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EX-21 - ELSINORE SERVICES INC | v179737_ex21.htm |
EX-3.2 - ELSINORE SERVICES INC | v179737_ex3-2.htm |
EX-4.1 - ELSINORE SERVICES INC | v179737_ex4-1.htm |
EX-5.1 - ELSINORE SERVICES INC | v179737_ex5-1.htm |
EX-3.1 - ELSINORE SERVICES INC | v179737_ex3-1.htm |
EX-10.2 - ELSINORE SERVICES INC | v179737_ex10-2.htm |
EX-23.1 - ELSINORE SERVICES INC | v179737_ex23-1.htm |
EX-10.1 - ELSINORE SERVICES INC | v179737_ex10-1.htm |
As filed
with the Securities and Exchange Commission on April 8, 2010.
Registration
No. 333-_______
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ELSINORE SERVICES,
INC.
(Exact
name of registrant as specified in its charter)
Delaware
|
7310
|
27-0289010
|
(State or jurisdiction of
incorporation or organization)
|
(Primary Standard Industrial
Classification Code No.)
|
(I.R.S. Employer
Identification No.)
|
3400
International Drive, N.W., Suite 2K-300, Washington,
D.C. 20008-3006 (202) 609-7756
(Address,
including zip code, and telephone number, including area code, of registrant's
principal executive offices)
Arne
Dunhem, Chief Executive Officer
Elsinore
Services, Inc.
3400 International
Drive, N.W.
Suite 2K-300
Washington, D.C.
20008-3006
(202) 609-7756
(Name,
address, including zip code, and telephone number, including area code, of agent
for service)
Copies to:
Neil
R.E. Carr, Esquire
Babirak
Carr, P.C.
1050
17th
Street, N.W., Suite 600
Washington,
D.C. 20036
Telephone:
(202) 587-2983
Facsimile:
(202) 318-4486
Approximate
date of commencement of proposed sale to the public: As soon as practicable
after the effective date of this registration statement.
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933 (the
“Securities Act”), check the following box. þ
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act (Check
one):
Large
Accelerated Filer o
|
Accelerated
Filer o
|
Non-accelerated
Filer o
|
Smaller
Reporting Company þ
|
(Do not check if a smaller reporting company)
|
CALCULATION
OF REGISTRATION FEE
Title of each Class of
Securities to be Registered
|
Amount to be
Registered
|
Proposed
Maximum
Offering Price
Per Share
|
Proposed
Maximum
Aggregate
Offering Price
|
Amount of
Registration Fee
|
||||||||||||
Common
Stock, $.001 par value
|
3,000,000 |
$0.02
(1)
|
$ | 60,000 | $ | 4.28 | (2) | |||||||||
Total
Registration Fee:
|
$ | 4.28 | (2) |
|
(1)
|
The
offering price per share has been arbitrarily determined by the board of
directors of the Registrant and is not necessarily related to its assets,
book value, earnings or any other recognized criteria of
value.
|
|
(2)
|
Estimated
solely for purposes of calculating the registration fee pursuant to Rule
457(o) under the Securities Act of 1933, as
amended.
|
The
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
ii
Subject
to completion, dated April 8, 2010
PRELIMINARY
PROSPECTUS
ELSINORE
SERVICES, INC.
Maximum
of 3,000,000 Shares of Our Common Stock
This is
our initial public offering. We are offering up to a maximum of 3,000,000
shares of our common stock at a price of $0.02 per share on a self-underwritten,
“best efforts” basis. We are not offering the shares through an
underwriter or placement agent and will not be required to pay any underwriter’s
discount or commission. Our shares will be offered and sold by us solely through
our officers and directors who will not receive any commission for selling the
shares on our behalf. The offering price per share has been arbitrarily
determined by us and is not necessarily related to the value of our assets, or
our book value, earnings, or any other recognized criteria of value. An investor
is not required to purchase a minimum amount of shares.
Our
offering will commence promptly following the date of this prospectus and will
continue for a period of 120 days unless we earlier sell all of the shares or
terminate the offering. We reserve the right to extend the offering period
for up to an additional 90 days, in our sole discretion. We are not
required to sell a minimum amount of shares in this direct offering and we are
not required to raise a minimum amount of offering proceeds for us to complete
our offering. We reserve the right to accept or reject subscriptions for
our shares in the offering for any reason or for no reason.
All
proceeds of this offering will be received by us and will be immediately
available to us for our use. We will pay all expenses of this
offering.
Prior to
this offering, there has been no public market for our common stock and we can
give no assurance that any public market will ever develop or, if any public
market develops, that it will be sustained. Following the closing of this
offering, we propose to seek quotation of our shares on the OTC Bulletin
Board. We can give no assurance that our shares will be accepted for
quotation on the OTC Bulletin Board or any other quotation medium.
We are a development stage company.
There can be no assurance we will be able to implement our business plan,
generate any revenue, or ever become profitable. The shares being offered are highly
speculative and involve a high degree of risk. An investment in our shares
should be considered only by persons who can afford a loss of their entire
investment.
Price to public
|
Underwriting discounts and
commissions
|
Proceeds to us
|
|||||||
Per
share
|
$0.02
|
$0
|
$0.02
|
||||||
Total
maximum
|
$60,000
|
$0
|
$60,000
|
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The
date of this prospectus is ________ __, 2010.
TABLE
OF CONTENTS
Cautionary
Statements Regarding Forward-Looking Statements
|
3
|
Prospectus
Summary
|
4
|
Risk
Factors
|
7
|
Use
of Proceeds
|
14
|
Dilution
|
15
|
Capitalization
|
16
|
Determination
of Our Offering Price
|
16
|
Dividend
Policy
|
16
|
Management’s
Discussion and Analysis
|
16
|
Our
Business
|
20
|
Directors
and Executive Officers
|
24
|
Executive
Compensation
|
26
|
Securities
Authorized for Issuance Under Equity Compensation Plans
|
28
|
Related
Party Transactions
|
28
|
Security
Ownership of Certain Beneficial Owners and Management
|
29
|
Market
for Our Common Stock and Related Stockholder Matters
|
30
|
Description
of Our Securities
|
30
|
Our
Plan of Distribution
|
32
|
Shares
Eligible for Future Sale
|
34
|
Additional
Information
|
35
|
Quantitative
and Qualitative Disclosure About Market Risk
|
35
|
Changes
in and Disagreements with Accountants
|
35
|
Legal
Matters
|
35
|
Experts
|
35
|
Disclosure
of Commission Position on Indemnification
|
36
|
Financial
Statements
|
F-1
|
You
should rely only on the information contained in this prospectus. We have not
authorized anyone to provide you with information that is different from that
contained in this prospectus. We are offering to sell and seeking offers to buy
shares of our common stock only in jurisdictions where such offers and sales are
permitted. This document may only be used where it is legal to sell the shares
of our common stock. The information contained in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of delivery of
this prospectus or of any sale of our common stock.
2
CAUTIONARY
STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements that involve a number of risks
and uncertainties. Forward-looking statements
generally can be identified by the use of forward-looking terminology such as
“believes,” “expects,” “may,” “will,” “intends, “plans,” “should,” “seeks,” “pro
forma,” “anticipates,” “estimates,” “continues,” or other variations thereof
(including their use in the negative), or by discussions of strategies, plans or
intentions. Such statements include but are not limited to
statements under the captions “Risk Factors,” “Management’s Discussion and
Analysis,” “Our Business” and elsewhere in this prospectus. A number of
factors could cause results to differ materially from those anticipated by such
forward-looking statements, including those discussed under “Risk Factors” and
“Our Business.”
Forward-looking
statements are subject to known and unknown risks and uncertainties and are
based on potentially inaccurate assumptions that could cause actual results to
differ materially from those expected or implied by the forward-looking
statements. Our actual results could differ materially from those
anticipated in the forward-looking statements for many reasons:
|
·
|
our
ability to implement our business
plan;
|
|
·
|
our
ability to market our proposed services, commence revenue operations and
then to achieve profitable results of
operation;
|
|
·
|
competition
from larger, more established companies with far greater economic and
human resources than we have;
|
|
·
|
our
ability to attract and retain customers and quality
employees;
|
|
·
|
the
effect of changing economic conditions;
and
|
|
·
|
changes
in government regulations, tax rates and similar
matters.
|
You
should not unduly rely on these forward-looking statements, which speak only as
of the date of this prospectus. We undertake no obligation to publicly revise
any forward-looking statement to reflect circumstances or events after the date
of this prospectus, or to reflect the occurrence of unanticipated events.
You should, however, review the factors and risks we describe in the reports we
intend to file from time to time with the Securities and Exchange Commission
(“SEC”). The
cautionary statements made in this prospectus are intended to be applicable to
all related forward-looking statements wherever they appear in this
prospectus.
3
PROSPECTUS
SUMMARY
The
following summary highlights information contained elsewhere in this
prospectus. It does not contain all of the information that you should
consider before investing in our shares of common stock. It should be read
in conjunction with the more detailed information elsewhere in this prospectus
and the financial statements and notes thereto. Each prospective investor is
urged to read this prospectus carefully, and in its entirety. Throughout
this prospectus we refer to Elsinore Services, Inc. as “Elsinore,” “we,” “our”
or “us.”
This
prospectus contains forward-looking statements. The outcome of the events
described in these forward-looking statements is subject to risks and actual
results could differ materially. The sections entitled “Risk Factors,”
“Management’s Discussion and Analysis” and “Our Business” contain a discussion
of some of the factors that could contribute to those differences.
Our
Company
We were
incorporated in Delaware on June 2, 2009, and are a development stage
company. We are a full-service Advertising and Marketing agency that
intends to operate through different practice groups providing advertising and
marketing services, with an emphasis on digital interactive media. We
intend to utilize state-of-the-art digital interactive media technology to
develop more targeted, effective, quantifiable, less expensive, and more
comprehensive advertising and marketing campaigns than traditional
methods.
We have
not generated any revenues to date. As of December 31, 2009, we had no current
assets and current liabilities in the amount of $11,116. We had working
capital of $(11,116) as of December 31, 2009. Our current working capital is not
sufficient to enable us to implement our business plan described in this
prospectus. For these and other reasons, our independent auditors have raised
substantial doubt about our ability to continue as a going concern. Accordingly,
we will require financing in addition to the net proceeds we are able to raise
in this offering.
Our
fiscal year ends on December 31.
Where
You Can Find Us
Our
principal executive offices are located at 3400 International Drive N.W.,
Suite 2K-300, Washington, D.C. 20008-3006. Our telephone number
at this location is (202) 609-7756. Our web site address is
www.elsinoreservices.com. The information contained on our web site is not
deemed a part of this prospectus.
Our
Direct Initial Public Offering
We are
offering up to a maximum of 3,000,000 shares of our common stock at an offering
price of $0.02 per share in our initial public offering directly to the public.
We are not offering the shares through an underwriter or placement agent.
The offering is being made on a self underwritten, “best efforts” basis by
our officers and directors who will not receive any commission for selling our
shares. An investor is not required to purchase a minimum amount of
shares.
The
offering price of $0.02 per share was arbitrarily determined by us and is not
necessarily related to the value of our assets, or our book value, earnings or
any other recognized criteria of value.
Our
offering will commence promptly following the date of this prospectus and will
continue for a period of 120 days thereafter unless earlier we sell all of the
shares or we terminate the offering. We reserve the right to extend the
offering period for up to an additional 90 days, in our sole
discretion.
We are
not required to sell a minimum amount of shares in this direct offering and we
are not required to raise a minimum amount of offering proceeds for us to
complete this offering. Accordingly, we may close on the offering even if
we have sold fewer than the maximum number of shares offered.
Your
subscription proceeds will not be held in an escrow account pending a
closing. All proceeds of this offering will be received by us and will be
immediately available to us and for our use.
4
There is
no public market for our shares. The absence of a public market for our stock
may make it difficult or impossible for you to sell your shares.
We
propose to seek quotation of our shares of common stock on the OTC Bulletin
Board. There can be no assurance that our shares will be accepted for
quotation on the OTC Bulletin Board. In order for our shares to be quoted
on the OTC Bulletin Board, a market maker will need to apply to make a market in
our common stock. As of the date of this prospectus, we have not requested
any market maker to make a market in our common stock or to quote our
shares. Accordingly, an investment in our shares will not be liquid and
you may never be able to resell our shares.
If all of
the shares are sold in the offering, the gross offering proceeds to us will be
$60,000 before deducting the expenses of this offering. We estimate that
the expenses of this offering will be approximately $16,700 or 27.8% of the
gross offering proceeds if all of the shares are sold. If all of the
shares offered by us are not sold, the percentage of offering expenses to gross
proceeds will increase and we will receive a lower amount of net proceeds from
this offering.
The
Offering
Securities
being offered
|
A
maximum of 3,000,000 shares of our common stock
|
|
Offering
price per share
|
$0.02
per share
|
|
Shares
outstanding before the offering
|
10,000,000
shares
|
|
Shares
outstanding after the offering
|
13,000,000
shares
|
|
Minimum
number of shares to be sold in this offering
|
There
is no minimum amount.
|
|
Offering
period
|
The
shares are being offered for a period up to 120 days after the date of
this prospectus unless we earlier sell all of the shares or we terminate
the offering. We reserve the right to extend the offering for up to
an additional 90 days, in our sole discretion.
|
|
Proceeds
of the offering
|
The
net proceeds of the offering will be approximately $43,300 assuming we
sell all 3,000,000 shares. We intend to use the net proceeds to
implement our business plan, including developing our business and
establishing certain strategic relationships, purchasing resale services
from existing vendors, marketing and advertising, media content
production, and initial network implementation and installation, and for
general working capital purposes. See “Use of
Proceeds.” We will receive all of the proceeds of this
offering. The net proceeds will be immediately available to us for
our use following closing of the offering.
|
|
Risk
Factors
|
We
are subject to a number of risks. These risks are discussed under
the heading “Risk
Factors,” below. Since our inception, we
have incurred operating losses, negative cash flows, and we have never
generated any revenue. As of December 31, 2009, our accumulated
deficit was $18,529 and we had no cash. We expect to continue to
incur net losses and negative cash flows for the foreseeable future, and
we may never generate any revenue or become
profitable.
|
5
Selected
Financial Information
The
following selected financial data should be read in conjunction with our
“Management’s Discussion and Analysis - Plan of Operation” and our Financial
Statements and Notes thereto, included elsewhere in this prospectus. The
statement of operations and balance sheet data from our inception (June 2, 2009)
through to December 31, 2009 set forth below are derived from our audited
annual financial statements included elsewhere herein.
|
For the Period from
Inception (June 2,
2009)
through
December 31, 2009
(audited)
|
|||
STATEMENT
OF OPERATIONS
|
||||
Revenues
|
$ | - | ||
General
and Administrative Expenses
|
18,529 | |||
Total
Operating Expenses
|
18,529 | |||
Net
Loss
|
(18,529 | ) |
|
As of
December 31, 2009
(audited)
|
|||
BALANCE
SHEET DATA
|
||||
Cash
|
$ | - | ||
Total
Assets
|
- | |||
Total
Liabilities
|
11,116 | |||
Stockholders’
Equity/(Deficit)
|
(11,116 | ) |
We have
had no revenue to date and have incurred a net loss since inception. We have had
no operations and have received a “going concern” opinion from our independent
registered public accountants regarding our financial statements as of, and for
the period ended, December 31, 2009, as we are reliant solely upon the sale of
our common stock or other securities as the source of funds for our future
operations.
