Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 26, 2010
GENESIS CAPITAL CORPORATION OF NEVADA
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(Exact name of registrant as specified in its charter)
Nevada 000-27831 91-1947658
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
11415 NW 123 Lane,Reddick, Florida 32686
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (718) 554-3652
7340 North Highway 27, Suite 218, Ocala, Florida 4482
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
THE MERGER
On January 26, 2010, Genesis Capital Corporation of Nevada, a Nevada
Corporation ("GENESIS"), Genesis Capital Acquisition Corp., a wholly-owned
subsidiary of Genesis ("GENESIS SUB"), Milwaukee Iron Professional Arena
Football, LLC, a Wisconsin limited liability company ("MIPAF"), Wisconsin
Professional Arena Football Investment LLC, a Wisconsin limited liability
company ("WPAFI") and Christopher Astrom, as the sole owner of all of Genesis'
outstanding preferred stock (the "GENESIS PREFERRED SHAREHOLDERS") entered into
an Agreement and Plan of Merger (the "MERGER AGREEMENT") pursuant to which
MIPAF and WPAFI will merge with and into Genesis Sub, with Genesis Sub
continuing as the surviving corporation in the Merger and a wholly-owned
subsidiary of Genesis (the "SURVIVING CORPORATION"). Genesis intends to change
its name to "Milwaukee Iron Arena Football Inc".
The Merger Agreement is included as Exhibit 2.1 to this Current Report
and is the legal document that governs the merger transaction (the "MERGER")
and the other transactions contemplated by the Merger Agreement. The discussion
of the Merger Agreement set forth herein is qualified in its entirety by
reference to Exhibit 2.1.
As a result of the transaction and assuming no member of the Company
elects dissenters' rights, the former members of MIPAF and WPAFI (MIPAF and
WPAFI collectively, the "COMPANY") currently own approximately 99% of the
outstanding common stock of Genesis (before adjusting for any conversion or
exercise of any preferred stock into common stock of Genesis).
As soon as practicable after consummation of the Merger, Genesis shall
file with the Securities and Exchange Commission (the "SEC") a registration
statement on Form S-1 (or any successor form thereto)(the "REGISTRATION
STATEMENT"), to register: (a) the shares underlying the Genesis Series A and
Series B Preferred Stock if such preferred stock has not been previously
redeemed, (b) 7500 shares owned by Carl Dilley and/or his assigns (c) shares
issued in exchange for certain debt; and (d) any such securities that Genesis
deems appropriate (the "OFFERING"). In addition, Genesis shall issue to
Richard Astrom 14,333 Genesis Shares in full satisfaction of that certain debt
incurred by the Company in the approximate amount of $43,000.00.
Upon effectiveness of the Registration Statement, Genesis shall redeem
(the "REDEMPTION") all of Genesis' currently outstanding Series A and Series B
Preferred Stock (collectively, the "PREFERRED STOCK"). The purchase price
shall be: (a) $350,000 cash, and (b) 870,000 shares of common stock, to be
registered in the Offering pro rata to any shares issued by Genesis in
connection with this Transaction. The use of proceeds from the funds raised in
the Offering shall be first used to pay the purchase price and redeem the
Preferred Stock. At such time that the holder of said Preferred Stock receives
the purchase price, said Preferred Stock shall be transferred to Genesis for
redemption and cancellation. Christopher Astrom currently holds all such
Preferred Stock; namely 5,000,000 shares of the Series A and 5,000,000 shares
of Series B Preferred Stock.
Also in connection with the Merger, the new directors and officers of the
Surviving Corporation currently consist of Andrew Vallozzi III (Chairman and
CEO), Jason Clark (director and Secretary), Todd Hansen (director and
Treasurer), Chris Rebholz (director) and Larry Schroeder (director). Note that
in accordance with Section 7.4 of the Merger Agreement, Richard Astrom and
Christopher Astrom shall remain the sole officers and directors of Genesis
(Parent Corporation) until such time as the Preferred Stock has been redeemed
as described above.
As of the date of this Report, the Company has issued and outstanding the
following securities: (i)10,048 shares of common stock, (ii) 5,000,000 shares
of Series A Preferred Stock and (iii) 5,000,000 shares of Series B Preferred
Stock.
The issuance of the shares of Common Stock to the Company members in the
Merger will be made in reliance upon an exemption from registration under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), pursuant to
Regulation D promulgated thereunder. As such, the shares of Genesis' common
stock may not be offered or sold unless they are registered under the
Securities Act (as contemplated by the Registration Statement), or an exemption
from the registration requirements of the Securities Act is available.
ITEM 2.01 COMPLETION OF DISPOSITION OR ACQUISITION OF ASSETS.
On January 26, 2010 the Merger referenced in Item 1.01 closed. After the
Merger, there are now 29,064,381 shares of Genesis' common stock outstanding,
of which approximately 99% are held by the former members of the Company
(before adjusting for any conversion or exercise of any Preferred Stock into
common stock of Genesis). Prior to the Merger, Genesis was a shell company
with no business operations. As a result of the Merger, Genesis will no longer
be considered a shell company.
Pursuant to Item 2.01(f) of Form 8-K, the information that would be
required if Genesis were filing a general form for registration of securities
on Form 10 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") upon consummation of the transaction follows. The information below
corresponds to the item numbers of Form 10 under the Exchange Act.
FORWARD LOOKING STATEMENTS
The statements contained in this report that are not historical facts are
forward-looking statements that represent management's beliefs and assumptions
based on currently available information. Forward-looking statements include
all statements that are not historical facts and can be identified by the use
of forward-looking terminology such as the words "believes," "intends," "may,"
"will," "should," "anticipates," "expects," "could," "plans," or comparable
terminology or by discussions of strategy or trends. Although management
believes that the expectations reflected in such forward-looking statements are
reasonable, Genesis cannot give any assurances that these expectations will
prove to be correct. Such statements by their nature involve risks and
uncertainties that could significantly affect expected results, and actual
future results could differ materially from those described in such forward-
looking statements.
Among the factors that could cause actual future results to differ
materially are the risks and uncertainties discussed in this report. While it
is not possible to identify all factors, management continues to face many
risks and uncertainties including, but not limited to, the ability of Genesis
or a target entity to meet the requirements to close any potential acquisition,
the results of operations and profitability of the Genesis following the
acquisition of a new business venture, the acceptance in the market of the
products or services offered by Genesis following an acquisition. Should one
or more of these risks materialize, or should the underlying assumptions prove
incorrect, actual results could differ materially from those expected. Genesis
disclaims any intention or obligation to update publicly or revise such
statements whether as a result of new information, future events or otherwise.
Except as otherwise indicated by the context, references in this Current
Report on Form 8-K to "we," "us" and "our" are to the consolidated business of
Genesis and the Company.
ITEM 1. BUSINESS
INTRODUCTION
Genesis was incorporated in Colorado on September 19, 1983, under the
name Bugs, Inc., for the purpose of using microbial and other agents, including
metallurgy, to enhance oil and natural gas production and to facilitate the
recovery of certain metals. For the past several years, it has had no revenue
and has been a shell company.
The Company (formed beginning in 2006) owns and operates the Milwaukee
Iron (the "IRON"), a member team of the Arena Football One ("AF1" or the
"LEAGUE"), a professional arena football league. The Milwaukee Iron is a
professional arena football team based in Milwaukee and a charter member of
Arena Football One. The Iron play their home games at the Bradley Center, a
sports and entertainment venue in downtown Milwaukee.
Arena football is played in an indoor arena on a padded 50 yard long
football field using eight players on the field for each team. Most of the game
rules are similar to college or other professional football game rules with
certain exceptions intended to make the game faster and more exciting.
OVERVIEW
The Iron began play in 2009 in the af2, which was the developmental
league of the now defunct Arena Football League (the "AFL"). The Iron were
announced as an af2 expansion team in March 2008 when the team's ownership
group confirmed an agreement to play at the Bradley Center. The Iron signed the
three-year lease in August 2008 to begin play for the 2009 season. However, the
af2 ceased operations after the 2009 season.
Thereafter the Iron became a member team of the newly created AF1, whose
inaugural season begins in 2010. Gary Compton was the Head Coach in 2009, a
former member of the Milwaukee Mustangs of the AFL, as well as the 2001 AFL
Iron Man of the Year. His contract was not renewed for the 2010 season. On
October 13, 2009, the Iron named Green Bay Blizzard head coach, Bob Landsee as
the Iron's second head coach. The Green Bay Blizzard are a member team of the
Indoor Football League.
With the return of elite level Arena Football to the city of Milwaukee,
the Iron need to continue to develop a core fan, sponsorship and season ticket
holder base. With limited marketing and advertising dollars at our disposal
for 2010, a grass roots-focused campaign must be implemented utilizing
corporate partnership opportunities and relationships for exposure. Corporate
partnerships will include, whenever possible, media conversions to take
advantage of the advertising already in place by those corporate partners.
Each and every decision made will be a cost-conscious one as we make the jump
to the elite level of the AF1.
The new AF1 league debuts in April 2010 in 15 communities, including
seven cities that hosted teams in the AFL. AF1 in December 2009 purchased the
assets of the AFL in a deal approved by a judge overseeing the AFL's Chapter 11
bankruptcy proceedings. The reported $6.1 million sale included all team
names, logos, records, film and video libraries, and other assets from the AFL.
AF1 is a mix of former AFL and af2 teams. It will operate as a single
entity, with all players and coaches considered league employees. The league
also hopes it will have lower costs with centralized purchasing, insurance and
marketing.
STRATEGY
Our strategy at the League level is to participate through the operation
of the Iron and through our League ownership in what we believe will be the
continued growth of the AF1 which in turn is expected to result in increased
revenue to us from: (i) national (League) and regional (team) broadcast
contracts, (ii) national League sponsorship contracts, (iii) the sale of
additional team memberships in the League, and (iv) increased fan attendance at
AF1 games including Iron games, together with appreciation in the value of the
Iron as an AF1 team.
At the team level, our strategy is to increase fan attendance at Iron
home games, expand our advertising and sponsorship base, and contract with
additional local and regional broadcasters to broadcast Iron games.
We believe that fan attendance will increase based upon the game winning
success (if any) of the Iron in the AF1 and by increasing media exposure. Game
winning success requires the ongoing recruitment of superior players. In order
to recruit players, we employ a recruiting team which include our head coach
and Director of Player Personnel. In order to increase media exposure and
expand our sponsorship base, we call upon the media, corporate sponsors and
other Milwaukee area organizations. We also call upon local businesses to
solicit advertising and sponsorship funds on behalf of the Iron. We also
intend to participate in a number of charitable events during the year as a
part of a community relations and recognition program and maintain Internet
website www.mkeiron.com. We may also employ part-time telemarketing personnel
to assist in ticket sales.
Our strategy also includes maintaining and building community support
for, and recognition of, the team as an ongoing valuable entertainment
institution in the local Milwaukee area and throughout the state of Wisconsin.
HISTORY
ARENA FOOTBALL LEAGUE
The Arena Football League ("AFL") was an indoor American football league
founded in 1987 by Jim Foster. It was played indoors on a smaller field than
American football, resulting in a faster-paced and higher-scoring game. The
sport was invented in the early 1980s and patented by Foster, a former
executive of the United States Football League and the National Football
League. The AFL would play 22 seasons from 1987 to 2008 before mounting debt
and financial losses caused the league's owners to cancel the 2009 season and
develop a new long term economic strategy.
On August 4, 2009, the AFL released a statement announcing that while the
league is not folding, it has suspended operations indefinitely. Nevertheless,
several of the AFL's creditors pressured the league into filing for Bankruptcy
and on August 7, 2009, the AFL filed for Chapter 7 liquidation, though
converted on August 26, 2009 to a Chapter 11 reorganization.
On November 25, 2009, all assets of the AFL were auctioned off to AF1,
the approved stalking horse bidder (i.e., an interested buyer chosen by a
bankrupt company to make an initial bid on its assets) with a starting bid of
$2.5 million. At a hearing on December 7, 2009, the U.S. Bankruptcy Court in
Chicago approved the Order of Sale of AFL assets to AF1 for $6.1 million.
