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EX-31 - EXHIBIT 31 - EF Hutton America, Inc.efh10k15ex31.htm
EX-32 - EXHIBIT 32 - EF Hutton America, Inc.efh10k15ex32.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549


FORM 10-K


[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2015


OR


[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from     to


Commission file number: 333-186068


EF Hutton America, Inc.

(Exact name of the registrant in its charter)


 

 

 

Colorado

 

20-8594615

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification)


77 Water Street, 7th Floor, New York, NY 10005

(Address of principal executive offices, including zip code)


Registrant's Telephone number, including area code:  212-742-5000


Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common Stock, $0.001 par value


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [x]


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.   Yes [  ] No [x]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.406 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [ ] No [x]





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the part 90 days.  Yes [x] No[  ]


Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained hereof, and will not be contained, to will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [  ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  


 

 

 

Large accelerated filer   [  ]

 

Accelerated filer                     [  ]

Non-accelerated filer     [  ]

 

Smaller Reporting registrant  [x]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [x]


State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.  The market value of the registrant’s voting $0.001 par value common stock held by non-affiliates of the registrant on June 30, 2015 was approximately $3,173,214.


Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.  As of May 4, 2016, the registrant’s authorized capitalization consisted of 90,000,000 common shares, par value $0.001, of which 53,724,673 common shares were issued and outstanding, and 10,000,000 Class B common shares, par value $0.001 of which 5,797,000 Class B common shares were issued and outstanding.


No documents are incorporated into the text by reference.






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EF Hutton America, Inc.

Form 10-K

For the Fiscal Year Ended December 31, 2015

Table of Contents


 

 

 

 

 

Page

Part I

 

 

Item 1.  Business

 

4

Item 1A. Risk Factors

 

10

Item 1B. Unresolved Staff Comments

 

10

Item 2.  Properties

 

10

Item 3.  Legal Proceedings

 

10

Item 4.  Mine Safety Disclosures

 

10

 

 

 

Part II

 

 

Item 5.  Market for Registrant's Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities

 

11

Item 6.  Selected Financial Data

 

12

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations

 

12

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

 

18

Item 8.  Financial Statements and Supplementary Data

 

19

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

34

Item 9A.  Controls and Procedures

 

35

Item 9B.  Other Information

 

37

 

 

 

Part III

 

 

Item 10.  Directors, Executive Officers and Corporate Governance

 

38

Item 11.  Executive Compensation

 

41

Item 12.  Securities Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

42

Item 13.  Certain Relationships and Related Transactions, and Director Independence

 

43

Item 14.  Principal Accounting Fees and Services

 

43

 

 

 

Part IV

 

 

Item 15.  Exhibits and Financial Statement Schedules

 

45

Signatures

 

47



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PART I


ITEM 1.   BUSINESS


Business Overview

EF Hutton Financial Corp., a wholly owned subsidiary of the registrant, is developing an digital B2C financial platform that is to provide financial products, services and information, including, but not limited to, trading and investments.  The digital platform will deploy advanced technology that is developed from a combination of licensed software and internal proprietary software and customized user interfaces.  The platform will be available on OCs, tablets, mobile devices and all major electronic devices and is expected to be offered to the market in mid-2016.  In addition to the B2C products and services, EF Hutton plans to provide services to institutions.  EF Hutton will market nationwide through a combination of internal and external media.  


The digital financial platform complements Gateway, the internet marketplace we have continued to develop over the last nine months.  Gateway connects consumers with a wide range of financial providers and solutions.  Gateway makes independent providers a viable choice for consumers by eliminating barriers that impede consumers from using independent providers, primarily through marketing to raise awareness of the independent sector and by standardizing and streamlining the process of selecting and engaging independent financial professionals.  Financial providers who register with Gateway benefit by generating new client relationships.  


History

The registrant was incorporated under the laws of the State of Colorado in March 2007 under the name Twentyfour/seven Ventures, Inc.   On October 27, 2014, the registrant incorporated EFH Financial Corp. as a wholly owned subsidiary.  On November 20, 2014, the name of the registrant was changed to EFH Group, Inc.   On March 11, 2015, the name of EFH Financial Corp. was changed to EF Hutton Financial Corp.


The registrant incorporated Liberty Ventures, Inc. in the State of Colorado on November 16, 2014 as its wholly owned subsidiary.  Liberty operates a specialty insurance agency that provides surety bonds underwritten by Bankers Insurance of Florida.  On November 23, 2014, the assets and liabilities of the registrant were contributed at book value to Liberty and the registrant approved a spin-off of its shares in this subsidiary to its shareholders.  The common shares of EF Hutton Financial Corp. were not included in the spin-off.  The spin-off was approved in contemplation of asset purchase described below and the subsequent change of control of the registrant.  The spin-off common shares are being held in escrow with J.M. Walker & Associates, Attorneys At Law until all state and federal requirements have been met by Liberty.




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On November 25, 2014, the registrant purchased certain assets of EFH Group, Inc., a Wyoming corporation.  The assets consist of various trademarks and license rights, rights to computer programming code and other intellectual property.   The registrant issued a total of 52,173,000 restricted common shares and 5,797,000 restricted Class B common shares as consideration for the EFH Wyoming asset purchase.  


We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings.  We are not a blank check company as that term is defined in Rule 419(a) (2) of Regulation C of the Securities Act of 1933, because we have a specific business plan and purpose.  The registrant has had informal exploratory discussions with some acquisition candidates, but does not have any present plans, proposals, arrangements or understandings with any representatives of the owners of any business or company regarding the possibility of an acquisition or merger.


Operations

Through its subsidiaries, EF Hutton Financial Corp. and EF Hutton Investments LLC, a registered investment advisor, the registrant is developing a range of services for individuals and institutions.  

1.

Individuals.  EF Hutton is developing services that add-value to individuals.

a.

Self-Directed Clients.  a B2C financial technology platform to offer financial products and services. The platform will allow self-directed investors to invest and manage their retirement funds and other investment portfolios.

b.

Advised Clients.  EF Hutton plans to service a limited number of ultra-high networth clients serviced by our investment advisors.

2.

Institutions.  EF Hutton is developing services that solve financial and operational issues for institutions.

a.

Asset management services for institutions that require specialized solutions.

b.

Practise management services designed to enhance the efficiency of financial advisors.

3.

Information Services and Other Services.  EF Hutton is developing other services that add-value to clients and enhance its service.  

a.

Investment research consisting of reports on companies and on the economy.

b.

Gateway, an internet service that connects consumers with independent financial services providers.  


Each of the products and services described above is in a development stage and are expected to be made available commercially in stages during 2016.  Timing is a function of company resources and coordination with third-party suppliers.




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Currently, Gateway is operational.  In the last nine months it has been tested in live beta mode and there has not yet been actively marketed.  Gateway is a B2C marketplace for financial services.  Operationally, Gateway is a two-sided market network that connects consumers with independent financial service providers.  The service will provide consumers with one website that they can use to identify and locate providers for all their financial needs.   Consumers can engage providers for insurance, tax, real estate, lending, financial planning and other services.  


The service is free to consumers and provides the convenience of accessing information on providers for all services from one single website.   Consumers can choose a provider whose qualifications have been verified by the registrant.  Verification of qualifications applies to all service levels except for the Basic Service and is conducted by our staff and contractors we may engage to assist in verification.  The verification process involves checking regulatory status and provider credentials.  The providers of services include: retirement, insurance, financial planning, tax, trusts and estates, real estate, and other financial services, including additional categories of service that will be added in future, see www.efhutton.com for specific set of service categories.  Clients can book appointments with providers of their choice without leaving the website.  The registrant provides a reward program that gives points to consumers that use service providers in the registrant’s network.   Gateway receives a portion of service revenues and qualifies the service providers on the network.   


Service providers benefit from a source of new clients, because registrant does the marketing.  Management estimates that it typically costs more than $250 for financial service providers to acquire a new client.1


Financial Services Industry

In 2010, the financial services industry, excluding banks, accounted for $1.758 trillion, 12.1% of total GDP in the United States, according to the US Department of Commerce, Bureau of Economic Analysis.  Independent providers of financial services direct to consumers are a segment of the total financial services market.  Based on in-house research, management estimates that independent financial providers account for approximately 18% of the financial services market by revenue or $316 billion of annual GDP.   


The financial services industry is highly fragmented and the independent sector is even more so.  Approximately 2,320,000 professionals are employed in the sectors where most independents work.  The number of professionals in each sector illustrates the size of the market.   According to the IRS, there are over 1,130,000 employed for tax advice and preparation.  According to US Bureau of Labor Statistics, there are over 440,000 insurance independent insurance agents.  According to the National Association of Realtors there are over 420,000 independent real estate agents.  According to the SEC, in 2011, there were over 275,000 investment advisor representatives.


