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EX-23.1 - ELSINORE SERVICES INC | v186892_ex23-1.htm |
EX-10.1 - ELSINORE SERVICES INC | v186892_ex10-1.htm |
As
filed with the Securities and Exchange Commission on June 1,
2010.
Registration
No. 333-165949
|
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
PRE-EFFECTIVE
AMENDMENT NO. 2
TO
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.)
|
4201
Connecticut Avenue, N.W., Suite
407, Washington,
D.C. 20008 (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.
4201
Connecticut Avenue, N.W.
Suite
407
Washington,
D.C. 20008
(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. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
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 ¨
|
Accelerated
Filer ¨
|
Non-accelerated
Filer ¨
|
Smaller
Reporting Company þ
|
(Do not check if a smaller reporting company)
|
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)(3) |
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(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)
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Estimated
solely for purposes of calculating the registration fee pursuant to Rule
457(o) under the Securities Act of 1933, as
amended.
|
|
(3)
|
Previously
paid.
|
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.
Subject
to completion, dated June 1, 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. You may revoke your subscription at any time prior to our
acceptance of your subscription by notifying us in writing of your revocation
decision.
Your
subscription proceeds will not be held in an escrow account pending
closing. All proceeds of this offering will be received by us and
will be immediately available to us and for our use following acceptance of your
subscription. 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
and 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. Please refer to the section entitled “Risk
Factors” beginning on
page 7, below.
Price to public
|
Underwriting discounts and
commissions
|
Proceeds to us
|
||||||||||
Per
share
|
$ | 0.02 | $ | 0 | $ | 0.02 | ||||||
Total
maximum
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$ | 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
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3
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Prospectus
Summary
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4
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Risk
Factors
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7
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Use
of Proceeds
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15
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Dilution
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16
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Capitalization
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17
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Determination
of Our Offering Price
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17
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Dividend
Policy
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17
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Management’s
Discussion and Analysis
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17
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Our
Business
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21
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Directors
and Executive Officers
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28
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Executive
Compensation
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30
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Securities
Authorized for Issuance Under Equity Compensation Plans
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32
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Related
Party Transactions
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32
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Security
Ownership of Certain Beneficial Owners and Management
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34
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Market
for Our Common Stock and Related Stockholder Matters
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34
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Description
of Our Securities
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35
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Our
Plan of Distribution
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36
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Shares
Eligible for Future Sale
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38
|
Additional
Information
|
39
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Quantitative
and Qualitative Disclosure About Market Risk
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40
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Changes
in and Disagreements with Accountants
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40
|
Legal
Matters
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40
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Experts
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40
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Disclosure
of Commission Position on Indemnification
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40
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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
including :
|
·
|
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;
|
|
·
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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 March 31, 2010, we had current assets
in the amount of $1,100 and current liabilities in the amount of
$18,175. We had a working capital deficiency of $(17,075) as of March
31, 2010. 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.
Following
the closing of the offering, it is not our present intent or the present intent
of our management to engage in a “reverse acquisition” or “reverse merger” with
another operating entity. Our intention is to develop and implement
our business plan as described under “Management’s Discussion and
Analysis – Our Plan of Operation” beginning on page 18, under “Our Business” beginning on
page 21, and elsewhere in this prospectus.
Our
fiscal year ends on December 31.
Where
You Can Find Us
Our
principal executive offices are located at 4201
Connecticut Avenue, N.W., Suite
407, Washington,
D.C. 20008 . 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. We reserve the right to accept or reject subscriptions for
our shares in the offering for any reason or for no reason. You may
revoke your subscription at any time prior to our acceptance of your
subscription by notifying us in writing of your revocation
decision.
4
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 following acceptance of your
subscription.
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 $25,000 or 41.7% 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.
While
there are certain costs inherent in being a public reporting company, including
the costs of compliance with the periodic reporting and other requirements under
the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”),
applicable to public companies as well as the cost of the annual audit of our
financial statements to be included in our annual report on Form 10-K,
management believes such costs are outweighed by the benefits to be derived from
our ability to access certain sources of financing that management does not
believe would be available to a privately-held company. In view of
current economic conditions and based on discussions with certain private equity
funds, management believes that the availability of private equity and debt
financing and bank lending for a smaller enterprise with a developed business
plan but limited operating history and limited assets is limited.
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.
|
5
Proceeds
of the offering
|
The
net proceeds of the offering will be approximately $35,000 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”
on page 15, below. 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 a development stage company and we are subject to a number of
risks. These risks are discussed under the heading “Risk Factors”
beginning on page 7, below. Since our inception, we have incurred
operating losses, negative cash flows, and we have never generated any
revenue. As of March 31, 2010, our accumulated deficit was
$26,075 and we had cash of $1,100. 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.
|
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 balance sheet data as at
December 31, 2009, and the statement of operations data for the period
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. The
balance sheet data as at
March 31, 2010, and the statement of operations data for the three month
period ended March 31, 2010, is derived from our unaudited financial statements
included elsewhere herein.
|
For the Period from
Inception (June 2, 2009)
through
December 31, 2009
(audited)
|
For the Period from
January 1, 2010
through
March 31, 2010
(unaudited)
|
||||||
STATEMENT
OF OPERATIONS
|
||||||||
Revenues
|
$ | - | $ | - | ||||
General
and Administrative Expenses
|
18,529 | 7,546 | ||||||
Total
Operating Expenses
|
18,529 | 7,546 | ||||||
Net
Loss
|
18,529 | 7,546 |
As of
December 31, 2009
(audited)
|
As of
March 31, 2010
(unaudited)
|
|||||||
BALANCE
SHEET DATA
|
||||||||
Cash
|
$ | - | $ | 1,100 | ||||
Total
Assets
|
- | 1,100 | ||||||
Total
Liabilities
|
11,116 | 18,175 | ||||||
Stockholders’
Equity/(Deficit)
|
(11.116 | ) | (17,075 | ) |
We
have had no revenue to date and have incurred net losses since inception. We
have had limited 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
We
are a development stage company and 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 a
development stage company and 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. We are subject to all of the risks inherent in a
new business. We were formed in June 2009 and have generated no revenue as of
the date of this prospectus. As of March 31, 2010, we had cash of
$1,100 and have relied upon management advances to provide cash for our ongoing
operations. Since inception, we have experienced operating losses and
negative cash flows. We incurred an operating loss of $18,529 for the
period from our inception through December 31, 2009, and an operating loss of
$7,546 for the three month period ended March 31, 2010. Our accumulated deficit
as of March 31, 2010, is $26,075. 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
further implement our business plan. 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 borrowings. If we
are unable to raise such additional financing, we may be unable to continue in
business and may have to curtail our operations. Also, there can be
no assurance that management will continue to provide funds for our operations
in the form of advances.
