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EX-5.1 - ACCELERATED ACQUISITIONS III INC | v189594_ex5-1.htm |
EX-23.2 - ACCELERATED ACQUISITIONS III INC | v189594_ex23-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CLS
Capital Group, Inc.
(Formerly
known as Accelerated Acquisitions III, Inc.)
(Exact
Name of Registrant as Specified in its Charter)
Delaware
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000-53393
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26-2517715
|
||
(State
or Other Jurisdiction of
Incorporation)
|
(Commission
File
No.)
|
(I.R.S.
Employer
Identification
No.)
|
||
6800 W. Central Avenue, Suite E-1, Toledo,
OH
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43617
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|||
(Address
of Principal Executive Offices)
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(Zip
Code)
|
Registrant’s
telephone number, including area code: 888-616-6639
Accelerated
Acquisitions III, Inc.
122 Ocean Park Blvd. Suite
307, Santa Monica, CA 90405
(Former
name or former address, if changed since last report)
(Address
of Principal Offices)
Approximate
date of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
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, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check the following box. o
CALCULATION
OF REGISTRATION FEE
Title of Class of Securities to be Registered
|
Amount to be
Registered(1)
|
Proposed
Maximum
Offering
Price Per
Unit(2)
|
Proposed
Maximum Aggregate
Offering Price
|
Amount of
Registration
Fee
|
||||||||||||
Common Stock, par value
$0.0001
|
423,950 | $ | 2.00 | $ | 847,900 | $ | 60.46 | |||||||||
Total
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423,950 | $ | 2.00 | $ | 847,900 | $ | 60.46 |
(1)
|
All shares registered pursuant to
this registration statement are to be offered by the selling stockholders.
Pursuant to Rule 416, this registration statement also covers such number
of additional shares of common stock to prevent dilution resulting from
stock splits, stock dividends and similar
transactions.
|
(2)
|
Based on the last sales price in
$2.00 per share of common stock. The offering price has been estimated
solely for the purpose of computing the amount of the registration fee in
accordance with Rule 457(e). Our common stock is not traded on any
national exchange and in accordance with Rule 457; the offering price was
determined by the price the shares were sold to our shareholders in a
private placement completed June 21, 2010. The price of $2.00 is a fixed
price at which the selling security holders may sell their shares until
our common stock is quoted on the OTC Bulletin Board at which time the
shares may be sold at prevailing market prices or privately negotiated
prices. There can be no assurance that a market maker will agree to file
the necessary documents with the National Association of Securities
Dealers, which operates the OTC Electronic Bulletin Board, nor can there
be any assurance that such an application for quotation will be
approved.
|
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 Section 8(a), may
determine.
The
information in this prospectus is not complete and may be changed. We may not
sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer and sale is not permitted.
Subject
to Completion, dated June , 2010
CLS
Capital Group, Inc.
423,950
Shares
of Common Stock
Par
Value $0.0001 Per Share
This
prospectus relates to the offering by the selling stockholders of CLS CAPITAL GROUP, INC. of up
to 423,950 shares of our common stock, par value $0.0001 per
share. We will not receive any proceeds from the sale of common
stock.
The
selling stockholders have advised us that they will sell the shares of common
stock from time to time in the open market, at the initial offering price of
$2.00 per share, which was the price they paid for their shares, until the
shares are quoted on the OTC Bulletin Board or national securities exchange, at
which point the selling securities holders may sell the registered
shares at market prices prevailing at the time of sale, at prices related
to the prevailing market prices, at negotiated prices, or otherwise as described
under the section of this prospectus titled “Plan of Distribution.”
Our
common stock does not currently trade in the public market.
You
should rely only on the information contained in this prospectus or any
prospectus supplement or amendment. We have not authorized anyone to provide you
with different information.
Investing
in these securities involves significant risks. See “Risk Factors”
beginning on page 11.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of the 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 June 22, 2010.
The
information contained in this prospectus is not complete and may be
changed. This prospectus is included in the registration statement
that was filed by CLS CAPITAL GROUP, INC. with the Securities and Exchange
Commission. The selling stockholders may not sell these securities
until the registration statement becomes effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is not
permitted.
TABLE
OF CONTENTS
Page
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Prospectus
Summary
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4
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Forward-Looking
Statements
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4
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Risk
Factors
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11
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Use
of Proceeds
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23
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Determination
of Offering Price
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23
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Dilution
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23
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Market
for Common Equity and Related Stockholder Matters
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24
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Business
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25
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Dividends
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25
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Security
Ownership of Certain Beneficial Owners and Management
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28
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Management
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29
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Executive
Compensation
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30
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Certain
Relationships and Related Party Transactions
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30
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Legal
Proceedings
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30
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Recent
Sales of Unregistered Securities
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31
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Description
of Securities
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31
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Selling
Shareholders
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32
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Plan
of Distribution
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33
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Experts
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36
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Where
You Can Find Additional Information
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36
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Financial
Statements
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36
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3
ABOUT
THIS PROSPECTUS
You
should rely only on the information contained in this prospectus. We have not
authorized anyone to provide you with information different from that contained
in this prospectus. The selling stockholders are offering to sell and seeking
offers to buy shares of our common stock only in jurisdictions where offers and
sales are permitted. The information contained in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of delivery of
this prospectus or of any sale of our common stock. The prospectus will be
updated and updated prospectuses made available for delivery to the extent
required by the federal securities laws.
No person
is authorized in connection with this prospectus to give any information or to
make any representations about us, the selling stockholders, the securities or
any matter discussed in this prospectus, other than the information and
representations contained in this prospectus. If any other information or
representation is given or made, such information or representation may not be
relied upon as having been authorized by us or any selling stockholder. This
prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy the securities in any circumstances under which the offer or solicitation
is unlawful. Neither the delivery of this prospectus nor any distribution of
securities in accordance with this prospectus shall, under any circumstances,
imply that there has been no change in our affairs since the date of this
prospectus. The prospectus will be updated and updated prospectuses made
available for delivery to the extent required by the federal securities
laws.
SUMMARY
The
following summary highlights selected information contained in this
prospectus. This summary does not contain all the information you
should consider before investing in the securities. Before making an
investment decision, you should read the entire prospectus carefully, including
the “Risk Factors” section, the financial statements, and the notes to the
financial statements.
For
purposes of this prospectus, unless otherwise indicated or the context otherwise
requires, all references herein to “AAIII,” “we,” “us,” and “our,” refer to CLS
CAPITAL GROUP, INC., a Delaware corporation.
THE
COMPANY
Business
Overview
From
inception (April 30, 2008) Accelerated Acquisitions III, Inc. was organized
as a vehicle to investigate and, if such investigation warrants, acquire a
target company or business seeking the perceived advantages of being a publicly
held corporation. Our principal business objectives were to achieve long-term
growth potential through a combination with a business rather than immediate,
short-term earnings. The Company has not restricted our potential candidate
target companies to any specific business, industry or geographical location
and, thus, may acquire any type of business.
On April
29, 2008, the Registrant sold 5,000,000 shares of Common Stock to Accelerated
Venture Partners, LLC for an aggregate investment of $4,000.00. The
Registrant sold these shares of Common Stock under the exemption from
registration provided by Section 4(2) of the Securities Act.
On
December 29, 2009, Redell Vincent Napper II and Reynaldo Uballe, Jr.
(“Purchasers”) each agreed to acquire 8,500,000 shares of the Company’s common
stock par value $0.0001 (17,000,000 shares in the aggregate) for a price of
$0.0001 per share. At the same time, Accelerated Venture Partners,
LLC agreed to tender 3,750,000 of their 5,000,000 shares of the Company’s common
stock par value $0.0001 for cancellation. Following these
transactions, each of Messrs. Napper and Uballe owned 46.57% of the Company’s
18,250,000 issued and outstanding shares of common stock par value $0.0001 and
the interest of Accelerated Venture Partners, LLC was reduced to approximately
6.86% of the total issued and outstanding shares. Simultaneously with
the share purchase, Timothy Neher resigned from the Company’s Board of Directors
and Messrs. Napper and Uballe were simultaneously appointed to the Company’s
Board of Directors. Such action represents a change of control of the
Company. The Purchasers used their working capital to acquire the
Shares. Prior to the
purchase of the shares, the Purchasers were not affiliated with the Company.
However, the Purchasers will be deemed affiliates of the Company after the share
purchase as a result of their stock ownership interest in the Company. The purchase of the shares
by the Purchasers was completed pursuant to written Subscription Agreements with
the Company. The purchase was not subject to any other terms and conditions
other than the sale of the shares in exchange for the cash payment.
4
Concurrent
with the sale of the shares, the Company filed a Certificate of Amendment to its
Certificate of Incorporation with the Secretary of State of Delaware in order to
change its name to “CLS Capital Group, Inc.”.
On April
26, 2010, the Company commenced operations by entering into an Assignment of
Rights Under Servicing Agreements (“Servicing Agreement”) with CLS Capital Group
LLC (“LLC”). Pursuant to the terms of the Servicing Agreement, LLC
assigned to the Company certain rights and obligations with respect to a loan
portfolio of approximately $8.9 billion. Pursuant to the Servicing
Agreement, the Company will assume the obligations of LLC to service the loans
in the portfolio and earn fees with respect to such services. By
entering into the Servicing Agreement, the Company commenced business as a
specialty investment company principally providing capital and other assistance
to start-up and micro companies. The Company intends to focus its portfolio in a
wide variety of different sectors including but not limited to alternative
resources, technology, biotech, insurance, and services.
The
Company and LLC are both controlled by the same principals who believe that
substantial benefit will be derived from the assignment of the Loan Portfolio to
a publicly-reporting entity by potentially facilitating the funding of future
operations and permitting the expansion of the business and thereby opening up
new funding resources for the business.
On June
21, 2010, the company completed an offering of our common shares under the
provisions of the Delaware General Corporation Law and under an exemption
detailed in Regulation D issued pursuant to the Securities Act of 1933. We sold
a total of 136,850 common shares at a price of $2.00 per share to a total of
thirty-eight investors. We raised a total of $273,700 in this
offering.
CLS
Capital Group, Inc. (formally known as Accelerated Acquisitions III) has become
a specialty investment company principally providing capital and other
assistance to start-up and micro companies. The Company intends to focus its
portfolio in a wide variety of different sectors including but not limited to
alternative resources, technology, biotech, insurance, and services. Our
investment objective is to maximize our portfolio’s total return by using a
unique financing models that collateralizes traditional loan using investment
grade fixed income instruments, such as CD, Bonds, Medium Term Notes, etc.
and investing in the debt and/or equity securities of start-up and
micro companies. We also seek to provide our stockholders with current income on
investments in debt securities and long-term capital growth through the
appreciation in the value of warrants or other equity instruments that we may
receive when we make debt investments or equity investments.
Our
capital will generally be invested to purchase investment grade fixed income
instruments, such as CD, Bonds, Medium Term Notes, etc. used as collateral by
our portfolio companies or invested to finance organic growth, acquisitions,
recapitalizations and working capital. Our investment decisions are based on
analysis of potential portfolio companies’ business operations supported by an
in-depth, including proprietary intangible assets and intellectual
property.
We are a
Delaware corporation that has elected to be regulated as a business development
company under the Investment Company Act of 1940, as amended (the “1940 Act”).
As a business development company, we are required to meet certain regulatory
tests, including the requirement to invest at least 70% of our total assets in
eligible portfolio companies. In addition, we have elected to be treated for
federal income tax purposes as a regulated investment company, or RIC, under the
Internal Revenue Code of 1986 (the “Code”).
We may seek other investment
opportunities outside the start-up and micro companies’ arena and may also have
up to 30% of our assets invested other than in eligible portfolio companies.
Currently our headquarters are at 6800 W. Central Avenue, Suite E-1, Toledo, OH,
43617 and our telephone number is (888) 616-6639.
5
Market
Opportunity
Many
start-up and micro companies have merged with competitors, scaled back their
operations or simply closed down in response to difficult business conditions
following the 2008 market crash. At the same time, start-up and micro companies
with strong balance sheets, stable revenues and efficient operating structures
are benefiting from the consolidation or elimination of competitors in their
markets.
Large,
underserved market for product. An increasing number of well-positioned
start-up and micro companies have been seeking to raise capital. Historically,
growing micro companies have generally relied upon equity rather than debt
financing. As a result, the market for debt financing for these companies is
generally less developed than the debt markets serving other industries. In
spite of the large number of start-up and micro companies in the United States
today, we believe that these companies are significantly underserved by
traditional lenders such as banks, savings and loan institutions and finance
companies for the following reasons:
·
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Non-traditional
financial profile - The high revenue growth rates
characteristic of start-up and micro companies often render them difficult
to evaluate from a credit perspective. Moreover, these companies often
incur relatively high expenditures for research and development, utilize
unconventional sales and marketing techniques and selling channels, and
experience rapid shifts in technology, consumer demand and market share.
These attributes can make it difficult for traditional lenders to analyze
these companies using conventional analytical
methods.
|
·
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Industry
scale, concentration and regulation - Many companies lack the size, and
the markets in which they operate lack the scale, necessary to service
large loans by traditional lenders. In the banking industry, in
particular, consolidation over the last decade has increased the size, and
reduced the number, of surviving banks. The surviving institutions have
sought to limit their credit exposures to, and the monitoring costs
associated with loans to, smaller businesses. In addition, traditional
lending institutions operate in a regulatory environment that favors
lending to large, established businesses. In response to such regulation,
many traditional lending institutions have developed loan approval
processes which conflict with the entrepreneurial culture of start-up and
micro companies.
|
For the
reasons outlined above, we believe that many viable start-up and micro companies
have either not been able, or have elected not, to obtain financing from
traditional lending institutions. We believe that these factors are likely to
continue, given the ongoing consolidation in the financial services
industry.
Complementing
private equity and venture capital funds. Our investment approach to
purchase investment grade fixed income instruments, such as CD, Bonds, Medium
Term Notes, etc. used as collateral by our portfolio companies and investing in
their debt and equity securities complements other sources of capital available
to start-up and micro companies. For example, although we may compete with
private equity and venture capital funds as a source of capital for such
businesses, those types of investors typically invest primarily in equity-based
securities. We intend to make investments in both debt securities and equity
securities. We believe that the nature of our investments in debt securities may
be viewed by such entities as an attractive alternative source of capital.
Private equity and venture capital funds may base their investments on
anticipated annual internal rates of return that are substantially higher than
the annual internal rates of return that we set as our operating target.
Moreover, private equity and venture capital funds generally require a
significantly greater percentage of equity ownership interests than we require.
However, private equity and venture capital investments typically entail
considerably more risk than the debt investments that we make, as they are
usually uncollateralized and rank lower in priority in the capital structure of
the portfolio companies. We believe the prospect of obtaining additional capital
without incurring substantial incremental dilution makes us attractive to
owner-managers as a prospective source of capital.
Competitive
Advantages
We
believe that we are well positioned to provide financing to start-up and micro
companies at least for the following reasons:
6
Identification of
prospective portfolio companies. We identify and source new prospective
portfolio companies through a network of venture capital and private equity
funds, investment banks, accounting and law firms and direct company
relationships.
Due diligence
review. Prior to an investment, we perform a preliminary due diligence
review including company and technology assessments, market analysis,
competitive analysis, evaluation of management, risk analysis and transaction
size, pricing and structure analysis. Upon successful completion of this
preliminary evaluation process, we then decide whether to move forward towards
the completion of a transaction.
Investment
structuring. We seek to achieve income by purchasing investment grade
fixed income instruments, such as CD, Bonds, Medium Term Notes, etc. used as
collateral by our portfolio companies, investing a portion of our assets in debt
securities, consisting primarily of senior notes, senior subordinated notes and
junior subordinated notes, of start-up and micro companies. We also seek to
provide our stockholders with long-term capital growth through the appreciation
in the value of warrants or other equity instruments that we may receive when we
make loans, and through direct equity investments.
Ongoing
Relationships With Portfolio Companies
Monitoring.
We monitor the financial trends of each portfolio company to assess the
appropriate course of action for each company and to evaluate overall portfolio
quality. We monitor the status and performance of each individual company on at
least a quarterly basis.
Managerial
assistance. As a business development company, we are required to offer,
and in some cases may provide and be paid for, significant managerial assistance
to portfolio companies. This assistance typically involves monitoring the
operations of portfolio companies, participating in their board and management
meetings, consulting with and advising their officers and providing other
organizational and financial guidance.
Competition
Our
primary competitors in providing financing to start-up and micro companies
include private equity and venture capital funds, other equity and non-equity
based investment funds and investment banks and other sources of financing,
including traditional financial services companies such as commercial banks and
specialty finance companies. Many of these entities have greater financial and
managerial resources than we will have. For additional information concerning
the competitive risks we face, see “Risk factors — We operate in a highly
competitive market for investment opportunities.”
Employees
We have
three employees that manage our day-to-day investment operations: Redell V.
Napper II is serving as our CEO/CFO and Reynaldo Uballe Jr. is serving as our
chief compliance officer, or CCO and COO. In addition, Helen Odum provides
back-office administrative support.