Despite the AFL's financial challenges, it remained a popular spectator
sport. The average attendance in the 1990s for AFL games were around 10,000-
11,000 per game , dropping below 10,000 thorough 2004, and above 12,000 through
2007. Eleven of the seventeen teams in operation in 2007 had average
attendance figures over 13,000. In 2008, the overall attendance average
increased to 12,957, with 8 teams exceeding 13,000 per game.[31]
AF2
AF2 ("AF2") was the developmental league of the AFL founded in 1999. It
played its first season in 2000 and ceased operations in 2009. The AF2
continued to operate while the AFL had suspended operations. However, because
of legal issues regarding the dissolution of AFL, AF2 was effectively
disbanded in September 2009 when no team committed to playing in 2010.
Because the AFL had ceased 2009 operations and later ceased all
operations indefinitely, the af2 board of directors began working to create a
new arena football league. The AFL owned a majority of af2 and thus the
remaining af2 owners were reluctant to fund operations and the league because
of the uncertainty surrounding AFL's bankruptcy.
Like most other minor sports leagues, the AF2 existed to develop football
players and also to help players adapt to the style and pace of arena football.
In addition, the AF2 was similar to other minor leagues because AF2 teams
played in smaller cities and smaller venues. While the AFL was played in cities
like Los Angeles, New York City, Philadelphia, Dallas, and Chicago, the AF2
fielded teams in cities which are part of metropolitan statistical areas
ranging in size from Milwaukee (with 1,739,497 residents) to Albany, Georgia
(with 164,000 residents).
The league's teams were divided into two conferences, the American and
National Conferences. The conferences were further subdivided into three
divisions each. Each division represented a region of the country in which
teams played. Unlike most sports leagues, the alignment of teams into divisions
was not even; in 2009, the Central division featured three teams while the West
featured five teams. Teams were placed in divisions based on geographic
rivalries to reduce travel costs as teams played division opponents more often
than non-divisional opponents. Alignment was subject to change each year as new
teams joined the league and others dropped out.
ARENA FOOTBALL ONE
In September 2009, several parties, including members of the af2 board of
directors and former members of the AFL, joined together to create a new
league, Arena Football One ("AF1"). AF1 is an entity independent of the AFL and
af2. In December 2009, AF1 purchased the assets of the bankrupt AFL in a deal
approved by the Bankruptcy Court.
AF1 was formed with 15 teams: existing teams from the AFL and af2, an
existing team from the American Indoor Football Association, and several new
teams or markets. Despite the crossover from the AFL and af2, the league is
an entirely new entity and not a merger of the AFL and af2. The league's first
season will be in 2010, running spring through summer like the AFL and af2.
The league will play by the same rules the AFL and af2 played by in their
respective final seasons. AF1 league offices are headquartered in Tulsa,
Oklahoma. Its official website is arenafootballone.com.
Following the suspension of the AFL's 2009 season, af2 league officials
and owners began discussing the future of arena football and the two leagues.
With 50.1 percent ownership of af2, the AFL's bankruptcy and dissolution of the
league technically included the dissolution of the af2. Questions also arose
regarding payment of franchise fees and league dues to an entity which had
entered bankruptcy. Uncertainty surrounded the league immediately following
the 2009 season with no formal plan in place to continue. Several teams folded
while others suspended operations pending a definitive plan. The league was
formally considered disbanded on September 8, 2009, when no owner committed his
or her team to the league's eleventh season by that deadline.
AF1 board of directors meetings continued throughout and after the af2
season to work on plans for a new league independent of AFL and af2. Final
meetings were held on September 28, 2009, concluding with a press conference in
Tulsa announcing the league's formation.
On November 11, 2009, the new league announced its intention to purchase
the entire assets of the former AFL; the assets included the team names and
logos of all former AFL and af2 teams. The assets were awarded to Arena
Football 1 on December 7, 2009, with a winning bid of $6.1 million. Current
AF1 teams were given the option of restoring historical names to their teams.
Of those, the Chicago Rush, Tampa Bay Storm, Orlando Predators, Arizona
Rattlers, Cleveland Gladiators, and Utah Blaze chose to adopt their respective
AFL teams' identities.
The AF1 organizational structure is substantially similar to that of af2.
The league owns the rights to the teams, players, and coaches. Players will be
paid more than the $200 per game salary of af2 but less than the union-mandated
$1,800 per game AFL salary. The cost of running a team is expected to be
increased compared to af2.
As of September 28, 2009, 16 charter franchises were announced for AF1,
with eleven more teams either submitting membership applications or considering
doing so. Currently, there are 15 teams committed to play in the 2010 season.
Divisional alignment was announced on January 12, 2010. The league and
owners were considering the possibility of a two-tier system with the top tier
featuring the more popular, larger-market and larger-budget teams while the
lower tier would contain the smaller market teams with more limited budgets.
However when the alignment was announced, the teams were split into two
conferences, with each conference having two smaller geographical divisions.
2010 AF1 TEAMS
DIVISION TEAM CITY ARENA FOUNDED FIRST PREVIOUS
AF1 LEAGUE
SEASON
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AMERICAN CONFERENCE
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SOUTH Alabama Vipers Huntsville, AL Von Braun Center 1999 2010 af2
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Jacksonville Sharks Jacksonville, Jacksonville 2009 2010 New for
Florida Veterans Memorial 2010
Arena
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Orlando Predators Orlando, Amway Arena 1990 2010 AFL
Florida
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Tampa Bay Storm Tampa, Florida St. Pete Times Forum 1987 2010 AFL
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SOUTHWEST Bossier-Shreveport Battle Wings Bossier City, CenturyTel Center 2000 2010 af2
Louisiana
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Dallas Vigilantes Dallas, Texas American Airlines 2002 2010 AFL
Center
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Oklahoma City Yard Dawgz Oklahoma City, Cox Convention 2003 2010 af2
Oklahoma Center
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Tulsa Talons Tulsa, BOK Center 1999 2010 af2
Oklahoma
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National Conference
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MIDWEST Chicago Rushhttp://en.wikipedia.org/wiki/ Rosemont, Allstate Arena 2001 2010 AFL
Arena_Football_1 -cite_note-osc-14 Illinois
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Cleveland Gladiators Cleveland, Quicken Loans Arena 1997 2010 AFL
Ohio
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Iowa Barnstormers Des Moines, Wells Fargo Arena 1995 2010 af2
Iowa
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Milwaukee Iron Milwaukee, Bradley Center 2008 2010 af2
Wisconsin
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WEST Arizona Rattlers Phoenix, US Airways Center 1991 2010 AFL
Arizona
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Spokane Shock Spokane, Spokane Veterans 2005 2010 af2
Washington Memorial Arena
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Utah Blaze West Valley E Center 2008 2010 AIFA
City, Utah
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RULES OF ARENA FOOTBALL
Arena Football is played in an indoor arena on a field which consists of
a padded surface 85 feet wide and 50 yards long with eight-yard end zones. The
endzone goalposts are nine feet wide with a cross-bar height of 15 feet. Eight
feet above each endzone are goal-side rebound nets which are 30 feet wide by 32
feet high.
There are eight players on the field for each team as part of a 20-man
active roster. Players play both offense and defense with the exception of the
kicker, quarterback, an offensive specialist, two defensive specialists and a
kick returner.
The game is played using an NFL-size football in four 15-minute quarters
with a 15-minute halftime. The game clock stops for out of bounds plays or
incomplete passes only in the last minute of each half, when necessary for
penalties, injuries and time-outs or following points after touchdowns, field
goals and safeties. Accordingly, the average AFL football game is played in
approximately two hours and 25 minutes compared to approximately three hours
and five minutes for an NFL game.
Four downs are allowed to advance the ball ten yards for a first down or
to score. Scoring consists of six points for a touchdown, one point for a
conversion by placekicking after a touchdown, two points for a conversion by
dropkick and two points for a successful run or pass after a touchdown. Three
points are awarded for a field goal by placement or four points for a field
goal by dropkick, with two points for a safety. Punting is illegal. On fourth
down a team may attempt a first down, touchdown or field goal. The receiving
team may field any kickoff or missed field goal that rebounds off the rebound
nets.
Although passing rules for the AF1 are similar to outdoor NCAA football,
a unique exception involves the rebound nets. A forward pass that rebounds off
a rebound net is a live ball and is in play until it touches the playing
surface.
Overtime periods are 15 minutes during the regular season and the
playoffs. Each team has one possession to score. If, after each team has had
one possession and one team is ahead, that team wins. If the teams are tied
after each has had a possession, the next team to score wins.
REGULAR SEASON AND PLAYOFFS
The regular AF1 season extends from April through August, with each team
playing a total of 16 games against teams from both conferences. Half of the
games are played at home, and half are played away. At the end of the regular
season, the four division champions, plus the four teams with the next best
records, qualify for the AF1 playoffs to determine the AF1's Arena Bowl
champion for that season. Each playoff round is played in the home arena of
the team with the best winning record.
GATE RECEIPTS, AF1 ASSESSMENTS AND DISTRIBUTIONS
AF1 teams are entitled to keep all gate receipts from regular season home
games and playoff home games. Teams do not receive any gate receipts from away
games except that visiting teams are reimbursed for hotel expenses by the home
team. Each team is required to pay an annual assessment for management fees to
the AF1 which is generally equal to the team's share of the League's annual
operating costs.
AF1 LICENSING
The AF1 operates a League licensing program on behalf of its teams. Under
the program, product manufacturers sign agreements allowing them to use the
names and logos of all AF1 teams, the AF1 itself and AF1's special events
(including playoffs and the Arena Bowl) in exchange for royalty and guarantee
payments.
LEAGUE GOVERNANCE
The AF1 is generally responsible for regulating the conduct of its member
teams. It establishes the regular season and playoff schedules of the teams,
and negotiates, on behalf of its members, the League's national and network
broadcast contracts. Each of the AF1's members is, in general, liable on a pro
rata basis for the AF1's liabilities and obligations and shares pro rata in its
profits.
The AF1 is governed by a Board of Directors, which consists of one
representative from each team. The Board of Directors selects the AF1
Commissioner, who administers the daily affairs of the AF1 including
interpretation of playing rules and arbitration of conflicts among member
teams. The Commissioner also has the power to impose sanctions, including
fines and suspensions, for violations of League rules. Jerry Kurz is the
Commissioner of the AF1. We believe we are in compliance with all League
rules.
CURRENT OPERATIONS
We derive substantially all of our revenue from the arena football
operations of the Iron in the af2 for the year ended September 30, 2009 and in
the AF1 thereafter. This revenue is primarily generated from (i) the sale of
tickets to the Iron home games, (ii) the sale of advertising and promotions to
team sponsors, (iii) the sale of local and regional broadcast rights to Iron
games, (iv) our share of AF1 media contracts, membership fees paid by expansion
teams and League licensing sales, and (v) the sale of merchandise carrying the
Iron logos.
Ticket Sales. The Iron played nine home games and eight away games during
the 2009 af2 regular season. Under the af2 Bylaws, we receive all revenue from
the sale of tickets to regular season home games and no revenue from the sale
of tickets to regular season away games.