6
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and other information contained in
this prospectus before deciding to invest in our common stock. The risks
described below are not the only ones facing our company. Additional risks not
presently known to us or which we currently consider immaterial may also
adversely affect our company.
If
any of the following risks actually occur, our business, financial condition and
operating results could be materially adversely affected. In such case,
you could lose a part or all of your investment.
Risks Related to Our Company
and Our Operations
Our
business plan is unproven. We have generated no revenues from our operations and
incurred operating losses since our inception. We have very limited cash
resources. We are dependent on the proceeds of this offering to begin the
implementation of our business plan.
We are
subject to all of the risks inherent in the creation of a new business. We were
formed in June 2009 and have generated no revenue, have limited cash flow and
there is little likelihood that we will be able to do so in the foreseeable
future. Since inception, we have experienced operating losses and negative
cash flows. We incurred an operating loss of approximately $18,529 for the
period from our inception through December 31, 2009. Our accumulated deficit as
of December 31, 2009, is approximately $18,529. Our business plan is
unproven and we cannot assure you that we will ever achieve profitability or, if
we achieve profitability, that it will be sustainable. The income
potential of our proposed business is unproven and our limited operating history
makes it difficult to evaluate our prospects. We anticipate increased expenses
as we continue to expand and improve our infrastructure, implement our business
plan, invest in or develop additional services, develop our technology, expand
our sales and marketing efforts and pursue additional industry relationships.
Moreover, the acceptance of the services that we offer is uncertain. We
are dependent on the proceeds of this offering to begin the implementation of
our business plan and to pay for the initial costs of being an SEC reporting
company. Management believes that, in addition to the net proceeds from
this offering, we will require approximately an additional $5,000,000 during the
next 12 months to continue developing our operations and pay the costs
associated with being a public company. Although there can be no assurance,
management will seek to obtain such funds from one or more additional debt or
equity financings or bank borrowing. If we are unable to raise such
additional financing, we may be unable to continue in business and may have to
curtail our proposed operations.
There
is substantial doubt about our ability to continue as a going
concern.
In their
audit report with regard to our financial statements as of December 31, 2009 and
for the period from inception through December 31, 2009, our independent
registered public accountants have expressed an opinion that substantial doubt
exists as to whether we can continue as a going concern. Because we have limited
cash resources and our officers may be unwilling or unable to loan or advance
any additional capital to us, we believe that if we do not raise additional
capital within the next 12 months in addition to the net proceeds from this
offering, we may be required to suspend or cease the implementation of our
business plan. Due to the fact that there is no minimum offering amount and we
are not required to refund your subscription amount, you may be investing in a
company that will not have the funds necessary to develop its business
strategies. As such we may have to cease operations and you could lose your
entire investment. Accordingly, we may find it difficult or impossible to
attract investors.
If
we do not receive adequate financing, our business will fail resulting in the
entire loss of your investment.
If we are
not successful in earning revenues once we have started our sales activities, we
may require additional financing to sustain our business operations. Assuming we
do not generate any revenue and that we receive all of the proceeds from this
offering, during the next 12 months, we anticipate we will incur additional
expenses in the aggregate amount of approximately $5,000,000 related to our
business and operations that will not be covered by the maximum net proceeds of
this offering. Currently, we do not have any arrangement to raise any such
additional financing to cover our anticipated additional expenses and costs and
we can provide no assurance that we will be able to obtain financing when
required. Obtaining additional financing would be subject to a number of
factors, including our ability to develop our services and to attract customers.
These factors may have an effect on the timing, amount, terms or conditions of
additional financing and make such additional financing unavailable to us. See
“Our Business” and
“Management’s Discussion and
Analysis – Plan of Operation.”
7
Since
we are a new company and lack an operating history, we face a high risk of
business failure which could result in a loss of your entire
investment.
We are a
development stage company formed recently to carry out the activities described
in this prospectus and we have only a limited operating history upon which an
evaluation of our prospects can be made. We were incorporated on June 2, 2009
and to date have been involved primarily in the creation of our business plan
and we have transacted no business operations. Thus, there is no internal or
industry-based historical financial data upon which to estimate our planned
operating expenses.
We expect
that our results of operations may also fluctuate significantly in the future as
a result of a variety of market factors, including, among others, the dominance
of other companies offering similar services, the entry of new competitors into
our industry, our ability to attract, retain and motivate qualified personnel,
the initiation, renewal or expiration of our customer base, pricing changes by
us or our competitors, specific economic conditions in the new media
full-service advertising and agency industry, our ability to utilize
certain computer systems of others, and general economic conditions.
Accordingly, our future sales and operating results are difficult to forecast.
As of the date of this prospectus, we have earned no revenue. Failure to
generate revenue will cause us to go out of business, which will result in the
complete loss of your investment.
We
may be unable to gain any significant market acceptance for our new media
full-service advertising and agency services or establish a significant market
presence.
Our
business growth strategy is substantially dependent upon our ability to market
our services successfully to prospective customers. However, our planned
services may not achieve significant market acceptance. Such acceptance, if
achieved, may not be sustained for any significant period of time. Failure of
our services to achieve or sustain market acceptance could have a material
adverse effect on our business, financial conditions and the results of our
operations.
Initially,
we expect to be dependent on other strategic new media full- service advertising
and marketing agencies to provide certain of our services.
As part
of our business plan, we intend to rely upon certain other strategic new media
full-service advertising and marketing agencies to provide services to any
customers we obtain and intend to offer to resell their services until we are
able to build our own computer systems. We have no arrangement or
agreement with any such strategic new media full-service advertising and
marketing agencies. Such providers may be unwilling to allow us to resell or
otherwise utilize their services or we may not have the cash or other resources
to purchase such services on behalf of any customer we obtain.
We
expect to compete against other new media full-service advertising and marketing
agencies that may be better established and capitalized than we
are.
We expect
to compete against other new media full-service advertising and marketing
agencies. Such agencies may be better capitalized, have established
distribution and sales networks and a customer base that we do not have.
We may not be able to compete against such agencies or any other agencies that
enter the market after the date of this prospectus. Further, we do not
have any existing sales or marketing personnel or network to assist us in
establishing a customer base for our services.
We
may be unable to manage our future growth.
We expect
to experience continuous growth for the foreseeable future. Our growth may place
a significant strain on our limited management, financial, operating and
technical resources. Failure to manage this growth effectively could have a
material adverse effect on our financial condition or the results of our
operations.
8
Our
CEO and President, Arne Dunhem, and our CFO, Dean Schauer, have certain outside
business interests and activities. Currently and in the foreseeable future, they
are not being compensated by us; accordingly, although Mr. Dunhem has expressed
the intent to devote substantially all of his efforts to developing the
business, they may only be able to devote a portion of their time to our
operations which may result in periodic interruptions or suspensions of our
business activities.
Our
executive officers are engaged in other business activities in addition to our
business as described under “Directors
and Executive Officers,”
below. Also, our officers are not being compensated by us until we have
sufficient cash to do so. Accordingly, such officers could have a conflict
of interest between the amount of time they need to devote to our business
activities and the amount of time they are required to devote to their other
activities. Subsequent to the completion of this offering, we intend to
increase our business activities in the areas of development, marketing and
sales. Our proposed increased business activities may require that either of our
officers engage in our business activities on a full-time basis or that we hire
additional employees; however, at this time, we do not have sufficient funds to
engage them on a full-time basis and this may materially and adversely affect
our ability to implement our business plan and develop our operations.
Although Mr. Dunhem has advised us that he intends to devote substantially all
of his business efforts to our business and its development, we have no
employment or other agreement or arrangement with him requiring him to do so and
his other business activities may preclude him from devoting full time to our
business and operations.
One
of our directors is not resident in the U.S.; accordingly, you may experience
difficulties in attempting to enforce liabilities based upon U.S. federal
securities laws against our non-U.S. resident director.
One of
our directors, Mr. Leif T. Carlsson, is a foreign citizen and does not reside in
the United States. It may be difficult for courts in the United States to obtain
jurisdiction over a foreign person and, as a result, it may be difficult or
impossible for you to enforce a judgment rendered against Mr. Carlsson in United
States’ courts. In addition, the courts in the country where Mr. Carlsson is
located (Sweden) may not permit lawsuits for the enforcement of judgments
arising out of the United States and state securities or similar laws. Thus, you
may be unable to bring a lawsuit against our non-resident director or, if
successful in bringing such a lawsuit, in collecting judgment against our
non-resident director.
Investors
could lose confidence in our financial reports if our internal controls over
financial reporting are found not to be effective by management or by an
independent registered public accounting firm or if we make disclosure of
existing or potential significant deficiencies or material weaknesses in those
controls.
As a
public reporting company, we will become subject to Section 404 of the
Sarbanes-Oxley Act of 2002 which may require us to include an internal control
report with our Annual Report on Form 10-K. That report must include
management’s assessment of the effectiveness of our internal control over
financial reporting as of the end of the fiscal year. Additionally, our
independent registered public accounting firm may be required to issue a report
on management’s assessment of our internal control over financial reporting and
a report on their evaluation of the operating effectiveness of our internal
control over financial reporting for the year ending December 31,
2010.
We will
continue to evaluate our existing internal controls over financial reporting
against the framework developed by the Committee of Sponsoring Organizations
(COSO). During the course of our ongoing evaluation of the internal controls, we
may identify areas requiring improvement, and may have to design enhanced
processes and controls to address issues identified through this review.
Remedying any deficiencies, significant deficiencies or material weaknesses that
we or our independent registered public accounting firm may identify, may
require us to incur significant costs and expend significant time and management
resources. We cannot assure you that any of the measures we implement to remedy
any such deficiencies will effectively mitigate or remedy such deficiencies. In
addition, we cannot assure you that we will be able to complete the work
necessary for our management to issue its management report in a timely manner,
or that we will be able to complete any work required for our management to be
able to conclude that our internal control over financial reporting is operating
effectively. If we are not able to complete the assessment under
Section 404 in a timely manner, we and our independent registered public
accounting firm would be unable to conclude that our internal control over
financial reporting is effective. Investors could lose confidence in our
financial reports and, if a public market develops for our stock, our stock
price may be adversely affected if our internal controls over financial
reporting are found not to be effective by management or by an independent
registered public accounting firm or if we make disclosure of existing or
potential significant deficiencies or material weaknesses in those
controls.
9
A
determination that there is a significant deficiency or material weakness in the
effectiveness of our internal controls over financial reporting could also
reduce our ability to obtain financing or could increase the cost of any
financing we obtain and require additional expenditures to comply with
applicable requirements.
Certain
provisions of our charter and by-laws may discourage mergers and other
transactions.
Certain
provisions of our certificate of incorporation and by-laws may make it more
difficult for someone to acquire control of us. These provisions may make
it more difficult for stockholders to take certain corporate actions and could
delay or prevent someone from acquiring our business. These provisions
could limit the price that certain investors might be willing to pay for shares
of our common stock. The use of a staggered board of directors and the
ability to issue “blank check” preferred stock are traditional anti-takeover
measures. These provisions, and others, may be beneficial to our
management and the board of directors in a hostile tender offer, and may have an
adverse impact on stockholders who may want to participate in such tender offer,
or who may want to replace some or all of the members of the board of
directors.
Our
board of directors may issue shares of preferred stock without stockholder
approval.
Our
certificate of incorporation authorizes the issuance of up to 5,000,000 shares
of preferred stock. Accordingly, our board of directors may, without
shareholder approval, issue one or more new series of preferred stock with
rights which could adversely affect the voting power or other rights of the
holders of outstanding shares of common stock. In addition, the issuance
of additional shares of preferred stock may have the effect of rendering more
difficult or discouraging an acquisition or change of control of us.
Although we do not have any current plans to issue any shares of preferred
stock, we may do so in the future.
We
expect to depend on key personnel.
Our
success depends on the contributions of our key management personnel, including
Mr. Arne Dunhem, our Chief Executive Officer, President and Secretary, Mr. Dean
Schauer, our Chief Financial Officer, Senior Vice President and Treasurer.
If we lose the services of any of such personnel, or if such officers are only
able to devote a small portion of their time to our operations, we could be
delayed in or precluded from achieving our business objectives and implementing
our business plan. We do not have key man insurance on any of such
officers. The loss of any of our key officers or personnel could impair
our ability to successfully execute our business strategy, because we
substantially rely on their experience and management skills.
Our
directors and named executive officers own a substantial percentage of our
common stock.
As of the
date of this prospectus, our directors and named executive officers beneficially
own a 100% of our shares of common stock and, assuming sale of all of the shares
offered hereby, will own approximately 76.92% of our shares of common stock
following the closing of our offering. These stockholders, if they acted
together, could exert substantial control over matters requiring approval by our
stockholders. These matters would include the election of directors and
the approval of mergers or other business combination transactions. This
concentration of ownership may discourage or prevent someone from acquiring our
business.
Our
ability to attract and retain additional skilled personnel may impact our
ability to develop our technology and attract customers in growing our
business.
We
believe that our ability to attract, train, motivate and retain additional
highly skilled technical, managerial and sales personnel, particularly in the
areas of technology development, business intelligence, management, service
development and build out, integration and technical support, is essential to
our future success. Our business requires individuals with significant
levels of expertise in business operations and IT and computer
system networking, and multi-media. Competition for such personnel is
intense, and qualified technical personnel are likely to remain a limited
resource for the foreseeable future. Also, we have limited cash resources
to hire such personnel. Locating candidates with the appropriate
qualifications, particularly in the desired geographic location, can be costly
and difficult. We may not be able to hire the necessary personnel to
implement our business strategy, or we may need to provide higher compensation
to such personnel than we currently anticipate. If we fail to attract and
retain sufficient numbers of highly skilled employees, our ability to provide
the necessary technologies and services may be limited, and as a result, we may
be unable to attract customers and grow our business. Our ability to attract
such personnel will also depend on our ability to raise additional financing, of
which there can be no assurance.
10
We
do not have any customers and we cannot assure you that we will ever be able to
have any. Even if we have customers, we may not be able to make a
profit.
As of the
date of this prospectus, we have no clients or customers. We have not
identified any specific client or customer and we may never have any client or
customer. Even if we have customers, we can give you no assurance that we will
develop services that our customers will want to purchase from us. If we
are unable to generate customers or a sufficient number of customers, we may be
unable to generate sufficient revenue to enable us to develop or expand our
business. If we have insufficient revenue, we will be unable to continue
operations and we may be required to discontinue our operations.
We
do not have any additional source of financing for our business plan and may be
unable to find any such financing if and when we may need it, resulting in the
failure of our business.
Other
than the proceeds from this offering, we have no other source of additional
financing for our business. We do not have an alternative source of
financing if we fail to receive all or a portion of the net proceeds from this
offering. If we are unable to obtain additional financing, we may be
unable to continue our operations and we may be required to discontinue or
curtail our operations. Further, if we do obtain additional financing, the
terms and conditions of the securities we issue in connection with such
financing may dilute your interest in us.
We
have never paid a cash dividend.
We have
not declared or paid a cash dividend and we do not anticipate declaring or
paying any such dividends in the foreseeable future.
We
may infringe the proprietary rights of others.