Federal
Income Tax Considerations
We have
elected to be treated, and intend to qualify annually, as a RIC under Subchapter
M of the Code, beginning with our 2010 taxable year. As a RIC, we generally will
not have to pay corporate-level federal income taxes on any ordinary income or
capital gains that we distribute to our stockholders as dividends. To continue
to qualify as a RIC, we must, among other things, meet certain source-of-income
and asset diversification requirements (as described below). In addition, to
qualify for RIC tax treatment we must distribute to our stockholders, for each
taxable year, at least 90% of our “investment company taxable income,” which is
generally our ordinary income plus the excess of our realized net short-term
capital gains over our realized net long-term capital losses (the “Annual
Distribution Requirement”).
7
Taxation as a
Regulated Investment Company. If we qualify as a RIC and satisfy the
Annual Distribution Requirement, we will not be subject to federal income tax on
the portion of our investment company taxable income and net capital gain (i.e.,
realized net long-term capital gains in excess of realized net short-term
capital losses) we distribute to stockholders. We will be subject to U.S.
federal income tax at the regular corporate rates on any income or capital gain
not distributed (or deemed undistributed) to our stockholders. We will be
subject to a 4% non-deductible federal excise tax on certain undistributed
income unless we distribute in a timely manner an amount at least equal to the
sum of (1) 98% of our ordinary income for each calendar year, (2) 98% of our
capital gain net income for the one-year period ending October 31 in that
calendar year and (3) any income realized, but not distributed, in preceding
years (the “Excise Tax Avoidance Requirement”). We currently intend to make
sufficient distributions each taxable year to satisfy the Excise Tax Avoidance
Requirement. In order to qualify as a RIC for federal income tax purposes, we
must, among other things:
·
|
at all times during each taxable
year, have in effect an election to be treated as a business development
company under the 1940 Act.
|
·
|
derive in each taxable year at
least 90% of our gross income from dividends, interest, payments with
respect to certain securities loans, gains from the sale of stock or other
securities, or other income derived with respect to our business of
investing in such stock or
securities.
|
·
|
diversify our holdings so that at
the end of each quarter of the taxable
year:
|
|
1.
|
at least 50% of the value of our
assets consists of cash, cash equivalents, U.S. government securities,
securities of other RICs, and other securities if such other securities of
any one issuer do not represent more than 5% of the value of our assets or
more than 10% of the outstanding voting securities of the issuer;
and
|
|
2.
|
no more than 25% of the value of
our assets is invested in the securities, other than U.S. government
securities or securities of other RICs, of one issuer or of two or more
issuers that are controlled, as determined under applicable tax rules, by
us and that are engaged in the same or similar or related trades or
businesses.
|
Pursuant
to the American Jobs Creation Act of 2004 (the “2004 Tax Act”), for taxable
years of a RIC beginning after October 22, 2004, net income derived from an
interest in certain “qualified publicly traded partnerships” will be treated as
qualifying income for purposes of the 90% gross income requirement, and no more
than 25% of a RIC’s assets may be invested in the securities of one or more
qualified publicly traded partnerships. In addition, the separate treatment for
publicly traded partnerships under the passive loss rules applies to a RIC
holding an interest in a qualified publicly traded partnership, with respect to
items attributable to such interest.
We may be
required to recognize taxable income in circumstances in which we do not receive
cash. For example, if we hold debt obligations that are treated under applicable
tax rules as having original issue discount (such as debt instruments with
payment-in-kind interest or, in certain cases, increasing interest rates or
issued with warrants), we must include in income each year a portion of the
original issue discount that accrues over the life of the obligation, regardless
of whether cash representing such income is received by us in the same taxable
year. Because any original issue discount accrued will be included in our
investment company taxable income for the year of accrual, we may be required to
make a distribution to our stockholders in order to satisfy the Annual
Distribution Requirement, even though we will not have received any
corresponding cash amount.
Regulation
as a Business Development Company
General. A
business development company (“BDC”) is regulated under applicable provisions of
the 1940 Act. A BDC must be organized in the United States for the purpose of
investing in or lending to primarily private companies and making managerial
assistance available to them. A BDC may use capital provided by public
stockholders and from other sources to invest in long-term, private investments
in businesses. A BDC provides stockholders the ability to retain the liquidity
of a publicly traded stock, while sharing in the possible benefits, if any, of
investing in primarily privately owned companies.
8
We may
not change the nature of our business so as to cease to be, or withdraw our
election as, a BDC unless authorized by vote of a majority of the outstanding
voting securities, as required by the 1940 Act. A majority of the outstanding
voting securities of a company is defined under the 1940 Act as the lesser of:
(i) 67% or more of such company’s voting securities present at a meeting if more
than 50% of the outstanding voting securities of such company are present or
represented by proxy, or (ii) more than 50% of the outstanding voting securities
of such company. We do not anticipate any substantial change in the nature of
our business.
As with
other companies regulated by the 1940 Act, a BDC must adhere to certain
substantive regulatory requirements. For instance, a majority of our directors
must be persons who are not interested persons, as that term is defined in the
1940 Act. Additionally, we are required to provide and maintain a bond issued by
a reputable fidelity insurance company to protect the BDC. Furthermore, as a
BDC, we are prohibited from protecting any director or officer against any
liability to the company or our stockholders arising from willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of such person’s office.
As a BDC,
we are required to meet a coverage ratio of the value of total assets to total
senior securities, which include all of our borrowings and any preferred stock
with liquidation preference that we may issue in the future, of at least
200%.
We may
also be prohibited under the 1940 Act from knowingly participating in certain
transactions with our affiliates without the prior approval of our directors who
are not interested persons and, in some cases, prior approval by the
SEC.
We are
not generally able to issue and sell our common stock at a price below net asset
value per share. See “Risk factors—Risks relating to our business and
structure—Regulations governing our operation as a business development company
affect our ability to, and the way in which we raise additional capital.” We
may, however, sell our common stock, or warrants, options or rights to acquire
our common stock, at a price below the then-current net asset value of our
common stock if our Board of Directors determines that such sale is in our best
interests and the best interests of our stockholders, and our stockholders
approve such sale. In addition, we may generally issue new shares of our common
stock at a price below net asset value in rights offerings to existing
stockholders, in payment of dividends and in certain other limited
circumstances.
We will
be periodically examined by the SEC for compliance with the 1940
Act.
We are
subject to other regulatory requirements in addition to those set forth
above.
As a BDC,
we are subject to certain risks and uncertainties. See “Risk factors—Risks
relating to our business and structure.”
Qualifying
Assets
As a
business development company, we may not acquire any asset other than
“qualifying assets” unless, at the time we make the acquisition, the value of
our qualifying assets represent at least 70% of the value of our total assets.
The principal categories of qualifying assets relevant to our business
are:
·
|
Securities of an eligible
portfolio company that are purchased in transactions not involving any
public offering. An eligible portfolio company is defined under the 1940
Act to include any issuer
that:
|
|
a)
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is organized and has its
principal place of business in the U.S.;
and
|
|
b)
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is not an investment company or a
company operating pursuant to certain exemptions under the 1940 Act, other
than a small business investment company wholly owned by a business
development company.
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9
·
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Securities received in exchange
for or distributed with respect to securities described in the bullet
above or pursuant to the exercise of options, warrants, or rights relating
to those securities; and
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·
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Cash, cash items, government
securities, or high quality debt securities (as defined in the 1940 Act),
maturing in one year or less from the time of
investment.
|
Significant
Managerial Assistance. To include certain securities described above as
qualifying assets for the purpose of the 70% test, a business development
company must offer to make available to the issuer of those securities
significant managerial assistance such as providing guidance and counsel
concerning the management, operations, or business objectives and policies of a
portfolio company. We offer to provide managerial assistance to our portfolio
companies.
Investment
Concentration. Our investment objective is to maximize our portfolio’s
total return. In this respect, we intend to concentrate in the
technology-related sector and invest, under normal circumstances, at least 60%
of the value of our net assets (including the amount of any borrowings for
investment purposes) in technology-related companies. This 60% policy is not a
fundamental policy and therefore may be changed without the approval of our
stockholders. However, we may not change or modify this policy unless we provide
our stockholders with at least 60 days prior notice, pursuant to Rule 35d-1 of
the 1940 Act. See
“Risk factors—Risks related to our investments—Our portfolio may be concentrated
in a limited number of portfolio companies.”
Code of Ethics.
As required by the 1940 Act, we maintain a code of ethics that
establishes procedures for personal investments and restricts certain
transactions by our personnel. See “Risk factors—Risks relating to our business
and structure—There are significant potential conflicts of interest.” Our code
of ethics generally does not permit investments by our employees in securities
that may be purchased or held by us. You can request a copy of our Code of
Ethics free of charge by mailing a request to us at 6800 W. Central Avenue,
Suite E-1, Toledo, OH, 43617.
Compliance
Policies and Procedures. We have adopted and implemented written policies
and procedures reasonably designed to prevent violation of the federal
securities laws, and are required to review these compliance policies and
procedures annually for their adequacy and the effectiveness of their
implementation. We have designated a Chief Compliance Officer to be responsible
for administering the policies and procedures.
Sarbanes-Oxley
Act of 2002. On July 30, 2002, President Bush signed into law the
Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act, as well as the rules and
regulations promulgated there under, imposed a wide variety of new regulatory
requirements on publicly-held companies and their insiders. Many of these
requirements affect us. For example:
·
|
Pursuant to Rule 13a-14 of the
Securities Exchange Act of 1934, as amended (the “1934 Act”), our Chief
Executive Officer and Chief Financial Officer must certify the accuracy of
the financial statements contained in our periodic
reports.
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·
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Pursuant to Item 307 of
Regulation S-K, our periodic reports must disclose our conclusions about
the effectiveness of our disclosure controls and
procedures.
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·
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Pursuant to Rule 13a-15 of the
1934 Act, our management must prepare a report regarding its assessment of
our internal control over financial reporting, which must be audited by
our independent registered public accounting
firm.
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·
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Pursuant to Item 308 of
Regulation S-K and Rule 13a-15 of the 1934 Act, our periodic reports must
disclose whether there were significant changes in our internal controls
or in other factors that could significantly affect these controls
subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
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10
·
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The Sarbanes-Oxley Act requires
us to review our current policies and procedures to determine whether we
comply with the Sarbanes-Oxley Act and the regulations promulgated there
under. We will continue to monitor our compliance with all regulations
that are adopted under the Sarbanes-Oxley Act and will take actions
necessary to ensure that we are in compliance
therewith.
|
In June
2010, we completed a offering of our common shares under the provisions of the
Delaware General Corporation Law and under an exemption from registration
pursuant to Regulation D issued pursuant to the Securities Act of 1933. We sold
a total of 136,850 common shares at a price of $2.00 per share to a total of
thirty-eight investors. We raised a total of $273,700.00 in this
offering.
We have
not been subject to any bankruptcy, receivership or similar
proceeding.
This
Prospectus
We have
undertaken several transactions the result of which has been the issuance of
shares that have restrictions on their transferability. In order to
provide those investors with liquidity for their shares, we are filing with the
SEC this prospectus as part of a registration statement to register those
securities. We will not receive any proceeds from any sales of these
shares.
THE
OFFERING
Common
stock currently outstanding
|
18,586,850 shares(1)
|
Common
stock offered by the selling stockholders
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423,950
shares
|
Use
of proceeds
|
We
will not receive any proceeds from the sale of common stock offered by
this prospectus.
|
|
(1)
|
Shares
of common stock outstanding as of June 21,
2010.
|
RISK
FACTORS
Before
you invest in our securities, you should be aware that there are various risks.
You should consider carefully these risk factors, together with all of the other
information included in this annual report before you decide to purchase our
securities. If any of the following risks and uncertainties develop into actual
events, our business, financial condition or results of operations could be
materially adversely affected.
Our
independent auditors have expressed substantial doubt about our ability to
continue as a going concern, which may hinder our ability to continue as a going
concern and our ability to obtain future financing.
In their
report dated December 31, 2009 our independent auditors stated that our
financial statements for the period ended December 31, 2009 period ended March
31, 2010 were prepared assuming that we would continue as a going concern. Our
ability to continue as a going concern is an issue raised as a result of
recurring losses from operations and cash flow deficiencies since our inception.
We continue to experience net losses. Our ability to continue as a going concern
is subject to our ability to generate a profit and/or obtain necessary funding
from outside sources, including obtaining additional funding from the sale of
our securities, increasing sales or obtaining loans and grants from various
financial institutions where possible. If we are unable to continue as a going
concern, you may lose your entire investment.
11
We
were formed in April, 2008 and commenced operations in April 2010, and we
therefore have a limited operating history and, accordingly, you will not have
any basis on which to evaluate our ability to achieve our business
objectives.
We are a
development stage company with limited operating results to date. Since we do
not have an established operating history or regular sales yet, you will have no
basis upon which to evaluate our ability to achieve our business
objectives.
The
absence of any significant operating history for us makes forecasting our
revenue and expenses difficult, and we may be unable to adjust our spending in a
timely manner to compensate for unexpected revenue shortfalls or unexpected
expenses.
As a
result of the absence of any operating history for us, it is difficult to
accurately forecast our future revenue. In addition, we have limited meaningful
historical financial data upon which to base planned operating expenses. Current
and future expense levels are based on our operating plans and estimates of
future revenue. Revenue and operating results are difficult to forecast because
they generally depend on our ability to promote and sell our services. As a
result, we may be unable to adjust our spending in a timely manner to compensate
for any unexpected revenue shortfall, which would result in further substantial
losses. We may also be unable to expand our operations in a timely manner to
adequately meet demand to the extent it exceeds expectations.
Our
limited operating history does not afford investors a sufficient history on
which to base an investment decision.
We are
currently in the early stages of developing our business. There can be no
assurance that at this time that we will operate profitably or that we will have
adequate working capital to meet our obligations as they become
due.
Investors
must consider the risks and difficulties frequently encountered by early stage
companies, particularly in rapidly evolving markets. Such risks include the
following:
▪
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Competition
|
▪
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ability
to anticipate and adapt to a competitive
market;
|
▪
|
ability
to effectively manage expanding operations; amount and timing of operating
costs and capital expenditures relating to expansion of our business,
operations, and infrastructure;
and
|
▪
|
dependence
upon key personnel to market and sell our services and the loss of one of
our key managers may adversely affect the marketing of our
services.
|
We cannot
be certain that our business strategy will be successful or that we will
successfully address these risks. In the event that we do not successfully
address these risks, our business, prospects, financial condition, and results
of operations could be materially and adversely affected and we may not have the
resources to continue or expand our business operations.
We
have no profitable operating history and May Never Achieve
Profitability
From
inception (April 30, 2008), the Company (formerly known as Accelerated
Acquisitions III, Inc.) was organized as a vehicle to investigate and, if such
investigation warrants, acquire a target company or business seeking the
perceived advantages of being a publicly held corporation. Our principal
business objectives were to achieve long-term growth potential through a
combination with a business rather than immediate, short-term earnings. As of
April 2010, we changed our business plan to focus on the investment industry and
have only just recently commenced operations in that industry. As a
result, through March 31, 2010, the Company has an accumulated deficit of
$13,087 notwithstanding the fact that the principals of the Company have worked
without salary and the Company has operated with minimal overhead. We are an
early stage company and have a limited history of operations and have not
generated revenues from operations since our inception. We are faced with all of
the risks associated with a company in the early stages of development. Our
business is subject to numerous risks associated with a relatively new,
low-capitalized company engaged in our business sector. Such risks include, but
are not limited to, competition from well-established and well-capitalized
companies, and unanticipated difficulties regarding the marketing and sale of
our services. There can be no assurance that we will ever generate significant
commercial sales or achieve profitability. Should this be the case, our common
stock could become worthless and investors in our common stock or other
securities could lose their entire investment.
12
Dependence
on the Founders, without whose services Company business operations could
cease.
At this
time, our founders are wholly responsible for the development and execution of
our business plan. Our founders are under no contractual obligation to remain
employed by us, although they have no present intent to leave. If our founders
should choose to leave us for any reason before we have hired additional
personnel our operations may fail. Even if we are able to find additional
personnel, it is uncertain whether we could find qualified management who could
develop our business along the lines described herein or would be willing to
work for compensation the Company could afford. Without such management, the
Company could be forced to cease operations and investors in our common stock or
other securities could lose their entire investment.
Our
officers and directors devote limited time to the Company’s business and are
engaged in other business activities
At this
time, none of our officers and directors devotes his full-time attention to the
Company’s business. Based upon the growth of the business, we would intend to
employ additional management and staff. The limited time devoted to the
Company’s business could adversely affect the Company’s business operations and
prospects for the future. Without full-time devoted management, the Company
could be forced to cease operations and investors in our common stock or other
securities could lose their entire investment.
Concentrated
control risks; shareholders could be unable to control or influence key
corporate actions or effect changes in the Company’s board of directors or
management.
Our
current officers and directors currently own 17,000,000 shares of our common
stock, representing approximately 95% of the voting control of the Company. Our
current officers and directors therefore has the power to make all major
decisions regarding our affairs, including decisions regarding whether or not to
issue stock and for what consideration, whether or not to sell all or
substantially all of our assets and for what consideration and whether or not to
authorize more stock for issuance or otherwise amend our charter or
bylaws.