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 funds 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 – Our Plan of Operation.”
7
Since
we are a new company and lack a mature 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 provide “new media” advertising and
marketing services and have a limited operating history upon which an investor
may evaluate our prospects for success. We were incorporated on June 2, 2009,
and to date have focused primarily on developing our business, establishing
certain strategic relationships with an advertising agency, and have generated
no revenue to date. Thus, there is only limited historical financial data upon
which an investor is able to evaluate our business prospects and
operations.
We expect
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 marketing 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.
Initially,
we intend to rely upon certain other strategic new media full-service
advertising and marketing agencies to assist us in providing certain services to
our customers. We have entered into one such agreement with a
strategic new media full-service advertising and marketing agency to assist us
in providing such services and we may enter into additional contracts until we
are able to further develop our infrastructure, internal systems, and operations
and employ additional personnel. However, any such additional
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 or at costs to us that may enable
our customer contracts to be profitable.
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
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. Accordingly, we may find it difficult to compete against such
agencies or any other agencies that enter the market after the date of this
prospectus. Further, we have a limited sales and marketing capability
at this time to enable us to develop 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 time and efforts to further
developing our business, there is a risk that if we are not
successful, 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.
Arne
Dunhem, our CEO and President, is devoting approximately 40 hours each week, or
approximately 75% of his business time, to our business and operations,
including establishing certain strategic relationships with other agencies and
developing our customer base. He expects to continue to devote such amount of
his time to our business and operations following the date of this
prospectus. Dean Schauer, our CFO and Senior Vice President, is
devoting approximately 35 hours each week, or approximately 70% of his business
time, to our business and operations. He expects to continue to
devote such amount of his time to our business and operations following the date
of this prospectus. However, such executive officers are engaged in other
business activities in addition to our business as disclosed under “Directors and Executive
Officers,” beginning on page 28, below. Currently, we have no employment
or other agreement or arrangement with either Mr. Dunhem or Mr. Schauer
requiring them to do so and their other business activities may, from time to
time, preclude them from devoting full time to our business and operations.
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 operations 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 fully
implement our business plan and develop our 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.
Certain
of our executive officers have limited experience in managing and operating
a new media advertising and marketing industry business. We cannot
assure you that their past experience will be sufficient to enable them to
manage our company and further implement our business plan.
Mr.
Arne Dunhem, our CEO and President, and Mr. Dean Schauer, our CFO and Senior
Vice President, have limited experience managing and operating a new media
advertising and marketing company which may limit our ability to further
implement our business plan, develop our customer base, and manage our
growth.
9
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.
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 our 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.
10
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 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 business 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.
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.
11
We
may infringe the proprietary and trade secret rights of others.
If any of
our services or our employees or agents knowingly or unknowingly violate third
party proprietary rights, we may be subject to damages or equitable
claims. For example, we may engage employees who, without notifying
us, are subject to non-compete and non-solicitation agreements that may limit
their ability to compete within our service industry or within a given
geographic area; or who may be restricted from soliciting clients or customers
of their former employees; or that may violate trade secret law, for example, by
appropriating customer lists, pricing and other financial information, or other
proprietary business information of their former employers or
others. Accordingly, we may 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, or
that we are unable to pay, or require us to curtail certain of our
operations.
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 shares has been arbitrarily determined by us and
does not bear any relationship to the 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.
12
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.
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 $0.0050 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 $0.0167
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 $0.0033 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
$6,000 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 which may affect
the liquidity for our stock, the ability of our stockholders to resell their
shares through a broker-dealer, and their ability to obtain accurate price
quotations.
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.
14
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 $5,000, assuming 1,500,000 shares of our common stock are sold,
$20,000 if 2,250,000 shares are sold, and $35,000 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)
|
||||||||||||||||
SEC
Filing Fee
|
5 | |||||||||||||||
Legal
and accounting fees and expense
|
20,000 | |||||||||||||||
Edgar
filing fees
|
3,000 | |||||||||||||||
Printing
expenses
|
500 | |||||||||||||||
Miscellaneous
expenses
|
1,495 | |||||||||||||||
Repayment
of offering expenses advanced by management or payable at, before or
following closing to auditors and transfer agent (1)
|
$ | 25,000 | $ | 25,000 | $ | 25,000 | ||||||||||
Development
of the business and establishing strategic relationships
|
1,000 | 3,000 | 7,000 | |||||||||||||
Resale
of services from strategic partner agencies and use of
systems
|
0 | 2,000 | 7,000 | |||||||||||||
General
sales and marketing campaign
|
2,000 | 3,000 | 7,000 | |||||||||||||
Media
content production
|
1,000 | 4,000 | 6,000 | |||||||||||||
SEC
reporting expenses (2)
|
0 | 6,000 | 6,000 | |||||||||||||
General
working capital
|
1,000 | 2,000 | 2,000 | |||||||||||||
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 approximately $4,087 of the expenses of this offering, for an aggregate
of $8,175. 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.
(2) If
less than 75% of the shares are sold, management intends to advance funds to pay
for SEC reporting expenses.
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.
15
DILUTION
The pro
forma net tangible book value of our common stock as of March 31, 2010, was
approximately $(17,075) or $(0.0017) 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 our common
stock outstanding prior to the offering. Without taking into account any
other changes in the pro forma net tangible book value after March 31, 2010,
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 expenses of
this offering, our pro forma net tangible book value, as adjusted at March 31,
2010, would have been approximately $42,925 or $0.0033 per share,
assuming the maximum number of shares are sold. This represents an immediate
increase in pro forma net tangible book value of $0.0050 per share, assuming the
maximum number of shares is sold, to existing stockholders, and immediate
dilution in pro forma net tangible book value of $0.0167 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 expenses of this
offering and assuming the maximum number of shares is sold.
Existing Stockholders if all
of the Shares are Sold
Price
per share
|
$ | 0.02 | ||
Net
tangible book value per share before offering
|
$ | (0.0017 | ) | |
Potential
gain to existing shareholders
|
$ | 60,000 | ||
Net
tangible book value per share after offering
|
$ | 0.0033 | ||
Increase
to present stockholders in net tangible book value per share after
offering
|
$ | 0.0050 | ||
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
|
$ | 0.0167 | ||
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 | % |
16
CAPITALIZATION
The
following table sets forth our cash, cash equivalents, and capitalization at
March 31, 2010.