If any of
our services violate third party proprietary rights, we may be required to
re-engineer our services or seek to obtain licenses from third parties to
continue offering our services without substantial reengineering. Any efforts to
reengineer our services or obtain licenses from third parties may not be
successful, in which case we may be forced to stop selling the infringing
service or product or terminate our sale of the infringing feature. We may also
become subject to damage awards as a result of infringing the proprietary rights
of others, which could cause us to incur additional losses and have an adverse
impact on our financial position. We do not conduct comprehensive patent
searches to determine whether the technologies used in our services
infringe patents held by others. In addition, services development is inherently
uncertain in a rapidly evolving technological environment in which there may be
numerous patent applications pending; many of which are confidential when filed,
with regard to similar technologies.
Unforeseeable
disruption in the economy may take place consequent to terrorism or other
international events.
The
terrorist events of September 11, 2001, as well as new terrorists threats, the
war in Iraq and the possibility of war in other areas of the Middle East, have
sensitized us and many other businesses to the potential disruption that such
activities can have on the economy, the business cycle and, ultimately on the
financial performance of these organizations. It is impossible to know whether
such terrorist or military activities will continue, and whether, and to what
extent, they may cause a disruption that may have a material adverse effect on
our business and financial condition.
11
Risks Related to this
Offering
There
is no public trading market for our shares and no market may
develop.
There is
no public trading market for our common stock and no market may ever
develop. No assurance can be given that an active public trading market
will develop for our common stock or, if it develops, that it will be
sustained.
We
propose to seek quotation of our shares of common stock on the OTC Bulletin
Board. There can be no assurance that the shares will be accepted for
quotation on the OTC Bulletin Board. In order for our shares to be quoted
on the OTC Bulletin Board, a market maker will need to apply to make a market in
our common stock. As of the date of this prospectus, we have not requested
any market maker to make a market in our common stock or to quote our
shares. The OTC Bulletin Board is a regulated quotation service that
displays real-time quotes, last-sale prices and volume information for shares of
stock that are not designated for quotation on a national securities
exchange. Trades in OTC Bulletin Board quoted stocks will be displayed
only if the trade is processed by an institution acting as a market maker for
those shares. Market makers are not obligated to continue making a market
for any specific period of time. Thus, there can be no assurance that any
institution will be acting as a market maker for our common stock at any
time. If there is no market maker for our stock and no trades in those
shares are reported, it may be difficult for you to dispose of your shares or
even to obtain accurate quotations as to the market price for your shares.
Moreover, because the order handling rules adopted by the SEC that apply to
other listed stocks do not apply to OTC Bulletin Board quoted stock, no market
maker is required to maintain an orderly market in our common stock.
Accordingly, in the event our shares become quoted on the OTC Bulletin Board, an
order to sell our stock placed with a market maker may not be processed until a
buyer for the shares is readily available, if at all, which may further limit
your ability to sell your shares at prevailing market prices.
Because
there is no public trading market for our common stock, you may not be able to
resell your stock.
There is
no public trading market for our common stock and no such market may develop, or
if any such market does develop it may not be sustained. Therefore, there is
currently no central place, such as a stock exchange or electronic trading
system, to resell your shares. If you do want to resell your shares, you will
have to locate a buyer and negotiate your own sale.
The
offering price of our share has been arbitrarily determined by us and
do not bear any relationship to value of our assets, or our earnings, book
value, or any other recognized criteria of value. Additionally, we were formed
recently and have only a limited operating history and no earnings. We did
not consult with any investment banker, appraiser or other independent third
party regarding the offering price per share of our shares or the fairness of
our offering price.
Investing
in our shares is a highly speculative investment and could result in the entire
loss of your investment.
A
purchase of the offered shares is highly speculative and involves significant
risks. The offered shares should not be purchased by any person who cannot
afford the loss of his or her entire investment. Our business objectives are
also speculative and unproven, and it is possible that we could be unable to
satisfy them. Our shareholders may be unable to realize a substantial return on
their purchase of the offered shares, or any return whatsoever, and may lose
their entire investment. For this reason, each prospective purchaser of the
offered shares should read this prospectus and all of its exhibits carefully and
consult with their attorney, business and/or investment advisor.
Buyers
will pay more for our common stock than a pro rata portion of our assets are
worth; as a result, investing in us may result in an immediate
loss.
The
offering price and other terms and conditions regarding our shares have been
arbitrarily determined by us and do not bear any relationship to the value of
our assets, or our earnings, book value or any other recognized criteria of
value. The offering price of $0.02 per share is higher than the net
tangible book value per share of our common stock.
12
Because
our offering will be conducted on a self-underwritten, “best effort” basis,
there can be no assurance that we can raise the money we need.
Our
offering is being conducted on a self-underwritten, "best efforts" basis without
the benefit of an underwriter or placement agent. We can provide no assurance
that our offering will be completely sold out. If less than the maximum
proceeds are available to us, our business plans and prospects for the current
fiscal year could be adversely affected.
You
will experience immediate and substantial dilution of the price you pay for our
shares in this offering.
Our
executive officers and directors purchased an aggregate of 10,000,000 shares
from us prior to the commencement of this offering at a price of $0.001 per
share, a purchase price per share substantially less than the offering price of
the shares in this offering. Upon completion of this offering, the net
tangible book value per share of the shares held by our existing shareholders
will be increased by approximately $0.0049 per share without any additional
investment on their part. Purchasers in this offering will incur immediate
dilution (a reduction in the net tangible book value per share from the offering
price per share of $0.02 per share) of approximately $0.0162 per share.
Following completion of this offering and assuming all the shares are sold in
this offering, the net tangible book value per share of the shares purchased in
this offering will be $0.0038 per share, reflecting an immediate and substantial
reduction in the price a purchaser paid for the shares in this
offering.
Following
the completion of this offering, we will become subject to certain reporting and
compliance requirements under the Securities Exchange Act. Accordingly, we
will be subject to ongoing costs associated with such reporting and compliance
requirements. Unless we are able to raise sufficient funds from this
offering, generate revenue from our operations or obtain funds from other
sources, we may be unable to satisfy such reporting and compliance
requirements. If so, it may be more difficult for you to sell your shares,
if at all.
Assuming
we sell all of the shares in our offering, we propose to set aside approximately
$5,000 from the net proceeds of this offering to cover the cost of our ongoing
SEC public reporting requirements over the next 12 months. If the net
proceeds from this offering are insufficient or we are unable to generate
operating revenue or raise financing from other sources, of which we can give
you no assurance, we may not be able to continue to satisfy our SEC periodic
public reporting obligations. This will include legal, audit, filing,
transfer agent, and other related costs. Following completion of this
offering, we are proposing to seek quotation for our shares on the OTC Bulletin
Board. Under the OTC Bulletin Board’s Eligibility Requirements, we are
required to be an SEC public reporting company and to remain current in our SEC
public reporting obligations. Also, we will not be eligible for initial
quotation on the OTC Bulletin Board unless we are current in such SEC reporting
requirements. Shares quoted on the OTC Bulletin Board that become
delinquent in their reporting obligations will be removed from quotation
following a 30 day grace period if they do not make certain required filings
within the grace period.
Current
shareholdings may be diluted if we make future equity issuances or if future
outstanding debentures, warrants, and options are exercised for or converted
into shares of common stock.
“Dilution”
refers to the reduction in the voting effect and proportionate ownership
interest of a given number of shares of common stock as the total number of
shares increases. Our issuance of additional stock, convertible preferred
stock and convertible debt may result in dilution to the interests of
shareholders and, in the event a public market for our shares develops, may also
result in the reduction of your stock price. The sale of a substantial
number of shares into any market for our shares that develops, or even the
perception that sales could occur, could depress the price of the common stock
in any such market. Also, the exercise of any warrants and options we may
issue subsequent to this offering may result in additional
dilution.
13
Our
common stock is subject to the SEC’s Penny Stock Regulations.
Our
common stock is subject to the SEC’s “penny stock” rules. These
regulations define a “penny stock” to be any equity security that has a market
price (as defined) of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt,
these rules require the delivery, prior to the transaction, of a disclosure
schedule prepared by the SEC relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to the broker-dealer
and the registered underwriter, current quotations for the securities,
information on the limited market in penny stocks and, if the broker-dealer is
the sole market-maker, the broker-dealer must disclose this fact and the
broker-dealers’ presumed control over the market. In addition, the
broker-dealer must obtain a written statement from the customer that such
disclosure information was provided and must retain such acknowledgment for at
least three years. Further, monthly statements must be sent disclosing
current price information for the penny stock held in the account. The
penny stock rules also require that broker-dealers engaging in a transaction in
a penny stock make a special suitability determination for the purchaser and
receive the purchaser's written consent to the transaction prior to the
purchase. The foregoing rules may materially and adversely affect the
liquidity for the market of our common stock, if any such public market
develops. Such rules may also affect the ability of broker-dealers to sell
our common stock in any such public market, the ability of holders of such
securities to obtain accurate price quotations and may therefore impede the
ability of holders of our common stock to sell such securities in the secondary
market.
USE
OF PROCEEDS
We intend
to use the net proceeds of this offering for the uses described below. The
net proceeds of our offering are expected to be approximately $13,300, assuming
1,500,000 shares are sold, $28,300 if 2,250,000 shares are sold, and
$43,300 if all 3,000,000 shares are sold, respectively, after deducting
estimated offering expenses. There is no assurance that we can complete
the offering.
We
anticipate that the uses of the net proceeds of this offering will be as
follows
Uses of Proceeds
|
If 50% of
Shares Sold
|
If 75% of
Shares Sold
|
If 100% of
Shares Sold
|
|||||||||||||
Gross
proceeds of offering
|
$ | 30,000 | $ | 45,000 | $ | 60,000 | ||||||||||
Offering expenses,
including expense advanced by management or payable in connection with
closing, including: (1)
|
||||||||||||||||
Legal
and accounting fees and expense
|
15,000 | |||||||||||||||
Printing
expenses
|
200 | |||||||||||||||
Transfer
agent fees
|
1,500 | |||||||||||||||
Repayment of
offering expenses advanced by management or payable at, before or
following closing to auditors and transfer agent (1)
|
$ | 16,700 | $ | 16,700 | $ | 16,700 | ||||||||||
Development
of the business and establishing strategic relationships
|
2,000 | 5,000 | 7,000 | |||||||||||||
Resale
of services from strategic partner agencies and use of
systems
|
4,000 | 8,000 | 9,000 | |||||||||||||
General
sales and marketing campaign
|
4,000 | 7,000 | 8,000 | |||||||||||||
Media
content production
|
2,000 | 7,000 | 7,000 | |||||||||||||
Initial
computer system implementation and installation
|
0 | 0 | 6,000 | |||||||||||||
SEC
reporting expenses
|
0 | 0 | 5,000 | |||||||||||||
General working capital
|
1,300 | 1,300 | 1,300 | |||||||||||||
Totals
|
$ | 30,000 | $ | 45,000 | $ | 60,000 |
(1)
Mr. Arne Dunhem, CEO, President and a principal stockholder, and Mr. Dean V.
Schauer, CFO, Senior Vice President, Treasurer and a principal stockholder, each
advanced $4,000 of the expenses of this offering, for an aggregate of
$8,000. The advances were in the form of short-term loans that are
repayable from the proceeds of the offering. The loans are non-interest
bearing and are due and repayable at, or immediately following,
closing.
14
The
amounts we have set forth above are estimates developed by our management of the
allocation of net proceeds of the offering based upon our current plans and
prevailing economic and industry conditions. Although we do not currently
contemplate material changes in the proposed uses of proceeds set forth above,
to the extent that our management finds that adjustment thereto is required, the
amounts shown may be adjusted among the uses indicated above. Our proposed
uses of proceeds are subject to changes in general, economic and competitive
conditions, timing and management discretion, each of which may change the
amount of proceeds expended for the purposes intended. The proposed
application of proceeds is also subject to changes in market conditions and our
financial condition in general. Changes in general, economic, competitive
and market conditions and our financial condition would include, without
limitation, the occurrence of a national economic slowdown or recession, a
significant change in the demand for our services, changes in the competitive
environment in which we operate, and changes in general market or industry
conditions. While our management is not currently aware of the existence
or pending threat of any of the foregoing events, there can be no assurance
given that one or more of such events will not occur.
DILUTION
The pro
forma net tangible book value of our common stock as of December 31, 2009, was
approximately $(11,116) or $(0.0011) per share. Pro forma net
tangible book value per share represents the amount of our total pro forma
tangible assets, less total pro forma liabilities, divided by the number of
shares of common stock outstanding prior to the offering. Without
taking into account any other changes in the pro forma net tangible book value
after December 31, 2009, other than to give effect to the sale of the maximum
number of shares in this offering and receipt of the proceeds therefrom and
excluding the costs of the filing, our pro forma net tangible book value, as
adjusted at December 31, 2009, would have been approximately $48,884 or $0.0038
per share, assuming the maximum number of shares are sold. This
represents an immediate increase in pro forma net tangible book value of $0.0049
per share, assuming the maximum number of shares is sold, to existing
stockholders, and immediate dilution in pro forma net tangible book value of
$0.0162 per share, assuming the maximum number of shares is sold, to purchasers
of common stock in this offering.
The
following tables compare the differences of your investment in our shares with
the investment of our existing stockholders excluding the costs of the filing
and assuming the maximum number of shares are sold.
Existing Stockholders if all
of the Shares are Sold
Price
per share
|
$ | 0.02 | ||
Net
tangible book value per share before offering
|
$ | (0.0011 | ) | |
Potential
gain to existing shareholders
|
$ | 60,000 | ||
Net
tangible book value per share after offering
|
$ | 0.0038 | ||
Increase
to present stockholders in net tangible book value per share after
offering
|
$ | 0.0049 | ||
Capital
contributions
|
$ | 60,000 | ||
Number
of shares outstanding before the offering
|
10,000,000 | |||
Number
of shares after offering held by existing stockholders
|
10,000,000 | |||
Percentage
of ownership after offering
|
76.9 | % |
Purchasers of Shares in this
Offering if all Shares Sold
Price
per share
|
$ | 0.02 | ||
Dilution
per share
|
$ | 0.0162 | ||
Capital
contributions
|
$ | 60,000 | ||
Percentage
of capital contributions
|
85.7 | % | ||
Number
of shares after offering held by public investors
|
3,000,000 | |||
Percentage
of ownership after offering
|
23.1 | % |
15
CAPITALIZATION
The
following table sets forth our cash, cash equivalents, and capitalization at
December 31, 2009.
Cash
and cash equivalents
|
$ | 0 | ||
Stockholders’
Equity (Deficit):
|
$ | (11,116 | ) | |
Common
stock, $.001 par value; 10,000,000 shares authorized and 10,000,000 shares
issued
|
$ | 10,000 | ||
Common
stock subscribed
|
$ | (2,587 | ) | |
Accumulated
comprehensive income (loss)
|
$ | 0 | ||
Additional
paid-in capital
|
$ | 0 | ||
Accumulated
deficit
|
$ | (18,529 | ) | |
Total
stockholders’ deficit
|
$ | (11,116 | ) | |
Total
capitalization
|
$ | (11,116 | ) |
DETERMINATION
OF OUR OFFERING PRICE
The $0.02
per share offering price of our common stock was arbitrarily determined by us.
There is no relationship between the offering price per share and the value of
our assets, book value, earnings, or any other recognized criteria of value. We
intend to apply to the OTC Bulletin Board for quotation of our common
stock. If our common stock becomes so traded and a market for the stock
develops, the actual price of stock will be determined by prevailing market
prices at the time of sale or by private transactions negotiated by a
shareholder. The offering price would thus be determined by market factors
and the independent decisions of a selling shareholder.