1Based on a 170-page report from the McKinsey Global Institute, “The Social Economy: Unlocking and Productivity Through Social Technologies” which stated that client acquisition costs for banks are generally $70

to $300 in financial services.



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Snapshot of the Independent Financial Provider Segment:


Estimated Number of Firms


 44,000  

Tax Prep and Advice1

 87,577

Independent Real Estate Brokerages2

38,500

Independent Insurance Agencies3

    9,581

Independent RIAs - employing 50 or fewer professionals4

179,658

Total


According to McKinsey5, a thought-leader in financial services, “retail financial … products are intangible and often complex; consumers find it difficult to make comparisons across offerings, even within the same category.  Consumers do not always have full transparency into products or a clear understanding of how they work.  So, rather than doing their own research and evaluation, consumers often place their trust in an advisor (either a professional or a knowledgeable relative or friend) or a brand.


According the McKinsey report, the largest opportunities in the value chain for consumer-facing financial institutions are in customer insights and sales and marketing.  Value creation in these areas could amount to approximately $133 billion to $218 billion per year globally.  


Operating Strategy

The registrant intends to expand its business by internal growth and by acquisition.


The registrant also intends to acquire related businesses that will complement the current financial technology business that can expand the range of services it offers.  Prospective acquisition targets include existing financial firms, technology providers and marketing



companies.  The registrant is presently evaluating several such businesses as potential merger or acquisition candidates, and anticipates expanding the scope of possible candidates.


1According to mynacc.org.  See http://mynacc.org/6154/owntaxbusiness.html

2According to National Assn of Realtors 2008 study and the Inman “2015 Special Report – Shift to Independent Brokerages”

3According to 2012 Agency Universe Study by Future One and sponsored by Independent Insurance Agents & Brokers of America

4According to a 2014 report “A Profile of the Investment Advisor Profession” by Investment Advisor Association

5McKinsey Global Institute November 2012 “How Social Technologies Create Value in Consumer Financial Services” by Michael Chui, Et Al.



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The successful acquisition of related, complimentary businesses is expected to increase profits by providing a broader range of services in vertical markets which are consolidated under one parent, thus reducing overhead costs by streamlining operations and eliminating duplicitous efforts.


The registrant will seek out and evaluate related, complimentary businesses for acquisition.  The integrity and reputation of any potential acquisition candidate will first be thoroughly reviewed to ensure that it meets with management’s standards.  Once a company has been targeted as a potential acquisition candidate, the registrant will enter into negotiations with the potential candidate and commence due diligence evaluation of each business, including its financial statements, cash flow, debt, personnel, and services.


Marketing Strategy

The registrant, through its subsidiary, uses a range of marketing strategies and techniques, including but not limited to: direct marketing via phone and mail, internet marketing, social media such as Twitter, Facebook and Linkedin, public relations, traditional media advertising.  Marketing activities are enhanced by general consumer awareness of the EF Hutton brand.


The registrant plans to expand its marketing activities in 2016 with a range of sponsored media initiatives.  The plan includes, but is not limited to, cable TV, internet, radio, and publishing in both digital and print form.


Gateway

Gateway is an internet marketplace that connects consumers with independent financial providers.  We believe independent providers generally offer a high lever of customers care and a better overall value for consumers in each of their respective specialty service areas than many of the larger branded firms.  However, the benefits of selecting independent providers are not widely known to consumers.  Until Gateway, there has been no one nationally-branded firm that markets the independent segment as a choice for consumers.  Additionally, until Gateway, there were barriers to consumers’ choice in this segment because the independent provider segment is diverse and fragmented.  In the independent segment, there is no central source for information, standardization, service level standards or quality assessment resulting in extra effort by consumers to locate, evaluate and engage an independent provider.


We believe Gateway adds value by promoting the independent financial segment as a choice for consumers.  As a two-sided market, Gateway must add value to both providers and consumers.  For consumers, it removes barriers to consumer choice by streamlining the search and selection process and making independent providers a viable choice for a wide range of their financial needs.  For providers, Gateway reduces the cost of customer acquisition by providing efficient scale economies in marketing and related operations that no provider could gain alone




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Revenues

Gateway is free for consumers to use to search for and select financial providers.  Each independent service provider sets their own prices for services rendered to consumers.


Financial service providers receive a free 30-day trial.  After that trial period, they can select any of three different tiers of service.  Registration fees range from $99 per year for basic service to $399 per year for premium service.  Higher service levels enable providers to raise their ranking in search results and to enhance the profile description displayed on Gateway.  In addition, there are variable fees for client introductions.  Pricing is subject to change based on market factors.


Competition

We compete for attention of consumers and of providers of financial products and services.  Competitors operate within the traditional, offline business as well as with online.  Competition is on the basis of a number of factors, including breadth of service provider listings, quality of providers, depth and timeliness of information, quality and availability of e-commerce marketplace offerings and strength and recognition of our brand. We also compete for a share of service providers’ overall advertising budgets with traditional, offline media companies and other Internet marketing providers on the basis of a number of factors, including return on investment, effectiveness and relevance of our e-commerce initiatives, our pricing and monetization strategies and recognition of our brand.  Our competitors include:

 

•   Traditional, offline competitors. We compete with a number of traditional, offline consumer financial service providers and information services, such as full service financial services companies and directories that list financial providers. Many of these competitors also provide consumer reviews and information about service providers online.

 

•   Online competitors. We compete with “free to consumer” online websites that provide networking and referral services, such as Angie’s List, Thumbtack, Inc. and Yelp, Inc.   


Intellectual Property

We use a variety of methods, such as trademarks, patents, copyrights and trade secrets, to protect our intellectual property. We also place appropriate restrictions on our proprietary information to control access and prevent unauthorized disclosures. Our brands are important assets, and we take steps to protect the value of these assets and our reputation.  


Marketing

We launched Gateway in 2015 and will soon bring to market a range of other products and services. We estimate that we will spend as much as $5 million to market and promote our services, in 2016 and 2017.




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Employees

As a holding company, the registrant has no direct employees and it operates only through its subsidiary.  The subsidiary employs six persons under various arrangements from contractors to employees.  The subsidiary has outsourced certain functions to third-party service providers on an “as needed” basis.  As such the subsidiary has access to dozens of staff when necessary in specialty areas such as administration, marketing and sales.


ITEM 1A.  RISK FACTORS


Not applicable to a smaller reporting company.


ITEM 1B.  UNRESOLVED STAFF COMMENTS


Not applicable.


ITEM 2.  PROPERTIES.


Our headquarters is located at 77 Water Street, New York, NY 10005.  This space consists of approximately 10,000 square feet of shared office space that is available for our use on an as needed basis, at a nominal monthly rental rate plus costs for various office services, under a month-to-month arrangement.  This is a temporary office arrangement and we are actively seeking to identify new office space.


ITEM 3.  LEGAL PROCEEDINGS.


We are not aware of any litigation pending or threatened by or against the registrant.


ITEM 4.  MINE SAFETY DISCLOSURES.


Not applicable



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PART II


ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


    Item 5(a)


a)  Market Information.  The registrant began trading publicly on the OTCQB on January 30, 2014 under the symbol "TWYF".   The registrant’s symbol was changed to HUTN on December 19, 2014.


The following table sets forth the range of high and low bid quotations for our common stock.  The quotations represent inter-dealer prices without retail markup, markdown or commission, and may not necessarily represent actual transactions.


 

 

 

 

 

Quarter Ended

 

High Bid

 

Low Bid

3/31/14

 

13.75

 

3.125

6/30/14

 

13.75

 

4.625

9/30/14

 

11.00

 

1.00

12/31/14

 

2.25

 

.70

3/31/15

 

2.25

 

.64

6/30/15

 

.70

 

.65

9/30/15

 

.75

 

.40

12/31/15

 

3.00

 

.40


b)  Holders.  At May 4, 2016, there were approximately 51 shareholders of the registrant.


c)  Dividends.  Holders of our common stock are entitled to receive such dividends as may be declared by our board of directors.  No dividends on our common stock have ever been paid, and we do not anticipate that dividends will be paid on our common stock in the foreseeable future.


d)  Securities authorized for issuance under equity compensation plans.  No securities are authorized for issuance by the registrant under equity compensation plans.


e)  Performance graph.  Not applicable.


f)  Sale of unregistered securities.  On February 2, 2015, the registrant issued 11,034 common shares to KBM Worldwide, Inc. for cash consideration of $13,792.