The Iron play all home games at the Bradley Center, which holds
approximately 17,000 spectators, but the Iron are projecting to use the lower
level only in 2010 which holds approximately 8,000 spectators. Ticket prices
for regular season home games during the 2009 season at the Bradley Center
ranged from $11 to $90 per game. The following table sets forth certain
information relating to our regular season revenue generated by the sale of
tickets for the 2009 and 2010 season:
Season Number of Average per Average Paid Average Ticket
Season Game Paid Ticket Price Revenue per Game
Tickets Attendance
2009 898 ? $ $
2010 937 N/A N/A N/A
2010 REGULAR SEASON SCHEDULE
MILWAUKEE IRON
DAY DATE OPPONENT LOCATION TIME
-------- ---------- ---------------------- ----------------------------------- ------
Friday April 2 @ Spokane Shock Spokane Arena - Spokane, Wa 9:00PM
Fri/Sat April 9/10 Bye
Friday April 16 Iowa Barnstormers Bradley Center 7:30PM
Saturday April 24 Tampa Bay Storm Bradley Center 7:00PM
Saturday May 1 @ Alabama Vipers Vbc Arena - Huntsville, Al 7:30PM
Friday May 7 Chicago Rush Bradley Center 7:30PM
Friday May 14 Utah Thunder Bradley Center 7:30PM
Friday May 21 @ Orlando Predators Amway Arena - Orlando, Fl 6:30PM
Saturday May 29 Dallas Desperados Bradley Center 7:00PM
Saturday June 5 @ Arizona Rattlers Us Airways Center - Phoenix, Az 9:30PM
Saturday June 12 Cleveland Gladiators Bradley Center 7:00PM
Saturday June 19 @ Chicago Rush All-State Arena - Rosemont, Il 7:00PM
Saturday June 26 Spokane Shock Bradley Center 7:00PM
Saturday July 3 @ UtahThunder Energy Solutions Arena - 7:00PM
Salt Lake City, Ut
Fri/Sat July 9/10 Bye
Saturday July 17 Orlando Predators Bradley Center 7:00PM
Saturday July 24 @ Iowa Barnstormers Wells Fargo Arena - Des Moines, Ia 7:00PM
Saturday July 31 @ Cleveland Gladiators Quicken Loans Arena - Cleveland, Oh 6:00PM
2010 PLAYOFFS SCHEDULE
ARENA FOOTBALL ONE
DAY DATE OPPONENT LOCATION TIME
----------- ---------- ---------------------- ------------ ------
Fri/Sat August 6/7 Quarterfinal Playoffs Highest Seed TBD
Fri/Sat August 13/14 Semifinal Playoffs Highest Seed TBD
Fri/Sat/Sun August 20/21/22 Championship Highest Seed TBD
Advertising and Promotion. We generate revenue from the sale of
advertising displayed on signs located throughout the Bradley Center and
through other promotions utilizing the Iron name or logos. In addition, we
market team sponsorships to local and regional businesses which provide a
combination of advertising rights, promotional rights and VIP ticket
privileges. Advertising rights include the use of corporate logos within the
arenas, commercials on radio and television, advertisements in magazines,
display of the sponsor's name throughout the Bradley Center, public address
announcements, the inclusion of customer names on team posters and the like.
Promotional rights include banners displayed throughout the Bradley Center,
availability of blocks of seats for specific games, the use of the team's logos
and autographed helmets. VIP privileges include high priority seating
selections, parking passes, VIP room passes and travel packages, which include
attendance at team away games.
Local and Regional Television and Cable. Our television contract with
the Time Warner Cable Network does not generate revenue to us, but it does
provide us with invaluable media exposure to potential fans and business
partners.
Sale of Merchandise. We generate revenue from the sale of merchandise
carrying the Iron logos (primarily athletic clothing such as sweatshirts, T-
shirts, jackets and caps) at the arenas and at our corporate offices.
Telemarketing. We use telemarketing techniques to improve ticket sales.
Performance. For the 2009 season in the af2, the Iron's record was 5-11,
placing them in 5th place in their division.
COACHING STAFF
Former Head Coach.
Gary Compton was the Head Coach in 2009, a former member of the Milwaukee
Mustangs of the AFL, as well as the 2001 AFL Iron Man of the Year. His
contract was not renewed for the 2010 season.
Current Head Coach.
Bob Landsee was named head coach of the Milwaukee Iron in October of
2009. Prior to coming to Milwaukee, Coach Landsee was the head coach of Arena
Football's Green Bay Blizzard in the af2 for four seasons, from 2005-06 and
2008-09. The Blizzard went 45-28 in Landsee's tenure, which included playoff
appearances in all four years that resulted in a trip to the American
Conference finals in 2009 and the af2's championship game, ArenaCup VII, in
2006.
A University of Wisconsin alum, Landsee was selected by the Philadelphia
Eagles in the sixth round (149th overall) of the 1986 NFL Draft, where he
played for three seasons after being named an All-American and All-Big Ten
guard for the Badgers.
Following his playing career, Landsee made his professional coaching
debut in the Arena Football League as the offensive line coach for the
Milwaukee Mustangs from 1999-2001 before similar stints with the Toronto
Phantoms and Indiana Firebirds. Landsee still holds strong ties to the NFL as
president of the Madison, WI chapter of the NFL Alumni.
Other Coaches.
Mark Stoute - Assistant Head Coach and Director of Player Personnel.
Cedric Walker - Defensive Coordinator.
John Laske - Equipment Manager.
PLAYERS
In general, the rules of the AF1 permit each team to maintain an active
roster of 22 players during the regular season.
THE COLLECTIVE BARGAINING AGREEMENT
Unlike its predecessor, the AFL, the AF1 does not have a collective
bargaining agreement with its players.
BRADLEY CENTER
The Iron have played in the Bradley Center, which has a seating capacity
of approximately 17,000, since 2009. In August 2008, the Iron signed a three-
year lease with the Bradley Center commencing in the 2009 season. The Iron are
in the second year of that lease that calls for a base rent of $8500 per game.
Included in the lease are two escalator clauses for attendance: when the Iron
draw over 2500 paid spectators per game an additional $2,500 is added to the
base rent and when the Iron draw over 5000 spectators per game a second $2,500
is added to the base rent. New to the 2010 season a financial penalty of
$1000, in addition to the base rent, that is payable to the Bradley Center if
less than 5000 spectators attend a single home game. Furthermore, the Bradley
Center shall purchase and offer for sale a line of AF1 merchandise at Iron home
games and shall pay the Iron a twenty percent (20%) commission on any such net-
of-tax gross sales in excess of $1,000 per game. The Iron must also have a
$25,000 security deposit in place with the Bradley Center. The Bradley Center
is located at 1001 North 4th Street, Milwaukee, WI 53203.
COMPETITION
The Iron compete for sports entertainment dollars with other professional
sports teams and with college teams and with other sports-related
entertainment. During portions of the AF1 season, the Iron compete for
attendance and fan support with a professional basketball team (Milwaukee
Bucks) and a professional hockey team (Milwaukee Admirals) in Milwaukee and
with other professional hockey, basketball, baseball and other sports teams in
other parts of Wisconsin. In addition, the colleges and universities in the
Milwaukee area, as well as public and private secondary schools, offer a full
schedule of athletic events throughout the year. The Iron also compete for
attendance and advertising revenue with a wide range of other entertainment and
recreational activities available in the Milwaukee area, including festivals
and concerts. On a broader scale, AF1 teams compete with other football teams
including those fielded by high schools and colleges, the Indoor Football
League, the National Football League, the Canadian Football League, the
American Indoor Football Association and others.
EMPLOYEES
In addition to its active football players, the teams employ four
football personnel and seventeen front office/non-football personnel. During
the AF1 season, the team also uses volunteer part-time employees from time to
time.
INTELLECTUAL PROPERTY
We own the intellectual property related to the "Iron" team name and all
related branding elements, including logos and colors and related trademarks
and service marks, and all proprietary intellectual property, including web
site and all ancillary information, including player and team operating
information.
The Company currently owns Franchise Rights to use the Milwaukee Iron
Professional Arena Football Team.
ITEM 1A. RISK FACTORS
WE HAVE A HISTORY OF LOSSES AND OUR ACCOUNTANTS EXPRESSED DOUBTS ABOUT OUR
ABILITY TO CONTINUE AS A GOING CONCERN.
As of September 30, 2009, we have not yet achieved profitable operations.
We have accumulated losses of $1,157,867 since inception, a working capital
deficiency of $582,742 and we expect to incur further losses in the development
of our business, all of which, according to our accountants, casts substantial
doubt about our ability to continue as a going concern. Our ability to achieve
and maintain profitability and positive cash flow will depend on the success of
the business of the Company following the acquisition.
WE COMPETE FOR SPORT ENTERTAINMENT DOLLARS WITH OTHER SPORTS AND ENTERTAINMENT
VENUES.
The Iron compete for sports entertainment dollars with other professional
sports teams and with college teams and with other sports-related
entertainment. During portions of the AF1 season, the Iron compete for
attendance and fan support with a professional basketball team (Milwaukee
Bucks) and a professional hockey team (Milwaukee Admirals) in Milwaukee and
with other professional hockey, basketball, baseball and other sports teams in
other parts of Wisconsin. In addition, the colleges and universities in the
Milwaukee area, as well as public and private secondary schools, offer a full
schedule of athletic events throughout the year. The Iron also compete for
attendance and advertising revenue with a wide range of other entertainment and
recreational activities available in the Milwaukee area, including festivals
and concerts. On a broader scale, AF1 teams compete with other football teams
including those fielded by high schools and colleges, the Indoor Football
League, the National Football League, the Canadian Football League, the
American Indoor Football Association and others.
WE ARE SUBJECT TO AF1 LEAGUE OBLIGATIONS AND THE SUCCESS OF OTHER AF1 MEMBER
TEAMS.
Our Franchise/Membership agreement with the AF1 impose obligations on us
with respect to our operations. The success of the AF1 and its members depends
in part on the competitiveness of the teams in the AF1 and their ability to
maintain fiscally sound operations. Certain AF1 teams have encountered
financial difficulties in the past, and there can be no assurance that the AF1
and its teams will continue to operate. If the AF1 is unable to continue
operations, the Iron and the other teams forming the AF1 would be unable to
continue their own operations. In addition, the Iron and their personnel are
bound by a number of rules, regulations and agreements imposed upon them by the
Af1. Any change in these rules, regulations and agreements will be binding upon
our teams and their personnel, regardless of whether they agree with such
changes, and it is possible that any such change could adversely affect them.
WE WILL BE SUBJECT TO INCREASED COMPETITION AS A RESULT OF AF1 EXPANSION.
The AF1 intends to add additional teams in the future. While such
expansion affords the AF1 the opportunity to enter new markets and increase
revenue, it also increases the competition for talented players among AF1
teams. Expansion teams are permitted to select in an expansion draft designated
unprotected players playing for existing AF1 teams. There can be no assurance
that the Iron will be able to retain all of the team's key players during an
expansion draft or that the rules regarding the expansion draft will not change
to the detriment of the Iron.
WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE WHICH COULD DILUTE THE OWNERSHIP
OF CURRENT STOCKHOLDERS OR MAKE OUR CASH FLOW VULNERABLE TO DEBT REPAYMENT
REQUIREMENTS.
Historically, we have raised equity and debt capital to support our
operations. To the extent that we raise additional equity capital, existing
stockholders will experience a dilution in the voting power and ownership of
their common stock, and earnings per share, if any, would be negatively
impacted. Our inability to use our equity securities to finance our operations
could materially limit our growth. Any borrowings made to finance operations
could make us more vulnerable to a downturn in our operating results, a
downturn in economic conditions, or increases in interest rates on borrowings
that are subject to interest rate fluctuations. If our cash flow from
operations is insufficient to meet our debt service requirements, we could be
required to sell additional equity securities, refinance our obligations, or
dispose of assets in order to meet debt service requirements. There can be no
assurance that any financing will be available to us when needed or will be
available on terms acceptable to us. Our failure to obtain sufficient financing
on favorable terms and conditions could have a material adverse effect on our
growth prospects and our business, financial condition and results of
operations.
WE DEPEND UPON OUR COMPETITIVE SUCCESS FOR TICKET AND MERCHANDISE SALES.
Our financial results depend in part upon the Iron achieving game winning
success in the AF1. By achieving and maintaining such success, the Iron expect
to: (a) generate greater fan enthusiasm, resulting in higher ticket and
merchandise sales throughout the regular season and (b) capture a greater share
of local television and radio audiences. Failure to participate in the AF1
playoffs would deprive the teams of additional revenue that may result from
sales of tickets for home playoff games and from media contracts. Revenue is,
therefore, significantly adversely affected by a poor game winning performance,
especially involving losses of home games. The Iron win-loss record for the
2009 season in the af2 was five wins and eleven losses.
WE DEPEND UPON ATTRACTING TALENTED PLAYERS TO ACHIEVE GAME WINNING SUCCESS.
The success of the Iron depends, in part, upon the team's ability to
attract and retain talented players. The Iron compete with other AF1 teams as
well as teams fielded by the National Football League and the Canadian Football
League, among others, for available players. There can be no assurance that
the Iron will be able to retain players upon expiration of their contracts or
obtain new players of adequate talent to replace players who retire or are
injured, traded or released. Even if the Iron are able to obtain and retain
players who have had previously successful football careers, there can be no
assurance of the quality of their future performance.
OUR PLAYERS' SALARIES MAY INCREASE IN THE FUTURE, THEREBY INCREASING OUR
OPERATING EXPENSES.