DIVIDEND
POLICY
We have
never declared or paid a dividend on our common stock. Currently, we
anticipate that we will retain earnings, if any, to support operations and to
finance the growth and development of our business and do not anticipate
declaring or paying cash dividends in the foreseeable future.
MANAGEMENT’S
DISCUSSION AND ANALYSIS
General
You
should read the following plan of operation together with the more detailed
information and financial statements and notes thereto and schedules appearing
elsewhere in this prospectus. Throughout this prospectus, when we refer to
“Elsinore,” “we,” “our” or “us,” we mean Elsinore Services, Inc. This plan of
operation contains forward looking statements that involve risks, uncertainties,
and assumptions. The actual results may differ materially from those
anticipated in these forward looking statements as a result of certain factors,
including, but not limited to, those presented under “Risk Factors” or elsewhere
in this prospectus.
We are a
development stage company that has not generated any revenue and has limited or
no cash resources as of the date of this prospectus. Our independent
registered public accounting firm’s report on our financial statements included
herein as of December 31, 2009, and for the period from the date of our
inception (June 2, 2009) through December 31, 2009, contains an explanatory
paragraph wherein they express an opinion that there is substantial doubt about
our ability to continue as a going concern.
16
Our
Plan of Operation
We are a
full-service Advertising and Marketing agency that intends to operate through
different practice groups providing advertising and marketing services, with an
emphasis on digital interactive media. We intend to utilize
state-of-the-art digital interactive media technology to develop more targeted,
effective, quantifiable, less expensive, and more comprehensive advertising and
marketing campaigns, than traditional methods. By utilizing digital interactive
media such as the internet, mobile communications, and digital interactive
signage, we believe that we can implement highly targeted campaigns to a local
and global market quickly and cost effectively. Accordingly, we believe
that we can provide a greater, tangible, value-added service to our clients,
versus our competition. The strategy of our business plan is to use the proceeds
of this offering for the initial development and establishment of strategic
relationships with existing complementary agencies and provide marketing and
sales of our services using some of their existing services. In order to fully
develop and implement our own full-service agency, over the next 12 months, we
need to raise additional funds through one or more equity or debt financing or
bank borrowings, as discussed below.
We
believe we will need to undertake the following minimum activities in order for
us to begin generating revenue based on our utilizing services from other
agencies:
|
•
|
New media advertising and
marketing service development. Develop our initial new media
advertising and marketing services and the concept of the long-term
service offerings. We need to complete our long-term new media technical
and financial business plan. Over the subsequent months, we plan to
conduct a detailed market research before completing the detailed
definition of our new media services. This would help us to get more
information and a better perspective of our possible success in the
market. We expect that this activity will take approximately 3 - 4 months.
Potential investors should realize that as of the date of this prospectus,
we are in the process of developing the services and, at this time, they
are not fully defined.
|
|
•
|
Establish strategic
relationships. We intend to further develop our strategic
business relationships in the new media advertising and marketing industry
and other potential new strategic relationships. These relationships
may develop into direct strategic cooperation. We believe there may be
significant cost savings if we could benefit from experience and
complementary services already developed by strategic partners, although
we have not negotiated any service contracts and do not have any
information on potential cost for the services. This activity is an
ongoing process, but will be most intense during the first 3 – 6
months.
|
|
•
|
Initiate new media computer
system usage. We need to arrange through a strategic partner having
an operational new media computer system, the access to their system until
we have acquired our own full-scale system. Since we will not own this
initial computer system, we will not be able to fully control and modify
the system to adapt to our business strategy. Thus, we may not be able to
achieve the same revenue and profitability level as we would if we owned
the computer system. We have not negotiated any service contracts and do
not have any information on potential cost for the services. We plan to
use a strategic partner’s computer system only during the first 4 – 6
months of operation or until our own full-scale computer system network is
operational.
|
|
•
|
Sales and marketing
campaign. The future success and possible expansion of our
business, beyond the initial development stages, as described above, is
expected to require a significant and well planned sales and marketing
strategy, which we expect we will adapt following the results of our
initial market research. We intend to devote part of the first 4 - 5
months to this activity.
|
|
•
|
Media content
production. In order to offer a potential new media advertising or
media client service, we must be able to include in a service offering the
capability to produce media content, including certain advertising
material. This can only be accomplished through strategic partnership with
one or more advertising content producing agencies. We believe this is an
activity that will commence after 4 – 5
months.
|
17
|
•
|
New media full scale computer
system implementation and installation. We believe that the start
of our own full scale new media computer system implementation and
installation may not take place until after 7 – 8 months, subject to our
ability to raise, and the amount of any such, additional financing we
subsequently raise. It will also be subject to satisfactory agreements
with vendors for the equipment delivery and installation and associated
equipment financing.
|
Although
management believes the above timeframes for the related business steps are
conservative and are expected to be accomplished by us, potential investors
should be aware that unforeseen or unanticipated delays may cause us to change
our plans or stop us from accomplishing the above-described steps,
including:
|
•
|
We
may face certain problems during the further detailed design of our
services, difficulties with selling our services to our potential
customers, and difficulties with establishing profitable service
agreements with strategic partners, that management is unable to overcome
these problems, creating a time delay and additional costs;
and
|
|
•
|
We
may find that potential investors are unreceptive to our business plan and
have no interest in investing funds in
us.
|
If either
or both of these events occur, we would not be able to continue with our
business plan and operations and investors would lose some or all of their
investment. In addition to the above factors, investors should carefully review
the risks related to our business set forth under “Risk Factors,” above.
In the
event additional funds are needed by us, there is no guarantee that the proposed
sales and marketing strategy will be effective in accomplishing the goals we
have set. This may force management to redirect its efforts and create the need
for additional time, money, and resources, which may not be available to
us.
Our
Limited Operating History
Due to
our recent formation, we have a limited operating history and the financial
information is as of December 31, 2009, and for the period from the date of our
inception (June 2, 2009) through December 31, 2009. Accordingly, we have
not previously demonstrated that we will be able to implement our business plan,
develop or expand our business or provide any services. We are subject to
risks associated with development stage businesses, and to risks inherent in
growing an enterprise with very limited capital resources.
Our
Results of Operations
For the
period from inception through December 31, 2009, we had no revenue. Expenses for
the period totaled $18,529 resulting in a net loss of $18,529. All of such
loss is attributable to expenses related to our initial
organization.
Our
Capital Resources and Liquidity
As of
December 31, 2009, we had no cash. Subsequently, on or about April 1,
2010, we received cash from stock subscriptions in the amount of $2,000 from two
of our directors.
Our
auditors have issued a “going concern” opinion, meaning that there is
substantial doubt if we can continue as a going concern for the next 12 months
unless we obtain additional capital. No substantial revenues are anticipated
until we have completed the financing from this offering and implemented our
plan of operation. Our only source of cash at this time is investment by others
in this offering. We must raise cash to implement our strategy and stay in
business.
18
We are
dependent upon the proceeds and success of this offering and our ability to
raise additional financing following the closing of this offering. In addition
to the proceeds from this offering, over the next 12 months, we anticipate we
will require approximately an additional $5,000,000 to fund our operations, to
develop our business, and to satisfy the SEC public reporting and compliance
requirements applicable to us under the Securities Exchange Act. We expect to
seek to raise such additional financing from one or more equity or debt
financings or from bank borrowing. There is no assurance that any or sufficient
equity or debt financing or bank borrowing will be available to us, or upon
terms that are acceptable to us. Any such debt financing that we are able to
secure may, because we are a development stage company, require us to pay
additional costs associated with high risk loans and be subject to above market
interest rates. Any equity financing we are able to raise may result in a
dilution to existing shareholders. Also, we may be required to obtain financing
in the form of securities convertible into our shares of common stock the
conversion of which may be on the basis of the market price of our stock at the
time or immediately prior to the conversion of such securities. As a result, the
continued or ongoing conversion of such securities we issue in any such
financing may adversely affect the market price for our shares, if any such
market ever develops. If any such financing is not available on satisfactory
terms, we may be unable to commence and/or continue our operations. As a result,
investors would lose all of their investment in us.
Assuming
we do not generate any revenue and we receive all of the net proceeds from this
offering, during the next 12 months, we anticipate we will incur additional
expenses and costs in the aggregate amount of approximately $5,000,000 related
to our business and operations that will not be covered by the maximum net
proceeds of this offering, and as more particularly set forth in the table set
forth below (and we expect to expend such amount in the following order of
priority):
Nature of Expense
|
Amount
|
|||
Resale
of services from strategic partner agencies and use of their
systems
|
$ | 2,500,000 | ||
Sales
and marketing campaigns
|
750,000 | |||
Media
content production
|
500,000 | |||
Business
development
|
130,000 | |||
Initial
computer system implementation and installation
|
1,000,000 | |||
General
working capital
|
120,000 | |||
Total
|
$ | 5,000,000 |
We do not
anticipate engaging in any research and development or purchasing any
significant amount of equipment, except for certain capital lease purchases of
equipment and system
for the initial computer system implementation. Also, we do not expect
any significant increase in the number of our employees, except for contracting
personnel for marketing and sales, media content production and
initial computer system installation. Our ability to purchase
any such equipment or hire any such personnel is dependent on our ability to
raise additional financing as discussed above, of which there can be no
assurance.
Contractual
Obligations and Commitments
We had no
contractual commitments extending beyond one year for which the cash flows are
determinable as of the year ended December 31, 2009.
Critical
Accounting Policies
Basis
of Presentation
The
financial statements present our Balance
Sheet, Statement of Operations, Statement of Changes in Stockholders’ Deficiency
and Statement of Cash Flows. These financial statements are presented in
United States dollars and have been prepared in accordance with accounting
principles generally accepted in the United States.
19
Going
Concern
Our
financial statements are prepared in accordance with generally accepted
accounting principles applicable to a going concern. This contemplates the
realization of assets and the liquidation of liabilities in the normal course of
business. Currently, we do not have cash nor material assets, nor do we have
operations or a source of revenue sufficient to cover our operation costs and
allow us to continue as a going concern. We have a deficit accumulated since
inception (June 2, 2009) through December 31, 2009 of ($18,529). We will be
dependent upon the raising of additional capital through one or more
debt or equity financings or bank borrowing in order to implement our
business plan. There can be no assurance that we will be successful in raising
any such financing or on terms acceptable to us. Accordingly, these factors
raise substantial doubt as to our ability to continue as a going concern. We are
funding our initial operations by way of issuing founder’s shares. As of
December 31, 2009, we had issued 7,413,000 shares at $0.001 per share in
exchange for $7,413 in expenses incurred on our behalf. An additional
2,587,000 common shares at $0.001 per share have been subscribed for by an
officer and two directors at December 31, 2009.
As of
March 31, 2010, the officers and directors have advanced an aggregate of $8,000
to us in the form of short- term non-interest bearing loans to cover the
expenses of our initial public offering. The loans are repayable out of
the proceeds we receive from the offering.
Use
of Estimates
Management
uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results
could differ from these estimates.
Income
Taxes
We account
for income taxes pursuant to the provisions of the Accounting Standards
Codification 740, Accounting for Income Taxes, which requires an asset and
liability approach to calculate deferred income taxes. The asset and
liability approach requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary difference between
the carrying amounts and the tax basis of assets and liabilities.
Net
Loss per Share
Basic
loss per share includes no dilution and is computed by dividing loss available
to common stockholders by the weighted average number of common shares
outstanding for the period. Dilutive loss per share reflects the potential
dilution of securities that could share in our losses. Because we do not have
any potentially dilutive securities, the accompanying presentation is only of
basic loss per share.
OUR
BUSINESS
Our
Business and its Development
We are a
development stage company that intends to enter into the full-service new media
advertising and marketing agency industry.
We intend
to become a full-service Advertising and Marketing agency intending to operate
through different practice groups providing advertising and marketing services,
with an emphasis on digital interactive media. We intend to utilize
state-of-the-art digital interactive media technology to develop more targeted,
effective, quantifiable, less expensive, and more comprehensive advertising and
marketing campaigns, than traditional methods. By utilizing digital interactive
media such as the internet, mobile communications, and digital interactive
signage, we believe that we can implement highly targeted campaigns to a local
and global market quickly and cost effectively.
We have
not yet fully implemented our business plan, although we intend to do so
following the closing of this offering, and have generated no revenue. Our
ability to implement our plan is dependent on our ability to raise financing,
including through this offering. We anticipate that, following the closing
of this offering, we will raise additional funds to implement our business plan,
including through one or more equity or debt financings or bank borrowing.
There can be no assurance that we will be successful in these
efforts.
20
Market
for Our Services
The
spending on digital/online advertising and marketing will for the first time
overtake print in 2010, according to new projections from Outsell, Inc. (March
8, 2010). Outsell believes that companies in 2010 will spend $119.6 billion on
online and digital strategies, from search engine keywords to webinars, while
committing $111.5 billion to print methods such as newspaper and magazine ads.
Overall, Outsell believes that U.S. spending on advertising and marketing will
increase in 2010 compared with 2009, but by just 1.2 percent to $368 billion.
While the overall advertising and marketing sector is a $370 billion + industry,
it is a space that is experiencing dramatic shifts in client spending both in
actual dollars budgeted and how the funding is allocated, as a result
of changes in consumer habits and preferred delivery methods. These
changes are reflected in recent forecasts which illustrate projected CAGR
(Compound Annual Growth Rate) in the low-single digits for the industry in
the aggregate. Conversely, the alternative media segment, which
represents a significant share of the total revenue, is estimated to grow in
double digits annually through 2012. As a result, there is a
migration from purely traditional offerings by the market leaders such
as Omnicom, WPP, Publicis, and Interpublic to penetration of
the alternative new media segment.
The
growing use of the Internet by traditional media operators - television, radio
and newspapers - represents a clear opportunity for us. But our
opportunity also includes an evolving and growing set of other on-line New Media
participants. We define new media to be interactive media in any
form.
These new
media participants include "social media" and "social networking" applications
and importantly, the new media involves a paradigm shift. What has
changed in this paradigm shift of new media is that the provision of
content is relevant, timely, and in the consumer's preferred form and delivery
method. Interestingly, the revenue model in this arena is not materially
different from the traditional model. For the provision of this content,
be it through social media or social networking applications such as blogs,
podcasts, webcasts, etc., the content provider or author generates revenue
through advertising or in some cases, a share of revenue.
According
to blog search engine organization Technorati, there were over 112 million
blog sites on the Internet as of February 2008. It was suggested by
Technorati that more than one-third of all Internet users in the U.S. read blogs
and Technorati estimated that over 175,000 new blogs were created each
day. Thousands of social media firms abound on the Web while social
networks number well over 1,000,000. In fact, social network services
leader Ning claims it has helped launch and power over 1,000,000 social networks
of all shapes and sizes (Marchable, The Social Media Guide, April 2009).
The space's meteoric rise during the past 2-3 years and popularity can be
attributed to such personal social network behemoths as MySpace,
Youtube, and Facebook, which are household names. Other
business-oriented networks, or "closed" groups include Linkedin, with 60 million
members (according to LinkedIn in February, 2010), or
Collectivex.