Lack
of employment agreements with key management risking potential of the loss of
the Company’s top management
We do not
currently have an employment agreement with any of our key management or key man
insurance on their lives. Our future success will depend in significant part on
our ability to retain and hire key management personnel. Competition for such
personnel is intense and there can be no assurance that we will be successful in
attracting and retaining such personnel. Without such management, the Company
could be forced to cease operations and investors in our common stock or other
securities could lose their entire investment.
Lack
of additional working capital may cause curtailment of any expansion plans while
raising of capital through sale of equity securities would dilute existing
shareholders’ percentage of ownership
Our
available capital resources will not be adequate to fund our working capital
requirements based upon our present level of operations for the 12-month period
subsequent to December 31, 2009. A shortage of capital would affect our ability
to fund our working capital requirements. If we require additional capital,
funds may not be available on acceptable terms, if at all. In addition, if we
raise additional capital through the sale of equity or convertible debt
securities, the issuance of these securities could dilute existing shareholders.
If funds are not available, we could be placed in the position of having to
cease all operations.
13
We
do not presently have a traditional credit facility with a financial
institution. This absence may adversely affect our operations
We do not
presently have a traditional credit facility with a financial institution. The
absence of a traditional credit facility with a financial institution could
adversely impact our operations. If adequate funds are not otherwise available,
we may be required to delay, scale back or eliminate portions of our operations
and product development efforts. Without such credit facilities, the Company
could be forced to cease operations and investors in our common stock or other
securities could lose their entire investment.
Our
inability to successfully achieve a critical mass of sales could adversely
affect our financial condition
No
assurance can be given that we will be able to successfully achieve a critical
mass of sales in order to cover our operating expenses and achieve sustainable
profitability. Without such critical mass of sales, the Company could be forced
to cease operations.
Our
success is substantially dependent on general economic conditions and business
trends, particularly in the natural products, a downturn of which could
adversely affect our operations
The
success of our operations depends to a significant extent upon a number of
factors relating to business spending. These factors include economic
conditions, activity in the financial markets, general business conditions,
personnel cost, inflation, interest rates and taxation. Our business is affected
by the general condition and economic stability of our customers and their
continued willingness to work with us in the future. An overall decline in the
demand for document formatting services could cause a reduction in our sales and
the Company could face a situation where it never achieves a critical mass of
sales and thereby be forced to cease operations.
Changes
in generally accepted accounting principles could have an adverse effect on our
business financial condition, cash flows, revenue and results of
operations
We are
subject to changes in and interpretations of financial accounting matters that
govern the measurement of our performance. Based on our reading and
interpretations of relevant guidance, principles or concepts issued by, among
other authorities, the American Institute of Certified Public Accountants, the
Financial Accounting Standards Board, and the United States Securities and
Exchange Commission, our management believes that our current contract terms and
business arrangements have been properly reported. However, there continue to be
issued interpretations and guidance for applying the relevant standards to a
wide range of contract terms and business arrangements that are prevalent in the
industries in which we operate. Future interpretations or changes by the
regulators of existing accounting standards or changes in our business practices
could result in future changes in our revenue recognition and/or other
accounting policies and practices that could have a material adverse effect on
our business, financial condition, cash flows, revenue and results of
operations.
We
will need to increase the size of our organization, and may experience
difficulties in managing growth.
We are a
small company with three full-time employees. We expect to experience a period
of significant expansion in headcount, facilities, infrastructure and overhead
and anticipate that further expansion will be required to address potential
growth and market opportunities. Future growth will impose significant added
responsibilities on members of management, including the need to identify,
recruit, maintain and integrate managers. Our future financial performance and
its ability to compete effectively will depend, in part, on its ability to
manage any future growth effectively.
14
We
are subject to compliance with securities law, which exposes us to potential
liabilities, including potential rescission rights.
We have
offered and sold our common stock to investors pursuant to certain exemptions
from the registration requirements of the Securities Act of 1933, as well as
those of various state securities laws. The basis for relying on such exemptions
is factual; that is, the applicability of such exemptions depends upon our
conduct and that of those persons contacting prospective investors and making
the offering. We have not received a legal opinion to the effect that any of our
prior offerings were exempt from registration under any federal or state law.
Instead, we have relied upon the operative facts as the basis for such
exemptions, including information provided by investors themselves.
If any
prior offering did not qualify for such exemption, an investor would have the
right to rescind its purchase of the securities if it so desired. It is possible
that if an investor should seek rescission, such investor would succeed. A
similar situation prevails under state law in those states where the securities
may be offered without registration in reliance on the partial preemption from
the registration or qualification provisions of such state statutes under the
National Securities Markets Improvement Act of 1996. If investors were
successful in seeking rescission, we would face severe financial demands that
could adversely affect our business and operations. Additionally, if we did not
in fact qualify for the exemptions upon which it has relied, we may become
subject to significant fines and penalties imposed by the SEC and state
securities agencies.
We
incur costs associated with SEC reporting compliance.
The
Company made the decision to become an SEC “reporting company” in order to
comply with applicable laws and regulations. We incur certain costs of
compliance with applicable SEC reporting rules and regulations including, but
not limited to attorneys fees, accounting and auditing fees, other professional
fees, financial printing costs and Sarbanes-Oxley compliance costs in an amount
estimated at approximately $25,000 per year. On balance, the Company determined
that the incurrence of such costs and expenses was preferable to the Company
being in a position where it had very limited access to additional capital
funding.
The
availability of a large number of authorized but unissued shares of common stock
may, upon their issuance, lead to dilution of existing
stockholders.
We are
authorized to issue 100,000,000 shares of common stock, $0.0001 par value per
share, of which, as of June 22, 2010, 18,586,850 shares of common stock were
issued and outstanding. We are also authorized to issue 10,000,000 shares of
preferred stock, $0.0001 par value, none of which are issued and outstanding.
These shares may be issued by our board of directors without further
stockholder approval. The issuance of large numbers of shares, possibly at below
market prices, is likely to result in substantial dilution to the interests of
other stockholders. In addition, issuances of large numbers of shares may
adversely affect the market price of our common stock.
We
may need additional capital that could dilute the ownership interest of
investors.
We
require substantial working capital to fund our business. If we raise additional
funds through the issuance of equity, equity-related or convertible debt
securities, these securities may have rights, preferences or privileges senior
to those of the rights of holders of our common stock and they may experience
additional dilution. We cannot predict whether additional financing will be
available to us on favorable terms when required, or at all. Since our
inception, we have experienced negative cash flow from operations and expect to
experience significant negative cash flow from operations in the future. The
issuance of additional common stock by the Company may have the effect of
further diluting the proportionate equity interest and voting power of holders
of our common stock.
We
may not have adequate internal accounting controls. While we have certain
internal procedures in our budgeting, forecasting and in the management and
allocation of funds, our internal controls may not be adequate.
We are
constantly striving to improve our internal accounting controls. Our board of
directors has not designated an Audit Committee and we do not have any outside
directors. We do not have a dedicated full time Chief Financial Officer.
We hope to develop an adequate internal accounting control to budget, forecast,
manage and allocate our funds and account for them. There is no guarantee that
such improvements will be adequate or successful or that such improvements will
be carried out on a timely basis. If we do not have adequate internal accounting
controls, we may not be able to appropriately budget, forecast and manage our
funds, we may also be unable to prepare accurate accounts on a timely basis to
meet our continuing financial reporting obligations and we may not be able to
satisfy our obligations under US securities laws.
15
Wet
have inadequate insurance coverage
We do not
have any insurance coverage of any description at this time and therefore have
the risk of loss or damages to our business and assets. We cannot assure you
that we would not face liability upon the occurrence of any event which could
result in any loss or damages being assessed against the Company. Moreover, any
insurance we may ultimately acquire may not be adequate to cover any loss or
liability we may incur.
We
are subject to numerous laws and regulations that can adversely affect the cost,
manner or feasibility of doing business.
Our
operations are subject to extensive federal, state and local laws and
regulations relating to the financial markets. Future laws or regulations,
any adverse change in the interpretation of existing laws and regulations or our
failure to comply with existing legal requirements may result in substantial
penalties and harm to our business, results of operations and financial
condition. We may be required to make large and unanticipated capital
expenditures to comply with governmental regulations. Our operations could
be significantly delayed or curtailed and our cost of operations could
significantly increase as a result of regulatory requirements or restrictions.
We are unable to predict the ultimate cost of compliance with these requirements
or their effect on our operations.
We
do not intend to pay cash dividends in the foreseeable future
We
currently intend to retain all future earnings for use in the operation and
expansion of our business. We do not intend to pay any cash dividends in the
foreseeable future but will review this policy as circumstances
dictate.
There
is currently no market for our securities and there can be no assurance that any
market will ever develop or that our common stock will be listed for
trading.
There has
not been any established trading market for our common stock and there is
currently no market for our securities. While we have been approved for trading
on the OTC Bulletin Board (“OTCBB”), there can be no assurance as the prices at
which our common stock will trade if a trading market develops, of which there
can be no assurance. Until our common stock is fully distributed and an
orderly market develops, (if ever) in our common stock, the price at which it
trades is likely to fluctuate significantly.
Prices
for our common stock will be determined in the marketplace and may be influenced
by many factors, including the depth and liquidity of the market for shares of
our common stock, developments affecting our business, including the impact of
the factors referred to elsewhere in these Risk Factors, investor perception of
us and general economic and market conditions. No assurances can be given that
an orderly or liquid market will ever develop for the shares of our common
stock. Due to the anticipated low price of the securities, many brokerage firms
may not be willing to effect transactions in the securities.
Our common stock
is subject to the Penny Stock Regulations
Our
common stock will likely be subject to the SEC's “penny stock” rules to the
extent that the price remains less than $5.00. Those rules, which require
delivery of a schedule explaining the penny stock market and the associated
risks before any sale, may further limit your ability to sell your
shares.
The SEC
has adopted regulations which generally define “penny stock” to be an equity
security that has a market price of less than $5.00 per share. Our common stock,
when and if a trading market develops, may fall within the definition of penny
stock and subject to rules that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess of
$1,000,000, or annual incomes exceeding $200,000 or $300,000, together with
their spouse).
16
For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser's prior written consent to the transaction. Additionally, for any
transaction, other than exempt transactions, involving a penny stock, the rules
require the delivery, prior to the transaction, of a risk disclosure document
mandated by the Commission relating to the penny stock market. The broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities and, if the
broker-dealer is the sole market-maker, the broker-dealer must disclose this
fact and the broker-dealer's presumed control over the market. Finally, monthly
statements must be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks.
Consequently, the `penny stock` rules may restrict the ability of broker-dealers
to sell our common stock and may affect the ability of investors to sell their
common stock in the secondary market.
Our
common stock is illiquid and subject to price volatility unrelated to our
operations
The
market price of our common stock could fluctuate substantially due to a variety
of factors, including market perception of our ability to achieve our planned
growth, quarterly operating results of other companies in the same industry,
trading volume in our common stock, changes in general conditions in the economy
and the financial markets or other developments affecting our competitors or us.
In addition, the stock market is subject to extreme price and volume
fluctuations. This volatility has had a significant effect on the market price
of securities issued by many companies for reasons unrelated to their operating
performance and could have the same effect on our common stock. Sales of
substantial amounts of common stock, or the perception that such sales could
occur, could adversely affect the market price of our common stock and could
impair our ability to raise capital through the sale of our equity
securities.
We
have not voluntarily implemented various corporate governance measures, in the
absence of which, shareholders may have more limited protections against
interested director transactions, conflicts of interest and similar
matters.
Recent
Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in
the adoption of various corporate governance measures designed to promote the
integrity of the corporate management and the securities markets. Some of these
measures have been adopted in response to legal requirements. Others have been
adopted by companies in response to the requirements of national securities
exchanges, such as the NYSE or the Nasdaq Stock Market, on which their
securities are listed. Among the corporate governance measures that are required
under the rules of national securities exchanges are those that address board of
directors' independence, audit committee oversight, and the adoption of a code
of ethics. We have not yet adopted any of these corporate governance
measures and, since our securities are not yet listed on a national securities
exchange, we are not required to do so. It is possible that if we
were to adopt some or all of these corporate governance measures, stockholders
would benefit from somewhat greater assurances that internal corporate decisions
were being made by disinterested directors and that policies had been
implemented to define responsible conduct. Prospective investors
should bear in mind our current lack of corporate governance measures in
formulating their investment decisions.
We intend
to make investments into qualified companies that will provide the greatest
overall return on our investment. However, certain of those investments may
fail, in which case we will not receive any return on our investment. In
addition, our investments may not generate income, either in the immediate
future, or at all. As a result, we may have to sell additional stock, or borrow
money, to cover our operating expenses. The effect of such actions could cause
our stock price to decline or, if we are not successful in raising additional
capital, we could cease to continue as a going concern.
17
We
are a company with a limited operating history, and our management lacks
experience in operating a business development company.
We
elected to be regulated as a business development company, or BDC, in April of
2010 and have a limited operating history as a BDC. We are subject to all of the
business risks and uncertainties associated with any new business enterprise,
including the risk that we will not achieve our investment objective and that
the value of your investment in us could decline substantially. In addition,
none of our executive officers has any experience in managing the operations of
a business development company. This lack of experience may adversely affect the
value of your investment in our company if, for instance, our lack of experience
causes us to not be in compliance with our regulatory requirements.
Any failure on our part to maintain
our status as a “business development company” would reduce our operating
flexibility.
If we do
not remain a business development company, we may be required to register as a
closed-end investment company under the 1940 Act, which would make us subject to
additional regulatory requirements and decrease our operating flexibility.
We
may change our investment policies without further shareholder
approval.
Although
we are limited by the Investment Company Act of 1940 with respect to the
percentage of our assets that must be invested in qualified investment
companies, we are not limited with respect to the minimum standard that any
investment company must meet, nor the industries in which those investment
companies must operate. We may make investments without shareholder approval and
such investments may deviate significantly from our historic operations. Any
change in our investment policy or selection of investments could adversely
affect our stock price, liquidity, and the ability of our shareholders to sell
their stock.
We have a
limited operating history. As such, we are subject to the business risks and
uncertainties associated with any new business enterprise, including the lack of
experience in managing or operating a business development company. Our ability
to achieve our investment objective will depend on our ability to grow, which
will depend, in turn, on our investment team’s ability to identify, analyze,
invest in and finance companies that meet our investment criteria. Accomplishing
this result on a cost-effective basis is largely a function of our management’s
structuring of the investment process, its ability to provide competent,
attentive and efficient services to us, and our access to financing on
acceptable terms. As we grow, we will need to hire, train, supervise and manage
new employees. Failure to manage our future growth effectively could have a
material adverse effect on our business, financial condition and results of
operations.
We
operate in a highly competitive market for investment
opportunities.
A large
number of entities compete with us to make the types of investments that we make
in start-up and micro companies. We compete with a large number of private
equity and venture capital funds, other equity and non-equity based investment
funds, investment banks and other sources of financing, including traditional
financial services companies such as commercial banks and specialty finance
companies. Many of our competitors are substantially larger and have
considerably greater financial, technical and marketing resources than we do.
For example, some competitors may have a lower cost of funds and access to
funding sources that are not available to us. In addition, some of our
competitors may have higher risk tolerances or different risk assessments, which
could allow them to consider a wider variety of investments and establish more
relationships than us. Furthermore, many of our competitors are not subject to
the regulatory restrictions that the 1940 Act imposes on us as a business
development company. There can be no assurance that the competitive pressures we
face will not have a material adverse effect on our business, financial
condition and results of operations. Also, as a result of this competition, we
may not be able to take advantage of attractive investment opportunities from
time to time, and we can offer no assurance that we will be able to identify and
make investments that are consistent with our investment objective.
18
Our
business model depends upon the development of strong referral relationships
with private equity and venture capital funds and investment banking
firms.
If we
fail to maintain our relationships with key firms, or if we fail to establish
strong referral relationships with other firms or other sources of investment
opportunities, we will not be able to grow our portfolio and achieve our
investment objectives. In addition, persons with whom we have informal
relationships are not obligated to provide us with investment opportunities, and
therefore there is no assurance that such relationships will lead to the
origination of investments.
We
may not realize gains from our equity investments.
When we
invest in debt securities, we generally expect to acquire warrants or other
equity securities as well. However, the equity interests we receive may not
appreciate in value and, in fact, may decline in value. Accordingly, we may not
be able to realize gains from our equity interests, and any gains that we do
realize on the disposition of any equity interests may not be sufficient to
offset any other losses we experience.
As stated
above, our investments are not generally in publicly traded securities.
Substantially all of these securities are subject to legal and other
restrictions on resale or will otherwise be less liquid than publicly traded
securities. The illiquidity of our investments may make it difficult for us to
sell such investments if the need arises. Also, if we are required to liquidate
all or a portion of our portfolio quickly, we may realize significantly less
than the value at which we have previously recorded our investments. We expect
that our holdings of equity securities may require several years to appreciate
in value, and we can offer no assurance that such appreciation will
occur.
We
may experience fluctuations in our quarterly results.
