Registration No. 333-108715
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Amendment No. 11 to Registration Statement Originally Filed on Form SB-2)
G2 VENTURES, INC.
(Exact name of registrant as specified in its charter)
Texas
(State or other jurisdiction of incorporation or organization)
9995
(Primary Standard Industrial Classification Code Number)
98-0221494
(I.R.S. Employer Identification Number)
1810 Three Galleria Tower
13155 Noel Road
Dallas, Texas 75240
Telephone: (972) 726-9203
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Gust C. Kepler
President and Chief Executive Officer
1810 Three Galleria Tower
13155 Noel Road
Dallas, Texas 75240
Telephone: (972) 726-9203
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Jeffrey M. McPhaul, Esq.
Munck Butrus Carter, P.C.
12770 Coit Road, Suite 600
Dallas, Texas 75251
Telephone: (972) 628-3600
Approximate date of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: Q
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer," "accelerated filer,” and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer £ | Accelerated filer £ |
Non-accelerated filer £ | Smaller reporting company Q |
(Do not check if a smaller reporting company) |
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered | Amount to be Registered (Shares) | Proposed Maximum Offering Price Per Share | Proposed Maximum Aggregate Offering Price | Amount of Registration Fee [1] |
Common Stock | 1,500,000 | $ 0.10 | $ 150,000 | $ 100.00 |
[1] Previously paid in connection with the initial filing of this registration statement on Form SB-2.
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON DATES AS THE COMMISSION, ACTING UNDER SAID SECTION 8(a), MAY DETERMINE.
Prospectus
G2 VENTURES, INC.
Maximum of 1,500,000 shares/Minimum of 1,200,000 shares of common stock
Total proceeds if maximum sold: $150,000
Total proceeds if minimum sold: $120,000
This is our initial public offering. Our securities are not listed on any national securities exchange or the Nasdaq Stock Market.
We are offering up to a total of 1,500,000 shares of common stock on a self-underwritten basis, 1,200,000 shares minimum, 1,500,000 shares maximum. The shares will be offered and sold by the company through Gust Kepler, our sole officer, director and employee. This offering will terminate 180 days after the date of this prospectus, unless extended by us for an additional 90 days. In the event that 1,200,000 shares are not sold within 180 days after the date of this prospectus, at our sole discretion, we may extend the offering for an additional 90 days. In the event that 1,200,000 shares are not sold within the 180 days after the date of this prospectus, or within the additional 90 days if extended, all money received by us will be promptly returned to each subscriber without interest or deduction of any kind. If at least 1,200,000 shares are sold within 180 days after the date of this prospectus, or within the additional 90 days, if extended, all money received by us will be retained by us and there will be no refund. The funds will be maintained in a non-interest bearing bank account separate from our general corporate account until we receive minimum proceeds of $120,000, at which time we will remove those funds and use the funds as set forth in the Use of Proceeds section of this prospectus. This account is not an escrow, trust or similar account. Your subscription will only be deposited in a separate bank account under our name.
There are no minimum purchase requirements, and there are no arrangements to place the funds in an escrow, trust, or similar account.
Our officers, directors and affiliates will not purchase shares to enable us to reach the minimum or the maximum amounts of this offering.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE “RISK FACTORS” STARTING AT PAGE 2.
| | Underwriting | |
| | Discount and | Proceeds to G2 |
| Price to Public | Commissions | Ventures |
Per Share | $ | 0.10 | None | $ | 0.10 |
Total Maximum | $ | 150,000 | None | $ | 150,000 |
Total Minimum | $ | 120,000 | None | $ | 120,000 |
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary, is a criminal offense.
The date of this prospectus is _______________, 2008.
TABLE OF CONTENTS
| |
| Page |
| |
SUMMARY OF THE OFFERING | 1 |
RISK FACTORS | 2 |
USE OF PROCEEDS | 5 |
DETERMINATION OF OFFERING PRICE | 6 |
DILUTION | 7 |
PLAN OF DISTRIBUTION; TERMS OF THE OFFERING | 7 |
BUSINESS | 10 |
MANAGEMENT'S DISCUSSION AND PLAN OF OPERATION | 15 |
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 18 |
DIRECTOR AND EXECUTIVE OFFICER | 18 |
EXECUTIVE COMPENSATION | 19 |
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS | 20 |
DESCRIPTION OF SECURITIES | 20 |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND CORPORATE GOVERNANCE | 21 |
LEGAL PROCEEDINGS | 22 |
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES | 22 |
EXPERTS | 22 |
LEGAL MATTERS | 23 |
FINANCIAL STATEMENTS | F-1 |
i
SUMMARY OF THE OFFERING
The Company
G2 Ventures, Inc. (“G2 Ventures”) is a corporation formed under the laws of the State of Texas on March 21, 2003. We are currently a development stage music recording, production and artist management company that has had limited operations to date, due to our inability to raise sufficient capital. We have primarily relied upon financing provided by Gust Kepler, our principal shareholder, sole officer, director and employee, to conduct such limited operations. On April 1, 2003, we acquired the business, most of the assets and assumed certain liabilities of G2 Companies, Inc., a music recording and production company. At the time of such acquisition, Gust Kepler, our principal shareholder, sole officer, director and employee, also served as an officer, director and was the sole shareholder of G2 Companies, Inc., the seller. The acquisition of assets and assumption of liabilities from G2 Companies, Inc. was not conducted at “arm's-length,” due to Mr. Kepler's interest in both companies.
Since we have continuing losses from operations and no working capital, our auditors have expressed substantial doubt about our ability to continue as a going concern.
We expect to use the net proceeds of this offering to operate as an independent production label for the purpose of recording and producing the music of solo artists and bands. Part of the proceeds will be utilized for the payment of recording costs, engineering costs, producer costs and any other related costs of making full length compact discs, including mixing and mastering associated artwork. G2 Ventures will then package and print up to 1,000 compact disc units for test marketing, promotion, and solicitation of major record labels and major recorded music distributors. We intend to sell the rights to the music, or license the distribution and sale of the recorded music.
Though G2 Ventures is a development stage company that plans in this offering to issue “penny stock,” as defined in Rule 3a51-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we have no present plans to be acquired or to merge with another entity, nor do we or any of our affiliated shareholders have any present plans to enter into a change of control or similar transaction. Accordingly, we do not believe that G2 Ventures qualifies as a “blank check company” as that term is defined in Rule 419 promulgated under the Securities Act.
