Attached files
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) Securities
Exchange Act of 1934 for Quarterly Period Ended September 30, 2010
-OR-
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities And Exchange Act of 1934 for the transaction period from
_________ to________
Commission File Number 0-22965
Iron Eagle Group, Inc.
(formerly Pinnacle Resources, Inc.)
(Exact name of registrant as specified in its charter)
Delaware 27-1922514
---------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification Number)
61 West 62nd Street, Suite 23F, New York, NY 10023
---------------------------------------------------------------
(Address of principal executive offices, Zip Code)
(888) 481-4445
------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [x] No [ ]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (section 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [x]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [x]
The number of outstanding shares of the registrant's common stock as of
February 15, 2011 was 11,571,706.
2
IRON EAGLE GROUP, INC.
FORM 10-Q
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at September 30, 2010
and December 31, 2009 4
Consolidated Statements of Operations for the
Three and Nine Months ended September 30, 2010
and 2009 and Period from Inception (November 9,
2009) through September 30, 2010 5
Consolidated Statements of Cash Flows for the
Nine Months ended September 30, 2010 and 2009
and Period from Inception (November 9, 2009)
through September 30, 2010 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 28
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 31
Item 4. Controls and Procedures 31
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 33
Item 1A. Risk Factors 33
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds 33
Item 3. Defaults Upon Senior Securities 34
Item 4. (Removed and Reserved) 34
Item 5. Other Information 34
Item 6. Exhibits 34
SIGNATURES 35
3
PART I
Item I - FINANCIAL STATEMENTS
4
IRON EAGLE GROUP, INC.
(A Development Stage Enterprise)
Consolidated Balance Sheets
September 30, 2010 and December 31, 2009
September 30, December 31,
2010 2009
------------ -----------
ASSETS
Current Assets
Cash $ 571 $ 0
Other Assets 6,000 0
Prepaid Expenses 704,896 0
---------- ----------
Total Current Assets 711,467 0
---------- ----------
Other Assets
Note Receivable 0 10,000
Fixed Assets, Net of Accumulated
Depreciation of $15,030 and $0 2,834 0
---------- ----------
TOTAL ASSETS $ 714,301 $ 10,000
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable - Related Parties $ 419,439 $ 215,000
Accounts Payable 84,571 10,971
Advances From Officer 234,567 0
Accrued Liabilities 587,398 40,000
Note Payable - Related Party 18,345 15,000
Capital Lease 809 0
Line of Credit 50,000 0
---------- ----------
Total Current Liabilities 1,395,129 280,971
---------- ----------
TOTAL LIABILITIES 1,395,129 280,971
========== ==========
Stockholders' Equity
Preferred Stock (0 and 0 shares issued
and outstanding) 0 0
Common Stock (11,571,706 and 1,000
shares issued and outstanding) 116 1
Additional Paid in Capital 79,851 0
Accumulated Deficit (760,795) (270,972)
--------- ---------
Total Stockholders' Equity (680,828) (270,971)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 714,301 $ 10,000
========= =========
The accompanying notes are an integral
part of these financial statements.
4
IRON EAGLE GROUP, INC.
(A Development Stage Enterprise)
Consolidated Statements of Operations
For the Three and Nine Months Ended
September 30, 2010 and Period from Inception
(November 9, 2009) Through September 30, 2010
Period
Three Months Nine Months From Inception
Ended Ended (November 9, 2009)
September 30, September 30, through September
2010 2010 30, 2010
------------ ------------ ----------------
REVENUES $ 0 $ 0 $ 0
OPERATING EXPENSES
Operating Expenses 70,136 70,308 70,308
Compensation Expense 205,625 255,625 295,625
Professional Fees 70,209 70,209 86,181
Professional Fees to Related Parties 32,100 92,100 307,100
--------- --------- ---------
TOTAL OPERATING EXPENSES 378,070 488,242 759,214
--------- --------- ---------
NET OPERATING INCOME (LOSS) (378,070) (488,242) (759,214)
OTHER INCOME (EXPENSE) (217) (1,581) (1,581)
--------- --------- ---------
NET INCOME (LOSS) BEFORE
INCOME TAXES (378,287) (489,823) (760,795)
Provision for Income Taxes
(Expense) Benefit 0 0 0
--------- --------- ---------
NET INCOME (LOSS) $(378,287) (489,823) $(760,795)
========= ========= =========
Earnings per Share,
basic and diluted $ (0.06) (0.25)
========= =========
Weighted Average Shares Outstanding,
basic and diluted 5,962,636 1,995,518
========= =========
* As the Company's inception was November 9, 2009, there are no
comparatives presented for the three and nine months ended September
30, 2009.
The accompanying notes are an integral
part of these financial statements.
6
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2010
and Period From Inception (November 9, 2009)
through September 30, 2010
Period
Nine Months From Inception
Ended (November 9, 2009)
September 30, through September
2010 30, 2010
------------ ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $ (489,823) $ (760,795)
Adjustments to reconcile net income to net cash
provided by operating activities:
Stock Issued for Services 30,000 30,000
(Increase) in Other Assets (6,000) (6,000)
(Increase) in Prepaid Expenses (704,896) (704,896)
Decrease in Note Receivable 10,000 0
Increase in Accounts Payable - Related Party 204,439 419,439
Increase in Accounts Payable 73,600 84,571
Increase in Advances from Officer 234,567 234,567
Increase in Note Payable - Related Party 3,345 18,345
Increase in Capital Lease 809 809
Increase in Accrued Liabilities 547,398 547,398
---------- ----------
Net Cash (Used) by Operating Activities (96,561) (96,562)
CASH FLOWS FROM INVESTING ACTIVITIES
Net Fixed Assets Acquired in Reverse Merger (2,834) (2,834)
CASH FLOWS FROM FINANCING ACTIVITIES
Line of Credit Assumed in Reverse Merger 50,000 50,000
Recapitalization of Company 49,967 49,967
Contributed Capital (1) 0
---------- ----------
Net Cash Provided by Financing Activities 99,966 99,967
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 571 571
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 0 0
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 571 $ 571
========== ==========
SUPPLEMENTAL NON-CASH DISCLOSURES:
Stock Issued for Services $ 30,000 $ 30,000
========== ==========
The accompanying notes are an integral
part of these financial statements.
