Attached files
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EX-3.2 - WINDGATE ACQUISITION LTD | v210183_ex3-2.htm |
EX-2.3 - WINDGATE ACQUISITION LTD | v210183_ex2-3.htm |
EX-2.1 - WINDGATE ACQUISITION LTD | v210183_ex2-1.htm |
EX-3.1 - WINDGATE ACQUISITION LTD | v210183_ex3-1.htm |
EX-4.1 - WINDGATE ACQUISITION LTD | v210183_ex4-1.htm |
EX-2.2 - WINDGATE ACQUISITION LTD | v210183_ex2-2.htm |
EX-23.1 - WINDGATE ACQUISITION LTD | v210183_ex23-1.htm |
As
filed with the Securities and Exchange Commission
|
on
Registration
No.
|
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER
THE
SECURITIES ACT OF 1933
WINDGATE
ACQUISITION LTD.
(Exact
name of registrant as specified in its charter)
Delaware
|
7011
|
27-4754310
|
||
State
or other jurisdiction
incorporation
or organization
|
Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
Identification
Number)
|
105 West
Main Street, Suite 2B
P.O. Box
10250
Bozeman,
Montana 59719
866-583-8885
(Address,
including zip code, and telephone number, including area code
of
registrant’s principal executive offices)
Michael
B. Elliott
105 West
Main Street, Suite 2B
P.O. Box
10250
Bozeman,
Montana 59719
866-583-8885
(Name,
address, including zip code, and telephone number,
including
area code, of agent for service)
with copy
to
Cassidy
& Associates
9454
Wilshire Boulevard
Beverly
Hills, California 90212
(202)
387-5400 (949) 673-4525 (fax)
Approximate
Date of Commencement
of proposed sale to the
public: As soon as practicable after the effective date of
this Registration Statement.
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933,
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. ¨
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 registration statement for the same
offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See definitions “large accelerated filer,”“accelerated file,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer
|
¨
|
Accelerated
filed
|
¨
|
|
Non-accelerated
filed
|
¨
|
Smaller
reporting company
|
x
|
The
registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a)
of the Securities Act of 1933 or until the registration statement shall
become effective on such date as the Commission acting pursuant to said
section 8(a), may determine.
CALCULATION
OF REGISTRATION FEE
Proposed
|
Proposed
|
|||||||||||||
Amount
|
Maximum
|
Maximum
|
Amount
of
|
|||||||||||
Title
of Each Class of
|
to
be
|
Offering
Price
|
Aggregate
|
Registration
|
||||||||||
Securities to be Registered
|
Registered
|
Per Unit
(1)
|
Offering Price
|
Fee
|
||||||||||
Common
Stock
|
4,000,000
shares
|
$ | 6.00 | $ | 24,000,000 | $ | 2,786.40 | |||||||
Common
Stock held by
|
||||||||||||||
Selling
Shareholders
|
1,500,000
shares
|
$ | 6.00 | $ | 9,000,000 | $ | 1,044.90 | |||||||
Total
|
5,500,000
shares
|
$ | 6.00 | $ | 33,000,000 | $ | 3,831.30 |
(1) There
is no current market for the securities and the price at which the Shares are
being offered has been arbitrarily determined by the Company and used for
the purpose of computing the amount of the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as
amended.
EXPLANATORY
NOTE
This
registration statement and the prospectus therein covers the registration of (i)
up to 4,000,000 shares of Windgate Acquisition Ltd. common stock at an offering
price of $6.00 per share and (ii) up to 1,500,000 shares of common stock offered
by existing holders thereof.
The
information contained in this prospectus is not complete and may be changed. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission and these securities may not be sold until
that 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.
PROSPECTUS
|
Subject
to Completion, Dated ______, 2011
|
WINDGATE
ACQUISITION LTD.
Up
to a maximum of (i) 4,000,000 shares of Common Stock offered by the Company
at $6.00 per share
and
(ii) 1,500,000 shares of Common Stock offered by selling shareholders at $6.00
per share
This
prospectus relates to the offer and sale of (i) 4,000,000 shares of common stock
(the “Shares”) of Windgate Acquisition Ltd. (the “Company”), $0.0001 par value
per share, at a price of $6.00 per share and (ii) 1,500,000 shares of common
stock offered by the holders thereof (the “Selling Shareholder Shares”) at a
price of $6.00 per share until such time as the Company's common stock is listed
on a national securities exchange after which time such selling shareholders may
sell their shares at prevailing market or privately negotiated
prices.
There is
no minimum number of Shares that must be sold by the Company before the offering
can be closed and/or monies raised thereby utilized. The Company
plans to utilize funds as they are invested during the offering
period. The maximum number of Shares that can be sold pursuant to the
terms of this offering by the Company and the selling shareholders is (in
aggregate) 5,500,000. Funds received by the Company will be
immediately available to the Company for use by it.
The
offering will terminate twenty-four (24) months from the date of this prospectus
unless earlier fully subscribed or terminated by the Company. The
Company intends to maintain the current status and accuracy of this prospectus
and to sell the Shares for a period of up to two (2) years, unless earlier
completely sold, pursuant to Rule 415 of the General Rules and Regulations of
the Securities and Exchange Commission. All costs incurred in the
registration of the Shares are being borne by the Company.
Prior to
this offering, there has been no public market for the Company’s common stock.
No assurances can be given that a public market will develop
following completion of this offering or that, if a market does develop, it will
be sustained. The offering price for the Shares has been arbitrarily
determined by the Company and does not necessarily bear any direct relationship
to the assets, operations, book or other established criteria of value of
the Company. The Shares will become tradable on the effective
date of the registration statement of which this prospectus is a
part.
All or
some Shares may be sold by the officers and directors of the Company.
None of these officers or employees will receive any commission or
compensation for the sale of the Shares. The Company has no current
arrangements nor has it entered into any agreements with any underwriters,
broker-dealers or selling agents for the sale of the Shares. If the
Company can locate and enter into any such arrangement(s), the Shares will be
sold through such licensed underwriter(s), broker-dealer(s) and/or selling
agent(s).
Assumed
Price
|
Placement
|
Proceeds
|
Proceeds
to
|
|||||||||||||
To
Public
|
Agent
discount (1)
|
to
the Company
|
Selling
Shareholders
|
|||||||||||||
Per
Common Stock Share
|
||||||||||||||||
Offered
by Company
|
$ | 6.00 per share | $ | 0.60 per share | $ | 5.40 per share | $ | 0.00 per share | ||||||||
Offered
by Selling Shareholders
|
$ | 6.00 per share | $ | 0.60 per share | $ | 0.00 per share | $ | 5.40 per share |
(1)
|
Assumes
an underwriters’ discount or commission of 10%. The Company does not know
if it will enter any arrangement with any underwriter or other
placement agent but if such arrangement is entered into, the Company
expects it will pay customary
commission amounts.
|
(2)
|
(2)
Assumes no underwriters’ or brokers’ discount. The selling
shareholders may offer their shares through underwriters, broker-dealers,
agents or other intermediaries. No such arrangements have
currently been entered into and would be separately negotiated and entered
into by such selling shareholder.
|
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
These
securities involve a high degree of risk. See “RISK FACTORS” contained in this
prospectus beginning on page 7.
Windgate
Acquisition Ltd.
105 West
Main Street, Suite 2B
P.O. Box
10250
Bozeman,
Montana 59719
866-583-8885
Prospectus
dated __________________, 2011
2
TABLE
OF CONTENTS
Prospectus
Summary
|
4
|
Risk
Factors
|
6
|
Forward
Looking Statement
|
14
|
Use
of Proceeds
|
14
|
Determination
of Offering Price
|
15
|
Dividend
Policy
|
15
|
Dilution
|
15
|
Concurrent
Sales
|
15
|
Plan
of Distribution
|
15
|
Description
of Securities
|
16
|
Plan
of Operation
|
18
|
The
Business
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20
|
The
Company
|
21
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
23
|
Management
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25
|
Executive
Compensation
|
27
|
Security
Ownership of Certain Beneficial Owners and Management
|
28
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Certain
Relationships and Related Transactions
|
28
|
Selling
Shareholders
|
28
|
Shares
Eligible for Future Sales
|
29
|
Legal
Matters
|
29
|
Experts
|
29
|
Disclosure
of Commission Position of Indemnification for Securities Act
Liabilities
|
30
|
Financial
Statements
|
F-1
|
Part
II
|
|
Other
Expenses of Issuance and Distribution
|
31
|
Indemnification
of directors and Officers
|
31
|
Recent
Sales of Unregistered Securities
|
31
|
Exhibits
|
31
|
Undertakings
|
32
|
Signatures
|
33
|
_________________
Until
[_______________], all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
3
PROSPECTUS
SUMMARY
This summary highlights some
information from this prospectus, and it may not contain all the
information important to making an investment decision. A potential
investor should read the following summary together with the more detailed
information regarding the Company and the common stock being sold in this
offering, including “Risk Factors” and the financial statements and related
notes, included elsewhere in this prospectus.
The
Company
History
and Development of the Company
The Company is a development-stage
company focusing on acquiring, operating and managing hospitality properties
across the United States. The Company was incorporated in the State
of Delaware on January 11, 2011. The Company recently
acquired all of the outstanding equity interests and assets of Windgate Capital
Partners LLC (“Windgate LLC”), a limited liability company incorporated in the
State of Delaware on May 13, 2010. Windgate LLC was founded to
undertake selected mergers and acquisitions, but has not completed any
transactions or significant activities to date. As a result of this
recently completed transaction, Windgate LLC is presently a wholly owned
subsidiary of the Company. References herein to the Company’s
activities and operations include the limited activities and operations to date
of Windgate LLC, which was a predecessor-in-interest to the
Company.
The Company plans to acquire hotel
properties across the United States and improve the operations and management of
such hotels. The Company anticipates that its hotel properties will
include full-service, extended stay and limited service
operations. Currently, the Company plans to target properties in
several areas, including downtown centers, airports, and suburban
locations. Each hotel that the Company will acquire will be
strategically located and intended to serve as a hospitality provider for
its selected market. Generally, the Company will concentrate its efforts in
acquiring, operating and managing mid-priced hotels, however, from time to time
the Company may also consider opportunities in low-price or discount hotels (or
motels) and premium, higher-priced hotels (e.g. five-star hotels.)
The Company believes that its success
will be bolstered by a focus on building its business through mergers and
acquisitions. To that end, the Company plans to continuously
identify, refine, evaluate and analyze potential merger and acquisition
opportunities in the hospitality sector. The Company also believes
that one of its key strengths will be identifying opportunistic acquisition
opportunities. The Company will typically seek undervalued or
under-performing hotel properties that can be rehabilitated or improved, such
that the Company can realize a significant return on its
investment. While the primary focus of the Company will be in
acquiring, operating and managing hotels, from time to time the Company expects
to profit from the pursuit of selective dispositions and sales of its hotel
properties to third parties.
In addition to pursuing an effective
mergers and acquisitions strategy, the Company also plans to provide superior
customer service at all of its hotels. In acquiring a variety of
hotels, the Company plans to infuse throughout its organization (and at each of
the individual properties) a culture of providing customers the finest service,
facilities and value for guests. Regardless of geographic boundaries
or disparities in the price ranges of its acquired hotels, the Company plans to
develop a commitment to customer service and superior value for all of its
guests.
The Company plans to operate its
properties using a fair and practical management approach. While
individual managers will be appointed to oversee each individual hotel, the
Company’s executive officers and corporate managers will play a critical role in
providing senior-level management support and considering and approving
important decisions.
As of the date hereof, the Company has
not acquired any hotel properties, but is actively engaged in the initial
process of identifying and evaluating potential hotel acquisition
opportunities. The Company, through Windgate LLC, has entered into a
contract to purchase The Microtel Inn & Suites (“Microtel”)
located in Bozeman, Montana. Microtel is a Wyndham
brand. The acquisition opportunity consists of an operational
three-story hotel with 61 rooms. The property is 81,413 square feet
and is on a lot of 1.869 acres. The Company believes that this hotel
offers a suitable acquisition opportunity as it is located in a city with
favorable trends, including solid residential growth trends, a burgeoning
business community, Montana State University, and nearby tourist
attractions. The Company is seeking to form relationships with major
hotel brands and franchisors that have individual hotel properties available for
sale that may be of suitable acquisition interest for the Company.
Risks
and Uncertainties facing the Company
As a development-stage
company, the Company has no operating history and has continuously
experienced losses since its inception. The Company’s
independent auditors have issued a report questioning the Company’s ability
to continue as a going concern. That is, the Company needs to
create a source of revenue or locate additional financing in order to continue
its developmental plans. Except as disclosed in the section of this
Prospectus entitled “Management”, management of the Company has no prior
experience in acquiring, operating and/or managing hotels or properties similar
to that of the Company.
4
One of the biggest challenges facing
the Company is the identifying and targeting appropriate acquisition
opportunities. The Company is in the process of identifying such
properties. The Company believes that the current marketplace offers
suitable acquisition opportunities in the hospitality sector, but there can be
no assurance that the Company will be able to successfully acquire, operate and
manage such properties.
Another major challenge facing the
Company is the ability to raise adequate capital to acquire hotel
properties. To successfully execute its business plan, the Company
requires the ability to raise adequate capital and deploy such capital to
acquire suitable hotel properties.
If the Company is unable to raise
adequate capital to complete acquisitions or develop a suitable acquisition
opportunities, it is unlikely that the Company will successfully develop
its operations and execute its business plan as contemplated.
Moreover,
there is no assurance that properties to be acquired by the Company, if any,
will be favorably received in the marketplace by guests or will exhibit
steady growth.
Trading
Market
Currently, there is no trading market
for the securities of the Company. The Company intends to
initially apply for admission to quotation of its securities on the OTC
Bulletin Board as soon as possible which may be while this offering is
still in process. There can be no assurance that the Company will qualify
for quotation of its securities on the OTC Bulletin Board. See “RISK
FACTORS” and “DESCRIPTION OF SECURITIES”.
The
Offering
There is no minimum number of Shares
that must be sold by the Company before the offering can close and the
Company can immediately use any funds raised in this offering. The
maximum number of Shares that can be sold by the Company pursuant to the
terms of this offering is 4,000,000. The offering will terminate
twenty-four (24) months from the date of this prospectus unless earlier
fully subscribed or terminated by the Company.
This prospectus also relates to the
offer and sale by three (3) shareholders of the Company of up to 1,500,000
Shares (the “Selling Shareholder Shares”). The selling shareholders
will offer their shares at a price of $6.00 per share until such as the
Company's common stock is listed on a national securities exchange after which
time such selling shareholders may sell their shares at prevailing market
or privately negotiated prices, in one or more transaction that may take
place by ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more dealers for resale.
Common
stock outstanding before the offering
|
5,500,000 | (1) | ||
Maximum
number of shares of common stock offered by the Company
|
4,000,000 | |||
Common
stock for sale by selling shareholders
|
1,500,000 | |||
Total
maximum number of shares of common stock offered
|
5,500,000 | |||
Common
stock outstanding after the offering if maximum number
sold
|
8,000,000 | (2) | ||
Offering
Price
|
$ | 6.00 per share | ||
Proceeds
to the Company
|
$ | 24,000,000 | (2) (3) |
(1) Based
on number of shares outstanding as of the date of this prospectus.
