________________________________
Cash at End of Period $ 3,046 1,033 $ 3,046
_________________________________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing
Activities:
For the period ended March 31, 2001:
None
For the period ended March 31, 2000:
None
For the period from inception on May 4, 1998 through March 31,
2001:
An officer/shareholder of the Company paid $1,076 of expenses
for the Company.
The accompanying notes are an integral part of these financial
statements.
35
CACH FOODS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Cach Foods, Inc. (the Company) was organized under
the laws of the State of Nevada on May 4, 1998 as Llebpmac, Inc.
Effective November 2, 2000, the Company changed its name from
Llebpmac, Inc. to Cach Foods, Inc. The Company has not commenced
planned principal operations and is considered a development
stage company as defined in SFAS No. 7. The Company plans to be
a merchandiser of wholesale snack foods. The Company has, at the
present time, not paid any dividends and any dividends that may
be paid in the future will depend upon the financial requirements
of the Company and other relevant factors.
Organization Costs - Organization costs, which reflect amounts
expended to organize the Company, amounted to $530 and were
expensed during the period ended December 31, 1998
Loss Per Share - The computation of loss per share is based on
the weighted average number of shares outstanding during the
period presented in accordance with Statement of Financial
Accounting Standards No. 128, "Earnings Per Share". [See Note 6]
Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers all highly liquid debt investments
purchased with a maturity of three months or less to be cash
equivalents.
Accounting Estimates - The preparation of Unaudited 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, the
disclosures of contingent assets and liabilities at the date of
the Unaudited Financial Statements, and the reported amount of
revenues and expenses during the reported period. Actual results
could differ from those estimated.
Recently Enacted Accounting Standards - Statement of Financial
Accounting Standards (SFAS) No. 136, "Transfers of Assets to a
not for profit organization or charitable trust that raises or
holds contributions for others", SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - deferral of the
effective date of FASB Statement No. 133 (an amendment of FASB
Statement No. 133)", SFAS No. 138 "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - and
Amendment of SFAS No. 133", SFAS No. 139, "Recission of SFAS No.
53 and Amendment to SFAS No. 63, 89 and 21", and SFAS No. 140,
"Accounting to Transfer and Servicing of Financial Assets and
Extinguishment of Liabilities", were recently issued. SFAS No.
136, 137, 138, 139 and 140 have no current applicability to the
Company or their effect on the Unaudited Financial Statements
would not have been significant.
NOTE 2 - CAPITAL STOCK
Preferred Stock - The Company has authorized 5,000,000 shares of
preferred stock, $.001 par value, with such rights, preferences
and designations and to be issued in such series as determined by
the Board of Directors. No shares are issued and outstanding at
March 31, 2001.
Common Stock - On August 31, 1998, in connection with its
organization, the Company issued 2,000,000 shares of its
previously authorized, but unissued common stock. The shares
were issued for cash of $1,000 or $.0005 per share.
36
CACH FOODS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 2 - CAPITAL STOCK [CONTINUED]
On September 20, 2000, the Company issued 10,000,000 shares of
its previously authorized but unissued common stock. The shares
were issued for cash of $5,000 or $.0005 per share.
On October 2, 2000, the Company effected a 2-for-1 common stock
split. The financial statements for all periods presented have
been restated to reflect the stock split.
NOTE 3 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes". FASB 109 requires the Company to provide a
net deferred tax asset/liability equal to the expected future tax
benefit/expense of temporary reporting differences between book
and tax accounting methods and any available operating loss or
tax credit carryforwards.
The Company has available at March 31, 2001, unused operating
loss carryforwards of approximately $6,000 which may be applied
against future taxable income and which expire in various years
through 2021. The amount of and ultimate realization of the
benefits from the operating loss carryforwards for income tax
purposes is dependent, in part, upon the tax laws in effect, the
future earnings of the Company, and other future events, the
effects of which cannot be determined. Because of the
uncertainty surrounding the realization of the loss carryforwards
the Company has established a valuation allowance equal to the
amount of the loss carryforwards and, therefore, no deferred tax
asset has been recognized for the loss carryforwards. The net
deferred tax asset is approximately $2,050 as of March 31, 2001,
with an offsetting valuation allowance of the same amount
resulting in a change in the valuation allowance of approximately
$1,700 for the three months ended March 31, 2001.