Although our player salaries are low compared to salaries currently paid
by other professional sports teams, there can be no assurance that salaries
payable by us will not increase significantly in the future, thereby increasing
our operating expenses and adversely affecting our financial condition and
results of operations.
FOOTBALL INJURIES COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.
Player contracts entitle players to receive their salary even if unable
to play as a result of injuries sustained from arena football-related
activities during the course of employment. Although we carry occupational
health, accidental death and disability insurance on our players, we must pay
deductible portions of the insurance. Payment of insurance premiums, insurance
deductibles and salary payments that must be made directly to injured players
could have an adverse effect upon our financial condition and results of
operations.
OUR CASH FLOW IS SEASONAL, LIMITING OUR CASH RESOURCES.
The arena football season begins in April and ends in August. As a
result, we realize a significant portion of our revenue and incur a significant
portion of our expenses during that period. This seasonality can create cash
flow difficulties for us outside the AF1 season.
WE MAY ISSUE PREFERRED STOCK, WHICH COULD PREVENT A CHANGE IN OUR CONTROL.
Our Articles of Incorporation authorize the issuance of preferred stock
with such rights and preferences as may be determined from time to time by our
Board of Directors. Accordingly, under the Articles of Incorporation, the
Board of Directors, without shareholder approval, may issue preferred stock
with dividend, liquidation, conversion, voting, redemption or other rights that
could adversely affect the voting power or other rights of the holders of our
common stock. The issuance of any shares of preferred stock, having rights
superior to our common stock, may result in a decrease in the value or market
price of our common stock and could prevent a change in our control. We have
no other anti-takeover provisions in our Articles of Incorporation or Bylaws.
Holders of the preferred stock may also have the right to receive dividends,
certain preferences in liquidation and conversion rights.
UNTIL REDEMPTION OF THE PREFERRED STOCK, ONE HOLDER OF OUR SERIES A AND SERIES
B PREFERRED STOCK ELECTS ALL OF OUR DIRECTORS AND CONTROLS OUR OPERATIONS.
We have issued a total of 5 million shares of our Series A Preferred
Stock and 5 million shares of Series B Preferred Stock to one person,
Christopher Astrom. Each share of Series A Preferred Stock entitles the holder
thereof to 25 votes on all matters, the right to convert each share into 25
shares of common stock and a liquidation preference of $500.00 per share. Each
share of Series B Preferred Stock entitles the holder thereof to 250 votes on
all matters, the right to convert each share into 250 shares of common stock
and a liquidation preference of $500.00 per share. Accordingly, Mr. Astrom can
elect all of our directors and control our operations.
However, Genesis is obligated to redeem and cancel the Series A and
Series B Preferred Stock upon effectiveness of the Registration Statement in
connection with the Offering to be conducted after Closing of the Merger.
WE DO NOT PAY DIVIDENDS ON OUR COMMON STOCK.
We have not paid any dividends on our common stock since our inception
and do not anticipate paying dividends in the foreseeable future. We plan to
retain earnings, if any, to finance the development and expansion of our
business.
TRADING IN GENESIS COMMON STOCK OVER THE LAST 12 MONTHS HAS BEEN LIMITED SO
INVESTORS MAY NOT BE ABLE TO SELL AS MANY OF THEIR SHARES AS THEY WANT AT
PREVAILING PRICES.
Shares of Genesis are traded on the Over The Counter Bulletin Board
("OTCBB") under the symbol "GCNV.OB". If limited trading in Genesis Common
Stock continues, it may be difficult for shareholders to sell the Shares
acquired by them in the Merger in the public market at any given time at
prevailing prices. Also, the sale of a large block of Common Stock could
depress the market price of our Common Stock to a greater degree than a company
that typically has a higher volume of trading of its securities.
THE LIMITED PUBLIC TRADING MARKET MAY CAUSE VOLATILITY IN THE COMPANY'S STOCK
PRICE.
The quotation of Genesis Common Stock on the OTCBB does not assure that a
meaningful, consistent and liquid trading market currently exists, and in
recent years such market has experienced extreme price and volume fluctuations
that have particularly affected the market prices of many smaller companies
like us. Our Common Stock is thus subject to this volatility. Sales of
substantial amounts of our Common Stock, or the perception that such sales
might occur, could adversely affect prevailing market prices of our Common
Stock.
PENNY STOCK REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON MARKETABILITY ON THE
COMPANY'S SECURITIES.
The SEC has adopted regulations which generally define a "penny stock" to
be any equity security that has a market price (as defined) of less than $5.00
per share or an exercise price of less than $5.00 per share, subject to certain
exceptions. As a result, Genesis Common Stock is subject to rules that impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with net worth in excess of $1,000,000 or annual income
exceeding $200,000, or $300,000 together with their spouse). For transactions
covered by these rules, the broker-dealer must make a special suitability
determination for the purchase of such securities and have received the
purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a risk disclosure
document mandated by the SEC relating to the penny stock market. The broker-
dealer must also disclose the commission payable to both the broker-dealer and
the registered representative, current quotations for the securities and, if
the broker-dealer is the sole market maker, the broker-dealer must disclose
this fact and the broker-dealer's presumed control over the market. Finally,
monthly statements must be sent disclosing recent price information for the
penny stock held in the account and information on the limited market in penny
stocks. Consequently, the "penny stock" rules may restrict the ability of
broker-dealers to sell Genesis securities and may affect the ability of
shareholders to sell the Genesis securities in the secondary market and the
price at which such purchasers can sell any such securities.
Stockholders should be aware that, according to the SEC, the market for
penny stocks has suffered in recent years from patterns of fraud and abuse.
Such patterns include:
- Control of the market for the security by one or a few broker-
dealers that are often related to the promoter or issuer;
- }Manipulation of prices through prearranged matching of purchases and
sales and false and misleading press releases;
- "Boiler room" practices involving high pressure sales tactics and
unrealistic price projections by inexperienced sales persons;
- Excessive and undisclosed bid-ask differentials and markups by
selling broker-dealers; and
- The wholesale dumping of the same securities by promoters and
broker-dealers after prices have been manipulated to a desired level,
along with the inevitable collapse of those prices with consequent
investor losses.
Our management is aware of the abuses that have occurred historically in the
penny stock market.
ITEM 2. FINANCIAL INFORMATION
Management's Discussion And Analysis Of Financial Condition And Results Of
Operations
The following discussion relates to the Company's operations through
September 30, 2009. For information related to Genesis operations prior to the
merger transaction, please see Genesis' Annual Report on Form 10-K for the year
ended December 31, 2008 and all other reports filed with the Securities and
Exchange Commission.
PLAN OF OPERATIONS
We own and operate the Milwaukee Iron (the "IRON"), a member team of the
Arena Football One ("AF1" or the "LEAGUE"), a professional arena football
league. The Milwaukee Iron is a professional arena football team based in
Milwaukee and a charter member of Arena Football One. The Iron play their home
games at the Bradley Center, a sports and entertainment venue in downtown
Milwaukee.
As of September 30, 2009, we have not yet achieved profitable operations.
We have accumulated losses of $1,157,867 since inception, a working capital
deficiency of $582,742 and we expect to incur further losses in the development
of our business, all of which, according to our accountants, casts substantial
doubt about our ability to continue as a going concern. Our ability to
continue as a going concern is dependent upon our ability to generate future
profitable operations and/or to obtain the necessary financing to meet our
obligations and repay our liabilities arising from normal business operations
when they come due. We intend to seek additional funds by equity financing
through the Offering and/or related party advances, however there is no
assurance of additional funding being available. As of September 30, 2009 we
had cash and cash equivalents of $36,544.
Our strategy at the League level is to participate through the operation
of the Iron and through our League ownership in what we believe will be the
continued growth of the AF1 which in turn is expected to result in increased
revenue to us from: (i) national (League) and regional (team) broadcast
contracts, (ii) national League sponsorship contracts, (iii) the sale of
additional team memberships in the League, and (iv) increased fan attendance at
AF1 games including Iron games, together with appreciation in the value of the
Iron as an AF1 team.
At the team level, our strategy is to increase fan attendance at Iron
home games, expand our advertising and sponsorship base, and contract with
additional local and regional broadcasters to broadcast Iron games.
We believe that fan attendance will increase based upon the game winning
success (if any) of the Iron in the AF1 and by increasing media exposure. Game
winning success requires the ongoing recruitment of superior players. In order
to recruit players, we employ a recruiting team which include our head coach
and Director of Player Personnel. In order to increase media exposure and
expand our sponsorship base, we call upon the media, corporate sponsors and
other Milwaukee area organizations. We also call upon local businesses to
solicit advertising and sponsorship funds on behalf of the Iron. We also
intend to participate in a number of charitable events during the year as a
part of a community relations and recognition program and maintain Internet
website www.mkeiron.com. We may also employ part-time telemarketing personnel
to assist in ticket sales.
Our strategy also includes maintaining and building community support
for, and recognition of, the team as an ongoing valuable entertainment
institution in the local Milwaukee area and throughout the state of Wisconsin.
FINANCIAL OVERVIEW
The following is a detailed profit and loss statement for the operating
segments. There were no inter-segment revenues.
three months ended three months ended twelve months ended twelve months ended
September 30, 2009 September 30, 2008 September 30, 2009 September 30, 2008
------------------ ------------------ ------------------- -------------------
Revenue
Tickets 370,214 - 370,214 -
Sponsorship 137,452 - 137,452 -
Merchandising 4,390 - 4,390 -
Other 5,355 - 5,355 -
Total Revenue 517,411 - 517,411 -
Cost of Sales
Football team operations 488,582 488,582 -
Game operations 253,489 253,489 -
Sponsorships 170,901 170,901 -
Tickets 82,412 - 82,412 -
------------------ ------------------ ------------------- -------------------
Total cost of revenues 995,384 - 995,384 -
Gross Profit (477,972) - (477,972) -
Operating expenses
Selling, general and administrative 566,379 - 585,129
Depreciation and amortization 23,799 6,429 50,585 43,421
------------------ ------------------ ------------------- -------------------
Total operating expenses 590,178 6,429 635,714 43,421
------------------ ------------------ ------------------- -------------------
Net Operating Loss $ (1,068,150) $ (6,429) $ (1,113,686) $ (43,421)
================== ================== =================== ===================
The Company's credit facilities consist of a revolving line of credit of
up to $350,000. At the end of the 2009 fiscal year, there was a balance of
$150,000 outstanding on the revolving line of credit (the "Revolving Loan").
The Revolving Loan bears interest at varying rates that fluctuate based on the
prime rate plus one percentage point, with the rate not falling below six
percent. The rate is set at six percent until the lender changes it. The
Revolving Loan is due and payable in full on December 28, 2009 and requires
monthly interest payments. The Company also has two unused letters of credit of
$183,000 outstanding as of September 30, 2009.
The Company had issued a note payable to a member during the last fiscal
year totaling $60,000 as of September 30, 2009. This obligation is due on
demand and does not accrue interest.
As of September 30, 2009, the Company owed the President of the Company a
total of $10,000 for expenses paid on behalf of the company. The obligations
are included in the accompanying financial statements as Notes payable -
related parties.
Letters of Credit: In October and November of 2008, The Company was
granted two letters of credit in the amounts of $100,000 and $83,000,
respectively. These letters of credit expire in October and November of 2010,
subject to automatic renewal unless notified within 45 or 90 days,
respectively. Each letter of credit, if used, will accrued interest at the
Prime Rate plus one percentage point, with a floor rate of six percent.
Interest payments will require monthly interest payments, if used. As of
September 30, 2009, the unused letters of credit amounted to $183,000.
ITEM 3. PROPERTIES
The Company leases its office space from AVA Marketing, LLC, which is 50%
owned by Andrew Vallozzi III, President of Company. The office address is 259
South Street, Waukesha, WI 53186, Phone: (262) 523-9206, Fax: (262) 523-9210.
The term of the lease is month to month.
The Iron have played in the Bradley Center, which has a seating capacity
of approximately 17,000, since 2009. In August 2008, the Iron signed a three-
year lease with the Bradley Center commencing in the 2009 season. The Iron are
in the second year of that lease that calls for a base rent of $8500 per game.