(2)
Assumes the sale of the maximum number of Shares.
(3) The
Company will offer the Shares directly without payment to any officer or
director of any commission or compensation for sale of the Shares. The
Company will also attempt to locate broker-dealers or selling agents to
participate in the sale of the Shares. In such cases, the
Company will pay customary selling commissions and expenses of such sales
which would reduce the proceeds to the Company.
5
Summary
Financial Information
The Company was recently formed and was
incorporated in the State of Delaware in January 2011. The Company
recently acquired Windgate LLC, and accordingly, the financial summary below
reflects the financial statements of the Company based on the inclusion of
Windgate LLC prior to the actual formation and incorporation of the
Company. References below, and herein in this Prospectus, to the
financial statements or financial performance of the Company, include the
financial statements or financial performance (as applicable) of Windgate LLC,
which was a predecessor-in-interest to the Company.
The statements of operations data for
the period from May 13, 2010 (inception) to September 30, 2010 and the
balance sheet data at September 30, 2010 are derived from the Company’s audited
financial statements and related notes thereto included elsewhere in this
prospectus.
Period
ended September 30, 2010
|
||||
Statement
of operations data
|
||||
Revenue
|
$ | 0 | ||
Net
loss
|
$ | (133,302 | ) | |
Net
loss per share, basic and diluted
|
— | |||
Weighted
average number of shares
|
||||
outstanding,
weighted and diluted
|
— |
September
30, 2010
|
||||
Balance
sheet data
|
||||
Cash
and cash equivalents
|
$ | 31,610 | ||
Other
assets
|
$ | 0 | ||
Total
assets
|
$ | 31,610 | ||
Total
liabilities
|
$ | 6,500 | ||
Total
stockholders’ deficit
|
$ | 25,110 |
RISK
FACTORS
A
purchase of any Shares is an investment in the Company’s common stock and
involves a high degree of risk. Investors should consider carefully
the following information about these risks, together with the
other information contained in this prospectus, before the purchase of the
Shares. If any of the following risks actually occur, the business,
financial condition or results of operations of the Company would likely suffer.
In this case, the market price of the common stock could decline, and
investors may lose all or part of the money they paid to buy
the Shares.
The
Company's independent auditors have issued a report questioning the Company's
ability to continue as a going concern.
The report of the Company's independent
auditors contained in the Company's financial statements for the period
ended September 30, 2010 includes a paragraph that explains that the Company has
experienced recurring losses and has an accumulated retained earnings
deficiency at (133,302). These matters raise substantial
doubt regarding the Company's ability to continue as a going concern
without the influx of additional capital.
The Company is a
development-stage company with no operating
history of its own and as such any prospective investor cannot assess the
Company’s profitability or
performance.
Because the Company is a
development-stage company with no operating history, it is impossible for an
investor to assess the performance of the Company or to determine whether the
Company will meet its projected business plan. The Company has limited financial
results upon which an investor may judge its potential. As a company emerging
from the development-stage, the Company may in the future experience
under-capitalization, shortages of personnel and equipment, setbacks and many of
the problems, delays and expenses encountered by any early stage business. An
investor will be required to make an investment decision based solely on the
Company management’s history and its projected operations in light of the risks,
expenses and uncertainties that may be encountered by engaging in the Company’s
industry.
6
The
Company must develop a means to identify suitable acquisition opportunities and
raise sufficient capital to purchase such hotels in order to grow its business
and successfully execute its business plan.
An impediment to the Company’s
development and expansion in its market could be the difficulty
in finding suitable hotel acquisition opportunities and obtaining adequate
capital to finance such acquisition transactions. The Company anticipates
utilizing a variety of sources to identify prospective hotel acquisitions and to
reach its target acquisition market through the networks of management,
word-of-mouth, online and offline advertising, attendance at trade shows and
industry conferences and researching industry data and
publications. A failure to adequately identify and evaluate potential
hotel acquisitions would seriously impede the ability of the Company to
develop as a leader in its sector.
Furthermore, the Company may require
additional funding (through subsequent public and/or private offerings of its
common stock or other securities, as well as debt) in order to consummate
acquisitions of hotels that it has identified as attractive acquisitions
targets. There is no guarantee or assurance that the Company will be
able to raise such additional funds or that the receipt of any such financing
would be on terms that are not unfavorable to existing investors (such as those
investors that may invest through this offering).
No
assurance of commercial success of operating or management plans or
objectives.
Even if the Company is able to identify
suitable hotel acquisition opportunities and raise sufficient capital to acquire
such hotels, there is no assurance that the Company will realize commercial
success in operating or managing such hotels or that the Company’s operating or
management plans or objectives will experience any commercial
success.
The
Company has not acquired, operated or managed any hotels.
Since inception, the Company has not
acquired, operated or managed any hotels.
The
Company is a development-stage company and has a correspondingly small financial
and accounting organization. Being a public company may strain the
Company's resources, divert management’s attention and affect its ability
to attract and retain qualified officers and directors.
The Company is a development-stage
company with no developed finance and accounting organization and
the rigorous demands of being a public reporting company will require a
structured and developed finance and accounting group. As a public company,
the Company will be subject to the reporting requirements of the Securities
Exchange Act of 1934. The requirements of these laws and the rules and
regulations promulgated thereunder entail significant accounting, legal and
financial compliance costs, and have made, and will continue to make, some
activities more difficult, time consuming or costly than for established
companies and may place significant strain on its personnel, systems and
resources.
The Securities Exchange Act requires,
among other things, that companies maintain effective disclosure
controls and procedures and internal control over financial reporting. In
order to establish the requisite disclosure controls and procedures and
internal control over financial reporting, significant resources and management
oversight are required. As a result, management’s attention may be diverted
from other business concerns, which could have a material adverse effect on
the development of the Company's business, financial condition and results of
operations.
These rules and regulations may also
make it difficult and expensive for the Company to obtain director
and officer liability insurance. If the Company is unable to obtain
adequate director and officer insurance, its ability to recruit and retain
qualified officers and directors, especially those directors who may be deemed
independent, will be significantly curtailed.
The Company has no revenues to
date.
The Company has generated no revenues
to date. The Company has no operations to date and management’s time, and
most of the Company’s limited resources, have been spent in developing an
acquisition strategy, researching potential acquisition opportunities,
contacting potential acquisition targets, exploring marketing contacts,
preparing a business plan and model, selecting professional advisors and
consultants and seeking capital for the Company.
The
Company is a development-stage company and has little experience in acquiring,
operating or managing hotels.
The Company is a development-stage
company and as such has no experience in acquiring, operating or managing
hotels. Such lack of experience may result in the
Company experiencing difficulty in adequately setting acquisition criteria
or negotiating and consummating acquisitions of hotels. Further, the
Company may be hampered by lack of experience in addressing the issues and
considerations which are common to operating and managing hotels. If
the Company’s operating or management abilities consistently perform below
expectations, the Company’s hotels are unlikely to thrive. In
addition, the Company’s lack of experience in acquiring hotels may result, in
spite of the successful performance and operability of its management, in
difficultly in actually realizing an attractive investment return from the
acquisition for the Company. For example, if the Company poorly
negotiated an acquisition and agreed to unfavorable terms or if the Company
overpaid in an acquisition of a hotel, such acquisition may ultimately deliver
low or negative yields to the Company despite its success in operating and
managing such hotel property.
7
Reliance
on third party agreements and relationships is necessary for development of the
Company's business.
The Company will need the franchise
approvals, licenses and other relationships of third parties in order to develop
and grow its business. In the future, the Company anticipates applying for
additional approvals and licenses as well building relationships with third
parties in the industry. Such licenses and relationships would allow
the Company to operate hotels using the name, brand awareness and goodwill of
the licensor, thereby allowing the Company to benefit from existing brand
recognition of the third parties and established consumer awareness of the
Company’s acquired hotels. The Company will be substantially
dependent on these strategic partners and third party
relationships.
The
Company will require additional capital in order to execute its business plan
and expects to incur additional expenses and may ultimately never be
profitable.
The Company is a development-stage
company, has limited operations and is relying on this offering to finance
its development and operations. As of September 30, 2010, the Company had
accumulated losses of $133,302. The Company will require additional
capital in order to execute its current business plan, and as a result, the
Company may not be able to successfully implement its business model. The
Company estimates it will likely need up to the maximum offering
amount of $24,000,000 to execute its business plan as herein
described. If the Company raises an amount less that the
projected amount, it will not be able to develop all aspects of its business
plan as preferred and it will instead have to develop such plan in a more
incremental manner. In addition, although this offering will provide
the Company with cash for its working capital, the Company will need to begin
generating revenue to achieve and maintain profitability. To become
profitable, the Company must successfully acquire hotels, improve their
operations to reach profitability, and manage such hotels in a manner so as to
achieve recurring profitability, a process that involves many factors that are
beyond the Company’s control, including the type of competition that the Company
may encounter. Ultimately, in spite of the Company’s best or reasonable efforts,
the Company may never actually generate revenues or become
profitable.
The
proposed operations of the Company are speculative.
The success of the proposed business
plan of the Company will depend to a great extent on the
operations, financial condition and management of the
Company. Although the Company has a business plan and intends to
execute its overall business strategy, limited operations have been conducted to
date. As no hotel acquisitions have been finalized or consummated as
of yet, the proposed operations of the Company remain speculative.
If
the Company is unable to generate sufficient cash from operations, it may find
it necessary to curtail development and operational
activities.
The Company’s business plan is hinged
on its ability to acquire, operate and manage hotels. If the Company is
unable to acquire, operate or manage hotels, then it would not be able to
proceed with its business plan or possibly to successfully develop its planned
operations at all.
The
Company will likely need subsequent financing.
Although the Company anticipates that
upon realization and completion of the full amount of this offering, the Company
may be able to internally generate sufficient profits to continue the expansion
plans of the Company, there cannot be any assurance that this can be
accomplished. In fact, the Company presently believes that it will
likely need to obtain additional financing in the future, which could cause
additional dilution to investors participating in this offering.
Certain
shareholders own, and will continue to own, a substantial portion of the
Company’s common stock and, as a result, can exercise control over
stockholder and corporate actions.
Windgate Global LLC, a Delaware limited
liability company, is currently the beneficial owner (with its related
parties) of approximately 91% of the Company’s outstanding common stock,
and assuming sale of all the Shares, will own 50% of the Company's then
outstanding common stock upon closing of the offering. As such, Windgate
Global, LLC, will be able to control most matters requiring approval by
shareholders, including the election of directors and approval of significant
corporate transactions. This concentration of ownership may also have
the effect of delaying or preventing a change in control, which in turn
could have a material adverse effect on the market price of the Company’s common
stock or prevent stockholders from realizing a premium over the market
price for their Shares. A beneficial owner of a minority (33.0%) of the
ownership interests of Windgate Global, LLC is Norman W. Nash, who is also a
Director of the Company. The other beneficial owner of the majority
(67.0%) of the ownership interests of Windgate Global, LLC is Tim Diego, making
him a significant beneficial owner of the shares of the Company’s common stock
prior to and after the offering.
8
Executive
officers and directors of the Company will retain significant voting power after
the offering, which will allow them to exert substantial influence over major
corporate decisions.
The Company anticipates that its
executive officers and directors will, in the aggregate, beneficially (through
one director’s minority ownership in Windgate Global, LLC) own approximately
16.5% of its issued and outstanding capital stock following the completion of
this offering, assuming the sale of all Shares hereby offered. Accordingly, the
present shareholders, by virtue of their percentage share ownership and certain
procedures established by the certificate of incorporation and by-laws of the
Company for the election of its directors, may effectively control the board of
directors and the policies of the Company. As a result, these stockholders will
retain substantial control over matters requiring approval by the Company’s
stockholders, such as (without limitation) the election of directors and
approval of significant corporate transactions. This concentration of ownership
may also have the effect of delaying or preventing a change in control, which in
turn could have a material adverse effect on the market price of the Company’s
common stock or prevent stockholders from realizing a premium over the market
price for their Shares.
The
Company depends on its management team to manage its business
effectively.
The Company's future success is
dependent in large part upon its ability to understand and develop
the business plan and to attract and retain highly skilled mergers and
acquisitions, hotel management, operational and executive personnel. In
particular, due to the relatively early stage of the Company's business,
its future success is highly dependent on its officers, to provide the
necessary experience and background to execute the Company's business plan.
The loss of any officer’s services could impede, particularly
initially as the Company builds a record and reputation, its ability to develop
its objectives, particularly in its ability to develop a successful
strategy to acquire, operate and manage its hotel properties and as such
would negatively impact the Company's possible development.
Government
regulation could negatively impact the business.
The Company’s hotels may be
subject to various government regulations in the jurisdictions in which they
operate. Due to the potential wide geographic scope of the Company’s
operations, the Company could be subject to regulation by political and
regulatory entities throughout the United States, including various local and
municipal agencies and government sub-divisions. The Company may
incur increased costs necessary to comply with existing and newly adopted laws
and regulations or penalties for any failure to comply. The
Company’s operations could be adversely affected, directly or indirectly,
by existing or future laws and regulations relating to its business or
industry.
There
has been no prior public market for the Company’s securities and the lack of
such a market may make resale of the stock difficult.
No prior public market has existed for
the Company’s securities and the Company cannot assure any investor that a
market will develop subsequent to this offering. An investor must be fully aware
of the long-term nature of an investment in the Company. The Company
intends to apply for quotation of its common stock on the OTC
Bulletin Board as soon as possible which may be while this offering is
still in process. However, the Company does not know if it will be
successful in such application, how long such application will take, or, that if
successful, that a market for the common stock will ever develop or
continue on the OTC Bulletin Board. If for any reason the common stock
is not listed on the OTC Bulletin Board or a public trading market does not
otherwise develop, investors in the offering may have difficulty selling
their common stock should they desire to do so. If the Company is not
successful in its application for quotation on the OTC Bulletin Board, it
will apply to have its securities quoted by the Pink OTC Markets, Inc.,
real-time quotation service for over-the-counter equities.
The
Company does not intend to pay dividends to its stockholders, so investors will
not receive any return on investment in the Company prior to selling their
interest in it.
The Company does not project paying
dividends but anticipates that it will retain future earnings for
funding the Company’s growth and development. Therefore, investors
should not expect the Company to pay dividends in the foreseeable future.
As a result, investors will not receive any return on their investment
prior to selling their Shares in the Company, if and when a market for such
Shares develops. Furthermore, even if a market for the
Company’s securities does develop, there is no guarantee that the market
price for the shares would be equal to or more than the initial per share
investment price paid by any investor. There is a possibility that the
Shares could lose all or a significant portion of their value from the
initial price paid in this offering.
9
The
Company’s stock may be considered a penny stock and any investment in the
Company’s stock will be considered a high-risk investment and subject to
restrictions on marketability.
