<DOCUMENT>
<TYPE>SB-2
<SEQUENCE>1
<FILENAME>sb2.txt
<DESCRIPTION>FORM SB-2
<TEXT>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CARLATERAL, INC.
(Name of small business issuer in its charter)
Nevada 6141 20-4158835
(State or Other Jurisdiction (Primary Standard Industrial (IRS Employer
of Organization) Classification Code) Identification #)
STATE AGENT & TRANSFER
CARLATERAL, INC. SYNDICATE, INC.
112 North Curry St. 112 North Curry St.
Carson City, Nevada 89703-4934 Carson City, Nevada 89703-4934
(775) 321-8243 (800) 253-1013
(Address and telephone of registrant's (Name, address and telephone number of
executive office) agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
INVESTING IN THE COMPANY'S COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING AT PAGE 7.
If this Form is filed to register additional common stock for an offering under
Rule 462(b) of the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed under Rule 462(c) of 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 under Rule 462(d) of 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 under Rule 434, please
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Securities to be Amount To Be Offering Price Aggregate Registration
Registered Registered Per Share[1] Offering Price[2] Fee[3]
Common Stock by 3,300,000 $ 0.15 $ 495,000 $ 58.21
Selling Security
Shareholders
<PAGE>
[1] The offering price has been arbitrarily determined and bears no relationship
to assets, earnings, or any other valuation criteria. No assurance can be given
that the shares offered hereby will have a market value or that they may be sold
at this, or at any price.
[2] Carlateral, Inc. will not receive any of the proceeds from the sale of
common stock by the selling security shareholders.
[3] Estimated solely for the purpose of calculating the registration fee based
on Rule 457 (o) of the Securities Act of 1933. All of the securities are being
offered by existing security holders. If the security holders offer any
securities to the general public, the registration fee is to be calculated upon
the basis of the proposed offering price to the general public.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
PROSPECTUS
CARLATERAL, INC.
SHARES OF COMMON STOCK
3,300,000 SHARES OF COMMON STOCK BEING SOLD BY SELLING SECURITY HOLDERS
Prior to this offering, there has been no public trading market for the common
stock of Carlateral, Inc. ("Carlateral"). Carlateral's common stock is not
presently traded on any market or securities exchange. Carlateral is registering
3,300,000 shares of its common stock on behalf of certain existing shareholders,
as named under "Selling Security Holders" within this Registration Statement.
The selling security holders are selling all of the shares. The offering price
for the shares will be $0.15 per share until the shares are quoted on the
Over-The-Counter (OTC) Bulletin Board or an exchange. The selling security
holders may sell at prevailing market prices or privately negotiated prices only
after the shares are quoted on either the OTC Bulletin Board or an exchange.
The selling securities holders may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. Carlateral does not receive any proceeds from the sale of any of the
shares held by the selling security holders.
The securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is July 10, 2006.
The information in this prospectus is not complete and may be changed. 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.
INVESTING IN THE COMPANY'S COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING AT PAGE 7 . PLEASE READ THIS PROSPECTUS CAREFULLY.
TABLE OF CONTENTS
Page No.
Summary of our Prospectus 1
Risk Factors 3
Use of Proceeds 8
Determination of the Offering Price 8
Selling Security Holders 8
Plan of Distribution; Terms of the Offering 10
Legal Proceedings 11
Business 11
Management's Discussion and Analysis of our Financial
Condition and the Results of our Operations 12
Management 13
Executive Compensation 14
Principal Stockholders 15
Description of Securities 16
Certain Transactions 17
Litigation 17
Experts 18
Financial Statements 18
DEALER PROSPECTUS DELIVERY OBLIGATION
Until _______ , (90 days after the effective date of this prospectus) all
dealers that effect transactions in these securities whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealer obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
<PAGE>
SUMMARY OF OUR OFFERING
This summary provides an overview of selected information contained in this
prospectus. It does not contain all the information that you should consider
before making a decision to purchase the shares offered by the selling security
holders. You should very carefully and thoroughly read the more detailed
information in this prospectus and review our financial statements.
SUMMARY INFORMATION ABOUT CARLATERAL, INC.
Carlateral, Inc. ("Carlateral") is a development stage company, incorporated in
the State of Nevada on December 9, 2005, to establish itself as a finance
company specializing in sub prime title loans, secured primarily using
automobiles (but also boats, recreational vehicles, machinery and other
equipment) as collateral.
Carlateral intends to open regional and branch offices in metropolitan areas
throughout Canada and the US. Our target market is the community of individuals
needing short term loans.
We intend to create brand name awareness amongst people who need access to short
term capital. Our lending procedure will be designed to be simple, friendly and
quick.
Our business office is located at 112 North Curry St., Carson City, Nevada,
89703-4934 and our telephone number is (775) 321-8243. Our United States and
registered statutory office is located at 112 North Curry St., Carson City,
Nevada, 89703-4934 (775) 882-1013; our fax number is (775) 882-8628. Our fiscal
year end is February 28.
As of February 28, 2006, Carlateral has raised $23,500 through the sale of its
common stock. There is $18,904 cash on hand and in our corporate bank accounts.
Carlateral currently has accounts payable and liabilities of $3,000 as of
February 28, 2006. In addition, Carlateral anticipates that the costs associated
with this offering will be approximately $3,460. As of the date of this
prospectus, we have not yet generated or realized any revenues from our business
operations. The following financial information summarizes the more complete
historical financial information as indicated on the audited financial
statements we have filed with this prospectus.
DESCRIPTION OF PROPERTY
The company does not own any property, the company currently rents shared office
space on a month to month basis and has not entered into any lease or long term
rental agreements for property. The Carlateral office is at 112 North Curry
Street, Carson City Nevada, 89703-4934.
OFFERING BY THE SELLING SECURITY HOLDERS
A group of selling security holders is endeavoring to sell the shares of common
stock. The percentage of total outstanding common stock being offered by the
selling security holders is 32%. The price at which the selling security holders
offer their shares is a fixed price of $0.15 per share for the duration of the
offering. Carlateral will not receive any proceeds from the sale of the common
stock by the selling security holders. Currently, the company has 34
shareholders of common stock and 33 of the existing shareholders are endeavoring
to sell their shares of common stock.
SUMMARY INFORMATION REGARDING THE OFFERING
================================================================================
Securities being Offered by Up to 3,300,000 common shares are being offered by
the selling security
Selling Security Holders,
Commonholders. Stock,
par value $0.001
================================================================================
Offering Price Per Share by $0.15 per share, if and when the selling security
Selling Security Holders holders decide to sell their shares.
================================================================================
1
<PAGE>
Number of Shares Outstanding 10,300,000 common shares are currently issued and
Before the Offering of outstanding. 3,300,000 of the issued and
Common Shares outstanding shares are to be sold under this
prospectus by the existing security holders.
================================================================================
Number of Shares Outstanding 10,300,000 common shares.
After the Offering
================================================================================
Minimum Number of Shares to None
be Sold in this Offering
================================================================================
Use of Proceeds Carlateral will not receive any proceeds from the
sale of the common stock by the selling security
holders. The expenses of this offering, including
the preparation of this prospectus and the filing
of this registration statement, estimated at
$3,460, are being paid for by Carlateral.
================================================================================
Market for the Common Stock There is no public
market for the common shares. The price per share
will remain $0.15 per share until such a time the
shares are quoted on the Over-The-Counter (OTC)
Bulletin Board or an exchange. The selling
security holders may sell at prevailing market
prices or privately negotiated prices, only after
the shares are quoted on either the OTC Bulletin
Board or an exchange.
Carlateral may not be able to meet the requirement
for a public listing or quotation of its Common
Stock. Further, even if Carlateral common stock is
quoted or granted listing, a market for the common
shares may not develop. If a market develops, the
price of the shares in the market may not be
greater than or equal to the price per share that
investors in this offering pay; in fact, the price
of our shares in any market that may develop could
be significantly lower.
================================================================================
Terms of the Offering The selling security holders will determine when
and how they will sell the common stock offered in
this prospectus.
================================================================================
Termination of The offering will conclude when all 3,300,000
the Offering shares of common stock the registered in this
statement have been sold, or when Carlateral
decides to terminate the registration of these
shares.
Unless otherwise indicated, all information in this prospectus, including per
share data and information relating to the number of shares issued and
outstanding, has been adjusted for a ten-for-one (10:1) forward stock split of
our common stock effective on February 15, 2006. You should rely only on the
information contained in this prospectus. Carlateral has not authorized anyone
to provide you with information different from that which is contained in this
prospectus. The selling security holders are offering to sell shares of common
stock and seeking offers to buy shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus, or of any sale of the common stock.
SUMMARY OF OUR FINANCIAL INFORMATION
===================================================================
BALANCE SHEET AS OF FEBRUARY 28, 2006
===================================================================
Total Assets $20,378
===================================================================
Total Liabilities $3,000
===================================================================
Shareholder's Equity $17,378
===================================================================
2
<PAGE>
OPERATING DATA DEC 9, 2005 (INCEPTION) THROUGH
FEBRUARY 28, 2006
===================================================================
Revenue $0
===================================================================
Net Loss ($6,122)
===================================================================
Net Loss Per Share ($0.00)
===================================================================
Carlateral has had no revenues and has achieved losses since inception.