Included in the lease are two escalator clauses for attendance: when the Iron
draw over 2500 paid spectators per game an additional $2,500 is added to the
base rent and when the Iron draw over 5000 spectators per game a second $2,500
is added to the base rent. New to the 2010 season a financial penalty of
$1000, in addition to the base rent, that is payable to the Bradley Center if
less than 5000 spectators attend a single home game. Furthermore, the Bradley
Center shall purchase and offer for sale a line of AF1 merchandise at Iron home
games and shall pay the Iron a twenty percent (20%) commission on any such net-
of-tax gross sales in excess of $1,000 per game. The Iron must also have a
$25,000 security deposit in place with the Bradley Center. The Bradley Center
is located at 1001 North 4th Street, Milwaukee, WI 53203.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information, as of January 27,
2010 with respect to the beneficial ownership of the outstanding common stock
by (i) any holder of more than five percent, (ii) each of the Company's
executive officers and directors, and (iii) the Company's directors and
executive officers as a group. The information relating to the ownership
interests of such shareholders is provided after giving effect to the Merger.
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS(1)
--------------------------------- -------------------------------
Common stock Preferred Stock Common stock Preferred Stock
------------ --------------- ------------ ---------------
Christopher Astrom(2) 978 10,000,000(2) % 100%
c/o Genesis Capital Corporation of Nevada
11415 NW 123 Lane, Reddick, Florida 32686
Richard Astrom 505 0 % 0
c/o Genesis Capital Corporation of Nevada
11415 NW 123 Lane, Reddick, Florida 32686
Directors and Officers as a group (2 persons) 1,483 10,000,000
(1) Based on an aggregate of 29,064,381 common shares and 10,000,000 preferred
shares outstanding as of January 27, 2010. Each share of series A convertible
preferred stock entitles the holder thereof to 25 votes on all matters, the
right to convert each share into 25 shares of common stock and a liquidation
preference of $500.00 per share. Each share of series B convertible preferred
stock entitles the holder thereof to two hundred fifty (250) votes on all
matters, the right to convert each share into two hundred fifty (250) shares of
common stock and a liquidation preference of $500.00 per share.
(2) Christopher Astrom owns 5,000,000 shares of Series A Convertible Preferred
Stock and 5,000,000 shares of Series B Convertible Preferred Stock
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
The following table sets forth the names and ages of each of the persons
designated to become members of the Genesis' Board of Directors and Executive
Officers of Genesis.
NAME AGE POSITIONS AND OFFICES TO BE HELD
Christopher Astrom 38 Director, Chief Financial Officer
Richard Astrom 62 Director, Chief Executive Officer
Christopher Astrom is the son of Richard Astrom.
Note that in accordance with Section 7.4 of the Merger Agreement, Richard
Astrom and Christopher Astrom shall remain the sole officers and directors of
Genesis (Parent Corporation) until such time as the Preferred Stock has been
redeemed as described above.
The directors named above will serve until the first annual meeting of
the Company's stockholders following completion of the Merger or until their
respective successors have been appointed and duly qualified. Thereafter,
directors will be elected for one-year terms at the annual stockholders'
meeting. Officers will hold their positions at the pleasure of the board of
directors, absent any employment agreement. There is no arrangement or
understanding between any of the directors or officers of the Company and any
other person pursuant to which any director or officer was or is to be selected
as a director or officer, and there is no arrangement, plan or understanding as
to whether non-management shareholders will exercise their voting rights to
continue to elect the current directors to the Company's board. There are
also no arrangements, agreements or understandings between non-management
shareholders and management under which non-management shareholders may
directly or indirectly participate in or influence the management of the
Company's affairs.
Christopher Astrom has been an officer and director of the Company since
November 1, 2001. From 1995 through June 2007, Mr. Astrom has served as Vice-
President and Corporate Secretary of National Realty and Mortgage, Inc. with
responsibilities for property acquisitions. Mr. Astrom was the President,
Corporate Secretary and a director of Capital Solutions I, Inc. until December
2007 whereupon he divested his ownership interest in connection with an
exchange transaction described in Form 8-K filed with the SEC by Capital
Solutions on December 10, 2007. He graduated from the University of Florida
with a Bachelors Degree in Business Administration. Christopher Astrom is the
son of Richard Astrom.
Richard S. Astrom has been an officer and director of the Company since
November 1, 2001. From 1995 through June 2007, Mr. Astrom served as President
and Chief Executive Officer of National Realty and Mortgage, Inc. He also
served as a director of Capital Solutions I, Inc. until December 2007 whereupon
he resigned his position in connection with an exchange transaction described
in Form 8-K filed with the SEC by Capital Solutions on December 10, 2007. He
has been an active real estate broker in Florida since 1969. Mr. Astrom earned
a Bachelor's Degree in Business Administration from the University of Miami.
Richard Astrom is the father of Christopher Astrom.
Directors and Executive Officers of the Milwaukee Iron
The new directors and officers of the Surviving Corporation currently
consist of Andrew Vallozzi III (Chairman and CEO), Jason Clark (director and
Secretary), Todd Hansen (director and Treasurer), Chris Rebholz (director) and
Larry Schroeder (director). Note that in accordance with Section 7.4 of the
Merger Agreement, Richard Astrom and Christopher Astrom shall remain the sole
officers and directors of Genesis (Parent Corporation) until such time as the
Preferred Stock has been redeemed as described above.
Andrew Vallozzi III. Milwaukee Iron President Drew Vallozzi has been
involved in the sport of Arena Football since the early 1990's. In 2007 Mr.
Vallozzi led a group of investors on a quest to return Arena Football to the
city of Milwaukee. That quest became a reality when his group unveiled the
Milwaukee Iron and the team began play in the spring 2009. Since that time
Arena Football has proven to be alive and well in southeast Wisconsin once
again. As the Iron prepare for play in 2010 Mr. Vallozzi plays a prominent
role in new league business and legislation by serving on the Arena Football
One Board of Directors.
From 1993-2001 Mr. Vallozzi played an instrumental role in building the
Milwaukee Mustangs into one of the preeminent franchises of the Arena Football
League. Mr. Vallozzi's marketing background and expertise proved to be a key
component to the Mustangs' off-the-field success as the team never finished
lower than eighth in seasonal attendance by regularly drawing over 14,000 fans
per game. In 1996 the Mustangs led the AFL in total attendance attracting an
average of 15,600 people to the Bradley Center for each game.
Jason Clark brings over 15 years of sports marketing and management
experience back to Arena Football and the Milwaukee Iron. After serving for the
last 11 years in the NCAA Division I ranks as the Assistant Athletic Director
for External Relations at the University of Wisconsin-Milwaukee, Clark returned
to Arena Football to become Vice President and General Manager of the Milwaukee
Iron in July of 2009. Prior to his work at UWM, Clark served as the Director of
Communications for the Milwaukee Mustangs of the Arena Football League for
three years.
Mr. Clark spent over a decade at the University of Wisconsin-Milwaukee as
a senior member of the athletics staff, overseeing all aspects of the external
relations unit including media and broadcast contracts, corporate partnerships,
marketing, advertising and ticket sales. Clark played a prominent role in the
day-to-day operations of several Division I sports and served as the television
color analyst and post-game radio show host for the highly successful Panther
men's basketball program. He supervised the event operations staff and directed
game operations for men's and women's basketball, men's and women's soccer, and
women's volleyball, while coordinating activities for all of the spirit squads,
including the dance team, cheerleaders, mascot and pep band. In 2008 he founded
the Panther Pack, the student incentive rewards program designed to encourage
and promote student attendance at all home athletic events; the 2008-09 season
saw student attendance at UWM athletic events rise by over forty percent. He
also served as the director of the University's Athletics' Hall of Fame, as
well as the Horizon League's elected conference representative with the
National Association of Collegiate Marketing Administrators (NACMA) from 2002-
2009.
With the Mustangs, Clark was responsible for the content in various team
publications and coordinated Mustangs' telecasts with networks such as ESPN,
ESPN2, and ABC. He oversaw media relations, community relations, and the
telemarketing ticket sales department. He served as a founding member of the
AFL Public Relations Directors' Association.
In 2000, Clark served as a Site Control Coordinator for the NCAA Men's
Basketball Final Four in Indianapolis, Indiana. He has extensive experience in
several capacities working in sports and has spent time as an account executive
and a ticket sales representative with hockey's Milwaukee Admirals and Utah
Grizzlies as well as minor league baseball's Indianapolis Indians.
ITEM 6. EXECUTIVE COMPENSATION.
The following table provides certain information for the fiscal years ended
December 31, 2007 and 2008 concerning compensation earned for services rendered
in all capacities by our named executive officers during the fiscal years ended
December 31, 2007 and 2008.
SUMMARY COMPENSATION TABLE
Name and Year Salary Bonus Stock Option Non-Equity Nonqualified All Total
Principal Awards Awards Incentive Deferred Other
Position Plan Compensation Compensation
Compensation Earnings
--------- ---- ------ ----- ------ ------ ------------ ------------ ------------ -----
Christopher 2008 0 0 0 0 0 0 0 0
Astrom, CEO 2007 0 0 0 0 0 0 0 0
Richard 2008 0 0 0 0 0 0 0 0
Astrom, 2007 0 0 0 0 0 0 0 0
Sec/Treas
2008 0 0 0 0 0 0 0 0
2007 0 0 0 0 0 0 0 0
2008 0 0 0 0 0 0 0 0
2007 0 0 0 0 0 0 0 0
Employment Agreements
None.
We do not have an employment contract with any other executive officer.
OUTSTANDING EQUITY AWARDS AT SEPTEMBER 30, 2009
OPTION AWARDS STOCK AWARDS
Name Number of Number of Equity Option Option Number Market Equity Equity Incentive Plan
Securities Securities Incentive Exercise Expiration of Value Incentive Awards: Market or Payout
Underlying Underlying Plan Awards:Price Date Shares of Plan Awards: Value of Unearned Shares,
Unexercised Unexercised Number of ($) or Shares Number of Units or Other Rights That
Options Options Securities Units or Unearned Have Not Vested
(#) (#) Underlying of Units Shares, (#)
Exercisable UnexercisableUnexercised Stock of Units or
Unearned That Stock Other Rights
Options Have That That Have
(#) Not Have Not Vested
Vested Not (#)
(#) Vested
($)
Christopher 0 0 0 0 0 0 0 0 0
Astrom
Richard 0 0 0 0 0 0 0 0 0
Astrom
Discussion of Director Compensation
The Company did not pay any director compensation during the fiscal year ended
December 31, 2008. The Company may begin to compensate its directors at some
time in the future.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
RELATED PARTY TRANSACTIONS
The Company had issued a note payable to a member during the last fiscal
year totaling $60,000 as of September 30, 2009. This obligation is due on
demand and does not accrue interest.
As of September 30, 2009, the Company owed the President of the Company a
total of $10,000 for expenses paid on behalf of the company. The obligations
are included in the accompanying financial statements as Notes payable -
related parties.
The Company leases its office space from AVA Marketing, LLC, which is 50%
owned by Andrew Vallozzi III, President of Company. The office address is 259
South Street, Waukesha, WI 53186, Phone: (262) 523-9206, Fax: (262) 523-9210.
The term of the lease is month to month.
Christopher Astrom is the son of Richard Astrom
ITEM 8. LEGAL PROCEEDINGS.
The following is summary information on the cases currently in active
litigation against either Milwaukee Iron Professional Arena Football, LLC or
Wisconsin Professional Arena Football Investment, LLC.. Defenses for both of
the cases are being handled by the law firm of Terschan, Steinle & Ness.
Christina Flowers v. Milwaukee Iron Organization EEOC Charge No.: 443-
2009-02500C. This case is an EEOC complaint (improperly naming "Milwaukee Iron
Organization", which does not exist as such) by a former cheerleader for the
Milwaukee Iron who was terminated on April 29, 2009. Ms. Flowers is claiming
that the termination was based upon racial discrimination. We are of the
opinion that the claim is meritless.
Catering Specialties, Inc. v. Milwaukee Iron Professional Arena Football,
LLC. Milwaukee County Circuit Court Case No.: 10-CV-26. This case is a claim
for $9,000 by a vendor for the defendant Company. We are informed that Company
is in the process of attempting to resolve that case through payment to the
vendor as soon as available funding is procured.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.
Our common stock is quoted on the Over-the-Counter Bulletin Board under the
symbol "GCNV.OB". Such trading of our common stock is limited and sporadic.