On March 16, 2015, the registrant issued 26,940 common shares to KBM Worldwide, Inc. for cash consideration of $21,283.


On March 25, 2015, the registrant issued 100,000 common shares each to Christopher Daniels and Stanley Hutton Rumbough for services valued at $80,000 and $80,000, respectively.



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On May 8, 2015, the registrant issued 37,500 common shares to Bruce David Winn for cash consideration of $30,000.


On June 12, 2015, the registrant issued 20,000 common shares to Johnny M. Tooke for cash consideration of $16,000.


On June 18, 2015, the registrant issued 200,000 common shares to Craig J. Marshak for services valued at $140,000.


On July 31, 2015, the registrant issued 200,000 common shares to Dennis R. White for services valued at $80,000.


On September 2, 2015, the registrant issued 20,000 common shares to Barbara Portman for cash consideration of $15,000.


On September 2, 2015, the registrant issued 12,000 common shares to Frederick P. Ziwot for cash consideration of $9,600.


On December 18, 2015, the registrant issued 15,000 common shares to Johnny M. Tooke for cash consideration of $12,000.


All of the above issuances were made to sophisticated investors pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933.


    Item 5(b)  Use of Proceeds.  Not applicable.


    Item 5(c)  Purchases of Equity Securities by the issuer and affiliated purchasers.  None



ITEM 6.  SELECTED FINANCIAL DATA


Not applicable to a smaller reporting company.



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


On November 23, 2014, the assets and liabilities of the registrant (not including the common shares of EF Hutton Financial Corp.) were contributed at book value to Liberty Ventures, Inc., its then wholly owned subsidiary and the registrant approved a spin-off of this subsidiary to its shareholders.


On November 25, 2014, the registrant purchased certain assets of EFH Wyoming.  The assets consisted of various trademarks and license rights, rights to computer programming code and other intellectual property.   The registrant issued a total of 52,173,000 restricted common shares and 5,797,000 restricted Class B common shares as consideration for the EFH Wyoming asset purchase.  



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The discussion below does not include the operations of the registrant prior to the spin-off.


Trends and Uncertainties:


Other than described below, there are no known trends, events or uncertainties that have or are reasonably likely to have a material impact on the registrant’s short term or long term liquidity.  Sources of liquidity both internal and external will come from receipt of revenue from the registrant’s service network, advances from affiliates as well as through debt and equity financings.  


Other than described below, there are no trends, events or uncertainties that have had or are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations.  There are no significant elements of income or loss that do not arise from the registrant’s continuing operations.  There are no known causes for any material changes from period to period in one or more line items of the registrant’s financial statements.


Business Development Risk.  The registrant owns significant intangible assets, primarily intellectual property in the form of trademarks and other brand assets, that it seeks to develop.  Development of such assets can take significant time and requires expertise to apply and use the assets in a business.  Even with such expertise and skill there can be no assurance that the assets will be developed or developed to their full potential.   Brand assets value and use in particular are sensitive to factors such as public awareness and attributes of the brand.  Many factors impact successful development and a significant set of factors are beyond the control of the registrant.  Factors affecting development include, but are not limited to: general economic conditions; skilled personnel; industry specific trends and conditions.   


The registrant attempts to mitigate its development risk by exploring a range of internal and external development opportunities.  Beyond development risk, management is faced with a number of other risk factors. The more significant ones include:


Financial Markets.   Presently, the registrant obtains the majority of its capital from sale of common stock and advances by certain directors.  There can be no assurance that financing will be available to the registrant in the amount required at any time or for any period or if available, that it can be obtained on terms satisfactory to the registrant or at a time when it is needed by the registrant.  Smaller capitalized companies historically have greater challenges in funding than larger companies.




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Cash Flows. Operations generate insufficient cash to satisfy operating expenses and the cash flow deficit has to be funded by financing activities.   However, the registrant has initiatives that are expected to improve.  In addition, the registrant is exploring several external initiatives, such as acquisition opportunities.  Certain of these external initiatives could provide immediate source of revenues that and can significantly impact the registrant’s liquidity position.  The sources of funds currently available to the registrant are the sale of its common stock and advances from related parties. The registrant’s financial resources are limited and therefore the registrant focuses on those opportunities that are most likely to generate cashflow in the near term.  


 Credit Risk. Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The registrant’s cash and cash equivalents and amounts receivable are exposed to credit risk. The registrant reduces its credit risk on cash and cash equivalent by placing these instruments with institutions of high credit worthiness. The majority of the registrant’s cash is held through large US financial institutions with a investment grade rating.


Liquidity.  Liquidity risk is the risk that the registrant will not be able to meet its financial obligations as they fall due. The registrant manages its liquidity risk through the management of its cash and its capital structure and financial leverage. The registrant intends that accounts payable and accrued liabilities are due and paid within a reasonable time.


The registrant has limited liquidity and will continue to have limited liquidity until it generates earnings or completes a funding transaction through.  The registrant is actively seeking to improve its liquidity position.  It will do that through sale of stock and borrowing funds.  The registrant has a valuable asset that can be utilized to generate liquidity through financing and the registrant has had discussions with various parties about such a transaction. However, financial transactions involving intellectual property assets are highly specialized, take months to structure and may involve terms that are inferior to those involving other classes of assets.


The registrant has no unused sources of liquid assets.


Interest Rate Risk.  The registrant’s exposure to interest rate risk arises from the interest rate impact on its cash. There is minimal risk that the registrant would recognize any loss as a result of a decrease in the fair value of any short-term investments included in cash due to the short term nature.


Market Volatility for Marketable Securities.  The registrant’s marketable securities consist of shares of exploration companies that are historically very volatile. There is no assurance that the registrant will be able to recover the current fair market value of those shares. The registrant also may not be able to sell the shares it holds in other companies in an illiquid market.



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Possible Dilution. The registrant’s plan of operation, in part, contemplates the financing of its business by the issuance of securities and possibly, incurring debt. Any transaction involving the issuance of previously authorized but unissued shares of common stock, or securities convertible into common stock, would result in dilution, possibly substantial, to present and prospective holders of common stock.


Trading Volume.  The relatively low trading volume of the registrant’s shares reduces the liquidity of an investment in its shares. Trading volumes fluctuate with market conditions and seasons. Less liquid shares can limit the appeal of our shares to only those who have an ability to hold shares for a longer period and have no need for immediate liquidity.


Volatility of Share Price.   Market prices for shares of companies at our stage are often volatile. Factors such as announcements of development milestones, acquisitions and other results, can have a significant effect on share price.


Competition.  There is aggressive competition within the financial services industry.  The registrant competes with other developing companies in that industry, many of which have greater financial resources than the registrant, for acquisitions as well as for the recruitment and retention of qualified employees and other personnel.


Dependence on Management.  The registrant depends on the business expertise of its management. There is risk to the registrant’s ability to execute its business development plans if key members of the current management team were to suddenly leave the registrant or become incapable of performing their individual and collective responsibilities.


Asset Related Risks.  Although the registrant has taken steps to maintain its assets there is a risk that the assets value can be damaged or impaired by actions and events, including those which may be outside the registrant’s control.   


Environmental.   The registrant knows of no environmental risks that could directly impact its business.  


Laws and Regulations.  The registrant’s business and development activities are subject to extensive federal, state and local laws and regulations governing financial services, taxes, labor standards, occupational health and safety, human resources and other matters in all the jurisdictions in which it operates. These laws and regulations are subject to change, can become more stringent and compliance can therefore become more costly. The registrant applies the expertise of its management, advisors, employees and contractors to ensure compliance with current laws.




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Capital and Source of Liquidity:


Investing activities.   For the year ended December 31, 2015, we invested $50,000 in common stock of an unaffiliated entity and lent $45,250 to a shareholder.  As a result, we had net cash used in investing activities – continuing operations of $95,250 for the year ended December 31, 2015.


For the year ended December 31, 2014, we did not pursue any investing activities.


Financing Activities.   For the year ended December 31, 2015, we received proceeds from the issuance of common stock of $52,600.  We received advances from related parties of $61,861 and advances from a shareholder to be settled in stock of $50,000.  Additionally, we received proceeds from stock subscriptions of $150,000 and had $6,000 due from a shareholder.  As a result, we had net cash provided by financing activities – continuing operations of $308,461 for the year ended December 31, 2015.


For the year ended December 31, 2014, we received an advance from related party of $13,991 and had $(6,500) due from a shareholder.  As a result, for the year ended December 31, 2014, we had net cash provided by financing activities of $7,491.