Carlateral has had no operations and has been issued a "going concern" opinion
by its auditor.
RISK FACTORS
Please consider the following risk factors before deciding to invest in our
common stock.
RISKS RELATED TO OUR FINANCIAL CONDITION
IF WE DO NOT OBTAIN ADEQUATE FINANCING, OUR BUSINESS WILL FAIL, WHICH WILL
RESULT IN THE COMPLETE LOSS OF YOUR INVESTMENT.
Our current operating funds are adequate for corporate existence over the next
twelve months. Carlateral's cash balance as of February 28, 2006 is $20,378. We
will require additional financing in order to implement our business plans and
strategy. The company is currently spending approximately $1,500 per month.
We require significant capital to finance our growth. We will need funds in
order to enter into leasing agreements for our storefront offices and to furnish
and equip those offices. Opening a single store requires approximately $10,000
and we anticipate incurring operational losses for a period of 6 months in each
location before the location generates enough cash flow to sustain our
operations.
SINCE WE LACK AN OPERATING HISTORY, WE FACE A HIGH RISK OF BUSINESS FAILURE,
WHICH MAY RESULT IN THE LOSS OF YOUR INVESTMENT.
Carlateral is a development stage company and has not yet begun to open offices
and deliver services. Thus, we have no way to evaluate the likelihood that we
will be able to operate the business successfully. We were incorporated on
December 9, 2005 and to date have been involved primarily in organizational
activities and market research. Based upon current plans, we expect to incur
operating losses in future periods. We will incur these losses due to expenses
associated with setting up our computerized loan systems, opening and staffing
our offices and paying salaries and benefits to our future employees.
We cannot guarantee that we will be successful in generating revenue in the
future, or in raising funds through the sale of our shares, adequate to pay for
our business operations and planed expenditures. As of the date of this
prospectus, we have earned no revenue. Failure to generate revenue will cause us
to go out of business, which will result in the complete loss of your
investment.
AS OUR SOLE OFFICER AND DIRECTOR HAS OTHER OUTSIDE BUSINESS ACTIVITIES, HE MAY
BE UNABLE TO DEVOTE A MAJORITY OF HIS TIME TO THE COMPANY. AS A RESULT, THERE
MAY BE PERIODIC INTERRUPTIONS IN OUR OPERATIONS AND OUR BUSINESS COULD FAIL.
Mr. Cameron, our sole officer and director, has other outside business
activities and is devoting only approximately 5-10 hours per week to our
operations. Our operations may be sporadic and occur at times which are not
convenient to Mr. Cameron, which may result in periodic interruptions or
suspensions of our business plan. If the demands of the company's business
require the full time of our executive officer, he is prepared to adjust his
timetable in order to devote more time to conducting our business operations.
However, our executive officer may be unable to devote sufficient time to the
management of the company's business, which may result in periodic interruptions
in the implementation of the company's business plans and operations. Such
delays could have a significant negative effect on the success of our business.
3
<PAGE>
SHOULD OUR SOLE OFFICER AND DIRECTOR LEAVE THE COMPANY, WE MAY BE UNABLE TO
CONTINUE OUR OPERATIONS.
The company is entirely dependent on the efforts and abilities of its sole
officer and director. The loss of our sole officer and director could have a
material adverse effect on the business and its prospects. The company believes
that all commercially reasonable efforts have been made to minimize the risks
attendant the departure from service of our current sole officer and director.
However, replacement personnel may be unavailable to us. Moreover, even if
available, replacement personnel may not enable the company to operate
profitably.
All decisions regarding the management of the company's affairs will be made
exclusively by its sole officer and director. Purchasers of the offered shares
may not participate in the management of the company and, therefore, are
dependent upon the management abilities of the company's sole officer and
director. The only assurance that the shareholders of the company (including
purchasers of the offered shares) have that the company's sole officer and
director will not abuse his discretion in making decisions, with respect to its
affairs and other business decisions, is his fiduciary obligations and business
integrity. Accordingly, no person should purchase offered shares unless that
person is willing to entrust all aspects of management to the company's sole
officer and director, or his successors. Potential purchasers of the offered
shares must carefully evaluate the personal experience and business performance
of the company's management.
The company's management may retain independent contractors to provide services
to the company. Those contractors have no fiduciary duty to the shareholders of
the company and may not perform as expected. The company does not maintain key
person life insurance on its sole officer and director.
IF WE CANNOT SECURE ADDITIONAL CAPITAL, OR IF AVAILABLE CAPITAL IS TOO
EXPENSIVE, OUR BUSINESS WILL FAIL.
Opening more stores and implementing an electronic loan management system will
require a significant capital investment. Debt or equity financing may not be
available for us to do so, or if available may be too expensive. To open our
average store requires an investment of approximately $10,000, and we anticipate
6 months of operational losses at approximately $1,500 per month before an
average store generates adequate cash flow to cover operations.
IF WE EXPAND OUR OPERATIONS AND FAIL TO MANAGE THE RESULTING GROWTH EFFECTIVELY,
OUR BUSINESS WILL BE HARMED.
Our plans include opening new stores at periodic intervals. Our growth strategy
is subject to significant risks which you should carefully consider before
purchasing the shares we are offering.
Although we plan on researching our locations carefully, some stores may be slow
to achieve profitability, or may not become profitable at all, which will result
in losses. There can be no assurance that we will succeed.
We intend to enter markets where the regulatory climate is favorable to our
business. However, we may be unable to enter such markets successfully. The
factors that will affect our growth strategy include our success in (a)
identifying and implementing an electronic loan management system, (b) obtaining
adequate financing on acceptable terms and (c) adapting our internal controls
and operating procedures to accommodate our future growth.
Our systems, procedures and controls may not be adequate to support the
expansion of our business operations. Significant growth will place managerial
demands on all aspects of our operations. Our future operating results will
depend substantially upon our ability to manage changing business conditions and
to implement and improve our technical, administrative and financial controls
and reporting systems. In addition, we may be unable to implement our business
strategy profitably in all jurisdictions that we intend to operate due to local
regulatory restrictions.
4
<PAGE>
RISKS RELATED TO THIS OFFERING
INVESTORS WILL PAY MORE FOR CARLATERAL'S COMMON STOCK THAN THE PRO RATA PORTION
OF OUR ASSETS ARE WORTH; AS A RESULT INVESTING IN THE COMMON STOCK MAY RESULT IN
AN IMMEDIATE LOSS.
The arbitrary offering price of $0.15 per common share as determined herein, is
substantially higher than the net tangible book value per share of Carlateral's
common stock. Carlateral's assets do not substantiate a share price of $0.15 per
share. This premium in share price applies to the terms of this offering and
does not attempt to reflect any forward looking share price subsequent to the
company obtaining a listing on any exchange, or becoming quoted on the OTC
Bulletin Board.
AS WE CURRENTLY HAVE NO MARKET FOR OUR SHARES, SHAREHOLDERS MAY BE UNABLE TO
SELL THEIR SHARES. EVEN IF A MARKET SHOULD DEVELOP, THE PRICE MAY BE VOLATILE
AND SHAREHOLDERS MAY LOSE THEIR ENTIRE INVESTMENT.
Our stock is currently not traded and we cannot provide investors with any
assurance that it will be traded, or if traded, whether a market will develop.
If no market develops, the holders of our common stock may find it difficult or
impossible to sell their shares. Further, even if a market develops, our common
stock will be subject to price fluctuations and volatility.
The company cannot apply directly to be quoted on the OTC Bulletin Board.
Additionally, the stock can be listed or traded only to the extent that there is
interest by broker/dealers in acting as a market maker in the company's stock.
Despite the company's best efforts, the company may not be able to convince any
broker/dealers to act as market-makers and make quotations on the OTC Bulletin
Board. It is the company's intent to contact potential market makers for the OTC
Bulletin Board after it has completed its primary offering.
IN THE EVENT THAT THE COMPANY'S SHARES ARE TRADED, THEY MAY TRADE UNDER $5.00
PER SHARE AND THUS WILL BE A PENNY STOCK. TRADING IN PENNY STOCKS HAS MANY
RESTRICTIONS AND THESE RESTRICTIONS COULD SEVERELY AFFECT THE PRICE AND
LIQUIDITY OF THE COMPANY'S SHARES.
In the event our shares are traded, and our stock trades below $5.00 per share
our stock would be known as a "penny stock" which is subject to various
regulations involving disclosures to be given to you prior to purchase of any
penny stock. The U.S. Securities and Exchange Commission (the "SEC") has adopted
regulations which generally define a "penny stock" to be any equity security
that has a market price of less than $5.00 per share, subject to certain
exceptions. Depending on market fluctuations, our common stock could be
considered to be a "penny stock". A penny stock is subject to rules that impose
additional sales practice requirements on broker/dealers who sell these
securities to persons other than established customers and accredited investors.
For transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of these securities. In addition he
must receive the purchaser's written consent to the transaction prior to the
purchase. He must also provide certain written disclosures to the purchaser.
Consequently, the "penny stock" rules may restrict the ability of broker/dealers
to sell our securities, and may negatively affect the ability of holders of
shares of our common stock to resell them. These disclosures require you to
acknowledge you understand the risk associated with buying penny stocks and that
you can absorb the entire loss of your investment. Penny stocks are low priced
securities that do not have a very high trading volume. Consequently, the price
of the stock is oftentimes volatile and you may not be able to buy or sell the
stock when you want.
