-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FzmUST74v2jqIYO+m+yK3HHjYaPz85MZBe3bopNoLQAa9SSX8+m9IBbN3ugFiWVs RkTXr+rcLZjB1xGDwEV5bQ== 0001165527-05-000356.txt : 20051222 0001165527-05-000356.hdr.sgml : 20051222 20051222131808 ACCESSION NUMBER: 0001165527-05-000356 CONFORMED SUBMISSION TYPE: SB-2 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20051222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Gemwood Productions, Inc. CENTRAL INDEX KEY: 0001342219 IRS NUMBER: 203240178 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SB-2 SEC ACT: 1933 Act SEC FILE NUMBER: 333-130606 FILM NUMBER: 051281161 BUSINESS ADDRESS: STREET 1: C ALTA MAR 157 FRACC BAJA DEL MAR CITY: ROSARITO STATE: O5 ZIP: 22710 BUSINESS PHONE: 775-352-4178 MAIL ADDRESS: STREET 1: C ALTA MAR 157 FRACC BAJA DEL MAR CITY: ROSARITO STATE: O5 ZIP: 22710 SB-2 1 g1047.txt FORM SB-2 OF GEMWOOD PRODUCTIONS As filed with the Securities and Exchange Commission on December 22, 2005 Registration No. 333-______ ================================================================================ U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM SB-2 Registration Statement Under the Securities Act of 1934 Gemwood Productions, Inc. (Name of Small Business Issuer in Its Charter)
NEVADA 7231 20-3240178 (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Incorporation or Organization) Classification Code Number) Identification No.)
C Alta Mar 157 Fracc Baja Del Mar Playas de Rosarito BC 22710 Mexico (775) 352-4178 (Address of principal Executive Offices) (Issuer's Telephone Number) Law Office of Michael M. Kessler 3436 American River Drive, Suite 11 Sacramento, CA 95864 (916)239-4000 (919)239-4008 (Name and Address of Agent for Service) (Telephone Number) (Fax Number) Approximate Date of Commencement of Proposed Sale to the Public: As soon as practicable after the effective date of this Registration Statement. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. [ ] CALCULATION OF REGISTRATION FEE ================================================================================ Title of Each Proposed Proposed Class of Maximum Maximum Securities Offering Aggregate Amount of to be Amount to be Price Offering Registration Registered Registered Per Unit (1) Price (2) Fee - -------------------------------------------------------------------------------- Common 900,000 $0.03 $27,000 $2.89 ================================================================================ (1) Fixed offering price was set by the selling shareholders until securities are quoted on the OTC Bulletin Board or other national exchange, and thereafter at prevailing market prices or privately negotiated prices. (2) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457 under the Securities Act. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ================================================================================ PROSPECTUS Gemwood Productions, Inc. C Alta Mar 157 Fracc Baja Del Mar, Playas De Rosarito, B.C. 22710, Mexico 900,000 SHARES OF COMMON STOCK This is the initial offering of common stock of Gemwood Productions, Inc. and no public market exists for the securities being offered. Gemwood Productions is offering for sale a total of 900,000 shares of its common stock on a self-underwritten, best effort, all-or-none basis. The shares will be offered at a fixed price of $.03 per share for a period of 180 days from the date of this prospectus, unless extended by our Board of Directors for an additional 90 days. There is no minimum number of shares required to be purchased per investor. We intend to open a standard bank checking account to be used only for the deposit of funds received from the sale of shares in this offering. This offering is on best efforts, all-or-none basis, meaning if all shares are not sold and the total offering amount is not deposited by the expiration date of the offering, all monies will be returned to investors, without interest or deduction. See "Use of Proceeds" and "Plan of Distribution". Gemwood Productions is a development stage, start-up Company and currently has limited operations. Any investment in the shares offered herein involves a high degree of risk. You should only purchase shares if you can afford a complete loss of your investment. BEFORE INVESTING, YOU SHOULD CAREFULLY READ THIS PROSPECTUS AND, PARTICULARLY, THE RISK FACTORS SECTION, BEGINNING ON PAGE 4. Neither the U.S. Securities and Exchange Commission nor any state securities division has approved or disapproved these securities, or determined if this prospectus is current, complete, truthful or accurate. Any representation to the contrary is a criminal offense. Offering Total Price Amount of Underwriting Proceeds Per Share Offering Commissions to Us --------- -------- ----------- ----- Common Stock $.03 $27,000 $0 $27,000 THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE WILL NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. Subject to Completion, Dated , 2005 TABLE OF CONTENTS SUMMARY...................................................................... 3 OFFERING..................................................................... 3 RISK FACTORS................................................................. 4 FORWARD LOOKING STATEMENTS .................................................. 9 USE OF PROCEEDS.............................................................. 9 DETERMINATION OF OFFERING PRICE ............................................. 10 DIVIDEND POLICY.............................................................. 10 PLAN OF DISTRIBUTION......................................................... 10 LEGAL PROCEEDINGS............................................................ 12 DIRECTORS, OFFICERS, PROMOTERS AND CONTROL PERSONS .......................... 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT .............. 13 DESCRIPTION OF SECURITIES ................................................... 13 INTEREST OF NAMED EXPERTS AND COUNSEL ....................................... 14 SECURITIES ACT INDEMNIFICATION DISCLOSURE ................................... 14 ORGANIZATION IN THE LAST FIVE YEARS ......................................... 15 DESCRIPTION OF BUSINESS ..................................................... 15 PLAN OF OPERATION............................................................ 20 DESCRIPTION OF PROPERTY ..................................................... 24 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .............................. 24 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS COMMON EQUITY AND OTHER SHAREHOLDER MATTERS .................................................. 24 EXECUTIVE COMPENSATION ...................................................... 27 FINANCIAL STATEMENTS ........................................................ 27 CHANGES IN OR DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING CONTROL AND FINANCIAL DISCLOSURE ................................................... 27 2 SUMMARY You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we," "us," and "our" are to Gemwood Productions, Inc. Gemwood Productions, Inc. was incorporated in Nevada on January 17, 2005 for the purpose of marketing and selling day spa services to tourists at resort destinations throughout Mexico. We have signed a commercial lease agreement to commence on April 1st, 2006 and continue month-to-month thereafter until canceled upon 30 days prior notice by either party. We have paid a deposit of $500.00 for the location, and the rental cost will be $300.00 per month. We have received a letter-of-intent from Gran Baja Resorts offering their intent to authorize Gemwood Productions, Inc. to provide day spa and salon services to their resort guests beginning spring of 2006. The principal executive offices are located at C Alta Mar 157 Fracc Baja Del Mar, Playas De Rosarito, B.C. 22710. The telephone number is (775) 352-4178. From inception until the date of this filing we have had limited operating activities. Our audited financial statements for the year ended September 30, 2005 report no revenues and no losses. Our independent auditors have issued an audit opinion for Gemwood Productions which includes a statement expressing substantial doubt as to our ability to continue as a going concern. Our only asset as of the date of this prospectus is our cash in the bank, consisting of $20,000 in cash generated from the issuance of shares to our founder. OFFERING The following is a brief summary of this offering. Please see the Plan of Distribution and Terms of the Offering sections for a more detailed description of the terms of the offering. Securities Being Offered 900,000 Shares of common stock, par value $.001. Offering Price per Share $.03 Offering Period The shares are being offered for a period not to exceed 180 days, unless extended by our Board of Directors for an additional 90 days. In the event we do not sell all of the shares before the expiration date of the offering, all funds raised will be promptly returned to the investors, without interest or deduction. Net Proceeds $27,000 Use of Proceeds We intend to use the proceeds to expand our business operations. No. of Shares Outstanding Before the Offering: 2,000,000 No. of Shares Outstanding After the Offering: 2,900,000 3 Our officer, director, control person and/or affiliates do not intend to purchase any shares in this offering. If all the shares in this offering are sold, our executive officer and director will own 69% of our common stock. Due to the controlling amount of his share ownership, he will have a significant influence in determining the outcome of all corporate transactions. RISK FACTORS RISKS ASSOCIATED WITH OUR COMPANY: OUR OFFICER AND DIRECTOR CURRENTLY DEVOTES ONLY PART TIME SERVICES TO THE COMPANY AND IS ALSO INVOLVED IN OTHER BUSINESS ACTIVITIES. THE COMPANY'S NEEDS COULD EXCEED THE AMOUNT OF TIME OR LEVEL OF EXPERIENCE HE MAY HAVE. THIS COULD RESULT IN HIS INABILITY TO PROPERLY MANAGE COMPANY AFFAIRS, RESULTING IN OUR REMAINING A START-UP COMPANY WITH NO REVENUES OR PROFITS. Victor Manuel Savceda, the President and Director of the company, currently devotes approximately 5 - 10 hours per week to company matters. The responsibility of developing the company's business, the offering and selling of the shares through this prospectus and fulfilling the reporting requirements of a public company all fall upon Mr. Savceda. He has no prior experience serving as a principal accounting officer or principal financial officer in a public company. We have not formulated a plan to resolve any possible conflict of interest with his other business activities. Mr. Savceda intends to limit his role in his other business activities and devote full time services to Gemwood Productions after we attain a sufficient level of revenue and are able to provide sufficient officers' salaries. In the event he is unable to fulfill any aspect of his duties to the company we may experience a shortfall or complete lack of sales resulting in little or no profits and eventual closure of the business. SINCE WE ARE A DEVELOPMENT STAGE COMPANY, HAVE GENERATED NO REVENUES AND LACK AN OPERATING HISTORY, AN INVESTMENT IN THE SHARES OFFERED HEREIN IS HIGHLY RISKY AND COULD RESULT IN A COMPLETE LOSS OF YOUR INVESTMENT IF WE ARE UNSUCCESSFUL IN OUR BUSINESS PLANS. Our company was incorporated on January 17, 2005; we have not yet commenced our business operations; and we have not yet realized any revenues. We have no operating history upon which an evaluation of our future prospects can be made. Based upon current plans, we expect to incur operating losses in future periods as we incur significant expenses associated with the initial startup of our business. Further, we cannot guarantee that we will be successful in realizing revenues or in achieving or sustaining positive cash flow at any time in the future. Any such failure could result in the possible closure of our business or force us to seek additional capital through loans or additional sales of our equity securities to continue business operations, which would dilute the value of any shares you purchase in this offering. OUR ONLY ASSET IS $20,000 CASH IN THE BANK AND WE ARE DEPENDENT UPON THE PROCEEDS OF THIS OFFERING TO COMPLETE THE FUNDING FOR OUR BUSINESS PLAN. IF WE DO NOT RECEIVE FUNDING OUR BUSINESS WILL FAIL. 4 The only cash currently available is the cash paid by our founder for the acquisition of his shares. In the event we do not sell all of the shares and raise the total offering proceeds, there can be no assurance that we would be able to raise the additional funding needed to fully implement our business plans or that unanticipated costs will not increase our projected expenses for the year following completion of this offering. Our auditors have expressed substantial doubt as to our ability to continue as a going concern. WE DO NOT HAVE ANY ADDITIONAL SOURCE OF FUNDING FOR OUR BUSINESS PLANS AND MAY BE UNABLE TO FIND ANY SUCH FUNDING IF AND WHEN NEEDED, RESULTING IN THE FAILURE OF OUR BUSINESS. Other than the shares offered by this prospectus, no other source of additional capital has been has been identified or sought. As a result we do not have an alternate source of funds should we fail to complete this offering. If we do find an alternative source of capital, the terms and conditions of acquiring such capital may result in dilution and the resultant lessening of value of the shares of stockholders. If we are not successful in raising sufficient capital through this offering, we will be faced with several options: 1. abandon our business plans, cease operations and go out of business; 2. continue to seek alternative and acceptable sources of capital; or 3. bring in additional capital that may result in a change of control. In the event of any of the above circumstances you could lose a substantial part or all of your investment. In addition, there can no be guarantee that the total proceeds raised in this offering will be sufficient, as we have projected, to fund our business plans or that we will be profitable. As a result, you could lose any investment you make in our shares. WE CANNOT PREDICT WHEN OR IF WE WILL PRODUCE REVENUES, WHICH COULD RESULT IN A TOTAL LOSS OF YOUR INVESTMENT IF WE ARE UNSUCCESSFUL IN OUR BUSINESS PLANS. We have not yet opened our day spa and have not yet generated any revenues from operations. In order for us to continue with our plans and open our business, we must raise capital through this offering. The timing of the completion of the milestones needed to commence operations and generate revenues is contingent on the success of this offering. There can be no assurance that we will generate revenues or that revenues will be sufficient to maintain our business. As a result, you could lose all of your investment if you decide to purchase shares in this offering and we are not successful in our proposed business plans. THE DAY SPA INDUSTRY IS HIGHLY COMPETITIVE. IF WE CAN NOT DEVELOP AND MARKET A DESIRABLE OFFERING OF SERVICES THAT THE PUBLIC IS WILLING PURCHASE, WE WILL NOT BE ABLE TO COMPETE SUCCESSFULLY, OUR BUSINESS MAY BE ADVERSELY AFFECTED AND WE MAY NEVER BE ABLE TO GENERATE ANY REVENUES. The day spa industry is intensely competitive and fragmented. We will compete against a number of large well-established companies with greater name recognition, a more comprehensive offering of services, and with substantially larger resources than ours. In addition to these large competitors there are 5 numerous smaller operations that have developed and are marketing services similar to ours. Our competitors include, by way of example, Cielo, Spa Vital, and Spa at the Riviera Alta. There can be no assurance that we can compete successfully in this complex and changing market. If we cannot successfully compete in this highly competitive industry, we may never be able to generate revenues or become profitable. As a result, you may never be able to liquidate or sell any shares you purchase in this offering. OUR CONTINUED OPERATIONS DEPEND ON THE PUBLIC'S ACCEPTANCE OF OUR DAY SPA SERVICES. IF THE PUBLIC DOESN'T FIND OUR SERVICES DESIRABLE AND WE CANNOT ESTABLISH A RETURNING CUSTOMER BASE, WE MAY NOT BE ABLE TO GENERATE ANY FUTURE REVENUES, WHICH WOULD RESULT IN A FAILURE OF OUR BUSINESS AND A LOSS OF ANY INVESTMENT YOU MAKE IN OUR SHARES. The ability to offer a line of day spa services that the public finds desirable and willing to purchase on a recurring basis is critically important to our success. We cannot be certain that the services that we will be offering will be appealing to the public and as a result there may not be any demand for our services and our sales could be limited and we may never realize any revenues. In addition, there are no assurances that if we alter or change our services in the future that the public's demand for these new offerings will develop and this could adversely affect our business and any possible revenues. WE WILL BE SUBJECT TO THE MANY RISKS OF DOING BUSINESS INTERNATIONALLY, INCLUDING BUT NOT LIMITED TO THE DIFFICULTY OF ENFORCING LIABILITIES IN FOREIGN JURISDICTIONS, MAKING IT DIFFICULT FOR AN INVESTOR TO EFFECT SERVICE UPON THE COMPANY. We are a Nevada corporation and, as such, are subject to the jurisdiction of the State of Nevada and the United States courts for purposes of any lawsuit, action or proceeding by investors herein. An investor would have the ability to effect service of process in any action on the company within the United States. In addition, we will be operating as a foreign corporation doing business in Mexico and are subject to the local laws of Mexico governing the investor's ability to bring actions in foreign courts and enforce liabilities against a foreign private issuer, or any person, based on U.S. federal securities laws. Generally, a final and conclusive judgment obtained by investors in U.S. courts would be recognized and enforceable against us in the Mexican courts having jurisdiction without reexamination of the merits of the case. Since our officer and director resides outside the United States, substantially all or a portion of his assets are located outside the United States. As a result, it may not be possible for investors to affect service of process within the United States upon such persons or to enforce against them judgments obtained in United States courts predicated upon the civil liability provisions of the federal securities laws of the United States. BECAUSE WE OPERATE IN A FOREIGN COUNTRY, OUR BUSINESS WILL BE SUBJECT TO FOREIGN CURRENCY FLUCTUATIONS AND RISKS WHICH COULD SEVERELY IMPACT OUR REVENUES AND RESULTS OF OPERATIONS. While our bank account is in U.S. Dollars and is held in a U.S. bank, we will be conducting the majority of our business, at least initially, in the Mexican Peso. The Mexican Peso has traded in a fairly narrow range over the past several years so we currently only have limited exposure to exchange rate fluctuations. 