Results of Operations:


For the year ended December 31, 2015, we did not receive any revenues from continued operations.  We incurred selling, general and administrative expenses from continued operations of $884,323.  These expenses consisted of professional fees of $111,537, rent expense of $4,455, selling and marketing expenses of $5,458 and stock-based compensation of $622,023.   Additionally, we incurred general and administrative expenses of $140,850 which consisted of software and hosting fees of $9,166, accounting & bookkeeping of $72,000, computer and internet expenses of $4,850, office services &supplies of $8,936, dues & subscriptions of $7,110, telephone of $2,366 and miscellaneous expenses of $17,224.  Interest income was $4,126.  As a result, the registrant had net loss of $(880,197) for the year ended December 31, 2015.


For the year ended December 31, 2014, we did not receive any revenues from continued operations.  We incurred selling, general and administrative expenses from continued operations of $23,021.  These expenses consisted of professional fees of $3,530, rent expense of $253 and other general and administrative expenses of $19,238.  Additionally, for the year ended December 31, 2014, we had loss on discontinued operations (net of tax) of ($113,500).  As a result, the registrant had net loss of $(136,521) for the year ended December 31, 2014.


Critical Accounting Policies:




16



Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the periods presented.


We make our estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available. We believe that our significant estimates, assumptions and judgments are reasonable, based upon information available at the time they were made. Actual results could differ from these estimates, making it possible that a change in these estimates could occur in the near term.


Cash and cash equivalents

The registrant considers all highly liquid investments with an original maturity of three months or less as cash equivalents.


Property and equipment

Property and equipment are recorded at cost and depreciated under straight line methods over each item's estimated useful life, generally seven years for furniture and fixtures and five years for office equipment.


Revenue recognition

The registrant recognizes revenue when upon receipt of the fees received for services rendered through its Gateway system.


Income tax

The registrant accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.


Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.




17



Net income (loss) per share

The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding, including both the common shares and Class B common shares. Warrants, stock options, and common stock issuable upon the conversion of the registrant's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.


Financial Instruments

The carrying value of the registrant's financial instruments, as reported in the accompanying balance sheet, approximates fair value due to their short term maturities.


Long-Lived Assets

In accordance with ASC 350, the registrant regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the registrant if the carrying amount of a long-lived asset exceeds its fair value.


New Accounting Pronouncements:


The registrant has adopted all recently issued accounting pronouncements.  The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the registrant.



ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Not applicable





18



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


EF Hutton America, Inc.

Index to the Financial Statements


 

 

 

 

 

Page

Report of Independent Registered Public Accounting Firm

 

20

Consolidated Balance Sheet as of December 31, 2015 and 2014

 

21

Consolidated Statement of Operations for the years ended December 31, 2015 and 2014

 

22

Consolidated Statement of Changes in Stockholders' Equity for the years ended December 31, 2015 and 2014

 

23

Consolidated Statement of Cash Flows for the years ended December 31, 2015 and 2014

 

24

Notes to Consolidated Financial Statements

 

26



19




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholders of EF Hutton America, Inc.:


We have audited the accompanying consolidated balance sheet of EF Hutton America, Inc. as of December 31, 2015 and 2014, and the related consolidated statement of operations, consolidated statement of changes in stockholders’ equity, and consolidated statement of cash flows for the years ended December 31, 2015 and 2014.  EF Hutton America, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of EF Hutton America, Inc. as of December 31, 2015 and 2014 and the results of its operations and its cash flows for the years ended December 31, 2015 and 2014, in conformity with accounting principles generally accepted in the United States of America.


/s/ Michael F. Albanese

Michael F. Albanese, CPA

Parsippany, New Jersey

April 9, 2016




20



EF HUTTON AMERICA, INC.

CONSOLIDATED BALANCE SHEET


 

 

 

 

 

 

 

December 31, 2015

December 31, 2014 (As Restated)

Assets

 

 

Current assets

 

  Cash

$             23,240

$                 -

  Prepaid expenses & other

27,509

-

  Due from shareholder

12,500

6,500

    Total current assets

63,249

6,500

 Other assets:

 

  Loans receivable

45,250

-

  Accrued interest receivable

4,126

-

  License

30,000

-

  Brand assets

10,025,000

10,025,000

   Total other assets

10,104,376

10,025,000

 Total assets

$10,167,625

$10,031,500

 

 

 

Liabilities and Stockholders' Equity

Current liabilities:

 

  Advances from related parties

$75,852

$13,991

  Advance from shareholder to be settled in stock

50,000

-

  Due to related party

62,000

-

  Deposit on private placement

150,000

 

  Accounts payable

26,298

-

  Accrued expense to be settled in stock

345,571

-

  Accrued expenses

27,070

15,530

    Total current liabilities

736,791

29,521

 

 

 

Commitments and contingencies

                        -

                  -

 

 

 

Stockholders' equity:

 

 

  Common stock, $0.001 par value; 90,000,000 shares authorized;

  53,724,673 and 52,982,199 shares issued and outstanding,

  Respectively

53,725

   52,982

  Class B common stock, $0.001 par value, 10,000,000 shares authorized, 5,797,000 issued and outstanding

5,797

5,797

  Additional paid-in capital

10,593,038

10,036,846

  Accumulated deficit

(1,221,726)

(93,646)

    Total stockholders' equity

9,430,834

10,001,979

Total liabilities and stockholders' equity

$10,167,625

$10,031,500


See accompanying notes to consolidated financial statements.



21



EF HUTTON AMERICA, INC.

CONSOLIDATED STATEMENT OF OPERATIONS


 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

2015

2014

   (As Restated)

Operating expenses

 

 

 

  Professional fees

 

 

$   111,537

$             -

  Rent Expenses

 

 

4,455

-

  Selling and Marketing

 

 

5,458

-

  Stock-based compensation

 

 

539,075

-

  General and administrative

 

 

140,850

23,021

    Total operating expenses

 

 

801,375

-

 

 

 

 

 

Other Income (Expense)

 

 

 

   Loss on Investment

 

 

330,831

 

  Interest income

 

 

(4,126)

-

    Net other income

 

 

326,705

-

Loss from continuing operations (net of tax)

 

 

$(1,128,080)

$  (23,021)

Discontinued operations:

 

 

  Loss on discontinued operations (net of tax)

 

 

-

(113,500)

 

 

 

 

 

Net loss from continuing operations

 

 

$(1,128,080)

$  (23,021)

Net loss from discontinued operations

 

 

$                 -

$(113,500)

 

 

 

 

 

Basic and diluted loss per common share

 

  Loss from continuing operations

 

 

(0.00)

(0.00)

  Loss from discontinued operations

 

 

(0.00)

(0.00)

Net loss per share - basic and diluted

 

 

$         (0.00)

$     (0.00)

 

 

 

 

 

Weighted average number of common shares outstanding - basic and diluted

 

 

53,405,309

6,524,985



See accompanying notes to consolidated financial statements.




22



EF HUTTON AMERICA, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY


 

Common Stock

Class B Common Stock

Additional Paid In

Retained Earnings/ Accumulated

Total Stockholder'

 

Shares (1)

Amount (1)

Shares

Amount

Capital (1)

Deficit

Equity

Balances at December 31, 2012

809,199

$809

-

-

$82,400

35,778

$118,987

Net income for the year

-

-

-

-

-

7,097

7,097

Balances at December 31, 2013

809,199

$809

-

-

$82,400

$42,875

$126,084

Asset purchase issuances

52,173,000

52,173

5,797,000

5,797

 

-

10,025,000

Spin off Subsidiary

 

 

 

 

(12,584)

-

(12,584)

Net loss for the period

-

-

-

-

-

(136,521)

(136,521)

 

 

 

 

 

 

 

 

Balances at December 31, 2014 (restated)

52,982,199

52,982

5,797,000

5,797

10,036,846

(93,646)

10,001,979

Stock issued for cash

742,474

67

 

 

52,533

 

52,600

Warrants Issued

 

-

 

 

59,260

 

59,260

Stock Issued for Acquisition

 

37

 

 

29,963

 

30,000

Share Issued for Stock Compensation

 

638

 

 

414,437

 

415,075

Stock Subscribed

 

 

 

 

 

 

150,000

Net loss for the period

-

-

-

-

-

(1,128,080)

(1,128,080)

Balances at December, 31 2015

53,724,673

53,725

5,797,000

5,797

10,593,038

(1,221,726)

9,403,334




(1)

As retrospectively restated for the 1: 100 stock split completed effective November 20 2014.
















See accompanying notes to consolidated financial statements.