AS THE COMPANY HAS 75,000,000 AUTHORIZED SHARES, THE COMPANY'S MANAGEMENT COULD
ISSUE ADDITIONAL SHARES DILUTING THE COMPANY'S CURRENT SHAREHOLDERS' EQUITY.
The company has 75,000,000 authorized shares of which only 10,300,000 are
currently outstanding and will be issued and outstanding if all the shares in
this offering are sold. The company's management could, without the consent of
the company's existing shareholders issue substantially more shares causing a
large dilution in our current shareholders' equity position. Additionally, large
share issuances by the company would generally have a negative impact on our
share price. It is possible that due to additional share issuance you could lose
a substantial amount or all of your investment.
5
<PAGE>
AS OUR COMPANY'S SOLE OFFICER AND DIRECTOR CURRENTLY OWNS 68% OF THE OUTSTANDING
COMMON STOCK, INVESTORS MAY FIND DECISIONS MADE BY THE COMPANY'S SOLE OFFICER
AND DIRECTOR CONTRARY TO THEIR INTERESTS.
The company's sole officer and director owns approximately 68% of our currently
outstanding common stock. As a result, he will be able to decide who will be
directors and control the direction of the company. Our sole officer and
director's interests may differ from the interests of our other stockholders.
Factors that could cause his interests to differ from the interests of other
stockholders include the impact of corporate transactions on the timing of our
business operations and his ability to continue to manage the business, in terms
of the amount of time he is able to devote to the company.
IF WE FILE FOR BANKRUPTCY PROTECTION OR ARE FORCED INTO BANKRUPTCY PROTECTION,
INVESTORS WILL LOSE THEIR ENTIRE INVESTMENT.
If we file for bankruptcy protection, or a petition for involuntary bankruptcy
is filed by creditors against us, all funds will become part of the bankruptcy
estate and administered according to the bankruptcy laws. In this case, you will
lose your investment and your funds will be used to pay creditors and will not
be used for implementing our electronic loan management systems or opening our
storefront sales locations.
RISKS RELATING TO OUR BUSINESS
IF WE CANNOT EFFECTIVELY PROMOTE OUR LOAN SERVICES, WE WILL NOT ATTRACT
CUSTOMERS.
Our success will depend on several factors, including consumers' perception of
our role in the financial community and acceptance of our services. We believe
that the publics' acceptance of our services depends on several factors,
including the overall simplicity and expediency of our lending process, the
pricing of our loan services, the convenience of our locations and the
effectiveness of our marketing efforts. Our services may not achieve broad
market acceptance. A decline in the demand for our consumer finance services, or
our failure to achieve public acceptance for our loan services, would have a
material and adverse effect on our business, operating results and financial
condition.
CHANGING ECONOMIC CONDITIONS MAY HAVE AN ADVERSE EFFECT ON OUR BUSINESS.
Changing economic conditions may adversely affect our business. The risks
associated with our business may become more significant in an economic slowdown
or recession. In the event of an economic slowdown or recession we may suffer an
increase in delinquency rates and loan write-offs. Our delinquency rates and the
frequency and severity of our losses may be higher under adverse economic
conditions than those experienced by the financial services industry generally
because of our limited credit requirements, the fact that each transaction is
the result of a customer's short-term financial need and the overall nature of
our business. Any sustained period of economic slowdown or recession could have
a material and adverse effect on our business, operating results and financial
condition.
Our quarterly operating results may fluctuate significantly and any failure to
meet financial expectations for any fiscal quarter may disappoint investors and
could cause the price of our common stock to fall.
WE FACE SIGNIFICANT COMPETITION FROM OTHER COMPANIES THAT PROVIDE SHORT-TERM
ADVANCES TO OUR TARGET CUSTOMERS.
In addition to other title loan companies, we compete with banks, credit card
issuers, pawnshops, payday loan establishments and other financial services
entities and retail businesses that provide short-term cash advances. We believe
that the cash advance and short term loan industry will become more competitive
as the industry consolidates, and we could face additional competition as
increasing numbers of traditional check cashers, commercial banks and other
retail credit outlets add title loan services to their financial product
offerings. The entry of such competitors into our markets could have a material
adverse effect on our business, operating results and financial condition. Many
of our competitors have larger and more established customer bases and
substantially greater financial, marketing and other resources than us.
6
<PAGE>
ALTHOUGH WE REQUIRE THAT OUR CUSTOMERS PROVIDE COLLATERAL FOR CASH LOANS, WE ARE
SUSCEPTIBLE TO SUBSTANTIAL RISKS OF NON-PAYMENT.
We require that our customers entitle us to the collateral that secures their
loans. However, in the case of default, we may be unable to recover all of the
costs incurred from failed loans. In addition, our customers have little or no
liquidity. As a result, we are more susceptible to the risk that customers will
not repay their loans than consumer lenders or finance companies that have more
stringent underwriting criteria, and typically require significant collateral
for their loan.
RISKS RELATING TO OUR INDUSTRY
OUR INDUSTRY IS CLOSELY REGULATED AND CHANGES IN LAWS AND PRACTICES MAY HAVE AN
ADVERSE AFFECT ON OUR ABILITY TO OPERATE.
States closely regulate our industry. Several lawsuits have challenged sub prime
loans as violations of state usury laws. If such lawsuits are successful in
those states in which we operate, or if state laws are changed to disallow sub
prime loans, we will be required to change the manner in which we conduct our
business.
There is a substantial risk that we may be materially and adversely affected by
future litigation, new state or federal regulations or consumer initiatives
directed against us individually or against the sub prime loan industry in
general. Several states have also raised questions related to the proper
regulatory framework for sub prime loans. Each state where we operate regulates
our business through consumer protection and lending practices laws (such as
truth-in-lending and usury). These laws and regulations, among other things,
establish licensing requirements, regulate our credit approval and application
procedures, establish maximum fees and late payment charges, require specified
disclosures to customers and govern collection practices. Our inability or
failure to comply with any adverse changes in our regulatory environment, such
as new laws and regulations or new interpretations of existing laws and
regulations, could result in fines, class-action litigation or interruption or
cessation of certain of our business activities. Any of these events could have
a material and adverse effect upon our business, operating results and financial
condition.
In addition, changes in our regulatory environment may be adopted by states in
which we operate that may make our compliance to our regulatory environment more
difficult or expensive, further limit or restrict our fees and other charges,
curtail our future operations, restrict our ability to operate, or otherwise
materially and adversely effect our business, operating results and financial
condition.
FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements regarding
management's plans and objectives for future operations, including plans and
objectives relating to our planned entry into the sub-prime lending industry.
The forward-looking statements and associated risks set forth in this prospectus
include or relate to, among other things, (a) our projected profitability, (b)
our growth strategies, (c) anticipated trends in our industry, (d) our ability
to obtain and retain sufficient capital for future operations, and (e) our
anticipated needs for working capital. These statements may be found under
"Management's Discussion and Analysis or Plan of Operation" and "Description of
Business," as well as in this prospectus generally. Actual events or results may
differ materially from those discussed in these forward-looking statements as a
result of various factors, including, without limitation, the risks outlined
under "Risk Factors" and matters described in this prospectus generally. In
light of these risks and uncertainties, the forward-looking statements contained
in this prospectus may not in fact occur.
The forward-looking statements herein are based on current expectations that
involve a number of risks and uncertainties. Such forward-looking statements are
based on the assumptions that we will be able to continue our business
strategies on a timely basis, that we will attract customers, that there will be
no material adverse competitive or regulatory changes in the conditions under
which our business operates, that our sole officer and director will remain
employed as such, and that our forecasts accurately anticipate market demand.
The foregoing assumptions are based on judgments with respect to, among other
things, future economic, competitive and market conditions, and future business
decisions, all of which are difficult or impossible to predict accurately and
7
<PAGE>
many of which are beyond our control. Accordingly, although we believe that the
assumptions underlying the forward-looking statements are reasonable, any such
assumption could prove to be inaccurate and therefore there can be no assurance
that the results contemplated in forward-looking statements will be realized.
In addition, as disclosed elsewhere in this "Risk Factors" section of this
prospectus, there are a number of other risks inherent in our business and
operations, which could cause our operating results to vary markedly and
adversely from prior results or the results contemplated by the forward-looking
statements. Increases in the cost of developing and maintaining our electronic
loan management systems, or in our general or administrative expenses, or the
occurrence of extraordinary events, could cause actual results to vary
materially from the results contemplated by these forward-looking statements.
Management decisions, including budgeting, are subjective in many respects and
subject to periodic revisions in order to reflect actual business conditions and
developments. The impact of such conditions and developments could lead us to
alter our marketing, capital investment or other expenditures and may adversely
affect the results of our operations. In light of the significant uncertainties
inherent in the forward-looking information included in this prospectus, the
inclusion of such information should not be regarded as a representation by us
or any other person that our objectives or plans will be achieved.
USE OF PROCEEDS
Carlateral will not receive any proceeds from the sale of the securities being
registered pursuant to this statement.
DETERMINATION OF OFFERING PRICE
As there is no established public market for our shares, the offering price and
other terms and conditions relative to our shares have been arbitrarily
determined by Carlateral and do not bear any relationship to assets, earnings,
book value, or any other objective criteria of value. In addition, no investment
banker, appraiser, or other independent third party has been consulted
concerning the offering price for the shares or the fairness of the offering
price used for the shares.