Statistics
from many market research firms and investment firms suggest the expected
meteoric growth in online advertising, including advertising on social
networks. One example is a recent eMarketer report which suggests that in
2009, advertisers spent $1.1 billion on social network advertising with that
figure expected to rise to $1.4 billion in 2011. In
addition, eMarketer believes that advertisers are expected to be more
likely to target more niche-oriented communities for as much as $200
million (2009) worth of advertising, up from an estimated $70 million in
2007. In 2009, it was estimated by eMarketer that Facebook and
MySpace accounted for 65% of the industry's advertising
revenue.
Description
of Our Service Offering
We intend
to develop digital interactive media and other alternative media campaigns that
produce quantifiable results. These campaigns involve the utilization of
traditional strategic planning functions, with robust implementation and
delivery.
While
each client has its own individual needs and objectives, elements of our
offering are similar. For example, most engagements begin with strategic
planning and due diligence sessions whereby client objectives, target markets,
and messages are defined. The next phase typically
includes targeted demographic outreach campaigns utilizing digital
interactive media delivery systems. We may also elect to incorporate
traditional processes as well.
In an
effort to fully engage the target markets, we may employ interactive
applications including:
|
·
|
Blog
creation and management
|
|
·
|
Mobile
distribution
|
|
·
|
Online
Publication Outreach
|
|
·
|
New
Media Press portals
|
|
·
|
Podcasts
|
|
·
|
Social
Network and media content creation and
management
|
|
·
|
Viral
Marketing Campaigns
|
|
·
|
Webcasts
|
|
·
|
Website
Optimization
|
We may
also utilize traditional advertising and marketing methods,
including:
|
·
|
Campaign
Design and Creation
|
|
·
|
Direct
Response
|
21
|
·
|
Market
Research
|
|
·
|
Media
Buying
|
|
·
|
Promotion
|
|
·
|
Strategic
Planning
|
|
·
|
Competition
|
The
industry is both highly fragmented at the bottom end, top-heavy with four
dominating firms generating over half of all U.S. marketing communications
revenue, with a fairly sizable swath of middle market sized agencies as
well. We believe that it is important to delineate between advertising and
marketing, and traditional and interactive, in order to provide a reasonable
portrayal of the competition to our proposed service offerings.
In the
traditional marketing communications agency market, the top firms are Omnicom,
WPP, Publicis, and Interpublic. All of these firms derive roughly half
of their revenue from marketing services and have acquired dozens of
agencies in recent years in an effort to expand their reach, practice
areas, and diversify their respective customer bases. As a result of these
deals, in which the sellers continue to operate under their own brand, these
behemoths have been increasing their presence and expertise in the digital
interactive media space. However, for all of the M&A activity, of the
$38.1 billion they generated in worldwide revenue in 2007, they are believed to
only generate 12% of its business in the digital arena, according to
Advertising Age, despite the significant increase in digital revenue over
the last few years. Apparently, it has taken time to integrate these firms
and effectively execute cross-sale opportunities.
According
to Advertising Age, the largest, pure-play interactive agencies not
affiliated with the major agencies listed above include aQuantive (bought by
Microsoft), Sapient, and LBI International. Sapient, now the largest
remaining independent firm in this segment, generated $406 million in revenue
last year.
Marketing
We have
developed a strategy we believe may ensure long-term growth and success as a new
media full-service advertising and marketing agency. We plan to implement many
of the strategies we intend to offer to our prospective clients as part of our
own marketing efforts. As a result, we believe we will be able to
demonstrate the marketing results as an effective capability, to our
prospects and clients. We will continue to refine and improve on this strategy;
however it will initially include:
|
·
|
Identifying
strategic core partners in the area of complementary new media services
for advertising and marketing;
|
|
·
|
The
active use of blog sites;
|
|
·
|
Develop
relationships with select local media, to include radio and television to
promote us;
|
|
·
|
Initiate active
e-marketing to a number of prospective business
clients;
|
|
·
|
Develop
and distribute a marketing kit to be used when making sales
calls;
|
|
·
|
Initiate
active PR campaigns in the targeted
markets;
|
|
·
|
Initially
providing our services in the Mid-Atlantic region, before expanding to
other regions to get a nationwide
footprint;
|
22
We
believe most prospective clients desire a new media full-service advertising and
marketing agency vendor or a partnership at an affordable price. We intend
to be that vendor. Our strategy to the overall service offering
includes:
|
·
|
Price;
|
|
·
|
Features;
|
|
·
|
Service
offering; and
|
|
·
|
Service
flexibility.
|
Patents
and Proprietary Rights
We expect
to rely on a combination of common law trademark, service mark, copyright and
trade secret law and contractual restrictions to establish and protect our
proprietary rights and promote our reputation and the growth of our business. We
do not own any patents. We expect that, in the future, we will require our
employees, consultants and independent contractors to enter into agreements
containing non-disclosure, non-competition and non-solicitation restrictions and
covenants, and we expect to include in our agreements with some of our customers
and suppliers provisions prohibiting or restricting the disclosure of
proprietary information; however, we can give no assurance that these
contractual arrangements or the other steps taken by us to protect our
proprietary rights will prove sufficient protection to prevent misappropriation
of our proprietary rights or to deter independent, third-party development of
similar proprietary assets.
Regulatory
Matters
We are
unaware of and do not anticipate having to expend significant resources to
comply with any governmental regulations of the media industry. We are subject
to the laws and regulations of those jurisdictions in which we plan to sell our
services, which are generally applicable to business operations, such as
business licensing requirements, income taxes and payroll taxes. In
general, the development and operation of our business is not subject to special
regulatory and/or supervisory requirements. We do not believe we are
currently subject to any environmental or similar laws.
Employees
and Employment Agreements
As the
date of this prospectus, we have no permanent staff, other than Mr. Arne Dunhem,
who is our CEO and President and Dean Schauer, our Chief Financial Officer,
Senior Vice President and Treasurer. Mr. Dunhem expects to devote substantially
all of his efforts to our business following the closing of our offering. Mr.
Schauer expects to devote a significant amount of his efforts to our business
following the closing of our offering. We do not have an employment agreement
with Mr. Dunhem or Mr. Schauer and they are not receiving any compensation for
their services. In addition, several consultants are supporting our activities
on a part-time basis, including a Manager of Operations and a strategic advisor.
We do not have any employment or consulting agreement with any such persons and
none of whom are being compensated by us at present.
We do not
have any pension, health, annuity, insurance, stock option, profit sharing or
similar benefit plans; however, we may adopt such plans in the future. We do not
plan to hire additional employees until adequate financing has been
obtained.
Principal
Offices
Our
principal executive offices are located at 3400 International Drive, N.W.,
Suite 2K-300, Washington, D.C. 20008-3006 that we license on a
month-by-month basis at nominal cost from a company controlled by Mr. Todd
Mason, one of our directors. We believe such facilities to be sufficient
for our use for the foreseeable future and until we have begun to implement our
business plan and generate revenue. Our telephone number at this location
is (202) 609-7756.
23
Legal
Proceedings
We are
not a party to any legal proceeding.
DIRECTORS
AND EXECUTIVE OFFICERS
Our
directors and executive officers are as follows:
Name
|
Age
|
Title
|
||
Arne
Dunhem
|
59
|
President,
Chief Executive Officer, and Chairman of the Board of Director (Class I
Director
|
||
Dean
V. Schauer
|
47
|
Senior
Vice President, Chief Financial Officer and Director (Class II
Director)
|
||
Leif
T. Carlsson
|
67
|
Director
(Class III Director)
|
||
Todd
Mason
|
47
|
Director
(Class III
Director)
|
Our
amended and restated certificate of incorporation provides that the board of
directors shall be divided into three classes. The first term of office of
directors of the first class will expire at the first annual meeting after their
election as members of the first class, and thereafter their terms will expire
on each three year anniversary of that date; the term of office of the directors
of the second class will expire on the one year anniversary of the first annual
meeting after their election as members of the second class, and thereafter
their terms will expire on each three year anniversary of that one year
anniversary; and the term of office of the directors of the third class will
expire on the two year anniversary of the first annual meeting after their
election as members of the third class, and thereafter their terms will expire
on each three year anniversary of that two year anniversary. At each succeeding
annual meeting, our stockholders will elect directors for a full term or the
remainder thereof, as the case may be, to succeed those whose terms have
expired. Each director will hold office for the term for which he or she is
elected and until his or her successor shall be elected and shall qualify. If
the number of directors is changed, any increase or decrease in directors will
be apportioned among the classes so as to maintain all classes as equal in
number as possible, and any additional director elected to any class will hold
office for a term which shall coincide with the terms of the other directors in
such class. Each of
our directors were elected for the terms set forth below by unanimous written
consent of our stockholders in lieu of our 2010 annual meeting of stockholders
dated March 31, 2010.
Biographical
information with respect to each of our present executive officers and directors
is set forth below.
Arne Dunhem, a
Class I director, has served as our President, Chief Executive Officer
and Chairman of our board of directors since our inception on June 2, 2009. His
term as a director expires in 2011. Mr. Dunhem has over 35 years of executive
management and engineering experience with large complex multinational
corporations, large international organizations as well as early stage
technology and start-up companies. From February 2004 to the present, he has
been Chairman, President and Chief Executive Officer of Ariel Way, Inc., a
public company engaged in the business of secure global communications and
multimedia services. From December 2003 to February 2004, he was a consultant
providing executive management and merger and acquisition support services.
Between January 2002 and November 2003, he was Chairman, President and CEO of
MobilePro Corp. From July 2001 to January 2002, Mr. Dunhem was a strategic
business consultant and, in January 2002, he was President and CEO of Neoreach,
Inc. From November 1998 to June 2001 he was the Chairman and CEO of erbia, Inc.
From January 1998 to October 1998, he was a strategic business consultant for
various private companies. From July 1993 to September 1997, he was Chairman of
Tele8 Kontakt AB, a Swedish nationwide start-up cell-phone operator and, from
January 1993 to December 1997, he was Chairman of Nordiska Tele8 AB of Sweden, a
European international long distance and local telephone services company. He
took the companies from their start-up phases through full operation and
eventually the sale of both companies. Mr. Dunhem received a M.Sc. degree from
Chalmers University of Technology of Sweden.
24
Dean V. Schauer,
a Class II director, has served as our Chief Financial Officer and as a
director since March 3, 2010. His term as a director expires in 2012. Mr.
Schauer has over 26 years of executive-level financial management experience
gained in a wide range of public and private companies. From March 2006 to the
present, he has been the Chief Executive Officer of Reliant Financial
Consulting, an
accounting and financial consulting company. From July 1998 to March
2006 he was the Managing Partner of Enterprise Financial Consulting. From April
1990 to July 1998, he served as the Assistant Vice President of Global
Accounting for Global One. From April 1988 to April 1990, he was the Financial
Reporting Manager for Planning Research Corporation. From January 1984 to April
1988, he served as an Audit Senior for Ernst & Young. Mr. Schauer received a
Bachelor of Arts degree from Texas A&M University. He is a Certified Public
Accountant.
Leif T. Carlsson,
a Class III director, was appointed a director on March 3, 2010.
His term expires in 2013. Mr. Carlsson has over 45 years of senior
executive management experience with large European multinational corporations
as well as with early stage technology companies. He has since 2002 been with
Arrow Capital, a European Venture Capital firm based in Stockholm, Sweden. Mr.
Carlsson has been a President of a number of large European corporations
including from 2001 through 2002 with Scanfood AB. He was from 1992 through 2001
President of Scandic Hotels Europe AB, currently part of the EQT-Group; during
1990 through 1992 President of FFV Aerotech AB and FFV Aerotech Ltd, currently
part of the Saab Group and FL Schmidt. From February 2004 to the present,
he has also been a Director of Ariel Way, Inc. Mr. Carlsson
received a M.Sc. degree from Chalmers University of Technology of
Sweden.
Todd Mason, a
Class III director, was appointed a director on March 3, 2010. His
term expires in 2013. Mr. Mason is a senior media communications executive
with over two decades of experience in financial management, technology,
business development and mergers and acquisitions. In 2005, he founded
Mason Media Group, LLC (MMG) and has served as its Chairman and Chief Executive
Officer since its formation. MMG develops and invests in growing
technology companies in the communications industry. MMG has made five
acquisitions since its inception and currently has operations throughout the
United States. Mr. Mason is also Chairman and CEO of FaceTime Strategy,
LLC - a wholly owned subsidiary of Mason Media Group. FaceTime is a
leading technology focused advertising, marketing and public relations agency.
Prior to founding MMG, Mr. Mason served for eight years as President and
COO of Atlantic Video, one of the country’s largest broadcast-production
management companies with broadcast operations in New York, Los Angeles and
Washington DC. Under Mr. Mason’s leadership, the company grew revenue over
400% and secured major broadcast contracts with networks such as ESPN, Discovery
Channel and Animal Planet. Prior to Atlantic Video, Mr. Mason was Senior
Vice President and Chief Financial Officer of Henninger Media Services, Inc. for
six years, one of the country’s largest broadcast post-production
companies. The company grew revenue 600% while under the guidance of Mr.
Mason. Mr. Mason attended Virginia Commonwealth University and majored in
Business Administration.
Each
officer is appointed by the board of directors and holds his office at the
pleasure and discretion of the board of directors or until his earlier
resignation, removal or death.
There are
no material proceedings to which any of our directors, officers or affiliates,
any owner of record or beneficially of more than five percent of any class of
our voting securities, or any associate of any such director, officer,
affiliate, or security holder is a party adverse to us or has a material
interest adverse to us.
Independent
Directors
Our board
of directors has determined that the following directors are independent as
“independence” is defined in Rule 5605(a)(2) of the NASDAQ Stock Market Rules:
Leif T. Carlsson and Todd Mason. Our board of directors does not maintain
an audit committee, nominating committee or compensation committee the functions
of which are performed by our full board of directors. We do not have an
“audit committee financial expert.”
Our
Board of Directors
Our board
oversees our business affairs and monitors the performance of our management.
During the period from inception through December 31, 2009, our board held no
meetings and handled certain business through unanimous written consents in
accordance with our by-laws and applicable Delaware law. We have a policy
of requesting all directors attend our annual meetings of
stockholders.
25
Code
of Ethics
Effective
March 31, 2010, we adopted a Code of Ethics for our CEO, CFO, principal
accounting officer or controller, and persons performing similar
functions. A copy of the Code of Ethics has been posted to our
website. Our website address is www.elsinoreservices.com.
Information contained on our website is not deemed a part of this
prospectus.
Potential
Conflicts of Interest
We do not
have an audit or compensation committee comprised of independent
directors. The functions of those committees are performed by our board of
directors. Accordingly, there is a potential conflict of interest in that
our directors have the authority to determine issues concerning management’s
compensation on their own, and audit related issues that may affect management
decisions. We are not aware of any other conflict of interest with any of
our executive officers or directors.
EXECUTIVE
COMPENSATION
We have
not paid, nor do we owe, any compensation to our executive officers. We
have not paid any compensation to our directors since inception. We do not
anticipate doing so until we have sufficient cash flows from our operations or
other sources of financing.
We have
no employment agreements with any of our executive officers and do not have any
employees.
Summary
Compensation Table
The
following Summary Compensation Table sets forth the compensation earned or
awarded to our CEO and President, CFO and other named executive officers during
the period from the date of our inception through December 31,
2009.
