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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest event Reported): June 11, 2012
CASTMOR RESOURCES LTD
(Exact name of registrant as specified in its charter)
Nevada 001-34039 98-0471928
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
614 E. Hwy. 50, Suite 235 Clermont, Florida 34711
(Address of principal executive offices)
866.926.6427
(Registrant's telephone number, including area code)
427 Princess Street, Suite 406, Kingston, Ontario, Canada K7L 5S9
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (See: General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17CFR240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17CFR240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17CFR240.13e-4(c))
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. This document contains forward-looking
statements which reflect the views of Castmor Resources Ltd. and the members of
management with respect to future events and financial performance. These
forward-looking statements are subject to certain uncertainties and other
factors that could cause actual results to differ materially from such
statements. From time to time, our management or persons acting on our behalf
may make forward-looking statements to inform existing and potential security
holders about our Company. All statements other than statements of historical
facts included in this report regarding our financial position, business
strategy, plans and objectives of management for future operations, industry
conditions, and indebtedness covenant compliance are forward-looking statements.
When used in this report, forward-looking statements are generally accompanied
by terms or phrases such as "estimate," "expects", "project," "predict,"
"believe," "expect," "anticipate," "target," "plan," "intend," "seek," "goal,"
"will," "should," "may," "targets" or other words and similar expressions that
convey the uncertainty of future events or outcomes. Items contemplating or
making assumptions about, actual or potential future sales, market size,
collaborations, and trends or operating results also constitute such
forward-looking statements. We undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise.
We are including the following discussion to inform our existing and potential
security holders generally of some of the risks and uncertainties that can
affect us and to take advantage of the "safe harbor" protection for
forward-looking statements that applicable federal securities law affords.
Forward-looking statements involve inherent risks and uncertainties, and
important factors (many of which are beyond our control) that could cause actual
results to differ materially from those set forth in the forward-looking
statements, including the following: general economic or industry conditions,
nationally and/or in the communities in which we conduct business, changes in
the interest rate environment, legislation or regulatory requirements,
conditions of the securities markets, our ability to raise capital, changes in
accounting principles, policies or guidelines, financial or political
instability, acts of war or terrorism, other economic, competitive,
governmental, regulatory and technical factors affecting our operations,
products, services, and prices.
We have based these forward-looking statements on our current expectations and
assumptions about future events. While our management considers these
expectations and assumptions to be reasonable, they are inherently subject to
significant business, economic, competitive, regulatory and other risks,
contingencies and uncertainties, most of which are difficult to predict and many
of which are beyond our control. Accordingly, results actually achieved may
differ materially from expected results in these statements. Forward-looking
statements speak only as of the date they are made. You should consider
carefully the statements in the section below entitled "Risk Factors" and other
sections of this report, which describe factors that could cause our actual
results to differ from those set forth in the forward-looking statements. We do
not undertake, and specifically disclaims, any obligation to update any
forward-looking statements to reflect events or circumstances occurring after
the date of such statements.
Readers are urged not to place undue reliance on these forward-looking
statements, which speak only as of the date of this report. We assume no
obligation to update any forward-looking statements in order to reflect any
event or circumstance that may arise after the date of this report, other than
as may be required by applicable law or regulation. Readers are urged to
carefully review and consider the various disclosures made by us in our reports
filed with the Securities and Exchange Commission which attempt to advise
interested parties of the risks and factors that may affect our business,
financial condition, results of operation and cash flows. If one or more of
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these risks or uncertainties materialize, or if the underlying assumptions prove
incorrect, our actual results may vary materially from those expected or
projected.
FORM 10 DISCLOSURES
As disclosed elsewhere in this report, on June 11, 2012, Castmor Resources Ltd.
(the "Company", "CASL", or "Castmor") acquired Red Giant Entertainment Inc.
("RGE") for stock. Item 2.01(f) of Form 8-K states that: if the registrant was a
shell company, as we were immediately before the acquisition transaction
disclosed under Item 2.01, then the registrant must disclose the information
that would be required if the registrant were filing a general form for
registration of securities on Form 10.
Accordingly, we are providing below the information that would be included in a
Form 10, if we were to file a Form 10. Please note that the information provided
below relates to the combined enterprises after the acquisition of RGE.
ITEM 1.01 - ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On June 11, 2012, Castmor Resources Ltd., a Nevada corporation entered into a
Share Exchange Agreement (the "Share Exchange Agreement") with Red Giant
Entertainment Inc., a Florida corporation, and Benny Powell, who presently owns
100% of the issued and outstanding shares in RGE. Pursuant to the terms and
conditions of the Share Exchange Agreement, RGE shall exchange 100% of the
outstanding shares in RGE in exchange for forty million (40,000,000)
newly-issued restricted shares of the Company's common stock, par value $0.001
per share.
The exchange will result in RGE becoming a wholly-owned subsidiary of the
Company. As a result of the Share Exchange Agreement, the Company will now
conduct all current operations through Red Giant Entertainment, and our
principal business became the business of RGE.
Please see Item 5.01 - Changes in Control of Registrant, in the Business section
under "Acquisition of Assets" below, which is incorporated herein by reference.
ITEM 2.01 - COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On June 11, 2012, we completed an acquisition of RGE pursuant to the Share
Exchange Agreement in Exhibit 10.1. The acquisition was accounted for as a
recapitalization effected by the issuance of restricted common stock pursuant to
a Share Exchange Agreement.
See Item 1.01 - Entry Into a Material Definitive Agreement, Item 3.02 -
Unregistered Sales of Equity Securities, and Item 5.01 - Changes in Control of
Registrant, which are incorporated herein by reference.
ITEM 2.02 - RESULTS OF OPERATIONS AND FINANCIAL CONDITION
CORPORATE HISTORY
Castmor Resources Ltd. was incorporated in the State of Nevada on June 25, 2009.
Since inception we have had minimal operations and as such we were considered a
"shell company" as that term is defined under Rule 405 of the Securities and
Exchange Act of 1934. It was our initial intention to be a mineral exploration
company; however, due to the lack of revenues and adequate financing, we
abandoned our business plan and began seeking out potential acquisitions, joint
ventures and/or strategic relationships.
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Thereafter, on June 11, 2012 the Company entered into the Share Exchange
Agreement with RGE. Pursuant to the terms and conditions of the Share Exchange
Agreement, (i) RGE exchanged 100% of the issued and outstanding shares in RGE
for: forty million (40,000,000) newly-issued restricted shares of the Company's
common stock and, resulting in the acquisition of RGE by the Company.
AS A RESULT OF THE SHARE EXCHANGE AGREEMENT, OUR NEW BUSINESS OPERATIONS SHALL
BE CONDUCTED THROUGH OUR WHOLLY-OWNED SUBSIDIARY, RGE AND OUR PRINCIPAL BUSINESS
IS NOW THAT OF RGE, WHICH IS DESCRIBED IN GREATER DETAIL BELOW.
RGE COMPANY OVERVIEW
Red Giant Entertainment, Inc. is a Florida-based corporation that specializes in
Intellectual Property (IP) development for multiple media platforms and
transmedia propagation. The cornerstone of this development is based around the
more than forty online and print graphic novel properties being published as
well as the cast of thousands of characters from those series. These properties
have a readership that numbers in the millions globally. Some of these
properties are actively in development into other media such as movies, video
games, television, novels, toys, apparel, applications, etc. through either
direct production or licensing agreements.
Further, we are already the cornerstone content provider for the largest online
Web portal to comic books with page views in the tens of millions. Circulation
means not only eyeballs and awareness for the mass-market translations of these
properties, but profitability in the advertising arena where audience numbers
equates directly to revenue.
While Red Giant Entertainment is a relatively new company, the creative talent
and staff are not new names to the industry. The vast majority of creative
talent will be hand-picked from the upper echelon of the comic book fan
favorites.
Each week a new comic book targeting a different audience demographic will be
distributed at 1 million copies throughout the network. These demographics will
include: young adults males, adult females, children and mass audience in a
rotating fashion to increase overall scope of reach and breadth of audiences.
INDUSTRY HISTORY
Comic books are one of the few, true American artistic inventions. It is an
institution that dates back to the early 1900's, and consists of several "Ages"
and genres.
First there is what has become known as the "Platinum" Age. This "age" was
developed to encompass all comic books prior to the advent of 1938 and a comic
called Action Comics #1. It was during this period when comic strips took the
first step out of the newspaper page in "Yellow Kid #1" and were collected into
a stand-alone product.
Then came 1938 and Action Comics #1 - the first appearance of Superman and the
Golden Age of comics. When Superman hit the scene, little did Jerry Siegel and
Joe Shuster realize when they created the first "Super-Hero" they gave birth to
an entire genre of comics that would overtake the medium by storm. This Golden
Age saw the birth of characters such as Batman, Shazam, Captain America and
Wonder Woman.
In October 1956, Showcase #4 hit the stands and so officially began the Silver
Age. It featured the "Scarlet Speedster" known as The Flash and reignited the
comic book medium which had languished into a string of lack-luster Romance
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comics, Cowboy serials and Monster thrillers. Super-heroes were back on top
again. From there the Justice League of America was born and was a huge hit for
DC Comics. Then in 1961 the publisher of Timely Comics, a smaller struggling
company who would one day be known as Marvel, instructed a man named Stan Lee to
mimic the Justice League's success. Thus, the Fantastic Four and the "Marvel
Age" were born.
By the early 1970's the comic landscape had once again changed. Archie Comics
and Conan had supplanted super-heroes as the dominant selling comic books. And
relatively few new comic book characters came to the forefront. Then in 1975, a
book on the brink of cancellation was produced, "Giant Size X-Men #1", featuring
a new roster for the ailing series, and many argue this is the point at which
the Bronze Age of comics began. Giant-Size X-Men introduced the world to the
grim-and-gritty character. These were a far cry from the wacky Batman Adam West
Television series. As a result, this was an unparalleled time of mature themes.