SELLING SECURITY HOLDERS
Carlateral is registering, for offer and sale shares of common stock held by
certain selling security holders. The selling security holders may offer their
shares for sale on a continuous or delayed basis pursuant to Rule 415under the
1933 Act.
Carlateral intends to apply for listing on the Over-The-Counter (OTC) Bulletin
Board or an exchange as soon as meeting listing requirements, however, there is
no assurance that Carlateral will be granted a listing. Moreover, selling
shareholders will still be limited to selling the shares at $0.15 per share (set
offering price per share pursuant to this prospectus) until the shares are
quoted on the OTC or any securities exchanges. To date, there have been no steps
taken to list Carlateral's common stock on any public exchange for listing.
All of the shares registered herein will become tradable on the effective date
of this registration statement. The following table sets forth information as of
July 10, 2006, with respect to the beneficial ownership of our common stock both
before and after the offering. The table includes all those who beneficially own
any of our outstanding common stock and are selling their shares in the
offering. The company is not aware of any selling security holders being a
broker-dealer or being affiliated with a broker-dealer.
NOTE: AS OF THE DATE OF THIS PROSPECTUS, OUR SOLE OFFICER AND DIRECTOR OWNS
7,000,000 OF OUR COMMON SHARES, WHICH ARE SUBJECT TO RULE 144 RESTRICTIONS.
The percentages determined in these calculations are based upon 10,300,000 of
our common shares issued and outstanding as of the date of this prospectus. The
following table shows the number of shares and percentage before and after the
public offering:
8
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF OWNERSHIP TOTAL SHARETOTAL SHARE%
BENEFICIAL OWNERS OF BEFORE BEFORE OFFERED FOR SALE AFTER OFFERINOWNED AFTER
COMMON STOCK OFFERING OFFERING OFFERING
(1)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Susan J Alcott 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Art Cameron 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Josh Cameron 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Cindy Julia Corcoran 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Kenneth Corcoran 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Dolores L Dawson 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Evelyn Gail Dawson 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Gordon Dawson 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
John A Dawson 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
John B Dawson 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Colin Embley 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Darrel Thomas Embley 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Erin Embley 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Marilyn Beverley Embley 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Todd Embley 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Malcolm Gray 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Margot Gray 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Peggy Lalor 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Pamela McDonald 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Richard Kyle Paisley 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Sheila Paterson 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Rob Phillips 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Teresa Phillips 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Shana Richmond 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Aaron Smith 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Brian Sprout 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Virginia Stanton 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Alec Tidey 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
April Tidey 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Linda Webb 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Peter Webb 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
John Welch 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
Wendy Welch 100,000 0.097% 100,000 0 0%
-------------------------------------------------------------------------------------------------------------------
TOTALS 3,300,000 32% 3,300,000 0 0%
-------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on 10,300,000 common shares currently outstanding.
o EXCEPT AS PURSUANT TO APPLICABLE COMMUNITY PROPERTY LAWS, THE PERSONS NAMED
IN THIS TABLE HAVE SOLE VOTING AND INVESTMENT POWER WITH RESPECT TO ALL
SHARES OF COMMON STOCK.
As a group, the selling security holders are hereby registering 3,300,000 common
shares. After the effective date of this registration statement, they may sell
theses shares at any price or time.
The shares were acquired in December 2005; we issued 330,000 common shares for
total consideration of $16,500, which was accounted for as a purchase of common
stock.
On February 15, 2006, pursuant to a company resolution, we initiated a forward
split in the ratio of 10:1. Share totals in the table above reflect this split.
The shares owned by the selling security holders are being registered pursuant
to Rule 415 of the General Rules and Regulations of the Securities and Exchange
Commission, which Rule pertains to delayed and continuous offerings and sales of
securities. In regard to the shares offered under Rule 415, Carlateral
undertakes in Part II of this registration statement to keep this registration
statement current during any period in which offers or sales are made pursuant
to Rule 415.
In the event the selling security holders receive payment for the sale of their
shares, Carlateral will not receive any of the proceeds from such sales.
Carlateral is bearing all expenses in connection with the registration of the
shares of the selling security holders.
9
<PAGE>
To our knowledge, none of the selling security holders has either (1) had a
material relationship with Carlateral, other than as a shareholder as noted
above, at any time since inception, December 9, 2005, or (2) ever been an
officer or director of Carlateral.
PLAN OF DISTRIBUTION
GENERAL
Carlateral will not receive the proceeds from the sale of the shares by the
selling security holders. The price per share is $0.15 and will remain at this
price until such a time the shares are quoted on the Over-The-Counter (OTC)
Bulletin Board or an exchange. The selling security holders may sell at
prevailing market prices or privately negotiated prices, only after the shares
are quoted on either the OTC Bulletin Board or an exchange. Carlateral cannot
guarantee or provide assurances that its common stock will ever be quoted on the
OTC Bulletin Board or listed on any exchange.
If and when the common stock is quoted on the OTC Bulletin Board or listed on an
exchange the selling security holders' shares may be sold to purchasers from
time to time directly by, and subject to, the discretion of the selling security
holders. In addition, the selling security holders may from time to time offer
their shares for sale through underwriters, dealers, or agents, who may receive
compensation in the form of underwriting discounts, concessions or commissions
from the selling security holders and/or the purchasers of the shares for whom
they may act as agents. The shares sold by the selling security holders may be
sold from time to time in one or more transactions: (i) at an offering price
that is fixed or that may vary from transaction to transaction depending upon
the time of sale or (ii) at prices otherwise negotiated at the time of sale.
Such prices will be determined by the selling security holders or by agreement
between the selling security holders and any underwriters.
If the selling security holders enter into an agreement, after the effectiveness
of this Registration Statement, to sell their shares through a broker-dealer
that acts as an underwriter, then Carlateral will file a post-effective
amendment to the Registration Statement identifying the underwriter, and thereby
providing the required information on the plan of distribution, revising the
appropriate disclosures in the Registration Statement, and filing the agreement
as an exhibit to the Registration Statement.
Any underwriters, dealers, or agents who participate in the distribution of the
securities may be deemed to be "underwriters" under the Securities Act and any
discounts, commissions, or concessions received by any such underwriters,
dealers, or agents may be deemed to be underwriting discounts and commissions
under the Securities Act.
At the time a particular offer is made by, or on the behalf of, the selling
security holders, a registration statement, including any necessary supplement
thereto, will be distributed, which will set forth the number of shares of
common stock and other securities being offered and the terms of the offering,
including the name or names of any underwriters, dealers, or agents, the
purchase price paid by any underwriter for the shares purchased from the selling
security holders, any discounts, commissions, and other items constituting
compensation from the selling security holders, any discounts, commissions, or
concessions allowed, realized or paid to dealers, and the proposed selling price
to the public.
Pursuant to Regulation M of the General Rules and Regulations of the Securities
and Exchange Commission, any person engaged in a distribution of securities,
including on behalf of a selling security holder, may not simultaneously bid
for, purchase or attempt to induce any person to bid for, or purchase securities
of the same class for a period of five business days prior to the commencement
of such distribution and continuing until the selling security holder (or other
person engaged in the distribution) is no longer a participant in the
distribution.
In order to comply with the applicable securities laws of certain states, the
securities will be offered or sold in such states through registered or licensed
brokers or dealers in those states. In addition, in certain states, the
securities may not be offered or sold unless they have been registered or
qualified for sale in such states or an exemption from such registration or
qualification requirement is available, and with which Carlateral has complied.
10
<PAGE>
In addition and without limiting the foregoing, the selling security holders
will be subject to applicable provisions of the Exchange Act and the rules and
regulations there under in connection with transactions in shares during the
effectiveness of the registration statement.
Carlateral, Inc. will pay all expenses incidental to the registration of the
shares (including registration pursuant to the securities laws of certain
states) other than commissions, expenses, reimbursements and discounts of
underwriters, dealers or agents, if any.
LEGAL PROCEEDINGS
We are not a party to any material legal proceedings and, to our knowledge, no
such proceedings are threatened or contemplated by any party.
BUSINESS
GENERAL
Carlateral, Inc. is a development stage company and was incorporated on December
9, 2005 to enter into the financial services industry. Our key demographic
market is comprised of individuals needing short term capital. By "short term"
we mean 30 to 90 days, but we may include loans for longer periods on a
case-by-case basis. Our target consumers are those that either do not meet the
lending criteria of established banks and lending institutions, or do not wish
to incur the delays associated with a lengthy loan application and approval
process.
SERVICES
Carlateral intends to provide title loans and other forms of collateral loans to
individuals on a short term basis. We intend to secure our loans through signed
title transfers, liens, and other agreements whereby we take possession and
ownership of the specified collateral if the loan defaults. If we take
possession and ownership of any collateral we will dispose of it in the most
efficient manner possible to both recoup our investment and to free up capital
for subsequent loans.
MARKETING
Our primary marketing will be to purchase advertisements on local radio stations
and in community newspapers. Our target audience is people experiencing short
term cash needs.
COMPANY LAUNCH
Our goal is to open our first office within 11 months of having our registration
approved.