We maintain our executive offices at 1810 Three Galleria Tower, 13155 Noel Road, Dallas, Texas 75240 and our telephone number is (972) 726-9203. Our web address is www.g2records.com. Information contained on our website is not part of this prospectus.
Securities Offered
We are offering a minimum of 1,200,000 shares and a maximum of 1,500,000 shares of common stock, $0.001 par value per share. The shares are offered at $0.10 per share for total gross offering proceeds of $150,000, assuming the maximum amount is sold, and $120,000 assuming the minimum amount is sold.
Shares Now Outstanding | 3,500,000 |
Shares Outstanding Assuming Minimum Sold | 4,700,000 |
Shares Outstanding Assuming Maximum Sold | 5,000,000 |
Terms of the Offering
We intend to raise a maximum of $150,000 and a minimum of $120,000 in this offering. The offering will remain open for 180 days after the date of this prospectus unless we decide to cease selling efforts prior to this date. We may also extend our offering for 90 days past the original period if we choose.
Use of Proceeds
We intend to use the net proceeds of this offering primarily to pay recording costs, engineering costs, producer costs and any other related costs of making full length compact discs, including mixing and mastering and creating the associated artwork for two artists currently signed to exclusive recording contracts with G2 Ventures. Some of the proceeds will be allocated to cover legal and accounting expenses incurred in connection with this offering and other general administrative costs. If we raise the maximum of $150,000, we will pay $15,000 to Gust Kepler, our sole officer, director and employee, as repayment of a portion of the money that Mr. Kepler lent to us (including loans from Mr. Kepler to G2 Companies, Inc. assumed by us). We have entered into a written agreement with Mr. Kepler, pursuant to which the $15,000 of proceeds allocated to partial repayment of loans made to us by Mr. Kepler (including loans from Mr. Kepler to G2 Companies, Inc. assumed by us) will only be paid to Mr. Kepler if we raise the maximum amount of this offering.
1
Plan of Distribution
This is a self underwritten offering, with no commitment by anyone to purchase any shares. The shares will be offered and sold by the company through Gust Kepler, our sole officer, director and employee. No underwriter will be used and no sales commissions will be paid from the proceeds of the offering.
Selected Financial Data
The following financial information summarizes the more complete historical financial information at the end of this prospectus.
| As of December 31, 2007 | | As of December 31, 2006 | |
Balance Sheet | | | | |
Total Assets | $ | 529 | | $ | 529 | |
Total Liabilities | $ | 102,054 | | $ | 55,347 | |
Stockholders Equity (Deficit) | $ | (101,525) | | $ | (54,818) | |
| | | | |
| Year Ended | | Year Ended | |
| December 31, 2007 | | December 31, 2006 | |
Income Statement | | | | |
Revenue | $ | - | | $ | 8,000 | |
Total Expenses | $ | 46,707 | [1] | $ | 11,611 | [2] |
Net Income (Loss) | $ | (46,707) | | $ | (3,611) | |
[1] This number includes $27,260 for legal services, $17,977 for accounting services, $1,470 for financial printing services.
[2] This number includes $6,800 in cost of revenues (artist fees) and $4,811 in general and administrative expenses (including $12 for bank fees, $3,699 for accounting services and $1,100 for contract labor expenses incurred in connection with artist management activities).
RISK FACTORS
An investment in the shares involves a high degree of risk, including a risk of loss of an investor's entire investment in G2 Ventures. Set forth below are all of the material risks associated with this offering. Prospective investors should consider carefully, in addition to the other information contained in this prospectus, the following risk factors before purchasing any shares.
Because of our continuing losses from operations and lack of working capital, our auditors have expressed substantial doubt as to our ability to continue as a going concern.
Because of our continuing losses from operations and lack of working capital, our auditors have expressed substantial doubt as to our ability to continue as a going concern. This means that there is substantial doubt that we can continue as an ongoing business for the next 12 months without raising additional funds. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. If we continue to sustain losses and lack sufficient capital, we may have to cease operations and you could lose your investment.
2
We have a limited operating history and have losses which we expect to continue into the future. There is no assurance our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate profitably, we may suspend or cease operations.
We were incorporated on March 21, 2003. We have a limited operating history. To date we have not produced any master recordings, and have derived all revenues, totaling $0 in 2005, $8,000 in 2006, and $0 in 2007, from artist management fees (i.e., securing live performances for performing artists). As of December 31, 2007 our net loss since inception was $146,315. Our ability to achieve and maintain profitability and positive cash flow is dependent, among other things, upon:
* | completion of this offering |
* | our ability to attract new artists |
* | our artists' ability to write lyrics and music which is popular with the public |
* | our ability to record and sell our artists' music |
* | our ability to book artists |
Based upon current plans, we expect to incur operating losses in future periods because we expect to incur expenses which will exceed revenues for an unknown period of time. We cannot guarantee that we will be successful in generating sufficient revenues to support operations in the future. Failure to generate sufficient revenues will cause us to go out of business and you could lose your investment.
We are depending upon the funds raised in this offering to revitalize and continue pursuit of our business plans. We may need to obtain additional financing which may not be available on acceptable terms, if at all.
As noted above, we have derived all revenue to date from artist management fees and been unable to fully fund the pursuit of our primary business plans involving recording and production of music for artists we have under contract. We need the proceeds from this offering to revitalize and continue pursuit of our planned operations. Planned operations include the recording, mastering and packaging of albums for artists under exclusive contract. If the minimum offering amount of $120,000 is raised, we believe that, after paying certain expenses of this offering, we can revitalize and continue pursuit of our planned operations. We may need additional funds to complete further development of our business plan to achieve a sustainable sales level, where ongoing operations can be funded out of current revenues. There is no assurance that any additional financing will be available, or if available, that it will be on terms that will be acceptable to us. Currently, other than this offering, we do not have any arrangements in place or contemplated with respect to future financings.
Because we are a small company, have minimal overall capitalization, no working capital and continue to incur operating losses, we must limit marketing our operations and the number of artists we represent. As a result, we may not be able to attract enough artists to operate profitably at this time. If we do not make a profit, we may have to suspend or cease operations.