23



EF HUTTON AMERICA, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

 

Year Ended December 31, 2015

Year Ended December 31, 2014

(As Restated)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$(1,128,079)

$  (136,521)

Non-Cash Adjustments:

  Loss on Investment

330,831

 

  Stock-based compensation

539,075

-

Changes in operating assets and liabilities:

  Prepaid Expenses

(27,509)

 

  Accounts payable

26,298

-

  Due to related party

62,000

-

  Accrued interest receivable

  Accrued expenses

(4,126)

(11,540)

-

15,530

Net cash used in operating activities - continuing operations

$   (189,971)

$       (7,491)

Net cash used in operating activities - discontinued operations

$                 -

$   (113,500)

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

  Fixed asset purchases

$                 -

$                 -

  Investment at Cost

(50,000)

 

  Loan receivable

(45,250)

-

  Acquisition of intangible assets

-

-

  Increase in restricted cash reserves

-

-

Net cash used in investing activities - continuing operations

$    (95,250)

$                -

Net cash used in investing activities - discontinued operations

$                -

$                -

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

  Shares issued for cash

$       52,600

$                -

  Advances from related parties

61,861

13,991

  Advances from shareholder to be settled in    

     stock

50,000

-

  Deposit on private placement

150,000

 

  Due from shareholder

(6,000)

(6,500)

  Debt issuance costs

-

-

  Convertible note payable

-

-

  Convertible note payable, related party

-

-

Net cash provided by financing activities - continuing operations

$     308,461

$        7,491



24



EF HUTTON AMERICA, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

Continued


Net cash provided by financing activities - discontinued operations

$             -

$                -


Net increase (decrease) in cash - continuing operations

23,240

-

Net increase (decrease) in cash - discontinued operations

-

-

 

 

 

Cash - beginning of period - continuing operations

-

-

Cash - beginning of period - discontinued operations

-

-

 

 

 

Cash - end of period - continuing operations

 $    23,240

$            -

Cash - end of period - discontinued operations

$              -

$            -

 

 

 


SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

Common stock issued in registered investment advisor acquisition

$    30,000

$             -

Warrants issued for investment

$    59,260

$             -

Shares to be issued for investment

$  221,571

$             -

Supplemental Disclosure

  Cash paid for interest

$              -

$             -

  Cash paid for income taxes

$              -

$             -

















See accompanying notes to consolidated financial statements.



25



EF HUTTON AMERICA, INC,

Notes to Consolidated Financial Statements


Note 1 – Nature of Operations


Nature of Operations


EF Hutton America, Inc. (the “Company”) was incorporated in the State of Colorado on March 8, 2007 under the name of Twentyfour/seven Ventures, Inc.  The name of the Company was changed to EFH Group, Inc. on October 28, 2014.  The name of the Company was changed to EF Hutton America, Inc. on March 30, 2015.


EF Hutton Financial Corp., a wholly owned subsidiary of the registrant, operates an internet marketplace that connects consumers with a network of financial providers across a range of financial products and services, including, but not limited to insurance, tax, real estate and financial planning.  The marketplace, Gateway, connects consumers with a wide range of financial providers and solutions.  Gateway makes independent provides a viable choice for consumers by eliminating barriers that impede consumers from using independent providers, primarily through marketing to raise awareness of the independent sector and by standardizing and streamlining the process of selecting and engaging independent financial professionals.  Financial providers who register with Gateway benefit by generating new client relationships.  In addition to operating Gateway, the subsidiary intends to offer specialty financial services through its institution division.


On November 25, 2014, the Company purchased certain assets of EFH Group, Inc., a Wyoming corporation (“EFH Wyoming”).  The assets consist of various trademarks and license rights, rights to computer programming code and other intellectual property.  The purchase has been deemed an affiliate transaction under generally accepted accounting principles (“GAAP”) and, as such, the assets will be held on the balance sheet at the seller’s carrying value as of November 25, 2014 of $10,025,000.  The Company issued a total of 52,173,000 restricted common shares and 5,797,000 restricted Class B common shares as consideration for the EFH Wyoming asset purchase.  


On November 23, 2014, the assets and liabilities of the Company were contributed at book value to Liberty Ventures, Inc., a then wholly owned subsidiary of the Company.  The common shares of EF Hutton Financial Corp., a wholly owned subsidiary of the Company were not included in the spin-off.  Effective on November 25, 2014, the Company spun off Liberty Ventures, Inc., its then wholly owned subsidiary, to its shareholders as of November 24, 2014.


Note 2 – Summary of Significant Accounting Policies


Use of Estimates


The preparation of financial statements in conformity with GAAP requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the periods presented.




26



EF HUTTON AMERICA, INC,

Notes to Consolidated Financial Statements


The Company makes the estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available. The Company believes that significant estimates, assumptions and judgments are reasonable, based upon information available at the time they are made. Actual results could differ from these estimates, making it possible that a change in these estimates could occur in the near term.


Cash and cash equivalents


The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.


Property and equipment


Property and equipment are recorded at cost and depreciated under straight line methods over each item's estimated useful life, generally seven years for furniture and fixtures and five years for office equipment.


Revenue recognition


The Company recognizes revenue when upon receipt of the fees received for services rendered through its Gateway system.


Income tax


The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.


Net income (loss) per share


The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding.


Financial Instruments


The carrying value of the Company's financial instruments, as reported in the accompanying balance sheet, approximates fair value due to their short term maturities.




27



EF HUTTON AMERICA, INC,

Notes to Consolidated Financial Statements


Long-Lived Assets


In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value.


New Accounting Standards


From time to time, the Financial Accounting Standards Board ("FASB") or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification ("ASC") are communicated through issuance of an Accounting Standards Update ("ASU"). Unless otherwise discussed, the Company believes that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on the condensed financial statements upon adoption.


Note 3 – Going Concern


The Company’s financial statements have been prepared on a going concern basis that assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.  The Company’s ability to continue as a going concern depends on its ability to generate profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities when they come due. There is no assurance that these events will be satisfactorily completed.


Note 4 - Income Taxes


Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses and other items. Loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur. The Company accounts for income taxes pursuant to ASC 740.


Income taxes at federal and state statutory rates are reconciled to the Company’s actual income taxes as follows:

 

December 31, 2015

December 31, 2014

Tax at federal statutory rate (15%)

$                 0

$               0

State income tax (5%)

0

0

Book/tax permanent differences:

  Revenue estimates

0

0

  Expense estimates

(1,128,080)

(136,521)

  Tax rate estimate

0

0

 

 

 

Net operating loss carryforward

$(1,128,080)

$(136,521)




28



EF HUTTON AMERICA, INC,

Notes to Consolidated Financial Statements


Note 5 – Fair Value of Financial Instruments


The Company has adopted the guidance of ASC 820, “Fair Value Measurement” which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:


Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.


Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.


Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.


ASC 825, “Financial Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company has not elected to apply the fair value option to any outstanding instruments.


The Company did not have any liabilities carried at fair value measured on a recurring basis as of December 31, 2015 and 2014.


Note 6 – Intangible Assets


On November 25, 2014, the Company purchased certain assets from EFH Group, Inc., a Wyoming corporation.  The license to use the EF Hutton name was the only material asset purchased.  This license has an indefinite useful life.


The purchase has been deemed under GAAP to be an affiliate transaction and, therefore, the assets will be held on the balance sheet at the seller’s carrying value of $10,025,000.  The Company issued a total of 52,173,000 restricted voting common shares and 5,797,000 restricted non-voting Class B common shares as consideration for the EFH Wyoming asset purchase.  


Note 7 – Stockholders’ Equity


Common stock


Pursuant to the asset purchase agreement, the Company issued the 52,173,000 common shares and 5,797,000 Class B common shares to EFH Wyoming, a company controlled by an officer and director of the registrant.




29



EF HUTTON AMERICA, INC,

Notes to Consolidated Financial Statements


The Class B common shares have the following rights and privileges:

Dividend rights - Fifty percent (50%) of the standard common share dividend

Liquidation rights - Fifty percent (50%) of standard common share liquidation rights

Exchange privileges - Exchangeable for standard common shares on a one for one basis

   with thirty (30) days prior notice to the Company


On February 2, 2015, the Company issued 11,034 common shares to KBM Worldwide, Inc. for cash of $13,792.


On March 16, 2015, the Company issued 26,940 common shares to KBM Worldwide, Inc. for cash of 21,283.


On March 25, 2015, the Company issued 100,000 common shares each to Christopher Daniels and Stanley Hutton Rumbough for services valued at $160,000.


On May 8, 2015, the Company issued 37,500 common shares to Bruce David Winn for $30,000.