The following table reflects the high and low bid information for our
common stock for each fiscal quarter during the fiscal year ended September 30,
2009 and 2008. The bid information was obtained from the OTC Bulletin Board and
reflects inter-dealer prices, without retail mark-up, markdown or commission,
and may not necessarily represent actual transactions.
QUARTER ENDED BID HIGH BID LOW
------------------ -------- -------
Fiscal Year 2009
------------------
September 30, 2009 $3.00 $3.00
June 30, 2009 $3.00 $3.00
March 31, 2009 $4.00 $3.00
December 31, 2008 $4.00 $0.00
------------------
Fiscal Year 2008
------------------
September 30, 2008 $8.000 $4.500
June 30, 2008 $15.00 $7.500
March 31, 2008 $45.00 $0.050
December 31, 2007 $12.50 $7.500
* The high and low prices of our Common Stock were adjusted to reflect a
1 for 500 reverse split of the Company's common stock effective September 30,
2008.
We have never declared or paid cash dividends on our capital stock. We
currently intend to retain all available funds and any future earnings for use
in the operation and expansion of our business and do not anticipate paying any
cash dividends in the foreseeable future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
29,040,000 shares of Genesis common stock have been issued in connection
with the Merger.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
Genesis' authorized capital stock consists of 500,000,000 shares of
Common Stock and 10,000,000 shares of preferred stock. As of January 27, 2009
there were 29,064,381 outstanding shares of Common Stock, 5,000,000 shares of
Series A Convertible Preferred stock and 5,000,000 shares of Series B
Convertible Preferred Stock outstanding.
On November 23, 2009, Genesis filed with the SEC a Preliminary
Information Statement on Schedule 14C in which it reported that it had received
the requisite board and stockholder approval to increase its authorized shares
of common stock and blank check preferred stock to 1.5 billion and 75,000,001,
respectively. Genesis received a comment letter from the SEC regarding the
above filing, to which it has not yet responded.
COMMON STOCK
Subject to preferences that may be applicable to any preferred stock
outstanding at the time, the holders of Common Stock are entitled to receive
dividends out of legally available assets at such times and in such amounts as
our Board of Directors may from time to time determine. Each stockholder is
entitled to one vote for each share of Common Stock held on all matters
submitted to a vote of stockholders. Cumulative voting for the election of
directors is not authorized.
Our Common Stock is not subject to conversion or redemption and holders
of Common Stock are not entitled to preemptive rights. Upon the liquidation,
dissolution or winding up of the Company, the remaining assets legally
available for distribution to stockholders, after payment of claims or
creditors and payment of liquidation preferences, if any, on outstanding
preferred stock, are distributable ratably among the holders of Common Stock
and any participating preferred stock outstanding at that time. Each
outstanding share of Common Stock is fully paid and nonassessable.
PREFERRED STOCK
Our Board of Directors has the authority, without action by stockholders,
to designate and issue preferred stock in one or more series. The Board of
Directors may also designate the rights, preferences and privileges of each
series of preferred stock, any or all of which may be greater than the rights
of our Common Stock. It is not possible to state the actual effect of the
issuance of any shares of preferred stock on the rights of holders of the
Common Stock until the Board of Directors determines the specific rights of the
holders of the preferred stock. However, these effects might include:
(a) restricting dividends paid to the holders of shares of the Common Stock;
(b) diluting the voting power of the holders of shares of the Common Stock;
(c) impairing the liquidation rights of holders of shares of the Common Stock
and (d) delaying or preventing a change in control of the Company without
further action by stockholders.
SERIES A CONVERTIBLE PREFERRED STOCK
Each share of series A convertible preferred stock entitles the holder
thereof to 25 votes on all matters, the right to convert each share into 25
shares of common stock and a liquidation preference of $500.00 per share.
SERIES B CONVERTIBLE PREFERRED STOCK
Each share of series B convertible preferred stock entitles the holder
thereof to two hundred fifty (250) votes on all matters, the right to convert
each share into two hundred fifty (250) shares of common stock and a
liquidation preference of $500.00 per share.
WARRANTS
None.
OPTIONS
None.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws and section 78.751 of the Nevada General
Corporation Law for indemnification of the Company's officers and
directors in certain situations where they might otherwise personally incur
liability, judgments, penalties, fines and expenses in connection with a
proceeding or lawsuit to which they might become parties because of their
position with the Company.
The Company's Bylaws permit it to limit the liability of its directors
to the fullest extent permitted under Section 78.037 of the Nevada General
Corporation Law. As permitted by Section 78.037 of the Nevada General
Corporation Law, the Company's Certificate of Incorporation also include
provisions that eliminate the personal liability of each of its officers and
directors for any obligations arising out of any acts or conduct of such
officer or director performed for or on behalf of the Company. To the fullest
extent allowed by Section 78.751 of the Nevada General Corporation Law, the
Company will defend, indemnify and hold harmless its directors or
officers from and against any and all claims, judgments and liabilities
to which each director or officer becomes subject to in connection with the
performance of his or her duties and will reimburse each such director or
officer for all legal and other expenses reasonably incurred in connection with
any such claim of liability. However, we will not indemnify any officer or
director against, or reimburse for, any expense incurred in connection
with any claim or liability arising out of the officer's or director's
own negligence or misconduct in the performance of duty. The provisions of
the Company's Bylaws and Certificate of Incorporation regarding
indemnification are not exclusive of any other right the Company has to
indemnify or reimburse officers or directors in any proper case, even if not
specifically provided for in the Certificate of Incorporation or Bylaws.
The Company believes that the indemnity provisions contained in its
bylaws and the limitation of liability provisions contained in its
certificate of incorporation are necessary to attract and retain qualified
persons for these positions. No pending material litigation or proceeding
involving our directors, executive officers, employees or other agents as to
which indemnification is being sought exists, and the Company is not aware
of any pending or threatened material litigation that may result in claims for
indemnification by any of our directors or executive officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, we have been informed that, in the
opinion of the SEC, such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See Item 9.01 of this report on Form 8-K.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
See Item 4.01 of this report on Form 8-K.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
See Item 9.01 of this report on Form 8-K.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
On January 26, 2010, the Company issued 29,040,000 shares of its common
stock to the recipients set forth on Schedule 2.4(c) of the Merger Agreement,
in connection with the Merger. Such issuance was conducted pursuant to Section
4(2) of the Securities Act, as amended, and Regulation D promulgated
thereunder.
ITEM 4.01 CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Genesis was notified that the audit practice of Bagell, Josephs, Levine &
Company, LLC, the Genesis' independent registered public accounting firm (the
"Former Accountant"), was combined with Friedman LLP ("New Accountant") on
January 1, 2010. As of the same date, the Former Accountant resigned as the
independent registered public accounting firm of Genesis and, with the approval
of Genesis' Board of Directors, the New Accountant was engaged to be the
Company's independent registered public accounting firm.
The Former Accountant's report on the financial statements for the years
ended December 31, 2008 and 2007 were not subject to an adverse or qualified
opinion or a disclaimer of opinion and were not modified as to audit scope or
accounting principles. However, the Former Accountant's report on the financial
statements for the years ended December 31, 2008 and 2007 contained an
explanatory paragraph which noted that there was substantial doubt about
Company's ability to continue as a "Going Concern" due to recurring net losses,
a working capital deficiency and negative cash flows from operations.
During the two years ended December 31, 2008, and from December 31, 2008
through the January 1, 2010, there were no reportable events as the term is
described in Item 304(a)(1)(iv) of Regulation S-K.
From the date Genesis retained the Former Accountant on January 4, 2008
through the date of dismissal, there were no disagreements with the Former
Accountant on any matters of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which, if not resolved to
the satisfaction of the Former Accountant would have caused it to make
reference to the subject matter of the disagreements in connection with its
reports on these financial statements for those periods.
Genesis did not consult with the New Accountant regarding the application
of accounting principles to a specific transaction, either completed or
proposed, or the type of audit opinion that might be rendered on Genesis'
financial statements, and no written or oral advice was provided by the New
Accountant that was a factor considered by Genesis in reaching a decision as to
the accounting, auditing or financial reporting issues.
Genesis has requested that the Former Accountant furnish it with a letter
addressed to the Securities and Exchange Commission stating whether it agrees
with the above statements. The requested letter is attached as Exhibit 16.1 to
this Form 8-K.
ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT.
See Item 2.01 of this report.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
OFFICERS.
In accordance with Section 7.4 of the Merger Agreement, Richard Astrom
and Christopher Astrom shall remain the sole officers and directors of Genesis
Capital Corporation of Nevada, Inc. (Parent Corporation) until such time as the
Preferred Stock has been redeemed in accordance with Section 7.3..
ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL
YEAR.
On November 23, 2009, Genesis filed with the SEC an Preliminary
Information Statement of Schedule 14C in which it reported that it received
board and shareholder approval to amend the articles of incorporation to : (a)
increase the number of authorized shares of Common Stock, par value $0.001 per
share, that the Company can have outstanding at any time from 500 million to
1.5 billion, and (b) to increase the number of authorized shares of Preferred
Stock that the Company can have outstanding at any time from 10,000,000 to
20,000,000. Genesis does not intend to pursue this proposed change in Articles
of Incorporation.
ITEM 5.06 CHANGE IN SHELL COMPANY STATUS.