Characters such as the Punisher - an anti-hero vigilante who used a gun to
dispense his own sense of justice - became popular. Comics were being written
seriously... on a level that adults and children could enjoy alike.
Beginning in the mid 1980's and continuing until now, the Modern Age persists.
Comic books became flashier. The comic book speculator became aware of comic
books as an investment, and began buying hundreds of copies of each book,
expecting instantaneous return on their investments.
Once the so-called speculators realized the lack of value, they left the
industry, putting over 12,000 specialty shop owners out of business... leaving a
void. It is these same shop owners who provide a strong back-bone for
distribution owners who are hungry for a company with an eye to changing the
status quo and re-invigorate the medium.
Currently this provides an opportunity for a company that can help to channel
the growing interest in comic books as a medium into the various outlets. By not
being simply "super-heroes" and through the use as an advertising source for the
distribution outlets to drive new business, Red Giant Entertainment provides the
key to realizing a resurgence in comic book readership.
PRODUCTS AND SERVICES
There will initially be three primary distribution lines. Some of this
groundwork has already begun and the proof of concept for each has long been
established. These three product lines are: MASS MARKET BOOKS, COLLECTED BOOKS,
and ELECTRONIC DISTRIBUTION.
MASS MARKET BOOK DISTRIBUTION
The "Mass Market Book" line will consist of four main titles with a fifth
quarterly title that will fill out the calendar to insure a full 52 week
schedule. Each book's format will be 64 pages in total, plus 4-page cover.
Currently, we're budgeting 32 pages of each issue to content, 2-4 pages for
editorial and up to 30 pages interior and 3 "premium" cover pages (inside front,
inside back and back cover) to advertising. The "Center Spread" will also be a
premium spot and will always be reserved for advertisements.
COLLECTED BOOK DISTRIBUTION
The "Collected" line will consist of four to five issues bundled together with
extra material to create what is called a "graphic novel." These will be sold
through regular comic book and book store markets as well as direct to consumers
through our online store.
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ELECTRONIC BOOK DISTRIBUTION
The overall goal of Red Giant Entertainment is to generate viewers/readers. To
this end, the print book distribution accomplishes this beautifully, but is
limited geographically in its reach within the United States. Continuing the
concept of "audience-building" free content, a current proven business model is
the use of the Internet and other electronic media to disseminate content on a
global scale.
To this end, Red Giant Entertainment has a strategic partnership with
Keenspot.com to host the Web versions of various projects as well as handle the
digital application and mobile media distribution channels as well. Keenspot's
stable of comic properties includes a network of more than four dozen
Keenspot-exclusive webcomic sites, in addition to the #1 user-generated comics
site ComicGenesis.com, which hosts over 10,000 independent webcomics. Keenspot
sites welcome more than 2 million unique visitors monthly. The company also
produces animated shorts under the Keentoons label which are distributed
internationally by ThunderSquid to mobile phone carriers worldwide including
Verizon V-CAST (U.S.) and O2 (U.K.).
This simultaneous delivery mechanism allows for concept incubation to take place
on a global scale for new projects, to reintroduce past projects that have been
out-of-print to new, global audiences on a scale otherwise unheard of, and to
release content that would otherwise only ever be seen in America to audiences
around the world.
The direct revenue stream of the Web projects is not a major, but the ancillary
monetization has been proven to be substantial. The heavy-hitters (of which we
will be one) are currently generating six-to-seven figure revenue for each of
their top titles. The electronic distribution revenue comes from advertising,
application sales (such as Wowio, Comixology, and other existing mobile
distributor contracts) and merchandising opportunities.
All of the "Mass Market" books will be released in their own "Webcomics" pages
in a staggered format after the print edition has already been distributed. For
example, if the Wayward Son #1 book drops in the first week March 2013, then the
first pages will begin to appear on its Webcomic portal four weeks later in
April 2013. This is not merely a concept; as this component of the business is
ALREADY in motion as of right now and are among the most popular full page
comics in the world.
PRODUCTION
We have three stages of production. First is the creative phase of our comics
into electronic, printable files. Second is the printing phase where these
electronic files are turned into paper periodicals. And finally, there is a
digital phase that converts the files into electronic media suitable for
dissemination as applications or Web content.
1. CREATIVE PHASE
* Production techniques and costs - Roughly $400/page budget for
freelancers, which is highly competitive for mid-tier publishers.
This will start for our initial books to be no more than
$75,000/month and should cap out at $150,000/month within the
first year of production. We will not require (at present)
exclusivity or long term contracts for our talent.
* Quality control - Editorial staff, including Editor-in-Chief,
Proofreader, Production Manager, Art Director and Publisher will
all monitor each project for quality control measures. Any
corrections necessary will be handled in-house or sent back to
the original artists for completion.
* Customer service - Executive Assistant will act as Customer
Service for the short term, and if demand requires may become a
new hire in the future. If customer service is necessary for
subscriptions, then the Production Manager will become involved.
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* Inventory control - Production Managers will manage inventory and
Subscriptions portions.
* Product development - Editorial staff will handle all product
development. Any new product development will done in conjunction
with Red Giant Media.
2. PRINTING AND DISTRIBUTION PHASE
* Production techniques and costs - There are two techniques
involved, offset printing, and shipping of the products.
a. Printing comprises the vast majority of costs in this
process. With a rough cost of $0.28 per unit for printing,
this is a weekly cost of $280,000. When "sales" books enter
the equation, this number doesn't rise noticeably and is
practically absorbed. Thus for ease-of-use, the numbers in
the spreadsheet for profits on these other books are the NET
numbers and not factored.
b. Shipping costs are quite similar to printing. They comprise
two facets, both SEA and GROUND services. With a rough cost
of $0.25 per unit, the weekly cost is $250,000 or less. Due
to bulk shipments on the quarterly books, this cost goes
down to $0.20 per unit every 3rd month.
* Quality control - Our Art Director will handle proofing process
along with Editorial staff. Onsite at the printers, quality
control will be handled by our Printing Coordinator who resides
in China to oversee that process completely.
* Customer service - Our Production Director will be the primary
point of contact for Customer Service to our retailers. Overseas,
our Printing Coordinator will handle any issues that might arise
during the printing process.
* Inventory control - Inventory control will be managed internally
by our Production Director and distributed through UPS Supply
Chain for tracking and management.
* Product development - Total printing time is roughly 7 days
(including weekends). Shipping time totals (roughly) 22 days
(including weekends). Total lead time, therefore, should be
considered 30 days, but we pad this time and factor 45 days
total. During Chinese holidays (such as Chinese New Year),
printing and shipping must be done in excess of 60 days to bypass
any unforeseen delays that may occur.
3. DIGITAL PHASE
Production techniques and costs - The artwork/creative costs for many
books are essentially "free" as this component has already been
covered via the Creative Phase. For "Web- only" or "Digital First"
creations, we'll likely go to a lower creative cost of roughly
$200/page during their formative time, with larger payouts if/when the
books might be developed in other formats.
MARKETING PLAN
Our market research comes from both primary and secondary resources and
independent research groups. All of this research has the same conclusion, comic
books have never been more popular, yet strangely the books themselves are
selling less than ever before.
Now more than ever before, attention is focused on the American comic book
industry. This provides opportunities that were previously unavailable, as well
as new sets of challenges. Within the overall entertainment print (pulp)
industry, readership has continued to slump as the Internet has proven to become
a "FREE" source of instantly accessible material to read. Further, video games
and movies have successfully lured an ever-increasing number of today's youth
(once a staple of the comic book industry) away from the traditional "pay" comic
book and reading periodicals in general. All of this coupled with the increasing
price of publishing - there has to be a paradigm shift in the method of
distribution and a way to breach the barriers to gaining new readership.
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MARKET TRENDS
Comic books have always had a cyclical trend of waxing and waning interest.
Starting in 1938 with Action Comics #1, comic books sold in the millions. These
numbers dropped during the mid-50's when the highest selling books were
female-oriented romantic comics. It wasn't until the 60's when Marvel Comics
re-invigorated the industry with their new approach. In the late 70's, when
sales were at another all-time low, yet another approach by Marvel served to
bring about one more boom that lasted until the early 90's.
Currently comic book circulation at the major companies is at an all-time low.
With the rapid succession of new comic book licensed properties hitting all
media, the time is ripe for bringing about a new upward swing in interest.
READERSHIP PROFILE
Comics produced by Red Giant Entertainment deliver quality entertainment to the
very heart of the young-adult male and female markets which is projected to be
over a $400 million dollar direct industry with billions in indirect, ancillary
sales. By covering the entire comic book industry of genres as well as reaching
out to new, untouched areas, our comics appeal to fans of all ages, genders and
ethnic backgrounds. We're able to reach a broad spectrum of pop culture
enthusiasts, as no other company can. Comic books attract a highly loyal and
enthusiastic segment of the young, male market - dedicated fans. They are at the
heart of popular culture. Their commitment can only be established from sources
they enjoy. This has been seen clearly in the entertainment field with the
success of such movies as SPIDERMAN, BATMAN, MIB, X-MEN, and dozens of others.
Comic books are big business - appealing to everyone currently reaching an
audience of over 30 million every month. Our own reach extends to over 52
million readers annually! These readers are early adopters who influence the
habits of their peers. Our own influence over these readers may extend well
beyond the comic book content themselves.
COMPETITION
Unlike our competitors, we can guarantee 100% "sell-through." That means that if
we say one million eyeballs see a book, we mean it. Comic book direct market
sales are less than accurate with their numbers at other companies. While they
report their number in "paid" circulation, over 90% of their sales are made
through NON-RETURNABLE retail outlets. As such, perhaps only 60-80% of their
product ever actually reaches a potential consumer, with the remainder staying
on the shelves, only to later become part of a retailer's "back-stock."