We may
experience fluctuations in our quarterly operating results due to a number of
factors, including the rate at which we make new investments, the interest rates
payable on the debt securities we acquire, the default rate on such securities,
the level of our expenses, variations in and the timing of the recognition of
realized and unrealized gains or losses, the degree to which we encounter
competition in our markets and general economic conditions. As a result of these
factors, results for any period should not be relied upon as being indicative of
performance in future periods.
Regulations
governing our operation as a business development company affect our ability to,
and the way in which we raise additional capital, which may expose us to risks,
including the typical risks associated with leverage.
Our
business will require a substantial amount of capital, which we may acquire from
the following sources:
Senior securities
and other indebtedness. We may issue debt securities or preferred stock
and/or borrow money from banks or other financial institutions, which we refer
to collectively as “senior securities,” up to the maximum amount permitted by
the 1940 Act. Under the provisions of the 1940 Act, we are permitted, as a
business development company, to issue senior securities in amounts such that
our asset coverage ratio, as defined in the 1940 Act, equals at least 200% of
gross assets, less all liabilities and indebtedness not represented by senior
securities, after each issuance of senior securities. If we issue senior
securities, including preferred stock and debt securities, we will be exposed to
typical risks associated with leverage, including an increased risk of loss. If
we incur leverage to make investments, a decrease in the value of our
investments would have a greater negative impact on the value of our common
stock. If we issue debt securities or preferred stock, it is likely that such
securities will be governed by an indenture or other instrument containing
covenants restricting our operating flexibility. In addition, such securities
may be rated by rating agencies, and in obtaining a rating for such securities,
we may be required to abide by operating and investment guidelines that could
further restrict our operating flexibility. Our ability to pay dividends or
issue additional senior securities would be restricted if our asset coverage
ratio was not at least 200%. If the value of our assets declines, we may be
unable to satisfy this test. If that happens, we would be unable to issue any
additional senior securities. Furthermore, any amounts that we use to service
our indebtedness would not be available for distributions to our common
stockholders.
19
A change in interest rates may
adversely affect our profitability.
A portion
of our income will depend upon the difference between the rate at which we
borrow funds (if we do borrow) and the interest rate on the debt securities in
which we invest. We anticipate using a combination of equity and long-term and
short-term borrowings to finance our investment activities. Some of our
investments in debt securities are at fixed rates and others at variable rates.
We may, but will not be required to, hedge against interest rate fluctuations by
using standard hedging instruments such as futures, options and forward
contracts, subject to applicable legal requirements. These activities may limit
our ability to participate in the benefits of lower interest rates with respect
to the hedged portfolio. Adverse developments resulting from changes in interest
rates or hedging transactions could have a material adverse effect on our
business, financial condition and results of operations. Also, we have limited
experience in entering into hedging transactions, and we will initially have to
purchase or develop such expertise.
We
will be subject to corporate-level income tax if we are unable to qualify as a
RIC.
To remain
entitled to the tax benefits accorded RIC under the Code, we must meet certain
income source, asset diversification and annual distribution requirements. The
annual distribution requirement for a RIC is satisfied if we distribute at least
90% of our ordinary income and realized net short-term capital gains in excess
of realized net long-term capital losses, if any, to our stockholders on an
annual basis. Because we may use debt financing in the future, we may be subject
to certain asset coverage ratio requirements under the 1940 Act and financial
covenants under loan and credit agreements that could, under certain
circumstances, restrict us from making distributions necessary to satisfy the
annual distribution requirement. If we are unable to obtain cash from other
sources, we may fail to qualify for special tax treatment as a RIC and, thus,
may be subject to corporate-level income tax on all our income. To qualify as a
RIC, we must also meet certain asset diversification requirements at the end of
each calendar quarter. Failure to meet these tests may result in our having to
dispose of certain investments quickly in order to prevent the loss of RIC
status. Because most of our investments will be in private companies, any such
dispositions could be made at disadvantageous prices and may result in
substantial losses. If we fail to qualify as a RIC for any reason and remain or
become subject to corporate income tax, the resulting corporate taxes could
substantially reduce our net assets, the amount of income available for
distribution and the amount of our distributions. Such a failure would have a
material adverse effect on us and our stockholders.
For
federal income tax purposes, we will include in income certain amounts that we
have not yet received in cash, such as original issue discount, which may arise
if we receive warrants in connection with the making of a loan or possibly in
other circumstances, or contracted payment-in-kind interest, which represents
contractual interest added to the loan balance and due at the end of the loan
term. We also may be required to include in income certain other amounts that we
will not receive in cash. Since in certain cases we may recognize income before
or without receiving cash representing such income, we may have difficulty
satisfying the annual distribution requirement applicable to RICs. Accordingly,
we may have to sell some of our investments at times we would not consider
advantageous, raise additional debt or equity capital or reduce new investments
to meet these distribution requirements. If we are not able to obtain cash from
other sources, we may fail to qualify for RIC tax treatment and thus be subject
to corporate-level income tax.
20
Start-up
and micro-cap companies are subject to many risks, including volatility, intense
competition, decreasing life cycles and periodic downturns.
We invest
in companies in the technology-related sector, some of which may have relatively
short operating histories. The revenues, income (or losses) and valuations of
start-up and micro companies can and often do fluctuate suddenly and
dramatically.
Our investments in start-up and
micro companies
that we are targeting may be extremely risky and we could lose all or part of
our investments.
Although
a prospective portfolio company’s assets are one component of our analysis when
determining whether to provide debt capital, we generally do not base an
investment decision primarily on the liquidation value of a company’s balance
sheet assets. Instead, given the nature of the companies that we invest in, we
also review the company’s historical and projected cash flows, equity capital
and “soft” assets, including intellectual property (patented and non-patented),
databases, business relationships (both contractual and non-contractual) and the
like. Accordingly, considerably higher levels of overall risk will likely be
associated with our portfolio compared with that of a traditional asset-based
lender whose security consists primarily of receivables, inventories, equipment
and other tangible assets. Interest rates payable by our portfolio companies may
not compensate for these additional risks. Specifically, investment in the
start-up and micro companies that we are targeting involves a number of
significant risks, including:
·
|
these
companies may have limited financial resources and may be unable to meet
their obligations under their debt securities that we hold, which may be
accompanied by a deterioration in the value of any collateral and a
reduction in the likelihood of us realizing any value from the liquidation
of such collateral;
|
·
|
they typically have limited
operating histories, narrower product lines and smaller market shares than
larger businesses, which tend to render them more vulnerable to
competitors’ actions and market conditions, as well as general economic
downturns;
|
·
|
because they tend to be privately
owned, there is generally little publicly available information about
these businesses;
|
·
|
they are more likely to depend on
the management talents and efforts of a small group of persons; therefore,
the death, disability, resignation or termination of one or more of these
persons could have a material adverse impact on our portfolio company and,
in turn, on us; and
|
·
|
they generally have less
predictable operating results, may from time to time be parties to
litigation, may be engaged in rapidly changing businesses with products
subject to a substantial risk of obsolescence, and may require substantial
additional capital to support their operations, finance expansion or
maintain their competitive
position.
|
A
portfolio company’s failure to satisfy financial or operating covenants imposed
by us or other lenders could lead to defaults and, potentially, termination of
its loans and foreclosure on its secured assets, which could trigger
cross-defaults under other agreements and jeopardize our portfolio company’s
ability to meet its obligations under the debt securities that we hold. We may
incur expenses to the extent necessary to seek recovery upon default or to
negotiate new terms with a defaulting portfolio company. In addition, if a
portfolio company goes bankrupt, even though we may have structured our interest
as senior debt, depending on the facts and circumstances, including the extent
to which we actually provided significant “managerial assistance” to that
portfolio company, a bankruptcy court might re-characterize our debt holding and
subordinate all or a portion of our claim to that of other
creditors.
21
Elections
to not make follow-on investments in our portfolio companies could impair the
value of our portfolio.
Following
an initial investment in a portfolio company, we may make additional investments
in that portfolio company as “follow-on” investments, in order to: (1) increase
or maintain in whole or in part our equity ownership percentage; (2) exercise
warrants, options or convertible securities that were acquired in the original
or subsequent financing; or (3) attempt to preserve or enhance the value of our
investment. We may elect not to make follow-on investments or otherwise lack
sufficient funds to make those investments. We have the discretion to make any
follow-on investments, subject to the availability of capital resources. The
failure to make follow-on investments may, in some circumstances, jeopardize the
continued viability of a portfolio company and our initial investment, or may
result in a missed opportunity for us to increase our participation in a
successful operation. Even if we have sufficient capital to make a desired
follow-on investment, we may elect not to make a follow-on investment because we
may not want to increase our concentration of risk, because we prefer other
opportunities, or because we are inhibited by compliance with business
development company requirements or the desire to maintain our tax
status.
Our
portfolio companies may incur debt that ranks equally with, or senior to, our
investments in such companies.
We intend
primarily purchase investment grade fixed income instruments, such as CD, Bonds,
Medium Term Notes, etc. used as collateral by our portfolio companies and invest
a portion of our assets in debt securities, consisting primarily of senior
notes, senior subordinated notes and junior subordinated notes, of start-up and
micro companies. In some cases portfolio companies will be permitted to have
other debt that ranks equally with, or senior to, the debt securities in which
we invest. By their terms, such debt instruments may provide that the holders
thereof are entitled to receive payment of interest or principal on or before
the dates on which we are entitled to receive payments in respect of the debt
securities in which we invest. Also, in the event of insolvency, liquidation,
dissolution, reorganization or bankruptcy of a portfolio company, holders of
debt instruments ranking senior to our investment in that portfolio company
would typically be entitled to receive payment in full before we receive any
distribution in respect of our investment. After repaying such senior creditors,
such portfolio company may not have any remaining assets to use for repaying its
obligations to us. In the case of debt ranking equally with debt securities in
which we invest, we would have to share on an equal basis any distributions with
other creditors holding such debt in the event of an insolvency, liquidation,
dissolution, reorganization or bankruptcy of the relevant portfolio company. In
addition, we will not be in a position to control any portfolio company by
investing in its debt securities. As a result, we are subject to the risk that a
portfolio company in which we invest may make business decisions with which we
disagree and the management of such companies, as representatives of the holders
of their common equity, may take risks or otherwise act in ways that do not best
serve our interests as debt investors.
Although
we may do so in the future, to date we have generally not taken controlling
equity positions in our portfolio companies. As a result, we are subject to the
risk that a portfolio company may make business decisions with which we
disagree, and the stockholders and management of a portfolio company may take
risks or otherwise act in ways that are adverse to our interests. Due to the
lack of liquidity for the debt and equity investments that we typically hold in
our portfolio companies, we may not be able to dispose of our investments in the
event we disagree with the actions of a portfolio company, and may therefore
suffer a decrease in the value of our investments.
22
This
prospectus contains forward-looking statements. This prospectus includes
statements regarding our plans, goals, strategies, intent, beliefs or current
expectations. These statements are expressed in good faith and based upon a
reasonable basis when made, but there can be no assurance that these
expectations will be achieved or accomplished. These forward looking statements
can be identified by the use of terms and phrases such as “believe,” “plan,”
“intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or
future-tense or conditional constructions “may,” “could,” “should,” etc. Items
contemplating or making assumptions about, actual or potential future sales,
market size, collaborations, and business opportunities also constitute such
forward-looking statements.
Although
forward-looking statements in this report reflect the good faith judgment of our
management, forward-looking statements are inherently subject to known and
unknown risks, business, economic and other risks and uncertainties that may
cause actual results to be materially different from those discussed in these
forward-looking statements. Readers are urged not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
report. We assume no obligation to update any forward-looking statements in
order to reflect any event or circumstance that may arise after the date of this
report, other than as may be required by applicable law or regulation. Readers
are urged to carefully review and consider the various disclosures made by us in
our reports filed with the Securities and Exchange Commission which attempt to
advise interested parties of the risks and factors that may affect our business,
financial condition, results of operation and cash flows. If one or more of
these risks or uncertainties materialize, or if the underlying assumptions prove
incorrect, our actual results may vary materially from those expected or
projected.
This
prospectus relates to the resale of our common stock that may be offered and
sold from time to time by the selling stockholders. We will not
receive any proceeds from the sale of shares of common stock in this
offering.
Since our
shares are not listed or quoted on any exchange or quotation system, the
offering price of the shares of common stock was arbitrarily determined. The
offering price was determined by the price shares were sold to our shareholders
in our last private placement which was completed on June 21, 2010 pursuant to
an exemption under Rule 506 of Regulation D.
The
offering price of the shares of our common stock has been determined arbitrarily
by us and does not necessarily bear any relationship to our book value, assets,
past operating results, financial condition or any other established criteria of
value. The facts considered in determining the offering price were our financial
condition and prospects, our limited operating history and the general condition
of the securities market. Although our common stock is not listed on a public
exchange, we will be filing to obtain a listing on the Over The Counter Bulletin
Board (OTCBB) concurrently with or shortly after the filing of this prospectus.
In order to be quoted on the Bulletin Board, a market maker must file an
application on our behalf in order to make a market for our common stock. There
can be no assurance that a market maker will agree to file the necessary
documents with the National Association of Securities Dealers, which operates
the OTC Electronic Bulletin Board, nor can there be any assurance that such an
application for quotation will be approved.
In
addition, there is no assurance that our common stock will trade at market
prices in excess of the initial public offering price as prices for the common
stock in any public market which may develop will be determined in the
marketplace and may be influenced by many factors, including the depth and
liquidity.
DILUTION
The
common stock to be sold by the selling shareholders is common stock that is
currently issued or will be issued to our shareholders upon conversion or
exercise of certain Convertible Securities. Accordingly, there will be no
dilution to our existing shareholders.
23
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Holders
As of
June 21, 2010, there were 42 record holders of our common stock and there were
shares of 18,586,850 our common stock outstanding. No public market currently
exists for shares of our common stock. We intend to apply to have our common
stock quoted on the Over-the-Counter Bulletin Board.
The
Securities Enforcement and Penny Stock Reform Act of 1990
The
Securities and Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).
A
purchaser is purchasing penny stock which limits the ability to sell the stock.
The shares offered by this prospectus constitute penny stock under the
Securities and Exchange Act. The shares will remain penny stocks for the
foreseeable future. The classification of penny stock makes it more difficult
for a broker-dealer to sell the stock into a secondary market, which makes it
more difficult for a purchaser to liquidate his/her investment. Any
broker-dealer engaged by the purchaser for the purpose of selling his or her
shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and
Exchange Act. Rather than creating a need to comply with those rules, some
broker-dealers will refuse to attempt to sell penny stock.
The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from those rules, to deliver a standardized risk disclosure
document prepared by the Commission, which:
¨
|
contains
a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary
trading;
|
¨
|
contains
a description of the broker's or dealer's duties to the customer and of
the rights and remedies available to the customer with respect to a
violation to such duties or other requirements of the Securities Act of
1934, as amended;
|
¨
|
contains
a brief, clear, narrative description of a dealer market, including "bid"
and "ask" prices for penny stocks and the significance of the spread
between the bid and ask price;
|
¨
|
contains
a toll-free telephone number for inquiries on disciplinary
actions;
|
¨
|
defines
significant terms in the disclosure document or in the conduct of trading
penny stocks; and
|
¨
|
contains
such other information and is in such form (including language, type, size
and format) as the Securities and Exchange Commission shall require by
rule or regulation;
|
The
broker-dealer also must provide, prior to effecting any transaction in a penny
stock, to the customer:
¨
|
the
bid and offer quotations for the penny
stock;
|
¨
|
the
compensation of the broker-dealer and its salesperson in the
transaction;
|
¨
|
the
number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market
for such stock; and
|
¨
|
monthly
account statements showing the market value of each penny stock held in
the customer's account.
|
In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
their securities.
24
Equity
Compensation Plan Information
We have
no outstanding stock options or other equity compensation plans.
Reports
Once our
registration statement under Form S-1 has been declared effective, we will
continue to be subject to certain reporting requirements and will furnish annual
financial reports to our stockholders, certified by our independent accountants,
and will furnish unaudited quarterly financial reports in our quarterly reports
filed electronically with the SEC. All reports and information filed by us can
be found at the SEC website, www.sec.gov.
Stock
Transfer Agent
The stock
transfer agent for our securities is Island Capital Management, LLC. St.
Petersburg. Their address is 100 2nd Avenue
South, 300N, St Petersburg, Florida 33701. Their phone number is (727)
502-0508.
Dividend
Policy
We have
not previously declared or paid any dividends on our common stock and do not
anticipate declaring any dividends in the foreseeable future. The payment of
dividends on our common stock is within the discretion of
our board of directors. We intend to retain any earnings for
use in our operations and the expansion of our business. Payment of dividends in
the future will depend on our future earnings, future capital needs and our
operating and financial condition, among other factors that our board of
directors may deem relevant. We are not under any contractual restriction as to
our present or future ability to pay dividends.
FINANCIAL
INFORMATION
SELECTED
CONSOLIDATED FINANCIAL DATA
The
following selected consolidated statement of operations data contains
consolidated statement of operations data and consolidated balance sheet for the
fiscal years period ended December 31, 2009, December 31, 2008 and period ending
March 31, 2010. The consolidated statement of operations data and balance sheet
data were derived from the audited consolidated financial statements. Such
financial data should be read in conjunction with the consolidated financial
statements and the notes to the consolidated financial statements starting on
page F-4 and with “Management’s Discussion and Analysis of Financial Condition
and Results of Operations.”