As described in Item 2.01 of this report, on January 26, 2010 the Merger
was completed. As a result of this transaction, Genesis no longer a shell
company as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as
amended.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
(b) Pro forma financial information
(c) Exhibits
Balance Sheet
Twelve months ended September 30, 2009
As of As of
September 30, 2009 September 30, 2008
------------------ ------------------
ASSETS
Current assets
Cash $ 21,082 $ 172,446
Accounts receivable 25 27,304
Prepaid expenses 15,438 20,000
---------------- ---------------
Total current assets 36,544 219,750
Fixed assets
Leasehold improvements, net 6,775 -
Equipment, football, net 42,176 -
Furniture and fixtures, net 11,957 -
Playing field, net 122,565 -
Franchise acquisition cost, net 170,865 136,579
---------------- ---------------
Total fixed assets 354,339 136,579
Other Assets - -
Investment in Af2 Operating Co. 52,537 -
---------------- ---------------
Total other assets 52,537 -
Total assets $ 443,420 $ 356,329
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities $ 369,025 $ 14,750
Loans from related parties 10,073 -
Short term credit line 150,000 -
Accrued interest 760 -
Payroll liabilities 28,108 -
Deferred revenue 61,320 -
---------------- ---------------
Total current liabilities 619,287 14,750
Long-term liabilities - -
Notes payable - related parties 70,000 -
---------------- ---------------
Total long-term liabilities 70,000 -
---------------- ---------------
Total liabilities 689,287 14,750
Members' share capital
Members' share capital 912,000 385,000
Accumulated deficit (1,157,867) (43,421)
---------------- ---------------
Total members' capital (deficit) (245,867) 341,579
---------------- ---------------
---------------- ---------------
Total liabilities and members' (deficit) $ 443,420 $ 356,329
================ ===============
0 -
Income Statement
Twelve months ended September 30, 2009
Three months ended Three months ended Twelve months ended Twelve months ended
September 30, 2009 September 30, 2008 September 30, 2009 September 30, 2008
------------------ ------------------ ------------------- -------------------
Revenue
Revenues $ 517,411 $ - $ 517,411 $ -
------------------ ------------------ ------------------- -------------------
Total Revenue 517,411 - 517,411 -
Cost of Sales
Cost of revenues 995,384 - 995,384 -
------------------ ------------------ ------------------- -------------------
Total cost of revenues 995,384 - 995,384 -
------------------ ------------------ ------------------- -------------------
Gross Profit (477,972) - (477,972) -
Operating expenses
Selling, general and administrative 585,129 - 585,129 -
Depreciation and amortization 23,799 6,429 50,585 43,421
------------------ ------------------ ------------------- -------------------
Total operating expenses 608,928 6,429 635,714 43,421
------------------ ------------------ ------------------- -------------------
Loss from operations (1,086,900) (6,429) (1,113,686) (43,421)
Other income (expenses):
Interest expense (760) - (760) -
------------------ ------------------ ------------------- -------------------
Total other income (expenses) (760) - (760) -
------------------ ------------------ ------------------- -------------------
Loss before provision for income taxes (1,087,660) (6,429) (1,114,446) (43,421)
Provision for income taxes
Net loss $ (1,087,660) $ (6,429) $ (1,114,446) $ (43,421)
================== ================== =================== ===================
Members' share capital, beginning of period 855,000 385,000 385,000 385,000
Members' share capital contributions 57,000 - 527,000 -
------------------ ------------------ ------------------- -------------------
Members' share capital, end of period $ 912,000 $ 385,000 $ 912,000 $ 385,000
------------------ ------------------ ------------------- -------------------
Segment Income Statement
Three months ended Three months ended Twelve months ended Twelve months ended
September 30, 2009 September 30, 2008 September 30, 2009 September 30, 2008
------------------ ------------------ ------------------- -------------------
Revenue
Tickets 370,214 - 370,214 -
Sponsorship 137,452 - 137,452 -
Merchandising 4,390 - 4,390 -
Other 5,355 - 5,355 -
------------------ ------------------ --------------- ---------------
Total Revenue 517,411 - 517,411 -
Cost of Sales
Football team operations 488,582 488,582 -
Game operations 253,489 253,489 -
Sponsorships 170,901 170,901 -
Tickets 82,412 - 82,412 -
------------------ ------------------ --------------- ---------------
Total cost of revenues 995,384 - 995,384 -
------------------ ------------------ --------------- ---------------
Gross Profit (477,972) - (477,972) -
Operating expenses
Selling, general and administrative 566,379 - 585,129 -
Depreciation and amortization 23,799 6,429 50,585 43,421
------------------ ------------------ --------------- ---------------
Total operating expenses 590,178 6,429 635,714 43,421
Net Operating Loss $ (1,068,150) $ (6,429) $ (1,113,686) $ (43,421)
=================== ================== =============== ================
Cash Flow Statement
Twelve months ended Twelve months ended
September 30, 2009 September 30, 2008
------------------- -------------------
Cash flows from operating activities:
Net loss $ (1,114,446) $ (43,421)
Adjustments to reconcile net loss to
net cash used by operating activities:
Changes in operating assets and liabilities:
Depreciation and amortization 50,585 43,421
(Increase) decrease in accounts receivable 27,279 (27,304)
(Increase) / decrease in prepaid expenses 4,563 (20,000)
Increase / (decrease) in accounts payable
& accrued liabilities 354,275 14,750
Increase / (decrease) in accrued interest 760 -
Increase / (decrease) in payroll liabilities 8,108 -
Increase / (decrease) in deferred revenue 61,320 -
---------------- -------------
Net cash used by operating activities $ (587,557) $ (32,554)
Cash flows from investing activities:
Purchase of fixed assets (198,344) -
Franchise acquisition cost (70,000)
Investment in Af2 (52,537)
---------------- -------------
Net cash used by investing activities $ (320,881) $ -
Cash flows from financing activities:
Short term credit line 150,000 -
Loan to (from) related party 10,073 -
Proceeds from issuance of notes payable-
related parties 70,000 -
Issuance of membership shares 527,000 205,000
---------------- -------------
Net cash provided by financing activities $ 757,073 $ 205,000
---------------- -------------
Net increase in cash $ (151,365) $ 172,446
Cash, beginning of period $ 172,446 $ -
---------------- -------------
Cash, end of period $ 21,082 $ 172,446
================ =============
MILWAUKEE IRON PROFESSIONAL ARENA FOOTBALL, LLC
NOTES TO FINANCIAL STATEMENTS (AUDITED)
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
Nature of Business: Milwaukee Iron Professional Arena Football, LLC was formed
in November of 2006, in the State of Wisconsin, as a limited liability company,
originally named Wisconsin Professional Indoor Football, LLC. The Milwaukee
Iron are a professional Arena Football team that plays their home games at the
Bradley Center, the premier sports and entertainment venue in downtown
Milwaukee, Wisconsin, as a member of Arena Football One.
These financial statements have been prepared in accordance with generally
accepted accounting principles applicable to a going concern, which assumes
that the Company will be able to meet its obligations and continue its
operations for its next fiscal year. Realization values may be substantially
different from carrying values as shown and these financial statements do not
give effect to adjustments that would be necessary to the carrying values and
classifications of assets and liabilities should the Company be unable to
continue as a going concern. At September 30, 2009, the Company had not yet
achieved profitable operations, has accumulated losses of $1,157,867 since its
inception, has a working capital deficiency of $582,742 and expects to incur
further losses in the development of its business, all of which casts
substantial doubt about the Company's ability to continue as a going
concern. The Company's ability to continue as a going concern is dependent
upon its ability to generate future profitable operations and/or to obtain the
necessary financing to meet its obligations and repay its liabilities arising
from normal business operations when they come due. Management has no formal
plan in place to address this concern but considers that the Company will be
able to obtain additional funds by equity financing and/or related party
advances, however there is no assurance of additional funding being available.
The accompanying financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts or amounts
and classification of liabilities that might result from the outcome of this
uncertainty.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR
The Company's fiscal year-end is September 30, 2009.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the combined accounts of
Milwaukee Iron Professional Arena Football, LLC and Wisconsin Professional
Arena Football Investment, LLC, a Wisconsin Limited Liability Corporation. All
material intercompany transactions and accounts have been eliminated in
consolidation.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of highly liquid investments with maturities
of three months or less when purchased.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
PROPERTY AND EQUIPMENT
Depreciation is computed primarily on the straight-line method for financial
statements purposes over 7 years.
All assets are booked at historical cost. Management reviews on an annual basis
the book value, along with the prospective dismantlement, restoration, and
abandonment costs and estimate residual value for the assets, in comparison to
the carrying values on the financial statements.
IMPAIRMENT AND DISPOSAL OF LONG-LIVED ASSETS
The Company evaluates the carrying value of its long-lived assets under the
provisions of FASB ASC 360-10-35, "Subsequent Measurement". This requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted future cash flows
estimated to be generated by those assets are less than the assets' carrying
amount. If such assets are impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower
of the carrying value or fair value, less costs to sell. No impairments were
recognized during the years ended September 30, 2008 and September 30, 2009.
REVENUE RECOGNITION
Revenues consist principally of ticket sales, sponsorships, and merchandise
sales.
All revenues are recognized when the products are sold to a purchaser at a
fixed or determinable price, delivery or event has occurred and title has
transferred, and collection of the revenue is reasonably assured.
INCOME TAXES
INCOME TAX STATUS-LIMITED LIABILITY CORPORATION: The Company has elected under
the Internal Revenue Code to be a taxed as a Corporation. In lieu of the
members of a Limited Liability Corporation being taxed on their proportionate
share of the Company's taxable income, the corporation will pay income taxes.
Therefore, no provision or liability for federal income taxes has been included
in the financial statements. The Company incurred net operating losses during
all periods presented resulting in a deferred tax asset, which was fully
allowed for in a valuation allowance. As a result, the net benefit and expense
resulted in no income taxes.
MARKETING/ ADVERTISING COSTS
Marketing and advertising costs are expensed as incurred.
GUARANTEED PAYMENTS TO MEMBERS
Guaranteed payments to members that are designed to represent reasonable
compensation for services rendered are accounted for as expenses rather than as
an allocation of net income. Guaranteed payments that are designed to reflect
payment of interest on capital accounts are not accounted for as expenses of
the Company. Such payments are considered as part of the allocation of net
income. There have been no guaranteed payments to members to date.
NOTE 3 - SEGMENT INFORMATION
The following is a detailed profit and loss statement for the operating
segments. There were no inter-segment revenues.
three months ended three months ended twelve months ended twelve months ended
September 30, 2009 September 30, 2008 September 30, 2009 September 30, 2008
------------------ ------------------ ------------------- -------------------
Revenue
Tickets 370,214 - 370,214 -
Sponsorship 137,452 - 137,452 -
Merchandising 4,390 - 4,390 -
Other 5,355 - 5,355 -
Total Revenue 517,411 - 517,411 -
Cost of Sales
Football team operations 488,582 488,582 -
Game operations 253,489 253,489 -
Sponsorships 170,901 170,901 -
Tickets 82,412 - 82,412 -
------------------ ------------------ ------------------- -------------------
Total cost of revenues 995,384 - 995,384 -
Gross Profit (477,972) - (477,972) -
Operating expenses
Selling, general and administrative 566,379 - 585,129
Depreciation and amortization 23,799 6,429 50,585 43,421
------------------ ------------------ ------------------- -------------------
Total operating expenses 590,178 6,429 635,714 43,421
------------------ ------------------ ------------------- -------------------
Net Operating Loss $ (1,068,150) $ (6,429) $ (1,113,686) $ (43,421)
================== ================== =================== ===================
NOTE 4 - INTANGIBLE ASSETS
The Company currently owns Franchise Rights to use the Milwaukee Iron
Professional Arena Football Team. The Company amortizes the intangibles using
the straight-line method over a useful life of 7 years. While the Company has
the rights as long as they continue to abide by the rules of the Af2 agreement
by paying fees, fines, and assessments on time, management has determined that
using a 7 year life for amortization to be the most conservative. The
historical cost of the intangible assets was $250,000. Accumulated amortization
totaled $43,421 and $79,135 (unaudited) for the years ended September 30, 2008
and September 30, 2009, respectively.
NOTE 5 - LINE OF CREDIT
The Company's credit facilities consist of a revolving line of credit of up to
$350,000. At the end of the 2009 fiscal year, there was a balance of $150,000
outstanding on the revolving line of credit (the "Revolving Loan"). The
Revolving Loan bears interest at varying rates that fluctuate based on the
prime rate plus one percentage point, with the rate not falling below six
percent. The rate is set at six percent until the lender changes it. The
Revolving Loan is due and payable in full on December 28, 2009 and requires
monthly interest payments. The Company also has two unused letters of credit of
$183,000 outstanding as of September 30, 2009. See Note 8 for more information
on the unused letters of credit.
NOTE 6 - MEMBERS' SHARE CAPITAL
DURING THE YEAR ENDED SEPTEMBER 30, 2009:
CONTRIBUTED CAPITAL: During the year, various members and other entities
contributed a total of $527,000 to the Company to finance costs necessary for
the Company to continue operations.
NOTE 7 - RELATED PARTY TRANSACTIONS
The Company had issued a note payable to a member during the last fiscal year
totaling $60,000 as of September 30, 2009. This obligation is due on demand and
does not accrue interest.
As of September 30, 2009, the Company owed the President of the Company a total
of $10,000 for expenses paid on behalf of the company. The obligations are
included in the accompanying financial statements as Notes payable - related
parties.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Letters of Credit: In October and November of 2008, The Company was granted two
letters of credit in the amounts of $100,000 and $83,000, respectively. These
letters of credit expire in October and November of 2010, subject to automatic
renewal unless notified within 45 or 90 days, respectively. Each letter of
credit, if used, will accrued interest at the Prime Rate plus one percentage
point, with a floor rate of six percent. Interest payments will require monthly
interest payments, if used.
As of September 30, 2009, the unused letters of credit amounted to $183,000.