6 At some point in the future the exchange rate could fluctuate substantially more which would cause us exposure to exchange rate risk as our profits would then be subject to exchange rate fluctuations. RISKS ASSOCIATED WITH THIS OFFERING: THE SHARES BEING OFFERED ARE DEFINED AS "PENNY STOCK", THE RULES IMPOSED ON THE SALE OF THE SHARES MAY AFFECT YOUR ABILITY TO RESELL ANY SHARES YOU MAY PURCHASE, IF AT ALL. The shares being offered are defined as a penny stock under the Securities and Exchange Act of 1934, and rules of the Commission. The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than certain accredited investors who are, generally, institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 ($300,000 jointly with spouse), or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker-dealer must make a suitability determination for each purchaser and receive the purchaser's written agreement prior to the sale. In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required by the Commission. Consequently, the penny stock rules may affect the ability of broker-dealers to make a market in or trade our common stock and may also affect your ability to resell any shares you may purchase in this offering in the public markets. See the Plan of Distribution section on page 10. WE ARE SELLING THIS OFFERING WITHOUT AN UNDERWRITER AND MAY BE UNABLE TO SELL ANY SHARES. This offering is self-underwritten, that is, we are not going to engage the services of an underwriter to sell the shares; we intend to sell them through our officer and director, who will receive no commission. He will offer the shares to his friends, relatives, acquaintances and business associates. However; there is no guarantee that he will be able to sell any of the shares. In the event all of the shares are not sold before the expiration date of the offering, all funds will be promptly returned to the investors, without interest or deduction. DUE TO THE LACK OF A TRADING MARKET FOR OUR SECURITIES, YOU MAY HAVE DIFFICULTY SELLING ANY SHARES YOU PURCHASE IN THIS OFFERING. There is presently no demand for our common stock and no public market exists for the shares being offered in this prospectus. We plan to contact a market maker to file an application on our behalf to have our common stock listed for quotation on the Over-the-Counter Bulletin Board (OTCBB) immediately following the effectiveness of this Registration Statement. The OTCBB is a regulated quotation service that displays real-time quotes, last sale prices and volume information in over-the-counter (OTC) securities. The OTCBB is not an issuer listing service, market or exchange. Although the OTCBB does not have any listing requirements per se, to be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC or applicable regulatory authority. Market Makers are not permitted to begin quotation of a security 7 whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following a 30 or 60 day grace period if they do not make their required filing during that time. We cannot guarantee that our application will be accepted or approved and our stock listed and quoted for sale. As of the date of this filing, there have been no discussions or understandings between Gemwood Productions or anyone acting on our behalf with any market maker regarding participation in a future trading market for our securities. If no market is ever developed for our common stock, it will be difficult for you to sell any shares you purchase in this offering. In such a case, you may find that you are unable to achieve any benefit from your investment or liquidate your shares without considerable delay, if at all. In addition, if we fail to have our common stock quoted on a public trading market, your common stock will not have a quantifiable value and it may be difficult, if not impossible, to ever resell your shares, resulting in an inability to realize any value from your investment. YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES. Our existing stockholder acquired his shares at a cost substantially less than that which you will pay for the shares you purchase in this offering. Accordingly, any investment you make in these shares will result in the immediate and substantial dilution of the net tangible book value of those shares from the $.03 you pay for them. Upon completion of the offering, the net tangible book value of your shares will be $.014 per share, $.016 less than what you paid for them. WE WILL BE HOLDING ALL PROCEEDS FROM THE OFFERING IN A STANDARD BANK CHECKING ACCOUNT UNTIL ALL SHARES ARE SOLD HOWEVER THERE IS NO GUARANTEE ALL OF THE FUNDS WILL BE USED AS OUTLINED IN THIS PROSPECTUS. All funds received from the sale of shares in this offering will be deposited into a standard bank checking account until all shares are sold and the offering is closed, at which time, the proceeds will be transferred to our business operating account. We have committed to use the proceeds raised in this offering for the uses set forth in the proceeds table. However, certain factors beyond our control, such as increases in certain costs, could result in the company being forced to reduce the proceeds allocated for other uses in order to accommodate these unforeseen changes. The failure of our management to use these funds effectively could result in unfavorable returns. This could have a significant adverse effect on our financial condition and could cause the price of our common stock to decline. OUR DIRECTOR WILL CONTINUE TO EXERCISE SIGNIFICANT CONTROL OVER OUR OPERATIONS, WHICH MEANS AS A MINORITY SHAREHOLDER, YOU WOULD HAVE NO CONTROL OVER CERTAIN MATTERS REQUIRING STOCKHOLDER APPROVAL THAT COULD AFFECT YOUR ABILITY TO EVER RESELL ANY SHARES YOU PURCHASE IN THIS OFFERING. After the completion of this offering, our executive officer and director will own 69% of our common stock. Due to the controlling amount of his share ownership, he will have a significant influence in determining the outcome of all corporate transactions, including the election of directors, approval of significant corporate transactions, changes in control of the company or other matters that could affect your ability to ever resell your shares. His interests may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders. 8 WE WILL INCUR ONGOING COSTS AND EXPENSES FOR SEC REPORTING AND COMPLIANCE, WITHOUT REVENUE WE MAY NOT BE ABLE TO REMAIN IN COMPLIANCE, MAKING IT DIFFICULT FOR INVESTORS TO SELL THEIR SHARES, IF AT ALL. Our business plan allows for the estimated $5,000 cost of this Registration Statement to be paid from existing cash on hand. We plan to contact a market maker immediately following the effectiveness of this Registration Statement and have them file an application on our behalf to have the shares quoted on the OTC Electronic Bulletin Board. To be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC. Market Makers are not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following a 30 or 60 day grace period if they do not make their required filing during that time. In order for us to remain in compliance we will require future revenues to cover the cost of these filings, which could comprise a substantial portion of our available cash resources. If we are unable to generate sufficient revenues to remain in compliance it may be difficult for you to resell any shares you may purchase, if at all. FORWARD LOOKING STATEMENTS This prospectus contains forward-looking statements that involve risk and uncertainties. We use words such as "anticipate", "believe", "plan", "expect", "future", "intend", and similar expressions to identify such forward-looking statements. Investors should be aware that all forward-looking statements contained within this filing are good faith estimates of management as of the date of this filing. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us as described in the "Risk Factors" section and elsewhere in this prospectus. USE OF PROCEEDS Assuming we are able to sell all of the shares and complete the offering, which we can't guarantee, the proceeds to us will be $27,000. We expect to disburse those proceeds in the priority set forth below, during the first 12 months following successful completion of this offering: Total Proceeds $27,000 ------- Salaries 12,000 Advertising and Marketing 12,000 Renovations 3,000 ------- Total Net Proceeds $27,000 ======= DETERMINATION OF OFFERING PRICE The offering price of the shares has been determined arbitrarily by us. The price does not bear any relationship to our assets, book value, earnings, or other established criteria for valuing a privately held company. In determining 9 the number of shares to be offered and the offering price we took into consideration our cash assets and the amount of money we would need to fully implement our business plans. Accordingly, the offering price should not be considered an indication of the actual value of our securities. DIVIDEND POLICY We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of the business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. PLAN OF DISTRIBUTION There is currently no market for any of our shares and we can provide no assurance that the shares offered will have a market value or that they can be resold at the offering price. We can also provide no assurance when an active secondary market might develop, or that a public market for our securities may be sustained even if it is developed. We plan to contact a market maker to file an application on our behalf to have our common stock listed for quotation on the Over-the-Counter Bulletin Board (OTCBB) immediately following the effectiveness of this Registration Statement. The OTCBB is a regulated quotation service that displays real-time quotes, last sale prices and volume information in over-the-counter (OTC) securities. We do not know how long this process will take and we cannot guarantee that our application will be accepted or approved and our stock listed and quoted for sale. As of the date of this filing, there have been no discussions or understandings between Gemwood Productions or anyone acting on our behalf with any market maker regarding participation in a future trading market for our securities. If no market is ever developed for our common stock, it will be difficult for you to sell any shares you purchase in this offering. In such a case, you may find that you are unable to achieve any benefit from your investment or liquidate your shares without considerable delay, if at all. In addition, if we fail to have our common stock quoted on a public trading market, your common stock will not have a quantifiable value and it may be difficult, if not impossible, to ever resell your shares, resulting in an inability to realize any value from your investment. This is a self-underwritten offering. This prospectus is part of a prospectus that permits our officer and director to sell the shares directly to the public, with no commission or other remuneration payable to him for any shares they sell. There are no plans or arrangements to enter into any contracts or agreements to sell the shares with a broker or dealer. Our officer and director will sell the shares and intends to offer them to friends, family members and business acquaintances. In offering the securities on our behalf, our officer and director will rely on the safe harbor from broker dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934, 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. a. Our officer and director is not subject to a statutory disqualification, as that term is defined in Section 3(a)(39) of the Act, at the time of his participation; and, 10 b. Our officer and director will not be compensated in connection with his participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities; and c. Our officer and director is not, nor will be at the time of his participation in the offering, an associated person of a broker-dealer; and d. Our officer and director meets the conditions of paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in that he (A) primarily performs, or is intending primarily to perform at the end of the offering, substantial duties for or on behalf of our company, other than in connection with transactions in securities; and (B) is not a broker or dealer, or been associated person of a broker or dealer, within the preceding twelve months; and (C) has not participated in selling and offering securities for any Issuer more than once every twelve months other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii). Our officer, director, control person and affiliates of same do not intend to purchase any shares in this offering. TERMS OF THE OFFERING The Shares will be sold at the fixed price of $.03 per Share until the completion of this offering. There is no minimum amount of subscription required per investor. This offering will commence on the date of this prospectus and continue for a period of 180 days, unless we extend the offering period for an additional 90 days, or unless the offering is completed. This is a "best efforts", "all or none" offering and, as such, we will not be able to spend any of the proceeds unless and until all shares are sold and all proceeds are received. We intend to hold all funds collected for subscriptions in a separate bank account until the total amount of $27,000 has been received. At that time, the funds will be transferred to our business account for use in our business plans. In the event the offering is not sold out prior to the Expiration Date, all funds will be returned to investors, without interest or deduction. PROCEDURES FOR SUBSCRIBING If you decide to subscribe for any shares in this offering, you will be required to execute a Subscription Agreement and tender it, together with a check or certified funds to us. All checks for subscriptions should be made payable to Gemwood Productions, Inc. LEGAL PROCEEDINGS Gemwood is not currently involved in any legal proceedings and we are not aware of any pending or potential legal actions. 11 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The director and officer of Gemwood, whose one year term will expire 11/15/06, or at such a time as his successor(s) shall be elected and qualified is as follows: Date Name & Address Age Position First Elected Term Expires - -------------- --- -------- ------------- ------------ Victor Manuel Savceda 20 President, 08/13/05 11/15/06 C Alta Mar 157 Fracc Baja Del Mar Secretary, Playas De Rosarito B.C 22710 Director The foregoing person is a promoter of Gemwood, as that term is defined in the rules and regulations promulgated under the Securities and Exchange Act of 1933. Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the board of directors following the next annual meeting of stockholders and until their successors have been elected and qualified. The director and officer currently devotes an immaterial amount of time, approximately five to ten hours per week, to manage the business affairs of our company. After receiving funding per our business plan Mr. Savceda intends to devote full time services to the company. No executive officer or director of the corporation has been the subject of any order, judgment, or decree of any court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring, suspending or otherwise limiting him or her from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities. No executive officer or director of the corporation has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending. No executive officer or director of the corporation is the subject of any pending legal proceedings. Resume Arco Iris Salon Owner - Rosarito, B.C. 2004 - Present Owner of the Arco Iris Salon in Rosarito Beach, Baja California, Mexico. Arco Iris Salon provides manicure, pedicure, hair salon, hair removal and waxing services to customers in Rosarito Beach, Baja California, Mexico. Mr. Savceda manages the daily operations of the business, including management of its four employees, inventory, sales, marketing, budgeting, and customer relations. Graduate of the Instituto Europeo - 2004 Prior to 2004, Mr. Savceda was a student. 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information on the ownership of Gemwood's voting securities by officers, directors and major shareholders as well as those who own beneficially more than five percent of Gemwood's common stock through the most current date - December 16, 2005: Title Of Name & Amount & Percent Class Address Nature of owner Owned ----- ------- --------------- ----- Common Victor Manuel Savceda 2,000,000 (a) 100% C Alta Mar 157 Fracc Baja Del Mar Playas De Rosarito B.C 22710 Total Shares Owned by Officers & Directors as a Group 2,000,000 100% - ---------- (a) Mr. Savceda received 1,000,000 shares of the company's common stock on August 25, 2005 for $10,000 cash. He received an additional 1,000,000 shares of common stock on October 25, 2005 for $10,000 cash. FUTURE SALES BY EXISTING STOCKHOLDER A total of 2,000,000 shares have been issued to the existing stockholder, all of which are held by our officer and director and are restricted securities, as that term is defined in Rule 144 of the Rules and Regulations of the SEC promulgated under the Act. Under Rule 144, such shares can be publicly sold, subject to volume restrictions and certain restrictions on the manner of sale, commencing one year after their acquisition. Any sale of shares held by the existing stockholder (after applicable restrictions expire) may have a depressive effect on the price of our common stock in any market that may develop, of which there can be no assurance. Our principal shareholder does not have any existing plans to sell his shares at any time after this offering is complete. DESCRIPTION OF SECURITIES Gemwood's Certificate of Incorporation authorizes the issuance of 50,000,000 shares of common stock, par value $0.001 per share. There is no preferred stock authorized. Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders, and do not have cumulative voting rights. Holders of shares of common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the board of directors in its discretion, from funds legally available therefore. In the event of a liquidation, dissolution, or winding up of Gemwood, the holders of shares of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. Holders of common stock have no preemptive or other subscription rights, and there are no conversion rights or redemption with respect to such shares. 13 INTEREST OF NAMED EXPERTS AND COUNSEL None of the below described experts or counsel have been hired on a contingent basis and none of them will receive a direct or indirect interest in the Company. Our financial statements for the period from inception to the year ended September 30, 2005 included in this prospectus have been audited by De Joya Griffith & Company, LLC, 2425 W. Horizon Ridge Parkway, Henderson, NV 89052. We include the financial statements in reliance on their reports, given upon their authority as experts in accounting and auditing. The Law Office of Michael M. Kessler, 3436 American River Drive, Suite 11, Sacramento, CA 95864, has passed upon the validity of the shares being offered and certain other legal matters and is representing us in connection with this offering. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Pursuant to the Articles of Incorporation and By-Laws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. In certain cases, we may advance expenses incurred in defending any such proceeding. To the extent that the officer or director is successful on the merits in any such proceeding as to which such person is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue. 14 ORGANIZATION IN THE LAST FIVE YEARS Gemwood Productions, Inc. was incorporated in Nevada on January 17, 2005. In August of 2005 the board of directors voted to seek capital and began development of our business plan. We received our initial funding of $20,000 through the sale of common stock to our officer and director. Gemwood does not have any, nor has it had any, associations with any promoters aside from Mr. Savceda, our director, who is considered a promoter. DESCRIPTION OF BUSINESS FORM AND YEAR OF ORGANIZATION Gemwood Productions, Inc. was incorporated in Nevada on January 17, 2005. We have taken the following steps: developed our business plan, signed a commercial lease for our first day spa, and received a letter of intent to provide services for a beach resort hotel. We are a development stage company with essentially no revenues and a limited operating history. Gemwood Productions, Inc. has a very specific business plan that it is executing as aggressively as it can with the current funding. Our director has the experience and knowledge in the day spa and salon services industry to successfully execute the business plan. We are a new company early in the implementation of our business plan and performing those tasks necessary to raise the funding to complete the plan. BANKRUPTCY OR SIMILAR PROCEEDINGS There has been no bankruptcy, receivership or similar proceedings. REORGANIZATIONS, PURCHASE OR SALE OF ASSETS There have been no material reclassifications, mergers, consolidations, or purchase or sale of a significant amount of assets not in the ordinary course of business. PRINCIPAL PRODUCTS OR SERVICES AND THEIR MARKETS Gemwood Productions, Inc. intends to market and sell its day spa services to tourists at resort destinations throughout Mexico. We intend to market and sell massage, stone therapy, manicure, pedicure, hair salon, aromatherapy, facial rejuvenation, skin care and cleansing treatments, professional peels, herbal steam treatments, steam bath and sauna, permanent make up, skin exfoliation, tanning, hair removal and waxing, body wraps, Moor mud treatments, yoga, nutrition and diet counseling, and cellulite treatment services to tourist resorts throughout Mexico. We plan to open our fist day spa in Rosarito Beach, Baja California, Mexico. We have signed a commercial lease agreement to commence on April 1st, 2006. For centuries, massage and other forms of body work and beauty enhancement have been practiced. The benefits are; relief of stress and tension, increased circulation, improved emotional and physical well-being, and improved 15 appearance. The different styles of massage that will be offered at our day spa are: SWEDISH MASSAGE is designed to relieve everyday stress and tension by using soothing gentle strokes to relieve sore muscles and relieve stress. THERAPEUTIC AND DEEP TISSUE MASSAGE is used to target specific areas of concern. Muscle groups are isolated and massaged to relieve pain and restore well being. AROMATHERAPY MASSAGE incorporates Aromatherapy oils with traditional massage techniques in order to relax the client. Aromatherapy is the art of using oils extracted from plants for healing. The essential oils are extracted from the flowers, seeds, fruits, leaves, bark, and roots of organically grown plants. The oils are absorbed into the body via the skin's pores during massage. Molecules within the oils enter the bloodstream, and from there target the nervous system, thus affecting ones emotional and physical well being. Each essential oil has a number of different properties. For example, lavender is a sedative, antidepressant and antispasmodic. It is mainly used to relieve nervous tension and digestive complaints. Tea tree is a powerful antiseptic, geranium is a mood enhancer and eucalyptus is a decongestant. HOT STONE MASSAGE is a specialty massage that uses smooth, heated stones. They are often basalt, a black volcanic rock that absorbs and retains heat well. It is a deeply soothing, relaxing form of massage. The heat helps tight muscles release. The stones are sanitized and then heated in 120 and 150 degree water. The therapist uses traditional strokes of Swedish massage while holding a heated stone. As the stone cools, the therapist replaces it with another. Heated stones are also placed in specific points along the spine, the palms of the hands, and between the toes to improve the flow of energy in the body. If inflammation or muscle injury is present, cold stones are sometimes used. The principles of facial rejuvenation are to stimulate the facial muscles to stimulate muscle tone. Facial massage stimulates circulation in the skin which improves skin tone, collagen, and elastin levels. This is also called the non-surgical facelift. It is intended to help with wrinkles and sagging facial muscles. A manicure is a cosmetic beauty treatment for fingernails and hands. A manicure can treat just the hands, just the nails, or both. During a spa manicure hands are soaked in warm water that is treated with tea tree oils and sea salt to clean and moisturize the finger nails and cuticles. The nails are then clipped, filed, buffed and polished. A similar treatment performed on the feet is a pedicure. We intend to perform both services at our day spas. Waxing is a temporary method of hair removal which removes the hair at the root. New hairs do not grow back in the waxed area for up to three to eight weeks. Almost any area of the body can be waxed, including eyebrows, face, bikini area, legs, arms, back, abdomen and feet. Waxing is accomplished by spreading a warmed wax combination thinly over the skin. A cloth or paper strip is pressed on top 16 and then ripped off with a quick movement against the direction of the hair growth. This removes the wax along with the hair and dead skin cells leaving the skin smooth. New hair growth in the waxed areas is soft and fine, not sharp and coarse like shaved hair. Moor mud is imported from France and is known for its cleansing, healing and detoxifying properties. The therapeutic benefits of Moor mud include relieving joint pain and skin inflammations, improving blood flow and lymphatic circulation, and nourishing the skin. This treatment is a full body mask that combines the therapeutic properties of the Moor with the use of essential oils and massage for releasing stress and enhancing deep relaxation. The most popular body treatment is a "body scrub" -- sometimes called a sea-salt scrub or salt glow. This is an exfoliating treatment that takes place on a massage table covered with a sheet and a large, thin piece of plastic. As the client lays on their stomach, the massage therapist rubs a mixture of sea salt, oil, and aromatics like lemon into the skin. This removes the outermost layer of dead skin cells and leaves skin feeling velvety soft. Once the whole body is scrubbed, which takes ten or fifteen minutes, the therapist drapes plastic over the client and goes away for about 20 minutes while the client rests. Variations can come from the essential oils or scrub materials: some of the most popular being the orange blossom/peppermint salt glow, the cucumber salt glow, and the grape seed scrub. A "body mask," which sometimes takes place after a scrub, involves the application of product over the entire body. Mud, algae, or seaweed is applied to the skin and then the client is wrapped in a thermal blanket. It's a "detoxifying" treatment that stimulates the metabolic system, speeding its ability to carry away waste products. A very heavy cream product that penetrates into the body can also be used as a "hydrating" treatment. A "body wrap" is a wrapping treatment used to treat cellulite. It sometimes has a diuretic effect that aids in temporary weight reduction. An herbal and amino acid masque is applied to the body to open pores, flush out toxins and stimulate circulation. Linen cloths soaked in the amino acid solution are wrapped very firmly around the body to contour and smooth problem areas. The client then relaxes under a warm blanket for 30 minutes. The resulting inch loss can be maintained if the client follows a healthy lifestyle. Added benefits include stimulation of the lymphatic system, reduction of cellulite and a boost in metabolism. We also plan to offer tanning services to our customers. Tanning leaves skin with a healthy glow. It is used by men and women alike. Tanning helps keep a natural tan or provide enhancement during a vacation. The types of tanning services we plan to offer are: AIRBRUSH TANNING - A perfect all-over tan in less than 20 minutes, fully developed within 4-6 hours. The FDA approved active ingredient, dihydroxyacetone (DHA), reacts with the amino acids (proteins) in the outermost layer of the skin to produce a golden brown color. The body is evenly bronzed with healthy color for 5-12 days. Airbrush tanning provides a beautiful natural-looking tan without the long-term skin damage associated with UV exposure or the streaks and drips of other self tanning systems. The micro-fine mist is administered by a certified Airbrush Tanning technician who can customize and perfect the tan. 17 SUNLESS BRONZING LOTION - A two step spa treatment. The client is exfoliated with a salt body rub, then a sunless tanning lotion is applied by the esthetician and rubbed into the skin. The treatment generally takes 1 hour. TANNING BEDS - A true melanin tan is achieved by exposing the skin to ultraviolet rays produced by lights in the beds and capsules. Approximately three visits are necessary to build a strong base tan. Sauna and Steam Room treatments will also be offered. The sauna utilizes dry heat in a wooden structure which forces sweating and the elimination of toxins, open pores. It is followed by a cold shower that will close the opened pores and stop the sweating process. The steam room utilizes wet, hot steam which promotes sweating, opening pores and ridding of toxins. Permanent cosmetic makeup is a state of the art form of cosmetic tattooing. The specialized techniques used for permanent cosmetics are often referred to as "micro-pigmentation", "micro-pigment implantation" or "derma-graphics". The cosmetic implantation technique deposits tiny individual implants of pigment into the dermal layer of the skin. Permanent cosmetics procedures are performed using various machines and methods, including the traditional (or specialized) tattoo or coil machines, the pen or rotary machine and the non-machine or hand method. These procedures are a process which includes the initial consultation, initial application of pigment, and usually one or two follow up visits for adjusting the shape and color or density of the pigment. The most popular permanent makeup services are for eyebrows, eyeliner, eyelash enhancement, lip-liner and full lip color. DISTRIBUTION METHODS OF PRODUCTS OR SERVICES Gemwood plans to utilize its management's background in the salon and spa services industry to offer our services to tourists at resort destinations throughout Mexico. Our director has a background in the salon and spa services industry. We plan to offer our services through a web site, hotels and resorts, and travel agencies. STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCTS OR SERVICES Gemwood has no new product or service planned or announced to the public. COMPETITION AND COMPETITIVE POSITION Gemwood Productions intends to compete in the salon and day spa services industry. Gemwood Productions Inc. competitors Cielo, Spa Vital, and Spa at the Riviera Alta have longer operating histories, larger customer bases, and greater brand recognition than Gemwood Productions Inc. SUPPLIERS AND SOURCES OF RAW MATERIALS We have no principal suppliers or sources for raw materials. We will utilize our management's background to offer our salon and spa services without the use of major suppliers of raw materials. 