As of
December 31, 2009
|
As of
December 31, 2008
|
|||||||
Balance
Sheet Data:
|
||||||||
Assets
|
$ | 116 | $ | 2,000 | ||||
Liabilities
|
$ | 6,164 | $ | 1,256 | ||||
Total
Stockholders’ Deficiency
|
$ | (6,048 | ) | $ | (3,256 | ) | ||
Statement
of Operations Data
|
||||||||
Revenue
|
$ | - | $ | - | ||||
Operating
Expenses
|
$ | 4,442 | $ | 2,000 | ||||
Other
Expenses
|
$ | 1,722 | $ | - | ||||
Net
Loss
|
$ | (6,792 | ) | $ | (3,256 | ) | ||
Basis
and Diluted Loss Per Share
|
$ | 0.00 | $ | 0.00 | ||||
Weighted
Average Number of Shares Outstanding
|
5,108,904 | 5,000,000 |
The
following selected data contains statement of operations data and balance sheet
for the three months ended March 31, 2010 and year ended December, 2009. The
statement of operations data and balance sheet data were derived from the
financial statements for the periods. Such financial data should be read in
conjunction with the unaudited financial statements and the notes to the
financial statements for said periods starting on page F-4 and with
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations.”
25
As
of
March
31,
2010
|
As
of
December
31,
2009
|
|||||||
Balance
Sheet Data:
|
||||||||
Assets
|
$ | 120 | $ | 116 | ||||
Liabilities
|
$ | 13,207 | $ | 6,164 | ||||
Total
Stockholders’ Deficiency
|
$ | 13,087 | $ | (6,048 | ) | |||
Statement
of Operations Data
|
||||||||
Revenue
|
— | — | ||||||
Operating
Expenses
|
$ | 7,000 | $ | 4,442 | ||||
Other
(Income) Expenses
|
$ | - | $ | 1,722 | ||||
Net
Loss
|
$ | (7,000 | ) | $ | (6.792 | ) | ||
Basis
and Diluted Loss Per Share
|
$ | $0.00 | $ | $0.00 | ||||
Weighted
Average Number of Shares Outstanding
|
18,250,000 | 5,000,000 |
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
The
following discussion of our financial condition and results of operation for the
twelve months ended December 31, 2009, December 31, 2008 and period
ended March 31, 2010 should be read in conjunction with the financial statements
and the notes to those statements that are included elsewhere in this report.
Our discussion includes forward-looking statements based upon current
expectations that involve risks and uncertainties, such as our plans,
objectives, expectations and intentions. Actual results and the timing of events
could differ materially from those anticipated in these forward-looking
statements as a result of a number of factors, including those set forth under
the “Risk Factors,” “Cautionary Notice Regarding Forward-Looking Statements” and
“Our Business” sections in this Form S1. We use words such as
“anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,”
“believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions
to identify forward-looking statements.
Plan
of Operation
The
Company intends to focus its portfolio in a wide variety of different sectors
including but not limited to alternative resources, technology, biotech,
insurance, and services. Our investment objective is to maximize our portfolio’s
total return by using a unique financing models that collateralizes traditional
loan using investment grade fixed income instruments, such as CD, Bonds, Medium
Term Notes, etc. and investing in the debt and/or equity securities of
start-up and micro companies. We also seek to provide our stockholders with
current income on investments in debt securities and long-term capital growth
through the appreciation in the value of warrants or other equity instruments
that we may receive when we make debt investments or equity
investments.
The
Company is currently in the development stage and has not commenced operations.
All activities of the Company to date relate to its organization, initial
funding and share issuances.
The
Company currently does not engage in any business activities that provide cash
flow. Until the Company commences operations, we anticipate incurring
costs related to:
|
(i)
|
filing Exchange Act reports,
and
|
(ii)
|
investigating, analyzing and
consummating various business
opportunities.
|
We
believe we will be able to meet these costs primarily through deferral of fees
by certain service providers and additional amounts, as necessary, to be loaned
to or invested in us by our stockholders, management or other investors. There
is no guarantee that we will be able to access any funding or that the funding
we access will be sufficient in amount to sustain our operations or that such
funds may be accessed on terms which are beneficial to the Company
26
Going
Concern
The
accompanying financial statements have been prepared on a going concern basis,
which assumes the Company will realize its assets and discharge its liabilities
in the normal course of business. As reflected in the accompanying financial
statements, the Company has a deficit accumulated during the development stage
of $17,087, used cash from operations of $9,387 since its inception, and has
negative working capital of $13,207 at March 31, 2010. The Company’s ability to
continue as a going concern is dependent upon its ability to generate future
profitable operations and/or to obtain the necessary financing to meet its
obligations and repay its liabilities arising from normal business operations
when they come due. The Company’s ability to continue as a going concern is also
dependent on its ability to find a suitable target company and enter into a
possible reverse merger with such company. Management’s plan includes obtaining
additional funds by equity financing through a reverse merger transaction and/or
related party advances, however there is no assurance of additional funding
being available. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern. The accompanying financial statements do
not include any adjustments that might arise as a result of this
uncertainty.
Results
of Operations
For the
three months ending March 31, 2010, the Company had no revenues and incurred
general and administrative expenses of $7,000.
For the
period from inception (April 29, 2008) through March 31, 2010, the Company had
no activities that produced revenues from operations and had a net loss of
$(15,831), due to legal, accounting, audit and other professional service fees
incurred in relation to the formation of the Company and the filing of the
Company’s Registration Statement on Form 10 filed in August 2008 and other
SEC-related compliance matters.
Liquidity
and Capital Resources
As of
March 31, 2010, the Company had assets equal to $120 and had current liabilities
of $13,207 as of March 31, 2010.
The
following is a summary of the Company's cash flows from operating, investing,
and financing activities:
For the
Cumulative Period from Inception (April 29, 2008) through March 31,
2010
Operating
activities
|
$ | (9,387 | ) | |
Investing
activities
|
- | |||
Financing
activities
|
$ | 9,507 | ||
Net
effect on cash
|
$ | 120 |
The
Company has nominal assets and has generated no revenues since inception. The
Company is also dependent upon the receipt of capital investment or other
financing to fund its ongoing operations and to execute its business plan of
seeking a combination with a private operating company. If continued funding and
capital resources are unavailable at reasonable terms, the Company may not be
able to implement its plan of operations.
Off-Balance
Sheet Arrangements
The
Company does not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on the Company’s financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to investors.
27
Seasonality
Our
operating results are not affected by seasonality.
Inflation
Our
business and operating results are not affected in any material way by
inflation.
Critical
Accounting Policies
The
Securities and Exchange Commission issued Financial Reporting Release No. 60,
"Cautionary Advice Regarding Disclosure About Critical Accounting Policies"
suggesting that companies provide additional disclosure and commentary on their
most critical accounting policies. In Financial Reporting Release No.
60, the Securities and Exchange Commission has defined the most critical
accounting policies as the ones that are most important to the portrayal of a
company's financial condition and operating results, and require management to
make its most difficult and subjective judgments, often as a result of the need
to make estimates of matters that are inherently uncertain. The
nature of our business generally does not call for the preparation or use of
estimates. Due to the fact that the Company does not have any
operating business, we do not believe that we do not have any such critical
accounting policies.
PROPERTIES
Offices
At this
time, the Company maintains its designated office at 6800 W. Central Ave;
Suite E1; Toledo, OH 43617. The Company’s telephone number is
888-61-MONEY and 419-381-5626. The Company’s fax number is
419-381-5627. The Company’s website is www.clscapitalgroup.com and a request
for information can be email to the Company at info@clscapitalgroup.com.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS
AND MANAGEMENT
The
following table sets forth certain information regarding beneficial ownership of
the Company's Common Stock as of June 21, 2010, by: (i) each current director;
each nominee for director, and executive officer of the Company; (ii) all
directors and executive officers as a group; and (iii) each shareholder who owns
more than five percent of the outstanding shares of the Company's Common Stock.
Except as otherwise indicated, the Company believes each of the persons listed
below possesses sole voting and investment power with respect to the shares
indicated.
Name and Address
|
Number of Shares
|
Percentage Owned
|
||||||
Reynaldo
Uballe Jr
|
8,500,000 | 46.57 | % | |||||
5536
Forest Green
|
||||||||
Toledo,
OH 43615
|
||||||||
Redell
V Napper II
|
8,500,000 | 46.57 | % | |||||
723
Weatherstone Rd.
|
||||||||
Holland,
OH 43528
|
||||||||
Timothy
Neher
|
1,250,000 | 6.86 | % | |||||
1840
Gateway Drive
|
||||||||
Suite
200
|
||||||||
Foster
City CA 94404
|
28
(1) This
table is based upon 18,586,850 shares
issued and outstanding as June 21, 2010.
(2)
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting and investment power with
respect to the shares. Shares of Common Stock subject to options or warrants
currently exercisable or exercisable within 60 days are deemed outstanding for
computing the percentage of the person holding such options or warrants, but are
not deemed outstanding for computing the percentage of any other
person.
DIRECTORS
AND EXECUTIVE OFFICERS
Set forth
below is the name of our directors and executive officers, their ages, all
positions and offices that he held with us, the period during which each has
served as such, and their business experience during at least the last five
years.
Name
|
Age
|
Position
|
|||
Redell
Vincent Napper III
|
35
|
Director,
CEO, CFO and Treasurer
|
|||
Reynaldo
Uballe Jr.
|
47
|
Director,
COO
|
|||
Helen
Odum
|
37
|
Director,
Secretary
|
Redell Vincent Napper II
became CEO, CFO, Treasurer and a director of the Company in December
2009. Since 2007, he has been a Managing Member of CLS Capital Group,
LLC. From 2003 to the present date, he has also been the Managing
Member of Napper Investments, LLC which was involved in the business of
purchasing, renovating, leasing and managing residential and commercial real
estate. Mr. Napper attended Ohio Northern University.
Reynaldo Uballe, Jr. became
COO, Secretary and a director of the Company in December 2009. Since
March 2008, he has been Managing Member of CLS Capital Group,
LLC. From November 2004 to March 2008, he was Regional Manager for
Homeloan USA Corp./ Macloud Financial; from June 2004 to November 2004, he was
Branch Manager for Macloud Financial; from June 2002 to June 2004, he was Branch
Manager of 1st
Metropolitan Mortgage and from August 2000 to June 2002 he was Branch Operator
for Pacific Guarantee Mortgage. Mr. Uballe attended Tiffin University
and the University of Toledo.
Helen Odum became Secretary
and a Director of the Company in December 2009. She had previously
served in various capacities for CLS Capital Group, LLC.
Messrs.
Napper and Uballe and Ms. Odum devote less than 100% of their business time
to the affairs of the Company. The time Messrs. Napper and Uballe
spend on the business affairs of the Company varies from week to week and is
based upon the needs and requirements of the Company.
Audit
Committee and Audit Committee Financial Expert
We do not
currently have an audit committee financial expert, nor do we have an audit
committee. Our entire board of directors, which currently consists of
Messrs. Napper and Uballe and Ms. Odum, handles the functions that would
otherwise be handled by an audit committee. We do not currently have
the capital resources to pay director fees to a qualified independent expert who
would be willing to serve on our board and who would be willing to act as an
audit committee financial expert. As our business expands and as we
appoint others to our board of directors we expect that we will seek a qualified
independent expert to become a member of our board of
directors. Before retaining any such expert our board would make a
determination as to whether such person is independent.
There are
no family relationships between our officers and directors. Each
director is elected at our annual meeting of stockholders and holds office until
the next annual meeting of stockholders, or until his successor is elected and
qualified.
29
EXECUTIVE
COMPENSATION
The
following table summarizes all compensation recorded by us in 2009 for our
principal executive officers, each other executive officer serving as such whose
annual compensation exceeded $100,000, and up to two additional individuals for
whom disclosure would have been made in this table but for the fact that the
individual was not serving as an executive officer of our Company at December
31, 2008.
None
Outstanding
Equity Awards at Fiscal Year-End
The
following table provides information concerning unexercised options, stock that
has not vested and equity incentive plan awards for each named executive officer
outstanding as of December 31, 2009 and June 21, 2010:
None
Compensation
of Directors
We have
not established standard compensation arrangements for our directors and the
compensation, if any, payable to each individual for their service on our Board
will be determined from time to time by our Board of Directors based upon the
amount of time expended by each of the directors on our behalf. None
of our directors received any compensation for their services.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS,
AND
DIRECTOR INDEPENDENCE
Related
Transactions
The
Company neither owns real or personal property. The Company leases its
office space from Forrester Wehrle Properties. The Company is on a
month to month lease paying $2,209 per month. The Company is
responsible for all utilities, telephone, and internet services. The
company also leases two (2) copier machines from Peninsular
Leasing. Upon completion of the lease agreement, the Company will
purchase the copiers for $1.00 each.
The
officers and directors for the Company are involved in other business activities
and may, in the future, become involved in other business opportunities.
If a specific business opportunity becomes available, such persons may
face a conflict in selecting between the Company and their other business
interest. The Company has not formulated a policy for the resolution of
such conflicts.
Director
Independence
The
Company has no “independent” directors within the meaning of Nasdaq Marketplace
Rule 4200.
LEGAL
PROCEEDINGS
None
30
MARKET
PRICE OF AND DIVIDENDS ON THE REGISTRANT’S
COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
Market
Price of the Registrant’s Common Equity
Our stock
has yet to trade on any established market.
Dividend
Policy
We have
never paid cash dividends on our common stock. Under Delaware law, we
may declare and pay dividends on our capital stock either out of our surplus, as
defined in the relevant Delaware statutes, or if there is no such surplus, out
of our net profits for the fiscal year in which the dividend is declared and/or
the preceding fiscal year. If, however, the capital of our company,
computed in accordance with the relevant Delaware statutes, has been diminished
by depreciation in the value of our property, or by losses, or otherwise, to an
amount less than the aggregate amount of the capital represented by the issued
and outstanding stock of all classes having a preference upon the distribution
of assets, we are prohibited from declaring and paying out of such net profits
any dividends upon any shares of our capital stock until the deficiency in the
amount of capital represented by the issued and outstanding stock of all classes
having a preference upon the distribution of assets shall have been
repaired.
RECENT
SALES OF UNREGISTERED SECURITIES
On April
29, 2008, the Registrant sold 5,000,000 shares of Common Stock to Accelerated
Venture Partners, LLC for an aggregate investment of $4,000.00. The
Registrant sold these shares of Common Stock under the exemption from
registration provided by Section 4(2) of the Securities Act.
On
December 29, 2009, Redell Vincent Napper II and Reynaldo Uballe, Jr.
(“Purchasers”) each agreed to acquire 8,500,000 shares of the Company’s common
stock par value $0.0001 (17,000,000 shares in the aggregate) for a price of
$0.0001 per share. At the same time, Accelerated Venture Partners,
LLC agreed to tender 3,750,000 of their 5,000,000 shares of the Company’s common
stock par value $0.0001 for cancellation. Following these
transactions, each of Messrs. Napper and Uballe owned 46.57% of the Company’s
18,250,000 issued and outstanding shares of common stock par value $0.0001 and
the interest of Accelerated Venture Partners, LLC was reduced to approximately
6.86% of the total issued and outstanding shares. Simultaneously with
the share purchase, Timothy Neher resigned from the Company’s Board of Directors
and Messrs. Napper and Uballe were simultaneously appointed to the Company’s
Board of Directors. Such action represents a change of control of the
Company. The Purchasers used their working capital to acquire the
Shares. Prior to the
purchase of the shares, the Purchasers were not affiliated with the Company.
However, the Purchasers will be deemed affiliates of the Company after the share
purchase as a result of their stock ownership interest in the Company. The purchase of the shares
by the Purchasers was completed pursuant to written Subscription Agreements with
the Company. The purchase was not subject to any other terms and conditions
other than the sale of the shares in exchange for the cash payment.
June 21,
2010, the company completed an offering of our common shares under the
provisions of the Delaware securities laws and under an exemption from the
federal securities laws. We sold a total of 136,850 common shares at a price of
$2.00 per share to a total of thirty-four investors. We raised a total of
$273,700.00 in this offering.
DESCRIPTION
OF SECURITIES
Our
authorized capital stock consists of 100,000,000 shares of common stock, par
value $0.0001 per share, and 10,000,000 shares of preferred stock, par value
$0.0001 per share, the rights and preferences of which may be established from
time to time by our board. As of June 21, 2010, there were 18,586,850 shares of common
stock and no shares of preferred stock issued and outstanding.
31
Common
Stock
Holders
of our common stock are entitled to one vote for each share on all matters voted
upon by our stockholders, including the election of directors, and do not have
cumulative voting rights. Subject to the rights of holders of any
then outstanding shares of our preferred stock, our common stockholders are
entitled to any dividends that may be declared by our board. Holders
of our common stock are entitled to share ratably in our net assets upon our
dissolution or liquidation after payment or provision for all liabilities and
any preferential liquidation rights of our preferred stock then
outstanding. Holders of our common stock have no preemptive rights to
purchase shares of our stock. The shares of our common stock are not
subject to any redemption provisions and are not convertible into any other
shares of our capital stock. All outstanding shares of our common
stock are, and the shares of common stock to be issued in the offering will be,
upon payment therefor, fully paid and nonassessable. The rights, preferences and
privileges of holders of our common stock will be subject to those of the
holders of any shares of our preferred stock we may issue in the
future.