As
of
December
31, 2009
(audited)
|
As
of
March
31, 2010
(unaudited)
|
|||||||
Cash
and cash equivalents
|
$ | 0 | $ | 1,100 | ||||
Stockholders’
Equity (Deficit):
|
$ | (11,116 | ) | $ | (17,075 | ) | ||
Common
stock, $.001 par value;
|
||||||||
10,000,000
shares authorized and 10,000,000 shares issued
|
$ | 10,000 | $ | 10,000 | ||||
Common
stock subscribed
|
$ | (2,587 | ) | $ | (1,000 | ) | ||
Accumulated
comprehensive income (loss)
|
$ | 0 | $ | 0 | ||||
Additional
paid-in capital
|
$ | 0 | $ | 0 | ||||
Accumulated
deficit
|
$ | (18,529 | ) | $ | (26,075 | ) | ||
Total
stockholders’ deficit
|
$ | (11,116 | ) | $ | (17,075 | ) | ||
Total
capitalization
|
$ | (11,116 | ) | $ | (17,075 | ) |
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
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.
17
Our
Plan of Operation
We are a
full-service Advertising and Marketing agency that operates through different
practice groups and provides advertising and marketing services, with an
emphasis on digital interactive media. We 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 are able to
provide a greater, tangible, value-added service to our clients, versus our
competition. Our strategy is to develop and establish 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 expect we
will need to raise additional funds through one or more equity or debt financing
or bank borrowings, as discussed below.
As of the
date of this prospectus, we have entered into a strategic arrangement with a
marketing and advertising agency to assist us in providing such services to our
customers. As we develop and expand our services offerings and expand into
different geographical markets, we expect to enter into additional similar
arrangements with other advertising and marketing services
providers.
Our
business plan and strategy includes the following:
•
|
New media advertising and
marketing service development. We offer and plan to further develop
our new media advertising and marketing services capabilities and our
long-term service offerings. Initially, we plan to provide a full range
of new media services by reselling the services of other agencies and, as
we further develop our infrastructure and internal operational
capabilities, through our own agency
personnel.
|
•
|
Establish additional strategic
relationships. We anticipate entering into service agreements with
advertising and marketing agencies that will enable us to access their
services for our clients. Such agreements will cover: the development and
implementation of client media campaigns, including the internet, email,
and other new media; the types of services and media to be made available
to our customers; the development of demographic industry-centric data;
the terms of reimbursement of the costs and charges of providing such
services of the provider; time frames for providing such services;
and availability of and access to databases for purposes of
distributing marketing information and materials. We believe there may be
significant cost savings if we could benefit from experience and
complementary services already developed by service providers. As of the
date of this prospectus, we have entered into a two year agreement with
FaceTime Strategies, LLC, to assist us in providing new media advertising
and marketing services to our clients and customers. For
a discussion of our agreement with FaceTime, see “Our Business- Strategic
Relationships” on page 24,
below.
|
•
|
Initiate new media computer
system usage. We have entered into an arrangement with FaceTime to
provide to us access to an operational new media computer system. We
expect to utilize such system until we have acquired our own full-scale
system. However, 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.
|
•
|
Sales and marketing
campaign. Our future success and the expansion of our business will
require us to further develop our sales and marketing
strategy.
|
•
|
Media content
production. We expect to offer our customers media content,
including certain advertising material. We expect to offer such services
either directly or through collaboration with our strategic
partners.
|
•
|
New media full scale computer
system implementation and installation. Our ability to offer our
own proprietary new media computer systems access and service will depend
on our ability to raise financing in addition to the funds generated from
this offering.
|
18
As
discussed above, we have entered into one service agreement with an advertising
and marketing agency and expect to develop further relationships with service
providers we identify that are able to provide services we require to service
our customers and clients; however, our ability to provide services and develop
our customer base is dependent on our ability to raise additional financing, of
which there can be no assurance. Our inability to raise additional financing in
addition to the proceeds of this offering may cause delays in our ability to
make available to our customers a full range of services and we may be more
reliant upon our strategic partners to provide such services. In addition to the
risks identified under “Risk
Factors” commencing on page 7, and as discussed above, we may find it
difficult or impossible to offer our services profitably in the event we are
required to engage strategic partners to provide services to our customers
rather than offering such services through our own in house personnel.
In such
event, we may be required to curtail or discontinue our operations and investors
could 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,”
on page 7, above.
Moreover,
we expect we will require additional financing in addition to the proceeds of
this offering. In the event such additional financing is not available to us or
on terms acceptable to us, we may be unable to continue offering such services
or to offer a full range of sales and marketing services to our customers and we
may need to curtail or discontinue certain or all of our services
offerings.
Our
Limited Operating History
We were
formed in June 2009 and have a limited operating history. Our 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, and as of March 31, 2010,
and for the three month period ended March 31, 2010. Accordingly, we have just
begun implementing our business plan. 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
Since
inception through March 31, 2010, we have had no revenue. Expenses for the
period from inception (June 2, 2009 through December 31, 2009, totaled $18,529
resulting in a net loss of $18,529, and expenses for the three month period
ended March 31, 2010, totaled $7,546 resulting in a net loss of $7,546. All of
such losses are attributable to expenses related to our initial
organization.
Our
Capital Resources and Liquidity
As of
March 31, 2010, we had $1,100 in cash. Subsequently, on or about April 5, 2010,
we received cash from a stock subscription in the amount of $1,000 from one 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 financing in addition to the financing from this offering. No
or no substantial revenues are anticipated until we have completed the financing
from this offering and further implemented our business plan. We are reliant
upon the proceeds of this offering to fund operations and will be required to
raise additional financing to fully implement our strategy and stay in
business.
In
addition to the proceeds from this offering, over the next 12 months, we
anticipate we will require additional financing of approximately
$5,000,000 to fund our operations, develop our business, and to satisfy the
costs associated with 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 borrowings 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 continue our operations. As a result, investors would lose some
or all of their investment in us.
19
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 other advertising 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 systems 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 December 31, 2009.
Critical
Accounting Policies
Basis
of Presentation
The
financial statements are presented in United States dollars and have been
prepared in accordance with accounting principles generally accepted in the
United States.
Going
Concern
Our
financial statements are prepared assuming we will continue as a going concern.
This contemplates the realization of assets and the liquidation of liabilities
in the normal course of business. As of March 31, 2010, we had cash of $1,100.
To date, we have not generated any revenue to cover our operational 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), and an
accumulated deficit of $26,075 as of March 31, 2010. We will be dependent upon
the raising of additional capital through one of more debt or equity financings
or bank borrowing in order to fully 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 March
31, 2010, we had issued an aggregate of 9,000,000 shares of our common stock at
a purchase price of $0.001 per share in exchange for $8,000 in expenses incurred
on our behalf and $1,000 in cash. On March 31, 2009, a director subscribed for
and agreed to purchase an aggregate of 1,000,000 shares of our common stock at a
purchase price of $0.001 per share, and, on or about April 5, 2010, we received
the cash from such stock subscription in the amount of $1,000.