7
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Activities, History and Organization:
-----------------------------------------------
Iron Eagle Group, Inc. (formerly Pinnacle Resources, Inc.) ("Iron
Eagle" or the "Company") was incorporated under the laws of Wyoming in
January 1995. In March 2010, the Company re-domiciled in Delaware and
changed its name to Iron Eagle Group, Inc. The Company has
discontinued all domestic mining and exploration activities. All
foreign mining and exploration activities were discontinued as of April
2009.
Iron Eagle will provide construction and contracting services in both
the commercial and government markets. Iron Eagle's management
consists of business leaders in construction, government contracting,
defense, finance, operations, and business development. Management has
a strategic plan to capitalize on the $100 billion market opportunity
in infrastructure construction created by the Federal government's
stimulus package as in addition to the billions of federal funds that
have been approved to be spent at the state level for projects
throughout the United States. There can be no assurance that the
Company will not encounter problems as it attempts to implement its
business plan.
The Company is in the development stage and presents its financial
statements in accordance with Accounting Standards Codification ("ASC")
915 "Development Stage Entities" (formerly Statement of Financial
Accounting Standard ("SFAS") No. 7, "Accounting and Reporting by
Development Stage Enterprises"). As of September 30, 2010, the Company
had three full-time employees, owned minimal fixed assets and does not
generate revenue. The Company is currently engaged in the
identification and ongoing negotiations for the acquisition of
construction related entities.
Iron Eagle entered into a share exchange agreement to acquire 100% of
the outstanding common stock of Iron Eagle Group (a Nevada corporation)
("Iron Eagle Nevada"). On August 18, 2010, Iron Eagle issued 9,337,296
shares of common stock in exchange for a 100% equity interest in Iron
Eagle Nevada. As a result of the share exchange, Iron Eagle Nevada
became the wholly owned subsidiary of Iron Eagle. The shareholders of
Iron Eagle Nevada owned a majority of the voting stock of Iron Eagle.
Therefore, the transaction was regarded as a reverse merger whereby
8
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Nature of Activities, History and Organization: (Continued)
-----------------------------------------------
Iron Eagle Nevada was considered to be the accounting acquirer as its
shareholders retained control of Iron Eagle after the exchange,
although Iron Eagle is the legal parent company. The share exchange
was treated as a recapitalization of Iron Eagle. As such, Iron Eagle
Nevada (and its historical financial statements) is the continuing
entity for financial reporting purposes. The financial statements have
been prepared as if Iron Eagle had always been the reporting company
and then on the share exchange date, reorganized its capital stock. At
the time of the exchange transaction, Iron Eagle had assets of
approximately $830,065 and equity of approximately $49,967 and Iron
Eagle Nevada had assets of approximately $10,000 with a deficit of
approximately $(382,707).
The exchange agreement has been treated as a recapitalization and not a
business combination and therefore no proforma information is
presented.
As a result of the recapitalization, the Company changed its fiscal
year from June 30th to December 31st, to conform to the merged entity.
Therefore, the information presented herein is for the Company's nine
months ended September 30, 2010. The Company will file an Annual
Report on Form 10-K for the full year ended December 31, 2010.
Unaudited Interim Financial Statements:
---------------------------------------
The accompanying unaudited interim financial statements have been
prepared in accordance with accounting principles generally accepted in
the United States and applicable Securities and Exchange Commission
("SEC") regulations for interim financial information. These financial
statements are unaudited and, in the opinion of management, include all
adjustments (consisting of normal recurring accruals) necessary to
present fairly the balance sheets, statements of operations and
statements of cash flows for the periods presented in accordance with
accounting principles generally accepted in the United States. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally
9
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Unaudited Interim Financial Statements: (Continued)
---------------------------------------
accepted in the United States have been condensed or omitted pursuant
to SEC rules and regulations. It is presumed that users of this interim
financial information have read or have access to the audited financial
statements and footnote disclosure for the preceding fiscal year
contained in the Company's Annual Report on Form 10-K. Operating
results for the interim periods presented are not necessarily
indicative of the results that may be expected for the year ending
December 31, 2010.
Significant Accounting Policies:
--------------------------------
The Company's management selects accounting principles generally
accepted in the United States of America and adopts methods for their
application. The application of accounting principles requires the
estimating, matching and timing of revenue and expense. The accounting
policies used conform to generally accepted accounting principles which
have been consistently applied in the preparation of these financial
statements.
The financial statements and notes are representations of the Company's
management which is responsible for their integrity and objectivity.
Management further acknowledges that it is solely responsible for
adopting sound accounting practices, establishing and maintaining a
system of internal accounting control and preventing and detecting
fraud. The Company's system of internal accounting control is designed
to assure, among other items, that 1) recorded transactions are
valid; 2) valid transactions are recorded; and 3) transactions are
recorded in the proper period in a timely manner to produce financial
statements which present fairly the financial condition, results of
operations and cash flows of the Company for the respective periods
being presented.
10
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
(Continued)
FASB Accounting Standards Codification:
---------------------------------------
In June 2009, the Financial Accounting Standards Board ("FASB") issued
new guidance concerning the organization of authoritative guidance
under U.S. Generally Accepted Accounting Principles ("GAAP"). This new
guidance created the FASB Accounting Standards Codification
("ASC")("the Codification"). The Codification has become the source of
authoritative U.S. GAAP recognized by the FASB to be applied by
nongovernmental entities. The Codification became effective for the
Company as of September 15, 2009, the required date of adoption. As
the Codification is not intended to change or alter existing U.S. GAAP,
it did not have any impact on the Company's financial statements.
Basis of Presentation and Principles of Consolidation:
The Company prepares its financial statements on the accrual basis of
accounting. The Company is consolidated with its wholly owned
subsidiary, Iron Eagle Nevada, as of the date of August 18, 2010, the
date of the reverse merger. All intercompany transactions have been
eliminated.
Revenue Recognition:
--------------------
The Company recognizes revenue from the sale of products in accordance
with ASC 605-15 "Revenue Recognition" (formerly Securities and Exchange
Commission Staff Accounting Bulletin No. 104, "Revenue Recognition in
Financial Statements" ("SAB 104")).
Revenue will be recognized only when all of the following criteria have
been met:
- Persuasive evidence of an arrangement exists;
- Ownership and all risks of loss have been transferred to buyer,
which is generally upon shipment;
- The price is fixed and determinable; and
- Collectability is reasonably assured.
11
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Income Taxes:
-------------
The Company has adopted ASC 740-10 "Income Taxes" (formerly SFAS No.