On June 12, 2015, the Company issued 20,000 common shares to Johnny M. Tooke for cash consideration of $16,000.


On June 18, 2015, the Company issued 200,000 common shares to Craig J. Marshak valued at $140,000.


On July 31, 2015, the Company issued 200,000 common shares to Dennis R. White for $80,000.


On September 2, 2015, the Company issued 20,000 common shares to Barbara Portman for cash consideration of $15,000.


On September 2, 2015, the Company issued 12,000 common shares to Frederick P. Ziwot for $9,600.


On December 18, 2015, the Company issued 15,000 common shares to Johnny M. Tooke for cash consideration of  $12,000.


Note 8 – Discontinued Operations


On November 23, 2014, the business, assets and liabilities of the Company’s former surety bonding operations were contributed at book value to Liberty Ventures, Inc., a newly formed wholly owned subsidiary of the Company.  Effective on November 25, 2014, the Company spun off Liberty Ventures, Inc. to its shareholders.  The financial results of the discontinued surety bonding operations are presented as discontinued operations during the year ended December 31, 2014. The components of the loss from discontinued operations for years ended December 31, 2014 are as follows:



30



EF HUTTON AMERICA, INC,

Notes to Consolidated Financial Statements


 

Year ended December 31, 2014

Revenue

$   548,471

Cost of revenue

378,139

Gross profit

170,332

 

 

Selling, general and administrative expenses

229,348

 

 

Income (loss) from operations

59,016

 

 

Other income (expense)

(115,600)

 

 

Income (loss) before provision for income taxes

(174,616)

 

 

Total benefit (provision) for tax

61,116

 

 

Net income (loss)

$ (113,500)


Note 9 – Related Party Advances


EFH Group Inc., a Wyoming corporation, the majority shareholder of the registrant, advanced the registrant $0 and $13,991 during the years ended December 31, 2015 and 2014.  The advances are repayable upon demand and is without interest.


Note 10 – Subsequent Events


The Company has evaluated subsequent events through the date these condensed financial statements were available to be issued of May 4, 2016, and determined that there are no other reportable subsequent events.


Note 11 - Restatement


The Company has restated its financial statements for the year ended December 31, 2014 to restate the carrying value of the assets acquired on November 25, 2014 to reflect the seller's carrying value because the transaction has been deemed an affiliate transaction. The table below summarizes the impact of the restatement described above:




31



EF HUTTON AMERICA, INC,

Notes to Consolidated Financial Statements


Except from 2014 Consolidated Balance Sheets:

 

As Restated

As Originally Reported

 

 

 

2014

2014

 

Advance from shareholder

 

6,500

6,500

 

Brand Assets

 

10,025,000

157,500,000

 

Assets from Discontinued Operations

 

 

 

 

Advance from related party

 

13,991

13,991

 

Accrued Expenses

 

15,530

15,530

 

Common Stock

 

52,982

52,982

 

Class B Common Stock

 

5,797

5,797

 

Additional Paid in Capital

 

10,036,846

157,441,221

 

Accumulated Deficit

 

(93,646)

(23,021)

 

 

 

 

 

 

Excerpt from 2014 Statement of Operations

 

 

 

 

 

 

 

 

 

Operating Expenses

 

23,021

23,021

 

Income (Loss) from operations

 

-

(23,021)

 

Loss from Continued Operations

 

(23,021)

        (113,500)

Net Income (Loss)

 

(136,521)

(23,021)

 

Net Income (loss) on discontinued operations

-

-

 

Excerpt from 2014 Consolidated Statement of Cash Flows

 

 

 

 

Net gain (loss)

 

(136,521)

(23,021)

 

Accrued Expenses

 

15,530

15,530

 

Net cash used by operating activities - continuing operations

 

(7,491)

-

 

Net cash used by operating activities - discontinued operations

 

(113,500)

-

 

Net Cash Used in operating activities

 

-

(7,491)

 

Advance from related party

 

13,991

13,991

 

Due from Shareholder

 

(6,500)

(6,500)

 

Net cash used by financing activities - continuing operations

 

7,491

-

 

Net Cash provided by (used for) financing activities

-

7,491

 

Net Increase (decrease) in cash - continuing operations

 

-

-

 




32



EF HUTTON AMERICA, INC,

Notes to Consolidated Financial Statements


Excerpt from 2014 Statement of Stockholders’ Equity

 

 

AS RESTATED

 

 

 

EF HUTTON AMERICA, INC.

STATEMENT OF STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Common Stock

Class B Common Stock

Additional Paid In

Retained Earnings/ Accumulated

Total Stockholder'

 

Shares

Amount

Shares

Amount

Capital

Deficit

Equity

Balances at December 31, 2012

809,199

$809

 

 

$82,400

35,778

$118,987

Net income (loss) for the year

-

-

 

 

-

7,097

7,097

Balances at December 31, 2013

809,199

$809

-

-

$82,400

$42,875

$126,084

Asset purchase issuances

52,173,000

52,173

5,797,000

5,797

9,967,030

-

10,025,000

Spin off Subsidiary

 

 

 

 

(12,584)

-

(12,584)

Net loss for the period

-

-

-

-

-

(136,521)

(136,521)

 

 

 

 

 

 

 

 

Balances at December 31, 2014

52,982,199

52,982

5,797,000

5,797

10,036,846

(93,646)

10,001,070



AS REPORTED

EF HUTTON AMERICA, INC.

STATEMENT OF STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Common Stock

Class B Common Stock

Additional Paid In

Accumulated

Total Stockholder'

 

Shares

Amount

Shares

Amount

Capital

Deficit

Equity

Balances at November 24, 2014

809,199

809

-

-

(809)

-

-

 

 

 

 

 

 

 

 

Asset purchase issuances

52,173,000

52,173

5,797,000

5,797

10,025,000

-

10,025,000

Net loss for the period

-

-

-

-

-

(23,021)

(23,021)

 

 

 

 

 

 

 

 

Balances at December 31, 2014

52,982,199

52,982

5,797,000

5,797

10,024,191

(23,021)

10,001,979




33



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


1) Previous Independent Auditors:


a.  On March 23, 2015, the registrant dismissed Cutler & Co., LLC (“Cutler”) as their registered independent public accountant.  On March 23, 2015, the registrant engaged Michael F. Albanese, CPA (“Albanese”) as its new registered independent public accountant.

b.  For the year ended December 31, 2013, Cutler’s report did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to audit scope or accounting principles, except that the report contained an explanatory paragraph stating that there was substantial doubt about the registrant’s ability to continue as a going concern.

c.  The decision to dismiss Cutler and to engage Albanese was approved by the registrant’s board of directors.

d.  Through the period covered by the financial audit for the year ended December 31, 2013 there have been no disagreements with Cutler on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Cutler would have caused them to make reference thereto in their report on the financial statements.  For the interim period through March 23, 2015 (the date of dismissal), there have been no disagreements with Cutler on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Cutler would have caused them to make reference thereto in their report on the financial statements.

e.  We have authorized Cutler to respond fully to any inquiries of Albanese.

f.  During the year ended December 31, 2014 and the interim period through March 23, 2015, there have been no reportable events between the registrant and Cutler as set forth in Item 304(a)(1)(v) of Regulation S-K.

g.  The registrant provided a copy of the foregoing disclosures to Cutler prior to the date of the filing of this report and requested that Cutler furnish it with a letter addressed to the Securities & Exchange Commission stating whether or not it agrees with the statements in this report.  A copy of this letter is filed as Exhibit 16.1 to Form 8-K filed on March 31, 2015.


2) New Independent Accountants:


a.  On March 23, 2015, the registrant engaged Michael F. Albanese, CPA as its registered independent public accountant.  During the year ended December 31, 2014 and prior to March 23, 2015 (the date of the new engagement), the registrant did not consult with Albanese regarding (i) the application of accounting principles to a specified transaction, (ii) the type of audit opinion that might be rendered on the registrant’s financial statements by Albanese, in either case where written or oral advice provided by



34



Albanese would be an important factor considered by the registrant in reaching a decision as to any accounting, auditing or financial reporting issues or (iii) any other matter that was the subject of a disagreement between the registrant and our former auditor or was a reportable event (as described in Items 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K, respectively).



ITEM 9A.  CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures:


The registrant maintains disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to insure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, or the persons performing similar functions, to allow timely decisions regarding required disclosure.


Under the supervision and with the participation of our chief executive officer and chief financial officer, or the persons performing similar functions, our management has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report.  Based on that evaluation, our chief executive officer and chief financial officer, or the persons performing similar functions, concluded that our disclosure controls and procedures were not effective as of December 31, 2015.