20
As of
March 31, 2010, our officers and directors have advanced an aggregate of $8,175
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, if any.
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. At March 31, 2010
there were no deferred tax assets or 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
“new media” advertising and marketing agency that operates through different
practice groups providing advertising and marketing services, with an emphasis
on digital interactive media. We 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.
Our
ability to continue to implement our business plan is dependent on our ability
to raise financing, including through this offering. We anticipate that,
following the closing of this offering, we will seek to raise additional funds
to further 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.
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. 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. (See article entitled
“Marketers Digital Spending to
Overtake Print for First Time Ever, According to Outsell, Inc.,” March 8,
2010; and article entitled “Digital Lift-Off,” dated
March 8, 2010, Forbes.com.) 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.
21
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, it had tracked over 112 million
blog sites on the Internet as of February 2008. (See article entitled “How Many Blogs are There? Is
Someone Still Counting?” The Blog Herald, February 11, 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, as of July 2006, over 175,000 new
blogs were created each day. (See “Sifrey’s Alerts,” August 7,
2006, at http://www.sifry.com/alerts/archives/000436.html.) 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 . (See 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 (See
http://press.linkedin.com/,
May 2010), or Collectivex/Groupsite.com.
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 $1.14 billion on social network advertising with that figure
expected to rise to approximately $1.29 billion in 2010, and to $1.395 billion
in 2011. (See
article entitled “Is Social
Network Advertising Ready for Primetime?” July 9, 2009,
www.emarketer.com/Articles/Print.aspx?1007165.) In the same article, in 2009, it
was estimated by eMarketer that Facebook and MySpace accounted for 63% of the
industry's advertising revenue.
While the
advertising and marketing industry (also known as marketing communications) is
fragmented, with a few thousand small agencies in the U.S. (i.e., agencies with
less than $10 million in annual revenue), the industry remains dominated by a
handful of agencies. From time to time, these agencies acquire firms with
expertise in specific practice areas. However, there are a number of
middle-market-sized firms that continue to operate independently.
While the
small to medium sized agencies are primarily engaged in traditional marketing
and advertising, the evolution of the alternative media segment in recent years
has resulted in the emergence of small agencies that are focused on specific
elements of new media, including digital interactive media. Interestingly,
certain of these firms have elected to direct their efforts in specific
verticals or, in many cases, have opted not to offer traditional advertising and
marketing services and operate exclusively as alternative or digital interactive
media entities. For some middle market firms, such as Schematic, 24/7 Media and
Blast Radius, this strategy has proven successful to some degree as they have
enjoyed a growth in revenue and a growing reputation. Furthermore, this success
has resulted in acquisitions of such agencies by larger agencies.
Description
of Our Service Offering
We offer
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.
22
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.
Our
revenue will be derived from fees for services rendered to our clients based
upon the hourly billing rates of our employees or agents. We bill on a monthly
basis in arrears and require our customers to pay their invoices within 30 days
of receipt thereof. We also bill on a fixed fee basis for certain projects. We
intend to book revenue net of sales, use and value added taxes. A portion of our
revenue will be derived from performance-based commissions and other performance
incentives tied to the quality of our services and success of our media and/or
advertising campaigns.
In an
effort to fully engage the target markets, we 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 also
utilize traditional advertising and marketing methods, including:
|
·
|
Campaign
Design and Creation
|
|
·
|
Direct
Response
|
|
·
|
Market
Research
|
|
·
|
Media
Buying
|
|
·
|
Promotion
|
|
·
|
Strategic
Planning
|
|
·
|
Competition
|
We
believe most prospective clients desire a new media full-service advertising and
marketing agency at an affordable price. We intend to market our services
primarily to such clients.
23
Much like
traditional advertising and marketing firms, we intend to work closely with our
clients to define objectives, craft messages and define target markets. We will
implement these plans through the production of innovative audio, video, online
and/or print content that builds brand awareness and constituencies, and drives
sales, thereby motivating consumers. Each project will include one or
more of the following:
|
·
|
Campaign
design and creation
|
|
·
|
Market
Research, and Direct Response tasks
|
|
·
|
Media
buying activities for promotion over TV, radio or
newspapers
|
|
·
|
Traditional
tasks, including strategic planning and analysis of the client’s
competitors in the market
|
However,
while we perform strategic planning functions in similar ways to our traditional
competitors, we will implement processes, protocols and delivery systems that we
believe are far more robust and effective. For example, the traditional delivery
outlets that advertising and marketing firms have employed have remained largely
the same for decades and in recent years have proven to be less effective than
new methods, extremely expensive, and slow to implement. Conversely, we will
leverage state-of-the-art digital interactive media technology to develop more
targeted, effective, quantifiable, less expensive, and more comprehensive
campaigns. By utilizing digital interactive media such as the internet, mobile
communications, and digital interactive signage, we expect we will be able to
implement highly targeted campaigns to a local and regional market quickly and
cost effectively. Accordingly, we believe we can provide a greater, tangible,
value-added service to our clients, versus our competitors.
Strategically,
we will focus our efforts on those clients that have not yet created or
implemented a digital interactive media plan and/or are seeking to reach their
objectives via a much more targeted, comprehensive, effective campaign,
utilizing state-of-the art tools and methods. These prospective clients will be
approached through targeted marketing. We are focusing on those clients that
have embraced the digital interactive media concept and may engage us to direct
their efforts from the planning and campaign creation phase to implementation
through multiple channels, such as social media and mobile marketing, and direct
response.
Our
industry is both highly fragmented at the bottom end, top-heavy with four firms
dominating the market and generating approximately one-half of all U.S.
marketing communications’ revenue, as well as certain a number of middle market
sized agencies.
In the
traditional marketing/communications agency market, the largest firms include
Omnicom, WPP, Publicis, and Interpublic. Each of these firms derive
approximately one-half of their revenue from marketing services and have
acquired agencies in recent years in an effort to expand their reach, practice
areas, and diversify their respective customer bases. As a result of these
acquisitions, in which the sellers continue to operate under their own brand,
these larger agencies have been increasing their presence and expertise in the
digital interactive media space. However, we believe that it has taken time to
integrate these firms and effectively execute on cross-selling
opportunities.
Strategic
Relationships
Currently,
we are offering our advertising and marketing services to clients and customers
and are utilizing the services of certain strategic relationships we have
entered into with another advertising and marketing agency, as described below.