Our distributors are motivated to use our books to promote themselves, and as
such they each work hard to make sure that each week's shipment is liquidated.
So when we guarantee 1,000,000 readers, that is exactly what we mean.
We expect to build an immense distribution network. We have access to over 3500
comic book and hobby specialty retailers across the country. That's roughly the
number of screens that any major movie opens with! In addition, we also plan to
have over 6500 outlets in major entertainment stores and bookstores. This
effectively places us with a comic book location within a few minutes drive of
every major neighborhood in the United States. Further, we only have an average
of 100 copies of each of our books in any one location, making scarcity a factor
instead of waste.
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For those rare instances where potential readers are unable to be near one of
our retail outlets, we may implement the use of comic book mail-order services
ready to utilize our books as "incentives" for their services.
Retail outlets will have the option for premium and specialty racking for all of
our books. These racking will insure prominence in retail outlets and will be
supplied with a new display stand once every three months. An unprecedented mass
media exposure and interest is expected to revolve around our "new approach" to
comic books. This will only heighten interest in the books and consequently our
advertisers as well. As the true stars of this show, are indeed, our
advertisers.
DC COMICS RATES
Adult Group (Ages 18+) 1,800,000 Rate Base
Open 6x Rate 9x Rate 12x Rate
Full Page $30.44 CPM $27.39 CPM $25.89 CPM $24.33 CPM
Cover 2 & 3 $37.44 CPM $33.72 CPM $31.83 CPM $29.94 CPM
Cover 4 $40.50 CPM $36.44 CPM $34.44 CPM $32.39 CPM
Kids Group (Ages 6+) 650,000 Rate Base
Open 6x Rate 9x Rate 12x Rate
Full Page $38.18 CPM $34.37 CPM $32.46 CPM $30.54 CPM
Cover 2 & 3 $46.58 CPM $41.92 CPM $39.58 CPM $37.26 CPM
Cover 4 $50.77 CPM $45.69 CPM $43.15 CPM $40.62 CPM
MARVEL COMICS RATES
Adult Group (Ages 18+) 2,400,000 Rate Base
Open 2-4x Rate 5-8x Rate 9-12x Rate
Full Page $35.81 CPM $28.93 CPM $27.63 CPM $26.28 CPM
Cover 2 & 3 $39.39 CPM $31.95 CPM $30.42 CPM $28.97 CPM
Cover 4 $41.18 CPM $31.67 CPM $31.81 CPM $30.23 CPM
Kids Group (Ages 6+) 900,000 Rate Base
Open 2-4x Rate 5-8x Rate 9-12x Rate
Full Page $38.44 CPM $31.04 CPM $29.64 CPM $28.21 CPM
Cover 2 & 3 $39.64 CPM $34.28 CPM $32.64 CPM $31.02 CPM
Cover 4 $44.21 CPM $35.68 CPM $34.14 CPM $32.44 CPM
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And finally, our pricing is competitively priced, with features our competitors
cannot offer in terms of unmatched 100% "sell-through" and the ability to
produce actual "end user" numbers, not just the number of books printed.
Our average CPM will be roughly $33, which given the fact that we are at a 4
million base and can select down to 1 million incremental signatures with a
higher targeting than either competitor... the competitive advantage is clear.
EMPLOYEES
We currently do not have any employees. Mr. Powell is expected to enter into an
employment agreement in the near future. We anticipate that we will initially
have one full time employee; President and Chairman of the Board; Vice President
of Operations (to be hired); and an administrative assistant and Secretary. The
Chief Financial Officer is planned to initially be part-time and paid an hourly
fee for services rendered to CASL, but no employment agreement or compensation
arrangement is currently in place. The company will employ a number of outside
consultants on an as needed basis. In the event the company is successful at
raising addition capital by the sale of equity, debt or pursuant to a possible
joint venture, we may hire additional technical, operational or administrative
personnel as appropriate. We are using and will continue to use the services of
independent consultants and contractors to perform various professional
services. We believe that this use of third-party service providers may enhance
our ability to contain general and administrative expenses. Mr. Powell currently
represents the Company as the CEO and CFO.
FINANCIAL INFORMATION
SELECTED FINANCIAL INFORMATION
We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.
PROPERTIES.
OFFICE LOCATIONS
We have been provided month to month office space for $300 a month from an
unrelated third party and will continue to utilize this office until such time
as the company has a defined need to expand. The company anticipates a new
office lease will be executed on or around June, 2012.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
None of our directors will have personal liability to us or any of our
stockholders for monetary damages for breach of fiduciary duty as a director
involving any act or omission of any such director since provisions have been
made in the Articles of Incorporation limiting such liability. The foregoing
provisions shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to us or our stockholders, (ii) for
acts or omissions not in good faith or, which involve intentional misconduct or
a knowing violation of law, (iii) under applicable Sections of the Nevada, (iv)
the payment of dividends in violation of Section 78.300 of the Nevada or, (v)
for any transaction from which the director derived an improper personal
benefit.
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The Bylaws provide for indemnification of the directors, officers, and employees
of the Company in most cases for any liability suffered by them or arising out
of their activities as directors, officers, and employees of the Company if they
were not engaged in willful misfeasance or malfeasance in the performance of his
or her duties; provided that in the event of a settlement the indemnification
will apply only when the Board of Directors approves such settlement and
reimbursement as being for the best interests of the Corporation. The Bylaws,
therefore, limit the liability of directors to the maximum extent permitted by
Nevada law (Section 78.751).
Our officers and directors are accountable to us as fiduciaries; which means
they are required to exercise good faith and fairness in all dealings affecting
us. In the event that a stockholder believes the officers and/or directors have
violated their fiduciary duties to us, the stockholder may, subject to
applicable rules of civil procedure, be able to bring a class action or
derivative suit to enforce the stockholder's rights, including rights under
certain federal and state securities laws and regulations to recover damages
from and require an accounting by management. Stockholders who have suffered
losses in connection with the purchase or sale of their interest in the Company
in connection with such sale or purchase, including the misapplication by any
such officer or director of the proceeds from the sale of these securities, may
be able to recover such losses from us.
CHANGES AND DISAGREEMENTS WITH AUDITORS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our
financial statements and the notes thereto appearing in Item 9.01.
CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS
THIS INFORMATION FROM OUR REPORT ON FORM 8-K CONTAINS "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995 AND INVOLVES A HIGH DEGREE OF RISK AND UNCERTAINTY. ALL STATEMENTS,
OTHER THAN STATEMENTS OF HISTORICAL FACTS, INCLUDED IN OR INCORPORATED BY
REFERENCE INTO THIS FORM 8-K ARE FORWARD-LOOKING STATEMENTS. IN ADDITION, WHEN
USED IN THIS DOCUMENT, THE WORDS "ANTICIPATE," "ESTIMATE," "PROJECT," AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. OUR
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING
STATEMENTS DUE TO RISKS AND UNCERTAINTIES THAT EXIST IN OUR OPERATIONS. THESE
FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND
ASSUMPTIONS INCLUDING AMONG OTHERS, THE RISK THAT OUR PRODUCT DEVELOPMENT
PROGRAMS WILL NOT PROVE SUCCESSFUL, THAT WE WILL NOT BE ABLE TO OBTAIN FINANCING
TO COMPLETE ANY FUTURE PRODUCT DEVELOPMENT, THAT OUR PRODUCTS WILL NOT PROVE
COMPETITVE IN THEIR MARKETS. THESE RISKS AND OTHERS ARE MORE FULLY DESCRIBED IN
OUR MOST RECENT 10-K ANNUAL REPORT. SHOULD ONE OR MORE OF THESE RISKS OR
UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT,
ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE ANTICIPATED, ESTIMATED OR
PROJECTED.
11
ALTHOUGH WE BELIEVE THAT THE EXPECTATIONS INCLUDED IN SUCH FORWARD-LOOKING
STATEMENTS ARE REASONABLE, WE CANNOT GIVE ANY ASSURANCES THAT THESE EXPECTATIONS
WILL PROVE TO BE CORRECT. WE UNDERTAKE NO OBLIGATION TO PUBLICLY RELEASE THE
RESULT OF ANY REVISIONS TO SUCH FORWARD-LOOKING STATEMENTS THAT MAY BE MADE TO
REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE
OCCURRENCE OF UNANTICIPATED EVENTS.
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH OUR
FINANCIAL STATEMENTS AND THE NOTES THERETO APPEARING IN ITEM 9.01.
RESULTS OF OPERATIONS.
Since Red Giant Entertainment Inc. was formed on January 1, 2011, it has
generated only $ 25,723 in net sales and has incurred net income of $9,122 for
the period from January 1, 2011 (inception) through December 31, 2011. For the
five months ended May 31, 2012 we earned $15,351 in net sales and $10,156 of net
income, compared to $9,207 in net sales and $4,141 of net income in May 31,
2011.
For the five month periods ended May 31, 2012 and 2011, we incurred $5,195 and
$5,066 in operating expenses, respectively. The slight increase is attributable
to offsetting increases and decreases in professional fees, advertising,
communications and other.
Our cash in the bank at May 31, 2012 was $97. Net cash provided by financing
activities during the five months ended May 31, 2012 and 2011 was $10,869 and
$1,426, retrospectively from the conversion of the LLC member ownership to
common stock.
Net cash used in operating activities during the five months ended May 31, 2012
and 2011 was $10,261 and $1,426, retrospectively. The increase was due to
increases in operational activities. For the five months ended May 31, 2012 and,
2011, we reported net income of $10,156 and $4,141, respectively. Our material
financial obligations for the future will include our public reporting expenses,
transfer agent fees, bank fees, and other recurring fees, combined with any
additional operating expense related to our new business.