Because we are a small company, have minimal overall capitalization, no working capital and continue to incur operating losses, we must limit our operations and the number of artists we service. Currently, we have agreements to service two artists, Jeremiah Donnelly and Nick Brisco. However, our two artists currently book their own engagements and we have waived payment of management fees from them until completion of their master recordings. If we raise the minimum amount of this offering, we believe we can effectively service the two artists we currently have under contract. If we raise the maximum amount, we believe we can service up to three artists. Since we service a limited number of artists, if one is unsuccessful, quits or retires, the loss of one artist could have a significant negative impact on our revenues and cause us to operate at a loss. If we cannot operate profitably, we may have to suspend or cease operations.
Because Mr. Gust Kepler, our sole officer, director and employee, will maintain ownership of up to 66% of the outstanding shares upon completion of this offering, even if the maximum number of shares are sold in this offering, he will control our operations.
Even if we sell the maximum number of shares in this offering, Gust Kepler, our sole officer, director and employee, will still own 3,300,000 shares (or 66%) of the 5,000,000 total outstanding shares, and will continue to control the company. As a result, after completion of this offering, regardless of the number of shares we sell, Mr. Kepler will be able to elect all of our directors and entirely control our operations. If his decisions are incorrect, we could go out of business and you would lose your investment.
3
If we are unable to raise sufficient capital in this offering to pay advances to our artists, we may be unable to maintain our contractual relations with such artists.
We currently have two artists under recording contracts: Jeremiah Donnelly and Nick Brisco. Both contracts require us to pay each of the artists $25,000 advances for initial albums during the first nine months after execution of each contract. If we are unable to raise sufficient capital in this offering within a reasonable period of time, we may not be able to meet our obligations under contracts with the artists. If we are unable to meet our obligations to pay advances under the contracts we will lose the opportunity to derive revenues from the works of the artists. There can be no assurance that we will be able to enter into subsequent contracts with the artists in the event that we are unable to meet our obligations under current contracts.
Because we have not made efforts to provide manufacturing, distribution, and sales services, you could lose your investment.
Under the terms of our contracts with our recording artists, we have the right to manufacture, distribute and sell up to four albums of music for each artist. We have made no efforts to provide these services as of the date hereof and will not begin to do so until this offering is completed. As a result, we may not be able to provide such services in the future. If we are unable to provide such services, we will be unable to generate revenues and you could lose your investment.
In light of our limited financial resources, we may be unable to obtain agreements for services of certain vendors identified herein, which could impair our ability to pursue our business plans.
We have identified and intend to use certain vendors in connection with planned music recording and production activities. See section below entitled “BUSINESS - Business Overview.” In light of the fact that we are a small company, and have limited financial resources, we may be unable to obtain formal agreements for the services of planned vendors. In the event that we are unable to obtain the services of planned vendors, we may be forced to seek alternative sources for such services and the costs may be higher than anticipated.
In the event that any one or both of our current artists fails to perform their obligations under their respective Exclusive Recording Artist Agreements, we may be unable to apply the offering proceeds as currently anticipated and may also be unable to recoup payments and/or expenditures already made.
It is possible that Jeremiah Donnelly and/or Nick Brisco could fail to perform their obligations under their Exclusive Recording Artist Agreements. In the event that either or both of these artists fail to perform under the terms of their agreements prior to completion of any recording for which offering proceeds are advanced as specified herein, we intend to apply such proceeds toward recording costs for one or more artists with whom we may contract. However, there can be no assurance that we will be able to identify and contract with any other artists on acceptable terms. Furthermore, though we intend to try, we may be unable to recoup any payments and/or expenditures advanced in connection with incomplete recordings.
We have not filed federal tax returns and may be subject to penalties as a result.
Since inception, we have not filed any federal tax returns. We intend to file all delinquent federal tax returns for G2 Ventures by June 1, 2008. When such filings are made, we may be subject to failure to file penalties. We periodically assess the liabilities and contingencies in connection with this matter based upon the latest information available. We estimate that the amount of penalties, if any, will not have a material effect on the results of our operations, cash flows or financial position. No provisions have been made in the financial statements for such penalties, if any.
4
Risks Associated with this Offering
Because we do not have an escrow or trust account for your subscription, if we file for bankruptcy protection, are forced into bankruptcy, or a creditor obtains a judgment against us and attaches the subscription, you will lose your investment.
Your funds will not be placed in an escrow or trust account. The funds will be maintained in a non-interest bearing bank account under G2 Venture's control, separate from our general corporate account. Accordingly, if we file for bankruptcy protection or a petition for involuntary bankruptcy is filed by our creditors against us, your funds will become part of the bankruptcy estate and administered according to the bankruptcy laws. If a creditor sues us and obtains a judgment against us, the creditor could garnish the bank account and take possession of the subscriptions. As such, even if the minimum conditions of this offering are not satisfied, it is possible that a creditor could attach your subscription which could preclude or delay the return of your subscription. If that happens, you may lose your investment and your funds may be used to pay creditors.
FINRA sales practice requirements may limit a stockholder's ability to buy and sell our stock.
The Financial Industry Regulatory Authority (“FINRA”) has adopted rules that relate to the application of the SEC's penny stock rules in trading our securities and require that a broker/dealer have reasonable grounds for believing that the investment is suitable for that customer, prior to recommending the investment. Prior to recommending speculative, low priced securities to their non-institutional customers, broker/dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative, low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker/dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in our common stock, reducing a shareholder's ability to resell shares of our common stock.
Because there is no public trading market for our common stock, you may not be able to resell your stock.
There is currently no public trading market for our common stock, nor is there any assurance that a trading market will ever develop. Therefore, there is no central place and there may not be a place in the future, such as a stock exchange or electronic trading system, where you can resell your stock. If you do want to resell your shares, you will have to locate a buyer and negotiate your own sale or you may not be able to resell your shares, thereby rendering your investment illiquid.
USE OF PROCEEDS
The net proceeds to G2 Ventures from the sale of shares offered hereby, assuming all of the shares offered hereby are sold, of which no assurances are given, are estimated to be $140,000, after deducting the estimated cash expenses of the offering of approximately $10,000.