If the Shares commence trading, the
trading price of the Company's common stock may be below $5.00 per share. If the
price of the common stock is below such level, trading in its common stock would
be subject to the requirements of certain rules promulgated under the Securities
Exchange Act of 1934, as amended. These rules require additional disclosure by
broker-dealers in connection with any trades generally involving any non-NASDAQ
equity security that has a market price of less than $5.00 per share, subject to
certain exceptions. Such rules require the delivery, before any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith, and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors (generally institutions). For these types of
transactions, the broker-dealer must determine the suitability of the penny
stock for the purchaser and receive the purchaser’s written consent to the
transactions before sale. The additional burdens imposed upon broker-dealers by
such requirements may discourage broker-dealers from effecting transactions in
the Company’s common stock which could impact the liquidity of the Company’s
common stock.
The
Company may face significant competition from companies that serve its
industry.
The Company may face competition from
other companies that offer similar solutions, ranging from regional hospitality
organizations to large multinational companies. Some of these
potential competitors may have longer operating histories, greater brand
recognition, larger hotel bases and significantly greater financial, technical
and marketing resources than the Company does. These advantages may
enable such competitors to respond more quickly to new or emerging technologies
and changes in customer preferences. These advantages may also allow
them to engage in more extensive research and development, pursue more
advantageous merger and acquisition opportunities, undertake extensive
far-reaching marketing campaigns, adopt more aggressive pricing policies and
make more attractive offers to potential customers, employees and strategic
partners. Accordingly, the Company may not be able to compete
successfully, and competitive pressures may adversely affect its business,
results of operations and financial condition.
No formal market survey has been
conducted.
No independent market survey has been
performed to determine the number of potential acquisition targets for the
Company’s objectives in the hospitality sector. While the Company
believes that the hotel industry is significantly fragmented and that numerous
opportunities exist to buy hotels at attractive valuations, the Company has
conducted only limited internal marketing studies and/or analysis which indicate
the same. Accordingly, no assurances can be given that upon the
Company’s receipt of additional funds through this offering that any such funds
can be duly utilized by the Company to acquire suitable
hotels.
The Company may be subject to increasing
environmental and regulatory restrictions and developments, which may result in
increased costs, lower revenue and profits and/or difficulty in conducting
business.
Current or future environmental laws
and regulations may affect the ability of the Company to operate its
business. Any violation of these laws could adversely affect the
Company and its business. The Company’s operations may be subject to
various federal, state and local laws, regulations and ordinances relating to
the protection of the environment, including (without limitation) those
regulations governing discharges to air and water, handling and disposal
practices for solid and hazardous wastes, the cleanup of contaminated sites and
the maintenance of a safe work place. The hotel facilities may have an
agreement with a waste management company for the proper disposal of all
environmental waste, but the use of such waste management companies does not
immunize the Company from alleged violations of such laws for operations for
which it is responsible even if carried out by such waste management companies,
nor does it immunize the Company from third-party claims for the cost to cleanup
disposal sites at which such wastes have been disposed.
Environmental laws and regulations
impose penalties, fines and other sanctions for noncompliance and liability for
response costs, property damages and personal injury resulting from past and
current spills, disposals or other releases of, or exposure to, hazardous
materials. The Company could incur substantial costs as a result of
noncompliance with or liability for cleanup or other costs or damages under
these laws. The Company may become subject to more stringent
environmental laws in the future. If more stringent environmental
laws are enacted in the future, these laws could have a material adverse effect
on the business, financial condition and results of operations of the
Company.
Under various federal and state laws,
owners or operators of real estate may be required to respond to the release of
hazardous substances on the property and may be held liable for property damage,
personal injuries or penalties that result from environmental
contamination. These laws also expose the Company to the possibility
that it may become liable to reimburse the government for damages and costs
incurred in connection with the contamination. Environmental
liabilities may be present in properties to be acquired by the Company may incur
costs to remediate contamination, which could have a material adverse effect on
the business of the Company or its financial condition.
10
In acquiring hotels as part of its
business plan, the Company will be exposed to the additional risks of becoming
an owner of real estate.
The risks of an investment in real
estate, to which the Company will be exposed by virtue of its acquiring any
hotel, will depend upon many factors over which the Company will have no
control. For example, the yields available from investments in real estate
depend on the amount of income earned and capital appreciation generated by the
property as well as the expenses incurred. Income from the investments may be
adversely affected by the general economic climate, local conditions, such as an
oversupply of space, or a reduction in demand for the Company’s services or
properties in the relevant area, competition from other available properties in
the area and increased operating costs (including, but not limited to, real
estate taxes). Certain significant expenditures associated with an investment in
real estate (such as, without limitation, mortgage payments, real estate taxes
and maintenance costs) generally are not reduced when circumstances cause a
reduction in income from the investment. In addition, income from properties and
real estate values are also affected by a variety of other factors, such as
governmental regulations and applicable laws (including, without limitation,
real estate, zoning and tax laws), interest rate levels and the availability of
financing.
Furthermore, federal regulations
require building owners and those exercising control over a building’s
management to identify and warn their employees and certain other employers
operating in the building of potential hazards posed by workplace exposure to
installed asbestos-containing materials and potential asbestos-containing
materials in their buildings. Significant fines can be assessed for
violation of these regulations. Building owners and those exercising
control over a building’s management may be subject to an increased risk of
personal injury lawsuits. Federal, state and local laws and regulations
also govern the removal, encapsulation, disturbance, handling and/or disposal of
asbestos-containing materials and potential asbestos-containing materials when
such materials are in poor condition or in the event of construction,
remodeling, renovation or demolition of a building. Such laws may impose
liability for improper handling or a release to the environment of
asbestos-containing materials and potential asbestos containing materials and
may provide for fines to, and for third parties to seek recovery from, owners or
operators of real properties for personal injury or improper work exposure
associated with asbestos-containing materials and potential asbestos-containing
materials.
The presence of mold, lead-based paint,
contaminants in drinking water, radon and/or other substances at one of the
Company’s properties may lead to the incurrence of costs for remediation,
mitigation or the implementation of an operations and maintenance plan and may
result in third party litigation for personal injury or property damage.
Furthermore, in some circumstances, areas affected by mold may be unusable
for periods of time for repairs, and even after successful remediation, the
known prior presence of extensive mold could adversely affect the ability of the
property to retain or attract hotel guests and could adversely affect the
property’s market value. If the Company fails to comply with such
laws, it would face increased expenditures both in terms of fines and
remediation of the underlying problem(s), potential litigation relating to
exposure to such materials, and a potential decrease in value to business
associated with such hotel property and in the value of the property
itself. Therefore, the Company’s failure to comply with existing
environmental laws would have an adverse effect on its earnings, its financial
condition and its ability to pursue its growth strategy.
The Company is unable to predict the
future course of federal, state and local environmental regulation and
legislation. However, the Company believes that any changes in the environmental
regulatory framework could have a material adverse effect on the Company and its
business.
The Company may become the co-owner of
real estate assets, exposing the Company to additional risks from
co-ownership..
The Company may acquire real estate
assets alongside third parties, who would be a co-owner of the asset with the
Company. Co-ownership of an asset with one or more third parties involves
a number of additional and unique risks, including inability to make decisions
due to disagreements between co-owners and potential liability from the actions
and omissions of a co-owner.
If
the Company uses leverage (as is often used in real estate acquisitions) in
its acquisitions of hotels, the Company will be subject to certain additional
risks.
In utilizing leverage to acquire any
hotels, the Company will incur additional risks that are traditional to the use
of leverage to finance purchases. For example, holders of the
Company’s debt or loans would likely receive preferential rights and privileges
above the Company’s stockholders, and in certain instances, such holders of debt
or loans could substantially influence and/or effectively control the operations
and business of the Company. The Company believes that the use of
leverage, while perhaps necessary in the ordinary course of its business and
acquisitions of hotel properties, exposes the Company to increased volatility
and overall risk.
11
If the Company fails to successfully manage its hotel portfolio development or market expansion,
its business and
financial condition may suffer.
While the Company continues to identify
new acquisition opportunities and looks to expand into new hotel markets, the
success of its operating plan depends on a number of factors, including, but not
limited to, its ability to anticipate and manage a variety of issues associated
with the various individual hotels and their markets, such as (without
limitation): difficulties faced in restructuring underperforming hotels,
locating effective hotel management personnel, rebranding or rebuilding the
image of underperforming hotels, and successfully calibrating the
hotels’ services to the needs of its guests and
customers. Further, the Company will need to identify
and address how the individual market of each potential hotel
acquisition may be different from other markets in which the
Company
may acquire properties. These characteristics may include (without limitation):
demand volume requirements; demand seasonality; customer concentrations; guest
expectations and refund policies; amenities and facilities requirements;
and cost, performance and compatibility requirements. The business of
the Company may suffer if it fails to successfully anticipate and manage these
issues associated with the diversity of its operations and overall growth
plans.
The time devoted by Company management may not be
full-time.
It is anticipated that key officers
will eventually devote themselves full-time to the business of the
Company. However, certain officers will devote only such time as is
necessary (which may be less than full-time) to fulfill their respective duties
as an officer of the Company. Furthermore, the Company may choose not
to require its management to be available or provide services on a full-time
basis to the Company.
The
Company may have conflicts of interest and have engaged in transactions with its
officers and directors and have entered into agreements or arrangements that
were not negotiated at arms’-length.
The Company has engaged, and may in the
future engage, in transactions with its officers, directors and principal
shareholders, or persons or entities affiliated with any of these
persons. These transactions may not have been on terms as favorable
to the Company as could have been obtained from non-affiliated
persons. While an effort has been made and will continue to be made
to obtain services from affiliated persons at rates as favorable as would be
charged by others, there will always be an inherent conflict of interest between
the interests of our Company and those of the officers, directors, principal
shareholders, and affiliates.
Acquisition
plans are still in early discussion phases and, except for one contract to
purchase, no formal transaction has been agreed with a hotel
seller.
Except for the Microtel transaction described
below, the Company has not completed the development of any formal agreement to
acquire a hotel, and further, it anticipates a continuing need to engage in
preliminary discussions with potential hotel sellers, before any hotel will
actually be acquired by the Company. Although the Company’s
management feels that it can successfully structure, negotiate and complete an
acquisition of a hotel property, no assurance can be given that such
transactions will ultimately be achieved or consummated on grounds that are not
unfavorable to investors in this offering. The Company, through
Windgate LLC, has entered into a contract to purchase The Microtel Inn &
Suites (“Microtel”)
located in Bozeman, Montana. Microtel is a Wyndham
brand. The acquisition opportunity consists of an operational
three-story hotel with 61 rooms. The property is 81,413 square feet
and is on a lot of 1.869 acres. The Company believes that this hotel
offers a suitable acquisition opportunity as it is located in a city with
favorable trends, including solid residential growth trends, a burgeoning
business community, Montana State University, and nearby tourist
attractions.
If the Company experiences
significant growth, this may cause strains on its management and
employees.
If the Company experiences significant
growth in the future, this will expose the Company to increased competition,
greater overhead, marketing and support costs and other costs associated with
entry into new markets and solicitation of new prospective acquisition targets
and potential customers. To manage growth effectively, the Company
will need to continue to improve and expand operational, financial and
management information systems and to expand, train, motivate and manage its
employees and key personnel. Should the Company be unable to manage
its growth effectively, the results of its operations could be adversely
affected.
The Company has a narrow focus, which results in a lack of
diversification.
While the Company intends to pursue
hotel acquisition opportunities in disparate geographic markets across the
United States and to acquire hotels that cater to various demographics, the
underlying focus and business of the Company is limited to that which is
described herein, namely hotels and hospitality acquisitions, operations and
management. The Company does not intend to investigate or commercialize
other businesses, products or services. The Company’s focus on one
narrow area will impair its ability to pursue other business, product or service
offerings. Therefore, the Company will be subject to any and all risks
that may be associated with a lack of diversification.
12
The
Company has no control over general economic conditions.
The financial success of the Company is
likely to be sensitive to adverse changes in general economic conditions in
the United States, as a whole, and specific local conditions that impact
particular localities and regions in which the Company may operate its business,
such as (without limitation) recession, inflation, unemployment, and interest
rates. Such changing conditions could reduce demand in the marketplace for
the Company’s services. The Company has no control over these changes
and its business could be adversely and severely affected as a result of changes
in general economic conditions.
The Company has authorized the issuance of preferred
stock with certain preferences.
The board of directors of the Company
is authorized to issue up to 20,000,000 shares of $0.0001 par value preferred
stock. The board of directors has the power to establish the dividend
rates, liquidation preferences, and voting rights of any series of preferred
stock, and these rights may be superior to the rights of holders of the
Shares. The board of directors may also establish redemption and
conversion terms and privileges with respect to any shares of preferred
stock. Any such preferences may operate to the detriment of the
rights of the holders of the Shares, and further, could be used by the board of
directors as a device to prevent a change in control of the Company. No
such preferred shares or preferences have been issued to date, but such shares
or preferences may be issued at a later time, subject to the sole discretion of
the board of directors.
It
is difficult to predict the Company’s financial performance, which may fluctuate
widely.
The Company has not yet generated
revenues or profits and may never do so. If the Company does generate
revenues or profits, its quarterly results of operations are likely to vary
significantly. A number of factors are likely to cause these
variations, some of which are outside of the Company’s control. Some
of these factors include (without limitation):
|
·
|
the
hotels that the Company acquires;
|
|
·
|
the
ability of the Company to improve or restructure the operations of hotels
that it acquires;
|
|
·
|
the
amount and timing of capital expenditures and other costs relating to the
expansion of the Company;
|
|
·
|
the
introduction of competition for the acquisition, operation and/or
management of the hotels that the Company identifies as suitable
acquisition targets;
|
|
·
|
price
competition or changes in the hotel industry;
and
|
|
·
|
operational
or management difficulties or economic conditions specific to the Company
or its business.
|
The
Company does not maintain certain insurance, including errors and omissions and
indemnification insurance.
The Company has limited capital and,
therefore, does not currently have a policy of insurance against liabilities
arising out of the negligence of its officers and directors and/or deficiencies
in any of its business operations. Even assuming that the Company obtained
insurance, there is no assurance that such insurance coverage would be adequate
to satisfy any potential claims made against the Company, its officers and
directors, or its business operations or products. Any such liability which
might arise could be substantial and may exceed the assets of the Company. The
certificate of incorporation and by-laws of the Company provide for
indemnification of officers and directors to the fullest extent permitted under
Delaware law. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons,
it is the opinion of the Securities and Exchange Commission that such
indemnification is against public policy, as expressed in the Act, and is
therefore, unenforceable.
There
may be certain material adverse tax consequences from an investment in the
Company and/or from a purchase of the Shares through this offering.
Investors should carefully consider the
federal, state, local (and, if applicable, foreign) tax consequences of an
investment in the Company and/or of a purchase of the Shares through this
offering. The Company urges prospective investors to consult
their own tax advisors on all matters relating to
taxation. Specifically, as the Company will own and operate real
estate, the Company believes that certain special tax consequences may result
therefrom. Furthermore, as the Company will be acquiring and
potentially selling hotels, businesses and properties during the course of the
Company’s operations, the Company believes that certain material tax risks may
potentially result for investors.
The
concurrent sales of shares by the Company and the selling shareholders may make
sales by either more difficult.