As we develop our customer base and geographic reach, we expect to enter into
additional such relationships and/or provide such services through our own
in-house advertising and marketing capability.
24
Our Agreement with
FaceTime
Effective
May 17, 2010, we entered into a two year services agreement with FaceTime
Strategy, LLC, a marketing, public relations, database development and
management company. Under the agreement, FaceTime has agreed to provide to us
certain web site upgrade, development and maintenance services and web site
blog, shareholder communications and maintenance, and related services for us
for a one-time fee of $60,000 and a monthly maintenance fee of $2,500. Also,
FaceTime has agreed to provide services with regard to: the preparation of our
marketing kit; communication with supporting vendors in fulfillment of our
client’s marketing programs; maintain software used for customer address
standardization; provide our clients with access to certain system database
management software, and related services for a one-time fee of $25,000 and a
monthly maintenance fee of $2,500. Further, FaceTime has agreed to provide to us
email marketing services, online survey, and tracking and graphical reporting
services, electronic email mailings services, and related services for a monthly
maintenance fee of $1,000. FaceTime has also agreed to provide the following
services for our clients: campaign design and creation; strategic planning;
direct response programs; market research; media buying; promotion; podcast and
webcast preparation; viral marketing campaigns; social networking and media
content creation and management; and related services at costs to be agreed to
by us and FaceTime. Each of the foregoing services will commence upon our mutual
agreement with FaceTime. We or FaceTime may terminate the agreement upon thirty
days’ prior written notice by a non-defaulting party to the defaulting
party in the event of an uncured default under the agreement during which
period the defaulting party shall have the opportunity to cure the default. The
agreement also contains certain proprietary information, confidentiality,
non-disclosure and indemnification provisions.
Marketing
Our
business strategy for ensuring our long-term growth and success as a new media
full-service advertising and marketing agency, includes:
|
·
|
Identifying
strategic core partners in the area of complementary new media services
for advertising and marketing;
|
|
·
|
The
active use of blog sites;
|
|
·
|
Developing
relationships with select local media, to include radio and television to
promote us;
|
|
·
|
Initiating
active e-marketing to a number of prospective business
clients;
|
|
·
|
Developing
and distribute a marketing kit to be used when making sales
calls;
|
|
·
|
Initiating
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;
|
We
believe our clients desire a new media full-service advertising and marketing
agency vendor or a partnership at an affordable price.
Our
specific marketing activities will include the following:
|
·
|
Web site. Update and
upgrade our web site for a more complete description of us and our
services.
|
|
·
|
E-Marketing.
Compilation of a comprehensive marketing e-mail list of businesses in the
U.S. with an initial focus on the East Coast. We will distribute
advertising and marketing strategy briefs to such businesses. E-mails
may include blogging strategy, viral video examples, benefits of search
engine optimization, etc.
|
|
·
|
Blogs. Create a blog
site that is search engine optimized and can be viewed on our home
page. We will routinely comment on news, stories, and events
regarding new media, and provide strategic and tactical methods of
leveraging these trends. Blogs will include video and the latest
techniques in the blogsphere.
|
|
·
|
PR Campaigns. We intend
to issue several press releases each month describing new business
developments, to be distributed via PR Newswire, both with
traditional distribution and on-line, and posted to our web
site.
|
|
·
|
Search Engine Optimization.
Utilization of search engine optimization (“SEO”) to drive
attention and traffic to our web
site.
|
25
|
·
|
Viral Video Marketing.
Produce videos demonstrating our capabilities and include comments on
strategies and the implementation of such strategies to prospective
clients.
|
|
·
|
Broadcast Marketing.
Establish arrangements with select television and radio networks so that
we can produce commercials to promote us and drive prospective clients to
our website.
|
|
·
|
Print. Distribute a
marketing kit for delivery to our prospective customers outlining our
service offerings.
|
Our
Competitive Advantages
As a full
service agency with a focus on digital interactive media, we expect to be able
to build a competitive agency by attracting technical, marketing and creative
personnel that are leaders in both traditional and new media advertising and
marketing. We can thus help our clients maximize the potential of their
advertising and marketing dollars providing quantifiable results for their
campaigns. The following factors will also provide us with competitive
advantages:
·
|
Unified Branding.
Certain of the large agencies have engaged in acquisition
strategies over the years allowing the acquired firms to operate under
their own brand, thereby offering a basket of services to their clients
through their many, individually branded companies. We will promote and
offer our services under a single brand. We believe that we will be
well-positioned to capitalize on demands for digital interactive media
advertising and marketing services and that, through our strategy and
positioning, we will be able to secure major accounts based on our
developed expertise and our unified
brand.
|
·
|
Targeted media.
Targeted new media attracts prospective consumer customers who are
relatively narrowly focused demographically or in their interests.
Targeted new media can deliver better measurable marketing results for our
clients, at lower media costs for us, due to greater attractiveness for
targeted offerings and, often, due to less competition from traditional
advertisers. We will develop many of the targeted new media sources for
our marketing programs and make them proprietary and more defensible
because of our direct ownership of the
technologies.
|
·
|
Vertical market segments and
focuses. We
are focusing our efforts on large, attractive vertical market segments,
and on developing our depth of media and coverage of prospective clients
and client offerings within them. We expect to establish strong
capabilities in technologies for developing services for vertical market
segments and media on-line, and in providing measurable marketing results
for our clients. We are focusing on clients who are moving their marketing
spending to measurable new media advertising methods and on
information-intensive vertical market segments. This focus allows us to
utilize targeted new media technologies, in-depth industry and client
knowledge, and customer segmentation and breadth of client offerings, or
coverage, to deliver results for our clients and greater media
yield.
|
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.
26
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 is devoting and, following the
closing of our offering, expects to continue devoting approximately 40 hours a
week to our business. Mr. Schauer is devoting and, following the closing of our
offering, expects to continue devoting approximately 35 hours per week to our
business. 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, two
consultants are supporting our activities on a part-time basis, including a
Manager of Operations, Magdy Battikha, and a strategic advisor, Mr. Todd Mason,
who is also one of our directors. See biographical information set forth under
“Directors and Executive
Officers” beginning on page 28, below. 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 4201
Connecticut Avenue, N.W., Suite
407, Washington,
D.C. 20008 and are provided 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 fully implement our business plan and generate
revenue. Our telephone number at this location is (202) 609-7756.
Legal
Proceedings
We are
not a party to any legal proceeding.
27
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 was 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 37 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. Since September 2008, Ariel Way, Inc. has been delinquent
in its SEC public reporting obligations. 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. In April 2002, Neoreach became a wholly-owned subsidiary
of MobilePro. 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.