18 DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS Gemwood will not depend on any one or a few major customers. Management has experience in the management of salon and spa services in Mexico. PATENTS, TRADEMARKS, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS, OR LABOR CONTRACTS We have no current plans for any registrations such as patents, trademarks, copyrights, franchises, concessions, royalty agreements or labor contracts. We will assess the need for any copyright, trademark or patent applications on an ongoing basis. NEED FOR GOVERNMENT APPROVAL FOR ITS PRODUCTS OR SERVICES Gemwood is not required to apply for or have any government approval for its products or services. EFFECT OF GOVERNMENTAL REGULATIONS ON THE COMPANY'S BUSINESS Gemwood will be subject to federal laws and regulations that relate directly or indirectly to its operations. We will be subject to common business and tax rules and regulations pertaining to the operation of our business in Mexico. RESEARCH AND DEVELOPMENT COSTS DURING THE LAST TWO YEARS Gemwood has not expended funds for research and development costs since inception. COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS Environmental regulations have had no materially adverse effect on Gemwood's operations to date, but no assurance can be given that environmental regulations will not, in the future, result in a curtailment of service or otherwise have a materially adverse effect on our business, financial condition or results of operation. Public interest in the protection of the environment has increased dramatically in recent years. The trend of more expansive and stricter environmental legislation and regulations could continue. To the extent that laws are enacted or other governmental action is taken that imposes environmental protection requirements that result in increased costs, the business and prospects of Gemwood could be adversely affected. NUMBER OF EMPLOYEES Gemwood's only current employee is its officer who will devote as much time as the board of directors determines is necessary to manage the affairs of the company. The officer intends to work on a full time basis when Gemwood raises capital per its business plan. 19 REPORTS TO SECURITIES HOLDERS We provide an annual report that includes audited financial information to our shareholders. We will make our financial information equally available to any interested parties or investors through compliance with the disclosure rules of Regulation S-B for a small business issuer under the Securities Exchange Act of 1934. We will become subject to disclosure filing requirements once our SB-2 registration statement becomes effective, including filing Form 10-KSB annually and Form 10-QSB quarterly. In addition, we will file Form 8K and other proxy and information statements from time to time as required. We do not intend to voluntarily file the above reports in the event that our obligation to file such reports is suspended under the Exchange Act. The public may read and copy any materials that we file with the Securities and Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 100 F Street NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. PLAN OF OPERATION Gemwood's current cash balance is $20,000. We believe our cash balance is sufficient to fund our planned levels of operations until we are able to secure the additional financing from the offering. If we experience a shortage of funds prior to funding we may utilize our director has informally agreed to advance funds to allow us to pay for offering costs and filing fees, however our director has no formal commitment, arrangement or legal obligation to advance or loan funds to Gemwood. In order to achieve our business plan goals, we will need to raise capital through the sale of equity securities. We are a development stage company and have generated no revenue to date. We have sold $20,000 in equity securities to pay for our minimum level of operations. We have received a going concern opinion on our financial statements that raises substantial doubt as to our ability to continue as a going concern. As described in Note 1 of our accompanying financial statements, our lack of any guaranteed sources of future capital creates substantial doubt as to our ability to continue as a going concern. If our business plan does not work, we could remain as a start-up company with limited material operations, revenues, or profits. Although management has believes their plan for Gemwood will generate revenue and profit, there is no guarantee their past experiences will provide Gemwood with similar future successes. As of the date of this filing, we have taken the following steps: developed our business plan, determined the market in which we intend to open our first day spa location Rosarito Beach, Baja California, Mexico. Gemwood has signed a commercial lease agreement to commence on April 1st, 2006 and will continue month-to-month thereafter until canceled upon 30 days prior notice by either party. We have paid a deposit of $500.00 for the location. The monthly rent will cost $300.00. We have received a letter-of-intent from Gran Baja Resorts authorizing Gemwood Productions, Inc. to provide day spa and salon services to their guests beginning spring of 2006. We are now in the process of registering our securities with the Securities and Exchange Commission in order to raise 20 funds to implement our business plan. Our business plan includes a need for cash of $46,740, including the cost of this registration statement. PROPOSED MILESTONES TO IMPLEMENT OUR PLAN OF OPERATIONS: The following milestones are estimates from our director. They are estimates only. The number of employees, number of initial stores, subsequent costs, and other projected milestones are approximations only, and are subject to adjustments based upon the requirements of the business and costs of those requirements. We intend to execute the following portions of our business plan over a twelve month period: APRIL 2006: We intend to begin the remodeling and build out process for our first location during the month of April. The cost for the first month of remodeling is estimated to cost approximately $1,500. We will design the space with the intention of creating a soothing environment for customers to relax and enjoy a full day of being pampered. Our color choices will be neutral. We plan to paint and do finishing work to create an environment suitable for a day spa. We will also begin paying rent on our first location at a cost of $300 per month, phone $60 per month, utilities $50 per month, postage and supplies $100 per month, salary $1000 per month, $1,200 one time fee to purchase salon and spa equipment, $35 per month cost for a bookkeeper. Total cost for the month of April is $4,245. MAY 2006: During the month of May, we intend to continue our remodeling and build out efforts for our day spa. We will spend and additional $1,500 during this month on, flooring, molding and tile work. The material choices during this month of our build out will also be based on our goal of creating a soothing and comfortable environment for our customers. Our total cost of operations for the month of May including $300 per month for rent, phone $60 per month, utilities $50 per month, postage and supplies $100 per month, salary $1000 per month, $1,500 for remodeling, $35 per month cost for a bookkeeper. Our total cost for the month of May is estimated to be $3,045. JUNE 2006: In June, we will continue the remodeling efforts for our store at a cost of $1500. We will include aesthetically pleasing artwork, comfortable furnishings, new fixtures, and a musical sound system will be installed to provide meditation and ambient music for our patrons. Our total cost of operations for the month of June, including $300 per month for rent, phone $60 per month, utilities $50 per month, postage and supplies $100 per month, salary $1,000 per month, $1,500 for remodeling, $35 per month cost for a bookkeeper. Our total cost for the month of June is estimated to be $3,045. 21 JULY 2006: Our final month of remodeling is July. We will finalize any interior design choices remaining, purchase window treatments and complete any outstanding finishing work. We estimate our costs to be approximately $1,500 for the final month of remodeling and build out. Our total cost of operations for the month of July, including $300 per month for rent, phone $60 per month, utilities $50 per month, postage and supplies $100 per month, salary $1,000 per month, $$1,500 for remodeling, $35 per month cost for a bookkeeper. Our total cost for the month of July is estimated to be $3,045. AUGUST 2006: In the month of August, we intend to begin our marketing and advertising efforts and hire initial staff at a cost of $500 per month. Our budget for advertising in August is $1,500. We will have brochures designed, printed and distributed to the lobbies of the hotels in Rosarito Beach, Mexico. We will also distribute brochures to the travel agencies and hotels throughout San Diego, California to generate sales of our day spa services. Our ongoing cost of monthly operations is; $300 per month for rent, $500 for staff, phone $60 per month, utilities $50 per month, postage and supplies $100 per month, salary $1,000 per month, $35 per month cost for a bookkeeper. Our total cost of operations for the month of August is $3,545. SEPTEMBER 2006: We intend for sales to begin in the month of September. We will continue marketing throughout the month of September. We intend to design and develop a web site at a cost of $1,500 to promote our services. Our ongoing cost of monthly operations is; $300 per month for rent, $5000 for staff, phone $60 per month, utilities $50 per month, postage and supplies $100 per month, salary $1,000 per month, $35 per month cost for a bookkeeper. Our total cost of operations for the month of September is $3,545. OCTOBER 2006: In October, we will begin our print advertising campaign. We will run ads in local newspapers and magazines to generate business for our day spa. We intend to spend $1,500 in print advertising in October. Our ongoing cost of monthly operations is; $300 per month for rent, $500 for staff, phone $60 per month, utilities $50 per month, postage and supplies $100 per month, salary $1,000 per month, $35 per month cost for a bookkeeper. Our total cost of operations for the month of October is $3,545. NOVEMBER 2006: In November, we intend to continue our marketing efforts by offering a free day at our facility to travel agents, hotel management, restaurant, bar, and nightclub owners throughout Rosarito Beach and San Diego. The cost for invitations, mailing, and catering for the day and evening is estimated to be $1,500. We hope that this open house style approach of one-to-one marketing will generate interest and sales for our business. Our ongoing cost of monthly 22 operations is; $300 per month for rent, $500 for staff, phone $60 per month, utilities $50 per month, postage and supplies $100 per month, salary $1,000 per month, $35 per month cost for a bookkeeper. Our total cost of operations for the month of November is $3,545. DECEMBER 2006: Our marketing efforts during the month of December will include a direct mailing of coupon Christmas cards to potential clients. We will target women's gift, bath, and beauty store managers by offering them a free day at our spa. In return we would like them to put coupons for our store on their register counters through the holiday season. We anticipate the cost for this effort to be $1,500. Our ongoing cost of monthly operations is; $300 per month for rent, $500 for staff, phone $60 per month, utilities $50 per month, postage and supplies $100 per month, salary $1,000 per month, $35 per month cost for a bookkeeper. Our total cost of operations for the month of December is $3,545. JANUARY 2007: In the month of January, we intend to begin an email marketing campaign. We will send out emails to targeted potential customers. The cost for our email campaign is $1,500. Our ongoing cost of monthly operations is; $300 per month for rent, $500 for staff, phone $60 per month, utilities $50 per month, postage and supplies $100 per month, salary $1,000 per month, $35 per month cost for a bookkeeper. Our total cost of operations for the month of January is $3,545. FEBRUARY 2007: In February, we intend to continue our marketing efforts by offering a free day at our facility to travel agents, hotel management, restaurant, bar, and nightclub owners throughout Rosarito Beach and San Diego. This will be a direct mailing effort followed by a phone call follow up. Each participant will receive a full treatment for themselves and a guest. Cost of this campaign is estimated to be $1,500. Our ongoing cost of monthly operations is; $300 per month for rent, $500 for staff, phone $60 per month, utilities $50 per month, postage and supplies $100 per month, salary $1,000 per month, $35 per month cost for a bookkeeper. Our total cost of operations for the month of February is $3545. MARCH 2007: In March, we intend to advertise in the travel section of the San Diego Union Tribune. We will offer a buy-one, get-one free coupon redeemable for six months. We believe the cost of this campaign to be $1,500. Our ongoing cost of monthly operations is; $300 per month for rent, $500 for staff, phone $60 per month, utilities $50 per month, postage and supplies $100 per month, salary $1,000 per month, $35 per month cost for a bookkeeper. Our total cost of operations for the month of March is $3,545. Our total cost for twelve months of operations is $41,740. 23 In order to meet all of our current business plan goals, we need to receive funding. We intend to use funding we receive to provide cash for our business plan during the next twelve months as cash flow from sales is not estimated to begin until the 2nd quarter of 2006. We anticipate our expenditures through December, 2005 will not exceed $5,000. These costs will consist primarily of offering costs and filing fees. We will face considerable risk in each of our business plan steps, such as difficulty of hiring competent personnel within our budget, longer than anticipated lead time necessary for us to complete our marketing plan, and a shortfall of funding due to our inability to raise capital. If no funding is received during the next twelve months, we may utilize one or more options such as use existing cash in the bank or funds loaned by our director. While our director has informally agreed to advance funds to allow us to pay for offering costs, filing fees, and miscellaneous business expenses, our director has no formal commitments, arrangements or legal obligation to advance or loan funds to Gemwood. To date, there have been no loans by the director to Gemwood, no negotiated material terms or agreed upon amounts, and no formalized agreements of any kind. DESCRIPTION OF PROPERTY Gemwood's principal executive office address is C Alta Mar 157 Fracc Baja Del Mar, Playas De Rosarito, B.C. 22710. The principal executive office and telephone number are provided by the officer of the corporation. The office is used by the officer for other business interests and is estimated to be sufficient for our business needs until such time as we receive funding and should remain sufficient to accommodate our hiring requirements during the initial phases of our business. We consider our current principal office space arrangement adequate until such time as we achieve our business plan goal of raising capital and then begin hiring new employees for our day spa per our business plan. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The principal executive office and telephone number are provided by Mr. Savceda, an officer of the corporation. The director has determined that based on the fair market value of his services and the use of his offices the Company will begin paying $200 per month to Mr. Savceda beginning in October 2005. Mr. Savceda purchased 2,000,000 shares of the company's common stock for cash in the amount of $20,000. The stock was valued at $0.01 per share. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER SHAREHOLDER MATTERS No public market currently exists for shares of our common stock. Following completion of this offering, we intend to contact a market maker to file an application on our behalf to have our common stock listed for quotation on the Over-the-Counter Bulletin Board. 24 PENNY STOCK RULES The Securities and Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). A purchaser is purchasing penny stock which limits the ability to sell the stock. The shares offered by this prospectus constitute penny stock under the Securities and Exchange Act. The shares will remain penny stocks for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the Commission, which: a. contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; b. contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of the Securities Act of 1934, as amended; c. contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask price; d. contains a toll-free telephone number for inquiries on disciplinary actions; e. defines significant terms in the disclosure document or in the conduct of trading penny stocks; and f. contains such other information and is in such form (including language, type, size and format) as the Securities and Exchange Commission shall require by rule or regulation; The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer: a. the bid and offer quotations for the penny stock; b. the compensation of the broker-dealer and its salesperson in the transaction; c. the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and d. monthly account statements showing the market value of each penny stock held in the customer's account. 25 In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling their securities. REGULATION M Our officer and director, who will offer and sell the Shares, is aware that he is required to comply with the provisions of Regulation M promulgated under the Securities Exchange Act of 1934, as amended. With certain exceptions, Regulation M precludes the officer and director, sales agents, any broker-dealer or other person who participates in the distribution of shares in this offering from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. As an exception to these rules, an underwriter may engage in transactions effected in accordance with Regulation M that are intended to stabilize, maintain or otherwise affect the price of our common stock. The underwriter may engage in over-allotment sales, syndicate covering transactions, stabilizing transactions and penalty bids in accordance with Regulation M. Over-allotments occur when an underwriter sells more shares than it purchases in an offering. In order to cover the resulting short position, the underwriter may exercise the over-allotment option described above. Additionally, an underwriter may engage in syndicate covering transactions. Syndicate covering transactions are bids for or purchases of stock on the open market by the underwriter in order to reduce a short position incurred by the underwriter on behalf of the underwriting syndicate. There is no contractual limit on the size of any syndicate covering transaction. Stabilizing transactions consist of bids or purchases made by an underwriter for the purpose of preventing or slowing a decline in the market price of our securities while the offering is in progress. A penalty bid is an arrangement permitting the underwriter to reclaim the selling concession that would otherwise accrue to an underwriter if the common stock originally sold by the underwriter was later repurchased by the underwriter and therefore was not effectively sold to the public by such underwriter. We have not and do not intend to engage the services of an underwriter in connection with the offer and sale of the shares in this offering. In general, the purchase of a security to stabilize or to reduce a short position could cause the price of the security to be higher than it might otherwise be. Sales of securities by us or even the potential of these sales could have a negative effect on the market price of the shares of common stock offered hereby. 26 EXECUTIVE COMPENSATION Gemwood's current officer has received no compensation to date. Beginning in April 2006 our business plan allows for a salary for Mr. Savceda of $1,000 per month if we receive funding. The current Board of Directors is comprised of only Mr. Victor Manuel Savceda. Summary Compensation Table