Preferred
Stock
Our board
may, from time to time, authorize the issuance of one or more classes or series
of preferred stock without stockholder approval. Subject to the provisions of
our certificate of incorporation and limitations prescribed by law, our board is
authorized to adopt resolutions to issue shares, establish the number of shares,
change the number of shares constituting any series, and provide or change the
voting powers, designations, preferences and relative rights, qualifications,
limitations or restrictions on shares of our preferred stock, including dividend
rights, terms of redemption, conversion rights and liquidation preferences, in
each case without any action or vote by our stockholders. One of the effects of
undesignated preferred stock may be to enable our board to discourage an attempt
to obtain control of our company by means of a tender offer, proxy contest,
merger or otherwise. The issuance of preferred stock may adversely affect the
rights of our common stockholders by, among other things:
•
|
Restricting
dividends on the common stock;
|
•
|
diluting
the voting power of the common
stock;
|
•
|
impairing
the liquidation rights of the common stock;
or
|
•
|
delaying
or preventing a change in control without further action by the
stockholders.
|
The
following table sets forth the shares beneficially owned, as of the date of this
prospectus, by the selling stockholders prior to the offering contemplated by
this prospectus, the number of shares each selling stockholder is offering by
this prospectus and the number of shares which each selling stockholder would
own beneficially if all such offered shares are sold. None of the
selling stockholders is known to us to be a registered broker-dealer or an
affiliate of a registered broker-dealer. Each of the selling
stockholders has acquired his, her or its shares solely for investment and not
with a view to or for resale or distribution of such
securities. Beneficial ownership is determined in accordance with SEC
rules and includes voting or investment power with respect to the
securities.
32
Name(1)
|
Shares of common
stock owned prior to
the offering
|
Shares of
common stock
to be sold(2)
|
Shares of common
stock owned after
the offering
|
Percentage of common
stock owned after this
offering
|
||||||||||||
Accelerated
Venture Partners LLC.
|
1,250,000 | 285,100 | 964,900 | 4.81 | % | |||||||||||
Bryan
Wilson
|
200 | 200 | -0- | -0- | % | |||||||||||
Francis
Oruma
|
50,000 | 50,000 | -0- | -0- | % | |||||||||||
Kimberly
Blount
|
200 | 200 | -0- | -0- | % | |||||||||||
Jessica
Nappere
|
200 | 200 | -0- | -0- | % | |||||||||||
Michael
Nappere
|
200 | 200 | -0- | -0- | % | |||||||||||
Angela
Blount
|
200 | 200 | -0- | -0- | % | |||||||||||
Jacqueline
Blount
|
200 | 200 | -0- | -0- | % | |||||||||||
Lorenzo
White
|
200 | 200 | -0- | -0- | % | |||||||||||
Robert
White
|
200 | 200 | -0- | -0- | % | |||||||||||
Harambee
Investment Club
|
200 | 200 | -0- | -0- | % | |||||||||||
Walter
Turner
|
35,000 | 35,000 | -0- | -0- | % | |||||||||||
Talitha
Napper
|
200 | 200 | -0- | -0- | % | |||||||||||
Sheikinah
Napper
|
200 | 200 | -0- | -0- | % | |||||||||||
Redell
Napper Sr.
|
200 | 200 | -0- | -0- | % | |||||||||||
Kevin
Napper
|
200 | 200 | -0- | -0- | % | |||||||||||
Marvin
Burgess
|
200 | 200 | -0- | -0- | % | |||||||||||
Debra
Napper
|
200 | 200 | -0- | -0- | % | |||||||||||
Saul
Allen
|
200 | 200 | -0- | -0- | % | |||||||||||
Rodney
Watson
|
200 | 200 | -0- | -0- | % | |||||||||||
Thomas
K Nelson
|
200 | 200 | -0- | -0- | % | |||||||||||
Crystal
Bagner
|
200 | 200 | -0- | -0- | % | |||||||||||
Robbin
Hackney
|
200 | 200 | -0- | -0- | % | |||||||||||
Walter
Jenkins
|
200 | 200 | -0- | -0- | % | |||||||||||
Robert
Russell
|
200 | 200 | -0- | -0- | % | |||||||||||
Rene
Uballe
|
5,000 | 5,000 | -0- | -0- | % | |||||||||||
Wendy
Uballe
|
10,200 | 10,200 | -0- | -0- | % | |||||||||||
Brian
J Searles
|
200 | 200 | -0- | -0- | % | |||||||||||
Michael
D. Repass
|
200 | 200 | -0- | -0- | % | |||||||||||
Herby
S.Guilliod
|
400 | 400 | -0- | -0- | % | |||||||||||
Bret
Richards
|
200 | 200 | -0- | -0- | % | |||||||||||
Timothy
W. Harrison
|
200 | 200 | -0- | -0- | % | |||||||||||
Kris
K. Newman
|
10,200 | 10,200 | -0- | -0- | % | |||||||||||
Stephen
R. Uballe
|
5,200 | 5,200 | -0- | -0- | % | |||||||||||
Nikki
K. Newman
|
200 | 200 | -0- | -0- | % | |||||||||||
Virginia
Olivias
|
5,000 | 5,000 | -0- | -0- | % | |||||||||||
J
Michael Newman
|
200 | 200 | -0- | -0- | % | |||||||||||
Cheryl
Young
|
10,000 | 10,000 | -0- | -0- | % | |||||||||||
Raymond
Garcia
|
250 | 250 | -0- | -0- | % | |||||||||||
Total
|
1,388,850 | 423,950 | 964,900 | 4.81 | % |
|
(1)
|
All
shares are owned of record and beneficially unless otherwise indicated.
Beneficial ownership information for the selling stockholders is provided
as of June 21, 2010. , based upon information provided by the selling
stockholders or otherwise known to
us.
|
|
(2)
|
Assumes
the sale of all shares of common stock registered pursuant to this
prospectus. The selling stockholders are under no obligation known to us
to sell any shares of common stock at this
time.
|
The
selling stockholders may, from time to time, sell any or all of their shares of
common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. If the shares of common
stock are sold through underwriters or broker-dealers, the selling stockholders
will be responsible for underwriting discounts or commission or agent’s
commissions. The selling stockholders have advised us that they will
sell the shares of common stock from time to time in the open market, at the
initial offering price of $2.00 per share, which was the price they paid for
their shares, until the shares are quoted on the OTC Bulletin Board or national
securities exchange, at which point the selling securities holders may sell the
registered shares at fixed prices, at prevailing market prices at the time
of the sale, at varying prices determined at the time of sale, or negotiated
prices. The selling stockholders may use any one or more of the
following methods when selling shares:
33
|
•
|
any
national securities exchange or quotation service on which the securities
may be listed or quoted at the time of
sale;
|
|
•
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
•
|
block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
•
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
|
|
•
|
transactions
otherwise than on these exchanges or systems or in the over-the-counter
market;
|
|
•
|
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
|
•
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
•
|
privately
negotiated transactions;
|
|
•
|
short
sales;
|
|
•
|
broker-dealers
may agree with the selling stockholders to sell a specified number of such
shares at a stipulated price per
share;
|
|
•
|
a
combination of any such methods of sale;
and
|
|
•
|
any
other method permitted pursuant to applicable
law.
|
The
selling stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
The
selling stockholders may also engage in short sales against the box, puts and
calls and other transactions in our securities or derivatives of our securities
and may sell or deliver shares in connection with these trades.
Broker-dealers
engaged by the selling stockholders may arrange for other broker-dealers to
participate in sales. Broker-dealers may receive commissions or
discounts from the selling stockholders (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions
involved. Any profits on the resale of shares of common stock by a
broker-dealer acting as principal might be deemed to be underwriting discounts
or commissions under the Securities Act. Discounts, concessions,
commissions and similar selling expenses, if any, attributable to the sale of
shares will be borne by a selling stockholder. The selling
stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares if liabilities are
imposed on that person under the Securities Act.
In
connection with the sale of the shares of common stock or otherwise, the selling
stockholders may enter into hedging transactions with broker-dealers, which may
in turn engage in short sales of the shares of common stock in the course of
hedging in positions they assume.
The
selling stockholders may also sell shares of common stock short and deliver
shares of common stock covered by this prospectus to close out short positions
and to return borrowed shares in connection with such short
sales. The selling stockholders may also loan or pledge shares of
common stock to broker-dealers that in turn may sell such shares. The
selling stockholders may, from time to time, pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time under this
prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list
of selling stockholders to include the pledgee, transferee or other successors
in interest as selling stockholders under this prospectus.
34
The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus. The selling
stockholders also may transfer and donate the shares of common stock in other
circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus. The selling stockholders and any broker-dealers or
agents that are involved in selling the shares may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with such
sales. In such event, any commissions paid, or any discounts or
concessions allowed to, such broker-dealers or agents and any profit realized on
the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. At the time a
particular offering of the shares of common stock is made, a prospectus
supplement, if required, will be distributed which will set forth the aggregate
amount of shares of common stock being offered and the terms of the offering,
including the name or names of any broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
stockholders and any discounts, commissions or concessions allowed or reallowed
or paid to broker-dealers. Under the securities laws of some states,
the shares of common stock may be sold in such states only through registered or
licensed brokers or dealers. In addition, in some states the shares
of common stock may not be sold unless such shares have been registered or
qualified for sale in such state or an exemption from registration or
qualification is available and is complied with. There can be no
assurance that any selling stockholder will sell any or all of the shares of
common stock registered pursuant to the shelf registration statement, of which
this prospectus forms a part.
Each
selling stockholder has informed us that it does not have any agreement or
understanding, directly or indirectly, with any person to distribute the common
stock. None of the selling stockholders who are affiliates of
broker-dealers, other than the initial purchasers in private transactions,
purchased the shares of common stock outside of the ordinary course of business
or, at the time of the purchase of the common stock, had any agreements, plans
or understandings, directly or indirectly, with any person to distribute the
securities.
We are
paying all fees and expenses incident to the registration of the shares of
common stock. Except as provided for indemnification of the selling
stockholders, we are not obligated to pay any of the expenses of any attorney or
other advisor engaged by a selling stockholder. We have not agreed to
indemnify any selling stockholders against losses, claims, damages and
liabilities, including liabilities under the Securities Act.
If we are
notified by any selling stockholder that any material arrangement has been
entered into with a broker-dealer for the sale of shares of common stock, if
required, we will file a supplement to this prospectus. If the
selling stockholders use this prospectus for any sale of the shares of common
stock, they will be subject to the prospectus delivery requirements of the
Securities Act.
The
anti-manipulation rules of Regulation M under the Exchange Act may apply to
sales of our common stock and activities of the selling stockholders, which may
limit the timing of purchases and sales of any of the shares of common stock by
the selling stockholders and any other participating
person. Regulation M may also restrict the ability of any person
engaged in the distribution of the shares of common stock to engage in passive
market-making activities with respect to the shares of common
stock. Passive market making involves transactions in which a market
maker acts as both our underwriter and as a purchaser of our common stock in the
secondary market. All of the foregoing may affect the marketability
of the shares of common stock and the ability of any person or entity to engage
in market-making activities with respect to the shares of common
stock.
Once sold
under the registration statement, of which this prospectus forms a part, the
shares of common stock will be freely tradable in the hands of persons other
than our affiliates.
35
EXPERTS
Our
financial statements from inception (April 29, 2008) through December 31, 2008,
for the fiscal year ended December 31, 2009, and the three month
ended March 31, 2010 along with the related consolidated statements
of operations, stockholders’ equity and cash flows in this prospectus have been
audited by Paritz & Company P.C. of Hackensack, New Jersey, independent
registered public accounting firm, to the extent and for the periods set forth
in their report, and are set forth in this prospectus in reliance upon such
report given upon the authority of them as experts in auditing and
accounting.
WHERE YOU CAN FIND MORE
INFORMATION
Our
filings are available to the public at the SEC’s web site at
http://www.sec.gov. You may also read and copy any document with the
SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C.
20549. Further information on the Public Reference Room may be
obtained by calling the SEC at 1-800-SEC-0330.
We have
filed a registration statement on Form S-1 with the SEC under the Securities Act
for the common stock offered by this prospectus. This prospectus does
not contain all of the information set forth in the registration statement,
certain parts of which have been omitted in accordance with the rules and
regulations of the SEC. For further information, reference is made to
the registration statement and its exhibits. Whenever we make
references in this prospectus to any of our contracts, agreements or other
documents, the references are not necessarily complete and you should refer to
the exhibits attached to the registration statement for the copies of the actual
contract, agreement or other document.
FINANCIAL
STATEMENTS
Our
consolidated financial statements as of December 31, 2008 and December 31, 2009
and for the fiscal years ended December 31, 2008 and December 31, 2009
(audited), and as of March 31, 2010 and for the quarter ended March 31, 2010
(unaudited) are included with this prospectus. These financial
statements have been prepared on the basis of accounting principles generally
accepted in the United States and are expressed in US dollars.
(a)
Consolidated financial statements as of December 31, 2008 and December 31, 2009
and for the fiscal years ended December 31, 2008 and December 31, 2009
(audited).
36
CLS
CAPITAL GROUP, INC.
CONSOLIDATED
FINANCIAL STATEMENTS
December
31, 2008 and
December
31, 2009
CLS
CAPITAL GROUP, INC.
Consolidated
Financial Statements
TABLE
OF CONTENTS
Page
|
|
REPORT
OF INDEPENDENT REGISTERED
|
|
PUBLIC
ACCOUNTING FIRM
|
F-1
|
CONSOLIDATED
FINANCIAL STATEMENTS
|
|
Consolidated
balance sheets
|
F-2
|
Consolidated
statements of operation
|
F-3
|
Consolidated
statements of stockholders' equity
|
F-4
|
Consolidated
statements of cash flows
|
F-5
|
Notes
to consolidated financial statements
|
F-6
|
37
Report
of Independent Registered Public Accounting Firm
Board of
Directors and Stockholders
We have
audited the accompanying balance sheets of CLS Capital Group, Inc. (fka
Accelerated Acquisitions III, Inc.) (a development stage company) as of December
31, 2009 and December 31, 2008 and the related statements of operations,
stockholder's deficiency and cash flows for the year ended December 31, 2009,
the period from inception (April 29, 2008) to December 31, 2008 and the period
from inception (April 29, 2008) 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
audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. 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 on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also 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
audits provide 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 (a development stage
company) as of December 31, 2009 and December 31, 2008 and the results of its
operations and its cash flows for the year ended December 31, 2009, the period
from inception (April 29, 2008) to December 31, 2008 and the period from
inception (April 29, 2008) to December 31, 2009 in conformity with accounting
principles generally accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has incurred a loss since inception, has a net
accumulated deficit and may be unable to raise further equity.These factors
raise substantial doubt about its ability to continue as a going concern.
Management’s plans regarding those matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/
Paritz & Co
Hackensack,
New Jersey
March 30,
2010
F-1
CLS
CAPITAL GROUP, INC.
(Formerly
known as ACCELERATED
ACQUISITIONS III, INC.)
A
Development Stage Company
BALANCE
SHEETS
December
31
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
|
(audited)
|
(audited)
|
||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
|
$ | 120 | $ | 2,000 | ||||
TOTAL
ASSETS
|
$ | 120 | $ | 2,000 | ||||
LIABILITIES
AND STOCKHOLDER’S EQUITY
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accrued
expenses
|
$ | 4,681 | $ | 1,256 | ||||
Shareholder
advances
|
1,526 | - | ||||||
TOTAL
LIABILITIES
|
$ | 6,207 | $ | 1,256 | ||||
STOCKHOLDER’S
EQUITY:
|
||||||||
Preferred
stock, $.0001 par value; 10,000,000 shares authorized; none issued and
outstanding
|
- | - | ||||||
Common
stock, $.0001 par value; 100,000,000 shares authorized; 18,250,000 and
5,000,000 shares issued and outstanding at December 31, 2009 and December
31, 2008, respectively
|
1,825 | 500 | ||||||
Additional
paid-in capital
|
3,875 | 3,500 | ||||||
Deficit
accumulated during the development stage
|
(10,087 | ) | (3,256 | ) | ||||
(4,387 | ) | (3,256 | ) | |||||
Stock
subscription receivable
|
(1,700 | ) | - | |||||
TOTAL
STOCKHOLDER’S DEFICIT
|
(6,087 | ) | (3,256 | ) | ||||
TOTAL
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT)
|
$ | 120 | $ | 2,000 |
See
notes to unaudited financial statements.
F-2
CLS
CAPITAL GROUP, INC.
(Formerly
known as ACCELERATED
ACQUISITIONS III, INC.)