Concurrent with the offering of the
Shares by the Company, the selling shareholders are registering 1,500,000 shares
of common stock which shares will be sold at $6.00 per share until such time as
the shares are accepted for quotation on a national stock exchange. For
whatever reason, a purchaser may determine not to purchase shares from the
Company but from one or more of the selling shareholders. In addition, the sale
of the Shares by the Company may have an adverse impact on the sale of
their shares by the selling shareholders.
13
Forward-Looking
Statements
This prospectus contains, in addition
to historical information, certain information, assumptions and discussions
that may constitute forward-looking statements. Such statements are subject to
certain risks and uncertainties which could cause actual results to differ
materially than those projected or anticipated. Actual results could differ
materially from those projected in the forward-looking statements. The Company
cannot assure an investor that the forward-looking statements set out in
this prospectus will prove to be accurate. The Company’s businesses can be
affected by, without limitation, such things as natural disasters, economic
trends, international strife or upheavals, consumer demand patterns, labor
relations, existing and new competition, risks described elsewhere in this
Prospectus, consolidation, and growth patterns within the industries in
which the Company competes and any deterioration in the economy may individually
or in combination impact future results.
USE
OF PROCEEDS
The
Company will receive proceeds from the sale of the Shares assuming the sale of
any Shares in the offering is concluded. The Company does not know how
many Shares may be sold or the aggregate amount of proceeds it may receive
from sales. The Company anticipates that it will use the proceeds from the
sale of any of the Shares as listed below. If less than the maximum number
of Shares offered is sold and less than the maximum proceeds are received,
the Company anticipates that the use of proceeds listed below will be
proportionately reduced where possible.
If
1,000,000
|
If
2,000,000
|
If
3,000,000
|
If
4,000,000
|
|||||||||||||
Shares
sold
|
Shares
sold
|
Shares
sold
|
Shares
sold
|
|||||||||||||
($6,000,000)
|
($12,000,000)
|
($18,000,000)
|
($24,000,000)
|
|||||||||||||
Hotel
Acquisitions
|
$ | 4,200,000 | $ | 8,400,000 | $ | 12,600,000 | $ | 16,800,000 | ||||||||
Sales,
Marketing and Licensing
|
$ | 600,000 | $ | 1,200,000 | $ | 1,800,000 | $ | 2,400,000 | ||||||||
General
and Administration
|
$ | 600,000 | $ | 1,200,000 | $ | 1,800,000 | $ | 2,400,000 | ||||||||
Working
Capital
|
$ | 600,000 | $ | 1,200,000 | $ | 1,800,000 | $ | 2,400,000 | ||||||||
Total
|
$ | 6,000,000 | $ | 12,000,000 | $ | 18,000,000 | $ | 24,000,000 |
_________________________________
(1) The
Company is seeking an underwriter, broker-dealer or selling agent to sell the
Shares. The Company has not entered into any arrangements with any
underwriter, broker-dealer or selling agent as of the date of this
prospectus.
(2) At
the time of this prospectus, the Company has not located a broker-dealer or
selling agent to sell the Shares. The Company does not know if and when it
will be able to locate such any such broker-dealer or selling agent. While
it is seeking a broker-dealer or selling agent to sell the Shares, the
Company, through its officers and directors, will offer the Shares to
current shareholders as well as contacts. Based on the foregoing, the Company is
estimating that probably at least 50% of the sale of the Shares will be
made by officers and directors of Company before the Company can locate,
negotiate and finalize any arrangement with any underwriter. Officers and
directors will not receive any commissions for any sales of the
Shares.
Discussion
of Use of Proceeds Items
Hotel Acquisitions: The
Company anticipates that the bulk of proceeds that are raised in this offering
will be used for acquisitions of hotels and the rehabilitation, retrofitting and
remodeling of hotel properties. For
example, the Company plans to use funds that are raised in this offering to
purchase the Microtel property for which it has entered into a definitive
transaction agreement.
Sales, Marketing and
Licensing: The Company anticipates a modest sales and marketing
budget. However, the Company plans to incur franchise and licensing
fees for use of the brand names, trademarks, goodwill and intellectual property
of existing brands, chains and hotel franchisors.
General and
Administration: The Company plans to hire additional personnel and
offer competitive salaries, bonuses and benefits to its
employees. The Company also plans to purchase or lease vehicles for
transportation of its employees. As certain officers and employees
will be expected to travel often to hotel properties and potential acquisition
candidates, a significant budget will be included for air travel
expenses.
Working Capital: The Company
will retain a certain amount of proceeds raised for working capital and
day-to-day general uses and corporate purposes.
14
DETERMINATION
OF OFFERING PRICE
There is no public market for the
Company’s common stock and the price at which the Shares are being offered has
been arbitrarily determined by the Company based on the Company’s belief in its
internal projections, anticipated growth and market potential. This price does
not necessarily bear any direct relationship to the assets, operations, book or
other established criteria of value of the Company but represents solely the
opinion of management that the Company will develop all or a portion of its
business plan and will develop a market value. Although a development-stage
company, the Company has spent considerable time and effort in developing its
business plan, and particularly its hotel acquisition strategy and criteria. The
Company believes that its development of its acquisition strategy and commitment
to customer service upon acquiring a hotel are unique factors that will allow
the Company to succeed upon the raising of capital in this offering. The Company
believes that such development and the business plan intended to be executed by
the Company perform particularly well regardless of any economic recession
because the Company seeks to benefit to a large extent from acquiring distressed
or underperforming hotel properties at a discount and then improving the
operations of such hotels. The Company has based its $6.00 per share offering
price on what it views as the potential future value of its acquisitions, its
operating and management strategy, and the anticipated growth of the
Company.
DIVIDEND
POLICY
The Company does not anticipate that it
will declare dividends in the foreseeable future but rather intends to use
any future earnings for the development of its business.
DILUTION
Purchasers of the Shares may experience
immediate dilution in the value of their shares of common stock. Purchasers
in this offering will pay $6.00 per share but immediately after purchase the
value of those Shares will be reduced. Dilution represents the
difference between the initial public offering price per share paid by
purchasers and the net tangible book value per share immediately after
completion of the offering. Net tangible book value per share is the
net tangible assets of the Company (total assets less total liabilities less
intangible assets), divided by the number of shares of common stock
outstanding.
CONCURRENT
SALES
This prospectus also relates to the
sale of 1,500,000 outstanding shares of the Company’s common stock by
the holders of those shares. The selling shareholders will offer
their shares for sale at an offering price of $6.00 per share until such time as
the Company's common stock is listed on a national securities exchange after
which time such selling shareholders may sell their shares at prevailing
market or privately negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by the selling shareholders
in connection with sales of the common stock. The selling shareholders may
from time to time offer their shares through underwriters, brokers-dealers,
agents or other intermediaries. The distribution of the common stock by the
selling shareholders may be effected in one or more transactions that may
take place through customary brokerage channels, in privately negotiated
sales; by a combination of these methods; or by other means. The Company will
not receive any portion or percentage of any of the proceeds from the sale
of the Selling Shareholders’ Shares.
PLAN
OF DISTRIBUTION
As of the date of this prospectus, the
Company has not entered into any arrangements with any underwriter,
broker-dealer or selling agent for the sale of the Shares. The
Company intends to attempt to locate an underwriter or broker-dealer or selling
agent to sell the Shares. Some Shares may be sold by certain officers
and directors of the Company, none of whom will receive any commission or
compensation for the sale of the Shares. The Company has no arrangements
nor has entered into any agreement with any underwriters, broker-dealer or
selling agents for the sale of the Shares. The executive officers and
directors of the Company will be offering the Shares for sale without commission
or payment. The offering will be presented by the Company primarily through
mail, telephone, electronic transmission and direct meetings in those
states in which it has registered the Shares.
There is no minimum of any Shares that
must be sold by the Company before the offering can be closed or the funds can
be utilized. The Company, at its sole discretion, may have additional
closings thereafter from time to time during the offering period. The
maximum number of Shares that can be sold pursuant to the terms of this offering
is 5,500,000 (4,000,000 by the Company and 1,500,000 by selling
shareholders).
15
The Company intends to maintain the
currency and accuracy of this prospectus and to sell the Shares for
a period of up to two (2) years, unless earlier completely sold, pursuant
to Rule 415 of the General Rules and Regulations of the Securities and
Exchange Commission.
Pursuant to the provisions of Rule
3a4-1 of the Securities Exchange Act of 1934, none of the officers or directors
offering the Shares is considered to be a broker of such securities as (i)
no officer or director is subject to any statutory disqualification, (ii)
no officer or director is nor will be compensated by commissions for sales of
the securities, (iii) no officer or director is associated with a
broker or dealer, (iv) all officers and directors, in their employment on behalf
of the Company, are primarily employed in substantial duties and (v)
no officer or director participates in offering and selling securities more
than once every 12 months.
The offering will terminate 24 months
following the date of this prospectus unless earlier closed.
Resales
of the Securities under State Securities Laws
The National Securities Market
Improvement Act of 1996 ("NSMIA") limits the authority of states to
impose restrictions upon resales of securities made pursuant to Sections
4(1) and 4(3) of the Securities Act of companies which file reports under
Sections 13 or 15(d) of the Securities Exchange Act. Resales of the Shares
in the secondary market will be made pursuant to Section 4(1) of the
Securities Act (sales other than by an issuer, underwriter or broker). The
resale of such Shares may be subject to the holding period and other
requirements of Rule 144 of the General Rules and Regulations of the Securities
and Exchange Commission.
Selling
Shareholders
The Selling Shareholder Shares will be
offered at an offering price of $6.00 per share until such time as
the Company's common stock is listed on a national securities exchange
after which time such selling shareholders may sell their shares at
prevailing market or privately negotiated prices and may be offered from time to
time through underwriters, brokers, dealers, agents or other
intermediaries. The distribution of the Selling Shareholder Shares may be
effected in one or more transactions that may take place through customary
brokerage channels, in privately-negotiated sales, by a combination of these
methods or by other means. Transactions occurring after the stock is listed
on a national exchange, if at all, will be made at market prices prevailing
at the time of sale. Usual and customary or specifically negotiated brokerage
fees or commissions may be paid by the selling shareholders in connection
with sales of the Shares. The Company will not receive any portion or
percentage of any of the proceeds from the sale of the
Selling Shareholders' Shares. Of the 1,500,000 Selling Shareholder
Shares included in the registration statement of which this prospectus is a
part, 1,000,000 of such Shares are held by Windgate Global, LLC. Of
such Shares held by Windgate Global, LLC, certain of these Shares may be deemed
to be beneficially owned by Norman W. Nash, a director of the Company, who is a
member and officer of Windgate Global, LLC. The other Shares of
Windgate Global, LLC, are held by Tim Diego, who may be deemed to beneficially
own greater than 5% of the shares of the Company’s common stock.
DESCRIPTION
OF SECURITIES
Capitalization
The Company is authorized to issue
100,000,000 shares of common stock, par value $0.0001, of which 5,500,000 shares
were outstanding as of the date of the registration statement, of which
this prospectus is a part. The Company is also authorized to issue
20,000,000 share of preferred stock, par value $0.0001, of which no shares were
outstanding as of the date of the registration statement, of which this
prospectus is a part.
The following statements relating to
the capital stock set forth the material terms of the securities of
the Company, however, reference is made to the more detailed provisions of,
and such statements are qualified in their entirety by reference to, the
certificate of incorporation and the by-laws, copies of which are filed as
exhibits to this registration statement.
Common
Stock
The Company is registering up to
5,500,000 shares of its common stock for sale (up to 4,000,000 by the Company
and up to 1,000,000 by selling shareholders) to the public at a price of $6.00
per share.
Holders of shares of common stock are
entitled to one vote for each share on all matters to be voted on by the
stockholders. In addition to any vote required by law, the consent of a
majority of the holders of the then-outstanding shares of common stock is
required in any action needing stockholder approval. Holders of
common stock do not have cumulative voting rights.
16
Subject to preferences that may be
applicable to any outstanding shares of preferred stock, the holders of common
stock are entitled to share ratably in dividends, if any, as may be declared
from time to time by the board of directors in its discretion from funds legally
available therefor. In the event of a liquidation, dissolution or winding
up, subject to the rights of the shares of preferred stock, the holders of
common stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities. All of the outstanding shares of common
stock are fully paid and non-assessable.
Holders of common stock have no
preemptive rights to purchase the Company’s common stock. There are no
conversion or redemption rights or sinking fund provisions with respect to the
common stock. The Company may issue additional shares of common stock which
could dilute its current shareholder's share value.
Preferred
Stock
Shares of preferred stock may be issued
from time to time in one or more series as may be determined by the board of
directors. The board of directors may fix the designation, powers,
preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof without any further vote or
action by the stockholders of the Company, except that no holder of preferred
stock shall have preemptive rights. Any shares of preferred
stock so issued would have priority over the common stock with respect to
dividend or liquidation rights. Any future issuance of preferred stock may
have the effect of delaying, deferring or preventing a change in control of
the Company without further action by the stockholders and may adversely affect
the voting and other rights of the holders of common stock.
At present, the Company has no plans to
issue any preferred stock or adopt any series, preferences or other
classification of preferred stock. The issuance of shares of preferred
stock, or the issuance of rights to purchase such shares, could be used
to discourage an unsolicited acquisition proposal. For instance, the
issuance of a series of preferred stock might impede a business combination
by including class voting rights that would enable the holder to block such a
transaction, or facilitate a business combination by including voting
rights that would provide a required percentage vote of the stockholders.
In addition, under certain circumstances, the issuance of preferred stock could
adversely affect the voting power of the holders of the common
stock.
Although the Company’s board of
directors is required to make any determination to issue such preferred stock
based on its judgment as to the best interests of the stockholders of the
Company, the board of directors could act in a manner that would discourage
an acquisition attempt or other transaction that some, or a majority, of the
stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then market price
of such stock. The board of directors does not at present intend to seek
stockholder approval prior to any issuance of currently authorized stock,
unless otherwise required by law or otherwise.
Admission
to Quotation on the OTC Bulletin Board
If the Company meets the
qualifications, it intends to apply for quotation of its securities on the OTC
Bulletin Board. The OTC Bulletin Board differs from national and
regional stock exchanges in that it (1) is not situated in a single
location but operates through communication of bids, offers and confirmations
between broker-dealers and (2) securities admitted to quotation are offered
by one or more broker-dealers rather than the "specialist" common to
stock exchanges. To qualify for quotation on the OTC Bulletin Board,
an equity security must have one registered broker-dealer, known as the
market maker, willing to list bid or sale quotations and to sponsor the company
listing. In addition, the Company must make available adequate
current public information as required by applicable rules and
regulations.
In certain cases the Company may elect
to have its securities initially quoted in the Pink Sheets published
by Pink OTC Markets Inc. In general there is greater liquidity for
traded securities on the OTC Bulletin Board, and less through quotation on the
Pink Sheets. It is not possible to predict where, if at all, the securities of
the Company will be traded following the effectiveness of this registration
statement.
Transfer
Agent
It is anticipated that Globex Transfer,
LLC of Deltona, Florida will act as transfer agent for the common stock of
the Company.