Name and Principal Position
|
Year
|
Salary
$
|
Bonus
$
|
Stock
Awards
$
|
Option
Awards
$
|
Nonequity
Incentive
Plan
Compensation
Earnings
$
|
Non-qualified
Compensation
Earnings
$
|
All
Other
Compensation
$
|
Total
$
|
|||||||||||||||||||||||||
Arne
Dunhem
|
2009
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||||||
Principal
Executive Officer
|
Outstanding
Equity Awards at Fiscal Year-End Table
The
following table sets forth information for each named executive officer
regarding the number of shares subject to exercisable and unexercisable stock
options for the period from our inception through December 31,
2009.
26
Option
Awards
|
Equity
Investment Plan Awards
|
|||||||||||||||||||||||||||||||||||
Name
(a)
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(b)
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(c)
|
Equity
Incentive
Plan Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options (#)
(d)
|
Option
Exercise
Price
($)
(e)
|
Option
Expiration
Date
(f)
|
Number of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
(g)
|
Market
Value of
Shares or
Units
of
Stock
That
Have
Not
Vested
($)
(h)
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares, Units
or
Other
Rights
That
Have
Not
Vested
(#) (i)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
($)
(j)
|
|||||||||||||||||||||||||||
Arne
Dunhem
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- |
Option
Exercises Table
We have
issued no options to our principal executive officer, principal accounting
officer, or other named executive officer. Accordingly, none of such
persons exercised options or acquired shares upon the exercise of stock options
during the period from the date of our inception through December 31,
2009. Also, we currently do not have stock appreciation rights (SARs) or
restricted stock plans.
Employment,
Severance and Change in Control Arrangements
We do not
have employment agreements with our principal executive officer, CFO, or any of
our named executive officers, or any severance or change in control arrangements
with such officers.
Pension
Benefits
None of
our named executive officers participate in or have account balances in
qualified or non-qualified defined benefit plans sponsored by us.
Non-Qualified
Deferred Compensation
None of
our named executive officers participate in or have account balances in
non-qualified defined contribution plans or other deferred compensation plans
established or maintained by us. Our board of directors may elect to provide our
officers and other employees with non-qualified defined contribution or deferred
compensation benefits if it determines that doing so is in our best
interests.
Director
Compensation and Benefits
We had no
non-employee directors during the period from inception through December 31,
2009, and we did not pay any cash compensation, or issue any stock options or
other equity based awards to any person serving as a director. We do not
currently reimburse any of our directors for out-of-pocket expenses for
attending meeting of our directors and do not anticipate doing so for the
foreseeable future. Further, we do not anticipate paying any cash compensation
to our directors for the foreseeable future or issuing to any such person any
options to purchase our shares, although we reserve the right to do so in the
future. We may, if we have the cash resources, purchase a directors’ and
officers’ liability insurance policy, although we have not purchased any such
policy as of the date of this prospectus.
27
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The
following table sets forth, as of December 31, 2009, information with regard to
equity compensation plans (including individual compensation arrangements) under
which our securities are authorized for issuance.
Plan Category
|
Number of Securities to be
issued upon exercise of
outstanding options
(a)
|
Weighted-average exercise
price of outstanding options
(b)
|
Number of securities
remaining available for future
issuance under equity
compensation plans (excluding
securities reflected in column
(a))
|
|||||||||
Equity
compensation plans approved by security holders
|
0 | $ | 0 | 0 | ||||||||
Equity
compensation plans not approved by security holders
|
0 | 0 | 0 | |||||||||
Total
|
0 | $ | 0 | 0 |
RELATED
PARTY TRANSACTIONS
Except as
set forth below, we have not been a party to any transaction since June 2,
2009, the date of our incorporation, in which the amount involved in the
transaction exceeded or will exceed the
lesser of $120,000 or one percent of the average of our total assets as at the
year end for the last two completed fiscal years, and in which any of our
directors, executive officers or beneficial holders of more than 5% of our
capital stock, or any immediate family member of, or person sharing the
household with, any of these individuals, had or will have a direct or indirect
material interest.
We issued
the following shares of our common stock to our executive officers
and directors during the period from inception through the date of this
prospectus:
On June
2, 2009, we issued an aggregate of 1,000,000 shares of our common stock at
$0.001 per share to Mr. Arne Dunhem, our CEO, President and a director and, on
December 31, 2009, Mr. Dunhem, exchanged and converted an aggregate of $1,000 in
expenses incurred and billed to us into the payment for the subscription of
1,000,000 shares of our common stock.
On
December 31, 2009, we issued an aggregate of 3,000,000 shares of our common
stock at $0.001 per share to Mr. Arne Dunhem, our CEO, President and a director,
in consideration of $3,000 in expenses incurred and billed to us.
On
December 31, 2009, we issued an aggregate of 3,413,000 share of our common stock
at $0.001 per share to Mr. Dean Schauer, our Chief Financial Officer, Senior
Vice President, Treasurer, and director in consideration of an aggregate of
$3,413 in expenses incurred and billed to us. In addition, on December 31,
2009, we entered into a stock subscription agreement with Mr. Schauer pursuant
to which he purchased an aggregate of 587,000 shares of common stock at $0.001
per share or for aggregate proceeds to us of $587.
On
December 31, 2009, we entered into a stock subscription agreement with Mr. Leif
T. Carlsson, one of our directors, pursuant to which he purchased 1,000,000
shares of common stock at $0.001 per share or for aggregate proceeds to us of
$1,000.
On
December 31, 2009, we entered into a stock subscription agreement with Mason
Media Group, LLC, a limited liability company wholly-owned and controlled by Mr.
Todd Mason, one of our directors, pursuant to which Mason Media Group, LLC,
purchased 1,000,000 shares of common stock at $0.001 per share or for
aggregate proceeds to us of $1,000.
28
In
connection with our offering, at various times during March 2010, Mr. Dunhem,
our CEO, President and a director, and Mr. Schauer, our CFO, Senior Vice
President and a director, have each advanced an aggregate of $4,000 to us to
cover certain of our offering expenses. The advances are non-interest
bearing and we expect to repay them at the time we close on our offering of
which there can be no assurance.
Review,
approval or ratification of transactions with related parties
Following
our completion of this offering, our policy will be to have any transaction,
other than one that involves compensation between us and any of our directors,
executive officers or beneficial holders of more than 5% of our capital stock,
or any immediate family member of, or person sharing the household with, any of
these individuals, be consummated only if approved by our disinterested member
of our board of directors and only if the transaction is an arm’s length
transaction and reasonable and fair to us. This approval process does not apply
to a transaction that is available to employees generally.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The
following table shows, as of April 7, 2010, beneficial ownership of our common
stock by the following: (i) any person we know who is the beneficial owner of
more than 5% of our common stock, (ii) each of our directors and our named
executive officers, and (iii) all of our directors and named executive officers
as a group. As of April 1, 2010, we had 10,000,000 shares of our common
stock issued and outstanding.
Name of
Beneficial Owner(1)
|
Number of Shares
Beneficially Owned (1)
|
% of Common Stock
Beneficially Owned
|
||||||
Arne
Dunhem
|
4,000,000 | 40 | % | |||||
Dean
V. Schauer
|
4,000,000 | 40 | % | |||||
Todd
Mason
|
1,000,000 |
(2)
|
10 | % | ||||
Leif
T. Carlsson
|
1,000,000 | 10 | % | |||||
All
executive officers and directors as a group (4 people)
|
10,000,000 | 100 | % |
(1)
|
Beneficial
ownership is determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, and is generally determined by
“voting power” and/or “investment power” with respect to
securities. Unless otherwise noted, all shares of common stock listed
above are owned of record by each individual named as beneficial owner and
such individual has sole voting and dispositive power with respect to the
shares of common stock owned by each of them. Such person or entity’s
percentage of ownership is determined by assuming that any options or
convertible securities held by such person or entity which are exercisable
within 60 days from the date hereof have been exercised or converted as
the case may be. All addresses, except as noted, are c/o Elsinore
Services, Inc., 3400 International Drive N.W., Suite 2K-300, Washington,
D.C. 20008.
|
(2)
|
Represents
shares owned of record by Mason Media Group, LLC, a limited liability
company wholly-owned and controlled by Mr. Todd Mason. Mr. Mason is,
therefore, deemed to have “voting” and “investment power” with regard to
such shares.
|
29
MARKET
FOR OUR COMMON STOCK
AND
RELATED STOCKHOLDER MATTERS
Prior to
this offering, no public market has existed for our common stock and we can give
no assurance that any public market will ever develop or, if any public market
for our common stock develops, that it will be sustained.
We
propose to seek quotation of our shares of common stock on the OTC Bulletin
Board. We can give no assurance that the shares will be accepted for
quotation on the OTC Bulletin Board. In order for our shares to be quoted
on the OTC Bulletin Board, a market maker will need to file an application
with the Financial Industry Regulatory Authority (FINRA) to make a market
in our common stock. As of the date of this prospectus, we have not
requested any market maker to make a market in our common stock or to quote our
shares. Consequently, a purchaser of our common stock may find it
difficult to resell the securities offered hereby if the purchaser desires to do
so when eligible for public resale.
As of the
date of this prospectus, there were 10,000,000 shares of our common stock issued
and outstanding, which were held by four stockholders of record.
Dividends
Since our
inception, we have not declared or paid cash dividends on our common
stock. Currently, we intend to retain earnings, if any, to support our
growth strategies and do not anticipate paying cash dividends in the foreseeable
future. Payment of future dividends, if any, will be at the discretion of our
board of directors after taking into account various factors, including our
financial condition, operating results, current and anticipated cash needs and
plans for expansion.
DESCRIPTION
OF OUR SECURITIES
We are
offering up to 3,000,000 shares of our common stock at an offering price of
$0.02 per share in our initial public offering directly to the
public.
Our
Common Stock
Our
amended and restated certificate of incorporation authorizes us to issue up to
245,000,000 shares of our common stock, $.001 par value per share. As
of April 7, 2010, 10,000,000 shares of our common stock were issued and
outstanding and we had four holders of record of our common stock. Each share of
our common stock entitles the holder thereof to one vote on each matter
submitted to our stockholders for a vote.
Holders
of our common stock:
|
·
|
have
equal ratable rights to dividends from funds legally available therefor
when, as and if declared by our board of
directors
|
|
·
|
are
entitled to share ratably in all of our assets available for distribution
to holders of common stock upon liquidation, dissolution or winding up of
our affairs
|
|
·
|
do
not have preemptive, subscription or conversion rights, or redemption or
applicable sinking fund provisions,
and
|
|
·
|
are
entitled to one non-cumulative vote per share on all matters submitted to
stockholders for a vote at any meeting of
stockholders.
|
We
anticipate that, for the foreseeable future, we will retain earnings, if any, to
finance the operation of our business. The payment of dividends in the future
will depend upon, among other things, our capital requirements and our operating
and financial conditions.
30
Preferred
Stock
Our
amended and restated certificate of incorporation authorizes the issuance of up
to 5,000,000 shares of preferred stock, $.001 par value per share. The
board of directors is authorized to issue shares of preferred stock from time to
time in one or more series and, subject to the limitations contained in our
amended and restated certificate of incorporation and any limitations prescribed
by law, to establish and designate series of our preferred stock and to fix the
number of shares and the relative conversion rights, voting rights and terms of
redemption (including sinking fund provisions) and liquidation preferences of
each such series.
New
issuances of shares of preferred stock with voting rights can affect the voting
rights of the holders of outstanding shares of preferred stock and common stock
by increasing the number of outstanding shares having voting rights and by the
creation of class or series voting rights. Also, additional issuances of
shares of preferred stock with conversion rights can have the effect of
increasing the number of shares of common stock outstanding up to the amount of
common stock authorized by our amended and restated certificate of incorporation
and can also, in some circumstances, have the effect of delaying or preventing a
change in control of us and otherwise adversely affect the rights of holders of
outstanding shares of preferred stock and common stock. To the extent
permitted by our amended and restated certificate of incorporation, a series of
preferred stock may have preferences over the common stock (and other series of
preferred stock) with respect to dividends and liquidation rights.
Anti-Takeover
Effects of Certain Provisions of Our Certificate of Incorporation, By-Laws and
Delaware Law
Our
amended and restated certificate of incorporation, provisions of our amended and
restated by-laws and Delaware law could discourage takeover attempts and prevent
stockholders from changing our management.
Our
amended and restated certificate of incorporation authorizes the issuance of up
to 5,000,000 shares of preferred stock, of which none are authorized, issued or
outstanding. Our board of directors, without further action by our stockholders,
is authorized to issue the shares of preferred stock in one or more series and
to fix and determine as to any series, any and all of the relative rights and
preferences of shares in each series, including without limitation, preferences,
limitations or relative rights with respect to redemption rights, conversion
rights, voting rights, dividend rights and preferences on liquidation. The
issuance of additional shares of preferred stock with voting and conversion
rights could materially adversely affect the voting power of the holders of
common stock and may have the effect of delaying, deferring or preventing a
change in control of us.
We have
elected in our amended and restated certificate of incorporation not to be
subject to the provisions of Section 203 of the Delaware General Corporation
Law, an anti-takeover law. In general, Section 203 prohibits a publicly held
Delaware corporation from engaging in a “business combination” with an
“interested stockholder” for a period of three years following the date the
person became an interested stockholder, unless (with certain exceptions) the
“business combination” or the transaction in which the person became an
“interested stockholder” is approved in a prescribed manner. Generally, a
“business combination” includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the interested stockholder.
Generally, an “interested stockholder” is a person who, together with affiliates
and associates, owns (or within three years prior to the determination of
interested stockholder status, did own) 15% or more of the corporation's voting
stock. This
provision will not be applicable to us until our common stock is listed on a
national securities exchange or held of record by more than 2,000
stockholders. The existence of this provision would have been expected to
have had an anti-takeover effect with respect to transactions not approved in
advance by the board of directors, including discouraging takeover attempts that
might result in a premium over the market price for the shares of common stock
held by stockholders.
We also
have a staggered board of directors and vacancies resulting from an increase in
the size of our board may be filled by a majority of our directors then in
office.
A
majority of our issued and outstanding shares of voting stock is required to
call a special meeting of our stockholders.
Our
stockholders are not entitled to cumulative voting in the election of
directors.
31
A
director, any class of directors, or the entire board of directors may only be
removed from office by a vote of stockholders holding of not less than 75% of
our voting stock. However, if 66 2/3% of our board of directors approve of
the removal of a director and recommend removal of a director to shareholders, a
director may be removed by a majority vote of our stockholders.
Our board
of directors and stockholders has concurrent power to make, alter, amend,
change, add to or repeal our by-laws, provided that any such change is
authorized by a majority of our directors or receives the affirmative vote of
not less than 66 2/3% of our voting stock.
We have
no plans or proposal to adopt any other provision or enter into any arrangements
that may have a material anti-takeover consequence.
Our
Transfer Agent
Computershare
Trust Co., N.A., Golden, Colorado, is our transfer agent.
OUR
PLAN OF DISTRIBUTION
We are
offering for sale up to a maximum of 3,000,000 shares of our common stock
directly to the public in our initial public offering. Our offering is being
conducted on a self-underwritten, “best efforts” basis. We are not
offering the shares through an underwriter or placement agent and we will not be
required to pay any underwriter’s discount or commission. Our shares will be
offered and sold by us solely through our officers and directors who will not
receive any commission for selling the shares on our behalf. An investor
is not required to purchase a minimum amount of shares.
Our
offering will commence promptly following the date of this prospectus and will
continue for a period of 120 days unless we earlier sell all of the shares or
terminate the offering. We reserve the right to extend the offering period
for up to an additional 90 days, in our sole discretion.