In its report on our December 31, 2011 audited financial statements, our
auditors expressed an opinion that there is substantial doubt about our ability
to continue as a going concern. Our financial statements do not include any
adjustments that may result from the outcome of this uncertainty. We are a newly
formed entity and have had revenues of only $91,972 since inception. Our
continuation as a going concern is dependent upon including our ability to raise
additional capital and to generate positive cash flows.
During the next twelve months we plan to seek financing opportunities to
commence a growth plan that will include the execution of our business plan as
the possibility of selling additional equity in the form of common stock.
LIQUIDITY AND CAPITAL RESOURCES.
As of May 31, 2012 we had cash or cash equivalents of $97 which is the only
amount available to us for current expenses until such time as we are able to
secure additional investment capital. Our recent rate of use of cash in our
operations over the last nine months has been approximately $0 per month. Unless
12
we incur further debt or raise additional equity capital we do not have
sufficient capital to carry on operations past September 30, 2012. Our long term
capital requirements and the adequacy of our available funds will depend on many
factors, including the eventual reporting company costs, and operating expenses,
among others. If we are unable to raise additional capital, generate sufficient
revenue, receive loans from the officers on an as needed basis, or enter into a
merger or acquisition transaction, we may have to curtail or cease our
operations.
Net cash provided by financing activities for the period from inception, through
June 15, 2012, was $0.
Liquidity is a measure of a company's ability to meet potential cash
requirements. We have historically met our capital requirements through the
issuance of stock and by borrowings. In the future, we anticipate we may be able
to provide the necessary liquidity we need by the revenues generated from the
sales of one or more of our mineral properties or entering into a Joint Venture
with an unrelated third party. If we do not generate sufficient sales revenues
we will continue to finance our operations through equity and/or debt
financings.
SATISFACTION OF OUR CASH OBLIGATIONS FOR THE NEXT 12 MONTHS.
A critical component of our operating plan impacting our continued existence is
the ability to obtain additional capital through additional equity and/or debt
financing. We do not anticipate enough positive internal operating cash flow
until such time as we can generate substantial revenues, which may take the
several months or years to fully realize. In the event we cannot obtain the
necessary capital to pursue our strategic plan, we may have to cease or
significantly curtail our operations. This would materially impact our ability
to continue operations.
Since inception, we have financed cash flow requirements through issuance of
common stock for cash and services. As we expand operational activities, we may
experience net negative cash flows from operations, pending receipt of sales or
development fees, and will be required to obtain additional financing to fund
operations through common stock offerings and debt borrowings to the extent
necessary to provide working capital. See "Risk Factors - Need For Additional
Funding."
Over the next twelve months we will seek additional capital in the future to
fund growth and expansion through additional equity or debt financing or credit
facilities. No assurance can be made that such financing would be available, and
if available it may take either the form of debt or equity. In either case, the
financing could have a negative impact on our financial condition and our
Stockholders.
We anticipate incurring operating losses over the next six months or more. Our
lack of operating history makes predictions of future operating results
difficult to ascertain. Risks include, but are not limited to, an evolving and
unpredictable business model and the management of growth. To address these
risks we must, among other things, implement and successfully execute our
business and marketing strategy, respond to competitive developments, and
attract, retain and motivate qualified personnel.
There can be no assurance that we will be successful in addressing such risks,
and the failure to do so can have a material adverse effect on our business
prospects, financial condition and results of operations.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES.
This discussion and analysis of our financial condition and results of
operations are based on our financial statements that have been prepared under
accounting principles generally accepted in the United States of America. The
preparation of financial statements in conformity with accounting principles
13
generally accepted in the United States of America requires our management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could materially differ from those
estimates. All significant accounting policies have been disclosed in Note2 to
the financial statements for the years ended December 31, 2011 . The preparation
of financial statements in conformity with accounting principles generally
accepted in the United States requires our management to make assumptions,
estimates, and judgments that affect the amounts reported, including the notes
thereto, and related disclosures of commitments and contingencies, if any.
We have identified certain accounting policies that are significant to the
preparation of our financial statements. These accounting policies are important
for an understanding of our financial condition and results of operations.
Critical accounting policies are those that are most important to the portrayal
of our financial condition and results of operations and require management's
difficult, subjective, or complex judgment, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain and may
change in subsequent periods. Certain accounting estimates are particularly
sensitive because of their significance to financial statements and because of
the possibility that future events affecting the estimate may differ
significantly from management's current judgments. We believe the following
critical accounting policies involve the most significant estimates and
judgments used in the preparation of our financial statements:
Our critical accounting policies are summarized below:
GOING CONCERN.
The financial statements included in our filings have been prepared in
conformity with generally accepted accounting principles that contemplate the
continuance of our Company as a going concern. Management may use borrowings and
security sales to mitigate the effects of its cash position; however, no
assurance can be given that debt or equity financing, if and when required, will
be available. The financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets and classification
of liabilities that might be necessary should we be unable to continue
existence.
USE OF ESTIMATES.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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.
INTANGIBLE ASSETS.
The Company's intellectual property consists of graphic novel artwork and was
contributed by a shareholder to the Company The intangible is being amortized
over its life of five years.
REVENUE RECOGNITION.
The Company follows the guidance of paragraph 605-10-S99-1 of the FASB
Accounting Standards Codification for revenue recognition. The Company
recognizes revenue when it is realized or realizable and earned. The Company
considers revenue realized or realizable and earned when all of the following
14
criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the
product has been shipped or the services have been rendered to the customer,
(iii) the sales price is fixed or determinable, and (iv) collectability is
reasonably assured.
QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.
INCOME TAXES.
The Company recognizes a liability or asset for deferred tax consequences of all
temporary differences between the tax bases of assets and liabilities and their
reported amounts in the financial statements that will result in taxable or
deductible amounts in future years when the reported amounts of the assets and
liabilities are recovered or settled. Deferred tax items mainly relate to net
operating loss carry forwards and accrued expenses. These deferred tax assets or
liabilities are measured using the enacted tax rates that will be in effect when
the differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date. Deferred tax assets are reviewed periodically for
recoverability, and valuation allowances are provided when it is more likely
than not that some or all of the deferred tax assets may not be realized.
EARNINGS (LOSS) PER SHARE.
The Company computes net loss per share and requires presentation of both basic
and diluted earnings per share, EPS, on the face of the income statement. Basic
EPS is computed by dividing net income (loss) available to common shareholders
by the weighted average number of common shares outstanding during the year.
Diluted EPS gives effect to all dilutive potential common shares outstanding
during the period using the treasury stock method. In computing diluted EPS, the
average stock price for the period is used in determining the number of shares
assumed to be purchased from the exercise of stock options or warrants. Diluted
EPS excludes all dilutive potential shares if their effect is anti-dilutive.
Because the Company does not have any potentially dilutive securities only basic
loss per share is presented in the accompanying financial statements
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS.
Management does not believe that any recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
In June 2011, the FASB issued authoritative guidance requiring entities to
present net income and other comprehensive income (OCI) in one continuous
statement or two separate, but consecutive, statements of net income and
comprehensive income. The option to present items of OCI in the statement of
changes in equity has been eliminated. The new requirements are effective for
annual reporting periods beginning after December 15, 2011 and for interim
reporting periods within those years. We do not expect the adoption to have a
material impact on our financial statements.
In May 2011, the FASB issued further additional authoritative guidance related
to fair value measurements and disclosures. The new guidance results in a
consistent definition of fair value and common requirements for measurement of
and disclosure about fair value between accounting principles generally accepted
in the United States (U.S. GAAP) and International Financial Reporting Standards
15
(IFRS). The guidance is effective for fiscal years and interim periods within
those years beginning after December 15, 2011. We are currently assessing the
impact of the guidance.
In April 2011, the FASB issued ASU No. 2011-17, "Revenue Recognition - Milestone
Method (Topic 605)." This ASU provides guidance on defining a milestone and
determining when it may be appropriate to apply the milestone method of revenue
recognition for research and development transactions. This update was effective
in the second quarter of 2011. Adoption of this update is not anticipated to
have a material impact on the Company's results of operation or financial
position.
In January 2011, the FASB issued ASU No. 2011-06, "Fair Value Measurements and
Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements."
This ASU requires additional disclosures about significant unobservable inputs
and transfers within Level 1 and 2 measurements. Adoption of this update did not
have any impact on the Company's results of operation or financial position.
OFF-BALANCE SHEET ARRANGEMENTS.
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
ITEM 3.02 - UNREGISTERED SALES OF EQUITY SECURITIES
On June 11, 2012, under the Share Exchange Agreement, we issued 40,000,000
shares of restricted common stock pursuant to that transaction. With the
issuance of the 40,000,000 shares to RED GIANT ENTERTAINMENT INC., they own a
controlling interest in CASL. See Item 5.01 - Changes in Control of Registrant,
"Recent Sales of Unregistered Securities" below, which is incorporated herein by
reference.
ITEM 5.01 - CHANGE IN CONTROL OF REGISTRANT
After the closing of the Share Exchange Agreement on June 12, 2012 which
involved the issuance of forty million (40,000,000) shares of CASL restricted
common stock to Red Giant Entertainment Inc., (Please see Item 1.01 - Entry into
a Material Agreement above, which is incorporated herein by reference) RGE holds
in aggregate approximately 55% of the outstanding shares of common stock of CASL
after the issuance of 40,000,000 shares. The existing stockholders of CASL, who
held 32,487,000 shares of common stock, experienced dilution as a result of the
issuance of the shares by CASL 40,000,000 shares of stock to RGE in exchange for
assets. The existing shareholders, as a result of these two transactions became
minority shareholders in CASL.