NOTE 9 - LEGAL MATTERS
None
NOTE 10 - SUBSEQUENT EVENTS
None
Balance Sheet
Three months ended December 31, 2009
As of
December 31, 2009
-----------------
ASSETS
Current assets
Cash $ 1,681
Accounts receivable 42,350
Prepaid expenses 18,788
-------------
Total current assets 62,819
Fixed assets
Leasehold improvements, net 6,657
Equipment, football, net 40,614
Furniture and fixtures, net 11,228
Playing field, net 117,818
Franchise acquisition cost, net 161,936
-------------
Total fixed assets 338,253
Other Assets -
Investment in Af2 Operating Co. 88,252
-------------
Intercompany receivables
-------------
Total other assets 88,252
-------------
Total assets $489,324
=============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities $ 391,858
Bank overdraft 47,963
Loans from related parties 40,073
Short term loans 150,000
Accrued interest 760
Payroll liabilities 37,533
Deferred revenue 92,264
-------------
Total current liabilities 760,452
Long-term liabilities
Notes payable - related parties 70,000
-------------
Total long-term liabilities 70,000
-------------
Total liabilities 830,452
Members' share capital
Members' share capital 974,500
Accumulated deficit (1,315,628)
-------------
Total members' capital (deficit) (341,128)
-------------
-------------
Total liabilities and members' (deficit) $ 489,324
=============
Income Statement
Three months ended December 31, 2009
Three months ended
December 31, 2009
------------------
Revenue
Revenues $ 49,645
----------------
Total Revenue 49,645
Cost of Sales
Cost of revenues 107,363
----------------
Total cost of revenues 107,363
-----------------
Gross Profit (57,718)
Operating expenses
Selling, general and administrative 82,721
Depreciation and amortization 16,086
----------------
Total operating expenses 98,807
-----------------
Loss from operations (156,524)
Other income (expenses):
Interest expense (1,287)
-----------------
Total other income (expenses) (1,287)
-----------------
Loss before provision for income taxes (157,811)
Provision for income taxes
Net loss $ (157,811)
=================
Members' share capital, beginning of period 912,000
Members' share capital contributions 62,500
-----------------
Members' share capital, end of period $ 974,500
-----------------
Segment Income Statement
Three months ended
December 31, 2009
------------------
Revenue
Tickets -
Sponsorship 49,300
Merchandising 345
Other -
-----------------
Total Revenue 49,645
Cost of Sales
Football team operations 20,488
Game operations 6,022
Sponsorships 75,043
Tickets 5,810
-----------------
Total cost of revenues 107,363
-----------------
Gross Profit (57,718)
Operating expenses
Selling, general and administrative 82,721
Depreciation and amortization 16,086
------------------
Total operating expenses 98,807
------------------
Net Operating Loss $ (156,524)
==================
Cash Flow Statement
Three months ended Three months ended
December 31, 2009 December 31, 2008
------------------- ------------------
Cash flows from operating activities:
Net loss $ (157,811) $ -
Adjustments to reconcile net loss to
net cash used by operating activities:
Changes in operating assets and liabilities:
Depreciation and amortization $ 16,086 $ -
(Increase) decrease in accounts receivable (15,046) (27,304)
(Increase) / decrease in prepaid expenses 1,213 (20,000)
Increase / (decrease) in accounts payable &
accrued liabilities 339,665 (14,750)
Increase / (decrease) in accrued interest 760 -
Increase / (decrease) in payroll liabilities 37,533 -
Increase / (decrease) in deferred revenue 92,264 -
------------------- ------------------
Net cash used by operating activities $ 314,664 $ (62,054)
Cash flows from investing activities:
Purchase of fixed assets $ (191,187) $ -
Franchise acquisition cost $ (70,000)
Investment in Af2 $ (88,252) $ -
Net cash used by investing activities $ (349,439) $ -
------------------- ------------------
Cash flows from financing activities:
Short term credit line $ 150,000 $ -
Loan to (from) related party $ 40,073 $ -
Proceeds from issuance of notes payable - related parties $ 70,000 $ -
Issuance of membership shares $ 589,500 $ (385,000)
------------------- ------------------
Net cash provided by financing activities $ 849,573 $ (385,000)
------------------- ------------------
Net increase in cash $ 814,797 $ (447,054)
Cash, beginning of period $ 172,446 $ -
------------------- ------------------
Cash, end of period $ 987,244 $ (447,054)
=================== ==================
985,562 (619,500)
MILWAUKEE IRON PROFESSIONAL ARENA FOOTBALL, LLC
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
Nature of Business: Milwaukee Iron Professional Arena Football, LLC was formed
in November of 2006, in the State of Wisconsin, as a limited liability company,
originally named Wisconsin Professional Indoor Football, LLC. The Milwaukee
Iron are a professional Arena Football team that plays their home games at the
Bradley Center, the premier sports and entertainment venue in downtown
Milwaukee, Wisconsin, as a member of Arena Football One.
These financial statements have been prepared in accordance with generally
accepted accounting principles applicable to a going concern, which assumes
that the Company will be able to meet its obligations and continue its
operations for its next fiscal year. Realization values may be substantially
different from carrying values as shown and these financial statements do not
give effect to adjustments that would be necessary to the carrying values and
classifications of assets and liabilities should the Company be unable to
continue as a going concern. At December 31, 2009, the Company had not yet
achieved profitable operations, has accumulated losses of $1,256,560 since its
inception, has a working capital deficiency of $660,190 and expects to incur
further losses in the development of its business, all of which casts
substantial doubt about the Company's ability to continue as a going
concern. The Company's ability to continue as a going concern is dependent
upon its ability to generate future profitable operations and/or to obtain the
necessary financing to meet its obligations and repay its liabilities arising
from normal business operations when they come due. Management has no formal
plan in place to address this concern but considers that the Company will be
able to obtain additional funds by equity financing and/or related party
advances, however there is no assurance of additional funding being available.
The accompanying financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts or amounts
and classification of liabilities that might result from the outcome of this
uncertainty.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR
The Company's fiscal year-end is September 30, 2009.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the combined accounts of
Milwaukee Iron Professional Arena Football, LLC and Wisconsin Professional
Arena Football Investment, LLC, a Wisconsin Limited Liability Corporation. All
material intercompany transactions and accounts have been eliminated in
consolidation.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of highly liquid investments with maturities
of three months or less when purchased.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
PROPERTY AND EQUIPMENT
Depreciation is computed primarily on the straight-line method for financial
statements purposes over the following years:
Leasehold Improvements 15
Equipment-Football 7
Fixtures & Furniture 5
Playing Field 7
All assets are booked at historical cost. Management reviews on an annual basis
the book value, along with the prospective dismantlement, restoration, and
abandonment costs and estimate residual value for the assets, in comparison to
the carrying values on the financial statements.
IMPAIRMENT AND DISPOSAL OF LONG-LIVED ASSETS
The Company evaluates the carrying value of its long-lived assets under the
provisions of FASB ASC 360-10-35, "Subsequent Measurement". This requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted future cash flows
estimated to be generated by those assets are less than the assets' carrying
amount. If such assets are impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower
of the carrying value or fair value, less costs to sell. No impairments were
recognized during the years ended December 31, 2008 and December 31, 2009.
REVENUE RECOGNITION
Revenues consist principally of ticket sales, sponsorships, and merchandise
sales.
All revenues are recognized when the products are sold to a purchaser at a
fixed or determinable price, delivery or event has occurred and title has
transferred, and collection of the revenue is reasonably assured.
INCOME TAXES
INCOME TAX STATUS-LIMITED LIABILITY CORPORATION: The Company has elected under
the Internal Revenue Code to be a taxed as a Corporation. In lieu of the
members of a Limited Liability Corporation being taxed on their proportionate
share of the Company's taxable income, the corporation will pay income taxes.
Therefore, no provision or liability for federal income taxes has been included
in the financial statements. The Company incurred net operating losses during
all periods presented resulting in a deferred tax asset, which was fully
allowed for in a valuation allowance. As a result, the net benefit and expense
resulted in no income taxes.
MARKETING/ ADVERTISING COSTS
Marketing and advertising costs are expensed as incurred.
GUARANTEED PAYMENTS TO MEMBERS
Guaranteed payments to members that are designed to represent reasonable
compensation for services rendered are accounted for as expenses rather than as
an allocation of net income. Guaranteed payments that are designed to reflect
payment of interest on capital accounts are not accounted for as expenses of
the Company. Such payments are considered as part of the allocation of net
income. There have been no guaranteed payments to members to date.
NOTE 3 - SEGMENT INFORMATION
The following is a detailed profit and loss statement for the operating
segments. There were no inter-segment revenues.
three months ended three months ended
December 31, 2009 December 31, 2008
------------------ ------------------
Revenue
Tickets - -
Sponsorship 49,300 -
Merchandising 345 -
Other - -
------------------ ------------------
Total Revenue 49,645 -
Cost of Sales
Football team operations 20,488
Game operations 6,022
Sponsorships 75,043
Tickets 5,810 -
Total cost of revenues 107,363 -
------------------ ------------------
Gross Profit (57,718) -
Operating expenses
Selling, general and administrative 61,046 566,379
Depreciation and amortization 16,086 6,429
------------------ ------------------
Total operating expenses 77,132 6,429
------------------ ------------------
Net Operating Loss $ (134,849) $ (6,429)
================== ==================
NOTE 4 - INTANGIBLE ASSETS
The Company currently owns Franchise Rights to use the Milwaukee Iron
Professional Arena Football Team. The Company amortizes the intangibles using
the straight-line method over a useful life of 7 years. While the Company has
the rights as long as they continue to abide by the rules of the Af2 agreement
by paying fees, fines, and assessments on time, management has determined that
using a 7 year life for amortization to be the most conservative. The
historical cost of the intangible assets was $250,000. Accumulated amortization
totaled $52,349 and $88,064 (unaudited) for the periods ended December 31, 2008
and December 31, 2009, respectively.
NOTE 5 - LINE OF CREDIT
The Company's credit facilities consist of a revolving line of credit of up to
$350,000. At the end of the 2009 fiscal year, there was a balance of $150,000
outstanding on the revolving line of credit (the "Revolving Loan"). The
Revolving Loan bears interest at varying rates that fluctuate based on the
prime rate plus one percentage point, with the rate not falling below six
percent. The rate is set at six percent until the lender changes it. The
Revolving Loan is due and payable in full on December 28, 2009 and requires
monthly interest payments. The Company also has two unused letters of credit of
$183,000 outstanding as of December 31, 2009. See Note 8 for more information
on the unused letters of credit.
NOTE 6 - MEMBERS' SHARE CAPITAL
DURING THE YEAR ENDED DECEMBER 31, 2009:
CONTRIBUTED CAPITAL: During the quarter, various members and other entities
contributed a total of $62,500 to the Company to finance costs necessary for
the Company to continue operations.
NOTE 7 - RELATED PARTY TRANSACTIONS
The Company had issued a note payable to a member during the last fiscal year.
The total due as of December 31, 2009 was $30,000. This obligation is due on
demand and does not accrue interest.
As of December 31, 2009, the Company owed another member a total of $10,614 for
expenses paid on behalf of the company.
Both of these obligations are included in the accompanying financial statements
as Loans from related parties.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Letters of Credit: In October and November of 2008, The Company was granted two
letters of credit in the amounts of $100,000 and $83,000, respectively. These
letters of credit expire in October and November of 2010, subject to automatic
renewal unless notified within 45 or 90 days, respectively. Each letter of
credit, if used, will accrued interest at the Prime Rate plus one percentage
point, with a floor rate of six percent. Interest payments will require monthly
interest payments, if used.
As of December 31, 2009, the unused letters of credit amounted to $183,000.
NOTE 9 - LEASE COMMITMENTS
The Company currently has an operating lease agreement with the Center where
the team plays its home games. The agreement has terms for a base fee of $8,500
per game (the "Base Fee") plus and additional fee of $2,500 for each game in
which attendance is equal to or greater than 2,500, but less that 5,000
attendees or $5,000 for each game in which attendance is equal to or greater
than 5,000 attendees. Additionally, beginning January 1, 2010, the Company will
pay an additional fee of $2,000 per game for which the Center must remove or
install a curtain system in connection with a team home game. Payments are made
to the Center on a per game basis as a deduction by the Center of any game
revenue.
The following is a schedule by years of future minimum lease fees required
under the operating lease agreement:
YEAR ENDING SEPTEMBER 30, AMOUNT
2010 $88,000
2011 88,000
The Company paid $0 and $106,700 in fees according to the operating lease
agreement in fiscal years 2010 and 2009, respectively.
NOTE 10 - LEGAL MATTERS
None
NOTE 11 - SUBSEQUENT EVENTS
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 1, 2010
Genesis Capital Corporation of Nevada
By: Richard Astrom
--------------------
Name: Richard Astrom
Title: Chief Executive Officer
EXHIBIT INDEX
Exhibit Number Description of Exhibit
-------------- ----------------------
2.1 Agreement and Plan Of Merger effective as of the 26th of
January, 2010 by and among Genesis Capital Corporation of
Nevada, a Nevada Corporation, Genesis Capital Acquisition Corp.
a wholly-owned subsidiary of Genesis, Milwaukee Iron
Professional Arena Football, LLC, a Wisconsin limited liability
company, Wisconsin Professional Arena Football Investment LLC,
a Wisconsin limited liability company and Christopher Astrom.
16.1 Letter on change in Certifying Accountant
23.1 Consent of Larry O'Donnell, CPA, P.C.