We are
not required to sell a minimum amount of shares in this direct offering and we
are not required to raise a minimum amount of offering proceeds for us to
complete our offering. All proceeds of this offering will be received by
us and will be immediately available to us for our use. We will pay all
expenses of this offering.
We have
made no arrangements to place the proceeds of the sale of our shares in an
escrow or similar account. Upon our receipt of the proceeds from this
offering, we will deposit them in our general business operating account and the
net proceeds will be used to conduct our business and operations.
The
offering price of our shares in this offering of $0.02 per share was arbitrarily
determined by us and bears no relationship to the value of our assets, or our
book value, earnings, net worth or any other recognized criteria of value.
We did not engage an independent investment banking firm to assist us in
determining the offering price of our shares. Also, our offering price was
not based on the price paid by our founders for their shares. The offering
price should not be regarded as an indication of any future price of our
stock.
Currently,
no public market for our shares of common stock exists and there can be no
assurance that a market for our common stock will be established or that, if
established, such market will be sustained. Therefore, purchasers of our shares
may be unable to sell their shares. As a result, you may find it more difficult
to dispose of, or obtain accurate quotes for, our common stock. A
purchaser of our securities in this offering should be able to bear the risk of
losing his or her entire investment.
We
propose to seek quotation of our shares of common stock on the OTC Bulletin
Board. We can give no assurance that the shares will be accepted for
quotation on the OTC Bulletin Board. In order for our shares to be quoted
on the OTC Bulletin Board, we must be a reporting company under the Securities
Exchange Act of 1934, have at least one market maker complete and file a Form
211 with FINRA, and have such application approved by FINRA. We have not yet
engaged a market maker to apply for quotation of our shares on the OTC Bulletin
Board and we are not able to determine the length of time that it will take for
any such application to be approved by FINRA.
32
We intend
to sell the shares in this offering through Mr. Arne Dunhem and Mr. Dean
Schauer, officers and directors of our company. Such persons will not
receive any commission from the sale of our shares in this offering. They
will rely upon the “safe harbor” exemption from the registration requirement
applicable to a broker-dealer under Section 15 of the Securities Exchange Act
set forth in Rule 3a4-1 thereunder. Rule 3a4-1 sets forth conditions under which
a person associated with an issuer may participate in an offering of an issuer's
securities and not be deemed to be a broker-dealer. The conditions are as
follows:
|
·
|
The
person is not subject to statutory disqualification, as that term is
defined in Section 3(a)(39) of the Securities Exchange Act, at the time of
his participation;
|
|
·
|
The
person is not compensated in connection with his participation by the
payment of commissions or other remuneration based either directly or
indirectly on transactions in
securities;
|
|
·
|
The
person is not at the time of his participation an associated person of a
broker-dealer; and,
|
|
·
|
The
person meets the conditions of Paragraph (a)(4)(ii) of Rule 3a4-1 under
the Securities Exchange Act, in that he (A) primarily performs, or is
intended primarily to perform at the end of the offering, substantial
duties for or on behalf of the issuer otherwise than in connection with
transactions in securities; and (B) was not a broker or dealer, or an
associated person of a broker or dealer, within the preceding twelve (12)
months; and (C) does not participate in selling an offering of securities
for any issuer more than once every twelve (12) months other than in
reliance on Paragraphs (a)(4)(i) or (a)(4)(iii) of the
rule.
|
We have
been advised that neither Arne Dunhem nor Dean Schauer: (i) is subject to
statutory disqualification within the meaning of Section 3(a)(39) of the
Securities Exchange Act; (ii) has or will be compensated in connection with his
participation in our offering by payment of commission or other remuneration
based either directly or indirectly on transactions in securities; (iii) is or
will be at the time of his participation in the offering an associated person of
a broker or dealer. Moreover, each of Messrs. Dunhem and Schauer: (a) primarily
perform and intend to primarily perform at the end of the offering, substantial
duties for or on our behalf otherwise in connection with transactions in
securities, and will continue to be our officers following the completion of
this offering; (b) was not a broker or dealer, or any associated person of a
broker or dealer, within the preceding 12 months; and (c) does not participate
in selling an offering of securities for any issuer more than once every twelve
(12) months other in reliance upon Rules 3a4-1(a)(4)(i) or (iii).
Offering
Period
The
offering period will commence promptly following the date of this prospectus and
will continue for a period of 120 days thereafter unless earlier we sell all of
the shares or we terminate the offering. We reserve the right to extend the
offering period for up to an additional 90 days, in our sole
discretion.
Subscription
Agreement and Procedures
We will
not accept any money until the registration statement of which this prospectus
forms a part is declared effective by the SEC. Once the registration statement
is declared effective by the SEC, if you decide to subscribe for any shares in
this offering, you must deliver to us:
|
·
|
an
executed subscription agreement in the form we will provide to you;
and
|
|
·
|
a
check, subject to collection, for the full subscription amount for the
shares made payable to "Elsinore Services,
Inc."
|
We may
accept or reject any subscription in our sole discretion. In the event we
reject a subscription, we shall return the subscription proceeds to the
subscriber without interest, charge or deduction.
Your
subscription proceeds will not be held in any escrow account and, if we accept
your subscription, will be immediately available for our use for general
business purposes.
33
SHARES ELIGIBLE FOR FUTURE
SALE
Prior to
this offering, there has been no public market for our common stock. Future
sales of substantial amounts of our common stock in the public market, if any
such public market develops, or the perception that such sales may occur, could
adversely affect the prevailing market price of our common stock. No prediction
can be made as to the effect, if any, future sales of shares, or the
availability of shares for future sales, will have on the market price of our
common stock prevailing from time to time, if any public market for our shares
develops. The sale of substantial amounts of our common stock in the public
market, or the perception that such sales could occur, could harm the prevailing
market price of our common stock.
Sale of Restricted
Shares
Upon
completion of this offering, we will have 13,000,000 shares of common stock
outstanding, assuming we sell all of the shares in this offering. Of these
shares of common stock, 3,000,000 shares of common stock being sold in this
offering will be freely tradable without restriction under the Securities Act,
except for any such shares which may be held or acquired by an “affiliate” of
ours, as that term is defined in Rule 144 under the Securities Act, which
shares will be subject to the volume limitations and other restrictions of
Rule 144 described below. The remaining 10,000,000 shares of common
stock held by our existing stockholders upon completion of this offering will be
“restricted securities” and may be deemed “control securities,” as such terms
are defined in Rule 144, and may be resold only following registration
under the Securities Act or pursuant to an exemption from such registration,
including, among other things, the safe harbor exemptions provided by
Rule 144 and Rule 701 under the Securities Act, which rules are summarized
below.
Rule 144
Under
Rule 144, a person who became the beneficial owner of shares of our common stock
prior to the commencement of this offering may not sell their shares until the
earlier of (i) the expiration of a six-month holding period, if we have
been subject to the reporting requirements under the Securities Exchange Act and
have filed all required reports for at least 90 days prior to the date of
the sale, or (ii) a one-year holding period.
At the
expiration of the six-month holding period, a person who was not one of our
affiliates at any time during the three month period preceding a sale would be
entitled to sell an unlimited number of shares of our common stock provided
current public information about us is available, and a person who was one of
our affiliates at any time during the three months preceding a sale would be
entitled to sell within any three-month period only a number of shares of common
stock that does not exceed 1% of the number of shares of our common stock then
outstanding (which will equal approximately 130,000 shares immediately
after this offering, assuming we sell all of the shares in this offering), and
to certain requirements regarding manner of sale, certain notice
requirements, and to the availability of current public information about
us.
At the
expiration of the one-year holding period, a person who was not one of our
affiliates at any time during the three months preceding a sale will be entitled
to sell an unlimited number of shares of our common stock without restriction. A
person who was one of our affiliates at any time during the three months
preceding a sale, would remain subject to the volume restrictions described
above and to certain requirements regarding manner of sale, certain notice
requirements, and to the availability of current public information about
us.
Rule 701
In
general, under Rule 701, any of our employees, directors, officers,
consultants or advisors who purchased shares from us in connection with a
compensatory stock or option plan or other written agreement before the date of
the commencement of this offering, or who purchased shares from us after that
date upon the exercise of options granted before that date, are eligible to
resell such shares in reliance upon Rule 144 beginning 90 days after
the date of this prospectus. If such person is not an affiliate, the sale may be
made subject only to the manner-of-sale restrictions of Rule 144. If such a
person is an affiliate, the sale may be made under Rule 144 without
compliance with the one-year minimum holding period, but subject to the other
Rule 144 restrictions described above.
34
ADDITIONAL
INFORMATION
We have
filed with the SEC a registration statement on Form S-1 under the Securities Act
of 1933 with respect to the shares of common stock registered hereby. This
prospectus, which is a part of our registration statement, does not contain all
the information included in the registration statement and the exhibits and
schedules thereto. Statements contained in this prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each contract, agreement or other
document filed as an exhibit to the registration statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified by such reference. For further
information with respect to us and the common stock offered hereby, reference is
made to the registration statement and the exhibits and schedules filed
therewith.
We file
annual, quarterly and special reports, proxy statements and other information
with the SEC. Our SEC filings are available to the public over the Internet at
the SEC’s web site at http://www.sec.gov. You may also read and copy any
documents we file at the SEC’s public reference rooms as indicated
above.
A copy of
the registration statement may be inspected without charge at the public
reference facilities of the SEC located at 100 F Street, N.E., Room 1580,
Washington, D.C. 20549. You can request copies of those documents
upon payment of a duplicating fee to the SEC. Please call the SEC at
1-800-SEC-0330 for further information regarding the operation of the public
reference room. The registration statement and this prospectus is also
available through the SEC’s Internet web site at
http://www.sec.gov.
QUANTITATIVE
AND QUALITATIVE DISCUSSION ABOUT MARKET RISK
We do not
believe we face any material market risk exposure with respect to derivative or
other financial instrument, financial currency risk, or otherwise.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS
During
the period from our inception through December 31, 2009, and during the
subsequent interim period, our independent registered public accountants have
not resigned (or indicated they have declined to stand for re-election after the
completion of their most recent audit) and have not been dismissed by
us.
LEGAL
MATTERS
Certain
legal matters in connection with the registration of the shares offered hereby
will be passed upon for us by Babirak Carr, P.C., Washington, D.C.
EXPERTS
Our
financial statements as of December 31, 2009, and for the period from the date
of our inception through December 31, 2009, included in this prospectus have
been included herein in reliance on the reports of Friedman LLP, our independent
registered public accountants, based upon the authority of that firm as experts
in accounting and auditing.
35
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION
Our
amended and restated certificate of incorporation and amended and restated
by-laws provide that we will indemnify our officers and directors under certain
circumstances. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the foregoing provision, or otherwise, we have been advised
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is unenforceable. In the event that a
claim for indemnification against such liabilities is asserted by one of our
directors, officers or controlling person in connection with the securities
being registered herein, we will, unless, in the opinion of our legal counsel,
the matter has been settled by controlling precedent, submit the question of
whether such indemnification is against public policy to a court of appropriate
jurisdiction. We will then be governed by the court’s
decision.
36
ELSINORE
SERVICES, INC.
(A
Development Stage Enterprise)
FINANCIAL
STATEMENTS
TOGETHER
WITH THE REPORT OF THE
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
DECEMBER
31, 2009
Elsinore
Services, Inc.
(A
Development Stage Enterprise)
December
31, 2009
INDEX TO FINANCIAL
INFORMATION
Page(s)
|
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
Balance Sheet as of December 31,
2009
|
F-2
|
|
|
Statement of Operations
for the period
from June 2, 2009 (inception) to December 31, 2009
|
F-3
|
Statement of Changes in
Stockholders' Deficiency for the period
from June 2, 2009 (inception) to
December 31,
2009
|
F-4
|
Statement of Cash Flows
for the period
from June 2, 2009 (inception) to
December 31,
2009
|
F-5
|
|
|
Notes to Financial
Statements
|
F-6
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Stockholders
Elsinore
Services, Inc.
(A
Development Stage Enterprise)
We have
audited the accompanying balance sheet of Elsinore Services, Inc. (a development
stage enterprise) as of December 31, 2009, and the related statements of
operations, changes in stockholders’ deficiency and cash flows for the period
June 2, 2009 (date of inception) to December 31, 2009. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). These standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion of the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such
opinion. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Elsinore Services, Inc. (a
development stage enterprise) as of December 31, 2009, and the results of its
operations and its cash flows for the period June 2, 2009 (date of inception) to
December 31, 2009 in conformity with the standards of the Public Company
Accounting Oversight Board (United States).
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company's accumulated deficit and lack of capital raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.
/s/ Friedman LLP
Marlton,
NJ
March 26,
2010
F-1
ELSINORE
SERVICES, INC.
(A
Development Stage Enterprise)
BALANCE
SHEET
As
of
December
31, 2009
|
||||
LIABILITIES
AND STOCKHOLDERS’ DEFICIENCY
|
||||
Current
Liabilities
|
||||
Accrued
expenses
|
$ | 10,000 | ||
Accounts
payable, officer
|
1,116 | |||
Total
current liabilities
|
11,116 | |||
|
||||
Commitments
|
||||
|
||||
Stockholders’
Deficiency
|
||||
Common
stock, par value $0.001, 75,000,000 shares authorized,
|
||||
and
10,000,000 shares issued and outstanding
|
10,000 | |||
Common
stock subscription
|
( 2,587 | ) | ||
Accumulated
deficit
|
(18,529 | ) | ||
|
||||
|
(11,116 | ) | ||
|
||||
|
$ | - |
The
accompanying notes are an integral part of these financial
statements
F-2
ELSINORE
SERVICES, INC.
(A
Development Stage Enterprise)
STATEMENT
OF OPERATIONS
From
inception (June 2, 2009) through
December
31, 2009
|
||||
Revenues
|
$ | - | ||
Operating
Expenses
|
||||
Professional
fees
|
10,000 | |||
Administrative
fees
|
8,529 | |||
18,529 | ||||
Net
Loss
|
$ | (18,529 | ) |
|
||||
Net
loss per share – basic and diluted
|
$ | (0.02 | ) | |
Weighted
average common shares outstanding
|
1,000,000 |
The
accompanying notes are an integral part of these financial
statements
F-3
ELSINORE
SERVICES, INC.
(A
Development Stage Enterprise)
STATEMENT
OF STOCKHOLDERS’ DEFICIENCY
FROM
INCEPTION (JUNE 2, 2009) TO DECEMBER 31, 2009
Common
Stock
|
||||||||||||||||||||
Shares
|
Amount
|
Common
Stock
Subscription
|
Accumulated
Deficit
|
Total
|
||||||||||||||||
Balance,
June 2, 2009 (Inception)
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
Common
stock issued
|
10,000,000 | 10,000 | (2,587 | ) | - | 7,413 | ||||||||||||||
Net
loss
|
- | - | - | (18,529 | ) | (18,529 | ) | |||||||||||||
Balance
at December 31, 2009
|
10,000,000 | $ | 10,000 | $ | (2,587 | ) | $ | (18,529 | ) | $ | ( 11,116 | ) |
The
accompanying notes are an integral part of these financial
statements.
F-4
ELSINORE
SERVICES, INC.