We are providing the following information in connection with a change in
control of our company.
RISK FACTORS
The securities described herein involve a high degree of risk. Interested
persons should carefully consider, among others, the risk factors described
below. As used in the Risk Factors, the term the "Company" when used in this
"Risk Factors" section may refer to CASL or CASL Sub on a combined asset basis,
based on the context of the language presented. If any of the following risks
actually occurs, our business, financial condition or results of operations
could suffer. In that case, the trading price of our common stock could decline,
and you may lose all or part of your investment. You should carefully consider
16
the various risks involved in investing in our shares, which include, among
others, the following factors:
FORWARD-LOOKING STATEMENTS:
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. This document contains forward-looking
statements which reflect the views of the President/CEO and the proposed new
members of management with respect to future events and financial performance.
These forward-looking statements are subject to certain uncertainties and other
factors that could cause actual results to differ materially from such
statements. From time to time, our management or persons acting on our behalf
may make forward-looking statements to inform existing and potential security
holders about our Company. All statements other than statements of historical
facts included in this report regarding our financial position, business
strategy, plans and objectives of management for future operations, industry
conditions, and indebtedness covenant compliance are forward-looking statements.
When used in this report, forward-looking statements are generally accompanied
by terms or phrases such as "estimate," "expects", "project," "predict,"
"believe," "expect," "anticipate," "target," "plan," "intend," "seek," "goal,"
"will," "should," "may," "targets" or other words and similar expressions that
convey the uncertainty of future events or outcomes. Items contemplating or
making assumptions about, actual or potential future sales, market size,
collaborations, and trends or operating results also constitute such
forward-looking statements. The Company undertakes no obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
We are including the following discussion to inform our existing and potential
security holders generally of some of the risks and uncertainties that can
affect our Company and to take advantage of the "safe harbor" protection for
forward-looking statements that applicable federal securities law affords.
Forward-looking statements involve inherent risks and uncertainties, and
important factors (many of which are beyond our Company's control) that could
cause actual results to differ materially from those set forth in the
forward-looking statements, including the following: general economic or
industry conditions, nationally and/or in the communities in which our Company
conducts business, changes in the interest rate environment, legislation or
regulatory requirements, conditions of the securities markets, our ability to
raise capital, changes in accounting principles, policies or guidelines,
financial or political instability, acts of war or terrorism, other economic,
competitive, governmental, regulatory and technical factors affecting our
Company's operations, products, services and prices.
We have based these forward-looking statements on our current expectations and
assumptions about future events. While our management considers these
expectations and assumptions to be reasonable, they are inherently subject to
significant business, economic, competitive, regulatory and other risks,
contingencies and uncertainties, most of which are difficult to predict and many
of which are beyond our control. Accordingly, results actually achieved may
differ materially from expected results in these statements. Forward-looking
statements speak only as of the date they are made. You should consider
carefully the statements in the "Risk Factors" section and other sections of
this report, which describe factors that could cause our actual results to
differ from those set forth in the forward-looking statements. Our Company does
not undertake, and specifically disclaims, any obligation to update any
forward-looking statements to reflect events or circumstances occurring after
the date of such statements.
Readers are urged not to place undue reliance on these forward-looking
statements, which speak only as of the date of this report. We assume no
obligation to update any forward-looking statements in order to reflect any
event or circumstance that may arise after the date of this report, other than
as may be required by applicable law or regulation. Readers are urged to
17
carefully review and consider the various disclosures made by us in our reports
filed with the Securities and Exchange Commission which attempt to advise
interested parties of the risks and factors that may affect our business,
financial condition, results of operation and cash flows. If one or more of
these risks or uncertainties materialize, or if the underlying assumptions prove
incorrect, our actual results may vary materially from those expected or
projected.
RISK FACTORS RELATED TO OUR COMPANY:
WE WILL BE A REORGANIZED START-UP COMPANY.
Castmor Resources Ltd. is reorganizing to engage in a new and different
business. If successful, of which there is no assurance, the newly reorganized
business, will still be deemed to be a start-up company that has generated a
limited amount of revenue its inception. We expect to incur significant
operating losses for the foreseeable future, and there can be no assurance that
we will be able to validate and market products in the future that will generate
revenues or that any revenues generated will be sufficient for us to become
profitable or thereafter maintain profitability.
WE HAVE LIMITED OPERATING HISTORY UPON WHICH TO EVALUATE OUR POTENTIAL FOR
FUTURE SUCCESS.
The likelihood of our success must be considered in light of the risks and
uncertainties frequently encountered by early stage companies like ours in an
evolving market, such as unforeseen capital requirements, failure of market
acceptance, failure to establish business relationships, and competitive
disadvantages as against larger and more established companies. If we are
unsuccessful in addressing these risks and uncertainties, our business will be
materially harmed.
THE GLOBAL FINANCIAL CRISIS MAY SIGNIFICANTLY IMPACT OUR BUSINESS AND FINANCIAL
CONDITION FOR THE FORESEEABLE FUTURE. The continued credit crisis and related
turmoil in the global financial system may adversely impact our business and our
financial condition, and we may face challenges if conditions in the financial
markets do not improve. Our ability to access the capital markets may be
restricted at a time when we would like, or need, to raise financing, which
could have an impact on our flexibility to react to changing economic and
business conditions. The economic situation could have an impact on the
properties leased and controlled by the company in that it may be impossible to
secure additional capital to finance development of the properties. If capital
is available to finance growth, it may not be on terms and conditions that are
favorable to the company and this may impact the shareholders of the company in
a negative way as it relates to dilution.
WE MAY BE UNABLE TO OBTAIN ADDITIONAL CAPITAL THAT WE WILL REQUIRE TO IMPLEMENT
OUR BUSINESS PLAN, WHICH COULD RESTRICT OUR ABILITY TO GROW.
We expect that our current capital and our other existing resources will not be
sufficient and will only provide a limited amount of working capital and may not
be sufficient to fund our continuing operations, and our planned growth. We will
require additional capital to continue to operate our business beyond the
initial phase of development. We may be unable to obtain additional capital
required and if we are able to secure additional capital, it may not be pursuant
to terms deemed to be favorable to the Company and its shareholders.
18
We may seek to sell additional equity or debt securities or obtain additional
credit facilities. The sale of additional equity securities could result in
dilution to our stockholders. The incurrence of indebtedness would result in
increased debt service obligations and could require us to agree to operating
and financing covenants that would restrict our operations. Our ability to
obtain additional capital on acceptable terms is subject to a variety of
uncertainties, including:
* investors' perception of, and demand for, securities of a U.S.-based
entertainment company involved in the media sector;
* conditions of the U.S. and other capital markets in which we may seek
to raise funds;
* our future results of operations, financial condition; and
* economic, political and other conditions in North America.
Financing may not be available in amounts or on terms acceptable to us, if at
all. Any failure by us to raise additional funds on terms favorable to us, or at
all, could have a material adverse effect on our business, financial condition
and results of operations.
In addition, our administrative requirements (such as salaries, insurance
expenses and general overhead expenses, as well as legal compliance costs and
accounting expenses) may require a substantial amount of additional capital and
cash flow.
We may pursue sources of additional capital through various financing
transactions or arrangements, including joint venturing of projects, debt
financing, equity financing or other means. We may not be successful in locating
suitable financing transactions in the time period required or at all, and we
may not obtain the capital we require by other means. If we do not succeed in
raising additional capital, our resources may not be sufficient to fund our
planned operations going forward.
Any additional capital raised through the sale of equity may dilute the
ownership percentage of our stockholders. This could also result in a decrease
in the fair market value of our equity securities because our assets would be
owned by a larger pool of outstanding equity. The terms of securities we issue
in future capital transactions may be more favorable to our new investors, and
may include preferences, superior voting rights and the issuance of other
derivative securities, and issuances of incentive awards under equity employee
incentive plans, which may have a further dilutive effect.
Our ability to obtain needed financing may be impaired by such factors as the
capital markets, our status as a new enterprise without a significant
demonstrated operating history and/or the loss of key management. If the amount
of capital we are able to raise from financing activities, together with our
revenues from operations, is not sufficient to satisfy our capital needs (even
to the extent that we reduce our operations), we may be required to cease our
operations.
We may incur substantial costs in pursuing future capital financing, including
investment banking fees, legal fees, accounting fees, securities law compliance
fees, printing and distribution expenses and other costs. We may also be
required to recognize non-cash expenses in connection with certain securities we
may issue, such as convertible notes, which may adversely impact our financial
condition.
WE WILL BE HIGHLY DEPENDENT ON OUR CURRENT OFFICERS AND DIRECTORS.
Benny Powell will remain as the Chief Executive Officer and President. No
individual has been identified to assume the role of Chief Financial Officer.
Assuming he remains the key officer and director of the Corporation after the
reorganization, the loss of him, upon whose knowledge, leadership and expertise
we shall be relying on in the future, would harm our ability to execute our new
business plan.
19
Our success will depend heavily upon the future contributions of Mr. Powell,
whose knowledge, leadership and expertise would be difficult to replace and
impact our ability to retain and attract new or replacement and professional
personnel. If we were to lose his services, our ability to execute our new
business plan would be harmed and we may be forced to cease operations until
such time as we could hire a suitable replacement for them. Mr. Powell will
enter into employment agreements with the Company.
OUR PROPOSED POST-REORGANIZATION MANAGEMENT TEAM DOES NOT HAVE EXTENSIVE
EXPERIENCE IN PUBLIC COMPANY MATTERS, WHICH COULD IMPAIR OUR ABILITY TO COMPLY
WITH LEGAL AND REGULATORY REQUIREMENTS.