(A
Development Stage Company)
Statements
of Operations (Unaudited)
Fiscal Year
Ended
December 31,
2009
|
Fiscal Year
Ended
December 31,
2008 (*)
|
April 29, 2008
(Inception)
through
December 31,
2009
|
||||||||||
Revenues
|
$ | - | $ | - | $ | - | ||||||
Operating
Expenses
|
||||||||||||
General
and administrative
|
6,831 | 3,256 | 8,831 | |||||||||
Net
Operating Expenses
|
6,831 | 3,256 | 8,831 | |||||||||
Net
Loss
|
$ | (6,831 | ) | $ | (3,256 | ) | $ | (8,831 | ) | |||
Basic
earnings (loss) per share—Basic and Diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
Weighted
average number of common shares outstanding
|
5,108,904 | 5,000,000 |
(*) Partial
year from April 29, 2008 (Date of Inception) to December 31, 2008
see
accompanying notes to financial statements.
F-3
CLS
CAPITAL GROUP, INC.
(Formerly
known as ACCELERATED
ACQUISITIONS II, INC.)
(A
Development Stage Company)
STATEMENTS OF STOCKHOLDER’S
DEFICIENCY
Preferred Stock
|
Common Stock
|
Additional
Paid-in
|
(Deficit)
Accumulated
During the
Development
|
Stockholder’s
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stage
|
Equity
|
||||||||||||||||||||||
BALANCE
AT INCEPTION (APRIL 29, 2008)
|
-
|
$
|
-
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||||
Issuance
of common stock
|
-
|
-
|
5,000,000
|
500
|
3,500
|
-
|
4,000
|
|||||||||||||||||||||
Net
(loss)
|
-
|
-
|
-
|
-
|
-
|
(3,256
|
)
|
(3,256
|
)
|
|||||||||||||||||||
BALANCE
AT DECEMBER 31, 2008
|
-
|
$
|
-
|
5,000,000
|
$
|
500
|
$
|
3,500
|
$
|
(3,256
|
)
|
$
|
744
|
|||||||||||||||
Issuance
of common stock
|
-
|
-
|
17,000,000
|
1,700
|
-
|
-
|
1,700
|
|||||||||||||||||||||
Cancellation
of common stock
|
-
|
-
|
(3,750,000
|
)
|
(375
|
)
|
375
|
-
|
-
|
|||||||||||||||||||
Stock
subscription receivable
|
-
|
-
|
-
|
(1,700
|
)
|
-
|
-
|
(1,700
|
)
|
|||||||||||||||||||
Net
(loss)
|
-
|
-
|
-
|
-
|
-
|
(6,831
|
)
|
(6,831
|
)
|
|||||||||||||||||||
BALANCE
AT DECEMBER 31, 2009
|
-
|
$
|
-
|
18,250,000
|
$
|
1,825
|
$
|
3,875
|
$
|
(10,087
|
)
|
$
|
(6,087
|
)
|
See
notes to financial statements.
F-4
CLS
CAPITAL GROUP, INC.
(Formerly
known as ACCELERATED
ACQUISITIONS II, INC.)
A
Development Stage Company
STATEMENTS OF CASH
FLOWS
(unaudited)
For the Fiscal
Year ended
December 31,
2009
|
For
the
Fiscal
year
ended
December
31,
2008
(*)
|
For the
Cumulative
Period from
Inception
(April 29, 2008)
through
December 31,
2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
(loss)
|
$ | (3,492 | ) | (3,256 | ) | $ | (8,052 | ) | ||||
Increase
(decrease) in accounts payable
|
956 | 1,256 | 3,346 | |||||||||
Net
cash used by operating activities
|
(2,506 | ) | (2,000 | ) | (4,706 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds
from the issuance of common stock
|
1,700 | 4,000 | 5,700 | |||||||||
Cancellation
of common stock
|
(375 | ) | - | (375 | ) | |||||||
Additional
paid-in capital
|
375 | - | 375 | |||||||||
Stock
subscription receivable
|
(1700 | ) | - | (1,700 | ) | |||||||
Shareholder
Advances
|
626 | - | 826 | |||||||||
Net
cash provided by financing activities
|
626 | 4,000 | 4,826 | |||||||||
NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
(1,880 | ) | 2,000 | 120 | ||||||||
Cash
and cash equivalents at beginning of period
|
2,000 | - | - | |||||||||
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 120 | 2,000 | $ | 120 |
(*) Partial
year from April 29, 2008 (Date of Inception) to December 31, 2008
See
notes to unaudited financial statements.
F-5
CLS
CAPITAL GROUP, INC.
(Formerly
known as ACCELERATED
ACQUISITIONS III, INC.)
A
Development Stage Company
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31,
2009
NOTE 1 -
|
ORGANIZATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
|
|
(a)
|
Organization
and Business:
|
CLS
Capital Group, Inc. (formerly known as Accelerated Acquisitions III, Inc.) (“the
Company”) was incorporated in the state of Delaware on April 29, 2008 for the
purpose of raising capital that is intended to be used in connection with its
business plan which may include a possible merger, acquisition or other business
combination with an operating business. On December 29, 2009, the Company
changed its name to CLS Capital Group, Inc.
The
Company is currently in the development stage. All activities of the Company to
date relate to its organization, initial funding and share
issuances.
|
(b)
|
Basis
of Presentation
|
The
accompanying Interim Financial Statements are unaudited and have been prepared
in accordance with accounting principles generally accepted for interim
financial statement presentation and in accordance with the instructions to
Regulations S-K. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statement presentation. In the
opinion of management, all adjustments for a fair statement of the results and
operations and financial position for the interim periods presented have been
included. All such adjustments are of a normal recurring nature. The
financial information should be read in conjunction with the Financial
Statements and notes thereto included in the Company’s Form 10-K Annual Report
for the year ended December 31, 2009 and the Company’s Registration Statement on
Form 10.
|
(c)
|
Going
Concern
|
The
accompanying financial statements have been prepared on a going concern basis,
which assumes the Company will realize its assets and discharge its liabilities
in the normal course of business. As reflected in the accompanying financial
statements, the Company has a deficit accumulated during the development stage
of $10,087, used cash from operations of $4,706 since its inception, and has
negative working capital of $6,087 at December 31, 2009. The Company’s ability
to continue as a going concern is dependent upon its ability to generate future
profitable operations and/or to obtain the necessary financing to meet its
obligations and repay its liabilities arising from normal business operations
when they come due. The Company’s ability to continue as a going concern is also
dependent on its ability to find a suitable target company and enter into a
possible reverse merger with such company. Management’s plan includes obtaining
additional funds by equity financing through a reverse merger transaction and/or
related party advances, however there is no assurance of additional funding
being available. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern. The accompanying financial statements do
not include any adjustments that might arise as a result of this
uncertainty.
F-6
CLS
CAPITAL GROUP, INC.
(Formerly
known as ACCELERATED
ACQUISITIONS II, INC.)
A
Development Stage Company
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31,
2009
NOTE 1
|
-
|
ORGANIZATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
|
(d) Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the balance sheet and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(e) Cash
and Cash Equivalents:
For
purposes of the statement of cash flows, the Company considers highly liquid
financial instruments purchased with a maturity of three months or less to be
cash equivalents. The Company had no cash equivalents at December 31,
2009
(f) Income
Taxes:
The
Company utilizes the liability method of accounting for income taxes. Under the
liability method deferred tax assets and liabilities are determined based on the
differences between financial reporting basis and the tax basis of the assets
and liabilities and are measured using enacted tax rates and laws that will be
in effect, when the differences are expected to reverse. An allowance against
deferred tax assets is recognized, when it is more likely than not, that such
tax benefits will not be realized.
(g) 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 for this
reporting period.
F-7
(h) Fair Value of
Financial Instruments:
The
carrying value of cash equivalents approximates fair value due to the short
period of time to maturity.
NOTE 2
- CAPITAL
STOCK:
The total
number of shares of capital stock which the Company has authority to issue is
one hundred ten million (110,000,000). These shares are divided into two classes
with 100,000,000 shares designated as common stock at $.0001 par value (the
“Common Stock”) and 10,000,000 shares designated as preferred stock at $.0001
par value (the “Preferred Stock”). The Preferred stock of the Company shall be
issued by the Board of Directors of the Company in one or more classes or one or
more series within any class and such classes or series shall have such voting
powers, full or limited, or no voting powers, and such designations,
preferences, limitations or restrictions as the Board of Directors of the
Company may determine, from time to time.
Holders
of shares of Common stock shall be entitled to cast one vote for each share held
at all stockholders’ meetings for all purposes, including the election of
directors. The Common Stock does not have cumulative voting
rights. No holder of shares of stock of any class shall be entitled
as a matter of right to subscribe for or purchase or receive any part of any new
or additional issue of shares of stock of any class, or of securities
convertible into shares of stock of any class, whether now hereafter authorized
or whether issued for money, for consideration other than money, or by way of
dividend.
On April
29, 2008, the Company issued 5,000,000 shares of Common stock at a purchase
price of $.0008 per share, for an aggregate purchase price of
$4,000.00.
On
December 29, 2009, Redell Vincent Napper II and Reynaldo Uballe, Jr. each agreed
to acquire 8,500,000 shares of the Company’s common stock par value $0.0001
(17,000,000 shares in the aggregate) for a price of $0.0001 per
share. At the same time, Accelerated Venture Partners, LLC agreed to
tender 3,750,000 of their 5,000,000 shares of the Company’s common stock par
value $0.0001 for cancellation.
NOTE 3
- RECENT
ACCOUNTING PRONOUNCEMENTS:
Recently
issued accounting pronouncements
FASB
Accounting Standards Codification
(Accounting
Standards Update (“ASU”) 2009-01)
F-8
CLS
CAPITAL GROUP, INC.
(Formerly
known as ACCELERATED
ACQUISITIONS II, INC.)
A
Development Stage Company
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31,
2009
NOTE
3
- RECENT ACCOUNTING
PRONOUNCEMENTS (Continued)
In
June 2009, FASB approved the FASB Accounting Standards Codification (“the
Codification”) as the single source of authoritative nongovernmental GAAP. All
existing accounting standard documents, such as FASB, American Institute of
Certified Public Accountants, Emerging Issues Task Force and other related
literature, excluding guidance from the SEC, have been superseded by the
Codification. All other non-grandfathered, non-SEC accounting literature not
included in the Codification has become nonauthoritative. The Codification did
not change GAAP, but instead introduced a new structure that combines all
authoritative standards into a comprehensive, topically organized online
database. The Codification is effective for interim or annual periods ending
after September 15, 2009, and impacts the Company’s financial statements as
all future references to authoritative accounting literature will be referenced
in accordance with the Codification. There have been no changes to the content
of the Company’s financial statements or disclosures as a result of implementing
the Codification during the quarter ended September 30, 2009.
As a
result of the Company’s implementation of the Codification during the year ended
December 31, 2009, previous references to new accounting standards and
literature are no longer applicable. In the current quarter financial
statements, the Company will provide reference to both new and old guidance to
assist in understanding the impacts of recently adopted accounting literature,
particularly for guidance adopted since the beginning of the current fiscal year
but prior to the Codification.
Subsequent
Events
(Included
in ASC 855 “Subsequent Events”, previously SFAS No. 165 “Subsequent
Events”)
ASC 855
established general standards of accounting for and disclosure of events that
occur after the balance sheet date, but before the financial statements are
issued or available to be issued (“subsequent events”). An entity is required to
disclose the date through which subsequent events have been evaluated and the
basis for that date. For public entities, this is the date the financial
statements are issued. ASC 855 does not apply to subsequent events or
transactions that are within the scope of other GAAP and did not result in
significant changes in the subsequent events reported by the Company. ASC 855
became effective for interim or annual periods ending after June 15, 2009
and did not impact the Company’s consolidated financial statements. The Company
evaluated for subsequent events through March 15, 2010, the issuance date of the
Company’s financial statements.
F-9
(b)
Consolidated financial statements as of March 31, 2010 and for the fiscal
quarter ended March 31, 2010 (unaudited).
F-10
CLS CAPITAL GROUP,
INC.
A
Development Stage Company
BALANCE
SHEETS
March 31,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(unaudited)
|
(audited)
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents,
|
$ | 120 | $ | 120 | ||||
TOTAL
ASSETS
|
$ | 120 | $ | 120 | ||||
LIABILITIES
AND STOCKHOLDER’S DEFICIT
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accrued
expenses
|
$ | 7,000 | $ | 4,681 | ||||
Shareholder
advances
|
6,207 | 1,526 | ||||||
TOTAL
LIABILITIES
|
$ | 13,207 | $ | 6,207 | ||||
STOCKHOLDER’S
DEFICIT:
|
||||||||
Preferred
stock, $.0001 par value; 10,000,000 shares authorized; none issued and
outstanding
|
- | |||||||
Common
stock, $.0001 par value; 100,000,000 shares authorized; 18,250,000 shares
issued and outstanding at March 31, 2010 and December 31,
2009
|
1,825 | 1,825 | ||||||
Additional
paid-in capital
|
3,875 | 3,875 | ||||||
Deficit
accumulated during the development stage
|
(17,087 | ) | (10,087 | ) | ||||
Stock
subscription receivable
|
(1,700 | ) | (1,700 | ) | ||||
TOTAL
STOCKHOLDER’S DEFICIT
|
(13,087 | ) | (6,087 | ) | ||||
TOTAL
LIABILITIES AND STOCKHOLDER’S DEFICIT
|
$ | 120 | $ | 120 |
See
notes to unaudited financial statements.
F-11
CLS
CAPITAL GROUP, INC.
(A
Development Stage Company)
Statements
of Operations
(Unaudited)
Three Mos.
Ended
March 31,
2010
|
Three Mos.
Ended
March 31,
2009
|
April 29,
2008
(Inception)
through
March 31,
2010
|
||||||||||
Revenues
|
$ | - | $ | - | $ | - | ||||||
Operating
Expenses
|
||||||||||||
General
and administrative
|
7,000 | 1,750 | 17,087 | |||||||||
Net
Operating Expenses
|
7,000 | 1,750 | 17,087 | |||||||||
Net
Loss
|
$ | (7,000 | ) | $ | (1,750 | ) | $ | (17,087 | ) | |||
Basic
earnings (loss) per share—Basic and Diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
Weighted
average number of common shares outstanding
|
18,250,000 | 5,000,000 |
see
notes to unaudited financial statements.
F-12
CLS CAPITAL GROUP,
INC.
A
Development Stage Company
STATEMENTS OF CASH
FLOWS
(unaudited)
For the
Three
Months
ended
March 31,
2010
|
For the
Cumulative
Period from
Inception
(April 29,
2008)
through
March 31,
2010
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
loss
|
$ | (7,000 | ) | $ | (15,052 | ) | ||
Increase
(decrease) in accounts payable
|
2,319 | 5,665 | ||||||
Net
cash used in operating activities
|
(4,681 | ) | (9,387 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds
from the issuance of common stock
|
- | 5,700 | ||||||
Cancellation
of common stock
|
- | (375 | ) | |||||
Additional
paid-in capital
|
- | 375 | ||||||
Stock
subscription receivable
|
- | (1,700 | ) | |||||
Shareholder
Advances
|
4,681 | 5,507 | ||||||
Net
cash provided by financing activities
|
4,681 | 9,507 | ||||||
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
- | 120 | ||||||
Cash
and cash equivalents at beginning of period
|
120 | - | ||||||
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 120 | $ | 120 |
See
notes to unaudited financial statements.
F-13
CLS CAPITAL GROUP,
INC.
A
Development Stage Company
NOTES TO FINANCIAL
STATEMENTS
MARCH 31,
2010
NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a)
Organization and Business:
CLS
Capital Group, Inc. (formerly known as Accelerated Acquisitions III, Inc.) (“the
Company”) was incorporated in the state of Delaware on April 29, 2008 for the
purpose of raising capital that is intended to be used in connection with its
business plan which may include a possible merger, acquisition or other business
combination with an operating business. On April 26, 2010, the Company changed
its business plan and has now become a specialty investment company principally
providing capital and other assistance to start-up and micro companies. The
Company intends to focus its portfolio in a wide variety of different sectors
including but not limited to alternative resources, technology, biotech,
insurance, and services. Our investment objective is to maximize our portfolio’s
total return by using a unique financing models that collateralizes traditional
loan using investment grade fixed income instruments, such as CD, Bonds, Medium
Term Notes, etc. and investing in the debt and/or equity securities of
start-up and micro companies. We also seek to provide our stockholders with
current income on investments in debt securities and long-term capital growth
through the appreciation in the value of warrants or other equity instruments
that we may receive when we make debt investments or equity
investments.
The
Company is currently in the development stage. All activities of the Company to
date relate to its organization, initial funding and share
issuances.
(b)
Basis of Presentation
The
accompanying Interim Financial Statements are unaudited and have been prepared
in accordance with accounting principles generally accepted for interim
financial statement presentation and in accordance with the instructions to
Regulations S-K. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statement presentation. In the
opinion of management, all adjustments for a fair statement of the results and
operations and financial position for the interim periods presented have been
included. All such adjustments are of a normal recurring nature. The
financial information should be read in conjunction with the Financial
Statements and notes thereto included in the Company’s Form 10-K Annual Report
for the year ended December 31, 2009 and the Company’s Registration Statement on
Form 10. The March 31, 2010 consolidated financial statements presented herein
may not be indicative of the results of the Company for the year ending December
31, 2010.