COMPETITIVE ADVANTAGES
Banks and other financial institutions have significant barriers in place that
may make it difficult for some individuals to secure a loan. Factors such as
credit history and employment may preclude getting a loan from many of these
financial institutions. Banks and other financial institutions also have an
extensive and burdensome application and approval process that does not
encourage people who may want to borrow only a small amount of money for a short
period of time.
Our other competitors include Payday loan companies and other title loan
companies. We intend to compete by being friendly and approachable, having a
quick approval process, and flexible terms and payments.
COMPANY HISTORY
On December 9, 2005 Don Cameron, our sole officer and director, founded the
company to enter into the financial services industry.
11
<PAGE>
EMPLOYEES AND EMPLOYMENT AGREEMENTS
At present, we have no employees other than our sole officer and director, who
has received no compensation. There are no employment agreements in existence.
We presently do not have pension, health, annuity, insurance, stock options,
profit sharing or similar benefit plans. However, we may adopt plans in the
future. There are presently no personal benefits available to our sole officer
and director.
During the initial implementation of our marketing strategy, the company intends
to hire independent consultants to develop its website, rather than hire full
time website development/maintenance employees. We plan on hiring initial sales
staff to service our customers on a commission basis and do not anticipate
paying fixed salaries to any future employees.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This section of the prospectus includes a number of forward-looking statements
that reflect our current views with respect to future events and financial
performance. Forward-looking statements are often identified by words like:
"believe", "expect", "estimate", "anticipate", "intend", "project" and similar
expressions, or words which, by their nature, refer to future events. You should
not place undue certainty on these forward-looking statements, which apply only
as of the date of this prospectus. These forward-looking statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from historical results or our predictions.
We are a start-up corporation organized to enter into the financial services
industry. We have not yet generated or realized any revenues from business
operations.
Our auditors have issued a going concern opinion. This means that there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. This is
because we have not generated any revenues and no revenues are anticipated until
we begin marketing our services to customers. Accordingly, we must raise cash
from sources other than revenues generated from the proceeds of loans we
undertake.
From inception to February 28, 2006 the company's business operations have
primarily been focused on developing our business model and marketing strategy.
The company has been conducting industry market research and an analysis of our
competitors. Our initial research has focused on identifying the best locations
for our initial office, both in terms of client demographics and the regulatory
environment.
The company believes that we will be able to determine the best location within
120 days of the date on which this prospectus becomes effective and will expend
approximately $8,000 during this period.
When the company has determined the best location for our initial office, we
will engage the services of an attorney to create a loan agreement that meets
the local state laws and requirements. The company expects to have a valid loan
agreement created within 180 days of the date on which this prospectus becomes
effective and will expend approximately $4,000 during this process.
Concurrently with creating the loan agreement, the company will search for a
suitable office space in the preferred locale based on the results of its
demographic research. To offset expenses incurred during this period, the
company may look at securing a shared space in an office with another
non-competing business. Upon finding the appropriate location, the company will
enter into a lease or sub-lease agreement. We believe that we will have secured
our initial office location within 210 days of the date on which this prospectus
becomes effective and will expend approximately $5,000 during this period.
The company will purchase a computer system and other office equipment and
supplies for our initial store location. The company estimates that these
equipment expenditures for the office will be $9,500. The company will also
design and have printed all of the necessary forms and agreements used in its
operations, at an estimated cost of $3,000.
The company will identify and hire a commission sales person to staff the
initial office. The company believes that it will hire the commission sales
person within 240 days of the date on which this prospectus becomes effective.
12
<PAGE>
The company will research local advertising possibilities, including community
newspapers, radio, yellow pages, and established local websites to determine the
most advantageous media for the company's advertising campaigns. The company
believes that it will have developed an advertising program within 300 days of
the date on which this prospectus becomes effective and will expend
approximately $8,500 on our initial advertising.
The company will research, purchase and implement a loan management system that
can be customized to suit its needs and is scalable so that we will be able to
manage multiple branches from a central location. The company expects to spend
about $27,500 to research and implement the loan management system for the
initial store location.
The company believes that it will be able to execute its first loan within 320
days of the date on which prospectus becomes effective.
LIMITED OPERATING HISTORY; NEED FOR ADDITIONAL CAPITAL
There is no historical financial information about us upon which to base an
evaluation of our performance. Carlateral was incorporated in the State of
Nevada in December of 2005; we are a development stage company attempting to
enter into the financial services industry and have not generated any revenues
from our operations. We cannot guarantee we will be successful in our business
operations. Our business is subject to risks inherent in the establishment of a
new business enterprise, including the financial risks associated with the
limited capital resources currently available to us for the implementation of
our business strategies. (See "Risk Factors").
To become profitable and competitive, we must first open and staff our initial
office, attract lenders to provide capital, and attract new business.
Our sole officer and director undertakes to provide us with intial operating and
loan capital to sustain our business plan over the next twelve month period.
RESULTS OF OPERATIONS
Since inception (December 9, 2005) to February 28, 2006, Carlateral has spent a
total of $6,122 on start-up costs. The company has not generated any revenue
from business operations. All proceeds currently held by the company are the
result of the sale of common stock.
The company incurred expenditures of $5,663 for accounting services, the
preparation of audited financial statements and legal services. The company also
had expenditures of $459 for general administrative costs.
Since inception, the majority of the company's time has been spent refining its
business plan and marketing model, conducting industry research, and preparing
for a primary financial offering.
LIQUIDITY AND CAPITAL RESOURCES
As of the date of this registration statement, we have yet to generate any
revenues from our business operations. On December 12, 2005, Carlateral issued
700,000 shares of common stock to our sole officer and director for cash
proceeds of $0.01 per share. On December 15, 2005, Carlateral issued 330,000
common shares for cash proceeds of $0.05 per share. As of Feb 28, 2006, our
total assets were $20,378 and our total liabilities were $3,000. From inception
to February 28, 2006 the company has raised $23,500 through the sale of its
shares.
MANAGEMENT
OFFICERS AND DIRECTORS
Our sole officer and director will serve until his successor is elected and
qualified. Our officers are elected by the board of directors to a term of one
(1) year and serve until their successor is duly elected and qualified, or until
they are removed from office. The board of directors has no nominating, auditing
or compensation committees.
13
<PAGE>
The name, address, age and position of our president, secretary/treasurer, and
director and vice president is set forth below:
Name and Address Age Position(s)
Don Cameron 53 President, Secretary/Treasurer,
1720 30th Street Principal Executive Officer,
West Vancouver, BC, Canada V7V 2X3 Principal Financial Officer and
sole member of the Board of
Directors
The person named above has held his offices/positions since the inception of our
company and is expected to hold his offices/positions until the next annual
meeting of our stockholders.
BACKGROUND OF OFFICERS AND DIRECTORS
DON CAMERON, PRESIDENT, CEO, DIRECTOR, SECRETARY/TREASURER
Mr. Cameron earned a Bachelor of Arts (Honors) in Economics (1975) and a
Bachelor of Law (1979) from the University of British Columbia and was called to
the Bar in British Columbia in 1980. Mr. Cameron attended an Executive
Management course at Stanford University in 1997 and the Program on Negotiation
at Harvard University in 1998.
Prior to practicing law, Mr. Cameron worked on the Pierce Royal Commission on
Forest Resources. Mr. Cameron practiced law with the law firm of Worrall Scott &
Page as an associate (1981 - 1985) and as a partner from (1986 - 1993),
specializing in corporate transactions. During this time Mr. Cameron developed
expertise in acquisitions and divestitures, various forms of debt and equity
financings, executive employment contracts, and litigation related thereto.
Mr. Cameron left the practice of law to pursue entrepreneurial activities,
moving to San Diego in 1993 and was the sole founder of Interactive Telesis Inc,
a firm specializing in interactive voice response (IVR) services and the
deployment of automated speech recognition (ASR) technologies. During Mr.
Cameron's tenure with ITI he held the positions of Chairman, Chief Executive
Officer and Director. Over a six year period, ITI grew to $5 million in revenue,
and secured several Fortune 100 customers. Mr. Cameron created all
product/service offerings, was directly responsible for raising all of the
funding required to sustain ITI's growth, and recruited talented senior
personnel at important stages in the development of the business.
In 2002 Mr. Cameron was the sole founder and CEO of ConferTel, a Carlsbad-based
teleconferencing provider. ConferTel has approximately 1,300 customers
throughout the U.S. and Canada and has been profitable since late 2004.
From December 2005 to present Mr. Cameron has been the founder and President of
Carlateral.
CONFLICTS OF INTEREST
At the present time, we do not foresee a direct conflict of interest with our
sole officer and director. The only conflict that we foresee is Mr. Cameron's
devotion of time to projects that do not involve us. In the event that Mr.
Cameron ceases devoting time to our operations, he has agreed to resign as an
officer and director.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by us from inception on
December 9, 2005 through February 28, 2006. The compensation addresses all
compensation awarded to, earned by, or paid to our named executive officer up to
February 28, 2006. This information includes the dollar value of base salaries,
bonus awards and number of stock options granted, and certain other
compensation, if any.
14
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities
Restricted
Other Under Shares or Other
Annual Options/ Restricted Annual
Names Executive Compensation SARs Share LTIP Compensation
Officer and Year Salary Bonus Granted Units Payouts
Principal Ended (US$) (US$) (US$) (#) (US$) (US$) (US$)
Position
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Don Cameron 2005 0 0 0 0 0 0 0
President
Don Cameron 2006 0 0 0 0 0 0 0
President
</TABLE>
We did not pay any salaries in 2006. We do not anticipate beginning to pay
salaries until we have adequate funds to do so. There are no other stock option
plans, retirement, pension, or profit sharing plans for the benefit of our
officers and director other than as described herein.