Our proposed new management team has had very limited public company management
experience or responsibilities, which could impair our ability to comply with
legal and regulatory requirements such as the Sarbanes-Oxley Act of 2002 and
applicable federal securities laws, including filing required reports and other
information required on a timely basis. It may be expensive to implement and
effect programs and policies in an effective and timely manner that adequately
respond to increased legal, regulatory compliance and reporting requirements
imposed by such laws and regulations, and we may not have the resources to do
so. Our failure to comply with such laws and regulations could lead to the
imposition of fines and penalties and further result in the deterioration of our
business.
OUR LACK OF DIVERSIFICATION WILL INCREASE THE RISK OF AN INVESTMENT IN THE
COMPANY, AND OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS MAY DETERIORATE
IF WE FAIL TO DIVERSIFY.
Our new business will initially be in the entertainment/media industry. Larger
companies have the ability to manage their risk by diversification. However, we
will lack diversification, in terms of both the nature and geographic scope of
our business. As a result, we will likely be impacted more acutely by factors
affecting our industry or the regions in which we operate than we would if our
business were more diversified, enhancing our risk profile. If we cannot
diversify or expand our operations, our financial condition and results of
operations could deteriorate. Initially, we are solely dependent on the
expertise of our management to conduct comprehensive exploration and evaluate
the economic viability of our leased properties.
CERTAIN OF OUR EXISTING STOCKHOLDERS HAVE SUBSTANTIAL INFLUENCE OVER OUR
COMPANY, AND THEIR INTERESTS MAY NOT BE ALIGNED WITH THE INTERESTS OF OUR OTHER
STOCKHOLDERS.
Mr. Powell, President and Chief Executive Officer, beneficially owns
approximately 55% of our outstanding voting securities. As a result, he has
significant influence over our business, including decisions regarding mergers,
consolidations, the sale of all or substantially all of our assets, election of
directors and other significant corporate actions. This concentration of
ownership may also have the effect of discouraging, delaying or preventing a
future change of control, which could deprive our stockholders of an opportunity
to receive a premium for their shares as part of a sale of our Company and might
reduce the price of our shares.
WE MAY BE EXPOSED TO POTENTIAL RISKS RELATING TO OUR INTERNAL CONTROLS OVER
FINANCIAL REPORTING AND OUR ABILITY TO HAVE THOSE CONTROLS ATTESTED TO BY OUR
INDEPENDENT AUDITORS.
As directed by Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the
SEC adopted rules requiring public companies to include a report of management
on the company's internal controls over financial reporting in their annual
reports, including Form 10-K. In addition, the independent registered public
accounting firm auditing a company's financial statements must also attest to
and report on management's assessment of the effectiveness of the company's
internal controls over financial reporting. Accordingly, we have not evaluated
our internal control systems in order to allow our management to report on, and
20
our independent auditors to attest to, our internal controls as required by
these requirements of SOX 404. Although smaller reporting companies are no
longer required to obtain an audit of their internal controls until they reach
the accelerated filer status, we can provide no assurance that we will comply
with all of the requirements imposed thereby. There can be no positive assurance
that we will receive a positive attestation from our independent auditors. In
the event we identify significant deficiencies or material weaknesses in our
internal controls that we cannot remediate in a timely manner or we are unable
to receive a positive attestation from our independent auditors with respect to
our internal controls, investors and others may lose confidence in the
reliability of our financial statements.
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM HAS EXPRESSED SUBSTANTIAL
DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
We have working capital of $16,398 and have recognized net income of $ 9,122 for
the cumulative period from January 1, 2011(inception) to December 31, 2011.
Although the Company has a revenue stream, it has only be operational for less
than one year and has no historical operations to base our anticipated future
cash flows. The future of our Company is dependent upon future profitable
operations from the sales of our media. Our management will need to seek
additional financing in the future in order to expand our operations. These
conditions raise substantial doubt about our company's ability to continue as a
going concern. Although there are no assurances that our plans will be realized,
our management believes that we will be able to continue operations in the
future.
WE MAY NOT BE ABLE TO EFFECTIVELY MANAGE OUR GROWTH, WHICH MAY HARM OUR
PROFITABILITY.
Our strategy envisions expanding our business is based in part on anticipated
future income, of which there is no assurance. If we fail to effectively manage
our growth, our financial results could be adversely affected. Growth may place
a strain on our management systems and resources. We must continue to refine and
expand our business capabilities, our systems and processes and our access to
financing sources. As we grow, we must continue to hire, train, supervise and
manage new employees. We cannot assure that we will be able to:
* meet our capital needs;
* expand our systems effectively or efficiently or in a timely manner;
* allocate our human resources optimally;
* identify and hire qualified employees or retain valued employees; or
* incorporate effectively the components of any business that we may
acquire in our effort to achieve growth.
If we are unable to manage our growth, our operations and our financial results
could be adversely affected by inefficiency, which could diminish our
profitability.
RISKS RELATING TO THE OWNERHIP OF
CASTMOR RESOURCES LTD. COMMON STOCK
RISKS RELATING TO LOW PRICED STOCKS.
Although the Company's Common Stock is approved for trading on the OTC Bulletin
Board, there has only been little if any trading activity in the stock.
Accordingly, there is no history on which to estimate the future trading price
range of the Common Stock. If the Common Stock trades below $5.00 per share,
trading in the Common Stock will be subject to the requirements of certain rules
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
21
Act"), which require additional disclosure by broker-dealers in connection with
any trades involving a stock defined as a penny stock (generally, any non-FINRA
equity security that has a market price share of less than $5.00 per share,
subject to certain exceptions). Such rules require the delivery, prior to 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 defined as an investor
with a net worth in excess of $1,000,000 or annual income exceeding $200,000
individually or $300,000 together with a spouse). For these types of
transactions, the broker-dealer must make a special suitability determination
for the purchaser and have received the purchaser's written consent to the
transaction prior to the sale. The broker-dealer also must disclose the
commissions payable to the broker-dealer, current bid and offer quotations for
the penny stock and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Such information must be provided to the customer orally or in
writing before or with the written confirmation of trade sent to the customer.
Monthly statements must be sent disclosing recent price information for the
penny stock held in the account and information on the limited market in penny
stocks. The additional burdens imposed upon broker-dealers by such requirements
could discourage broker-dealers from effecting transactions in the Common Stock
which could severely limit the market liquidity of the Common Stock and the
ability of holders of the Common Stock to sell it.
THE MARKET PRICE OF OUR COMMON STOCK IS VOLATILE, LEADING TO THE POSSIBILITY OF
ITS VALUE BEING DEPRESSED AT A TIME WHEN SHAREHOLDER MAY WANT TO SELL YOUR
HOLDINGS.
The market price of our common stock can become volatile. Numerous factors, many
of which are beyond our control, may cause the market price of our common stock
to fluctuate significantly. These factors include:
* our earnings releases, actual or anticipated changes in our earnings,
fluctuations in our operating results or our failure to meet the
expectations of financial market analysts and investors;
* changes in financial estimates by us or by any securities analysts who
might cover our stock;
* speculation about our business in the press or the investment
community;
* significant developments relating to our relationships with our
consultants and out-sourced contracting companies which will be
utilized for most of exploration services;
* stock market price and volume fluctuations of other publicly traded
companies customer demand for our products;
* investor perceptions of the entertainment industry in general and our
Company in particular;
* the operating and stock performance of comparable companies;
* general economic conditions and trends;
* announcements by us or our competitors of new products, significant
acquisitions, strategic partnerships or divestitures;
* changes in accounting standards, policies, guidance, interpretation or
principles;
* loss of external funding sources;
* sales of our common stock, including sales by our directors, officers
or significant stockholders; and
* additions or departures of key personnel.
Securities class action litigation is often instituted against companies
following periods of volatility in their stock price. Should this type of
litigation be instituted against us, it could result in substantial costs to us
and divert our management's attention and resources.
22
Moreover, securities markets may from time to time experience significant price
and volume fluctuations for reasons unrelated to the operating performance of
particular companies. These market fluctuations may adversely affect the price
of our common stock and other interests in our Company at a time when you want
to sell your interest in us.
BECAUSE WE WERE A "SHELL COMPANY", INVESTORS IN OUR COMPANY WILL NOT BE ABLE TO
UTILIZE RULE 144 TO SELL THEIR SHARES UNTIL AT LEAST ONE YEAR AFTER WE CEASE TO
BE A SHELL COMPANY, BUT WILL HAVE TO RELY ON OUR MAINTAINING AN EFFECTIVE
REGISTRATION STATEMENT TO ALLOW FOR RESALE OF THEIR SHARES.
The Shares issued to investors in the Company cannot be sold pursuant to Rule
144 promulgated under the Securities Act until one year after the Company ceases
to be a shell company. In general, under Rule 144 as currently in effect, a
person (or persons whose shares are aggregated) who has beneficially owned
restricted securities shares for at least six months, including persons who may
be deemed "affiliates" of the Company, as that term is defined under the
Securities Act, would be entitled to sell within any three month period a number
of shares that does not exceed the greater of 1% of the then outstanding shares
or the average weekly trading volume of shares during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain
manner-of-sale provisions, notice requirements and the availability of current
public information about the Company. A person who has not been an affiliate of
the Company at any time during the three months preceding a sale, and who has
beneficially owned his shares for at least one year, would be entitled under
Rule 144 to sell such shares without regard to any volume limitations under Rule
144.