109, "Accounting for Income Taxes"), which requires the use of the
liability method in computation of income tax expense and the current
and deferred income tax payable (deferred tax liability) or benefit
(deferred tax asset). Valuation allowances will be established when
necessary to reduce deferred tax assets to the amount expected to be
realized.
Earnings per Share:
-------------------
Earnings per share (basic) is calculated by dividing the net income
(loss) by the weighted average number of common shares outstanding for
the period covered.
The inclusion of the Company's warrants, which are considered common
stock equivalents as of September 30, 2010, in the earnings (loss) per
share computation has not been included because the results would be
anti-dilutive under the treasury stock method, as the Company incurred
a net loss in the periods presented.
Comprehensive Income (Loss):
----------------------------
ASC 220 "Comprehensive Income" (formerly SFAS No. 130, "Reporting
Comprehensive Income" (SFAS No. 130")), establishes standards for
reporting and display of comprehensive income and its components in a
full set of general-purpose financial statements. For the periods
ended September 30, 2010 and December 31, 2009, the Company had no
items of other comprehensive income. Therefore, net loss equals
comprehensive loss for the year ended December 31, 2009.
Prepaid Expenses:
-----------------
Prepaid expenses are recognized for services that the Company has paid
in advance. The value of the services to be rendered are amortized on
a straight line basis each month over the term of the contract service
period.
Fixed Assets:
-------------
Fixed assets are recorded at historical cost. Equipment is depreciated
on a straight-line basis over its estimated useful life (generally 5 to
7 years). Leasehold improvements are amortized over the shorter of the
12
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
(Continued)
estimated useful life or lease term. Capital Leases are amortized of
the life of the lease. Maintenance and repairs are expensed as
incurred. Expenditures for major renewals and betterments, which
extend the useful lives of existing equipment, are capitalized and
depreciated. Upon retirement or disposition of property and equipment,
the cost and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is recognized in the statements
of operations.
The Company reviews long-lived assets, including property and
equipment, for impairment whenever events or changes in business
circumstances indicate that the carrying amount of the assets may not
be fully recoverable. If impairment is indicated, the carrying value of
the asset is reduced to fair value.
Share Based Payments:
---------------------
The Company accounts for share based payments using a fair value based
method whereby compensation cost is measured at the grant date based on
the value of the services received and is recognized over the service
period. The Company uses the Black-Scholes pricing model to calculate
the fair value of options and warrants issued. In calculating this
fair value, there are certain assumptions used such as the expected
life of the option, risk-free interest rate, dividend yield, volatility
and forfeiture rate. The use of a different estimate for any one of
these components could have a material impact on the amount of
calculated compensation expense.
Recent Accounting Pronouncements:
---------------------------------
The Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position or cash flow. See Note 10 for a
discussion of new accounting pronouncements.
Use of Estimates:
-----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
13
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
From Inception through September 30, 2010
NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Fair Value of Financial Instruments:
------------------------------------
In accordance with the reporting requirements of ASC 820 "Fair Value
Measurement and Disclosure" (formerly SFAS No. 157, "Disclosures About
Fair Value of Financial Instruments"), the Company calculates the fair
value of its assets and liabilities which qualify as financial
instruments under this statement and includes this additional
information in the notes to the financial statements when the fair
value is different than the carrying value of those financial
instruments. As of September 30, 2010 the Company did not have any
financial instruments other than cash and cash equivalents.
NOTE 2 - PREPAID EXPENSES
The Company has entered into contracts for investor relations and
consulting services to assist in the financing and purchasing of a
construction related entity. All services were prepaid with Company
shares and warrants that vested immediately. The value of the services
to be rendered are amortized on a straight line basis each month over
the terms of the contract service periods. The services remaining to
be provided as of September 30, 2010 are reflected as a prepaid asset.
Amortization for the periods ending September 30, 2010 and December 31,
2009 are $122,964 and $0, respectively.
NOTE 3 - FIXED ASSETS
Fixed assets at September 30, 2010 and December 31, 2009 consist of the
following:
September 30, December 31,
2010 2009
------------ -----------
Office Equipment and Capital Leases $ 14,655 $ 0
Furniture 3,209 0
--------- --------
Subtotal 17,864 0
Accumulated Depreciation (15,030) 0
--------- --------
Total $ 2,834 $ 0
========= ========
14
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 3 - FIXED ASSETS (Continued)
Fixed assets are stated at cost less accumulated depreciation. Major
renewals and improvements are capitalized; minor replacements,
maintenance and repairs are charged to current operations.
Depreciation is computed by applying the straight-line method over the
estimated useful lives which are generally five to seven years.
In August 2008, Iron Eagle entered into a lease agreement for a copier
for 39 months which is classified as a capital lease. Depreciation and
amortization expense for the periods ended September 30, 2010 and
December 31, 2009 was $2,345 and $0, respectively.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company entered into an agreement on November 15, 2009 with Belle
Haven Partners, LLC ("Belle Haven") to assist Iron Eagle Nevada with
business development planning, raising additional capital, and
accessing the public markets. One of Belle Haven's principals is also
on Iron Eagle's management team, and the entities have common
ownership. Iron Eagle Nevada agreed to pay Belle Haven $20,000 per
month starting September 1, 2009, as well as to reimburse them for all
out-of-pocket expenses. As of September 30, 2010 and December 31,
2009, the Company had accrued $393,000 and $213,000, respectively in
amounts due to Belle Haven.
On December 31, 2009, the Company entered in two note agreements with
the Jason Shapiro, the Company's current Chief Executive Officer, for a
total of $15,000. These notes, which bear a 10% interest rate, were
originally due on June 30, 2010, and have been extended until June 30,
2011. The Company also owes its current Chief Executive Officer
$216,667 at September 30, 2010 and $2,000 as of December 31, 2009 for
operating expenses, which, in general include professional fees for
audit, legal and investor relations.
15
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 4 - RELATED PARTY TRANSACTIONS (Continued)
The Company also leases its New York, New York facility under a rental
agreement that has a one year lease starting September 1, 2010 for
$2,100 a month with Belle Haven Capital, LLC, a company of which Jason
Shapiro (the Company's current CEO), is a principal.
NOTE 5 - ACCRUED COMPENSATION
The Company has entered into employment agreements with the Company's
management team, as outlined in Note 9. As of September 30, 2010, no
cash compensation has been paid, and the Company has accrued amounts
pursuant to these agreements.