28
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 46 years of senior
executive management experience with large European multinational corporations
as well as with early stage technology companies. Since 2002 he has 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 for various media
companies. 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.
Consultant
– Manager of Operations
Biographical
information for Mr. Battikha, our Manager of Operations, is set forth
below:
Magdy
Battikha has been a consultant to us since September 2009, acting as a Manager
of Operations. Mr. Battikha has been an Adjunct Mathematics teacher with St.
Petersburg College, Florida, since August 2009 and has been a consulting
engineer for AANTV (St. Petersburg) since early 2008. Mr. Battikha served as a
Senior Vice President, Engineering Development, for Ariel Way, Inc. between
August, 2004 and August 2008. He was a Senior Manager, Earth Station Systems,
with the global satellite company INTELSAT for 21 year between 1983 through July
2004. Prior to joining INTELSAT, Mr. Battikha was a Group Leader at Teleglobe
Canada during the period 1978 to 1983, Manager of station in Newfoundland,
Canada for the Remote Sensing via satellites (employed by the Ministry of
Energy, Mines and Resources, Canada) and an earth station engineer with Telesat
Canada. Mr. Battikha holds a Master of Engineering (Electrical Systems) from
Concordia University, Montreal, Canada, and a Bachelor of Engineering
(Electrical) from McGill University, Montreal.
29
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 March 31, 2010, 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.
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
Principal
Executive Officer
|
2009
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- |
30
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.
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.
31
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.
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 our 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 our common stock at $0.001 per share or for aggregate proceeds to us
of $1,000.
32
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 our common stock at $0.001 per share or for
aggregate proceeds to us of $1,000.
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 approximately
$4,087 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.
Our
principal executive offices are provided to us on a month-by-month basis at
nominal cost by Mason Media, LLC, a company controlled by Mr. Todd Mason, one of
our directors and a principal stockholder of us.
Our
Services Agreement with FaceTime
Effective
May 17, 2010, we entered into a two year services agreement with FaceTime
Strategy, LLC, a marketing, public relations, database development and
management company. Mr. Todd Mason, our director and a principal
shareholder of us, is the Chairman and Chief Executive Officer, managing member,
and a control person of FaceTime. Under the agreement, FaceTime has agreed
to provide to us certain web site upgrade, development and maintenance services
and web site blog, shareholder communications and maintenance, and related
services for us for a one-time fee of $60,000 and a monthly maintenance fee of
$2,500. Also, FaceTime has agreed to provide services with regard to: the
preparation of our marketing kit; communication with supporting vendors in
fulfillment of our client’s marketing programs; maintain software used for
customer address standardization; provide our clients with access to certain
system database management software, and related services for a one-time fee of
$25,000 and a monthly maintenance fee of $2,500. Further, FaceTime has
agreed to provide to us email marketing services, online survey, and tracking
and graphical reporting services, electronic email mailings services, and
related services for a monthly maintenance fee of $1,000. FaceTime has
also agreed to provide the following services for our clients: campaign design
and creation; strategic planning; direct response programs; market research;
media buying; promotion; podcast and webcast preparation; viral marketing
campaigns; social networking and media content creation and management; and
related services at costs to be agreed to by us and FaceTime. Each of the
foregoing services will commence upon our mutual agreement with FaceTime.
We or FaceTime may terminate the agreement upon thirty days’ prior written
notice by a non-defaulting party to the defaulting party in the event of
an uncured default under the agreement during which period the defaulting party
shall have the opportunity to cure the default. The agreement also contains
certain proprietary information, confidentiality, non-disclosure and
indemnification provisions.
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.
33
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The
following table shows, as of May 31, 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 May 31, 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 and is generally determined by “voting power” and/or
“investment power” with respect to securities. Unless otherwise
noted, all shares of our 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 our 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.,
4201
Connecticut Avenue, N.W., Suite
407, 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.
|
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.
34
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
May 31, 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.
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 our 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.
35
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, however, would 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 our 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.
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 have 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.
36
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 following our acceptance
of your subscription. 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 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.
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.
|
37
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. You
may revoke your subscription at any time prior to our acceptance of your
subscription by notifying us in writing of your subscription revocation
decision.
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.
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 our common
stock outstanding, assuming we sell all of the shares in this offering. Of these
shares of our common stock, 3,000,000 shares of our 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 our 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.
38
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 our
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.
ADDITIONAL
INFORMATION
We
have filed with the SEC a registration statement on Form S-1 under the
Securities Act 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.
39
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.
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.
40
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-2
|
Balance
Sheet as of December 31, 2009
|
F-3
|
Statement
of Operations for the period from June 2, 2009 (inception) to December 31,
2009
|
F-4
|
Statement
of Changes in Stockholders' Deficiency for the period from June 2,
2009 (inception) to December 31, 2009
|
F-5
|
Statement
of Cash Flows for the period from June 2, 2009 (inception) to
December 31, 2009
|
F-6
|
Notes
to Financial Statements
|
F-7
– F-8
|
F-1
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-2
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-3
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-4
ELSINORE
SERVICES, INC.
(A
Development Stage Enterprise)
STATEMENT
OF STOCKHOLDERS’ DEFICIENCY
FROM
INCEPTION (JUNE 2, 2009) TO DECEMBER 31, 2009
Common Stock
|
Common
Stock
|
Accumulated
|
||||||||||||||||||
Shares
|
Amount
|
Subscription
|
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-5
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:
|
||||
Shares
issued for operating expenses (See Note 4)
|
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-6
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.
F-7
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-8
ELSINORE
SERVICES, INC.
(A
Development Stage Enterprise)
FINANCIAL
STATEMENTS
MARCH
31, 2010
(UNAUDITED)
F-9
Elsinore
Services, Inc.
(A
Development Stage Enterprise)
March 31,
2010
INDEX TO UNAUDITED FINANCIAL
INFORMATION
Page(s)
|
|||
Balance
Sheet as of March 31, 2010
|
F-11
|
||
Statement
of Operations for the three months ended March 31, 2010 and the period
from June 2, 2009 (inception) to March 31, 2010
|
F-12
|
||
Statement
of Changes in Stockholders’ Deficiency for the three months ended March
31, 2010
|
F-13
|
||
Statement
of Changes in Stockholders' Deficiency for the period from June 2,
2009 (inception) to March 31, 2010
|
F-14
|
||
Statement
of Cash Flows for the three months ended March 31, 2010 and the period
from June 2, 2009 (inception) to March 31, 2010
|
F-15
|
||
Notes
to Financial Statements
|
F-16 – F-17
|
F-10
ELSINORE
SERVICES, INC.