Castmor Resources Ltd. was a shell company prior to filing this periodic report
on Form 8-K and therefore a majority of its shareholders may not currently
utilize Rule 144 to sell their shares. Rule 144 is not available for sales of
shares of companies that are or have been "shell companies" except under certain
conditions. CASL completed an acquisition and has removed its status as a shell
company by filing this report on Form 8-K. Shareholders are able to utilize Rule
144 one year after the filing of this Form 8-K, assuming it files the documents
it is required to file as a reporting company. Investors in the Company whose
shares have been registered in an effective and current registration statement
will be able to sell their shares pursuant to said registration statement. They
will not be able to rely on Rule 144 to sell their shares during the one year
period after the filing of this Form 8-K changing our shell status if the
registration statement's effectiveness is not maintained on a temporary or
permanent basis.
LIMITATION ON LIABILITY OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation includes provisions to eliminate, to the
fullest extent permitted by Nevada Law as in effect from time to time, the
personal liability of directors of the Company for monetary damages arising from
a breach of their fiduciary duties as directors. The Articles of Incorporation
also includes provisions to the effect that the Company shall, to the maximum
extent permitted from time to time under the law of the State of Nevada,
indemnify any director or officer. In addition, the Company's bylaws require the
Company to indemnify, to the fullest extent permitted by law, any director,
officer, employee or agent of the Company for acts which such person reasonably
believes are not in violation of the Company's corporate purposes as set forth
in the Articles of Incorporation.
POTENTIAL ISSUANCE OF ADDITIONAL COMMON AND PREFERRED STOCK.
The Company will be authorized to issue up to 900,000,000 shares of Common
Stock. To the extent of such authorization, the board of directors of the
Company will have the ability, without seeking stockholder approval, to issue
additional shares of Common Stock in the future for such consideration as the
board of directors may consider sufficient. The issuance of additional Common
Stock in the future will reduce the proportionate ownership and voting power of
the Common Stock offered hereby. The Company will also be authorized to issue up
23
to 100,000,000 shares of preferred stock, the rights and preferences of which
may be designated in series by the board of directors. To the extent of such
authorization, such designations may be made without stockholder approval. The
designation and issuance of series of preferred stock in the future would create
additional securities which would have dividend and liquidation preferences over
the Common Stock offered hereby. In addition, the ability to issue any future
class or series of preferred stock could impede a non-negotiated change in
control and thereby prevent stockholders from obtaining a premium for their
Common Stock. See "Description of Securities."
NO ASSURANCE OF A LIQUID PUBLIC MARKET FOR SECURITIES.
Although the Company's shares of Common Stock are currently eligible for
quotation on the OTC Bulletin Board and the Pink Sheets, there has been no
significant market in such stock. There has been no long term established public
trading market for the Common Stock hereto, and there can be no assurance that a
regular and established market will be developed and maintained for the
securities upon completion of the Offering. There can also be no assurance as to
the depth or liquidity of any market for the Common Stock or the prices at which
holders may be able to sell the shares.
VOLATILITY OF STOCK PRICES.
In the event that a public market for the Company's Common Stock is created,
market prices for the Common Stock will be influenced by many factors and will
be subject to significant fluctuations in response to variations in operating
results of the Company and other factors such as investor perceptions of the
Company, supply and demand, interest rates, general economic conditions and
those specific to the industry, developments with regard to the Company's
activities, future financial condition and management.
THE MARKET PRICE OF OUR COMMON STOCK IS, AND IS LIKELY TO CONTINUE TO BE, HIGHLY
VOLATILE AND SUBJECT TO WIDE FLUCTUATIONS.
The market price of the Company's common stock is likely to be highly volatile
and could fluctuate widely in price in response to various factors, many of
which are beyond the Company's control, including the following:
* services by the Company or its competitors;
* additions or departures of key personnel;
* the Company's ability to execute its business plan;
* operating results that fall below expectations;
* loss of any strategic relationship;
* industry developments;
* economic and other external factors; and
* period-to-period fluctuations in the Company's financial results.
In addition, the securities markets have from time to time experienced
significant price and volume fluctuations that are unrelated to the operating
performance of particular companies. These market fluctuations may also
materially and adversely affect the market price of the Company's common stock.
WE MAY BE SUBJECT TO PENNY STOCK REGULATIONS AND RESTRICTIONS AND YOU MAY HAVE
DIFFICULTY SELLING SHARES OF OUR COMMON STOCK.
24
The SEC has adopted regulations which generally define so-called "penny stocks"
to be an equity security that has a market price less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exemptions. If
our common stock becomes a "penny stock," we may become subject to Rule 15g-9
under the Exchange Act, or the Penny Stock Rule. This rule imposes additional
sales practice requirements on broker-dealers that sell such securities to
persons other than established customers and "accredited investors" (generally,
individuals with a net worth in excess of $1,000,000 or annual incomes exceeding
$200,000, or $300,000 together with their spouses). For transactions covered by
the Penny Stock Rule, a broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transaction prior to sale. As a result, this rule may affect the
ability of broker-dealers to sell our securities and may affect the ability of
purchasers to sell any of our securities in the secondary market.
For any transaction involving a penny stock, unless exempt, the rules require
delivery, prior to any transaction in a penny stock, of a disclosure schedule
prepared by the SEC relating to the penny stock market. Disclosure is also
required to be made about sales commissions payable to both the broker-dealer
and the registered representative and current quotations for the securities.
Finally, monthly statements are required to be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stock.
There can be no assurance that our common stock will qualify for exemption from
the Penny Stock Rule. In any event, even if our common stock were exempt from
the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the
Exchange Act, which gives the SEC the authority to restrict any person from
participating in a distribution of penny stock, if the SEC finds that such a
restriction would be in the public interest.
WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.
We do not intend to declare dividends for the foreseeable future, as we
anticipate that we will reinvest any future earnings in the development and
growth of our business. Therefore, investors will not receive any funds unless
they sell their common stock, and stockholders may be unable to sell their
shares on favorable terms or at all. Investors cannot be assured of a positive
return on investment or that they will not lose the entire amount of their
investment in our common stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information, to the best of our knowledge, about
the beneficial ownership of our common stock on June 11, 2012, held by our
founders, directors and executive officers and by those persons known to
beneficially own more than 5% of our capital stock. The percentage of beneficial
ownership for the following table is based on 72,487,000 shares of common stock
outstanding as of June 11, 2012, just prior to the acquisition of RGE assets.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and does not necessarily indicate beneficial
ownership for any other purpose. Under these rules, beneficial ownership
includes those shares of common stock over which the stockholder has sole or
shared voting or investment power.
25
Name and Address of Amount of Shares Percent
Title of Class Beneficial Owner of Shares (1) Position Held by Owner of Class
-------------- ------------------------------ -------- ------------- --------
Common, $0.001 Benny Powell Director/Pres./CEO 40,000,000 55%
par value
All Executive Officers,
Directors as a Group 40,000,000 55%
----------
(1) Beneficial Ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to
securities. Each of the beneficial owners listed above has direct ownership
of and sole voting power and investment power with respect to the shares of
our common stock.
The following table presents information, to the best of our knowledge, about
the beneficial ownership of our common stock on June 11, 2012, directors,
executive officers and by those persons known to beneficially own more than 5%
of our capital stock. The percentage of beneficial ownership for the following
table is based on 72,487,000 shares of common stock outstanding as of June 11,
2012, just after the acquisition of RGE assets.
Name and Address of Amount of Shares Percent
Title of Class Beneficial Owner of Shares (1) Position Held by Owner of Class
-------------- ------------------------------ -------- ------------- --------
Common, $0.001 Benny Powell Director/Pres. 40,000,000 55%
All Executive Officers,
Directors as a Group
(2 persons) 40,000,000 55%
----------
(1) Beneficial Ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to
securities. Each of the beneficial owners listed above has direct ownership
of and sole voting power and investment power with respect to the shares of
our common stock.
DIRECTORS AND EXECUTIVE OFFICERS
The members of our board of directors serve for one year terms and are elected
at the next annual meeting of stockholders, or until their successors have been
elected. The officers serve at the pleasure of the board of directors.
Pursuant to the acquisition of RGE, some members or affiliates of RGE became the
officers and directors of CASL effective upon closing of the acquisition
agreement.
26
The following table sets forth the persons that became the directors and
executive officers of the Company after the Acquisition Closing. The previous
directors of CASL appointed the nominees designated by RGE as members of the
board of directors of CASL. Subsequently, some of the officers of CASL resigned
their positions at CASL, clearing the way for the appointment of new executive
officers by the new board of directors of CASL. Directors are elected for a
period of one year and thereafter serve until the next annual meeting at which
their successors are duly elected by the stockholders. Officers and other
employees serve at the will of the board of directors and hold office until
their death, resignation or removal from office.
Name Age Position
---- --- --------
Benny Powell 38 President and Chairman of the Board
Chief Financial Officer and Treasurer
Benny Powell Director
FAMILY RELATIONSHIPS.
There are no family relationships among our directors or officers
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS.
To our knowledge, during the past five years, no present director or executive
officer of our company: (1) filed a petition under the federal bankruptcy laws
or any state insolvency law, nor had a receiver, fiscal agent, or similar
officer appointed by a court for the business or present of such a person, or
any partnership in which he was a general partner at or within two years before
the time of such filing, or any corporation or business association of which he
was an executive officer within two years before the time of such filing; (2)
was convicted in a criminal proceeding or named subject of a pending criminal
proceeding (excluding traffic violations and other minor offenses); (3) was the
subject of any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining him from or otherwise limiting the following activities: (i) acting as
a futures commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, associated
person of any of the foregoing, or as an investment advisor, underwriter, broker
or dealer in securities, or as an affiliated person, director of any investment
company, or engaging in or continuing any conduct or practice in connection with
such activity; (ii) engaging in any type of business practice; (iii) engaging in
any activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of federal or state securities
laws or federal commodity laws; (4) was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any federal or state
authority barring, suspending or otherwise limiting for more than 60 days the
right of such person to engage in any activity described above under this Item,
or to be associated with persons engaged in any such activity; (5) was found by
a court of competent jurisdiction in a civil action or by the Securities and
Exchange Commission to have violated any federal or state securities law and the
judgment was not subsequently reversed, suspended or vacated; (6) was found by a
court of competent jurisdiction in a civil action or by the Commodity Futures
Trading Commission to have violated any federal commodities law, and the
judgment in such civil action or finding by the Commodity Futures Trading
Commission has not been subsequently reversed, suspended or vacated.