NOTE 6 - LINE OF CREDIT
The Company has a $50,000 line of credit with a major U.S. financial
institution. The current balance is $50,000 plus accrued interest of
$469 and carries an interest rate of 6.25%.
NOTE 7 - EQUITY
In December 2009, Iron Eagle Nevada issued 1,000 shares pursuant to the
"Founder's Agreement" dated December 1, 2009. Three of the founders
contributed intellectual capital in exchange for 81.639% of the shares.
As no specific intangible assets were identified, the sales were valued
at par. 18.36% of the shares were issued in change for 200,000 shares
of The Saint James Company. The fair value of the shares obtained,
based upon level 3 fair value inputs was $0. The shares are
restricted as to their transferability.
The Company entered into a share exchange agreement to acquire 100% of
the outstanding common stock of Iron Eagle Group, (a Nevada
corporation) ("Iron Eagle Nevada"). On August 18, 2010, Iron Eagle
issued 9,337,296 shares of common stock in exchange for a 100% equity
interest in Iron Eagle Nevada. As a result of the share exchange, Iron
Eagle Nevada became the wholly owned subsidiary of Iron Eagle. As a
result, the shareholders of Iron Eagle Nevada owned a majority of the
voting stock of Iron Eagle. The transaction was regarded as a reverse
16
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 7 - EQUITY (Continued)
merger whereby Iron Eagle Nevada was considered to be the accounting
acquirer as its shareholders retained control of Iron Eagle after the
exchange, although Iron Eagle is the legal parent company. The share
exchange was treated as a recapitalization of Iron Eagle. As such,
Iron Eagle Nevada (and its historical financial statements) is the
continuing entity for financial reporting purposes. The financial
statements have been prepared as if Iron Eagle had always been the
reporting company and then on the share exchange date, reorganized its
capital stock. At the time of the exchange transaction, Iron Eagle had
assets of approximately $830,065 and equity of approximately $49,967
and Iron Eagle Nevada had assets of approximately $10,000 with a
deficit of approximately $(382,707).
In March, 2010, the Company re-domiciled from Wyoming to Delaware.
Also at this time, the terms of its preferred shares was changed from
$.01 to $.00001. It also changed its total authorized preferred shares
from 2,000,000 to 20,000,000. No preferred shares are issued or
outstanding as of September 30, 2010 and December 31, 2009,
respectively.
Stock Issued for Services:
--------------------------
On May 1, 2010, the Company entered into a one year consulting
agreement with an individual for investor relations services. In
satisfaction of the agreement, the Company issued 200,000 shares of the
Company's common stock at a per share price of $1.20. The portion of
services that have not been utilized are recorded as a prepaid expense
as of September 30, 2010.
On May 4, 2010, the Company entered into a consulting agreement with a
website development firm. In satisfaction for the agreement, the
Company issued 5,000 shares of the Company's common stock at a per
share price of $1.20.
On May 4, 2010, the Company entered into a director's agreement with an
individual to become a member of the Company's board. In connection
the agreement, the Company issued 41,667 shares of the Company's common
stock at a per share price of $1.20.
17
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
Stock Issued for Services: (Continued)
--------------------------
On May 4, 2010, the Company entered into a one year consulting
agreement with an investor relations firm. In satisfaction for the
agreement, the Company issued 108,750 shares of the Company's common
stock at a per share price of $1.20 and a 5 year warrant to purchase up
to 108,750 shares with an exercise price of $0.033 per share. The
shares issued vested immediately. The fair value of the warrant was
$126,107. The Company has received three months of services under this
agreement, and the remaining services are currently on hold pending the
Company's decision to resume services. The portion of services that
have not been utilized are recorded as a prepaid expense as of
September 30, 2010.
On June 5, 2010, the Company entered into a three year consulting
agreement with an individual to help the Company obtain financing and
related services. The value of the services to be received is $400,000
a year. In satisfaction for the agreement, the Company issued
1,000,000 shares of the Company's common stock, resulting in a per
share price of $.40. The portion of services that have not been
utilized are recorded as a prepaid expense as of September 30, 2010.
In August 2010 the Board appointed Joseph Antonini as a Director and
granted him 38,462 shares of stock, valued at $1.30 a share, which
vested immediately.
In August 2010 the Company entered into a non-exclusive agreement with
Aegis Capital Corp., an investment bank, to act as their underwriter
with respect to a forthcoming public offering. In connection with this
agreement the company issued 28,572 shares of stock, valued at $1.05 a
share, which vested immediately.
Other than the plans mentioned under Subsequent Events (Note 13) and
the compensation plans of Michael Bovalino and Eric Hoffman, there are
no other stock option or other equity based compensation plans.
Warrants:
---------
As described above, on May 4, 2010, the Company entered into a one year
consulting agreement with an investor relations firm. In satisfaction
for the agreement, the Company issued 108,750 shares of the Company's
common stock at a per share price of $1.20 and a 5 year warrant to
purchase up to 108,750 shares with an exercise price of $1.32 per
18
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 7 - EQUITY (Continued)
share. The fair value of the warrant was $126,107. The fair value of
the warrant was determined using the Black Scholes option pricing model
with the following assumptions:
Risk free interest rate 2.57%
Volatility 333%
Dividend 0
Weighted average expected life 5 years
The following schedule summarizes the Company's warrant activity since
inception through September 30, 2010:
Weighted Weighted
Average Average Aggregate
Exercise Remaining Intrinsic
Warrants Price Term Value
-------- --------- --------- ---------
Outstanding at November 9, 2009 0 0 0 0
Warrants granted during 2010 108,750 $1.32 $5.00 0
Warrants exercised 0 0 0 0
Warrants expired 0 0 0 0
Outstanding at September 30, 2010 108,750 $1.32 4.83 0
NOTE 8 - INCOME TAXES
The Company has adopted ASC 740-10 "Income Taxes" (formerly SFAS No.
109, "Accounting for Income Taxes"), which requires the use of the
liability method in computation of income tax expense and the current
and deferred income tax payable (deferred tax liability) or benefit
(deferred tax asset). Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be
realized.