17
Penny
Stock Regulation
Penny stocks generally are equity
securities with a price of less than $5.00 per share other than
securities registered on national securities exchanges or listed on the
Nasdaq Stock Market, provided that current price and volume information
with respect to transactions in such securities are provided by the exchange or
system. The penny stock rules 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 income exceeding $200,000, or $300,000
together with their spouse). For transactions covered by these rules,
the broker-dealer must make a special suitability determination for the
purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a disclosure schedule prescribed
by the SEC relating to the penny stock market. The broker-dealer also must
disclose the commissions payable to both the broker-dealer and the
registered representative and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information on the
limited market in penny stocks. Because of these penny stock rules,
broker-dealers may be restricted in their ability to sell the Company’s common
stock. The foregoing required penny stock restrictions will not apply to
the Company’s common stock if such stock reaches and maintains a
market price of $5.00 per share or greater.
Dividends
The Company has not paid any dividends
to date. The Company intends to employ all available funds for the
growth and development of its business, and accordingly, does not intend to
declare or pay any dividends in the foreseeable future.
Stock
Option Plan
To provide incentive compensation to
officers and employees, the Company may implement a stock option plan which may
provide for the granting, in the discretion of the board of directors, to the
officers, employees and contractors of the Company, of options to purchase
shares of the Company's common stock in an amount to be subsequently determined
by the board of directors of the Company.
PLAN
OF OPERATION
Business
Plan
The Company intends to develop a
premier hospitality business by acquiring selected hotels and operating and
managing these hotel properties. The objectives of the Company
include identifying attractive acquisition candidates and structuring and
negotiating attractive purchase terms to acquire these
hotels. Following acquisition, the Company intends to improve and
bolster the operations of these hotels and effectively manage the business of
the hotels with a focus on customer service. While the focus of the
Company will be on acquiring and improving the business of hotels, the Company
will also consider suitable sale and disposition strategies for its individual
hotel properties on transaction terms that return an attractive yield to the
Company on its purchase and sale of the individual hotels.
Potential
Revenue
The Company has not identified any
potential sources of revenues in the near term. However, following
the completion of this offering and the receipt of funding, the Company plans to
undertake mergers and acquisitions in the hospitality sector. As a
result of such transactions, the Company anticipates investing in and owning
hotel properties, which will generate revenues by virtue of their normal
business practices. Such revenues typically would include lodging
fees paid by hospitality guests and guest spending at hotel properties (such as
at gift shops, restaurants and amenity stores).
Hospitality
Acquisition Process
The Company has prepared a general
acquisition process and procedure that it intends to follow in identifying,
evaluating and pursuing acquisition opportunities in the hospitality
sector.
Preliminary Investment
Approval
Initially, the Company will meet with
various real estate brokers and property sellers across target
markets. In this process, the Company will identify acquisitions that
are desirable and that fit the investment parameters that have been set
forth by the Company’s Investment Committee (“Investment
Committee”).
Internal Investment Review
Once a property is identified as a
potential acquisition, the Company’s personnel will perform internal analysis
and evaluation of the opportunity. This process consists of
performing the preliminary financial underwriting with the help of financial
analysts and having the acquisition reviewed by senior management. If
senior management approves a letter of Intent (“LOI”) outlining the proposed
terms of the acquisition, the LOI will be submitted to the
Seller. Once both parties have executed the LOI, the Company
will prepare a memorandum to be presented to the Investment Committee for
approval of due diligence costs.
18
Preliminary Due Diligence
Once the Investment Committee approves
due diligence expenses, the Company will begin to gather the appropriate
information to complete a Preliminary Investment Memorandum. The
preliminary due diligence process may consist of gathering various market and
submarket detailed information, environmental studies, physical studies, and any
other easily obtainable due diligence information to assist in preparing the
Preliminary Investment Memorandum and attempting to verify any of the initial
project-related assumptions. The preliminary due diligence phase is
one that is very much dependent on the willingness of the target seller to
provide information prior to signing any purchase and sale agreement with
the Company. In many cases, the seller will want to wait until the
purchase and sale agreement is signed before providing any of this information,
however, it is the Company’s desire to get as much useful information as
possible as early as possible in the process in order to verify and confirm the
Company’s underwriting assumptions.
Investment Committee Initial
Evaluation
The Preliminary Investment Memorandum
is presented to the Investment Committee which includes the executive management
of the Company. The Investment Committee will then decide to either
terminate the discussions with the seller, or to execute the purchase and sale
agreement (usually accompanied by an earnest money deposit) and initiate the
final due diligence process.
Final Due Diligence
The Company stresses the overall
importance of due diligence which includes preparation of a comprehensive due
diligence binder. The binder includes a detailed step-by-step process
that must be performed during the due diligence process. The final
due diligence process employed by the Company is very detailed and includes both
specific tasks that need to be performed by the Company’s personnel as
well as all of the duties that need to be performed by outside third parties,
such as attorneys, environmental consultants, physical consultants, field review
consultants and others.
The value of any potential
acquisition property is analyzed internally, and an independent appraisal
may also be ordered in some cases. An on-site inspection is typically
conducted by four different groups: the acquisition team at Company, the
physical consultant (reviewing the physical condition of the property structure,
roof, parking lot, HVAC, electric, etc.), the environmental consultant (to
perform a Phase I Environmental Assessment), and a field or file review
consultant, who reviews all of the files of the seller that pertain to the
property. The Company’s staff may duplicate some of the work
performed by third parties to verify conditions, tour the market and submarket,
and meet with the local real estate brokerage community to verify the
underwriting assumptions. The results of all of these due diligence
efforts are summarized in a Final Investment Memorandum which is presented to
the Investment Committee and the Company’s Board of Directors prior to closing
of the transaction.
Investment Committee Final
Evaluation
The Company then drafts an Investment
Committee Summary for the Investment Committee to review. The
Investment Committee will decide whether to terminate discussions or to present
the investment to the Board of Directors of the Company.
Board of Directors
Evaluation
As a final step, the Company’s Board of
Directors must approve all property acquisitions.
Acquisition Closing
If a proposed acquisition is approved
by the Company’s Board of Directors, a closing will occur at which ownership of
the property is formally transferred to the Company.
19
THE
BUSINESS
The
Business: Hotel Acquisitions
The Urban
Land Institute has recently published a brief summary of certain key highlights
with respect to the hospitality mergers and acquisitions business:
Strengths:
Hotels track back, thanks to modestly increased business and tourist travel
rising off depressing nadirs. All key metrics—occupancies, room rates, and
revenues—show improvement. “Hotels have the most flexibility to increase rates
and can come back fastest.” Operators “were geniuses at cutting costs” during
the downturn—putting fewer towels in rooms, eliminating nighttime turndown
service, shutting down elevators, you name it. “After the worst slump in
decades, the outlook can only get better.” Business-center hotels in gateway
destinations enjoy the best prospects. “You can get some pop.” The construction
pipeline has mostly run dry, so new supply will not hamper
recovery.
Weaknesses:
Highly leveraged owners who bought late in the cycle get weeded out and many
properties change hands. Deferred maintenance and capital expenditures leave
facilities thread-bare, tired looking, and needing upgrades. New owners must
factor necessary and often costly improvements into budgets. Five-star
properties struggle to attract enough profitable business to sustain substantial
overhead; luxury lifestyles pare back, too. At the other end of the spectrum,
extended-stay and roadside motels face oversupply. Better-capitalized owners can
reduce rates and knock out competitors. Skittish lenders show little interest in
providing financing to buyers. “There’s no such thing as a safe loan on a
hotel,” says an insurance executive. “If you want to play, you might as well
just own them. They are businesses, not property investments.”
Best
Bets: “Over the course of any decade, there are two years to buy hotels and two
years to sell them. Now is the time to buy.” But investors must fork
over substantial equity and not get overly enamored of lobby decors or
presidential-suite creature comforts. “This is a boom/bust property type,” so
prepare to sell quickly once any recovery takes hold.
Avoid:
Buyers could overpay if they base pricing on a rapid return to peak occupancies
and rates. “Those assumptions may not pan out,” even in the top markets.
Big-ticket resorts and high-end convention hotels will suffer as travelers and
companies continue to count their pennies and down-scale. Do not expect
spendthrift flings and anything-goes travel budgets to come back in fashion
anytime soon. Also, beware of gambling-related hotels and
resorts. Too many Native American–operated casinos compete for dollars from
exhausted consumers who do not have the luxury of losing any more money after
recent housing and stock market declines. In particular, Las Vegas loses some
glitz.
Development:
Some lenders may consider financing an apartment project or a build-to-suit
office for a high-credit corporation, but forget about a construction loan for a
new hotel in the current environment: virtually no way.
Outlook:
In an encouraging sign, “chocolates are back on pillows.” But hotel performance
correlates closely to growth in gross domestic product, and an expected
elongated economic recovery bodes for a more sluggish than typical resurgence in
the lodging sector. Strong brands should attract more business: guests prefer to
play it safe with tried-and-true innkeepers and make sure budgets go farther.
Those reward programs help, too. “This sector is not for the faint of heart. You
need a good operator.”
Entry
of the Company into the Market
The Company plans to enter the market
by acquiring selected hospitality properties. To date, the Company
has not acquired any such properties, but is currently in discussions and
negotiations regarding potential acquisitions that would occur following the
completion of this offering. The Company has entered into a contract
to purchase The Microtel Inn & Suites (“Microtel”)
located in Bozeman, Montana. Microtel is a Wyndham
brand. The acquisition opportunity consists of an operational
three-story hotel with 61 rooms. The property is 81,413 square feet
and is on a lot of 1.869 acres. The Company believes that this hotel
offers a suitable acquisition opportunity as it is located in a city with
favorable trends, including solid residential growth trends, a burgeoning
business community, Montana State University, and nearby tourist
attractions.
Competition
Several large competitors exist within
the industry, including Strategic Hotels & Resorts (BEE), Blackstone Group
(BX), Host Hotels (HST) and Hersha Hospitality Trust (HT).
While the Company acknowledges the
presence of the competitors noted above, the Company believes that its focus on
mid-tier properties and dedication to customer service will help differentiate
the Company from its competitors.
20
THE
COMPANY
Background
and Current Operations
The Company is a development-stage
company, has no operating history and has experienced losses since its
inception. The Company’s independent auditors have issued a report
questioning the Company’s ability to continue as a going
concern. The Company plans to acquire hotel properties across the
United States and improve the operations and management of such
hotels. The Company’s hotel properties will include full-service,
extended stay and limited service operations. Currently, the Company
plans to target properties in several areas, including downtown centers,
airports, and suburban locations. Each hotel that the Company will
acquire will be strategically located and intended to serve as an ideal
hospitality provider for its selected market. Generally, the Company will
concentrate its efforts in acquiring, operating and managing mid-priced hotels,
however, from time to time the Company may also consider opportunities in
low-price or discounts hotels (or motels) and premium, higher-priced hotels
(e.g. five-star hotels, etc.)
One of the first potential acquisition
opportunities which the Company has preliminarily considered and in which it has
entered into a contract to purchase, is The Microtel Inn & Suites (“Microtel”)
located in Bozeman, Montana. Microtel is a Wyndham
brand. The acquisition opportunity consists of an operational
three-story hotel with 61 rooms. The property is 81,413 square feet
and is on a lot of 1.869 acres. The Company believes that this hotel
offers a suitable acquisition opportunity as it is located in a city with
favorable trends, including solid residential growth trends, a burgeoning
business community, Montana State University, and nearby tourist
attractions.
The Company is continuously looking for
opportunities of properties that are currently under performing due to lack of
appropriate management. Requirements generally include: hotels in close
proximity to businesses, colleges, healthcare facilities, existing recognized
restaurants open for lunch and dinner (preferably within walking distance) or
hotels near restaurant pads already under development. The Company is planning
to invest in potentially high quality assets that can produce top-tier
operations and that already are or have the potential to be converted to one of
several major franchisers such as Marriott Courtyard, Marriott Residence Inn,
Fairfield Inn by Marriott, Hilton Garden Inn, Homewood Suites or Hampton Inn,
Wyndham Brands or Choice Bands.
Agreement
with Microtel
In
January 2011, the Company (through its subsidiary Windgate LLC) entered into a
definitive asset acquisition agreement (“Microtel Agreement”) with JM, Daniel,
LLC, a Montana limited liability company (“Seller”), for the purchase of
Microtel. The assets to be purchased by the Company include real
property, tangible personal property and intangible personal
property. Pursuant to the Microtel Agreement, the Company has delivered to
the Seller an earnest deposit in the amount of $10,000. The remainder
of the purchase price shall be paid upon closing of the transaction, provided
that the closing of the transaction will be subject to the Company obtaining
financing within forty-five (45) days of the effective date of the Microtel
Agreement (the effective date being January 24, 2011). If the Company
cannot obtain financing by such time, the Company may elect to terminate the
Microtel Agreement and receive a refund of its deposit (notice must be timely
provided in order for the Company to receive a refund of the
deposit). The Microtel Agreement is subject to other terms and
conditions, all of which are reasonable and customary for a transaction of this
size and scope. Pursuant to the Microtel Agreement, the Company has
forty-five (45) days following the effective date of the Microtel Agreement
(“Inspection Period”) to inspect the financial, environmental and physical
condition of property.
On
January 28, 2011, the Company and Seller entered into an Addendum to the
Microtel Agreement (“Addendum”). The Addendum provides that the
Inspection Period will commence when the Company actually receives the last of
its needed due diligence materials. Pursuant to the Addendum the
closing of the Microtel Agreement, and the acquisition transaction thereunder,
shall take place on the last of (a) the thirtieth (30th) day
following last day of the Inspection Period or (b) the tenth (10th) day
following the satisfaction, if at all, of the financing contingency (as may be
extended) in the Microtel Agreement.
Discussions
with Potential Partners
The Company will submit applications to
well known hospitality brands, when appropriate, as properties are put under
contract to purchase as applications will not be considered by the brands
without specific properties being under contract.
Agreement
with Tiber Creek Corporation
In September 2010, the Company entered
into a consulting agreement with Tiber Creek Corporation (“Tiber Creek”) whereby
Tiber Creek would provide assistance to the Company in effecting transactions
for the Company to become a public company, including causing the preparation
and filing a registration statement with the Securities and Exchange Commission,
assisting with applicable state blue sky requirements, advising and
assisting on listing its securities on a trading exchange, assisting in
establishing and maintaining relationships with market makers and broker-dealers
and assisting in other transactions, marketing and corporate structure
activities. Tiber Creek will receive a fee of $100,000 plus 250,000 common
shares of the Company; MB, Americus, LLC, an affiliate of Tiber Creek, also
received 250,000 common shares of the Company in connection with and related to
the services provided by Tiber Creek to the Company. The consulting
agreement also provides that the shares issued to Tiber Creek shall be included
in the registration statement (i.e. this registration statement) to be filed by
the Company. The consulting agreement further provides that the
Company will not at any time take or allow any action (whether by reverse
stock split or otherwise) which would have the effect of reducing the absolute
number of shares held by Tiber Creek
Intellectual
Property
The Company’s intellectual property
consists of its service marks and trademarks as well as its trade secrets and
proprietary methods and processes.