The following table sets forth the anticipated use of the net proceeds of this offering in the event that the minimum offering of 1,200,000 shares are sold or the maximum offering of 1,500,000 shares are sold.
| Assuming | Assuming |
| 1,200,000 | 1,500,000 |
| Shares Sold | Shares Sold |
Gross Aggregate Proceeds | $ | 120,000 | $ | 150,000 |
Less Offering Expenses (1) | $ | 10,000 | $ | 10,000 |
Net Proceeds | $ | 110,000 | $ | 140,000 |
| | | | |
Recording Cost - Jeremiah Donnelly(2) | $ | 25,000 | $ | 25,000 |
Recording Cost - Nick Brisco (2) | $ | 25,000 | $ | 25,000 |
CD Manufacturing (3) | $ | 2,500 | $ | 2,500 |
Promotional Materials (4) | $ | 2,500 | $ | 7,500 |
Accounting | $ | 25,000 | $ | 25,000 |
Administrative (5) | $ | 15,000 | $ | 15,000 |
Legal | $ | 15,000 | $ | 25,000 |
Partial Repayment of Loan to Gust Kepler (6) | $ | 0 | $ | 15,000 |
5
| |
(1) | Reflects $10,000 to be paid from the proceeds of this offering to our former attorney, Conrad C. Lysiak. All remaining offering expenses in excess of the $10,000 paid to Mr. Lysiak or subsequent legal counsel have been or will be advanced by Gust Kepler, our sole officer, director and employee, in the form of non-interest bearing, unsecured loans to the company that are due, subject to restrictions on repayment from proceeds of this Offering, on demand. Mr. Kepler intends to seek repayment of such advances as funds become available to G2 Ventures from any source - subject to the limitations on the use of proceeds from this Offering set forth herein. Estimated remaining offering expenses are SEC filing fees of $100; printing expenses of $3,000; accounting fees and expenses of approximately $20,000; legal fees and expenses of approximately $25,000; blue sky fees and expenses of $3,850; transfer agent fees of $500; and miscellaneous expenses of $400. |
(2) | Reflects advances to artist under an Exclusive Recording Artist Agreement. |
(3) | Anticipated costs of pressing, duplication and packaging of 1,000 compact disc units. |
(4) | Anticipated costs of design and creation of an electronic press kit for use in connection with marketing artist recordings. |
(5) | “Administrative” costs include secretarial fees, phone services, computer, courier, and postage and office supplies expenses. |
(6) | The loans from Mr. Kepler have been made to cover our operating expenses to date, including liabilities of G2 Companies, Inc. assumed by us. As of December 31, 2007, total unpaid principal balance due Mr. Kepler for advances is $91,954 without interest of any kind, until paid. Mr. Kepler and G2 Ventures entered into an Agreement dated September 14, 2006 pursuant to which Mr. Kepler agreed not to seek repayment of certain loans to G2 Ventures (outstanding as of the date of the Agreement) until the Offering registration statement is effective and the maximum shares offered in the Offering are sold. Subject to restrictions on repayment from proceeds of this Offering (i.e., no more than $15,000 of the offering proceeds will be used to repay amounts loaned by Mr. Kepler and only in the event that 1,500,000 shares are sold), the $91,954 payable to Mr. Kepler is due upon demand. |
In the event that our Exclusive Recording Artist Agreements with Jeremiah Donnelly and/or Nick Brisco are terminated prior to completion of any recording for which offering proceeds are advanced as specified above, we intend to apply such proceeds toward recording costs for another artist with whom we may contract. However, there can be no assurance that we will be able to identify and contract with any other artist on acceptable terms.
Our sole officer, director and employee, Gust Kepler, has advanced us $110,750 to cover our operating expenses incurred from September 26, 2002 (inception of G2 Companies, Inc., our predecessor) to December 31, 2007, including liabilities assumed from G2 Companies, Inc., and expenses associated with this offering. As of December 31, 2007, Mr. Kepler has forgiven $17,796 of such advances as additional paid in capital of G2 Ventures and $91,954 remained payable to him. We do not pay any interest to Mr. Kepler on these advances and they are payable, subject to restrictions on repayment from proceeds of this Offering, on demand. Mr. Kepler and G2 entered into an Agreement dated September 14, 2006 (the “Kepler Agreement”) pursuant to which Mr. Kepler agreed not to seek repayment of certain loans to G2 until the registration statement of which this prospectus is a part is effective and the maximum shares offered in the Offering are sold. Mr. Kepler has agreed that we must sell all 1,500,000 shares offered before he is to be repaid $15,000 of these advances out of the proceeds of this offering. The Kepler Agreement restrictions are only applicable to loan balances outstanding as of the date of the Kepler Agreement, however, only $15,000 of the offering proceeds will be used to repay amounts loaned by Mr. Kepler, and only in the event that 1,500,000 shares are sold in the offering.
In the event that we successfully complete this offering (i.e., sale of either the minimum or maximum amount), Mr. Kepler, our sole officer, director and employee, believes that the net proceeds will provide us with sufficient funds to meet our requirements for approximately 12 months following the receipt of offering proceeds.
6
DETERMINATION OF OFFERING PRICE
There is no established public market for the shares of common stock being registered. As a result, the offering price and other terms and conditions relative to the shares of common stock offered hereby have been arbitrarily determined by us and do not necessarily bear any relationship to assets, earnings, book value or any other objective criteria of value. In addition, no investment banker, appraiser or other independent third party has been consulted concerning the offering price for the shares or the fairness of the offering price.
DILUTION
On April 1, 2003, we issued 3,500,000 shares of restricted common stock to Gust Kepler, our sole officer, director and employee, at a price of approximately $0.007713 per share, in exchange for forgiveness of certain debt in the amount of $26,994 assumed by us from G2 Companies, Inc. No other shares have been issued as of the date of this Prospectus. Since the 3,500,000 shares of common stock were issued at a price significantly less than $.10 per shares, purchasers of Shares in this offering will suffer immediate and substantial dilution of their per share investments.