The cumulative tax effect at the expected tax rate of 25% of
significant items comprising the Company's net deferred tax amounts as
of September 30, 2010 and December 31, 2009, respectively are as
follows:
19
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 8 - INCOME TAXES (Continued)
Deferred Tax Asset Related to:
September 30, December 31,
2010 2009
------------ -----------
Prior Year $ 67,743 $ 0
Tax Benefit for Current Year 116,672 67,743
--------- --------
Total Deferred Tax Asset 184,415 67,743
Less: Valuation Allowance (184,415) (67,743)
--------- --------
Net Deferred Tax Asset $ 0 $ 0
========= ========
The net deferred tax asset generated by the loss carryforward has been
fully reserved. The cumulative net operating loss carry-forward is
approximately $728,589 at September 30, 2010, and will expire in the
years 2029 and 2030.
The realization of deferred tax benefits is contingent upon future
earnings and is fully reserved at September 30, 2010 and December 31,
2009.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Employment Agreements:
----------------------
On November 5, 2009, the Company entered into a three-year employment
agreement with Jason Shapiro, the Company's current Chief Financial
Officer, Acting Chief Executive Officer and Director on the Company's
Board. The agreement provides a salary of $200,000 per year and
reasonable and customary terms related to vacation, holidays and
travel. The agreement provides for a cash bonus of up to 200% of his
base salary based upon reaching certain objectives of the Company and
at the sole discretion of the board. The agreement may be terminated
by the Company or employee with three months advance written notice.
This employment agreement was amended with the amendment becoming
effective January 1, 2011.
20
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)
On May 4, 2010, the Company hired Eric J. Hoffman as the Chief
Financial Officer and entered into a 24 month employment agreement.
The employment agreement provided for an annual base salary of
$225,000, payable as $125,000 in cash and $100,000 in stock awards.
The agreement also provides for an annual incentive of 100% of his base
salary payable in a ratio consistent with his base salary. On
September 13, 2010, the Company amended the employment agreement with
Mr. Hoffman. The amendments changed the allocation between cash and
stock payments for base and bonus compensation, but had no impact on
total compensation. Mr. Hoffman's cash based salary increased to
$165,000 and stock based salary decreased to $60,000. The allocation
of the annual incentive payment between cash and stock changed to
$125,000 and $100,000, respectively. On November 29, 2010, the Company
accepted Mr. Hoffman's resignation.
On April 26, 2010, the Company hired Michael J. Bovalino as the Chief
Executive Officer and entered into a 30 month employment agreement.
The employment agreement provides for an annual base salary of
$300,000, payable as $175,000 in cash and $125,000 in stock awards.
The agreement also provides for an annual incentive of 100% of his base
salary. Upon termination by the registrant for cause or employee's
voluntary termination without good reason, Employee will receive a)
three months of base salary if such termination occurred within one
year of the signing of his employment agreement or b) nine months of
base salary if such termination occurred over one year from the signing
of his employment agreement. On September 13, 2010, the Company amended
the employment agreement with Mr. Bovalino. The amendment changed the
allocation between cash and stock payments for base and bonus
compensation, but had no impact on total compensation. Mr. Bovalino's
cash based salary increased to $215,000 and stock based salary
decreased to $85,000. The allocation of the annual incentive payment
between cash and stock changed to $175,000 and $125,000, respectively.
On November 29, 2010, the Company accepted Mr. Bovalino's resignation.
Belle Haven Agreement:
----------------------
The Company entered into an agreement on November 15, 2009 with Belle
Haven Partners, LLC ("Belle Haven") to assist Iron Eagle Nevada with
business development planning, raising additional capital, and
accessing the public markets. One of Belle Haven's principals is also
on Iron Eagle's management team, and the entities have common
21
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)
Belle Haven Agreement: (Continued)
----------------------
ownership. Iron Eagle Nevada agreed to pay Belle Haven $20,000 per
month starting September 1, 2009, as well as to reimburse them for all
out-of-pocket expenses.
Facilities Leases:
------------------
The Company leases office space and equipment under noncancelable
operating leases with terms of three years. The Company occupies its
Englewood, Colorado facility under a rental agreement that has a lease
term that was to expire in December 2008. On October 1, 2008, the
Company entered into an agreement to extend the lease term for an
additional 36 months ending December 2011. The Company also leases its
New York, New York facility under a rental agreement that has a one
year lease starting September 1, 2010 for $2,100 a month with Belle
Haven Capital, LLC, a company of which Jason Shapiro (CEO), is a
principal. The following is a schedule by years of future minimum
rentals under the leases for the years ending December 31:
Year Amount
---- ------
2010 (remainder of year) $11,294
2011 37,039
2012 9,078
2013 0
2014 and beyond 0
-------
Total $57,411
=======
At times, the Company has subleased space in its Colorado facility to
two tenants. Sublease income for the three and nine month periods ended
September 30, 2010 was $0, and $2,000, respectively. All sublease
income is treated as a reduction in rent expense.
Loss Contingencies:
-------------------
Certain conditions may exist as of the date the combined financial
statements are issued, which may result in a loss to the Company, but
which will only be resolved when one or more future events occur or
22
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)
Loss Contingencies: (Continued)
-------------------
fail to occur. The Company's management and its legal counsel assess
such contingent liabilities, and as such, assessment inherently
involves an exercise of judgment. In assessing loss contingencies
related to legal proceedings that are pending against the Company or
unasserted claims that may result in such proceedings, the Company's
legal counsel evaluates the perceived merits of any legal proceedings
or unasserted claims as well as the perceived merits of the amount of
relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a
material loss has been incurred and the amount of the liability can be
estimated, then the estimated liability would be accrued in the
Company's combined financial statements. If the assessment indicates
that a potentially material loss contingency is not probable but is
reasonably possible, or is probable but cannot be estimated, then the
nature of the contingent liability, together with an estimate of the
range of possible loss if determinable and material, would be
disclosed. Loss contingencies considered remote are generally not
disclosed unless they involve guarantees, in which case the guarantees
would be disclosed.
NOTE 10 - RECENT ACCOUNTING PRONOUNCEMENTS
Recently Adopted Accounting Guidance:
-------------------------------------
On January 1, 2010, the Company adopted Accounting Standard Update
("ASU") 2009-16, "Transfers and Servicing (Topic 860): Accounting for
Transfers of Financial Assets." This ASU is intended to improve the
information provided in financial statements concerning transfers of
financial assets, including the effects of transfers on financial
position, financial performance and cash flows, and any continuing
involvement of the transferor with the transferred financial assets.
The Company does not have a program to transfer financial assets;
therefore, this ASU had no impact on the Company's consolidated
financial statements.