Presently, the Company intends to
register the following trademark (and associated logos, graphics and images)
with the United States Patent and Trademark office: Windgate Capital
Partners.
Strategic
Partners
The Company believes that strategic
partnerships will be a major component of the Company’s operating strategy and
path to success. Currently, the Company plans to target properties in
several areas, including downtown centers, airports, and suburban locations and
is interested in hotels that operate with the following brands, or have the
ability to be converted to one of several major franchisers such as Marriott
Courtyard, Marriott Residence Inn, Fairfield Inn by Marriott, Hilton Garden Inn,
Homewood Suites or Hampton Inn, Wyndham Brands or Choice Bands. The
Company would like to form strategic partnerships with some or all of these
major brands.
21
Marketing Plan
and Strategy
The Company has conducted limited
advertising and marketing to date as the primary focus of the Company since
inception has been to concentrate on its potential acquisition
efforts. While the Company initially anticipates a limited budget and
need for marketing activities, it has, however, given attention to constructing
the marketing strategy and plans that it will use once its projects enter the
market. The primary focus of marketing campaigns will be designed to help
the Company find potential acquisition targets and to increase awareness of the
Company’s ability to purchase hotels (thus inviting hotel owners to directly
contact the Company to discuss potential mergers and acquisitions). The
overall marketing plan, consistent with the marketing strategy outlined above,
consists of a multifaceted approach that encompasses a versatile effort to reach
key decision-makers for hospitality-related projects.
Revenues
from Operations
The Company is a development-stage
company incorporated in the State of Delaware in January 2011.
Since its inception, the Company (and
its subsidiary, Windgate LLC, which was formed in May 2010) has focused its
efforts on sourcing and evaluating potential acquisition opportunities and has
devoted little attention or resources to sales and marketing or generating
near-term revenues and profits. Accordingly, the Company has no
revenues to date and has not realized any profits as of yet. In order
to succeed, the Company needs to develop a viable acquisition strategy to
purchase selected hotels.
The Company believes that it has
identified several potential acquisition opportunities and would like to
consummate one of these acquisitions shortly after raising adequate funds
through this offering.
Employees
The Company presently has five
employees, each whom is an executive officer. These employees currently
receive no salaries or other compensation and no salaries have been accrued.
They will not receive any compensation until such time as the Board of
Directors determines that cash flow is sufficient to pay them in light of other
cash needs of the Company. None of these officers are currently employed by the
Company in a full-time capacity. The Company has no other
employees but expects that it will hire additional personnel upon raising
capital through this offering and as the Company expands.
Property
The Company’s offices are located at
105 West Main Street, Suite 2B, P.O. Box 10250, Bozeman, Montana 59719. Its
telephone number is 866-583-8885. A company affiliated with Michael B.
Elliott, the Company’s president, chief executive officer and director, is
allowing the Company to use such office space free-of-charge.
Subsidiaries
Windgate Capital Partners, LLC
(“Windgate LLC”), as discussed above, is a wholly owned subsidiary of the
Company.
Industry
Regulation
The Company is subject to various
federal, state and local laws and regulations pertaining to hospitality, real
estate and businesses in general. There are no special or
non-customary laws and regulations that will apply to the business and/or
operations of the Company.
Reports
to Security Holders
The Company intends to deliver a copy
of its annual report to its security holders, and will voluntarily send a
copy of the annual report, including audited financial statements, to any
registered shareholder who requests the same. The Company will not be
a reporting issuer with the Securities and Exchange Commission until its
registration statement on Form S-1 is declared effective.
The Company has filed a registration
statement on Form S-1, under the Securities Act of 1933, with
the Securities and Exchange Commission with respect to the shares of its
common stock. This prospectus is filed as a part of that registration
statement, but does not contain all of the information contained in the
registration statement and exhibits. Statements made in the
registration statement are summaries of the material terms of the referenced
contracts, agreements or documents of the company. Reference is made to the
Company’s registration statement and each exhibit attached to it for a more
detailed description of matters involving the Company. A potential investor may
inspect the registration statement, exhibits and schedules filed with the
Securities and Exchange Commission at the Commission's principal office in
Washington, D.C. Copies of all or any part of the registration statement
may be obtained from the Public Reference Section of the Securities and
Exchange Commission, 100 F Street N.E., Washington, D.C. 20002. Please call
the Commission at 1-800-SEC-0330 for further information on the operation of the
public reference rooms. The Securities and Exchange Commission also
maintains a web site at http://www.sec.gov that contains reports,
proxy statements and information regarding registrants that file
electronically with the Commission. The Company’s registration
statement and the referenced exhibits can also be found at the web site
address.
22
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
The Company is a development-stage
company and was incorporated in the State of Delaware in January 2011and
recently acquired the interests of Windgate Capital Partners, LLC (“Windgate
LLC”). References below to the Company include the financial statements
and operations and activities of Windgate LLC, which was formed in the State of
Delaware in May 2010. As of September 30, 2010, the Company has not
generated any revenue since inception and has incurred significant operating
losses, as part of the Company's development-stage activities, since
inception of $133,302. The Company has received all of its operating funds
from the sale of its securities. The Company has identified and
evaluated potential acquisition opportunities, and plans to complete
acquisitions soon (subject to raising adequate capital for the Company’s
activities).
Going
Concern
The Company’s auditors have issued a
report questioning the Company’s ability to continue as a going
concern without the influx of additional capital. The Company
believes that the influx of capital from this offering will allow it to hold
adequate working capital and also capitalize on acquisition opportunities
in the hospitality sector.
Alternative
Financial Planning
The Company has no alternative
financial plans. If the Company is not able to successfully raise
monies in this offering, or otherwise obtain or raise funding through a private
placement or other securities offering, the Company’s ability to survive as a
going-concern and implement any part of its business plan or strategy will be
severely jeopardized.
Critical
Accounting Policies
The financial statements of the Company
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements
requires making estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. The estimates are based on historical
experience and on various other assumptions that are believed to
be reasonable under the circumstances, the results of which form the basis
of making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or
conditions.
The Company believes that the following
critical accounting policies listed below, among others, affect its
more significant judgments and estimates used in the preparation of its
financial statements.
Use
of Estimates
The preparation of financial statements
in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Concentration
of Risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of
cash. The Company places its cash with high quality banking institutions. From
time to time, the Company maintains cash balances at certain institutions in
excess of the Federal Deposit Insurance Corporation limit.
Income
Taxes
Under ASC 740, "Income Taxes", deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to temporary differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Valuation allowances are
established when it is more likely than not that some or all of the deferred tax
assets will not be realized.
23
Loss
per Common Shares
Basic loss per common shares excludes
dilution and is computed by dividing net loss by the weighted average number of
common shares outstanding during the period. Diluted earnings per common share
reflect the potential dilution that could occur if securities or other contracts
to issue common stock were exercised or converted into common stock or resulted
in the issuance of common stock that then shared in the earnings of the entity.
As of September 30, 2010 there are no outstanding dilutive
securities.
Fair
Value of Financial Instruments
The Company's financial instruments
include cash. The estimated fair value of these instruments approximates their
carrying amounts due to the short maturity of the instrument.
Recent
Accounting Pronouncements
For an
update regarding the impact of Recent Accounting Pronouncements, please see the
Company’s financial statements and Note 1. Significant Accounting
Policies.
Discussion
of Period Ended September 30, 2010
The Company incurred a net loss of
$(133,302) for the period from May 13, 2010 (inception) to September 30,
2010. The Company received no revenue in such period.
Liquidity. The Company received
$158,412 as proceeds from additional paid-in capital in the period ended
September 30, 2010. The Company has no continuous methods of
generating cash.
Capital Resources. The Company did not
incur any capital expenditures in the period ended September 30,
2010.
Results of Operations. The Company
completed no sales and received no revenues in the period ended September 30,
2010. The Company does not anticipate that it will generate revenue
sufficient to cover its operating expenses until the close of this offering and
the development of its business plan.
24
MANAGEMENT
The following table sets forth
information regarding the members of the Company’s board of directors
and its executive officers:
Name
|
Age
|
Position
|
Year
Commenced
|
|||
Michael
B. Elliott
|
37
|
Director,
President and CEO
|
2011
|
|||
Norman
W. Nash
|
54
|
Director
|
2011
|
|||
Lenne
Nicklaus-Ball
|
59
|
Director
|
2011
|
|||
Mark
A. Jones
|
46
|
Chief
Operating Officer
|
2011
|
|||
Ryan
W. Springer
|
39
|
Executive
VP, Director of Operations and Management
|
2011
|
|||
Timothy
P. Reid
|
45
|
Executive
VP, Director of Acquisitions
|
2011
|
|||
Cameron
J. Holt
|
|
27
|
|
Executive
VP, Director of Development
|
|
2011
|
Michael
B. Elliott, Director, President and CEO
Michael Elliott has served as a
member of the board of directors and President and CEO of the Company since
inception. Mr. Elliott is also is the founding principal of Catalyst
Real Estate Solutions, LLC, and Grubb & Ellis Catalyst, an internationally
recognized real estate brokerage, consulting and property services firm. He
oversees all operations of development, investments, real estate brokerage,
management and consulting. Previously, Mr. Elliott was an Adjunct
Professor in the University of Denver’s Real Estate and Construction Management
program where he taught real estate financial analysis. Prior to
that, Mr. Elliott was President of PureWest, Inc. and founding principal of
Grubb & Ellis Montana Commercial, LLC, both internationally recognized real
estate brokerages and consulting and property services firms. Before
that, he was with JWT Capital, LLC, where he was involved in the acquisitions,
development and management of a vast array of commercial and residential
projects, including in several office, retail, restaurant and hospitality
developments throughout Montana. Previously, Mr. Elliott was a
co-founder of Requity Real Estate Group, LLC, where he was involved in
investing, advising, developing and consulting on retail, industrial, office and
multi-family real estate projects across the country with a particular focus in
Denver, Phoenix and Southern California. Prior to that, Mr. Elliott was a
principal of Western Asset Development, LLC, where he was involved with third
party investments and development and created a private placement realty
fund. He also assisted in the start-up of non-traded REIT’s, 1031
UPREIT programs, 1031 syndications and customized investment
programs. Before that, Mr. Elliott was an acquisitions officer for
Triple Net Properties, LLC, a national real estate investment 1031 company and a
private REIT, where he assisted the company in acquiring properties nationally
and managed all aspects of due diligence and preparation of investment
packages. While at Triple Net, he also served as the Asset Manager
for over $225,000,000 of office, retail and industrial
properties. Prior to that, Mr. Elliott was a Senior Financial Analyst
for Kennedy Associates Real Estate Counsel, Inc., where he coordinated over
$1,000,000,000 of industrial, retail and office real estate budgeting in
addition to property valuation, property performance analysis, appraisal review
and real estate portfolio analysis. Previously, Mr. Elliott helped
introduce a software application, √ValueCheck√™, for the real estate
appraisal industry when he was a development manager for Valuation Research
Corporation. Mr. Elliott received both his Master’s degree in Real
Estate and Construction Management and his Bachelor of Science degree in
Business Administration from the University of Denver, in 2001 and 1995
respectively. Mr. Elliott has served on various associations and
committees including as Co-Chair of the Advisory Board of University of Denver’s
Burns School of Real Estate and Construction Management, the NAIOP Membership
Committee, and the Denver Metro Commercial Association of
Realtors. He is a licensed real estate appraiser in the State of
Colorado and a licensed real estate broker in the States of Colorado, South
Dakota and Montana.
Norman
W. Nash, Director
Norman W. Nash has served as a member
of the board of directors of the Company since inception. Mr. Nash has
practiced law for over twenty years primarily in real estate acquisition,
disposition and development, business transactions, corporate matters, banking,
and contracts. He designed and implemented new corporate legal departments
and served as general counsel for numerous privately held companies. Those
included a bank with over $1.1 billion in assets, a real estate development and
construction company with over $100 million in annual sales, a startup tech
company and Colorado’s largest real estate appraisal company. Mr.
Nash earned a law degree from the University of Denver in 1989 graduating in the
top 15% of his class and serving as an editor on the law
review. He is a member of the American Bar Association and its
real property and business sections, the Florida Bar Association and its real
estate and business sections and the Colorado Bar Association and its real
estate and business sections. He served on the real estate committee of
the Colorado Bar Association.
Lenne
Nicklaus-Ball, Director
Lenne Nicklaus-Ball has served as a
member of the board of directors of the Company since inception. Ms.
Nicklaus-Ball attended Carnegie Tech in Pittsburgh, and received her
Bachelor of Fine Arts from Bowling Green State University in 1973. Ms.
Nicklaus-Ball is currently the Vice President of Nicklaus of Florida, Inc.
and has been involved in the operations and sales of the Sirata Beach Resort for
over thirty (30) years. She has a current Real Estate License and
Condo Association Managers License in Florida. She has previously held
board positions with the St. Petersburg Junior College Corporate Advisory
Board,, St. Petersburg Chamber of Commerce, Tampa Bay Beaches Chamber of
Commerce in addition to numerous other boards.
25
Mark
A. Jones, Chief Operating Officer
Mark A. Jones has served as Chief
Operating Officer of the Company since inception. Mr. Jones also
manages Lone Peak Hospitality (LPH), which specializes in the operations,
development, and capital transactions of hospitality real estate. LPH has
experience in operating full-focus service hotels, extended-stay hotels, and
limited-service hotels in most major franchises. Prior to LPH, Mr.
Jones held positions as a General Manager of Hilton and Marriott
Hotels. During his tenure as a General Manager, Mr. Jones was awarded
numerous distinctions, including as General Manager of the Year, Opening Hotel
of the Year, a variety of community service awards and many accolades for guest
satisfaction. He was also previously recognized by Marriott for
his outstanding work with the disposition of a portfolio of 50
hotels. Formerly, Mr. Jones served in the United States Air
Force. He also attended Weber State University for his university
education.
Ryan
W. Springer, Executive VP, Director of Operations and Management
Ryan W. Springer has served as
Executive VP, Director of Operations and Management of the Company since
inception. Mr. Springer also is a co-founding principal of Catalyst
Real Estate Solutions, LLC, and Grubb & Ellis Catalyst, an internationally
recognized real estate brokerage, consulting and property services
firm. In this capacity, Mr. Springer specializes in real estate
brokerage, development & investment covering a wide variety of the
commercial real estate industry (including office, retail, industrial,
hospitality and multi-family). To adapt to the changing environment of the
real estate sector, Mr. Springer has been involved in commercial transactions
involving bankruptcy, short-sale and foreclosure properties. He also has
experience in receivership and asset and property management. Mr.
Springer served as a recruitment officer and as an infantry officer for the
United States Marine Corps. Mr. Springer received a Bachelor of Arts
degree in Political Science from Montana State University. He is a
licensed real estate broker in the State of Montana.
Timothy
P. Reid, Executive VP, Director of Acquisitions
Timothy P. Reid has served as Executive
VP, Director of Acquisitions for the Company since inception. Mr.