NOTE 4 - RELATED PARTY TRANSACTIONS
Management Compensation - As of March 31, 2001, the Company has
not paid any compensation to any officer or director of the
Company.
Office Space - The Company has not had a need to rent office
space. An officer/shareholder of the Company is allowing the
Company to use his offices as a mailing address, as needed, at no
expense to the Company.
Loan Payable - An officer/shareholder of the Company has paid
expenses totaling $1,076 on behalf of the Company. At March 31,
2001, the Company owed the shareholder $1,076. No interest is
being accrued on the advances.
Note Payable - An officer/shareholder of the Company advanced
$2,000 to the Company as a note payable. The note is due March
5, 2002 and accrues interest at 10% per annum. At March 31,
2001, accrued interest on the note was $7.
37
CACH FOODS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 5 - GOING CONCERN
The accompanying Unaudited Financial Statements have been
prepared in conformity with generally accepted accounting
principles, which contemplate continuation of the Company as a
going concern. However, the Company has incurred losses since
inception and has not yet been successful in establishing
profitable operations. Further, the Company has current
liabilities in excess of current assets. These factors raise
substantial doubt about the ability of the Company to continue as
a going concern. In this regard, management is proposing to
raise any necessary additional funds not provided by operations
through loans or through additional sales of its common stock.
There is no assurance that the Company will be successful in
raising this additional capital or achieving profitable
operations. The Unaudited Financial Statements do not include
any adjustments that might result from the outcome of these
uncertainties.
NOTE 6 - INCOME (LOSS) PER SHARE
The following data shows the amounts used in computing loss per
share:
For the Three From Inception
Months Ended on May 4,
March 31, 1998 Through
_________________________ March 31,
2001 2000 2001
____________ ____________ _________
Income (loss) from continuing
operations available to common
shareholders (numerator) $ (5,007) $ 5 $ (6,037)
____________ ____________ _________
Weighted average number of
common shares outstanding used
in income (loss) per share for
the period (denominator) 12,000,000 2,000,000 3,583,804
____________ ____________ _________
Dilutive income (loss) per share was not presented, as the
Company had no common stock equivalent shares for all periods
presented that would affect the computation of diluted income
(loss) per share.
NOTE 7 - CONTRACTS AND COMMITMENTS
On October 10, 2000, the Company entered into a licensing
agreement with an officer/shareholder of the Company for
exclusive rights to use the brand name "Idaho Chips". The
agreement is cancelable after April 10, 2003 by either party
giving three months written notice to the other. The agreement
requires payment of 5% of gross revenues produced from use of the
brand name to the officer/shareholder of the Company for 30
months. At that point, if total gross revenues from use of the
brand name are at least $500,000, the agreement will be renewed
for an additional 12 months. The agreement will then be renewed
for 12 month terms for each successive 12 month period of
$300,000 in gross revenues from use of the brand name. The
agreement is non-assignable and prohibits the Company from
selling or transferring more than 50% of the outstanding stock.
38
CACH FOODS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - SUBSEQUENT EVENTS
Stock Issuance - On April 20, 2001, the Company issued 1,000
shares of previously authorized but unissued common stock to two
directors for their services, totaling 2,000 new shares issued.
Stock Split- On April 26, 2001, the Company amended its Articles
of Incorporation. The amendment changed the par value of common
stock to $.001 per share and the authorized number of shares to
100,000,000. The financial statements for all periods presented
have been restated to reflect the amendment.
Proposed Stock Offering - The Company is proposing to make a
public offering of 250,000 shares of its previously authorized
but unissued common stock. This offering is proposed to be
registered with the Security and Exchange Commission on Form SB-
2. An offering price of $.50 per share has been arbitrarily
determined by the Company. The Company will pay a 15% commission
if brokers are used in the offering, otherwise the offering will
be managed by the Company, who will receive no sales commissions
or other compensation in connection with the offering, except for
reimbursement of expenses actually incurred on behalf of the
Company in connection with the offering. Offering costs are
estimated to be approximately $25,000.