Management’s Annual Report on Internal Control over Financial Reporting:


Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of December 31, 2015.  We do not have sufficient segregation of duties within accounting functions, which is a basic internal control.  Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible.  However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals.  Based on this evaluation, our chief executive officer and chief financial officer have concluded such controls and procedures to be not effective as of December 31, 2015 to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported,



35



within the time periods specified in the Commission's rules and forms and to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.


Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  Our internal control over financial reporting is the process designed by and under the supervision of our chief executive officer and chief financial officer, or the persons performing similar functions, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America.  These officers have evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control over Financial Reporting – Guidance for Smaller Public Companies.


Our chief executive officer and chief financial officer have assessed the effectiveness of our internal control over financial reporting as of December 31, 2015 and concluded that it was not effective because of the material weakness described below.


Due to resource constraints, material weaknesses continue to be evident to management regarding our inability to generate all the necessary disclosure for inclusion in our filings with the Securities and Exchange Commission due to the lack of resources and segregation of duties.  A material weakness is a significant deficiency in one or more of the internal control components that alone or in the aggregate precludes our internal controls from reducing to an appropriately low level the risk that material misstatements in our consolidated financial statements will not be prevented or detected on a timely basis.


We will aggressively recruit experienced professionals to ensure that we include all necessary disclosures in our filings with the Securities and Exchange Commission. Although we believe that this corrective step will enable management to conclude that the internal controls over our financial reporting are effective when the staff is trained, we cannot assure you these steps will be sufficient. We may be required to expend additional resources to identify, assess and correct any additional weaknesses in internal control.


This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the registrant’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the registrant to provide only management’s report in this annual report.




36



Evaluation of Changes in Internal Control over Financial Reporting

Our chief executive officer and chief financial officer have evaluated changes in our internal controls over financial reporting that occurred during the year ended December 31, 2015.  Based on that evaluation, our chief executive officer and chief financial officer, or those persons performing similar functions, did not identify any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


Remediation Plan for Material Weaknesses

At such time that it is economically feasible, we will aggressively recruit experienced professionals to ensure that we maintain adequate segregation of duties and have controls in place to ensure proper disclosures are in our filings with the Securities and Exchange Commission. Although we believe that these corrective steps will enable management to conclude that the internal controls over our financial reporting are effective when the staff is trained, we cannot assure you these steps will be sufficient. We may be required to expend additional resources to identify, assess and correct any additional weaknesses in internal control.


Important Considerations

The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.


ITEM 9B.  OTHER INFORMATION


None




37




PART III


ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 

Our bylaws provide that the number of directors who shall constitute the whole board shall not be less than one.  The shareholders at any annual meeting may determine the number which shall constitute the board and the number so determined shall remain fixed until changed at a subsequent annual meeting.  The directors shall be elected at each annual meeting of the shareholders; however, if any such annual meeting is not held or the directors are not elected thereat, the directors may be elected at any special meeting of shareholders held for that purpose.  All directors shall hold office until their respective successors are elected.


 

 

 

 

 

The officers and directors are as follows:


NAME

AGE

POSITIONS HELD

TERM OF OFFICE

Stanley Hutton Rumbough

67

Chairman

November 25, 2014 to present

 

 

 

 

Christopher Daniels

52

CEO

November 25, 2014 to present

 

 

Co-Chairman

August 29, 2014 to present

 

 

 

 

Lance Diamond

45

CFO

November 25, 2014 to present

 

 

 

 

Dennis White

74

Director

August 29, 2014 to present

 

 

 

 

John Daniels

52

Director

November 25, 2014 to present

 

 

 

 

Craig Marshak

56

Director

November 25, 2014 to present


Stanley Hutton Rumbough.  He is our chairman.  Since 2012, Mr. Rumbough has been a director of EFH Group, Inc. (WY).  For the prior twenty years, Mr. Rumbough has been a philanthropist, a collector of fine art and is a photographer. He was a lieutenant in the US Marine Corp on active duty from 1970 to 1974 and inactive duty until he retired from service in 1978 with the rank of Captain. He received a bachelor’s degree from University of Denver and received an MBA from Columbia University.


Christopher Daniels.  He has over twenty years of experience in financial services.  He has been an executive with EFH Group, Inc. (WY) since 2012. Prior to that, he was a managing director with Houlihan Smith. Prior to 2006, he was president of Ascend Financial services. Prior to 2000, he held various positions in with several financial services firms involving investment banking and capital markets activities. He is a director of EFH Global Holdings, Inc. and First National Boston Corp.  He received a bachelor’s degree from Hamilton College, an MBA from Cornell University and a master’s degree from Harvard University.



38




Lance Diamond.  Mr. Diamond has over twenty years of experience in accounting, auditing and finance.  Since 2004 he has been an executive director and a principal with Impacct LLC, an accounting services firm.  Prior to 2004, Lance Diamond spent the previous 4 years leading the finance departments of emerging small and mid-size companies.  Mr. Diamond served as CFO of Crunch Fitness, which was purchased by publicly-traded Bally's Fitness. Lance began his career at Ernst & Young.  He received a degree in accounting from the University Of Michigan Ross School Of Business Administration in 1994 and passed his CPA certification in 1995.


Dennis White.  Mr. White was appointed director of the registrant on August 29, 2014 and is president of EF Hutton Financial Corp., our subsidiary. He has over twenty years of experience in financial services.  Since 2006, he has been an executive with DRW & Associates, an entity engaged in strategic consulting.  From 1999 to 2005, he was a managing director of Atlanta Sosnoff, an investment company managing $6 billion in assets. Prior to that, he held various executive positions with Citigroup serving as national director of marketing and as director of the portfolio management group for the investment consulting that managed or advised on $200 billion of client assets.  He is a graduate of Gannon University and earned a post-graduate certificate in investment management from the Wharton School at the University of Pennsylvania.


John Daniels.  Mr. Daniels has over twenty years of experience in financial services.  He is managing director and head of research.  Since 2012, he has been a managing director at EFH Group, Inc. and a director since 2013.  From 2008 to 2010, he was a business consultant.  Prior to 2007, he was a managing director at Ascend Financial Services. For the fifteen years prior to that, he held various roles in fixed income research at major global investment banks, specifically –Dillon Reade, Prudential Securities and Shearson Lehman Brothers. He received a bachelor’s degree from Columbia University.


Craig Marshak.  He has over twenty years of experience in financial services.  From 2010 to 2014, he was a founding partner of Israel Venture Partners, and a Managing Director at Cross Point Capital Advisors. From 2007 to 2010, Mr. Marshak headed the London office of Trafalgar Capital. Prior to that, he was a managing director and co-head of Nomura merchant banking technology growth fund. Prior to that, he was a managing director at Robertson Stephens. Prior to that, he was an executive at Wertheim Schroder and its affiliates in New York and London.  He commenced his Wall Street career at Morgan Stanley.  He received his bachelor’s degree from Duke University, and a JD from Harvard Law School.


Director Independence

Our securities are not listed on a national securities exchange or in an inter-dealer quotation system, which has requirements that directors be independent.  


Mr. Christopher Daniels and John Daniels are brothers.




39



Committees of the Board of Directors

We do not have standing audit, nominating or compensation committees, or committees performing similar functions. Our board of directors believes that it is not necessary to have standing audit, nominating or compensation committees at this time because the functions of such committees are adequately performed by our board of directors.


Section 16(a) Beneficial Ownership Reporting Compliance

Under Section 16(a) of the Securities Exchange Act of 1934, as amended, an officer, director, or greater-than-10% shareholder of the registrant must file a Form 4 reporting the acquisition or disposition of registrant's equity securities with the Securities and Exchange Commission no later than the end of the second business day after the day the transaction occurred unless certain exceptions apply.  Transactions not reported on Form 4 must be reported on Form 5 within 45 days after the end of the registrant's fiscal year.  Such persons must also file initial reports of ownership on Form 3 upon becoming an officer, director, or greater-than-10% shareholder.  To our knowledge, based solely on a review of the copies of these reports furnished to it, the officers, directors, and greater than 10% beneficial owners complied with all applicable Section 16(a) filing requirements during 2014.


Code of Ethics Policy

We have not yet adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.


Corporate Governance

There have been no changes in any state law or other procedures by which security holders may recommend nominees to our board of directors.  In addition to having no nominating committee for this purpose, we currently have no specific audit committee and no audit committee financial expert.  Based on the fact that our current business affairs are simple, any such committees are excessive and beyond the scope of our business and needs.  As such, the board of directors shall undertake these tasks for the foreseeable future.