Reid is also the founding member and owner of Grubb & Ellis Idaho Commercial
Group a full service commercial real estate brokerage located in Boise, Idaho
where he is responsible for all oversight and operations of the
firm. His responsibilities include oversight of the firm, sales,
leasing and consulting, and the facilitation of an asset management group that
oversees one million plus square feet of real estate projects located throughout
the United States. Previously, Mr. Reid was a nuclear, biological and
chemical specialist with the United States Marine Corps. Mr. Reid
holds a Bachelor of Science degree in International Environmental Studies from
Rutgers University in 1994.
Cameron
J. Holt, Executive VP, Director of Development
Cameron J. Holt has served as Executive
VP, Director of Development for the Company since inception. Mr. Holt
is also the co-founding principal of Catalyst Real Estate Solutions, LLC, and
Grubb & Ellis Catalyst, an internationally recognized real estate brokerage,
consulting and property services firm. Mr. Holt specializes in real
estate brokerage, development & investment covering a wide variety of the
commercial real estate industry including hospitality, office, retail,
industrial, and multi-family. Mr. Springer has been involved in
commercial transactions involving bankruptcy, short-sale and foreclosure
properties. He also has experience in receivership and asset and property
management. Mr. Holt is a graduate of Montana State University, with
a degree in business finance with an emphasis in economics in 2007.
Director
Independence
Pursuant to Rule 4200 of The NASDAQ
Stock Market one of the definitions of an independent director is a person
other than an executive officer or employee of a company. The Company's
board of directors has reviewed the materiality of any relationship that each of
the directors has with the Company, either directly or indirectly. Based on
this review, the board has determined that Lenne Nicklaus-Ball is
an independent director.
Committees
and Terms
The Board of Directors (the “Board”)
has not established any committees.
The Company will notify its
stockholders for an annual shareholder meeting and that they may present
proposals for inclusion in the Company’s proxy statement to be mailed in
connection with any such annual meeting; such proposals must be received by the
Company at least 90 days prior to the meeting. No other specific policy
has been adopted in regard to the inclusion of shareholder nominations to
the Board of Directors.
26
Legal
Proceedings
There are currently no pending,
threatened or actual legal proceedings in which the Company is a
party.
EXECUTIVE
COMPENSATION
Remuneration of Officers: Summary
Compensation Table
Description of Compensation
Table
Annual
|
Annual
|
Aggregate
Accrued
|
Comp-
|
All
Other
|
Annual
Comp-
|
|||||||||||||
Payments
|
Payments`
|
Salary Since
|
Stock and
|
-ensation
|
Comp-
|
ensation
|
||||||||||||
Name/Position
|
Year
|
Salary
|
Made
|
Inception
|
Bonus
|
Options
|
Plans
|
ensation
|
Total
|
|||||||||
|
2010
|
|
None
|
|
|
|
|
|
|
|
No salaries or accrued compensation has
been paid. There is no accrued compensation that is due to any member
of the Company’s management. No executive officer has
received any cash compensation in the Company's fiscal year which ended as
of December 31, 2010. At the sole discretion of the Board of the
Company, however, certain management personnel may receive such compensation as
is discussed below in “Anticipated Officer and Director
Remuneration”.
There are no current plans to pay or
distribute cash or non-cash bonus compensation for fiscal year 2010 to the persons named
above. However, the
Board of Directors may allocate salaries and benefits to the officers for fiscal
year 2010 and thereafter in its sole discretion. No such person is
subject to a compensation plan or arrangement that results from his or her
resignation, retirement, or any other termination of employment with the company
or from a change in control of the Company or a change in his or her
responsibilities following a change in control. The members of the board
of directors may, if the board of directors so decides, receive a fixed fee and
reimbursement of expenses, for attendance at each regular or special meeting of
the Board of Directors, although no such program has been adopted to date. The
Company currently has no retirement, pension, or profit-sharing plan covering
its officers and directors; however, the Company may implement certain benefits
in the sole discretion of the Board of Directors after sufficient funds are
raised in this offering (see “Anticipated Officer and Director Remuneration”
below.)
Employment
Agreements
The Company has not entered into any
employment agreements with any officers and key personnel. The Company has
no oral agreements or understandings with any officer or employee regarding base
salary or other compensation.
Anticipated
Officer and Director Remuneration
The Company has not paid any
compensation to any officer or director. Although no binding or formal
employment agreement or contract exists, the Company intends to pay
annual salaries to all its officers and will pay an annual stipend to its
directors when the Board determines, in its sole discretion, that cash flow is
sufficient to make such payments in light of other cash needs of the
Company. At such time, the Company anticipates cash and non-cash
compensation to officers and directors in the following amounts (other benefits
or perquisites would be in addition to compensation noted below):
|
·
|
Michael
B. Elliott to receive a base salary of $200,000, 650,000 shares of common
stock and 350,000 options to purchase common stock. Quarterly
performance bonus of 1.5% of net profits of the
Company.
|
|
·
|
Mark
A. Jones to receive a base salary of $75,000, 75,000 shares of common
stock and 50,000 options to purchase common stock. A
performance bonus will also be available, but is still subject to
determination by the board of directors of the
Company.
|
|
·
|
Ryan
W. Springer to receive a base salary of $75,000, , 75,000 shares of common
stock and 50,000 options to purchase common stock. A
performance bonus will also be available, but is still subject to
determination by the board of directors of the
Company.
|
|
·
|
Timothy
P. Reid to receive a base salary of $75,000, , 75,000 shares of common
stock and 50,000 options to purchase common stock. A
performance bonus equal to 1% of the value of purchased properties where
Mr. Reid is directly involved in the
transaction.
|
27
|
·
|
Cameron
J. Holt to receive a base salary of $75,000, , 75,000 shares of common
stock and 50,000 options to purchase common stock. A
performance bonus equal to 1% of the value of properties delivered to the
Company
|
The non-cash compensation shares
referenced above (and the shares issuable upon exercise of options) have been
reserved by the Company as part of its Employee Share
Pool. Accordingly, 1,500,000 shares have been reserved for potential
future issuance to officers and employees of the Company as part of the Employee
Share Pool, subject to fulfillment by such officers and directors of vesting and
performance objectives and criteria. No portion of such 1,500,000
shares is currently issued or outstanding.
Although not presently offered, the
Company anticipates that its officers and directors will be provided with a
group health, vision and dental insurance program (at subsidizes rates or at the
sole expense of the Company, as may be determined on a case-by-case basis by the
Company in its sole discretion). In addition, the Company plans to
offer 401(k) matching funds as a retirement benefit, paid vacation days and paid
holidays.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth
information as of the date of this prospectus regarding the beneficial
ownership of the Company’s common stock by each of its executive officers
and directors, individually and as a group and by each person who
beneficially owns in excess of five percent of the common stock after giving
effect to any exercise of warrants or options held by that person.
Percent
of
|
Percent
of
|
||||||||||||
Number
of Shares of
|
Class
Before
|
Class
After
|
|||||||||||
Name
|
Position
|
Common
Stock
|
Offering
(1)
|
Offering
(2)
|
|||||||||
Norman
W. Nash (3)
|
Director
|
1,650,000 | 30.0 | % | 16.5 | % | |||||||
Tim
Diego (4)
|
5%
shareholder
|
3,350,000 | 60.9 | % | 33.5 | % | |||||||
Total
owned by officers, directors and 5% shareholders
|
1,500,000 | 90.9 | % | 50.0 | % |
* Less
than 1%
(1) Based
upon 5,500,000 shares outstanding as of the date of this
offering.
(2)
Assumes sale of all 5,500,000 Shares offered.
(3) As a
beneficial owner of 33.0% of the ownership interests in Windgate Global, LLC,
which holds title to such shares, Mr. Nash is deemed to beneficially hold 33.0%
of Windgate Global, LLC’s shares for the purposes hereof.
(4) As a
beneficial owner of 67.0% of the ownership interests in Windgate Global, LLC,
which holds title to such shares, Mr. Diego is deemed to beneficially hold 67.0%
of Windgate Global, LLC’s shares for the purposes hereof.
Additional
Shareholders
The other shareholders of the Company
are Tiber Creek Corporation and MB Americus, LLC, each of which owns 250,000
shares of common stock.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
A partner in the law firm which acts as
counsel to the Company is the sole owner and director of Tiber
Creek Corporation, which owns 250,000 shares of the Company's common
stock.
SELLING
SHAREHOLDERS
The Company is registering for offer
and sale by three (3) holders thereof 1,500,000 shares of common
stock held by such shareholders. The Company will not receive any
proceeds from the sale of the Selling Shareholder Shares. The
selling shareholders have no agreement with any underwriters with respect
to the sale of the Selling Shareholder Shares. The selling
shareholders will offer their shares for sale at an offering price of $6.00 per
share until such time as the Company's common stock is listed on a national
securities exchange after which time such selling shareholders may sell
their shares at prevailing market or privately negotiated prices.
28
The selling shareholders may from time
to time offer the Selling Shareholder Shares through underwriters, dealers
or agents, which may receive compensation in the form of underwriting
discounts, concessions or commissions from them and/or the purchasers of the
Selling Shareholder Shares for whom they may act as agents. Any agents,
dealers or underwriters that participate in the distribution of the Selling
Shareholder Shares may be deemed to be "underwriters" under the Securities Act
and any discounts, commissions or concessions received by any such
underwriters, dealers or agents might be deemed to be underwriting
discounts and commissions under the Securities Act.
The following table sets forth
ownership of shares held by each person who is a selling
shareholder.
Name and Address
|
Shares
Owned
|
Before
Offering (1)
|
Offered
Herein
|
Shares
Owned
|
After
Offering (2)
|
|||||||||||||||
Number
|
Percentage
|
Number
|
Number
|
Percentage
|
||||||||||||||||
Windgate
Global, LLC
|
5,000,000 | 90.9 | % | 1,000,000 | 4,000,000 | 50.40 | % | |||||||||||||
204
37th Avenue, North
|
||||||||||||||||||||
Mail
Stop 341
|
||||||||||||||||||||
St.
Petersburg, FL 33704
|
||||||||||||||||||||
Tiber
Creek Corporation
|
250,000 | 4.5 | % | 250,000 | 0 | 0.0 | % | |||||||||||||
9454
Wilshire Blvd.
|
||||||||||||||||||||
6th
Floor
|
||||||||||||||||||||
Beverly
Hills, CA 90210
|
||||||||||||||||||||
MB
Americus, LLC
|
250,000 | 4.5 | % | 250,000 | 0 | 0.0 | % | |||||||||||||
9454
Wilshire Blvd.
|
||||||||||||||||||||
6th
Floor
|
||||||||||||||||||||
Beverly
Hills, CA 90210
|
(1) Based
upon 5,500,000 shares outstanding as of the date of this offering.
(2)
Assumes sale of all 5,500,000 Shares offered.
SHARES
ELIGIBLE FOR FUTURE SALE
As of the date of this prospectus,
there are 5,500,000 shares of common stock outstanding, of which 5,000,000
shares are owned by Windgate Global, LLC, an owner of greater than five percent
(5.0%) of the Company’s total outstanding shares of common
stock. No shares of common stock are currently owned by
officers and directors of the Company. However, 1,500,000 shares of
common stock have been reserved (though such shares remain unissued and are not
currently outstanding) for employees and officers for the Employee Share Pool.
There will be 8,000,000 shares of common stock issued and outstanding if
the maximum number of Shares offered herein is sold. The shares of
common stock held by current shareholders are considered “restricted securities”
subject to the limitations of Rule 144 under the Securities Act. In
general, securities may be sold pursuant to Rule 144 after being fully-paid and
held for more than 12 months. While affiliates of the Company are
subject to certain limits in the amount of restricted securities they can
sell under Rule 144, there are no such limitations on sales by persons who are
not affiliates of the Company. In the event non-affiliated holders
elect to sell such shares in the public market, there is likely to be a negative
effect on the market price of the Company's securities.
LEGAL
MATTERS
Cassidy & Associates, Newport
Beach, California, has given its opinion as attorneys-at-law regarding the
validity of the issuance of the Shares offered by the Company. A member of
the law firm of Cassidy & Associates is the sole officer and director
of Tiber Creek Corporation and may be considered the beneficial owner of the
250,000 shares of common stock of the Company owned by Tiber Creek
Corporation.
EXPERTS
Anton
& Chia, LLP, an independent registered public accounting firm, has audited
Windgate Capital Partners, LLC’s (a development-stage company) balance
sheets as of September 30, 2010, and the related statements of operations,
stockholders' equity, and cash flows for the period from May 13, 2010
(Inception) through September 30, 2010. The Company has included
its financial statements in the prospectus and elsewhere in the registration
statement in reliance on the report of Anton & Chia, LLP, given their
authority as experts in accounting and auditing.
29
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION
FOR
SECURITIES ACT LIABILITIES
The Company’s certificate of
incorporation includes an indemnification provision that provides that the
Company shall indemnify directors against monetary damages to the Company
or any of its shareholders by reason of a breach of the director’s
fiduciary except (i) for any breach of the director’s duty of loyalty to the
Company or its shareholders or (ii) for acts or omissions not in good faith
or which involve intentional misconduct of (iii) for unlawful payment of
dividend or unlawful stock purchase or redemption or (iv) for any
transaction from which the director derived an improper
personal benefit.
The certificate of incorporation does
not specifically indemnify the officers or directors or controlling persons
against liability under the Securities Act.
The Securities and Exchange
Commission’s position on indemnification of officers, directors and control
persons under the Securities Act by the Company is as follows:
INSOFAR
AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933
MAY BE PERMITTED TO DIRECTORS, OFFICERS AND CONTROLLING PERSONS OF THE SMALL
BUSINESS ISSUER PURSUANT TO THE RULES OF THE COMMISSION, OR OTHERWISE, THE
SMALL BUSINESS ISSUER 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.
30
FINANCIAL
STATEMENTS
Report
of Independent Registered Public Accounting Firm
|
F-1
|
Balance
Sheet
|
F-2
|
Statement
of Operations
|
F-3
|
Statement
of Changes in Stockholders’ Equity
|
F-4
|
Statement
of Cash Flows
|
F-5
|
Not
Notes to Financial Statements
|
F6-F9
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors
Windgate
Capital Partners LLC
We have
audited the accompanying balance sheet of Windgate Capital Partners LLC (the
"Company") as of September 30, 2010, and the related statements of operations,
stockholders’ equity and cash flows for the period from May 13, 2010 (Inception)
through September 30, 2010. These financial statements are the responsibility of
the Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We
conducted our audits in accordance with 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 was not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit 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 Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our 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 the Company as of September 30,
2010 and the results of its operations and its cash flows for the period from
May 13, 2010 (Inception) through September 30, 2010, 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. The Company has a loss from operations and an
accumulated deficit of $133,302 from inception to September 30,
2010. As discussed in Note 1 to the financial statements, the Company
has no revenues and income since inception and significant amounts of additional
capital will be necessary to advance operations to the point at which the
Company is profitable. These conditions, among others, raise
substantial doubt about the Company’s ability to continue as a going concern.