39
=============================== ===================================
Until _____________, 2001, all
dealers that effect
transactions in these
securities, whether or not $75,000 Minimum
participating in this offering,
may be required to deliver a $125,000 Maximum
prospectus. This is in
addition to the dealers'
obligation to deliver a
prospectus when acting as
underwriters and with respect Cach Foods, Inc.
to their unsold allotments or
subscriptions.
- -------------------------------
150,000 Shares Minimum
TABLE OF CONTENTS 250,000 Shares Maximum
- ------------------------------- Common Stock
$0.001 Par Value
Prospectus Summary 2
Risk Factors 2
Forward-Looking Statements 6
Dilution and Comparative Data 7
Use of Proceeds 8
Determination of Offering Price 9
Description of Business 9
Plan of Operation 14 --------------------
Management 15 P R O S P E C T U S
Compensation 16 --------------------
Certain Relationships and
Related Transactions 16
Principal Stockholders 17
Description of the Securities 18
Shares Available for Future
Sale 19
Market for Common Stock 19
Plan of Distribution 20
Legal Matters 21 _________, 2001
Experts 21
Additional Information 21
Index to Financial Statements 22
No dealer, salesperson or other
person has been authorized to
give any information or to make
any representations other than
those contained in this
Prospectus and, if given or
made, such information or
representations must not be
relied upon as having been
authorized by the Company. This
Prospectus does not constitute
an offer to sell or a
solicitation of an offer to buy
any of the securities offered
hereby to whom it is unlawful
to make such offer in any
jurisdiction. Neither the
delivery of this Prospectus nor
any sale made hereunder shall,
under any circumstances, create
any implication that
information contained herein is
correct as of any time
subsequent to the date hereof
or that there has been no
change in the affairs of the
Company since such date.
====================================
40
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our company's charter provides that, to the fullest extent
that limitations on the liability of directors and officers are
permitted by the Nevada Revised Statutes, no director or officer
of the company shall have any liability to the company or its
stockholders for monetary damages. The Nevada Revised Statutes
provide that a corporation's charter may include a provision
which restricts or limits the liability of its directors or
officers to the corporation or its stockholders for money damages
except: (1) to the extent that it is provided that the person
actually received an improper benefit or profit in money,
property or services, for the amount of the benefit or profit in
money, property or services actually received, or (2) to the
extent that a judgment or other final adjudication adverse to the
person is entered in a proceeding based on a finding in the
proceeding that the person's action, or failure to act, was the
result of active and deliberate dishonesty and was material to
the cause of action adjudicated in the proceeding. Our charter
and bylaws provide that the company shall indemnify and advance
expenses to its currently acting and its former directors and
officers to the fullest extent permitted by the Nevada Revised
Business Corporations Act, except for liability for (i) breach of
duty of loyalty, (ii) acts or omissions not in good faith that
involve intentional misconduct or knowing violation of law, (iii)
for the payment of distributions to stockholders in violation of
section 78.300 of the Nevada Revised Statutes, or (iv) for any
transaction from which the director or officer derived an
improper personal benefit.
The charter and bylaws provide that we will indemnify our
directors and officers and may indemnify our employees or agents
to the fullest extent permitted by law against liabilities and
expenses incurred in connection with litigation in which they may
be involved because of their offices with Cach Foods. However,
nothing in our charter or bylaws of the company protects or
indemnifies a director, officer, employee or agent against any
liability to which he would otherwise be subject by reason of
negligence or misconduct of the duties involved in the conduct of
his office. To the extent that a director has been successful in
defense of any proceeding, the Nevada Revised Statutes provide
that he shall be indemnified against reasonable expenses incurred
in connection therewith.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy and is, therefore,
unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection
with this Registration Statement. We will pay all expenses of the
offering. All of such expenses are estimates, other than the
filing fees payable to the Securities and Exchange Commission.