On January 1, 2010, the Company adopted ASU 2009-17, "Consolidations
(Topic 810): Improvements to Financial Reporting by Enterprises
Involved with Variable Interest Entities," which amended the
23
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 10 - RECENT ACCOUNTING PRONOUNCEMENTS (Continued)
consolidation guidance applicable to variable interest entities and
required additional disclosures concerning an enterprise's continuing
involvement with variable interest entities. The Company does not
have variable interest entities; therefore, this ASU had no impact on
the Company's consolidated financial statements.
On January 1, 2010, the Company adopted ASU 2010-06, "Fair Value
Measurements and Disclosures (Topic 820): Improving Disclosures about
Fair Value Measurements," which added disclosure requirements about
transfers in and out of Levels 1 and 2 and separate disclosures about
activity relating to Level 3 measurements and clarifies existing
disclosure requirements related to the level of disaggregation and
input and valuation techniques. The adoption of this guidance did not
have a material impact on the Company's consolidated financial
statements or the related disclosures.
Accounting Guidance Issued But Not Adopted as of September 30, 2010
In October 2009, the FASB issued ASU 2009-13, "Revenue Recognition
(Topic 605): Multiple-Deliverable Revenue Arrangements - a consensus of
the FASB Emerging Issues Task Force," which amends the criteria for
when to evaluate individual delivered items in a multiple deliverable
arrangement and how to allocate consideration received. This ASU is
effective for fiscal years beginning on or after June 15, 2010, which
is January 1, 2011 for the Company. The Company is currently
evaluating the impact of adopting the guidance.
Management has reviewed these new standards and believes they had or
will have no material impact on the financial statements of the
Company.
NOTE 11 - FINANCIAL CONDITION AND GOING CONCERN
The Company has an accumulated deficit through September 30, 2010
totaling $760,795 and recurring losses from operations. Because of
this accumulated loss, the Company will require additional working
capital to develop its business operations.
24
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 11 - FINANCIAL CONDITION AND GOING CONCERN (Continued)
The Company's success will depend on its ability to raise money through
debt and the sale of stock to meet its cash flow requirements. The
ability to execute its strategic plan is contingent upon raising the
necessary cash to 1) pursue and close acquisitions; 2) sustain limited
operations; and, 3) meet current obligations. The current economy has
severely hampered the Company's ability to raise funds to close on
identified acquisitions. The construction market continues to remain
weak. The Company is uncertain what potential acquisitions will be
available to us in the near future, or whether, if they are available,
if they will be able to raise funds necessary to take advantage of
these opportunities. Management believes that the efforts it has made
to promote its business will continue for the foreseeable
future. These conditions raise substantial doubt about Iron Eagle
Group, Inc.'s ability to continue as a going concern. The financial
statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the
amount and classification of liabilities that might be necessary should
Iron Eagle Group, Inc. be unable to continue as a going concern.
NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTS AND LIABILITIES
The Company has adopted fair value guidance and utilized the market
approach to measure fair value of financial assets. The market approach
uses prices and other relevant information generated by market
transactions involving identical or comparable assets. The standard
describes a fair value hierarchy based on three levels of inputs, of
which the first two are considered observable and the last
unobservable, that may be used to measure fair value which are the
following:
Level 1: Quoted prices (unadjusted) in active markets that are
accessible at the measurement date for assets or liabilities. The fair
value hierarchy gives the highest priority to Level 1 inputs.
Level 2: Observable prices that are based on inputs not quoted on
active markets, but corroborated by market data.
25
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTS AND LIABILITIES
(Continued)
Level 3: Unobservable inputs are used when little or no market data is
available. The fair value hierarchy gives the lowest priority to Level
3 inputs.
In determining fair value, the Company utilizes valuation techniques
that maximize the use of observable inputs and minimize the use of
unobservable inputs to the extent possible.
As of September 30, 2010 the Company did not have any financial
instruments other than cash and cash equivalents.
NOTE 13 - SUBSEQUENT EVENTS
In May 2009, the FASB issued ASC 855-10, "Subsequent Events", (formerly
SFAS No. 165, "Subsequent Events," which establishes general standards
for accounting for and disclosure of events that occur after the
balance sheet date but before the financial statements are issued or
are available to be issued. The pronouncement requires the disclosure
through the date on which an entity has evaluated subsequent events and
the basis for that date, whether that date represents the date the
financial statements were issued or were available to be issued.
In February 2010, the FASB issued Accounting Standards Update 2010-09,
"Amendments to Certain Recognition and Disclosure Requirements", which
amended ASC 855 and which requires issuers of financial statements to
evaluate subsequent events through the date on which the financial
statements are issued. FASB 2010-09 defines the term "SEC Filer" and
eliminates the requirement that an SEC filer disclose the date through
which subsequent events have been evaluated. This change was made to
alleviate potential conflicts between ASC 855-10 and the reporting
requirements of the SEC. FASB 2010-09 is effective immediately, but is
not expected to have a material effect on the Company's financial
statements.
In conjunction with the preparation of these financial statements, an
evaluation of subsequent events was performed and the following items
were noted:
26
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 13 - SUBSEQUENT EVENTS (Continued)
Acquisition:
------------
On January 21, 2011, Iron Eagle Group, Inc. entered into a purchase
agreement, all of the members' interests in Sycamore Enterprises, LLC,
through Bruce A. Bookbinder's membership interests (100%). Sycamore
Enterprises, LLC is 100% holder of all of the membership interests of
Delta Mechanical Contractors, LLC, a mechanical contractor ("Delta").
Delta is a regional subcontractor providing commercial and industrial
installation of plumbing, heating, ventilation and air conditioning and
fire protection services in the regions of Rhode Island, Southeastern
Massachusetts and Eastern Connecticut.
The aggregate purchase price to be paid by Buyer for the purchased
membership interests consists of (i) a $9,000,000 buyer note (secured
by Delta) and (ii) future contingency payment(s), based on the
Company's results for the years ended December 31, 2011, 2012, 2013 and
2014, not to exceed $250,000 per year or $1,000,000 in aggregate, and
(iii) a four year employment contract with the President and Chief
Financial Officer of Delta.
The Company has agreed to secure its obligations to Mr. Bookbinder by
pledging to Mr. Bookbinder and granting to Mr. Bookbinder a 100%
security interest in the membership interest in Sycamore Enterprises
LLC together with the other Collateral until the buyer note is repaid.
The Company filed a Form 8-K on February 4, 2011 with details of the
acquisition. The Company will consolidate Delta and the combined
results will be reflected in the Company's March 31, 2011 Form 10-Q.