(c)
Going Concern
The
accompanying financial statements have been prepared on a going concern basis,
which assumes the Company will realize its assets and discharge its liabilities
in the normal course of business. As reflected in the accompanying financial
statements, the Company has a deficit accumulated during the development stage
of $17,087, used cash from operations of $9,387 since its inception, and has
negative working capital of $13,207 at March 31, 2010. The Company’s ability to
continue as a going concern is dependent upon its ability to generate future
profitable operations and/or to obtain the necessary financing to meet its
obligations and repay its liabilities arising from normal business operations
when they come due. The Company’s ability to continue as a going concern is also
dependent on its ability to find a suitable target company and enter into a
possible reverse merger with such company. Management’s plan includes obtaining
additional funds by equity financing through a reverse merger transaction and/or
related party advances, however there is no assurance of additional funding
being available. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern. The accompanying financial statements do
not include any adjustments that might arise as a result of this
uncertainty.
F-14
CLS CAPITAL GROUP,
INC.
A
Development Stage Company
NOTES TO FINANCIAL
STATEMENTS
MARCH 31,
2010
NOTE 1
|
-
|
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued):
|
(d)
Use of Estimates:
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the balance sheet and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
NOTE 2
|
-
|
INCOME
TAXES:
|
The
Company has incurred net operating losses since inception. The Company has not
reflected any benefit of such net operating loss carry forward in the financial
statements.
In
assessing the realization of deferred tax assets, management considers whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income.
Based on
the level of historical taxable losses and projections of future taxable income
(losses) over the periods in which the deferred tax assets can be realized,
management currently believes that it is more likely than not that the Company
will not realize the benefits of these deductible differences. Accordingly, the
Company has provided a valuation allowance against the gross deferred tax assets
as follows:
March 31, 2010
|
December 31, 2009
|
|||||||
Gross
deferred tax assets
|
5,800 | 3,400 | ||||||
Valuation
allowance
|
(5,800 | ) | (3,400 | ) | ||||
Net
deferred tax asset
|
— | — |
As of
March 31, 2010 $17,000 the federal net operating loss carryforwards expire in
the tax years 2028 and 2029.
Federal
tax laws impose significant restrictions on the utilization of net operating
loss carryforwards and research and development credits in the event of a change
in ownership of the Company, as defined by the Internal Revenue Code Section
382. The Company’s net operating loss carryforwards and research and development
credits may be subject to the above limitations.
The
relevant FASB standard resulted in no adjustments to the Company’s liability for
unrecognized tax benefits. As of both the date of adoption and as of March 31.
2010 there were no unrecognizable tax benefits. Accordingly, a tabular
reconciliation from beginning to ending periods is not provided. The Company
will classify any future interest and penalties as a component of income tax
expense if incurred. To date, there have been no interest or penalties charged
or accrued in relation to unrecognized tax benefits. The Company is
subject to federal and state examinations for the year 2008 forward. There are
no tax examinations currently in progress.
F-15
CLS CAPITAL GROUP,
INC.
A
Development Stage Company
NOTES TO FINANCIAL
STATEMENTS
MARCH 31,
2010
NOTE 3
|
-
|
RECENT ACCOUNTING
PRONOUNCEMENTS:
|
In
February 2010, the FASB issued amended guidance on subsequent events to
alleviate potential conflicts between FASB guidance and SEC requirements. Under
this amended guidance, SEC filers are no longer required to disclose the date
through which subsequent events have been evaluated in originally issued and
revised financial statements. This guidance was effective immediately and we
adopted these new requirements for the period ended March 31, 2010. The
adoption of this guidance did not have a material impact on our financial
statements.
In
February 2010, the FASB (Financial Accounting Standards Board) issued Accounting
Standards Update 2010-08 (ASU 2010-08), Technical Corrections to Various Topics.
This amendment eliminated inconsistencies and outdated provisions and provided
the needed clarifications to various topics within Topic 815. The
amendments are effective for the first reporting period (including interim
periods) beginning after issuance (February 2, 2010), except for certain
amendments. The amendments to the guidance on accounting for income
taxes in a reorganization (Subtopic 852-740) should be applied to
reorganizations for which the date of the reorganization is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008. For those reorganizations reflected in interim financial
statements issued before the amendments in this Update are effective,
retrospective application is required. The clarifications of the
guidance on the embedded derivates and hedging (Subtopic 815-15) are effective
for fiscal years beginning after December 15, 2009, and should be applied to
existing contracts (hybrid instruments) containing embedded derivative features
at the date of adoption. The Company does not expect the provisions
of ASU 2010-08 to have a material effect on the financial position, results of
operations or cash flows of the Company.
In
January 2010, the FASB (Financial Accounting Standards Board) issued Accounting
Standards Update 2010-07 (ASU 2010-07), Not-for-Profit Entities (Topic 958):
Not-for-Profit Entities: Mergers and Acquisitions. This amendment to
Topic 958 has occurred as a result of the issuance of FAS 164. The
Company does not expect the provisions of ASU 2010-07 to have a material effect
on the financial position, results of operations or cash flows of the
Company.
In
January 2010, the FASB (Financial Accounting Standards Board) issued Accounting
Standards Update 2010-06 (ASU 2010-06), Fair Value Measurements and Disclosures
(Topic 820): Improving Disclosures about Fair Value
Measurements. This amendment to Topic 820 has improved disclosures
about fair value measurements on the basis of input received from the users of
financial statements. This is effective for interim and annual
reporting periods beginning after December 15, 2009, except for the disclosures
about purchases, sales, issuances, and settlements in the roll forward of
activity in Level 3 fair value measurements. Those disclosures are
effective for fiscal years beginning after December 15, 2010, and for interim
periods within those fiscal years. Early adoption is
permitted. The Company does not expect the provisions of ASU 2010-06
to have a material effect on the financial position, results of operations or
cash flows of the Company.
In
January 2010, the FASB (Financial Accounting Standards Board) issued Accounting
Standards Update 2010-05 (ASU 2010-05), Compensation – Stock Compensation (Topic
718). This standard codifies EITF Topic D-110 Escrowed Share
Arrangements and the Presumption of Compensation.
F-16
CLS CAPITAL GROUP,
INC.
A
Development Stage Company
NOTES TO FINANCIAL
STATEMENTS
MARCH 31,
2010
NOTE 3
|
-
|
RECENT ACCOUNTING PRONOUNCEMENTS
(Continued):
|
In
January 2010, the FASB (Financial Accounting Standards Board) issued Accounting
Standards Update 2010-04 (ASU 2010-04), Accounting for Various Topics—Technical
Corrections to SEC Paragraphs.
In
January 2010, the FASB (Financial Accounting Standards Board) issued Accounting
Standards Update 2010-03 (ASU 2010-03), Extractive Activities—Oil and Gas (Topic
932): Oil and Gas Reserve Estimation and Disclosures. This amendment
to Topic 932 has improved the reserve estimation and disclosure requirements by
(1) updating the reserve estimation requirements for changes in practice and
technology that have occurred over the last several decades and (2) expanding
the disclosure requirements for equity method investments. This is
effective for annual reporting periods ending on or after December 31,
2009. However, an entity that becomes subject to the disclosures
because of the change to the definition oil- and gas- producing activities may
elect to provide those disclosures in annual periods beginning after December
31, 2009. Early adoption is not permitted. The Company
does not expect the provisions of ASU 2010-03 to have a material effect on the
financial position, results of operations or cash flows of the
Company.
In
January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation
(Topic 810): Accounting and Reporting for Decreases in Ownership of a
Subsidiary. This amendment to Topic 810 clarifies, but does not
change, the scope of current US GAAP. It clarifies the decrease in
ownership provisions of Subtopic 810-10 and removes the potential conflict
between guidance in that Subtopic and asset derecognition and gain or loss
recognition guidance that may exist in other US GAAP. An entity will
be required to follow the amended guidance beginning in the period that it first
adopts FAS 160 (now included in Subtopic 810-10). For those entities
that have already adopted FAS 160, the amendments are effective at the beginning
of the first interim or annual reporting period ending on or after December 15,
2009. The amendments should be applied retrospectively to the first period that
an entity adopted FAS 160. The Company does not expect the provisions
of ASU 2010-02 to have a material effect on the financial position, results of
operations or cash flows of the Company.
In
January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic
505): Accounting for Distributions to Shareholders with Components of Stock and
Cash (A Consensus of the FASB Emerging Issues Task Force). This
amendment to Topic 505 clarifies the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a limit on
the amount of cash that will be distributed is not a stock dividend for purposes
of applying Topics 505 and 260. Effective for interim and annual periods ending
on or after December 15, 2009, and would be applied on a retrospective
basis. The Company does not expect the provisions of ASU 2010-01 to
have a material effect on the financial position, results of operations or cash
flows of the Company.
F-17
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
10. Indemnification of Directors and
Officers
Pursuant
to our Articles of Incorporation and By-Laws, we may indemnify an officer or
director who is made a party to any proceeding, including a law suit, because of
his position, if he acted in good faith and in a manner he reasonably believed
to be in our best interest. In certain cases, we may advance expenses incurred
in defending any such proceeding. To the extent that the officer or director is
successful on the merits in any such proceeding as to which such person is to be
indemnified, we must indemnify him against all expenses incurred, including
attorney's fees. With respect to a derivative action, indemnity may be made only
for expenses actually and reasonably incurred in defending the proceeding, and
if the officer or director is judged liable, only by a court order. The prior
discussion of indemnification in this paragraph is intended to be to the fullest
extent permitted by the laws of the State of Delaware.
Indemnification
for liabilities arising under the Securities Act of 1933, as amended, may be
permitted to directors or officers pursuant to the foregoing provisions.
However, we are informed that, in the opinion of the Commission, such
indemnification is against public policy, as expressed in the Act and is,
therefore, unenforceable.
Item
11. Other Expenses of Issuance and
Distribution
Although
we will receive no proceeds from the sale of shares pursuant to this prospectus,
we have agreed to bear the costs and expenses of the registration of the shares.
Our expenses in connection with the issuance and distribution of the securities
being registered are estimated as follows:
Nature of expense
|
Amount
|
|||
SEC
Registration fee
|
$ | 60 | ||
Accounting
fees and expenses
|
$ | 2,000 | ||
Legal
fees and expenses
|
$ | 5,000 | ||
Printing
expenses
|
$ | 1,000 | ||
Miscellaneous
|
$ | 446 | ||
TOTAL
|
$ | 8,500 |
All
amounts are estimates other than the Securities and Exchange Commission’s
registration fee. We are paying all expenses of the offering listed above. No
portion of these expenses will be borne by the selling shareholders. The selling
shareholders, however, will pay any other expenses incurred in selling their
common stock, including any brokerage commissions or costs of
sale.
38
Below is
a list of securities sold by us within the past three years which were not
registered under the Securities Act.
Name of Purchaser (Selling Stockholder)
|
Date of Sale
|
Title of
Security
|
Amount of Securities
Sold
|
Consideration
|
||||||||
Accelerated
Venture Partners LLC.
|
April
29,2008
|
Common Stock
|
5,000,000 | (1) | $ | 4,0000 | ||||||
Redell
V Napper II
|
December
29,2009
|
Common
Stock
|
8,500,000 | $ | 850 | |||||||
Reynaldo
Uballe, Jr
|
December29,2009
|
Common
Stock
|
8,500,000 | $ | 850 | |||||||
Bryan
Wilson
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Francis
Oruma
|
May
6, 2010
|
Common
Stock
|
50,000 | $ | 100,000 | |||||||
Kimberly
Blount
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Jessica
Nappere
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Michael
Nappere
|
May
6, 2010
|
Common
Stock
|
200 | $ | 4000 | |||||||
Angela
Blount
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Jacqueline
Blount
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Lorenzo
White
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Robert
White
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Harambee
Investment Club
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Walter
Turner
|
May
6, 2010
|
Common
Stock
|
35,000 | $ | 70,000 | |||||||
Virginia
Olivias
|
June
19, 2010
|
Common
Stock
|
5,000 | $ | 10,000 | |||||||
J
Michael Newman
|
June
19, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Raymond
Garcia
|
June
19, 2010
|
Common
Stock
|
250 | $ | 500 | |||||||
Talitha
Napper
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Sheikinah
Napper
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Redell
Napper Sr.
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Kevin
Napper
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Cheryl
Young
|
May
6, 2010
|
Common
Stock
|
10,000 | $ | 20,000 | |||||||
Marvin
Burgess
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Debra
Napper
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Saul
Allen
|
May
6, 2010
|
Common Stock
|
200 | $ | 400 | |||||||
Rodney
Watson
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Thomas
K Nelson
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Crystal
Bagner
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Robbin
Hackney
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Walter
Jenkins
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Robert
Russell
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Rene
Uballe
|
May
6, 2010
|
Common
Stock
|
5,000 | $ | 10,000 | |||||||
Wendy
Uballe
|
May
6, 2010
|
Common
Stock
|
10,200 | $ | 20,400 | |||||||
Brian
J Searles
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Michael
D. Repass
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Herby
S.Guilliod
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Brett
Richards
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Timothy
W. Harrison
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 | |||||||
Kris
K. Newman
|
May
6, 2010
|
Common
Stock
|
10,200 | $ | 20,400 | |||||||
Stephen
R. Uballe
|
May
6, 2010
|
Common
Stock
|
5,200 | $ | 10,400 | |||||||
Nikki
K. Newman
|
May
6, 2010
|
Common
Stock
|
200 | $ | 400 |
(1)
|
3,750,000
of such shares were tendered to the Company for cancellation on December
29, 2009
|
The
securities issued in the abovementioned transactions were issued in connection
with private placements exempt from the registration requirements of Section 5
of the Securities Act of 1933, as amended, pursuant to the terms of Section 4(2)
of that Act and Rule 506 of Regulation D.
39
Exhibit No.
|
Description
|
|
3.1(i)
|
Articles
of Incorporation of CLS CAPITAL GROUP, INC. (filed with Form 10
Registration Statement filed on August 28, 2008 and incorporated by
reference)
|
|
3.1(ii)
|
Bylaws
of CLS CAPITAL GROUP, INC. (filed with Form 10 Registration Statement
filed on August 28, 2008 and incorporated by reference)
|
|
5.1
(*)
|
Opinion
of Robert Diener
|
|
10.1
|
Assignment
Servicing agreement between Accelerated Acquisitions III and CLS Capital
Group LLC. (filed with Form 8-K Registration Statement filed on April 29,
2010 and incorporated by reference)
|
|
23.1(*)
|
Legal
Opinion of Robert Diener, Esq. (included with Exhibit
5.1)
|
|
23.2
(*)
|
Consent
of Independent Auditors
|
(*)
Filed herewith
Item
13. Undertakings
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 of
1933;
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 20% 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 of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4)
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
40
(5) Each
prospectus filed pursuant to Rule 424(b) as part of a registration statement
relating to an offering, other than registration statements relying on Rule 430B
or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be
part of and included in the registration statement as of the date it is first
used after effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
(6) That,
for the 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 any 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;
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 an offer in the offering made by the undersigned
registrant to the purchaser.
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Toledo in the State of
Ohio on the 22th day of June, 2010.
|
CLS
CAPITAL GROUP, INC.
|
|
By:
|
/s/ Redell Napper
II
|
|
Redell
Napper II
|
||
Chief
Executive Officer and Director
|
||
By:
|
/s/
Reynaldo Uballe, Jr
|
|
Reynaldo
Uballe, Jr
|
||
Chief
Operations Officer and Director
|
||
By:
|
/s/ Helen
Odum
|
|
Helen
Odum
|
||
Secretary
and Director
|
41
In
accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following person in the capacities and
date stated.
/s/
Redell Napper II
|
June
22, 2010
|
|
Redell
Napper II
|
||
Chief
Executive Officer and Director
|
||
(Principal
Executive Officer,
|
||
Principal
Financial Officer,
|
||
Principal
Accounting Officer)
|
||
/s/
Reynaldo Uballe, Jr
|
June
22, 2010
|
|
Reynaldo
Uballe, Jr
|
||
Chief
Operations Officer and Director
|
||
/s/
Helen Odum
|
June
22, 2010
|
|
Helen
Odum
|
||
Secretary
and Director
|
42
EXHIBIT
LIST
Exhibit No.
|
Description
|
|
3.1(i)
|
Articles
of Incorporation of CLS CAPITAL GROUP, INC. (filed with Form 10
Registration Statement filed on August 28, 2008 and incorporated by
reference)
|
|
3.1(ii)
|
Bylaws
of CLS CAPITAL GROUP, INC. (filed with Form 10 Registration Statement
filed on August 28, 2008 and incorporated by reference)
|
|
5.1
(*)
|
Opinion
of Robert Diener
|
|
10.1
|
Assignment
Servicing agreement between Accelerated Acquisitions III and CLS Capital
Group LLC. (filed with Form 8-K Registration Statement filed on April 29,
2010 and incorporated by reference)
|
|
23.1(*)
|
Legal
Opinion of Robert Diener, Esq. (included with Exhibit
5.1)
|
|
23.2
(*)
|
Consent
of Independent Auditors
|
(*)
Filed herewith
43