At December 31, 2007, we had a negative net tangible book value of ($101,525) or ($0.029) per share. The following table sets forth the dilution to persons purchasing shares in this offering, without taking into account any changes in our net tangible book value, except the sale of 1,500,000 shares or 1,200,000 shares at the offering price less estimated offering expenses. The net tangible book value per share is determined by subtracting total liabilities from our tangible assets, then dividing by the total number of shares of common stock outstanding.
| Before | 1,200,000 | 1,500,000 |
| Offering | shares sold | shares sold |
Public offering price per share | | N/A | $ | 0.1000 | $ | 0.1000 |
Net tangible book value per share of common | | | | | | |
stock before the offering | $ | (0.0290) | | N/A | | N/A |
Pro forma net tangible book value per share of | | | | | | |
common stock after the offering | | N/A | $ | 0.0039 | $ | 0.0097 |
Increase of net tangible book value per share | | | | | | |
attributable to purchase of common stock by | | | | | | |
new investors | | N/A | $ | 0.0329 | $ | 0.0387 |
Dilution to new investors | | N/A | $ | 0.0961 | $ | 0.0921 |
PLAN OF DISTRIBUTION; TERMS OF THE OFFERING
We are offering a minimum of 1,200,000 and a maximum of 1,500,000 shares of our common stock on a self underwritten basis without any involvement of broker/dealers. The offering price is $0.10 per share. Funds from this offering will be placed in a separate non-interest bearing bank account at Bank of Texas, N.A. Its telephone number is (214) 575-1900. The funds will be maintained in the separate, non-interest bearing account until we receive a minimum of $120,000, at which time we will remove those funds and use the same as set forth in the USE OF PROCEEDS section of this prospectus. This account is not an escrow, trust or similar account. Any funds received by us thereafter will immediately be available to us for use as specified in the USE OF PROCEEDS section. If we have not sold the minimum amount of 1,200,000 shares and raised $120,000 within 180 days after the date of this prospectus, plus 90 additional days if we so choose to extend the offering, all funds will be promptly returned to you without a deduction of any kind. However, future actions by creditors in the subscription period could preclude or delay refund of your money. During the 180 day period and possible additional 90 day period, no funds will be returned to you. You will only receive a refund of your subscription if we do not raise a minimum of $120,000 within the 180 day period referred to above which could be expanded by an additional 90 days at our discretion to a total of 270 days. Gust Kepler, our sole officer, director and employee will make the determination regarding whether the minimum offering conditions are satisfied. There are no finders or broker/dealers involved in our distribution.
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We will sell the shares in this offering through Gust Kepler, our sole officer, director and employee. He will receive no commission from the sale of any shares. He will not register as a broker/dealer under Section 15 of the Exchange Act, in reliance upon Rule 3a4-1. Rule 3a4-1 sets forth those conditions under which a person associated with an issuer may participate in an offering of the issuer's securities and not be deemed to be a broker/dealer. The conditions are that:
1.
The person is not statutorily disqualified, as that term is defined in Section 3(a)(39) of the Act, at the time of his participation; and
2.
The person is not compensated in connection with his participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities; and
3.
The person is not at the time of his participation, an associated person of a broker/dealer; and
4.
The person meets the conditions of Paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in that he (A) primarily performs, or is intended primarily to perform at the end of the offering, substantial duties for or on behalf of the Issuer otherwise than in connection with transactions in securities; and (B) is not a broker or dealer, or an associated person of a broker or dealer, within the preceding 12 months; and (C) does not participate in selling and offering of securities for any Issuer more than once every 12 months other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
Mr. Kepler, our sole officer, director and employee, is not statutorily disqualified, is not being compensated, and is not associated with a broker/dealer. He is and will continue to be our sole officer, director and employee upon completion of the offering and has not been during the last 12 months and currently is not a broker/dealer or associated with a broker/dealer. He has not during the last 12 months and will not in the next 12 months offer or sell securities for another corporation.
We intend to advertise, through tombstones, and hold investment meetings in various states where the offering will be registered. We will not utilize the Internet to advertise our offering. Mr. Kepler, our sole officer, director and employee, will also distribute the prospectus to potential investors at the meetings, to business associates and to his friends and relatives who are interested in us, and a possible investment in the offering. No shares purchased in this offering will be subject to any kind of lock-up agreement. Mr. Kepler, our sole officer, director and employee, does not intend to purchase any shares in the offering.
We intend to sell our shares in the states of New York, New Jersey, Tennessee, Florida, Texas, Nevada, and Minnesota. Prior to selling our shares in the foregoing jurisdictions, we will file applications for the sale thereof with the respective securities administrations of those jurisdictions. We have not filed any applications for registration of this offering with any states and do not intend to do so until we have been advised by the Securities and Exchange Commission (“SEC”) that it has no further comments regarding our public offering.
Section 15(g) of the Exchange Act
Our shares are considered “penny stocks” covered by section 15(g) of the Exchange Act, and Rules 15g-1 through 15g-6 promulgated thereunder, which impose additional sales practice requirements on broker/dealers who sell our securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). While section 15(g) and Rules 15g-1 through 15g-6 apply to broker/dealers, they do not apply to sales by us.
Rule 15g-1 exempts a number of specific transactions from the scope of the penny stock rules.
Rule 15g-2 declares broker/dealer transactions in penny stocks unlawful unless the broker/dealer has first provided to the customer a standardized disclosure document.
Rule 15g-3 provides that it is unlawful for a broker/dealer to engage in a penny stock transaction unless the broker/dealer first discloses and subsequently confirms to the customer current quotation prices or similar market information concerning the penny stock in question.
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Rule 15g-4 prohibits broker/dealers from completing penny stock transactions for a customer unless the broker/dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.
Rule 15g-5 requires that a broker dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales person's compensation.
Rule 15g-6 requires broker/dealers selling penny stocks to provide their customers with monthly account statements.
Again, the foregoing rules apply to broker/dealers. They do not apply to us in any manner whatsoever. Since our shares are covered by section 15(g) of the Securities Exchange Act of 1934, which imposes additional sales practice requirements on broker/dealers, many broker/dealers may not want to make a market in our shares or conduct any transactions in our shares. As such, your ability to dispose of your shares may be adversely affected.
Offering Period and Expiration Date
This offering will start on the date of this prospectus and continue for a period of 180 days unless the offering is completed or otherwise terminated by us. We may extend the offering period for an additional 90 days.
Regulation M
We are subject to Regulation M of the Exchange Act. Regulation M governs activities of underwriters, issuers, selling security holders, and others in connection with offerings of securities. Regulation M prohibits distribution participants and their affiliated purchasers from bidding for, purchasing, or attempting to induce any person to bid for or purchase the securities being distributed.
Procedures for Subscribing
If you decide to subscribe for any shares in this offering, you must
1. | execute and deliver a subscription agreement; and |
2. | deliver a check or certified funds to us for acceptance or rejection. |
The subscription agreement requires you to disclose your name, address, telephone number, number of shares you are purchasing and the price you are paying for your shares.
All checks for subscriptions must be made payable to “G2 VENTURES, INC.”
Right to Reject Subscriptions
We have the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned immediately by us to the subscriber, without interest or deduction. Subscriptions for securities will be accepted or rejected within 48 hours after we receive them.