Shares Issued for Services:
---------------------------
On January 21, 2011, the board of directors ratified its media
relations agreement dated December 7, 2010 between the registrant and
Market Update Network Corp. ("MUNC") Pursuant to the agreement, the
Company granted MUNC 15,759 common shares valued at $0.95 per common
share.
27
IRON EAGLE GROUP, INC.
(a Development Stage Enterprise)
Notes to the Consolidated Financial Statements
September 30, 2010
NOTE 13 - SUBSEQUENT EVENTS (Continued)
Shares Issued for Services: (Continued)
---------------------------
On February 4, 2011, the registrant executed a consulting agreement
with IPX Capital, LLC ("IPX"). Pursuant to the agreement, the Company
granted IPX 125,000 common shares valued at $0.80 per common share.
New Officers and Directors:
---------------------------
On November 23, 2010, the Board of Directors appointed Joseph LoCurto
to the Board of Directors, Jed Sabio as the Executive Vice President of
Business Development, and Jason Shapiro, as Chief Executive Officer
("CEO") and Chief Financial Officer ("CFO"). The Company also accepted
the resignations of Michael Bovalino as the former CEO and Eric Hoffman
as the former CFO.
Compensation Agreements:
------------------------
Effective as of January 1, 2011, the Board ratified compensation
agreements for Joseph LoCurto, Jed Sabio, and Jason Shapiro.
No other reportable subsequent events were noted.
28
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following presentation of our management's discussion and analysis
should be read in conjunction with the financial statements and other
financial information included elsewhere in this report.
Overview
The registrant will provide construction and contracting services in
both the commercial and government markets. The registrant's management
consists of business leaders in construction, government contracting,
defense, finance, operations, and business development. Management has
a strategic plan to capitalize on the $100 billion market opportunity
in infrastructure construction created by the federal government's
stimulus package as in addition to the billions of federal funds that
have been approved to be spent at the state level for projects
throughout the United States. There can be no assurance that the
Company will not encounter problems as it attempts to implement its
business plan.
The registrant entered into a share exchange agreement to acquire 100%
of the outstanding common stock of Iron Eagle Group, a Nevada
corporation. On August 18, 2010, the registrant issued 9,337,296
shares of common stock in exchange for a 100% equity interest in Iron
Eagle Nevada. As a result of the share exchange, Iron Eagle Nevada
became the wholly owned subsidiary of the registrant. The shareholders
of Iron Eagle Nevada owned a majority of the voting stock of the
registrant. Therefore, the transaction was regarded as a reverse
merger whereby Iron Eagle Nevada was considered to be the accounting
acquirer as its shareholders retained control of registrant after the
exchange, although Iron Eagle is the legal parent company. The share
exchange was treated as a recapitalization of the registrant. As such,
Iron Eagle Nevada (and its historical financial statements) is the
continuing entity for financial reporting purposes. The financial
statements have been prepared as if registrant had always been the
reporting company and then on the share exchange date, reorganized its
capital stock. As a result of the recapitalization, the registrant
changed its fiscal year from June 30th to December 31st, to conform to
the merged entity.
Basis of Presentation of the Financial Statements
Our financial statements include those of the registrant and is
consolidated with its wholly owned subsidiary, Iron Eagle Nevada, as of
the date of August 18, 2010, the date of the reverse merger. All
intercompany transactions have been eliminated.
Industry Outlook
The current economy may hamper our ability to obtain funds to close on
future identified acquisitions. The construction market continues to
remain weak, however, Management has a strategic plan to capitalize on
the $100 billion market opportunity in infrastructure construction
created by the federal government's stimulus package as in addition to
the billions of federal funds that have been approved to be spent at
29
the state level for projects throughout the United States. There can
be no assurance that the registrant will not encounter problems as it
attempts to implement its business plan. We are uncertain what
potential acquisitions will be available to us in the near future, or
whether, if they are available, we will be able to obtain debt or
equity financing necessary to take advantage of these opportunities.
Results of Operations
Three months ended September 30, 2010
-------------------------------------
Total operating expenses for the three months ended September 30, 2010
were $378,070.
Compensation and professional fees for the three months ended September
30, 2010 were $307,934. All compensation expense related to the
Company's officers has been accrued and not paid as of September 30,
2010.
Our operating expenses for the three months ended September 30, 2010
was $70,136. This is due to financing, media relations, and travel
expenses.
We generated no revenue and recorded no bad debt expense during the
three months ended September 30, 2010.
Interest income was $0 during the three months ended September 30,
2010.
For the three months ended September 30, 2010, other expense was $217
due mostly to interest expense.
Income tax expense (benefit) during the three months ended September
30, 2010 was $0.
Net loss for the three months ended September 30, 2010 totaled
$378,287.
Nine month period ended September 30, 2010
------------------------------------------
Total operating expenses for the nine months ended September 30, 2010
were $488,242.
Compensation and professional fees for the nine months ended September
30, 2010 were $417,934. This is the result of the addition of new
management team. All compensation expense related to the Company's
officers has been accrued and not paid as of September 30, 2010.
Our operating expenses were $70,308 for the nine months ended September
30, 2010. This is due to financing, media relations, and travel
expenses.
We generated no revenue and recorded no bad debt expense during the
nine months ended September 30, 2010.
30
For the nine months ended September 30, 2010, other expense was $1,581
due mostly to interest expense.
Income tax expense (benefit) during the nine months ended September 30,
2010 was $0.
Net loss for the nine months ended September 30, 2010 totaled $489,823.
Liquidity
September 30, 2010 compared to December 31, 2009
------------------------------------------------
During the nine months ended September 30, 2010, we relied on loans
from management and key shareholders. Our cash position increased from
$0 at December 31, 2009 to $571 at September 30, 2010, primarily due to
cash used provided by our management and key shareholders.
During the nine months ended September 30, 2010, cash flows from
investing activities were $(2,834) due to net fixed assets acquired in
the reverse merger between the registrant and Iron Eagle Nevada.
During the nine months ended September 30, 2010, cash flows from
financing activities were $99,966 due to the line of credit assumed in
the reverse merger between the registrant and Iron Eagle Nevada and the
recapitalization of the registrant during the time period.
We have no current sources of cash and we will not be able to continue
in existence if further cash resources are not obtained.