Securities and Exchange $ 37.50
Commission Filing Fee
Printing Fees and Expenses 500.00
Legal Fees and Expenses 15,000.00
Accounting Fees and Expenses 8,000.00
Blue Sky Fees and Expenses 500.00
Trustee's and Registrar's Fees 500.00
Miscellaneous 462.50
TOTAL $ 25,000.00
41
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The following is a detailed list of securities sold within
the past three years without registering under the Securities
Act. The securities were sold to accredited investors since each
recipient was an officer or director at the time of issuance.
The sales were private transactions, without registration in
reliance on the exemption provided by Section 4(2) of the
Securities Act. Each purchaser had a pre-existing relationship
with the Company and had access to all material information
pertaining to the Company and its financial condition. No broker
was involved and no commissions were paid in the transaction.
In May 1998 and September 2000, we issued a total of
12,000,000 shares of restricted common stock to Cornelius A.
Hofman in exchange for $6,000.
In April 2001, we issued 1,000 shares of common stock to
Kelly O. McBride and 1,000 shares of common stock to Brian Kramer
in consideration for services rendered as directors.
ITEM 27. EXHIBITS.
Exhibits.
SEC Ref. No. Title of Document Location
3.1 Articles of Incorporation E-1
3.2 Amendment No. 1 to Articles of E-8
Incorporation
3.3 Amendment No. 2 to Articles of E-9
Incorporation
3.4 By-laws E-11
5.1 Legal Opinion included in Exhibit 23.1 See E-34
10.1 2001 Stock Option Plan E-21
10.2 License Agreement Dated October 10, 2000 E-31
10.3 Promissory Note to Mr. Hofman Dated March E-33
5, 2001
23.1 Consent of Lehman Walstrand & Associates E-34
23.2 Consent of Pritchett, Siler & Hardy E-35
99.1 Subscription Agreement with Mr. Hofman E-36
99.2 Escrow Agreement E-42
ITEM 28. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
provisions described in this Registration Statement or otherwise,
we have been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by us of expenses incurred or paid by a director, officer or
controlling persons of Cach Foods in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
42
The undersigned registrant hereby undertakes to:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by section 10(a)(3)
of the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement; and
(iii) Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at
that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
43
SIGNATURES
In accordance with the requirements of the Securities Act of
1933, Cach Foods, Inc., certifies that it has reasonable ground
to believe that it meets all of the requirements of filing on
Form SB-2 and authorizes this Registration Statement to be signed
on its behalf, in the City of Pocatello, State of Idaho, on May
9, 2001.
Cach Foods, Inc.
Dated: May 9, 2001 By: /s/Cornelius A. Hofman
Cornelius A. Hofman
President
Dated: May 9, 2001 By: /s/Kelly McBride
Kelly McBride
Secretary & Treasurer
44
POWER OF ATTORNEY
Know all men by these present, that each person whose
signature appears below constitutes and appoints Cornelius A.
Hofman and Kelly McBride (with full power to each of them to act
alone) as his true and lawful attorney-in-fact and agent, with
full power of substitution, for him and in his name, place and
stead in any and all capacities to sign any or all amendments or
post-effective amendments to this Registration Statement,
including registration statements filed or amendments made
pursuant to Rule 462 under the Securities Act of 1933, as
amended, and to file the same with all exhibits thereto and other
documents in connection therewith, with the Securities and
Exchange Commission, to sign any and all applications,
registration statements, notices or other document necessary or
advisable to comply with the applicable state securities laws,
and to file the same, together with all other documents in
connection therewith, with the appropriate state securities
authorities, granting unto said attorneys-in-fact and agents or
any of them, or their or his substitute or substitutes, full
power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or
could do in person, thereby ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement or Amendment has been signed below by
the following persons in the capacities and on the dates
indicated.
Dated: May 1, 2001 /s/Brian Kramer
Brian Kramer
Director
45
Pursuant to the requirements of the Securities Act of 1933,
this registration statement or Amendment has been signed below by
the following persons in the capacities and on the dates
indicated.
Dated: May 9, 2001 /s/Cornelius A. Hofman
Cornelius A. Hofman
Director
Dated: May 9, 2001 /s/Kelly McBride
Kelly McBride
Director
46