LIMITATION OF LIABILITY OF DIRECTORS.
Pursuant to Nevada Law, our Articles of Incorporation exclude personal liability
for our Directors for monetary damages based upon any violation of their
fiduciary duties as Directors, except as to liability for any breach of the duty
of loyalty, acts or omissions not in good faith or which involve intentional
27
misconduct or a knowing violation of law, or any transaction from which a
Director receives an improper personal benefit. This exclusion of liability does
not limit any right which a Director may have to be indemnified and does not
affect any Director's liability under federal or applicable state securities
laws. We have agreed to indemnify our directors against expenses, judgments, and
amounts paid in settlement in connection with any claim against a Director if he
acted in good faith and in a manner he believed to be in our best interests.
ELECTION OF DIRECTORS AND OFFICERS.
Directors are elected to serve until the next annual meeting of stockholders and
until their successors have been elected and qualified. Officers are appointed
to serve until the meeting of the Board of Directors following the next annual
meeting of stockholders and until their successors have been elected and
qualified.
No Executive Officer or Director of the Corporation has been the subject of any
Order, Judgment, or Decree of any Court of competent jurisdiction, or any
regulatory agency permanently or temporarily enjoining, barring suspending or
otherwise limiting him from acting as an investment advisor, underwriter, broker
or dealer in the securities industry, or as an affiliated person, director or
employee of an investment company, bank, savings and loan association, or
insurance company or from engaging in or continuing any conduct or practice in
connection with any such activity or in connection with the purchase or sale of
any securities.
No Executive Officer or Director of the Corporation has been convicted in any
criminal proceeding (excluding traffic violations) or is the subject of a
criminal proceeding which is currently pending.
No Executive Officer or Director of the Corporation is the subject of any
pending legal proceedings.
AUDIT COMMITTEE AND FINANCIAL EXPERT.
We do not as of this date have an Audit Committee, our directors perform some of
the same functions of an Audit Committee, such as: recommending a firm of
independent certified public accountants to audit the annual financial
statements; reviewing the independent auditors independence, the financial
statements and their audit report; and reviewing management's administration of
the system of internal accounting controls. The Company does currently have a
written audit committee charter.
We have no financial expert. We believe the cost related to retaining a
financial expert at this time is prohibitive. Further, because of our start-up
operations and financial experience of our officers, we believe the services of
a financial expert are not warranted.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE-FISCAL YEARS ENDED DECEMBER 31, 2011.
The following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid the named persons for all services
rendered in all capacities during the noted periods. The two named persons were
executive officers as of December 31, 2011. No executive officer received total
annual salary and bonus compensation in excess of $100,000.
28
Name and Principal Position All Other
as of 12-31-2011 Year Salary($) Bonus($) Compensation($) Total($)
---------------- ---- --------- -------- --------------- --------
Benny Powell 2011 -- -- -- --
EMPLOYMENT AGREEMENTS.
While we are in the process of preparing employment agreements with our
executive officers, no such agreements have presently been executed.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END.
None of our executive officers received any equity awards, including, options,
restricted stock or other equity incentives during the fiscal year ended
December 31, 2011.
COMPENSATION COMMITTEE.
We currently do not have a compensation committee of the board of directors.
Until a formal committee is established our entire board of directors will
review all forms of compensation provided to our executive officers, directors,
consultants and employees, including stock compensation.
DIRECTOR COMPENSATION AND OTHER ARRANGEMENTS.
None of our directors receive any compensation for serving as such, for serving
on committees of the Board of Directors or for special assignments. During the
fiscal year ended December 31, 2010 or 2011, there were no other arrangements
between us and our directors that resulted in our making payments to any of our
directors for any services provided to us by them as directors.
Change in
Pension
Value and
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Cash($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Total($)
---- ------- --------- --------- --------------- ----------- --------------- --------
Benny Powell 0 0 0 0 0 0 0
Total 0 0 0 0 0 0 0
TERMINATION OF EMPLOYMENT.
There are no compensatory plans or arrangements, including payments to be
received from us, with respect to any person named in Cash Consideration set out
above which would in any way result in payments to any such person because of
29
his resignation, retirement, or other termination of such person's employment
with us, or any change in control of our company, or a change in the person's
responsibilities following a change in control of our company.
PROMOTERS AND CERTAIN CONTROL PERSONS.
We did not have any promoters at any time during the past five fiscal years.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers, and persons who own more than ten percent of our common
stock, to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes of ownership of our common stock. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file. We
have no knowledge that, as of the date of this filing, our directors, executive
officers, and persons who own more than ten percent of our common stock have
filed an initial Form 3, Form 4 current report, or an annual Form 5 in a timely
manner.
DIRECTOR INDEPENDENCE.
Our Board of Directors has determined that none of our directors are currently
"independent directors" as that term is defined in Rule 4200(a)(15) of the
Marketplace Rules of the National Association of Securities Dealers. We are not
presently required to have independent directors. If we ever become a listed
issuer whose securities are listed on a national securities exchange or on an
automated inter-dealer quotation system of a national securities association,
which has independent director requirements, we intend to comply with all
applicable requirements relating to director independence.
TRANSFER AGENT.
Holladay Stock Transfer currently serves as the independent transfer agent and
registrar for our outstanding securities. The transfer agent's telephone number
is (480) 481-3940.
LEGAL PROCEEDINGS
To our knowledge as of the date of this report, there are no material pending
legal proceedings or threatened to which we are a party or to which any of our
property is subject. However, litigation is subject to inherent uncertainties,
and an adverse result in these or other matters may arise from time to time that
may harm our business. We are currently not aware of any such legal proceedings
or claims that we believe will have a material adverse effect on our business,
financial condition or operating results.
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION.
The Company's common stock was listed on the OTC Bulletin Board of the National
Association of Securities Dealers ("NASD") on March 4, 2008 under the symbol
"CASL". There is currently no established "public market" for shares of our
common stock. No assurance can be given that any market for our common stock
will develop or be maintained.
30
For any market that develops for our common stock, the sale of "restricted
securities" (common stock) pursuant to Rule 144 of the Securities and Exchange
Commission by members of management or any other person to whom any such
securities were issued or may be issued in the future may have a substantial
adverse impact on any such public market. Present members of management and new
shareholders who received their shares pursuant to the asset acquisition
agreement on June 11, 2012 when the company ceased to be a "shell" company, will
be required to satisfy the one year holding period of Rule 144 for public sales
of their respective holdings in our Company in accordance with Rule 144 on June
11, 2013, unless said shares are registered pursuant to certain S.E.C.
regulation. See the caption "Recent Sales of Unregistered Securities", of this
Item, below. A minimum holding period of one year is required for resales under
Rule 144, along with other pertinent provisions, including publicly available
information concerning our Company; limitations on the volume of restricted
securities which can be sold in any ninety (90) day period; the requirement of
unsolicited broker's transactions; and the filing of a Notice of Sale on Form
144.
NUMBER OF SHAREHOLDERS.
The number of record holders of the Company's common stock as of the date of
this Report is approximately 45.
DIVIDENDS.
The payment of dividends is subject to the discretion of our Board of Directors
and will depend, among other things, upon our earnings, our capital
requirements, our financial condition, and other relevant factors. We have not
paid or declared any dividends upon our common stock since our inception and, by
reason of our present financial status and our contemplated financial
requirements; we do not anticipate paying any dividends upon our common stock in
the foreseeable future.
We have never declared or paid any cash dividends. We currently do not intend to
pay cash dividends in the foreseeable future on the shares of common stock. We
intend to reinvest any earnings in the development and expansion of our
business. Any cash dividends in the future to common stockholders will be
payable when, as and if declared by our Board of Directors, based upon the
Board's assessment of:
* our financial condition;
* earnings;
* need for funds;
* capital requirements;
* prior claims of preferred stock to the extent issued and outstanding;
and
* other factors, including any applicable laws.
Therefore, there can be no assurance that any dividends on the common stock will
ever be paid.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.
STOCK OPTION PLAN.
There is currently no Stock Option Plan in place.
31
ITEM 5.06 - CHANGE IN SHELL COMPANY STATUS
Reference is made to the disclosures set forth under Item 2.01 and 5.01 of this
report, which disclosure is incorporated herein by reference. As a result of the
acquisition of RED GIANT ENTERTAINMENT INC. pursuant to the Share Exchange
Agreement entered into on June 11, 2012, we are no longer considered a "shell
company" (as such term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended), as CASTMOR RESOURCES LTD. now has significant non-cash
assets. See Item 5.01 - Changes in Control of Registrant, above, which is
incorporated herein by reference.
ITEM 9.01 - FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
See Exhibits 10.2 and 10.3
(b) Pro Forma Financial Information
None
(c) Shell Company Transaction
None
(d) Exhibits
Exhibit
Number Description
------ -----------
10.1 Share Exchange Agreement with RGE entered into on June 11, 2012
(incorporated herein by reference to Form 8-K, Exhibit 10.1.
10.2 Audited Financial Statements of Red Giant LLC for the year ended
December 31, 2012
10.3 Interim Financial Statements of Red Giant Inc for the five months ended
May 31, 2012
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 hereunto duly authorized.
CASTMOR RESOURCES LTD.
Date: June 18, 2012 By /s/ Benny Powell
----------------------------------
Benny Powell
President
3