Completed Agreement
-------------------
On January 8, 2010, the registrant agreed to the terms of a share
exchange agreement with Iron Eagle Group, a Nevada corporation and its
shareholders. The terms of this agreement were completed on August 18,
2010.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Cautionary Statement Regarding Forward Looking Information
Certain information set forth in this report contains "forward-looking
statements" within the meaning of federal securities laws. Forward
looking statements include statements concerning our plans, objectives,
goals, strategies, future events, future revenues or performance,
capital expenditures, and financing needs and other information that is
not historical information. When used in this report, the words
"estimates," "expects," "anticipates," "forecasts," "plans," "intends,"
"believes" and variations of such words or similar expressions are
intended to identify forward-looking statements. Additional forward-
looking statements may be made by us from time to time. All such
31
subsequent forward-looking statements, whether written or oral and
whether made by us or on our behalf, are also expressly qualified by
these cautionary statements.
Our forward-looking statements are based upon our current expectations
and various assumptions. Our expectations, beliefs and projections are
expressed in good faith and are believed by us to have a reasonable
basis, including without limitation, our examination of historical
operating trends, data contained in our records and other data
available from third parties, but there can be no assurance that our
expectations, beliefs and projections will result or be achieved or
accomplished. Our forward-looking statements apply only as of the date
made. We undertake no obligation to publicly update or revise forward-
looking statements which may be made to reflect events or circumstances
after the date made or to reflect the occurrence of unanticipated
events.
There are a number of risks and uncertainties that could cause actual
results to differ materially from those set forth in, contemplated by
or underlying the forward-looking statements contained in this report.
Those risks and uncertainties include, but are not limited to, our
history of operating losses, lack of liquidity in our common stock, our
dependence on key personnel, the expression by our auditors of
uncertainty as to our ability to continue as a going concern, and the
fact that we face substantial competition. Those risks and certain
other uncertainties are discussed in more detail in our June 2010
Annual Report on Form 10-K and our subsequent filings with the SEC.
There may also be other factors, including those discussed elsewhere in
this report that may cause our actual results to differ from the
forward-looking statements. Any forward-looking statements made by us
or on our behalf should be considered in light of these factors.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We do not consider the effects of interest rate movements to be a
material risk to our financial condition. We do not hold any
derivative instruments and do not engage in any hedging activities.
Item 4. Controls and Procedures.
During the three months ended September 30, 2010, there were no changes
in our internal controls over financial reporting (as defined in Rule
13a-15(f) and 15d-15(f) under the Exchange Act) that have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Evaluation of Disclosure Controls and Procedures
------------------------------------------------
Under the supervision and with the participation of our management,
including our chief executive officer and chief financial officer, we
conducted an evaluation of our disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) and Rule 15d-15(e)
32
promulgated under the Securities Exchange Act of 1934, as amended, as
of September 30, 2010. We do not have sufficient segregation of duties
within accounting functions, which is a basic internal control. Due to
our size and nature, segregation of all conflicting duties may not
always be possible and may not be economically feasible. However, to
the extent possible, the initiation of transactions, the custody of
assets and the recording of transactions should be performed by
separate individuals. Based on this evaluation, our chief executive
officer and chief principal financial officers have concluded such
controls and procedures to be not effective as of September 30, 2010 to
ensure that information required to be disclosed by the issuer in the
reports that it files or submits under the Act is recorded, processed,
summarized and reported, within the time periods specified in the
Commission's rules and forms and to ensure that information required to
be disclosed by an issuer in the reports that it files or submits under
the Act is accumulated and communicated to the issuer's management,
including its principal executive and principal financial officers, or
persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
33
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 1A. Risk Factors
Not applicable for smaller reporting companies
Item 2. Unregistered Sale of Securities and Use of Proceeds
On August 18, 2010, the registrant issued 9,337,296 shares of common
stock in exchange for a 100% equity interest in Iron Eagle Nevada.
Stock Issued for Services:
On May 1, 2010, the registrant entered into a one year consulting
agreement with Gary Smolen for investor relations services. In
satisfaction of the agreement, the registrant issued 200,000 shares of
the registrant's common stock at a per share price of $1.20.
On May 4, 2010, the registrant entered into a consulting agreement with
Dana Jones. In satisfaction for the agreement, the Company issued
5,000 shares of the registrant's common stock at a per share price of
$1.20.
On May 4, 2010, the registrant entered into a director's agreement with
Gary Giulietti to become a member of the registrant's board. In
connection the agreement, the registrant issued 41,667 shares of the
registrant's common stock at a per share price of $1.20.
On May 4, 2010, the registrant entered into a one year consulting
agreement with CCG, an investor relations firm. In satisfaction for
the agreement, the registrant issued 108,750 shares of the registrant's
common stock at a per share price of $1.20 and a 5 year warrant to
purchase up to 108,750 shares with an exercise price of $0.033 per
share. The shares issued vested immediately. The fair value of the
warrant was $126,107. The registrant has received three months of
services under this agreement, and the remaining services are currently
on hold pending the registrant's decision to resume services. The
portion of services that have not been utilized are recorded as a
prepaid expense as of September 30, 2010.
On June 5, 2010, the registrant entered into a three year consulting
agreement with Steven Antebi to help the registrant obtain financing
and related services. The value of the services to be received is
$400,000 a year. In satisfaction for the agreement, the registrant
issued 1,000,000 shares of the registrant's common stock, resulting in
a per share price of $.40. The portion of services that have not been
utilized are recorded as a prepaid expense as of September 30, 2010.
In August 2010, the board of director appointed Joseph Antonini as a
director and granted him 38,462 shares of stock, valued at $1.30 a
share, which vested immediately.
34
In August 2010, the registrant entered into a non-exclusive agreement
with Aegis Capital Corp., an investment bank, to act as their
underwriter with respect to a forthcoming public offering. In
connection with this agreement the registrant issued 28,572 shares of
stock, valued at $1.05 a share, which vested immediately.
In satisfaction for the agreement with Aegis Capital Corp., the
registrant issued 108,750 common shares at a per share price of $1.20
and a 5 year warrant to purchase up to 108,750 shares with an exercise
price of $1.32 per share.
Item 3. Defaults Upon Senior Securities.
None
Item 4. (Removed and Reserved)
Item 5. Other Information
None
Item 6. Exhibits
Exhibit 31 - Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 32 - Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
35
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated: February 15, 2011
Iron Eagle Group, Inc.
By /s/Jason M. Shapiro
------------------------
Chief Executive Officer
Chief Financial Officer