LONG-TERM INCENTIVE PLAN AWARDS
We do not have any long-term incentive plans that provide compensation intended
to serve as incentive for performance.
COMPENSATION OF DIRECTORS
Our sole officer and director does not receive any compensation for serving as a
member of the board of directors. As of the date hereof, we have not entered
into employment contracts with our sole officer and do not intend to enter into
any employment contracts until such time as it profitable to do so.
INDEMNIFICATION
Under our Articles of Incorporation and Bylaws 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. We may advance
expenses incurred in defending a proceeding. To the extent that the officer or
director is successful on the merits in a proceeding as to which he 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.
Regarding indemnification for liabilities arising under the Securities Act of
1933, which may be permitted to directors or officers under Nevada law, we are
informed that, in the opinion of the Securities and Exchange Commission,
indemnification is against public policy, as expressed in the Act and is,
therefore, unenforceable.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of the date of this prospectus, the total
number of shares owned beneficially by our sole officer and director, and the
present owners of 5% or more of our total outstanding shares. The table also
reflects what his ownership will be assuming completion of the sale of all
shares in this offering. The stockholder listed below has direct ownership of
his shares and possesses sole voting and dispositive power with respect to the
shares.
15
<PAGE>
<TABLE>
<CAPTION>
Number of Number of Percentage of Percentage of
Shares Shares after Ownership as of Ownership After
Before the Offering The date of this the Offering
Offering Prospectus
Name and Address
Beneficial Ownership [1]
<S> <C> <C> <C> <C>
Don Cameron
1720 30th Street 7,000,000 7,000,000 67.9% 67.9%
West Vancouver, BC
Canada V7V 2X3
</TABLE>
[1] The persons named above may be deemed to be a "parent" and "promoter" of
our company, within the meaning of such terms under the Securities Act of
1933, as amended, by virtue of his/its direct and indirect stock holdings.
Mr. Cameron is the only "promoter" of our company.
FUTURE SALES BY EXISTING STOCKHOLDERS
A total of 7,000,000 shares of common stock were issued to our sole officer and
director, all of which are restricted securities, as defined in Rule 144 of the
Rules and Regulations of the SEC promulgated under the Securities Act. Under
Rule 144, the shares can be publicly sold, subject to volume restrictions and
restrictions on the manner of sale, commencing one year after his acquisition
commencing on December 9, 2006. Under Rule 144, a shareholder can sell up to 1%
of total outstanding shares every three months in brokers' transactions. Shares
purchased in this offering will be immediately resalable and sales of our
remaining shares after applicable restrictions expire, could have a depressive
effect on the market price, if any, of our common stock and the shares the
selling security holders are offering.
Because our sole officer and director will control us after the offering,
regardless of the number of shares sold, your ability to cause a change in the
course of our operations is negligible. Thus, the value normally attributable to
the right to vote is eliminated. This could result in a reduction in value of
the shares you own because of their ineffective voting power. No common stock is
subject to outstanding options, warrants or securities convertible into common
stock.
DESCRIPTION OF SECURITIES
COMMON STOCK
Our authorized capital stock consists of 75,000,000 shares of common stock, par
value $0.001 per share. The holders of our common stock:
* Have equal ratable rights to dividends from funds legally available if and
when declared by our board of directors,
* are entitled to share ratably in all of our assets available for
distribution to holders of common stock upon liquidation, dissolution or
winding up of our affairs,
* have neither preemptive, subscription or conversion rights, nor redemption
or sinking fund provisions or rights, and
* are entitled to one non-cumulative vote per share on all matters on which
stockholders may vote.
We refer you to the Bylaws of our Articles of Incorporation and the applicable
statutes of the State of Nevada for a more complete description of the rights
and liabilities of holders of our securities.
NON-CUMULATIVE VOTING
Holders of shares of our common stock do not have cumulative voting rights.
Thus, when voting for the election of directors, shareholders who hold more than
50% of the outstanding shares can, if they so choose, elect all of the directors
to be elected. In that event, the holders of the remaining shares will not be
able to elect any of our directors. After this offering is completed, present
stockholders will own more than 51% of our outstanding shares.
16
<PAGE>
CASH DIVIDENDS
As of the date of this prospectus, we have not paid any cash dividends to
stockholders. The declaration of any future cash dividends will be at the
discretion of our board of directors and will depend upon our earnings, if any,
our capital requirements and financial position, our general economic
conditions, and other pertinent conditions. It is our present intention not to
pay any cash dividends in the foreseeable future, but rather to reinvest
earnings, if any, in our business operations.
ANTI-TAKEOVER PROVISIONS
There are no Nevada anti-takeover provisions that may have the affect of
delaying or preventing a change in control. Provisions 78.378 through 78.3793 of
the Nevada Revised Statutes relate to control share acquisitions that may delay,
or make more difficult, acquisitions or changes in our control. However, these
provisions apply only when we have 200 or more stockholders of record, at least
100 of whom have addresses in the state of Nevada appearing on our stock ledger
and we do business in this state directly or through an affiliated corporation.
Neither of the foregoing events seems likely to occur. Currently, we have no
Nevada shareholders and, since this offering will not be made in the state of
Nevada, no shares will be sold to Nevada residents. Further, we do not do
business in Nevada, either directly or through an affiliate corporation, and we
do not intend to do business in the state of Nevada in the future. Accordingly,
there are no anti-takeover provisions that have the affect of delaying or
preventing a change in our control.
REPORTS
After we complete this offering, we will not be required to furnish you with an
annual report. Further, we will not voluntarily send you an annual report. We
will be required to file reports with the SEC under section 15(d) of the
Securities Act. The reports will be filed electronically. The reports we will be
required to file are Forms 10-KSB, 10-QSB, and 8-K. You may read copies of any
materials we file with the SEC at the SEC's Public Reference Room at 100 F
Street N.E., Washington, D.C. 20549. You may obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains an Internet site that will contain copies of the reports we file
electronically. The address for the Internet site is www.sec.gov.
STOCK TRANSFER AGENT
We have not engaged the services of a transfer agent at this time. However,
within the next twelve months we anticipate doing so. Until such a time a
transfer agent is retained, Carlateral will act as its own transfer agent.
CERTAIN TRANSACTIONS
Don Cameron, our sole officer and director, has not received, and will not
receive, anything of value, directly or indirectly, from the company. Moreover,
the company has not received, and will not receive, any assets or other
consideration from Mr.Cameron, other than those managerial services he is
required to perform as our sole officer and director.
On December 9, 2005, we issued a total of 700,000 shares of common stock to Mr.
Cameron for total consideration of $7,000. This was accounted for as a purchase
of common stock.
On December 15, 2005, we issued 330,000 shares of common stock for total
consideration of $16,500. This was accounted for as a purchase of common stock.
On February 15, 2006, the company initiated a forward split in the ratio of 10:1
on each of the company's common shares in the form of a stock dividend. The
capital of the company was not reduced as a result of this forward split.
LITIGATION
We are not a party to any pending litigation and none is contemplated or
threatened.
17
<PAGE>
EXPERTS
Our financial statements have been audited for the period ending February 28,
2006 by MacKay LLP, Chartered Accountants, 1100 - 1177 West Hastings Street,
Vancouver, British Columbia, Canada V6E 4T5, as set forth in their report
included in this prospectus. Their report is given upon their authority as
experts in accounting and auditing.
James N. Barber, Attorney at Law, 50 West Broadway, Suite 100, 4th Floor, Chase
Bank Tower, Salt Lake City, Utah 84101-2006, has acted as our legal counsel. Mr.
Barber opined on the legality of the 6,500,000 shares of common stock offered
through this prospectus.
FINANCIAL STATEMENTS
Our fiscal year end is February 28. We will provide audited financial statements
to our stockholders on an annual basis; the statements will be prepared by an
Independent Registered Public Accounting Firm.
Our financial statements immediately follow:
FINANCIAL STATEMENTS Audited February 28, 2006
Auditors' Report
Balance Sheet
Statement of Operations
Statement of Stockholders' Equity (Deficit)
Statement of Cash Flows
NOTES TO THE FINANCIAL STATEMENTS
CARLATERAL, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FEBRUARY 28, 2006
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BALANCE SHEET
STATEMENT OF OPERATIONS
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
STATEMENT OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS OF
CARLATERAL, INC.
(a Development Stage Company)
Vancouver, British Columbia, Canada
We have audited the balance sheet of Carlateral, Inc. (a Development Stage
Company) as at February 28, 2006 and the related statement of operations and
deficit, stockholders' equity (deficit), and cash flows for the period from
December 9, 2005 (inception) to February 28, 2006. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe our audit provides a reasonable
basis for our opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at February 28, 2006 and the
results of its operations and its cash flows for the period from December 9,
2005 (inception) to February 28, 2006 in accordance with United States generally
accepted accounting principles.