(A
Development Stage Enterprise)
BALANCE
SHEET
MARCH
31, 2010
(UNAUDITED)
ASSETS
|
||||
Current
Assets
|
||||
Cash
|
$ | 1,100 | ||
Total
current assets
|
1,100 | |||
LIABILITIES
AND STOCKHOLDERS’ DEFICIENCY
|
||||
Current
Liabilities
|
||||
Accrued
expenses
|
$ | 10,000 | ||
Accounts
payable, officers
|
8,175 | |||
Total
current liabilities
|
18,175 | |||
Commitments
|
||||
Stockholders’
Deficiency
|
||||
Preferred
stock, $.001 par value, 5,000,000 shares authorized, none issued and
outstanding
|
- | |||
Common
stock, par value $.001, 245,000,000 shares authorized, and 10,000,000
shares issued and outstanding
|
10,000 | |||
Common
stock subscription
|
(1,000 | ) | ||
Deficit
accumulated during the development stage
|
(26,075 | ) | ||
Total
stockholders’ deficiency
|
(17,075 | ) | ||
Total
liabilities and stockholders’ deficiency
|
$ | 1,100 |
The
accompanying notes are an integral part of these financial
statements.
F-11
ELSINORE
SERVICES, INC.
(A
Development Stage Enterprise)
STATEMENTS
OF OPERATIONS
(UNAUDITED)
For the three
months ended
March 31, 2010
|
From inception
(June 2, 2009)
through
March 31, 2010
|
|||||||
Revenues
|
$ | - | $ | - | ||||
Operating
Expenses
|
||||||||
Professional
fees
|
5,000 | 15,000 | ||||||
Administrative
fees
|
2,546 | 11,075 | ||||||
7,546 | 26,075 | |||||||
Net
Loss
|
$ | (7,546 | ) | $ | (26,075 | ) | ||
|
||||||||
Net
loss per share – basic and diluted
|
$ | (0.00 | ) | |||||
Weighted
average common shares outstanding
|
10,000,000 |
The
accompanying notes are an integral part of these financial
statements.
F-12
ELSINORE
SERVICES, INC.
(A
Development Stage Enterprise)
STATEMENT
OF STOCKHOLDERS’ DEFICIENCY
FOR
THE THREE MONTHS ENDED
MARCH
31, 2010
(UNAUDITED)
Common Stock
|
Common
Stock
Subscription
|
Deficit
Accumulated
During
Development
|
||||||||||||||||||
Shares
|
Amount
|
Receivable
|
Stage
|
Total
|
||||||||||||||||
Balance,
December 31, 2009
|
10,000,000 | $ | 10,000 | $ | (2,587 | ) | $ | (18,529 | ) | $ | (11,116 | ) | ||||||||
Proceeds
from common stock subscription
|
1,587 | - | 1,587 | |||||||||||||||||
Net loss
|
- | - | - | (7,546 | ) | (7,546 | ) | |||||||||||||
Balance at March 31, 2010
|
10,000,000 | $ | 10,000 | $ | (1,000 | ) | $ | (26,075 | ) | $ | (17,075 | ) |
The
accompanying notes are an integral part of these financial
statements.
F-13
ELSINORE
SERVICES, INC.
(A
Development Stage Enterprise)
STATEMENT
OF STOCKHOLDERS’ DEFICIENCY
FROM
JUNE 2, 2009 (INCEPTION) THROUGH
MARCH
31, 2010
(UNAUDITED)
Common Stock
|
Common
Stock
Subscription
|
Deficit
Accumulated
During
Development
|
||||||||||||||||||
Shares
|
Amount
|
Receivable
|
Stage
|
Total
|
||||||||||||||||
Balance,
June 2, 2009
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
Common
stock issued
|
10,000,000 | $ | 10,000 | (1,000 | ) | - | 9,000 | |||||||||||||
Net
loss
|
- | - | - | (26,075 | ) | (26,075 | ) | |||||||||||||
Balance
at March 31, 2010
|
10,000,000 | $ | 10,000 | $ | (1,000 | ) | $ | (26,075 | ) | $ | (17,075 | ) |
The
accompanying notes are an integral part of these financial
statements.
F-14
ELSINORE
SERVICES, INC.
(A
Development Stage Enterprise)
STATEMENTS
OF CASH FLOWS
(UNAUDITED)
For the Three
Months Ended
March 31, 2010
|
From June 2, 2009
(inception)
through
March 31, 2010
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
loss
|
$ | (7,546 | ) | $ | (26,075 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||
Shares
issued for operating expenses (See Note 4)
|
587 | 8,000 | ||||||
Changes
in assets and liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
6,959 | 18,075 | ||||||
Net
cash flow from operating activities
|
- | - | ||||||
Cash
flows from financing activities
|
||||||||
Cash
receipts from stock subscription
|
1,000 | 1,000 | ||||||
Funding
provided by officers
|
100 | 100 | ||||||
Net
cash flow from financing activities
|
1,100 | 1,100 | ||||||
Net
increase in cash held
|
1,100 | 1,100 | ||||||
Cash
at the beginning of the reporting period
|
- | - | ||||||
Cash
at the end of the reporting period
|
$ | 1,100 | $ | 1,100 |
The
accompanying notes are an integral part of these financial
statements.
F-15
ELSINORE
SERVICES, INC.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
MARCH
31, 2010
(UNAUDITED)
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 provides 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.
Basis
of Presentation
The
condensed interim financial statements contain unaudited information as of March
31, 2010 and for the three months then ended and for the cumulative period June
2, 2009 (inception) through March 31, 2010. The unaudited interim
financial statements have been prepared pursuant to the rules and regulations
for reporting on Form 10-Q. Accordingly, certain disclosures required by
accounting principles generally accepted in the United States of America are not
included herein. In management’s opinion, these unaudited financial
statements include all adjustments necessary for a fair presentation of the
information when read in conjunction with our audited financial statements and
the related notes thereto. The financial information as of December
31, 2009 is derived from our 2009 audited annual financial
statements. The interim condensed financial statements should be read
in conjunction with the financial statements and the notes thereto included in
our 2009 audited annual financial statements. The financial results
for the interim period presented, are not necessarily indicative of the results
to be expected for the full year.
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.
Loss Per Common
Share
Basic
loss per share is calculated using the weighted-average number of common shares
outstanding during each reporting period. Diluted loss per share
includes potentially dilutive securities such as outstanding options and
warrants, using various methods such as the treasury stock or modified treasury
stock method in the determination of dilutive shares outstanding during each
reporting period. The Company does not have any potentially dilutive
instruments.