Other Name & annual Restricted All other principle compen- stock Options LTIP compen- position Year Salary($) Bonus($) sation($) awards($) SARs($) Payouts($) sation($) - -------- ---- --------- -------- --------- --------- ------- ---------- --------- VM Savceda 2005 -0- -0- -0- -0- -0- -0- -0- President
There are no current employment agreements between the company and its executive officer. There are no annuity, pension or retirement benefits proposed to be paid to officers, directors or employees of Gemwood in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the company or any of its subsidiaries, if any. FINANCIAL STATEMENTS The audited financial statements of Gemwood Productions for the year ended September 30, 2005, and related notes which are included in this offering have been examined by De Joya Griffith & Company, LLC, Certified Public Accountants, and have been so included in reliance upon the opinion of such accountants given upon their authority as an expert in auditing and accounting. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING CONTROL AND FINANCIAL DISCLOSURE None. 27 De Joya Griffith & Company, LLC Certified Public Accountants & Consultants 2425 West Horizon Ridge Parkway Henderson, Nevada 89052 - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors Gemwood Productions, Inc. Las Vegas, Nevada We have audited the accompanying balance sheet of Gemwood Productions, Inc. (A Development Stage Company) as of September 30, 2005 and the related statements of operations, stockholders' equity, and cash flows for the period from January 17, 2005 (Inception) through September 30, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gemwood Productions, Inc. (A Development Stage Company) as of September 30, 2005, and the results of its operations and cash flows for the period from January 17, 2005 (Inception) through September 30, 2005 in conformity with accounting principles generally accepted in the United States. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered losses from operations, all of which raise substantial doubt about its ability to continue as a going concern. Management's plans in regards to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ De Joya Griffith & Company, LLC - ---------------------------------------- De Joya Griffith & Company, LLC November 1, 2005 Henderson, Nevada - -------------------------------------------------------------------------------- Telephone (702) 563-1600 * Facsimile (702) 920-8049 F-1 GEMWOOD PRODUCTIONS, INC. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEET As of September 30, 2005 ------------------ ASSETS Current assets Cash $ 10,000 Deposits -- -------- Total current assets 10,000 Inventory -- -------- Total assets $ 10,000 ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ -- -------- Total current liabilities -- -------- Total liabilities -- Stockholders' equity Common stock; $.001 par value; 50,000,000 shares authorized, 1,000,000 shares issued and outstanding 1,000 Additional paid-in capital 9,000 Accumulated deficit -- -------- Total stockholders' equity 10,000 -------- Total liabilities and stockholders' equity $ 10,000 ======== See Accompanying Notes to Financial Statements F-2 GEMWOOD PRODUCTIONS, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS From January 17, 2005 (Date of inception) through September 30, 2005 ------------------ Revenue $ -- Operating expenses General and administrative -- Professional fees -- ---------- Total operating expenses -- ---------- Loss from operations -- Other income (expenses): Other expense -- Interest expense -- ---------- Total other income (expenses) -- ---------- Loss before provision for income taxes and minority interest -- Provision for income taxes -- ---------- Net loss $ -- ---------- Basic and diluted loss per common share $ -- ========== Basic and diluted weighted average common shares outstanding 1,000,000 ========== See Accompanying Notes to Financial Statements F-3 GEMWOOD PRODUCTIONS, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS From January 17, 2005 (Date of inception) through September 30, 2005 ------------------ Cash flows from operating activities: Net loss $ -- Adjustments to reconcile net loss to net cash used by operating activities: Changes in operating assets and liabilities: (Increase) / Decrease in Inventory -- Increase / (Decrease) in Accounts Payable -- Change in deposits -- -------- Net cash used by operating activities -- Cash flows from investing activities: Purchase of property and equipment -- -------- Net cash used by investing activities -- Cash flows from financing activities: Proceeds from issuance of common stock 10,000 -------- Net cash provided by financing activities 10,000 -------- Net increase in cash 10,000 Cash, beginning of period -- -------- Cash, end of period $ 10,000 ======== See Accompanying Notes to Financial Statements F-4 GEMWOOD PRODUCTIONS, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF STOCKHOLDERS' EQUITY
Common Stock Additional Total ------------------- Paid-in Accumulated Stockholders' Shares Amount Capital Deficit Equity ------ ------ ------- ------- ------ Balance at January 17, 2005 (Date of inception) -- $ -- $ -- $ -- $ -- Common stock issued for cash 1,000,000 1,000 9,000 -- 10,000 Net income (loss) -- -- -- -- -- --------- -------- -------- ------- --------- Balance, September 30, 2005 1,000,000 $ 1,000 $ 9,000 $ -- $ 10,000 ========= ======== ======== ======= =========
See Accompanying Notes to Financial Statements F-5 GEMWOOD PRODUCTIONS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES Description of business and history - Gemwood Productions, Inc., Nevada Corporation, (hereinafter referred to as the "Gemwood Productions" or "the Company") was incorporated in the State of Nevada on January 17, 2005. The Company was formed for the purpose of marketing and selling its day spa services to tourists at resort destinations throughout Mexico. Management of Company - The company filed its articles of incorporation with the Nevada Secretary of State on January 17, 2005, indicating Molly Wheeler as the incorporator. At that time Adam Barker was named Director, President, Secretary and Treasurer. On August 13, 2005 Mr. Barker resigned his positions with the Company and Mr. Victor Manuel Savceda was named Director, President, Secretary and Treasurer. Going concern - The Company incurred net losses of approximately $0.00 from the period from January 17, 2005 (Date of Inception) through September 30, 2005 and has not commenced its operations, rather, still in the development stages, raising substantial doubt about the Company's ability to continue as a going concern. The Company will seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance the Company will be successful in accomplishing its objectives. The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company's plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Year end - The Company's year end is September 30. Use of estimates - The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Income taxes - The Company accounts for its income taxes in accordance with Statement of Financial Accounting Standards No. 109, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. Management feels the Company will have a net operating loss carryover to be used for future years. Such losses may not be fully deductible due to the significant amounts of non-cash service costs. The Company has established a valuation allowance for the full tax benefit of the operating loss carryovers due to the uncertainty regarding realization. Net loss per common share - The Company computes net loss per share in accordance with SFAS No. 128, Earnings per Share (SFAS 128) and SEC Staff Accounting Bulletin No. 98 (SAB 98). Under the provisions of SFAS 128 and SAB 98, basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is antidilutive. For the period from January 17, 2005 (Date of Inception) through September 30, 2005, no options and warrants were excluded from the computation of diluted earnings per share because their effect would be antidilutive. Foreign Currency Translation - The Company's functional currency is in US dollars as substantially all of the Company's operations are in USD. The Company used the United States dollar as its reporting currency for consistency with registrants of the Securities and Exchange Commission ("SEC") and in accordance F-6 GEMWOOD PRODUCTIONS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS (CONTINUED) with the SFAS No. 52 - "Foreign Currency Translation". Assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the period end and capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange prevailing during the period. Translation adjustments from the use of different exchange rates from period to period are included in the comprehensive income account in stockholder's equity, if applicable. Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date. Any exchange gains and losses are included in other items on the statement of operations. Concentration of risk - A significant amount of the Company's assets and resources are dependent on the financial support (inclusive of free rent) of Victor Manuel Savceda should Victor Manuel Savceda determine to no longer finance the operations of the company, it may be unlikely for the company to continue. Revenue recognition - The Company has no revenues to date from its operations. Once the revenue is generated, the company will recognize revenues as the services are rendered. Inventory valuation - Inventories are stated at the lower of cost or market, cost being determined on the first in, first out (FIFO) basis. Advertising costs - The Company recognizes advertising expenses in accordance with Statement of Position 93-7 "Reporting on Advertising Costs." Accordingly, the Company expenses the costs of producing advertisements at the time production occurs, and expenses the costs of communicating advertisements in the period in which the advertising space or airtime is used. The Company has recorded no significant advertising costs for the period from January 17, 2005 through September 30, 2005. Legal Procedures - The Company is not aware of, nor is it involved in any pending legal proceedings. Stock-based compensation - The Company applies Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and Related Interpretations, in accounting for stock options issued to employees. Under APB No. 25, employee compensation cost is recognized when estimated fair value of the underlying stock on date of the grant exceeds exercise price of the stock option. For stock options and warrants issued to non-employees, the Company applies SFAS No. 123, Accounting for Stock-Based Compensation, which requires the recognition of compensation cost based upon the fair value of stock options at the grant date using the Black-Scholes option pricing model. The following table represents the effect on net loss and loss per share if the Company had applied the fair value based method and recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation", to stock-based employee compensation for the period from January 17, 2005 through September 30, 2005: 2005 --------- Net loss, as reported $ (-----) Other comprehensive income (-----) Add: Stock-based employee compensation expense included in reported loss, net of related tax effects -- Deduct: Total stock-based employee compensation expense determined under fair value based methods for all awards, net of related tax effects -- Pro forma net loss $ (-----) Net loss per common share: Basic and fully diluted loss per share, as reported $ (0.00) Basic and fully diluted loss per share, pro forma $ (0.00) F-7 There were no stock options granted for the period from January 17, 2005 through September 30, 2005. There are additionally no written or verbal agreements related to the sale of any stock, option or warrants of the Company's common stock. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure". SFAS No. 148 amends the transition and disclosure provisions of SFAS No. 123. The Company is currently evaluating SFAS No. 148 to determine if it will adopt SFAS No. 123 to account for employee stock options using the fair value method and, if so, when to begin transition to that method. 2. PROPERTY AND EQUIPMENT As of September 30, 2005, the Company does not own any property and/or equipment. 3. STOCKHOLDER'S EQUITY The Company has 50,000,000 shares authorized and 1,000,000 issued and outstanding as of September 30, 2005. The issued and outstanding shares were issued as follows: 1,000,000 common shares were issued to Victor Manuel Savceda on August 25, 2005 for the sum of $10,000 in cash. 4. LOAN FROM STOCKHOLDER As of September 30, 2005, there are no loans to the Company from any stockholders. 5. RELATED PARTY TRANSACTIONS The Company currently uses the offices of Mr. Savceda, the officer and director of the Company. The director has determined that based on the fair market value of his services and the use of his offices the Company will begin paying $200 per month to Mr. Savceda beginning in October 2005. There is no written lease agreement or other material terms or arrangements relating to said arrangement. As of September 30, 2005, there are no related party transactions between the Company and its officer, other than those mentioned above and in Note 3 - Stockholder's Equity. 6. STOCK OPTIONS As of September 30, 2005, the Company does not have any stock options outstanding, nor does it have any written or verbal agreements for the issuance or distribution of stock options at any point in the future. 7. LITIGATION As of September 30, 2005, the Company is not aware of any current or pending litigation which may affect the Company's operations. 8. SUBSEQUENT EVENTS On October 25, 2005, 1,000,000 common shares were issued to Victor Manuel Savceda for the sum of $10,000 in cash. F-8 DEALER PROSPECTUS DELIVERY OBLIGATION "UNTIL ______________, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS." PART II AVAILABLE INFORMATION INDEMNIFICATION OF DIRECTORS AND OFFICERS Gemwood's By-Laws allow for the indemnification of the officers and directors in regard to their carrying out the duties of their offices. The board of directors will make determination regarding the indemnification of the director, officer or employee as is proper under the circumstances if he/she has met the applicable standard of conduct set forth in the Nevada General Corporation Law. Section 78.751 of the Nevada Business Corporation Act provides that each corporation shall have the following powers: "1. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of any fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a pleas of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and that, with respect to any criminal action or proceeding, he had a reasonable cause to believe that his conduct was unlawful. 2. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals there from, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction, determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. II-1 3. To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in sections 1 and 2, or in defense of any claim, issue or matter therein, he must be indemnified by the corporation against expenses, including attorneys fees, actually and reasonably incurred by him in connection with the defense. 4. Any indemnification under sections 1 and 2, unless ordered by a court or advanced pursuant to section 5, must be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made: a. By the stockholders; b. By the board of directors by majority vote of a quorum consisting of directors who were not parties to the act, suit or proceeding; c. If a majority vote of a quorum consisting of directors who were not parties to the act, suit or proceeding so orders, by independent legal counsel, in a written opinion; or d. If a quorum consisting of directors who were not parties to the act, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion. 5. The certificate of articles of incorporation, the bylaws or an agreement made by the corporation may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the corporation. The provisions of this section do not affect any rights to advancement of expenses to which corporate personnel other than director or officers may be entitled under any contract or otherwise by law. 6. The indemnification and advancement of expenses authorized in or ordered by a court pursuant to this section: a. Does not include any other rights to which a person seeking indemnification or advancement of expenses may be entitled under the certificate or articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, for either an action in his official capacity or an action in another capacity while holding his office, except that indemnification, unless ordered by a court pursuant to section 2 or for the advancement of expenses made pursuant to section 5, may not be made to or on behalf of any director or officer if a final adjudication establishes that his acts or omission involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action. II-2 b. Continues for a person who has ceased to be a director, officer, employee or agent and inures to the benefit of the heirs, executors and administrators of such a person. c. The Articles of Incorporation provides that "the Corporation shall indemnify its officers, directors, employees and agents to the fullest extent permitted by the General Corporation Law of Nevada, as amended from time to time." As to indemnification for liabilities arising under the Securities Act of 1933 for directors, officers or persons controlling Gemwood, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy and unenforceable. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The estimated costs of the offering are denoted below. Please note all amounts are estimates other than the Commission's registration fee. Securities and Exchange Commission registration fee $ 3 Accounting fees and expenses $2,500 Legal fees $1,800 Transfer Agent fees $ 600 Printing $ 97 ------ Total $5,000 ====== RECENT SALES OF UNREGISTERED SECURITIES Set forth below is information regarding the issuance and sales of securities without registration since inception. No such sales involved the use of an underwriter; no advertising or public solicitation was involved; the securities bear a restrictive legend; and no commissions were paid in connection with the sale of any securities. On August 25, 2005, 1,000,000 shares of common stock were issued to Victor Manuel Savceda, the officer and director as founders' shares, and additional 1,000,000 shares were issued to him on October 25, 2005. The shares were issued in exchange for $20,000, or $.01 per share. These securities were issued in reliance upon the exemption contained in Section 4(2) of the Securities Act of 1933. These securities were issued to the promoters of the company, bear a restrictive legend and were issued to non-US residents. EXHIBITS Exhibit 3.1 Articles of Incorporation Included Exhibit 3.2 Bylaws Included Exhibit 5 Opinion re: Legality Included Exhibit 10 Lease Agreement Included Exhibit 23.1 Consent of counsel Included in Exhibit 5 Exhibit 23.2 Consent of independent auditor Included II-3 UNDERTAKINGS (a) The undersigned registrant hereby undertakes: 1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to: (i) Include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) Reflect in the prospectus any facts which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (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 such 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 registered which remain unsold at the end of the offering. (b) The undersigned Registrant hereby undertakes to provide to the purchasers in this offering, certificates in such denominations and registered in such names as required to permit prompt delivery to each purchaser. (c) Insofar as indemnification for liabilities arising under the Securities Act (the "Act") may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer of expenses incurred or paid by a director, officer, or controlling of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the small business issuer will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act, and will be governed by the final adjudication of such issue. II-4 (d) The undersigned Registrant hereby undertakes that: 1. For determining any liability under the Securities Act, it will treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the small business issuer under Rule 424(b)(1) or (4) or 497(h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective. 2. For determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the bona fide offering of those securities. SIGNATURES In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe it meets all of the requirements for filing Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the city of Playas de Rosarito, Baja California Mexico, on December 22, 2005. Gemwood Productions, Inc. /s/ Victor Manuel Savceda -------------------------- By Victor Manuel Savceda (Principal Executive Officer) In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and dates stated. /s/ Victor Manuel Savceda December 22, 2005 - ------------------------------------- ----------------- Victor Manuel Savceda, President Date (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer) II-5 EX-3.1 2 ex3-1.txt ARTICLES OF INCORPORATION Exhibit 3.1 DEAN HELLER Secretary of State 206 North Carson Street Carson City, Nevada 89701-4298 (775) 684-5708 Website: secretaryofstate.biz Entity # E0087172005-1 Document Number 20050037732-49 Date Filed: 2/7/2005 8:39:24 AM In the office of /s/ Dean Heller Dean Heller Secretary of State ARTICLES OF INCORPORATION (PURSUANT TO NRS 78) 1. Name of Corporation: Gemwood Productions, Inc. 2. Resident Agent Name & Street Address: Sage International, Inc. 1135 Terminal Way, Suite 209 Reno, NEVADA 89502 3. Shares: Number of Shares with par value: 75,000 Par value: None 4. Name & Address of Board Of Directors/Trustees: Molly Wheeler 1135 Terminal Way, Suite 209 Reno, NV 89502 5. Purpose: The purpose of this Corporation shall be: Any legal purpose 6. Name, Address & Signature Of Incorporator: Molly Wheeler /s/ Molly Wheeler 1135 Terminal Way, Suite 209 Reno, NV 89502 7. Certificate of Acceptance Of Appointment of Resident Agent: I hereby accept appointment as Resident Agent for the above named corporation. /s/ Molly Wheeler February 4, 2005 --------------------------- ---------------- Authorized Signature of R.A. Date DEAN HELLER Secretary of State 206 North Carson Street Carson City, Nevada 89701-4298 (775) 684-5708 Website: secretaryofstate.biz Entity # E0087172005-1 Document Number 20050056675-46 Date Filed: 2/22/2005 9:40:40 PM In the office of /s/ Dean Heller Dean Heller Secretary of State CERTIFICATE OF AMENDMENT (PURSUANT TO NRS 78) 1. Name of Corporation: Gemwood Productions, Inc. 2. The articles have been amended as follow: Article 3 - The total number of voting common stock authorized that may be issued by the corporation is FIFTY MILLION (50,000,000) shares of stock with .001 par value, and no other class of stock shall be authorized. Said shares may be issued by the corporation from time to time for such considerations as may be fixed from time to time by the Board of Directors. 3. The undersigned declare that they constitute at least two-thirds of the incorporators. 4. Effective Date of Filing (optional): 5. The undersigned affirmatively declare that to the date of this certificate, no stock of the corporation has been issued. 6. Signature /s/ Molly Wheeler ----------------------- ARTICLES OF INCORPORATION OF Gemwood Productions, Inc. a Nevada Corporation FIRST: The name of the corporation is: Gemwood Productions, Inc. SECOND: The resident agent for this corporation shall be: SAGE INTERNATIONAL, INC. The address of said agent, and the principal or statutory address of this corporation in the State of Nevada, shall be 1135 Terminal Way, Suite 209, Reno, Nevada, 89502, located in Washoe County, State of Nevada. This corporation may maintain an office, or offices, in such other place within or without the State of Nevada as may be from time to time designated by the Board of Directors, or by the By-Laws of said corporation, and that this corporation may conduct all corporation business of every kind and nature, including the holding of all meetings of Directors and Stockholders, outside the State of Nevada as well as with the State of Nevada. THIRD: The objects for which this corporation is formed are as follows: to engage in any lawful activity. FOURTH: That the total number of voting common stock authorized that may be issued by the corporation is SEVENTY FIVE THOUSAND (75,000) shares of stock with NO PAR VALUE, and no other class of stock shall be authorized. Said shares may be issued by the corporation from time to time for such considerations as may be fixed from time to time by the Board of Directors. FIFTH: The governing board of this corporation shall be known as directors, and the number of directors may from time to time be increased or decreased in such manner as shall be provided by the bylaws of this corporation, providing that the number of directors shall not be reduced to less than one (1). The name and post office address of the first Board of Directors shall be one (1) in number and listed as follows: NAME ADDRESS ---- ------- Molly Wheeler 1135 Terminal Way, Suite 209 Reno, Nevada 89502 SIXTH: After the amount of the subscription price, the purchase price, of the par value of the stock of any class or series is paid into the corporation, owners or holders of shares of any stock in the corporation may never be assessed to pay the debts of the corporation. SEVENTH: The name and post office address of the Incorporator signing the Articles of Incorporation is as follows: NAME ADDRESS ---- ------- Molly Wheeler 1135 Terminal Way, Suite 209 Reno, Nevada 89502 EIGHTH: The corporation is to have a perpetual existence. NINTH: No director or officer of the corporation shall be personally liable to the corporation or any of its stockholders for damages for breach of fiduciary duty as a director or officer of for any act or omission of any such director or officer; however, the foregoing provision shall not eliminate or limit the liability of a director or officer for (a) acts or omissions which involve intentional misconduct, fraud or a knowing violation of law; or (b) the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of this Article by the stockholders of this corporation shall be prospective only and shall not adversely affect any limitation on the personal liability of a director or officer of the corporation for acts or omissions prior to such repeal or modification. TENTH: No shareholder shall be entitled as a matter of right to subscribe for or receive additional shares of any class of stock of the corporation, whether now or hereafter authorized, or any bonds, debentures or securities convertible into stock, but such additional shares of stock or other securities convertible into stock may be issued or disposed of by the Board of Directors to such persons and on such terms as in its discretion it shall deem advisable. ELEVENTH: This corporation reserves the right to amend, alter, change or repeal and provision contained in the Articles of Incorporation, in the manner now or hereafter prescribed by statute, or by the Articles of Incorporation, and all rights conferred upon the Stockholders herein are granted subject to this reservation. I, THE UNDERSIGNED, being the Incorporator hereinbefore named for the purpose of forming a corporation pursuant to the General Corporation Laws of the State of Nevada, do make and file these Articles of Incorporation, hereby declaring and certifying the facts herein stated are true, and accordingly have hereunto set my hand January 17, 2005. /s/ Molly Wheeler - ---------------------------- MOLLY WHEELER, Incorporator 2 CERTIFICATE OF ACCEPTANCE OF APPOINTMENT BY RESIDENT AGENT SAGE INTERNATIONAL, INC., hereby accepts appointment as Resident Agent of Gemwood Productions, Inc. in accordance with NRS 78.090. RA# 47977 SAGE INTERNATIONAL, INC. By: /s/ Molly Wheeler ---------------------------- MOLLY WHEELER, Manager Date: January 17, 2005 3 EX-3.2 3 ex3-2.txt BYLAWS Exhibit 3.2 BYLAWS OF GEMWOOD PRODUCTIONS, INC. a Nevada Corporation ARTICLE ONE OFFICES Section 1.1 REGISTERED OFFICE - The registered office of this corporation shall be in the County of Washoe, State of Nevada. Section 1.2 OTHER OFFICES - The corporation may also have offices at such other places both within and without the State of Nevada as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE TWO MEETINGS OF STOCKHOLDERS Section 2.1 PLACE - All annual meetings of the stockholders shall be held at the registered office of the corporation or at such other place within or without the State of Nevada as the directors shall determine. Special meetings of the stockholders may be held at such time and place within or without the State of Nevada as shall be stated in the notice of the meeting, or in a duly executed waiver of notice thereof. Section 2.2 ANNUAL MEETINGS - Annual meetings of the stockholders, commencing with the year 2006, shall be held on the 15th day of November each year if not a legal holiday and, if a legal holiday, then on the next secular day following, or at such other time as may be set by the Board of Directors from time to time, at which the stockholders shall elect by vote a Board of Directors and transact such other business as may properly be brought before the meeting. Section 2.3 SPECIAL MEETINGS - Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by the statute or by the Articles of Incorporation, may be called by the President or the Secretary by resolution of the Board of Directors or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose of the proposed meeting. Section 2.4 NOTICE OF MEETINGS - Notices of meetings shall be in writing and signed by the President or a Vice-President or the Secretary or an Assistant Secretary or by such other person or persons as the directors shall designate. Such notice shall state the purpose for which the meeting is called and the time and the place, which may be within or without this State, where it is to be held. A copy of such notice shall be either delivered personally to or shall be mailed, postage prepaid to each stockholder of record entitled to vote at such meeting not less than ten nor more than sixty days before such meeting. If mailed, it shall ne directed to a stockholder at his address as it appears upon the records of the corporation and upon such mailing of any such notice, the service thereof shall be complete and the time of the notice shall be to run from the date upon which such notice is deposited in the mail for transmission to such stockholder. Personal delivery of any such notice to any officer of a corporation or association or to any member of a partnership shall constitute delivery of such notice to such corporation, association or partnership. In the event of the transfer of stock after delivery of such notice of and prior to the holding of the meeting it shall not be necessary to deliver of mail notice of the meeting to the transferee. Section 2.5 PURPOSE OF MEETINGS - Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 2.6 QUORUM - The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Articles of Incorporation. If however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until such quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. Section 2.7 VOTING - When a quorum is present or represented at any meeting, the vote of the holders of a majority of the stock have voting power present in person or represented by proxy shall be sufficient to elect directors or to decide any questions brought before such meeting, unless question is one upon which by express provision of the statutes or of the Articles of Incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 2.8 SHARE VOTING - Each stockholder of record of the corporation shall be entitled at each meeting of stockholders to one vote for each share of stock standing in his name of the books of the corporation. Upon the demand of any stockholder, the vote for directors and the vote upon any question before the meeting shall be by ballot. Section 2.9 PROXY - At any meeting of the stockholders any stockholder may be represented and vote by proxy or proxies appointed by an instrument in writing. In the event any such instrument in writing shall designate two or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one shall be present, then that one shall have and may exercise all of the powers conferred by such written instrument upon all of the persons so designated unless the instrument shall otherwise provide. No proxy or power of attorney to vote shall be used to vote at a meeting of the stockholders unless it shall have been filed with the secretary of the meeting when required by the inspectors of election. All questions regarding the qualification of voters, the validity of proxies and the acceptance or rejection of votes shall be decided by the inspectors of election who shall be appointed by the Board of Directors, or if not so appointed, then by the presiding officer of the meeting. Section 2.10 WRITTEN CONSENT IN LIEU OF MEETING - Any action which may be taken by the vote of the stockholders at a meeting may be taken without a meeting if authorized by the written consent of stockholders holding at least a majority of the voting power, unless the provisions of the statutes or of the Articles of Incorporation require a greater proportion of voting power to authorize such action in which case such greater proportion of written consents shall be required. 