The accompanying financial statements referred to above have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company is in the development stage, and has
no permanently established source of revenue and is dependent on its ability to
raise capital from shareholders or other sources to sustain operations. These
factors, along with other matters as set forth in Note 1, raise substantial
doubt that the Company will be able to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
VANCOUVER, CANADA "MACKAY LLP"
MAY 12, 2006 CHARTERED ACCOUNTANTS
19
<PAGE>
<TABLE>
<CAPTION>
CARLATERAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
February 28,
2006
--------------------------------------------------------------------------------------------------------------------------
<S> <C>
CURRENT ASSETS
Cash $ 20,378
--------------------------------------------------------------------------------------------------------------------------
$ 20,378
==========================================================================================================================
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 3,000
--------------------------------------------------------------------------------------------------------------------------
3,000
--------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY (DEFICIT )
Capital stock (Note 4)
Authorized
75,000,000 shares of common stock, $0.001 par value,
Issued and outstanding
10,300,000 shares of common stock 10,300
Additional paid-in capital 13,200
Deficit accumulated during the development stage (6,122)
--------------------------------------------------------------------------------------------------------------------------
17,378
--------------------------------------------------------------------------------------------------------------------------
$ 20,378
==========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
CARLATERAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
From
December 9, 2005
(inception) to
the Year ended
February 28,
2006
---------------------------------------------------------------------------------------------------------------------
GENERAL AND ADMINISTRATIVE EXPENSES
<S> <C>
Office and general $ 459
Professional fees 5,663
---------------------------------------------------------------------------------------------------------------------
NET LOSS, being deficit accumulated during the development state $ (6,122)
=====================================================================================================================
BASIC NET LOSS PER SHARE $ (0.00)
------------------------
=====================================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 9,211,011
=====================================================================================================================
</TABLE>
All share amounts have been restated to reflect the 10:1 forward split in
February 2006. (Refer to Note 5.)
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
<TABLE>
<CAPTION>
CARLATERAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION (DECEMBER 9, 2005) TO FEBRUARY 28, 2006
Deficit
Common Stock Accumulated
------------------------------ Additional During the
Number of Amount Paid-in Development
shares Capital Stage Total
------------------------------------------------------ ---------------- ------------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 9, 2005 - $ - $ - $ $ -
-
------------------------------------------------------ ---------------- ------------- --------------- --------------- ------------
Common stock issued for cash at $0.001 per share
December 15, 2005 7,000,000 7,000 - - 7,000
Common stock issued for cash at $0.005 per share
December 23, 2005 3,300,000 3,300 13,200 - 16,500
Net loss for the period - - - (6,122) (6,122)
------------------------------------------------------ ---------------- ------------- --------------- --------------- ------------
Balance, February 28, 2006 10,300,000 $ 10,300 $ 13,200 $ (6,122) $ 17,378
====================================================== ================ ============= =============== =============== ============
</TABLE>
All share amounts have been restated to reflect the 10:1 forward split in
February 2006. (Refer to Note 5.)
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
<TABLE>
<CAPTION>
CARLATERAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
From December 9,
2005 (inception)
to the Year ended
February 28,
2006
------------------------------------------------------------------------------------------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (6,122)
Adjustments to reconcile net loss to net cash used in operating activities:
- accounts payable and accrued liabilities 3,000
------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (3,122)
------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITY
Proceeds from sale of common stock 23,500
------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITY 23,500
------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 20,378
CASH, BEGINNING OF PERIOD -
------------------------------------------------------------------------------------------------------------------------
CASH, END OF PERIOD $ 20,378
========================================================================================================================
Supplemental cash flow information:
Cash paid for:
Interest $ -
========================================================================================================================
Income taxes $ -
========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
CARLATERAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 28, 2006
--------------------------------------------------------------------------------
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Carlateral, Inc. (the "Company") is in the initial development stage and has
incurred losses since inception totaling $6,122. The Company was incorporated on
December 9, 2005 in the State of Nevada. The Company's fiscal year end is
February 28. The Company was organized to establish itself as a finance company,
specializing in sub-prime title loans, primarily using automobiles as the form
of loan collateral, but will also include boats, recreational vehicles,
machinery and other equipment. Carlateral intends to open regional and branch
offices in metropolitan areas throughout the United States and Canada. The
target market is individuals needing short term loans.
On February15, 2006, the Company completed a forward stock split of the
Company's common stock by the issuance of 10 new shares for each 1 outstanding
share of the Company' common stock.
The ability of the Company to continue as a going concern is dependent on
raising capital to fund its business plan and ultimately to attain profitable
operations. Accordingly, these factors raise substantial doubt as to the
Company's ability to continue as a going concern. The Company is funding its
initial operations by way of issuing Founders' shares and a Private Placement
Offering for 4,000,000 shares at $.005 per share. As of February 28, 2006, the
Company had sold 10,300,000 shares and had received $23,500 in proceeds from the
sale of the Company's common stock of which 7,000,000 Founders' shares were
issued at $.001 per share for net proceeds of $7,000 and 3,300,000 shares were
issued at $.005 per share for net proceeds of $16,500 pursuant to the Private
Placement Offering.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements are presented in United States dollars and have been
prepared in accordance with accounting principles generally accepted in the
United States.
USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
INCOME TAXES
The Company follows the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
balances. Deferred tax assets and liabilities are measured using enacted or
substantially enacted tax rates expected to apply to the taxable income in the
years in which those differences are expected to be recovered or settled. The
24
<PAGE>
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the date of enactment or
substantive enactment. As of February 28, 2006, the Company had net operating
loss carryforwards; however, due to the uncertainty of realization the Company
has provided a full valuation allowance for the deferred tax assets resulting
from these loss carryforwards.
NET LOSS PER SHARE
Basic loss per share includes no dilution and is computed by dividing loss
available to common stockholders by the weighted average number of common shares
outstanding for the period. Dilutive losses per share reflects the potential
dilution of securities that could share in the losses of the Company. Because
the Company does not have any potentially dilutive securities, the accompanying
presentation is only of basic loss per share.
FOREIGN CURRENCY TRANSLATION
The financial statements are presented in United States dollars. In accordance
with SFAS No. 52, "Foreign Currency Translation", foreign denominated monetary
assets and liabilities are translated to their United States dollar equivalents
using foreign exchange rates which prevailed at the balance sheet date. Revenue
and expenses are translated at average rates of exchange during the period.
Related translation adjustments are reported as a separate component of
stockholders' equity (deficit), whereas gains or losses resulting from foreign
currency transactions are included in results of operations.
STOCK-BASED COMPENSATION
The Company has not adopted a stock option plan and has not granted any stock
options. Accordingly no stock-based compensation has been recorded to date.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2004, the FASB issued SFAS No. 153, EXCHANGES OF NON-MONETARY
ASSETS, AN AMENDMENT OF APB OPINION NO. 29, ACCOUNTING FOR NON-MONETARY
TRANSACTIONS ("SFAS 153"). SFAS 153 requires that exchanges of non-monetary
assets are to be measured based on fair value and eliminates the exception for
exchanges of non-monetary, similar productive assets, and adds an exemption for
non-monetary exchanges that do not have commercial substance. SFAS 153 will be
effective for fiscal periods beginning after June 15, 2005. Management does not
believe that the adoption of this standard will have a material impact on the
Company's financial condition or results of operations.
In December 2004, the FASB issued SFAS No. 123R, "Share Based Payment". SFAS
123R is a revision of SFAS No. 123 "Accounting for Stock-Based Compensation",
and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees"
and its related implementation guidance. SFAS 123R establishes standards for the
accounting for transactions in which an entity exchanges its equity instruments
for goods or services. It also addresses transactions in which an entity incurs
liabilities in exchange for goods or services that are based on the fair value
of the entity's equity instruments or that may be settled by the issuance of
those equity instruments. SFAS 123R focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based payment
transactions. SFAS 123R does not change the accounting guidance for share-based
payment transactions with parties other than employees provided in SFAS 123 as
originally issued and EITF Issue No. 96-18, "Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services". SFAS 123R does not address the accounting for
employee share ownership plans, which are subject to AICPA Statement of Position
93-6, "Employers' Accounting for Employee Stock Ownership Plans". SFAS 123R
requires a public entity to measure the cost of employee services received in
exchange for an award of equity instruments based on the grant-date fair value
of the award (with limited exceptions). That cost will be recognized over the
period during which an employee is required to provide service in exchange for
the award - the requisite service period (usually the vesting period). SFAS 123R
25
<PAGE>
requires that the compensation cost relating to share-based payment transactions
be recognized in financial statements. That cost will be measured based on the
fair value of the equity or liability instruments issued. The scope of SFAS 123R
includes a wide range of share-based compensation arrangements including share
options, restricted share plans, performance-based awards, share appreciation
rights, and employee share purchase plans. Public entities (other than those
filing as small business issuers) will be required to apply SFAS 123R as of the
first interim or annual reporting period that begins after June 15, 2005. Public
entities that file as small business issuers will be required to apply SFAS 123R
in the first interim or annual reporting period that begins after December 15,
2005. For nonpublic entities, SFAS 123R must be applied as of the beginning of
the first annual reporting period beginning after December 15, 2005. Management
is currently evaluating the impact, which the adoption of this standard will
have on the Company's results of operations or financial position.
NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance with the requirements of SFAS No. 107, the Company has determined
the estimated fair value of financial instruments using available market
information and appropriate valuation methodologies. The fair value of financial
instruments classified as current assets or liabilities approximate their
carrying value due to the short-term maturity of the instruments.