Separate Account for Subscriptions
Subscriptions will be placed in a separate non-interest bearing bank account at Bank of Texas, until we have received $120,000. Upon receipt of $120,000, we will withdraw and use the funds. If we do not receive the $120,000 within 180 days after the date of this prospectus, plus 90 additional days if we extend the offering period, all subscriptions received by us will be promptly returned to each investor without interest or deduction therefrom.
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Restricted Shares that May be Sold Under Rule 144
There are currently 3,500,000 shares of common stock outstanding, all of which are restricted but may be sold under Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”). Under Rule 144 as currently in effect, the shares can be publicly sold, subject to volume restrictions and restrictions on the manner of sale for affiliates, commencing one year after their acquisition. Rule 144 provides that affiliates may not sell more than 1% of the total outstanding shares in any three-month period (or an amount of shares equal to the average weekly reported volume of trading during the four calendar weeks preceding the sale) and the shares must be sold either in a brokers' transaction or in a transaction directly with a market maker. However, the foregoing restrictions do not apply to non-affiliates of the company who have held securities for more than one year. Nicole Evenson, a non-affiliate, owns 200,000 shares of common stock that were transferred to her from Mr. Kepler, our sole officer, director and employee, on August 12, 2003. Based upon the foregoing, Mr. Kepler could sell up to 50,000 shares of common stock each quarter, assuming the maximum number of shares are sold in this offering, and Ms. Evenson could sell all of her shares pursuant to Rule 144.
Sales of shares by Mr. Kepler, our sole officer, director and employee, or Ms. Evenson could have a depressive effect on the market price of our shares of common stock should a market develop for our common stock. We cannot assure you such a market will ever develop.
BUSINESS
Development of G2 Ventures, Inc.
G2 Ventures, Inc. was incorporated under the laws of the state of Texas on March 21, 2003. We were formed to acquire most of the assets and certain liabilities of and succeed the business of G2 Companies, Inc. (formerly Hartland Investments, Inc.) as an independent recording company and artist management company.
On April 1, 2003, we entered into a Sale of Assets Agreement pursuant to which we acquired most of the assets and assumed certain liabilities of G2 Companies, Inc. (a company incorporated under the laws of the State of Delaware as “Hartland Investments, Inc.” on May 26, 1998). At the time of the transaction, Gust Kepler, our sole officer, director and employee, controlled G2 Companies, Inc. The Sale of Assets Agreement specifically provided for the acquisition of the following assets in exchange for our assumption of liabilities totaling $41,404 (approximately $1,059 in accounts payable for accounting services and $40,345 in advances from Gust Kepler):
(1) | Exclusive Recording Artist Agreement for artist “One Up” dated January 6, 2003; |
(2) | Exclusive Recording Artist Agreement for Jeremiah Donnelly dated December 5, 2002; |
(3) | G2 Records logo, artwork, trademarks, web domains and affiliated intellectual property; |
(4) | G2 Records database, customer data, distributor lists, trade and industry contacts, and other proprietary data; and |
(5) | All office equipment, furniture, computers, software and supplies. |
The sale of assets transaction was consummated to facilitate recapitalization by transferring the assets and operations of G2 Companies, Inc. to a newly created business entity that had no operating history and therefore less exposure for potential unknown liabilities of G2 Companies, Inc.
Yarek Bartosz was the only promoter of G2 Companies, Inc. (at the time known as Hartland Investments, Inc.) from its inception until September 29, 2002. The original purpose of Hartland Investments, Inc. was to seek out and obtain an acquisition, merger or outright sale transaction, whereby its shareholders would benefit. On September 29, 2002, Mr. Kepler paid Mr. Bartosz $100 for 1,157,900 shares of common stock or 92.7% of the total outstanding shares of Hartland Investments, Inc. and the name of the company was changed to G2 Companies, Inc. effective as of December 13, 2002. Mr. Bartosz retained 15,100 shares of common stock or 1.21% of the total outstanding shares. Mr. Kepler became the principal shareholder, sole officer and sole director of G2 Companies, Inc. in September 2002 and remained in those positions until we effectively acquired its business operations by virtue of the Sale of Assets Agreement in April 2003. In September of 2002, G2 Companies, Inc. began operating as a record label and entered into recording agreements with two artists, one of whom was Jeremiah Donnelly (one of the artists currently under contract with us). In the year ended December 31, 2002, G2 Companies produced no revenues and incurred operating losses of approximately $41,000.
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After seeking legal counsel regarding filing obligations, Mr. Kepler was advised that G2 Companies, Inc. was delinquent in some of its reporting obligations under the federal securities laws. Upon being advised of such obligations, Mr. Kepler endeavored to satisfy reporting requirements by filing delinquent reports on behalf of G2 Companies, Inc. All delinquent reports were filed by January 2004. G2 Companies, Inc. filed a Form 15 with the SEC on February 4, 2004 and ceased reporting with the SEC.
Between September 2002 and April 1, 2003, G2 Companies, Inc. made no advances to any artist under its recording agreements and it never commenced recording. By April 1, 2003 G2 Companies, Inc. was insolvent and unable to continue business operations. By virtue of the above mentioned Sale of Assets Agreement, virtually all of the assets and liabilities of G2 Companies, Inc. were transferred to us on April 1, 2003.
Previous Involvement of our Sole Officer, Director and Employee in Similar Business Venture
Gust Kepler, our sole officer, director and employee, was also president, a director and controlling shareholder of a company called Parallax Entertainment, Inc. (“Parallax”) which was established to produce, license, acquire, market, and distribute recorded music for a variety of music formats. Parallax was incorporated on October 11, 1996 under the laws of the State of Texas. Mr. Kepler was the only promoter of Parallax. Parallax had recording contracts with two musical groups. The lead musician of the primary musical group became embroiled in legal difficulties and as a result could no longer perform with the musical group. In addition to this setback a key member of the other musical group decided to leave that group for personal reasons and that musical group broke up. As a result, Parallax was left without any clients. With the majority of Parallax's working capital expended on production projects for musical groups that were no longer viable, Parallax was unable to generate income. From October 1996 to July 2002, during which period Mr. Kepler served as president, chief executive officer and principal shareholder of Parallax, it generated only $102,291 in gross sales and incurred an aggregate loss of $4,275,323. On July 26, 2002, Mr. Kepler transferred his controlling ownership interest in Parallax to Yarek Bartosz because the company was deeply in debt, could not pay its bills, and was unable to fund future operations. Mr. Bartosz paid Mr. Kepler $160,000 for a controlling interest in Parallax consisting of 39,200,000 shares of Parallax's common stock. Mr. Kepler retained a minority interest in Parallax (2,406,000 shares of common stock) which he subsequently sold in a private transaction in September 2002. Under the new management of Mr. Bartosz, Parallax became a shell corporation engaged in the business of seeking out an acquisition candidate. In December 2003, Parallax Entertainment changed its name to Sunrise Real Estate Development Group, Inc. and began conducting business as a real estate development corporation.