Management's plans concerning these 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/
Anton & Chia LLP
Newport
Beach, CA
December
12, 2010
F-1
WINDGATE
CAPITAL PARTNERS LLC
(A
Development Stage Company)
BALANCE
SHEET
September
30,
|
||||
2010
|
||||
ASSETS
|
||||
Current
Assets
|
||||
Cash
|
$ | 31,610 | ||
TOTAL
ASSETS
|
$ | 31,610 | ||
LIABILITIES
|
||||
Current
Liabilities
|
||||
Due
to related party
|
||||
Other
payables
|
$ | 6,500 | ||
Total
Liabilities
|
$ | 6,500 | ||
STOCKHOLDERS'
EQUITY
|
||||
Common
Stock, $0.0001 Par Value, 10,000 Shares Authorized; 0 Shares Issued and
Outstanding
|
$ | - | ||
Additional
Paid-in Capital
|
158,412 | |||
Retained
Earnings
|
(133,302 | ) | ||
Total
Stockholders' Equity
|
$ | 25,110 | ||
TOTAL
STOCKHOLDERS' EQUITY
|
$ | 31,610 |
See
the accompanying notes to the financial statements
F-2
WINDGATE
CAPITAL PARTNERS LLC
(A
Development Stage Company)
STATEMENT
OF OPERATIONS
For the period from
|
||||
May
13, 2010
|
||||
(inception)
to
|
||||
September
30,
|
||||
2010
|
||||
Operating
Expenses
|
$ | 133,302 | ||
Net
Income
|
$ | (133,302 | ) | |
Basic
and Diluted Earnings per Share
|
$ | - | ||
Weighted
Average Shares
|
- |
See
the accompanying notes to the financial statements
F-3
WINDGATE
CAPITAL PARTNERS LLC
(A
Development Stage Company)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
Additional
|
Retained
|
Total
|
||||||||||||||||||
Common Stock
|
Paid-In
|
Earnings
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
(Deficit)
|
Equity
|
||||||||||||||||
Balance,
May 13, 2010
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
Additional
Paid-In Capital
|
- | - | 158,412 | - | 158,412 | |||||||||||||||
Net
Income
|
- | - | - | (133,302 | ) | (133,302 | ) | |||||||||||||
Balance,
September 30, 2010
|
- | $ | - | $ | 158,412 | $ | (133,302 | ) | $ | 25,110 |
See
the accompanying notes to the financial statements
F-4
WINDGATE
CAPITAL PARTNERS LLC
(A
Development Stage Company)
STATEMENT
OF CASH FLOWS
For
the period from
|
||||
May
13, 2010
|
||||
(inception)
|
||||
September
30,
|
||||
2010
|
||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||
Net
Income
|
$ | (133,302 | ) | |
Changes
in Operating Assets and Liabilities
|
||||
Trade
Accounts Payable
|
6,500 | |||
Net
Cash Provided by Operating Activities
|
(126,802 | ) | ||
CASH
FLOW FROM FINANCING ACTIVITIES
|
||||
Proceeds
from additional paid-in capital
|
$ | 158,412 | ||
Net
Cash Flows from Financing Activities
|
158,412 | |||
Net
Increase in Cash
|
31,610 | |||
Cash
at Beginning of Period
|
- | |||
Cash
at End of Period
|
$ | 31,610 |
See
the accompanying notes to the financial statements
F-5
Windgate
Capital Partners LLC
A
Development Stage Company
Notes
to the Financial Statements
For
the Period from May 13, 2010 (Inception) to September 30, 2010
NOTE
1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT POLICIES
NATURE
OF OPERATIONS
Windgate
Capital Partners LLC ("the Company") was incorporated on May13, 2010 under the
laws of the State of Delaware to engage in any lawful corporate undertaking,
including, but not limited to, selected mergers and acquisitions. The Company
has been in the developmental stage since inception and its operations to date
have been limited to issuing shares to its original shareholders and filing this
registration statement. The Company will attempt to locate and negotiate with a
business entity for the combination of that target company with Windgate Capital
Partners LLC. The combination will normally take the form of a merger,
stock-for-stock exchange or stock-for-assets exchange. In most instances the
target company will wish to structure the business combination to be within the
definition of a tax-free reorganization under Section 351 or Section 368 of the
Internal Revenue Code of 1986, as amended. No assurances can be given that the
Company will be successful in locating or negotiating with any target company.
The Company has been formed to provide a method for a foreign or domestic
private company to become a reporting company with a class of securities
registered under the Securities Exchange Act of 1934.
BASIS
OF PRESENTATION
The
summary of significant accounting policies presented below is designed to assist
in understanding the Company's financial statements. Such financial statements
and accompanying notes are the representations of the Company's management, who
are responsible for their integrity and objectivity. These accounting policies
conform to accounting principles generally accepted in the United States of
America ("GAAP") in all material respects, and have been consistently applied in
preparing the accompanying financial statements.
USE
OF ESTIMATES
The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
F-6
Windgate
Capital Partners LLC
A
Development Stage Company
Notes
to the Financial Statements
For
the Period from May 13, 2010 (Inception) to September 30, 2010
NOTE
1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT POLICIES
(CONTINUED)
CONCENTRATION
OF RISK
Financial
instruments that potentially subject the Company to concentrations of credit
risk consist principally of cash. The Company places its cash with high quality
banking institutions. From time to time, the Company maintains cash balances at
certain institutions in excess of the Federal Deposit Insurance Corporation
limit.
INCOME
TAXES
Under ASC
740, "Income Taxes", deferred tax assets and liabilities are recognized for the
future tax consequences attributable to temporary differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Valuation allowances are established when it is more likely than not that some
or all of the deferred tax assets will not be realized.
LOSS
PER COMMON SHARE
Basic
loss per common shares excludes dilution and is computed by dividing net loss by
the weighted average number of common shares outstanding during the period. As
of September 30, 2010 there are no issued and outstanding common
shares. Diluted earnings per common share reflect the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity. As of September 30,
2010 there are no outstanding dilutive securities.
FAIR
VALUE OF FINANCIAL INSTRUMENTS
The
Company's financial instruments include cash. The estimated fair value of these
instruments approximates their carrying amounts due to the short maturity of the
instrument.
F-7
Windgate
Capital Partners LLC
A
Development Stage Company
Notes
to the Financial Statements
For
the Period from May 13, 2010 (Inception) to September 30, 2010
Note
2 - GOING CONCERN
These
financial statements have been prepared on a going concern basis, which implies
Windgate Capital Partners LLC., will continue to meet its obligations and
continue its operations for the next fiscal year. As of September 30, 2010, the
Company has not generated revenues and has no income or cash flows from
operations since inception. The continuation of the Company as a going concern
is dependent upon financial support from its stockholders, the ability of the
Company to obtain necessary equity financing to continue operations,
successfully locating and negotiation with a business entity for the combination
of that target company with Windgate Capital Partners LLC. There is no assurance
that the Company will ever be profitable.
NOTE
3 - RECENT ACCOUNTING PRONOUNCEMENTS
In
January 2010, FASB issued ASU No. 2010-01- Accounting for Distributions to
Shareholders with Components of Stock and Cash. The amendments in this
update clarify that the stock portion of a distribution to shareholders that
allows them to elect to receive cash or stock with a potential limitation on the
total amount of cash that all shareholders can elect to receive in the aggregate
is considered a share issuance that is reflected in EPS prospectively and is not
a stock dividend for purposes of applying Topics 505 and 260 (Equity and
Earnings Per Share). The amendments in this update are effective for
interim and annual periods ending on or after December 15, 2009, and should be
applied on a retrospective basis. The Company does not expect the adoption of
this ASU to have a material impact on its financial statements.
In
January 2010, FASB issued ASU No. 2010-06 – Improving Disclosures about Fair
Value Measurements. This update provides amendments to Subtopic 820-10
that requires new disclosure as follows: 1) Transfers in and out of Levels
1 and 2. A reporting entity should disclose separately the amounts of
significant transfers in and out of Level 1 and Level 2 fair value measurements
and describe the reasons for the transfers. 2) Activity in
Level 3 fair value measurements. In the reconciliation for fair value
measurements using significant unobservable inputs (Level 3), a reporting entity
should present separately information about purchases, sales, issuances, and
settlements (that is, on a gross basis rather than as one net number). This
update provides amendments to Subtopic 820-10 that clarifies existing
disclosures as follows: 1) Level of disaggregation. A reporting entity
should provide fair value measurement disclosures for each class of assets and
liabilities. A class is often a subset of assets or liabilities within a line
item in the statement of financial position. A reporting entity needs to use
judgment in determining the appropriate classes of assets and liabilities.
2) Disclosures about inputs and valuation techniques. A reporting entity
should provide disclosures about the valuation techniques and inputs used to
measure fair value for both recurring and nonrecurring fair value measurements.
Those disclosures are required for fair value measurements that fall in either
Level 2 or Level 3.
F-8
Windgate
Capital Partners LLC
A
Development Stage Company
Notes
to the Financial Statements
For
the Period from May 13, 2010 (Inception) to September 30, 2010
NOTE
3 - RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
The new
disclosures and clarifications of existing disclosures are 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. The Company does not expect
the adoption of this ASU to have a material impact on its financial
statements.
Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the American Institute of Certified Public Accountants, and
the United States Securities and Exchange Commission did not or are not believed
by management to have a material impact on the Company’s present or future
financial statements.
NOTE
4 – COMMON STOCK
The
Company has 10,000 shares authorized and 0 shares issued and
outstanding. The Company received additional paid-in capital from
Windgate Global LLC in the amount of $150,000, as well as expenses paid in the
amount of approximately $33,800, for the period from May 13, 2010 (inception) to
September 30, 2010. The Company repaid approximately $19,000 to
Windgate Global LLC for the expenses paid during the period ending September 30,
2010.
NOTE
4 - RELATED PARTY TRANSACTIONS
Windgate
Global LLC paid the start-up costs on behalf of the Company in the amount of
approximately $33,800 for the period from May 13, 2010 (inception) to September
30, 2010. The Company repaid Windgate Global LLC approximately
$19,000 during the period from May 13, 2010 (inception) to September 30,
2010.
NOTE
5 – SUBSEQUENT EVENTS
In
preparing these financial statements, the Company has evaluated events and
transactions for potential recognition or disclosure through December 12, 2010,
the date the financial statements were available to be
issued.
In
November, 2010 the Company distributed $10,000 to an escrow account for the
intent to purchase a hotel.
F-9
PART
II
Item
13. Other expenses of Issuance and Distribution
The following table sets forth the
Company’s expenses in connection with this registration statement. All of
the listed expenses
are estimates, other than the filing fees payable to the Securities and Exchange
Commission.
Registration
Fees
|
$
|
State
filing fees
|
$
|
Edgarizing
fees
|
$
|
Transfer
agent fees
|
$
|
Accounting
fee
|
$4,000
|
Legal
fees
|
$
|
Printing
|
$
|
Item
14. Indemnification of Directors and Officers
The Company's certificate of
incorporation, by-laws and other contracts provide for indemnification of its
officers, directors, agents, fiduciaries and employees. These
provisions allow the Company to pay for the expenses of these persons in
connection with legal proceedings brought because of the person's position with
the Company, if the person is not ultimately adjudged liable to the Company for
misconduct in the action. Generally, no indemnification may be made where
the person has been determined to have intentionally, fraudulently or knowingly
violated the law.
The Company does not believe that such
indemnification affects the capacity of such person acting as
officer, director or control person of the Company.
Item
15. Recent Sales of Unregistered Securities
Since inception, the Company has issued
5,500,000 shares of common stock. Such shares were issued at a price
less than the price of the Shares offered by the Company pursuant to this
registration:
In January 2011, shortly after its
inception, the Company issued an aggregate of 5,000,000 shares of common stock
to Windgate Global, LLC, a Delaware limited liability company, in connection
with the acquisition of Windgate Capital Partners, LLC, a Delaware limited
liability company, from Windgate Global, LLC. Such shares of the Company
were issued to pursuant to an exemption from registration under Section 4(2) of
the Securities Act of 1933, as amended, as a transaction by an issuer not
involving any public offering.
The Company has also issued the
following securities since its inception. Such securities were
also issued pursuant to an exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended, as a transaction by an issuer not
involving any public offering, as follows:
In January 2011, the Company issued
250,000 shares of its common stock to each of Tiber Creek Corporation and MB
Americus, LLC. No monetary consideration was received by the Company
in payment for such shares (a total of 500,000 shares).
Item
16. Exhibits and Financial Statement Schedules.
EXHIBITS
2.1
|
Purchase
and Sale Agreement
|
2.2 |
Purchase
and Sale Agreement
|
2.3 |
Addendum
to Purchase and Sale Agreement
|
3.1
|
Certificate
of Incorporation,
|
3.2
|
By-laws
|
4.1
|
Form
of stock certificate for shares of common stock
|
5.0**
|
Opinion
of Counsel on legality of securities being registered
|
10.4**
|
Form
of subscription agreement for sale of the shares
|
23.1
|
Consent
of Accountants
|
23.2**
|
Consent
of Attorney (as part of Exhibit
5.0)
|
____________________
** To be
filed
31
Item
17. Undertakings
Pursuant
to Rule 415 under the Securities Act of 1933 (as amended and updated from time
to time)
The
undersigned registrant hereby undertakes:
(1)
|
To
file, during any period in which it offers or sales securities, 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 which, individually or together,
represent a fundamental change in the information 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) any deviation from the low
or high end of the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the “Calculation
of Registration Fee” table in the effective registration statement;
and
(iii) To
include any additional 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 the
securities at that time to be the initial bona fide offering
thereof.
(3). To remove from registration by
means of a post-effective amendment any of the securities that remainunsold at
the termination of the offering.
(4). That, for the purpose of
determining liability under the Securities Act of 1933 to any purchaser in the
initial distribution of securities:
Each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to this offering, other
than registration statements relying on Rule 403B 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.
(5). That, for the purpose of
determining liability under the Securities Act of 1933 to any purchaser in the
initial distribution of securities:
The undersigned registrant undertakes
that in a primary offering of securities of the undersigned
registrantpursuant to this registration statement, regardless of the
underwriting method used to sell the securities tothe 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 this offering required to
be filed pursuant to Rule 424;
ii. Any free writing prospectus
relating to this 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
informationabout 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.
(6) Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to
directors, officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 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.
32
SIGNATURES
In accordance with the requirements of
the Securities Act, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements of filing on Form S-1 and
authorized this registration statement to be signed on its behalf by the
undersigned, in the City of Bozeman, State of Montana on February 7,
2011.
/s/ Michael
B. Elliott
|
|||
Michael
B. Elliott
|
|||
Title:
Chief Executive Officer
|
|||
(Principal
executive officer)
|
|||
/s/ Michael B. Elliott
|
|||
Michael
B. Elliott
|
|||
Title:
Chief Executive Officer
|
|||
(Principal
finance and accounting officer)
|
Pursuant
to the requirements of the Securities Act, as amended, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature
|
Capacity
|
Date
|
|
/s/ Michael
B. Elliott
|
Director
|
February
7, 2011
|
|
Michael
B. Elliott
|
|||
/s/ Norman W.
Nash
|
Director
|
February
7, 2011
|
|
Norman
W. Nash
|
|||
Lenne
Nicklaus-Ball
|
Director
|
33