(A
Development Stage Enterprise)
STATEMENT
OF CASH FLOWS
|
From
inception (June 2, 2009) through
December
31, 2009
|
|||
Cash
flows from operating activities
|
||||
Net
loss
|
$ | (18,529 | ) | |
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||
Stock
issued to directors
|
7,413 | |||
Changes
in assets and liabilities:
|
||||
Accounts
payable and accrued expenses
|
11,116 | |||
|
||||
Net
Cash used in operating activities
|
- |
Supplemental
cash flow information:
Non-cash
financing activities:
|
||||
Issuance
of common stock through subscription
|
$ | 2,587 |
The
accompanying notes are an integral part of these financial
statements.
F-5
ELSINORE
SERVICES, INC.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description
of Business
Elsinore
Services, Inc. (the “Company”) was incorporated on June 2, 2009 in the State of
Delaware and established a fiscal year end of December 31. The Company is a
development stage enterprise that intends to provide full-service advertising
and marketing services with an emphasis on digital interactive media. The
Company is currently in the development stage as defined in the Accounting
Standards Codification 915. All activities of the Company to date relate to its
organization, initial funding and share issuances.
Use
of Estimates
Management
uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results
could differ from these estimates.
Income
Taxes
The
Company accounts for income taxes pursuant to the provisions of the Accounting
Standards Codification 740, Accounting for Income Taxes, which requires an asset
and liability approach to calculate deferred income taxes. The asset
and liability approach requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary difference between
the carrying amounts and the tax basis of assets and liabilities.
Subsequent
Events
These
financial statements were approved by management and available for issuance on
March 26, 2010. Management has evaluated subsequent events through
this date.
NOTE
2 – GOING CONCERN
As shown
in the accompanying financial statements, the Company has incurred net losses
and negative cash flows from operating activities for the period June 2, 2009
(date of inception) to December 31, 2009, and has an accumulated deficit of
$18,529 as of December 31, 2009. The Company has relied upon cash
from its officer to fund its ongoing operations as it has not been able to
generate sufficient cash from its operating activities. These factors
create an uncertainty about the company’s ability to continue as a going
concern. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going
concern.
NOTE
3 – RELATED PARTY TRANSACTIONS
As of
December 31, 2009, the Company received advances from a Director in the amount
of $1,116 to pay for incorporation costs, filing fees, and travel
expenses. The amounts due to the related party are unsecured and
non-interest bearing with no set terms of repayment.
NOTE
4 – EQUITY TRANSACTIONS
During
2009, the Company issued 7.4 million shares of common stock valued at $7,413 to
related parties in exchange for $7,413 in expenses incurred on behalf of the
Company. An additional 2.6 million shares have been subscribed by an
officer and two directors of the Company at December 31, 2009.
NOTE
5 – SUBSEQUENT EVENTS
On March
13, 2010, the Company increased the number of its authorized shares of common
stock to 245 million and authorized 5 million shares of preferred stock, $.001
par value per share.
F-6
Until
________, 2010 (120 days after the date of this prospectus), all dealers
that effect transactions in these securities, whether or not participating
in this offering, may be required to deliver a prospectus. This is in
addition to the dealers’ obligation to deliver a prospectus when acting as
underwriters with respect to their unsold allotments or
subscriptions.
|
ELSINORE
SERVICES, INC.
_____________________________________________
Maximum
of 3,000,000 Shares
of
Our Common Stock
____________________________________________
______________
PROSPECTUS
______________
_________,
2010
|
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution.
The
estimated expenses to be incurred by us in connection with the registration of
the securities subject of this registration statement are estimated as
follows:
Securities
and Exchange Commission Registration Fee
|
$ | 5 | ||
Printing
and Engraving Expenses
|
200 | |||
Registrant’s
Counsel Fees and Expenses
|
5,000 | |||
Accountant’s
Fees and Expenses
|
10,000 | |||
Miscellaneous
Expenses
|
1,495 | |||
Estimated
Total
|
$ | 16,700 |
Item
14. Indemnification of Directors and Officers.
Article
XI of our Amended and Restated Certificate provides that we shall indemnify and
advance expenses to, and hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may hereafter be amended, any person
(an “Indemnitee”) who was or is made or is threatened to be made a party or is
otherwise involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a “proceeding”), by reason of the fact that he,
or a person for whom he is the legal representative, is or was a director or an
officer of the company or, while a director or an officer of the company, is or
was serving at the request of the company as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or nonprofit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses (including
attorneys’ fees) reasonably incurred by such Indemnitee. Notwithstanding
the preceding sentence, we shall be required to indemnify, or advance expenses
to, an Indemnitee in connection with a proceeding (or part thereof) commenced by
such Indemnitee only if the commencement of such proceeding (or part thereof) by
the Indemnitee was authorized by our board of directors.
Article
VIII, Section 8.1 of our Amended and Restated By-Laws provide that each person
who was or is made a party or is threatened to be made a party to or is
otherwise involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a “proceeding”), by reason of the fact that he
or she is or was a director or an officer of our company or is or was serving at
our request of as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan (an “indemnitee”), whether the basis of
the proceeding is alleged action in an official capacity as a director or
officer or in any other capacity while serving as a director, officer, employee
or agent, shall be indemnified and held harmless by us to the fullest extent
permitted by applicable law as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that the amendment permits
us to provide broader indemnification rights than such law permitted us to
provide prior to such amendment), against all expense, liability and loss
(including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by the
indemnitee in connection therewith; provided, however, that, except as provided
in Section 8.3 with respect to proceedings to enforce rights to indemnification
and advancement of expenses, we will indemnify any such indemnitee in connection
with a proceeding (or part thereof) initiated by the indemnitee only if the
proceeding (or part thereof) was authorized by our board of
directors.
II-1
Article
VIII, Section 8.2 of our Amended and Restated By-Laws provides that the right to
indemnification conferred in Section 8.1 shall include the right to be paid by
us the expenses (including attorneys’ fees) incurred in defending any such
proceeding in advance of its final disposition (an “advancement of expenses”);
provided, however, that, if the General Corporation Law of the State of Delaware
requires, an advancement of expenses incurred by an indemnitee in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by the indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon delivery to the
Corporation of an undertaking (an “undertaking”), by or on behalf of the
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal (a “final adjudication”) that the indemnitee is not entitled to be
indemnified for the expenses under Section 8.2 or otherwise. The rights to
indemnification and to the advancement of expenses conferred in Sections 8.1 and
8.2 shall be contract rights and such rights shall continue as to an indemnitee
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the indemnitee’s heirs, executors and
administrators.
Article
VIII, Section 8.3 of our Amended and Restated By-Laws provides that if a claim
under Section 8.1 or 8.2 is not paid in full by us within 60 days after a
written claim has been received by us, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be 20 days,
the indemnitee may at any time thereafter bring suit against us to recover the
unpaid amount of the claim to the fullest extent permitted by law. If successful
in whole or in part in any such suit, or in a suit brought by us to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In any suit brought by (i) the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
(ii) us to recover an advancement of expenses pursuant to the terms of an
undertaking, we will be entitled to recover such expenses upon a final
adjudication that, the indemnitee has not met any applicable standard for
indemnification set forth in the General Corporation Law of the State of
Delaware. Neither our failure (including our board of directors, independent
legal counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the General Corporation Law of the State of Delaware, nor
an actual determination by us (including our board of directors, independent
legal counsel, or its stockholders) that the indemnitee has not met the
applicable standard of conduct, will create a presumption that the indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense to the suit. In any suit brought by the
indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or brought by us to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under Article VIII of our Amended and Restated By-Laws or otherwise
shall be on us.
Article
VIII, Section 8.4 of our Amended and Restated By-Laws provides that the rights
to indemnification and to the advancement of expenses conferred in Article VIII
shall not be exclusive of any other right which any person may have or hereafter
acquire under any statute, our Amended and Restated Certificate of
Incorporation, Amended and Restated By-Laws, agreement, vote of stockholders or
disinterested directors or otherwise.
Article
VIII, Section 8.5 of our Amended and Restated By-Laws provides that we may
maintain insurance, at our expense, to protect us and any director, officer,
employee or agent of the Corporation or another corporation, partnership, joint
venture, trust or other enterprise against any expense, liability or loss,
whether or not we would have the power to indemnify the person against the
expense, liability or loss under the General Corporation Law of the State of
Delaware.
Article
VIII, Section 8.6 of our Amended and Restated By-Laws provides that we may, to
the extent authorized from time to time by our board of directors, grant rights
to indemnification and to the advancement of expenses to any employee or agent
to the fullest extent of the provisions of Article VIII with respect to the
indemnification and advancement of expenses of our directors and
officers.
INSOFAR
AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT MAY BE
PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE COMPANY PURSUANT TO
THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED THAT IN THE OPINION OF
THE SECURITIES AND EXCHANGE COMMISSION, SUCH INDEMNIFICATION IS AGAINST PUBLIC
POLICY AS EXPRESSED IN THE SECURITIES ACT AND IS THEREFORE
UNENFORCEABLE.
II-2
Item
15. Recent Sales of Unregistered Securities.
We have
issued the following unregistered securities since the date of our inception on
June 2, 2009:
On June
2, 2009, we issued an aggregate of 1,000,000 shares of our common stock to Mr.
Arne Dunhem, our CEO, President and a director. We recorded a subscription
receivable of $1,000 as of June 2, 2009. On December 31, 2009, Mr. Dunhem
exchanged and converted an aggregate of $1,000 in expenses incurred and billed
to us into the payment for the subscription. The shares were issued in reliance
upon the exemption from the registration requirements under the Securities Act
of 1933, as amended (the “Securities Act”), set forth in Section 4(2)
thereof.
On
December 31, 2009, we issued an aggregate of 3,000,000 of our common stock
to Mr. Arne Dunhem, our CEO, President and a director, in consideration for
$3,000 in expenses incurred and billed to us. The shares were issued in reliance
upon the exemption from the registration requirements under the Securities Act
set forth in Section 4(2) thereof.
On
December 31, 2009, we issued an aggregate of 3,413,000 share of our common stock
to Mr. Dean Schauer, our Chief Financial Officer, Senior Vice
President, and Treasurer, in consideration of an aggregate of $3,413 in
expenses incurred and billed to us. In addition, on December 31, 2009, we
entered into a stock subscription agreement with Mr. Schauer pursuant to which
Mr. Schauer purchased an aggregate of 587,000 shares for an aggregate purchase
price of $587. The shares were issued in reliance upon the exemption from
the registration requirements under the Securities Act set forth in Section 4(2)
thereof.
On
December 31, 2009, we entered into a stock subscription agreement with Mr. Leif
T. Carlsson, a director, pursuant to which he purchased an
aggregate of 1,000,000 shares of our common stock for an aggregate purchase
price of $1,000. The shares were issued in reliance upon the exemption
from the registration requirements under the Securities Act set forth in Section
4(2) thereof and/or Regulation S under the Securities Act.
On
December 31, 2009, we entered into a stock subscription agreement with Mason
Media Group, LLC, a limited liability company that is wholly-owned and
controlled by Mr. Todd Mason, a director, pursuant to which Mason Media Group,
LLC, purchased an aggregate of 1,000,000 shares of our common stock for an
aggregate purchase price of $1,000. The shares were issued in reliance upon the
exemption from the registration requirements under the Securities Act set forth
in Section 4(2) thereof.
Item
16. Exhibits and Financial Statement Schedules.
The
following exhibits are filed as part of this Registration
Statement:
Incorporated by Reference From
|
||||||||
Exhibit
No.
|
Exhibit Description
|
Form
|
Exhibit
No.
|
Filing
Date
|
||||
3.1
|
Amended
and Restated Certificate of Incorporation of the Registrant, dated March
13, 2010, filed herewith
|
|||||||
3.2
|
Amended
and Restated By-Laws, adopted March 13, 2010, filed
herewith
|
|||||||
4.1
|
Form
of Common Stock Certificate, filed herewith
|
|||||||
5.1
|
Legal
Opinion of Babirak Carr, P.C., filed herewith
|
|||||||
10.1
|
Form
of Subscription Agreement for initial public offering, filed
herewith
|
|||||||
10.2
|
Form
of Subscription Agreement for common stock, filed herewith
|
|||||||
21
|
List
of Subsidiaries, filed herewith
|
|||||||
23.1
|
Consent
of Friedman LLP, filed herewith
|
|||||||
23.2
|
Consent
of Babirak Carr, P.C., included in Exhibit 5.1.
|
|||||||
24.1
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Power
of Attorney of certain directors and officers of the Registrant (included
on Signature Page of this Registration Statement).
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II-3
Item
17. Undertakings
(a)
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Rule
415 Offering. The undersigned Registrant hereby
undertakes:
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(1)
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To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration
statement:
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(i)
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To
include any prospectus required by section 10(a)(3) of the Securities
Act;
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(ii)
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To
reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in
the effective registration
statement;
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(iii)
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to
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration
statement.
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(2)
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That,
for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
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(3)
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To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
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(6)
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That,
for purpose of determining liability of the registrant under the
Securities Act of 1933 to any purchaser in the initial distribution of the
securities:
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The
undersigned registrant undertakes that in a primary offering of securities of
the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of the following
communications, the undersigned registrant will be a seller to the purchaser and
will be considered to offer or sell such securities to such
purchaser:
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(i)
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Any
preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule
424;
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(ii)
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Any
free writing prospectus relating to the offering prepared by or on behalf
of the undersigned registrant or used or referred to by the undersigned
registrant;
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(iii)
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The
portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant;
and
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II-4
|
(iv)
|
Any
other communication that is not an offer in the offering made by the
undersigned registrant to the
purchaser.
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(h)
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Indemnification.
|
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(i)
|
The
undersigned registrant hereby undertakes
that:
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|
(1)
|
For
purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b) (1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared
effective.
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(2)
|
For
the purpose of determining any liability under the Securities Act of 1933,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering
thereof.
|
II-5
|
SIGNATURES
|
Pursuant to the requirements of the
Securities Act of 1933, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Washington, D.C., on April 8, 2010.
ELSINORE
SERVICES, INC.
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||
By:
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/s/ Arne Dunhem
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|
Arne
Dunhem
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||
Chief
Executive Officer and President
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||
(Principal
Executive Officer)
|
POWERS
OF ATTORNEY
KNOW ALL MEN BY THESE
PRESENTS, that each person whose signature appears below constitutes and
appoints Arne Dunhem and Dean V. Schauer, or either of them, his or her true and
lawful attorney-in-fact and agents, with full power of substitution and
re-substitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to sign any
related Registration Statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granted unto said attorney-in-fact and agents, full power and
authority to do and to perform each and every act and thing required and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents, or any of them or their
substitutes or substitutes, could lawfully do or cause to be done by virtue
hereof.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
Signature
|
Title
|
Date
|
||
/s/ Arne Dunhem
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Chairman of the Board, Chief Executive
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April 8, 2010
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||
Arne Dunhem
|
Officer, President and Secretary
|
|||
(Principal Executive Officer)
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||||
|
||||
/s/ Dean V. Schauer
|
Senior Vice President, Chief Financial
|
April 8, 2010
|
||
Dean V. Schauer
|
Officer and Director
|
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||
(Principal Financial and Accounting
|
||||
Officer)
|
||||
/s/ Todd Mason
|
Director
|
April 8, 2010
|
||
Todd Mason
|
||||
/s/ Leif T. Carlsson
|
Director
|
April 8, 2010
|
||
Leif Carlsson
|
II-6