NOTE 4 - CAPITAL STOCK
The Company's capitalization is 75,000,000 common shares with a par value of
$0.001 per share. No preferred shares have been authorized or issued.
As of December 31, 2005, the Company has not granted any stock options and has
not recorded any stock-based compensation.
During the year ended February 28, 2006, the sole Director purchased 7,000,000
shares of common stock in the Company at $0.001 per share with proceeds to the
Company totaling $7,000.
PRIVATE PLACEMENT
On December 23, 2005, the Company authorized a Private Placement Offering of up
to 4,000,000 shares of common stock at a price of $0.005 per share. The total
amount to be raised in this financing is $20,000. As of February 28, 2006, the
Company had sold 3,300,000 shares and had received $16,500 in proceeds from the
sale of the Company's common stock.
On February 15, 2006, the majority shareholder and the director of the Company
approved a special resolution to undertake a forward split of the common stock
of the Company on a 10 new shares for 1 old share basis.
All references in these financial statements to number of common shares , price
per share and weighted average number of common shares outstanding prior to the
forward stock split have been adjusted to record the effect of the forward stock
split on a retroactive basis.
NOTE 5 - INCOME TAXES
THE COMPANY ACCOUNTS FOR ITS INCOME TAXES IN ACCORDANCE WITH FASB NO. 109,
"ACCOUNTING FOR INCOME TAXES." AS OF FEBRUARY 28, 2006, THE COMPANY HAD NET
OPERATING LOSS CARRY FORWARDS OF APPROXIMATELY $6,122 THAT MAY BE AVAILABLE TO
REDUCE FUTURE YEARS' TAXABLE INCOME AND WILL EXPIRE COMMENCING IN 2015.
AVAILABILITY OF LOSS USAGE IS SUBJECT TO CHANGE OF OWNERSHIP LIMITATIONS UNDER
INTERNAL REVENUE CODE 382. FUTURE TAX BENEFITS WHICH MAY ARISE AS A RESULT OF
26
<PAGE>
THESE LOSSES HAVE NOT BEEN RECOGNIZED IN THESE FINANCIAL STATEMENTS, AS THEIR
REALIZATION IS DETERMINED NOT LIKELY TO OCCUR AND ACCORDINGLY, THE COMPANY HAS
RECORDED A VALUATION ALLOWANCE FOR THE DEFERRED TAX ASSET RELATING TO THESE TAX
LOSS CARRYFORWARDS.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Our auditors are the firm of MacKay LLP, Chartered Accountants, operating from
their offices in Vancouver, British Columbia, Canada. We have never changed our
accountants, nor have we had any disagreements with accountants regarding our
accounts, accounting practices, financial disclosures, or any other matter.
PART II. INFORMATION NOT REQUIRED IN THE PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The registrant will pay for all expenses incurred by this offering. Whether or
not all of the offered shares are sold, these expenses are estimated as follows:
SEC Filing Fee $ 1,760
Printing 200
---------------
Transfer Agent 1,500
---------------
TOTAL $3,460
---------------
RECENT SALES OF UNREGISTERED SECURITIES
(A) PRIOR SALES OF COMMON SHARES
Carlateral is authorized to issue up to 75,000,000 shares of common stock with a
par value of $0.001. As of December 15, 2005, we had issued 700,000 common
shares to our sole officer and director for a total consideration of $7,000. In
addition we have issued 330,000 common shares for a total consideration of
$16,500 to a total of thirty-three (33) registered shareholders, all of whom are
resident outside the United States. There are no United States shareholders of
record who own shares in Carlateral.
On February 15, 2006, the company initiated a forward split in the ratio of 10:1
on each share of the company's common shares in the form of a stock dividend.
The capital of the company was not reduced as a result of this forward split.
Carlateral is not listed for trading on any securities exchange in the United
States, and there has been no active market in the United States or elsewhere
for our common shares.
During the past year, Carlateral has sold the following securities, which were
not registered under the Securities Act of 1933 as amended:
The company sold shares in an offshore transaction pursuant to Rule 903 of
Regulation S of the Securities Act of 1933. The company's shareholders are not
U.S. persons as that term is defined in Regulation S. No directed selling
efforts were made in the United States by the company, any distributor, any of
their respective affiliates or any person acting on behalf of any of the
foregoing.
We are subject to Category 3 of Rule 903 of Regulation S and accordingly we
implemented the offering restrictions required by Category 3 of Rule 903 of
Regulation S by including a legend on all offering materials and documents which
stated that the shares have not been registered under the Securities Act of 1933
and may not be offered or sold in the United States or to US persons unless the
shares are registered under the Securities Act of 1933, or an exemption from the
registration requirements of the Securities Act of 1933 is available.
27
<PAGE>
DECEMBER 15, 2005
Carlateral issued 700,000 shares of common stock to the sole officer and
director for cash proceeds of $0.01 per share.
DECEMBER 23, 2005
Carlateral issued 330,000 common shares to thirty three (33) individual
investors for cash proceeds of $0.05 per share.
We issued the foregoing restricted shares of common stock to the above named
thirty three (33) individuals pursuant to Regulation S of the Securities Act of
1933. None of the above are deemed to be accredited investors and each was in
possession of all material information relating to Carlateral. Further, no
commissions were paid to anyone in connection with the sale of the shares and no
general solicitation was made to anyone.
On February 15, 2006, the company initiated a forward split in the ratio of 10:1
on each share of the company's common shares in the form of a stock dividend.
The capital of the company was not reduced as a result of this forward split.
(B) USE OF PROCEEDS
We have spent a portion of the proceeds of the above private placements to pay
for the costs associated with this registration statement. We expect to apply
the balance of the proceeds to offset further costs associated with preparing
this prospectus, as well as administrative costs.
We shall report the use of these proceeds on our first periodic report filed
pursuant to sections 13(a) and 15(d) of the Exchange Act after the effective
date of this registration statement and thereafter on each of our subsequent
periodic reports through the later of the disclosure of the application of the
offering proceeds or disclosure of the termination of this offering.
EXHIBITS
The following exhibits are filed as part of this registration statement,
pursuant to Item 601 of Regulation K. All exhibits have been previously filed
unless otherwise noted.
================================================================================
EXHIBIT NO. DOCUMENT DESCRIPTION
================================================================================
3.1 Articles of Incorporation of Carlateral, Inc.
================================================================================
3.2 Bylaws of Carlateral, Inc.
================================================================================
4.1 Specimen Stock Certificate of Carlateral, Inc.
================================================================================
5.1 Opinion of James N. Barber regarding the legality of the
securities being registered
================================================================================
23.1 Consent of MacKay LLP Chartered Accountants.
================================================================================
99.1 Subscription Agreement of Carlateral, Inc..
================================================================================
(B) DESCRIPTION OF EXHIBITS
EXHIBIT 3.1
Articles of Incorporation of Carlateral, Inc. dated December 9, 2005 and
approved January 6, 2006.
EXHIBIT 3.2
Bylaws of Carlateral, Inc., approved and adopted on December 12, 2005.
EXHIBIT 4.1
Specimen Stock Certificate of Carlateral, Inc.
28
<PAGE>
EXHIBIT 5.1
Opinion of James N. Barber dated July 10, 2006 regarding the legality of the
securities being registered in this registration statement.
EXHIBIT 23.1
Consent of MacKay LLP, Chartered Accountants, 1177 West Hastings Street, Suite
1100, Vancouver, British Columbia, Canada V6E 4T5, dated July 11, 2006,
regarding the use in this Registration Statement of their auditors' report on
the financial statements of Carlateral, Inc. for the period ending February 28,
2006.
EXHIBIT 99.1
Subscription Agreement of Carlateral, Inc.
UNDERTAKINGS
Presently the sole officer and director of Carlateral is not covered by
liability insurance. However, Carlateral's Articles of Incorporation state that
the company may indemnify its officers, directors, employees and agents to the
full extent permitted by the laws of the State of Nevada. No other statute,
charter provision, by-law, contract or other arrangement to insure or indemnify
a controlling person, director or officer of Carlateral exists which would
affect his liability in that capacity.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities, other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding, is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by itself is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement:
a. To include any prospectus required by Section 10(a)(3) of the
Securities Act;
b. To reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in the volume of securities offered, if the
total dollar value of securities offered would not exceed that which
is 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% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
c. To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any change to such information in the registration statement.
29
<PAGE>
2. That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on this Form SB-2. Furthermore, the registrant has
authorized this registration statement and has duly caused this Form SB-2
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Vancouver, British Columbia, on this 10 day of July, 2006.
30
<PAGE>
Carlateral, Inc.
/s/ DON CAMERON
----------------------------
Don Cameron
President and Director
Principal Executive Officer
Principal Financial Officer
Principal Accounting Officer
Know all men by these present, that each person whose signature appears below
constitutes and appoints Don Cameron, as agent, with full power of substitution,
for his and in his name, place and stead, in any and all capacities, to sign any
and all amendments, including post-effective amendments, to this registration
statement, and to file the same, therewith, with the Securities and Exchange
Commission, and to make any and all state securities law filings, granting unto
said attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying the confirming all that said attorney-in-fact and agent, or any
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Form SB-2
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
/s/ DON CAMERON July 10, 2006
----------------------------
Don Cameron
President and Director
Principal Executive Officer
Principal Financial Officer
Principal Accounting Officer
31
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