2 ARTICLE THREE DIRECTORS Section 3.1 POWERS - The business of the corporation shall be managed by its Board of Directors which may exercise all such power of the corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders. Section 3.2 NUMBER OF DIRECTORS - The number of directors which shall constitute the whole board shall be one (1). The number of directors may from time to time be increased or decreased to not less than one nor more than fifteen by action of the Board of Directors. The directors shall be elected at the Annual Meeting of the Stockholders and except as provided in Section 2 of this Article, each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 3.3 VACANCIES - Vacancies in the Board of Directors including those caused by an increase in the number of directors, may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director, and each director so elected shall hold office until his successor is elected at an annual or a special meeting of the stockholders. The holders of a two-thirds of the outstanding shares of stock entitled to vote may at any time peremptorily terminate the term of office of all or any of the directors by a vote at a meeting called for such purpose or by a written statement filed with the secretary or, in his absence, with any other officer. Such removal shall be effective immediately, even if successors are not elected simultaneously and the vacancies on the Board of Directors resulting therefrom shall be filled only by the stockholders. A vacancy or vacancies in the Board of Directors shall be deemed to exist in case of the death, resignation or removal of any directors, or if the authorized number of directors be increased, or if the stockholders fail at any annual or special meeting of stockholders at which any director or directors are elected to elect the full authorized number of directors to be voted for at that meeting. The stockholders may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors. If the Board of Directors accepts the resignation of a director tendered to take effect at a future time, the Board or the stockholders shall have the power to elect a successor to take office when the resignation is to become effective. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of his term of office. ARTICLE FOUR MEETINGS OF THE BOARD OF DIRECTORS Section 4.1 PLACE - Regular meetings of the Board of Directors shall be held at any place within or without the State which has been designated from time to time by resolution of the Board or by written consent of all members of the Board. In the absence of such designation, regular meetings shall be held at the registered office of the corporation. Special meetings of the Board may be held either at a place so designated or at the registered office. 3 Section 4.2 FIRST MEETING - The first meeting of each newly elected Board of Directors shall be held immediately following the adjournment of the meeting of stockholders and at the place thereof. No notice of such meeting shall be necessary to the directors in order legally to constitute the meeting, provided a quorum be present. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. Section 4.3 REGULAR MEETINGS - Regular meetings of the Board of Directors may be held without call or notice at such time and at such place as shall from time to time be fixed and determined by the Board of Directors. Section 4.4 SPECIAL MEETINGS - Special meetings of the Board of Directors may be called by the Chairman or the President or by any Vice President or by any two Directors. Written notice of the time and place of special meetings shall be delivered personally to each director, or sent to each director by mail or by other form of written communication, charges prepaid, addressed to him at his address as it is shown upon the records, or if not readily ascertainable, at the place in which the meetings of the directors are regularly held. In case such notice is mailed or telegraphed, it shall be deposited in the United States mail or delivered to the telegraph company at least forty-eight (48) hours prior to the time of the holding of the meeting. In case such notice is delivered as above provided, it shall be so delivered at least twenty-four (24) hours prior to the time of the holding of the meeting. Such mailing, telegraphing or delivery as above provided shall be due, legal and personal notice to such director. Section 4.5 NOTICE - Notice of the time and place of holding an adjourned meeting need not be given to the absent directors if the time and place be fixed at the meeting adjourned. Section 4.6 WAIVER - The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present, and if, wither before or after the meeting, each of the directors not present signs a written waiver of notice, or a consent to holding such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Section 4.7 QUORUM - A majority of the authorized number of directors shall be necessary to constitute a quorum for the transaction of business, except to adjourn as hereinafter provided. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, unless a greater number be required by law of by the Articles of Incorporation. Any action of a majority, although not at a regularly called meeting, and the record thereof, if assented to in writing by all of the other members of the Board shall be as valid and effective in all respects as if passed by the Board in a regular meeting. Section 4.8 ADJOURNMENT - A quorum of the directors may adjourn any directors meeting to meet again at a stated day and hour; provided, however, that in the absence of a quorum, a majority of the directors present at any directors meeting, wither regular or special, may adjourn from time to time until the time fixed for the next regular meeting of the Board. 4 ARTICLE FIVE COMMITTEES OF DIRECTORS Section 5.1 POWER TO DESIGNATE - The Board of Directors may, by resolution adopted by a majority of the whole Board, designate on or more committees of the Board of Directors, each committee to consist of one or more of the directors of the corporation which, to the extent provided in the resolution, shall have and may exercise the power of the Board of Directors in the management of the business and affairs of the Corporation and may have power to authorize the seal of the corporation be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by the Board of Directors. The members of any such committee present at any meeting and not disqualified form voting may, whether or not they constitute a quorum, unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. At meetings of such committees, a majority of the members or alternate members shall constitute a quorum for the transaction of business, and the act of a majority of the members or alternate members at any meeting at which there is a quorum shall be the act of the committee. Section 5.2 REGULAR MINUTES - The committees shall keep regular minutes of their proceedings and report the same to the Board of Directors. Section 5.3 WRITTEN CONSENT - Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of the proceedings of the Board or committee. ARTICLE SIX COMPENSATION OF DIRECTORS Section 6.1 COMPENSATION - The directors may be paid their expenses of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like reimbursement and compensation for attending committee meetings. ARTICLE SEVEN NOTICES Section 7.1 NOTICE - Notices to directors and stockholders shall be in writing and delivered personally or mailed to the directors or stockholders at their addresses appearing on the books of the corporation. Notice by mail shall be deemed to be given at the time when the same shall be mailed. Notice to directors may also be given by telegram. Section 7.2 CONSENT - Whenever all parties entitled to vote at any meeting, whether directors or stockholders, consent, either by a writing on the records of the meeting or filed with the secretary, or by presence at such meeting and oral consent entered on the minutes, or by taking part in the deliberations at such meeting without objection, the doings of such meetings shall be valid as if had at a meeting regularly called and noticed, and at such meeting any business may be transacted which is not excepted from the written consent or to the consideration of which no objection for want of notice is made at the time, and 5 if any meeting be irregular for want of notice or of such consent, provided a quorum was present at such meeting, the proceedings of said meeting may be ratified and approved and rendered likewise valid and the irregularity or defect therein waived by a writing signed by all parties having the right to vote at such meeting; and such consent or approval of stockholders may be by proxy or attorney, but all such proxies and powers of attorney must be in writing. Section 7.3 WAIVER OF NOTICE - Whenever any notice whatever is required to be given under the provisions of the statutes, of the Articles of Incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE EIGHT OFFICERS Section 8.1 APPOINTMENT OF OFFICERS - The officers of the corporation shall be chosen by the Board of Directors and shall be a President, a Secretary and a Treasurer. Any person may hold two or more offices. Section 8.2 TIME OF APPOINTMENT - The Board of Directors at its first meeting after each annual meeting of stockholders shall choose a Chairman of the Board who shall be a director, and shall choose a President, a Secretary and a Treasurer, none of whom need to be directors. Section 8.3 ADDITIONAL OFFICERS - The Board of Directors may appoint a Vice-Chairman of the Board, Vice-Presidents and one or more Assistant Secretaries and Assistant Treasurers and such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. Section 8.4 SALARIES - The salaries and compensation of all officers of the corporation shall be fixed by the Board of Directors. Section 8.5 VACANCIES - The officers of the corporation shall hold office at the pleasure of the Board of Directors. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors. Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise shall be filled by the Board of Directors. Section 8.6 CHAIRMAN OF THE BOARD - The Chairman of the Board shall preside at meetings of the stockholders and the Board of Directors, and shall see that all orders and resolutions of the Board of Directors are carried into effect. Section 8.7 VICE-CHAIRMAN - The Vice-Chairman shall, in the absence or disability of the Chairman of the Board, perform the duties and exercise the powers of the Chairman of the Board and shall perform such other duties as the Board of Directors may from time to time prescribe. Section 8.8 PRESIDENT - The President shall be the chief executive officer of the corporation and shall have active management of the business of the corporation. He shall execute on behalf of the corporation all instruments requiring such execution except to the extent the signing and execution thereof shall be expressly designated by the Board of Directors to some other officer or agent of the corporation. Section 8.9 VICE-PRESIDENT - The Vice-President shall act under the direction of the President and in the absence or disability of the President shall perform the duties and exercise the powers of the President. They shall perform such 6 other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. The Board of Directors may designate one or more Executive Vice-Presidents or may otherwise specify the order of seniority of the Vice-Presidents. The duties and powers of the President shall descend to the Vice-Presidents in such specified order of seniority. Section 8.10 SECRETARY - The Secretary shall act under the direction of the President. Subject to the direction of the President he shall attend all meetings of the Board of Directors and all meetings of the stockholders and record the proceedings. He shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the President or the Board of Directors. Section 8.11 ASSISTANT SECRETARIES - The Assistant Secretaries shall act under the direction of the President. In order of their seniority, unless otherwise determined by the President or the Board of Directors, they shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. Section 8.12 TREASURER - The Treasurer shall act under the direction of the President. Subject to the direction of the President he shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the President or the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all of his transactions as Treasurer and of the financial condition of the corporation. Section 8.13 SURETY - If required by the Board of Directors, he shall give the corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration of the corporation, in case of death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 8.14 ASSISTANT TREASURER - The Assistant Treasurer in the order of their seniority, unless otherwise determined by the President or the Board of Directors, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. ARTICLE NINE CERTIFICATES OF STOCK Section 9.1 SHARE CERTIFICATES - Every stockholder shall be entitled to have a certificate signed by the President or a Vice-President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the corporation, certifying the number of shares owned by him in the corporation. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of the various classes of stock or series thereof and the qualifications, limitations or restrictions of such rights, shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such stock. 7 Section 9.2 TRANSFER AGENTS - If a certificate is signed (a) by a transfer agent other than the corporation or its employees or (b) by a registrar other than the corporation or its employees, the signatures of the officers of the corporation may be facsimiles. In case any officer who has signed or whose facsimile signature has been placed on a certificate shall cease to be such officer before such certificate is issued, such certificate may be issued with the same effect as though the person had not ceased to be such officer. The seal of the corporation, or a facsimile thereof, may, but need not be, affixed to certificates of stock. Section 9.3 LOST OR STOLEN CERTIFICATES - The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost or destroyed upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed. Section 9.4 SHARE TRANSFERS - Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation, if it is satisfied that all provisions of the laws and regulations applicable to the corporation regarding the transfer and ownership of shares have been complied with, to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 9.5 VOTING SHAREHOLDER - The Board of Directors may fix in advance a date not exceeding sixty (60) days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining the consent of stockholders for any purpose, as a record date for the determination of the stockholders entitled to notice of and to vote at any such meeting, and any adjournment thereof, or entitled to receive payment of any such dividend, or to give such consent, and in such case, such stockholders, and only such stockholders as shall be stockholder of record on the date so fixed, shall be entitled to notice of and to vote at such meeting, or any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. Section 9.6 SHAREHOLDERS RECORD - The corporation shall be entitled to recognize the person registered on its books as the owner of shares to be the exclusive owner for all purposes including voting and dividends, and the corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Nevada. ARTICLE TEN GENERAL PROVISIONS Section 10.1 DIVIDENDS - Dividends upon the capital stock of the corporation, subject to the provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant 8 to law. Dividends may be paid in cash, in property or in shares of the capital stock, subject to the provisions of the Articles of Incorporation. Section 10.2 RESERVES - Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors may from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends or for repairing or maintaining any property of the corporation or for such other purpose as the directors think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. Section 10.3 CHECKS - All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 10.4 FISCAL YEAR - The fiscal year of the corporation shall be fixed by resolution of the Board of Directors. Section 10.5 CORPORATE SEAL - The corporation may or may not have a corporate seal, as may from time to time be determined by resolution of the Board of Directors. If a corporate seal is adopted, it shall have inscribed thereon the name of the Corporation and the words "Corporate Seal" and "Nevada". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced. ARTICLE ELEVEN INDEMNIFICATION Every person who was or is a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or a person of whom he is the legal representative is or was a director or officer of the corporation or is or was serving at the request of the corporation for its benefit as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the General Corporation Law of the State of Nevada from time to time against all expenses, liability and loss (including attorneys' fees, judgements, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by him in connection herewith. The expenses of officers and directors incurred defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding upon receipt of any undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the corporation. Such right of indemnification shall be a contract right which may be enforced in any manner desired by the person. Such right of indemnification shall not be exclusive of any other right which such directors, officers or representatives may have or hereafter acquire and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote of stockholders, provision of law or otherwise, as well as their rights by this Article. The Board of Directors may cause the corporation to purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, or as its representative in a 9 partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the corporation would have the power to indemnify such person. The Board of Directors may from time to time adopt further Bylaws with respect to indemnification and may amend these and such Bylaws to provide at all times the fullest indemnification permitted by the General Corporation Law of the State of Nevada. ARTICLE TWELVE AMENDMENTS Section 12.1 BY SHAREHOLDER - The Bylaws may be amended by a majority vote of all the stock issued and outstanding and entitled to vote at any annual or special meeting of the stockholders, provided notice of intention to amend shall have been contained in the notice of the meeting. Section 12.2 BY BOARD OF DIRECTORS - The Board of Directors by a majority vote of the whole Board at any meeting may amend these Bylaws, including Bylaws adopted by the stockholders, but the stockholders may from time to time specify particular provisions of the Bylaws which shall not be amended by the Board of Directors. APPROVED and ADOPTED this 17th day of January, 2005. /s/ Adam Barker --------------------------------- Secretary 10 CERTIFICATE OF SECRETARY I hereby certify that I am the Secretary of Gemwood Productions, Inc., and that the foregoing Bylaws, consisting of 11 pages, constitute the code of Bylaws of Gemwood Productions, Inc., as duly adopted at a regular meeting of the Board of Directors of the corporation held January 17, 2005. IN WITNESS WHEREOF, I have hereunto subscribed my name this 17th day of January, 2005. /s/ Adam Barker ------------------------------------- Secretary 11 EX-5 4 ex5.txt OPINION & CONSENT OF MICHAEL M. KESSLER Exhibit 5 LAW OFFICE OF MICHAEL M. KESSLER, P.C. December 14, 2005 Mr. Victor Manuel Savceda Gemwood Productions C Alta Mar 157 Fracc Baja Del Mar Playas de Rosarito BC 22710 Mexico RE: Registration Statement on Form SB-2A of 900,000 shares of the Company's Common Stock Under the Securities Act of 1933 (the "Registration Statement"), of Gemwood Productions, Inc., a Nevada corporation (the "Company") Dear Mr. Savceda: We have acted as special counsel for the Company for the limited purpose of rendering this opinion in connection with the registration (pursuant to the Registration Statement) of the 900,000 shares (the "Shares") of the common stock, par value $0.001 per share, of the Company. In our capacity as special counsel to the Company, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents: 1. Certificate of Incorporation of the Company, as amended to date; 2. Bylaws of the Company, as amended to date; 3. The records of corporate proceedings relating to the issuance of the Shares and authorizing the offering. 4. Such other instruments and documents, if any, as we have believed to necessary for the purpose of rendering the following opinion. In such examinations, we have assumed the authenticity and completeness of all documents, certificates and records submitted to us as originals, the conformity to the original instruments of all documents, certificates and records submitted to us as copies, and the authenticity and completeness of the originals of such instruments. As to certain matters of fact relating to this opinion, we have relied on the accuracy and truthfulness of certificates of officers of the Company and on certificates of public officials, and have made such investigations of law as we have believed necessary and relevant. We do not express any opinion as to the laws of any other jurisdiction other than the General Corporation Law of the State of Nevada (the "NVCL"), all applicable provisions of the State of Nevada Constitution and all reported judicial decisions interpreting those laws, as well as U.S. federal securities law. No opinion is expressed herein with respect to the qualification of the 3436 AMERICAN RIVER DRIVE, SUITE 11 TELEPHONE (916) 239-4000 FACSIMILE (916) 239-4008 LAW OFFICE OF MICHAEL M. KESSLER, P.C. Shares under the securities or blue sky laws of any state or any foreign jurisdiction. This opinion is limited to the laws, including the rules and regulations thereunder, as in effect on the date hereof. Based on the following we are of the following opinion: 1. Gemwood Productions, Inc. (the "Company") is a duly and legally organized and existing Nevada State Corporation, with its registered office located in Reno, Nevada and its principal place of business located at C Alta Mar 157 Fracc Baja Del Mar, Playas De Rosarito, B.C. 22710 Mexico. The Articles of Incorporation and corporate registration fees were submitted to the Nevada Secretary of State's office and filed with the office on February 7, 2005. The Articles of Incorporation of the Company were amended by the filing of a Certificate of Amendment after a proper shareholder vote on 22nd day of February 2005. The Company increased its number of authorized shares to "Fifty Million Shares" with a stated par value of $0.001. The Company's existence and form is valid and legal pursuant to the representation above. 2. The Company is a fully and duly incorporated Nevada corporate entity. The Company has one class of Common Stock at this time. Neither the Articles of Incorporation, Bylaws, and amendments thereto, nor subsequent resolutions change the non-assessable characteristics of the Company's common shares of stock. The Common Stock previously issued by the Company is in legal form and in compliance with the laws of the State of Nevada, and when such stock was issued, it was fully paid for and non-assessable. The Common Stock to be sold under this Form SB-2A Registration Statement is likewise legal under the laws of the State of Nevada. 3. To our knowledge, the Company is not a party to any legal proceedings nor are there any judgments against the Company, nor are there any actions or suits filed or threatened against it or its officers and directors, in their capacities as such, other than as set forth in the Registration Statement. We know of no disputes involving the Company and the Company has no claim, actions or inquires from any federal, state or other government agency, other than as set forth in the Registration Statement. We know of no claims against the Company or any reputed claims against it at this time, other than as set forth in the Registration Statement. 4. The Company's outstanding shares are all common shares. There are no liquidation preference rights held by any of the Shareholders upon voluntary or involuntary liquidation of the Company. 5. By Directors' resolution dated September 30, 2005, the Company has authorized the issuance of 900,000 shares of Common Stock for this offering. The Company's Amended Articles of Incorporation presently provide the authority to the Company to issue 50,000,000 shares of Common Stock, $0.001 par value. Based upon the foregoing, we are of the opinion that the Shares being offered for sale and issuable by the Company pursuant to this Registration Statement LAW OFFICE OF MICHAEL M. KESSLER, P.C. will be duly authorized and validly issued, fully paid and non-assessable when issued, as contemplated by the Registration Statement. We do hereby consent to the use of this opinion as an exhibit to the Registration Statement and to the references to this firm in the Registration Statement. In giving this consent, we do not hereby admit that we are acting within the category of persons whose consent is required under Section 7 of the Securities Act and the rules and regulations of the Securities and Exchange Commission thereunder. Yours truly, Law Office of Michael M. Kessler, P.C. By: /s/ Michael M. Kessler, Esq ----------------------------------- EX-10 5 ex10.txt LEASE AGREEMENT Exhibit 10 COMMERCIAL PROPERTY LEASE This lease is made between Hortenzia Magallenas ("Lessor") and Gemwood Productions, Inc. ("Lessee") for the commercial retail property located at Calle Vista #13 Rosarito Beach, Baja California, Mexico 22710. The space is leased for a term of one month, to commence on April 1, 2006 and to continue from month to month thereafter until canceled upon 30 days prior notice by either party. Lessee shall pay a deposit of $500 (Five Hundred Dollars "U.S."). The monthly rental shall be $300.00 (Three Hundred Dollars "U.S."). Lessee shall in addition pay such applicable sales/use taxes as may be levied from time to time by competent authority in addition to the base rental. Lessee shall pay rent, and any additional rental as provided below, to lessor at lessor's above stated address, or at such other place as lessor may designate in writing, without demand, and without counterclaim, deduction or setoff. Lessee shall use and occupy the premises as a Day Spa and Salon and for no other purpose. Lessor represents that the premises may be lawfully used for such purpose. Lessee shall commit no act of waste and shall take good care of the premises and the fixtures therein, and shall, in the use and occupancy of the premises, conform to all laws, orders and regulations of the federal, state and municipal government of any of their departments. All improvements made by the lessee to the premises which are so attached to the premises that they cannot be removed without material injury to the premises, shall become the property of lessor upon installation. Not later than the last day of the term lessee shall, at lessee's expense, remove all of lessee's property and those improvements made by lessee which have not become the property of the lessor, including trade fixtures, cabinet work, movable paneling, partitions and the like; repair all injury done by or in connections with the installation or removal of the property and improvements; surrender the premises in as good conditional as they were at the beginning of the term, reasonable wear and damage by fire, the elements , casualty or other cause not due to the misuse or neglect by the lessee or lessee's agents, servants, visitors, servants or licensees, excepted. All property of the lessee remaining on the property after the last day of the term of this lease shall be conclusively deemed abandoned and may be removed by lessor, and lessee shall reimburse lessor for the cost of such removal. Lessor may have any such property stores at lessee's risk and expense. Lessee shall not, without first obtaining the written consent of the lessor, make any alterations, additions or improvements in, to or about the premises. Lessee shall not do or suffer anything to be done on the premises which will cause an increase in the rate of fire insurance on the building. Lessee shall not permit the accumulation of waste or refuse matter on the leased premises or anywhere in or near the building. Lessee shall not, without first obtaining the written consent of the lessor, abandon the premises, or allow the premises to become vacant or deserted. Lessee shall not, without obtaining the written consent of the lessor, assign, mortgage, pledge, or encumber this lease, in whole or in part, or sublet the premises or any part of the premises. Lessee shall observe and comply with such reasonable rules and regulations as may be established from time to time by lessor. If the building is damaged by fire or any other cause to such extent the at the cost of restoration, as reasonable estimated by lessor, will equal or exceed 60% of the replacement value of the building, just prior to the occurrence of the damage, then lessor may, no later than the seventy day following the damage, give lessee a notice of election to terminate the lease. In the event of such election this lease shall be deemed to terminate as of the date of the damage or destruction, and lessee shall surrender the premises within a reasonable time thereafter, and any pre-paid rent shall be refunded proportionally. Of the premises or any part of the premises, or any part of the building materially affecting lessee's use of the premises, be taken by eminent domain, this lease shall terminate on the date when title vests pursuant to such taking. The rent shall be apportioned as of the termination date and any rent paid for any period beyond such date shall be repaid to lessee. This lease shall be subject and subordinate to all underlying leases and to mortgages which may now or hereafter affect such leases or the real property of which the premises form a part, and also all renewals, modifications, consolidations, and replacements of the underlying leases and mortgages. Lessee agrees to execute such estoppel letters or other documents required to confirm the same. Lessor may enter the premises at any reasonable time, upon adequate notice to lessee (except that no notice need be given in case of an emergency) for the purpose of inspection or the making of such repairs, replacements, or additions in, to, on and about the premises or the building, as lessor deems necessary or desirable. Lessor shall make all necessary repairs to the premises, except where the repair has been made necessary by misuse or neglect by lessee or lessee's agents, servants, visitors or licensors. This document represents the entire agreement of the parties and there are no representations not stated herein, and this agreement may only be modified by a writing executed by both parties hereto. Dated: 10-19-2005 /s/ Hortenzia Magallenas - ------------------------------------- Hortenzia Magallenas ("Lessor") /s/ Victor Manuel Savceda - ------------------------------------- Victor Manuel Savceda ("Lessee") EX-23.2 6 ex23-2.txt CONSENT OF DE JOYA GRIFFITH & COMPANY Exhibit 23.2 De Joya Griffith & Company, LLC Certified Public Accountants & Consultants 2425 W. Horizon Ridge Parkway Henderson, Nevada 89052 - -------------------------------------------------------------------------------- INDEPENDENT AUDITORS' CONSENT We consent to the use of Gemwood Productions, Inc. on Form SB-2 of our Auditors' Report, dated November 1, 2005, on the balance sheet of Gemwood Productions, Inc. as of September 30, 2005 and the related statement of income and accumulated deficit from January 17, 2005, date of inception to September 30, 2005, changes in stockholders' equity, and cash flows for the period September 30, 2005. /s/ De Joya Griffith & Company, LLC - ----------------------------------------- De Joya Griffith & Company, LLC December 21, 2005 Las Vegas, Nevada - -------------------------------------------------------------------------------- Telephone (702) 563-1600 * Facsimile (702) 920-8049 -----END PRIVACY-ENHANCED MESSAGE-----