Notwithstanding the similarities and commonalities between G2 Ventures, Inc. and Parallax, the companies have never been formally affiliated, or even informally related. Also, notwithstanding the proximity of the transactions by virtue of which Mr. Kepler sold his controlling interest in Parallax and acquired his controlling interest in G2 Companies, the transactions were separate and unrelated.
Business Overview
As an independent record label G2 Ventures will retain contracts with artists, produce recorded music, and sell or license the music to third parties. Revenue from this business will result from sales of CD masters to, and/or licensing agreements with, other larger record companies. In order to produce music recordings, G2 Ventures will incur recording costs that will be recouped via sales or licensing agreements.
We intend to use Sonic Dropper Audio Production for creating master recordings of our artists under contract. The Sonic Dropper Audio Production recording studios are located at 2127 Barberry Drive, Dallas, TX 75211. We intend to use the services of Mr. Jim King (Engineer), in connection with our recordings. Though terms are negotiable, typical services by Sonic Dropper Audio Production cost approximately $40 per hour. We currently have no formal agreement with Sonic Dropper Audio Production or Mr. King and there can be no assurance that we will be able to retain the above mentioned services on anticipated or other acceptable terms.
We intend to use Crystal Clear Disc and Tape, Inc. with offices located at 10486 Brockwood Road, Dallas, TX 75238 to manufacture compact discs for the purpose of distributing them as promo material to major record labels in an attempt to license or sell the publishing rights. We currently have no formal agreement with Crystal Clear Disc and Tape, Inc. and there can be no assurance that we will be able to retain the above mentioned services on acceptable terms.
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G2 Ventures also intends to engage in artist management. Our artist management activities will not involve any associated recording costs. Artist management consists primarily of acting as a booking agent or obtaining a booking agent for artists, obtaining publishing deals, and negotiating major label recording contracts. The only associated costs with this activity are minimal travel, legal and administrative fees, all of which are recouped in management fees charged to artists. G2 Ventures' artist management fees will be in the form of a commission equal to 10% to 20% of an artist's income. G2 Ventures does not have any current written agreements for its artist management services, but intends to engage in such activities as opportunities arise based upon its contacts with artists and others in the music industry.
On behalf of the group “Track 10,” G2 Ventures negotiated a contract for the group to travel to Southeast Asia to perform for U.S. troops through Armed Forces Entertainment (“AFE”), the official Department of Defense agency for providing entertainment to U.S. military personnel overseas. Though we served as Track 10's management agent in the negotiations with AFE and received a management fee for negotiating the deal, we had no formal written agreement with Track 10. Track 10 entered into the agreement with AFE on June 19, 2003 for several performances in Southeast Asia beginning in Singapore on July 3, 2003 and ending in Japan on July 26, 2003. G2 Ventures earned a 10% management commission of $3,068 for its services. G2 Ventures has no ongoing or contractual relationship with Track 10, other than the relationship with Jeremiah Donnelly, the former lead singer of that band.
G2 Ventures intends to continue to provide artist management services both to artists that are signed to recording contracts with us as well as artists that do not have recording contracts. Management fees will range from 10% to 20% of gross revenues earned by the artist.
We currently rely on financing provided by Mr. Kepler, our sole officer, director and employee, to fund our activities. We currently anticipate that we may need to obtain additional financing from Mr. Kepler to sustain operations, particularly if we are unable to sell the full amount of shares in this offering. To achieve any degree of success, of which there is no certainty, we must produce recorded music and sell or license the music to third parties. We currently have two artists under exclusive recording contracts. Our plan is to record master recordings, have them manufactured by a third party in CD format, and distribute them as promo material to major record labels in an attempt to license or sell the publishing rights.
Though G2 Ventures is a development stage company that plans in this offering to issue “penny stock,” as defined in Rule 3a51-1 under the Exchange Act, it does not have any plans or intention to engage in a merger or acquisition with any other entity at this time. Accordingly, G2 Ventures does not qualify as a “blank check company” as that term is defined in Rule 419 promulgated under the Securities Act.
The music industry is highly competitive and comprised of approximately four major recorded music companies which dominate the market along with their subsidiary labels. These labels are (1) Time/Warner; (2) Sony Music Group/Bertelsmann Music Group; (3) Thorn-EMI; and (4) Universal Music Group. These labels and their subsidiaries are our target market. There is no assurance that any of these major labels or their subsidiaries will have any interest in licensing our artists.
We currently have two artists under recording contracts: Jeremiah Donnelly and Nick Brisco. Under our agreements with Jeremiah Donnelly and Nick Brisco, each artist will produce a master album during an initial 9 month term. G2 Ventures will bear all costs of producing the album. Each contract grants us the option for three additional albums from each artist. After recovering all of our cost, we will pay the artists royalties on sales of the albums of up to 20% for domestic sales and up to 66 2/3% for foreign sales.
Due to our inability to raise sufficient capital, we have not produced any master recordings to date (under the recording artist contracts assumed from G2 Companies or contracts originated by G2 Ventures) and our efforts to develop business have been limited. However, we intend to use the net proceeds of this offering primarily to pay recording costs, engineering costs, producer costs and any other related costs of making full length compact discs, including mixing and mastering and creating the associated artwork for Messrs. Donnelly and Brisco.
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Jeremiah Donnelly
Jeremiah Donnelly is a singer-songwriter specializing in alternative rock and pop rock. He was lead vocalist for the band Track 10.
Mr. Donnelly toured the southwest extensively with his former band Track 10 between 2000 and 2002. At that time Track 10 opened for major label acts including Blue October, The Old 97's, and Stroke 9. In addition, Track 10 was frequently invited to open for independent artists including Ian Moore and Monte Montgomery.
In the fall of 2001, Track 10 had two of the most requested songs on their hometown station, Hits 106.1, in Kearney, Nebraska: The songs “Stratosphere” and “Devil Girl” from their self-titled debut release.