Fair
Value of Financial Instruments
The
carrying value of current assets and liabilities approximates fair value due to
their short-term nature.
F-16
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 March 31, 2010, and has an accumulated deficit of $26,075
as of March 31, 2010. The Company has relied upon cash from its
officers 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
March 31, 2010, the Company had received cumulative advances from two officers
in the amount of $8,175 to pay for incorporation costs, filing fees, and travel
expenses. The amounts due to these related parties are unsecured and
non-interest bearing with no set terms of repayment.
NOTE
4 – EQUITY TRANSACTIONS
During
the three months ended March 31, 2010, the Company issued 587,000 shares of our
common stock valued at $587 to a related party in exchange for $587 in expenses
incurred on behalf of the Company. For
the period June 2, 2009 (date of inception) to March 31, 2010 the Company issued
8,000,000 shares of our common stock valued at $8,000 to related parties in
exchange for $8,000 in expenses incurred on behalf of the Company.
On March
31, 2010, the Company received $1,000 to fully satisfy a stock subscription from
one of its directors. An additional 1,000,000 shares of our
common stock have been subscribed by a director of the Company at March 31,
2010.
NOTE
5 – SUBSEQUENT EVENT
On or
about April 5, 2010, the Company received cash to fully satisfy a stock
subscription in the amount of $1,000 from one of its directors.
Effective
May 17, 2010, we entered into a two year services agreement with FaceTime
Strategy, LLC, a marketing, public relations, database development and
management company. Under the agreement, FaceTime has agreed to provide to us
certain web site upgrade, development and maintenance services and web site
blog, shareholder communications and maintenance, and related services for us
for a one-time fee of $60,000 and a monthly maintenance fee of $2,500. Also,
FaceTime has agreed to provide services with regard to: the preparation of our
marketing kit; communication with supporting vendors in fulfillment of our
client’s marketing programs; maintain software used for customer address
standardization; provide our clients with access to certain system database
management software, and related services for a one-time fee of $25,000 and a
monthly maintenance fee of $2,500. Further, FaceTime has agreed to provide to us
email marketing services, online survey, and tracking and graphical reporting
services, electronic email mailings services, and related services for a monthly
maintenance fee of $1,000. FaceTime has also agreed to provide the following
services for our clients: campaign design and creation; strategic planning;
direct response programs; market research; media buying; promotion; podcast and
webcast preparation; viral marketing campaigns; social networking and media
content creation and management; and related services at costs to be agreed to
by us and FaceTime. Each of the foregoing services will commence upon our mutual
agreement with FaceTime. We or FaceTime may terminate the agreement upon thirty
days’ prior written notice by a non-defaulting party to the defaulting
party in the event of an uncured default under the agreement during
which period the defaulting party shall have the opportunity to cure the
default. The agreement also contains certain proprietary information,
confidentiality, non-disclosure and indemnification provisions.
F-17
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
|
|
59
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
|
500 | |||
Registrant’s
Counsel Fees and Expenses
|
10,000 | |||
Accountant’s
Fees and Expenses
|
10,000 | |||
Edgar
Filing Fees
|
3,000 | |||
Miscellaneous
Expenses
|
1,495 | |||
Estimated
Total
|
$ | 25,000 |
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 of our common stock 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.
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.
|
S-1
|
3.1
|
4/8/10
|
||||
3.2
|
Amended
and Restated By-Laws, adopted March 13, 2010.
|
S-1
|
3.2
|
4/8/10
|
||||
4.1
|
Form
of Common Stock Certificate.
|
S-1
|
3.3
|
4/8/10
|
||||
5.1
|
Legal
Opinion of Babirak Carr, P.C.
|
S-1
|
5.1
|
4/8/10
|
||||
10.1
|
Form
of Subscription Agreement for initial public offering, filed
herewith
|
|
|
|
||||
|
||||||||
10.2
|
Form
of Subscription Agreement for common stock utilized by directors and
executive officers in connection with initial subscription for shares of
common stock of the Registrant.
|
S-1
|
10.1
|
4/8/10
|
||||
10.3
|
Services
Agreement, dated May 17, 2010, by and between the Registrant and FaceTime
Strategy, LLC.
|
PEA#1
to
Form
S-1
|
10.3
|
5/20/10
|
||||
21
|
List
of Subsidiaries.
|
S-1
|
21
|
4/8/10
|
||||
23.1
|
Consent
of Friedman LLP, filed herewith.
|
|||||||
23.2
|
Consent
of Babirak Carr, P.C.
|
S-1
|
5.1
|
4/8/10
|
||||
24.1
|
|
Power
of Attorney of certain directors and officers of the Registrant (included
on Signature Page of this Pre-Effective Amendment No. 2 to the
Form S-1 Registration Statement).
|
|
|
|
II-3
Item
17. Undertakings
(a)
|
Rule
415 Offering. The undersigned Registrant hereby
undertakes:
|
|
(1)
|
To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration
statement:
|
(i)
|
To
include any prospectus required by section 10(a)(3) of the Securities
Act;
|
|
(ii)
|
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;
|
|
(iii)
|
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.
|
|
(2)
|
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.
|
|
(3)
|
To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
|
|
(6)
|
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:
|
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:
|
(i)
|
Any
preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule
424;
|
|
(ii)
|
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;
|
II-4
|
(iii)
|
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
|
|
(iv)
|
Any
other communication that is not an offer in the offering made by the
undersigned registrant to the
purchaser.
|
(h)
|
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:
|
|
(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.
|
|
(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 Pre-Effective
Amendment No. 2 to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the city of Washington, D.C., on
June 1, 2010.
ELSINORE
SERVICES, INC.
|
||
By:
|
/s/ Arne Dunhem
|
|
Arne
Dunhem
|
||
Chief
Executive Officer and President
|
||
(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 Pre-Effective
Amendment No. 2 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
Signature
|
Title
|
Date
|
||
/s/ Arne Dunhem
|
Chairman
of the Board, Chief Executive
|
June
1, 2010
|
||
Arne
Dunhem
|
Officer,
President and Secretary
(Principal
Executive Officer)
|
|||
/s/ Dean V. Schauer
|
Senior
Vice President, Chief Financial
|
June
1, 2010
|
||
Dean
V. Schauer
|
Officer
and Director
(Principal
Financial and Accounting
Officer)
|
|||
/s/ Todd
Mason
|
Director
|
June
1, 2010
|
||
Todd
Mason
|
||||
/s/ Leif T. Carlsson
|
Director
|
June
1, 2010
|
||
Leif
T. Carlsson
|
||||
II-6