Indemnification

The registrant shall indemnify any officer or director or any former officer or director, to the full extent permitted by law.  We shall indemnify any officer or director in connection with any proceedings, including appeals, if he or she acted in good faith and in a manner he or she reasonably believed to be in the best interests of the corporation and they had no reasonable cause to believe that his or her conduct was unlawful.  The termination of any proceeding by judgment, order, settlement, or conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in the best interests of the registrant or had reasonable cause to believe that his or her conduct was unlawful.




40



At present, there is no pending litigation or proceeding involving any of our directors or executive officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or preceding that may result in a claim for indemnification.


We do not have any insurance policies covering our officers and directors with respect to certain liabilities, including liabilities arising under the Securities Act or otherwise.


INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE REGISTRANT FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE AGAINST PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS THEREFORE UNENFORCEABLE.



ITEM 11. EXECUTIVE COMPENSATION


The following table set forth certain information as to the compensation paid to our executive officers.


Summary Compensation Table

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name and Principal Position*

 

Year

 

Salary

 

Bonus

 

Stock Awards

 

Option Awards

 

Non-Equity Incentive Plan Comp

 

Nonqualified Deferred Comp Earnings

Christopher Daniels

 

2015

 

$0   

$0

 

n/a

 

n/a

 

n/a

 

n/a

CEO

 

2014

 

0

 

0

 

n/a

 

n/a

 

n/a

 

n/a

Lance Diamond

 

2015

 

$0

 

$0

 

n/a

 

n/a

 

n/a

 

n/a

CFO

 

2014

 

0

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

Robert M. Copley, Jr.

 

2015

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

CEO, CFO

 

2014

 

$0

 

$0

 

n/a

 

n/a

 

n/a

 

n/a


*Mr. Copley, Jr. resigned from all positions effective November 25, 2014.  Mr. Daniels and Mr. Diamond were appointed as CEO and CFO, respectively, on November 25, 2014.


Since inception, we have not paid any compensation to our officers.  We do not have any standard arrangements by which directors are compensated for any services provided as a director.  No cash has been paid to the directors in their capacity as such.


Equity Awards/Options/SAR Grants.  On March 13, 2015, the registrant approved the 2015 Stock Awards Plan.  The aggregate number of common shares to be issued under the Plan shall be 3,000,000 common shares.  The registrant awarded 200,000 common shares (100,000 each) to Christopher Daniels, an officer and director and Stanley Hutton



41



Rumbough, a director.  These common shares were among those registered on Form S-8 filed with the SEC on March 13, 2015.  No other individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to any executive officer or any director since our inception; accordingly, no other stock options have been granted or exercised by any of the officers or directors since inception.


Long-Term Incentive Plans and Awards.  We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.  No individual grants or agreements regarding future payouts under non-stock price-based plans have been made to any executive officer or any director or any employee or consultant since our inception; accordingly, no future payouts under non-stock price-based plans or agreements have been granted or entered into or exercised by our officers, directors, employees or consultants since inception.


ITEM 12.  SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS


The following table sets forth certain information regarding the beneficial ownership of the registrant's common shares by (i) the directors and executive officers of the registrant and (ii) each 5% shareholder.  Each person named in the table has sole voting and investment power with respect to the shares beneficially owned, unless otherwise indicated.       


 

 

 

 

 

 

 



Name of

Beneficial Owner and Address

Number of Shares of Voting Stock Beneficially Owned


Percentage of Class


Total Votes

Ordinary

Common


Class B

Ordinary

Common


Class B


Number


(1)

Christopher Daniels (2)

77 Water St., 7th Floor

NY, NY 10005

46,901,437

5,211,207

88.52%

89.90%

99,014,145

89.24 %


John Daniels

77 Water St., 7th Floor

NY, NY 10005

2,251,661

250,184

4.25%

4.32%

4,753,507

   4.248%

 

 

 

 

 

 

 

Stanley Hutton Rumbough (4)

77 Water St., 7th Floor

NY, NY 10005

316,507

35,174

0.60%

0.61%

668,314

 0.60 %




42




Craig Marshak (3)77 Water St., 7th Floor

NY, NY 10005

266,632

29,625

0.50%

0.51%

562,890

  0.50 %

Other Directors, Exec. Officers, 5% shareholders as a Group

0

0

0

0

0

   0

                     Total

49,191,510

5,465,723

92.85%

94.29%

103,848,747

93.6%

Less than 1%

(1)Out of a total of 110,952,195 votes that can be cast based on 809,195 outstanding common and 52,173,000 newly issued common and 5,797,000 newly issued Class B common.

(2)Includes shares held directly by EFH Global Holdings Inc., a Wyoming corporation, an entity for which Mr. Daniels is a control person, and trusts that are established to benefit minor children and third parties.

(3)As beneficial interest as majority owner of Triple Eight Markets, Inc. includes stock and assumes exercise all purchase rights.

(4)Includes minor children.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.


Other than the transactions discussed below, we have not entered into any transaction nor  are  there  any proposed transactions in which any of our founders, directors, executive officers, shareholders or any members of the immediate family of any of the foregoing had or is to have a direct or indirect material interest.


Relationships Among Officers and Directors

Christopher Daniels, an officer and director and John Daniels, a director are brothers.


Related Party Advances

EFH Group Inc., a Wyoming corporation, the majority shareholder of the registrant advanced the registrant $0 and $13,991 during the year ended December 31, 2015 and 2014.  The advance is repayable upon demand and is without interest.



ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.


We engaged Michael F. Albanese as our independent auditor on March 23, 2015.  No fees were paid to them during the period November 25, 2014 through December 31, 2014 and $37,562 was paid during the year ended December 31, 2015.


Audit Fees.  We paid aggregate fees and expenses of approximately $7,500 and $7,500 to Cutler & Co., LLC during 2015 and 2014 for work completed for our annual audits and quarterly reviews of our financial statements.




43



Tax Fees. We did not incur any aggregate tax fees and expenses from Michael F. Albanese or Cutler & Co., LLC for the year ended December 31, 2015 and 2014 for professional services rendered for tax compliance, tax advice, and tax planning.


All Other Fees. We did not incur any other fees from Michael F. Albanese or Cutler & Co., LLC during 2015 or 2014.


The board of directors, acting as the Audit Committee considered whether, and determined that, the auditor's provision of non-audit services was compatible with maintaining the auditor's independence.  All of the services described above for the years ended December 31, 2015 and 2014 were approved by the board of directors pursuant to its policies and procedures.




44



PART IV


ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


(a)(1)  List of Financial statements included in Part II hereof


Report of Independent Registered Accounting Firm

Balance Sheet as of December 31, 2015 and 2014

Statement of Operations for the years ended December 31, 2015 and 2014

Statement of Changes in Stockholders’ Equity

Statement of Cash Flows for the years ended December 31, 2015 and 2014

Notes to the Financial Statements


(a)(2) List of Financial Statement schedules included in Part IV hereof:  None.

(a)(3) Exhibits


The following exhibits are included herewith:


 

 

Exhibit No.

      Description

31

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*

XBRL Instance Document

101.SCH*

XBRL Taxonomy Extension Schema Document

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

XBRL Taxonomy Extension Label Linkbase Document

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document


*XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.




45




Following are a list of exhibits which we previously filed in other reports which we filed with the SEC, including the Exhibit No., description of the exhibit and the identity of the Report where the exhibit was filed.


 

 

 

 

NO.

DESCRIPTION

FILED WITH

DATE FILED

3.1

Articles of Incorporation

Form S-1

January 17, 2013

3.2

Amendment to Articles of Incorporation

Form S-1

January 17, 2013

3.3

Bylaws

Form S-1

January 17, 2013

10.1

Agency Agreement between A Alpha Bail Bonds and Bankers Insurance Group

Form S-1/A

April 26, 2013

99

Fee Distribution Outline

Form S-1/A

April 26, 2013





46




SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


EF Hutton America, Inc.


By: /s/ Christopher Daniels

            Christopher Daniels

            Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By:  /s/Christopher Daniels                                   Dated: May 4, 2016

           Christopher Daniels

           Chief Executive Officer/Director


By:  /s/Lance Diamond                                         Dated: May 4, 2016

           Lance Diamond

           CFO/Controller


By:  /s/Stanley Hutton Rumbough

  Dated:  May 4, 2016

           Stanley  Hutton Rumbough

           Chairman of the Board


By:  /s/Dennis White                                            Dated: May 4, 2016

           Dennis White

           Director


By: /s/Craig Marshak

  Dated:  May 4, 2016

Craig Marshak

Director





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