Prior to Track 10, Mr. Donnelly also was the front man and rhythm guitarist for Slappy Yellow, a band he founded while in high school in Kearney, Nebraska.
Under the terms of our March 31, 2008 Exclusive Recording Artist Agreement with Mr. Donnelly, we have the right to manufacture, distribute and sell up to four albums of Mr. Donnelly's music. We have made no efforts to provide these services as of the date hereof and will not do so until and unless this offering is successfully completed. We will pay all costs associated with recording, promoting and selling the albums. In addition we have agreed to advance Mr. Donnelly $25,000 for the first album; $30,000 for the second album; $40,000 for the third album; and, $75,000 for the fourth album. We will receive between 33 1/3% and 80% of all funds derived from the sale of the albums. The initial term of Mr. Donnelly's contract expires on December 31, 2008. We have the right to extend our agreement with Mr. Donnelly and intend to do so.
Nick Brisco
Nick Brisco, 37, is a singer/songwriter who has been performing and recording professionally since 1989, when he formed the post-modern country band, Fever in the Funkhouse. Fever in the Funkhouse was one of the defining pioneers of the “Deep Ellum” music scene in Dallas, Texas and earned Brisco and band notoriety and music awards, including the Dallas Observer's Best New Act of 1990 and Best Act Overall in 1991.
After Fever in the Funkhouse broke up, Brisco released various solo projects before relocating to Astoria, Queens just outside of New York City. Born and raised in Dallas, Texas, Brisco follows in the footsteps of Texas troubadours such as Steve Earle, Guy Clark and Kris Kristofferson. Brisco has opened for many songwriting legends including Townes Van Zandt and Jimmie Dale Gilmore.
As a singer/songwriter Brisco has performed all over the United States and internationally in Russia, Greece and the U.K. His diverse music combines an eclectic mix of genres and song styles, affording him a wide audience and musical opportunity including off-Broadway scores for musical theater.
Under the terms of our December 9, 2007 Exclusive Recording Artist Agreement with Mr. Brisco, we have the right to manufacture, distribute and sell up to four albums of Mr. Brisco's music. We have made no efforts to provide these services as of the date hereof and will not do so until and unless this offering is successfully completed. We will pay all costs associated with recording, promoting and selling the albums. In addition we have agreed to advance Mr. Brisco $25,000 for the first album; $30,000 for the second album; $40,000 for the third album; and, $75,000 for the fourth album. We will receive between 33 1/3% and 80% of all funds derived from the sale of the albums. The initial term of Mr. Brisco's current contract expires on September 9, 2008. We have the right to extend our agreement with Mr. Brisco and intend to do so.
We have not spent any amount of money during the last two fiscal years on research and development activities.
Competition
The music industry is highly competitive and comprised of approximately four major recorded music companies which dominate the recording industry along with their subsidiary labels; (1) Time/Warner; (2) Sony Music Group/Bertelsmann Music Group; (3) Thorn-EMI; and (4) Universal Records Group. In addition, there are many smaller independent labels. In Texas alone there are over 500 independent labels. We are a minuscule participant in the business. Virtually everyone we compete with has more financial resources than we do and will have more financial resources than we will in the foreseeable future. We intend to compete for artists by promoting our company and attempting to be diligent and personal in supporting our client artists.
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G2 Ventures' principal competitors are other independent labels. Many of the competing independent labels are larger than G2 Ventures and have greater financial resources, professional relationships and distribution capabilities. The competition for sales of recordings or licensing agreements with the four major labels will be based upon the popularity of the artist and the particular recordings. There can be no guarantee that G2 Ventures will be able to attract the business of a major label.
Copyright Laws
Federal law provides severe civil and criminal penalties for the unauthorized reproduction, distribution, rental or digital transmission of copyrighted sound recordings. (Title 17, United States Code, Section 501 and 506). The FBI investigates allegations of criminal copyright infringement and violators will be prosecuted.
The civil courts have continually ruled in favor of the record industry on copyright infringement matters. Although some companies have begun filing civil suits against individuals that download music illegally from the Internet, there is still some piracy taking place. We believe contained litigation will act as an increasing deterrent, as will software to prevent illegal copying, such as MediaMax CD3 Copy Protection by SunnComm Tech., and music industry anti-theft campaigns. Another solution the record industry is counting on is the increased availability of online music to be purchased legally. A number of legal digital music store fronts are finding a presence on the Internet, including MusicMatch, iTunes, BuyMusic, and Napster (which currently uses a legal format for downloading music). As these sites gain popularity, anti-theft software becomes more advanced and reliable, and the public becomes more aware of the consequences of illegally downloading music, the recording industry should recoup some of the losses from previous years. There is however, no guarantee that these methods will succeed.
Intellectual Property Rights
Our operations will be dependent upon the intellectual property rights to our records. International copyright laws including those in the United States and Texas protect any master recordings we produce. As of the date of this prospectus, we have not taken any steps to secure any intellectual property rights and do not intend to do so until we complete our public offering. There is no assurance we will ever complete our public offering.
Regulation
We do not foresee any material effects of federal, state, or local regulation on any aspect of our operations. However, changes in laws or regulations may adversely affect our operations.
Employees
Currently we have one employee. The employee is Mr. Gust Kepler, our sole officer and director.
Description of the Property
G2 International, Inc., a company wholly owned by Gust Kepler, our sole officer, director and employee, provides office space for G2 Ventures without charge. G2 International, Inc. subleases the office space we currently use as our principal office from E*Trade. If we move, we have no plans to rent from an affiliated party. Our current principal office space is located at 1810 Three Galleria Tower, 13155 Noel Road, Dallas, Texas 75240. This business office space is adequate for our immediate needs.
G2 Ventures does not intend to acquire any properties in the immediate future.
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Available Information
After we complete this offering, we will not be required to furnish you with an annual report. Further, we will not voluntarily send you an annual report. We will be required to file reports with the SEC under the informational and periodic reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The reports will be filed electronically. You may read copies of any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that will contain copies of the reports we file electronically. The address for the Internet site is www.sec.gov.
MANAGEMENT'S DISCUSSION AND PLAN OF OPERATION
Overview
We are an independent record label that has entered into exclusive recording and production contracts with two musical artists and intend, assuming we are successful in raising the necessary financing in this offering, to produce and create master recordings of these artists' work for sale or license to other established record labels for distribution. If we are successful in marketing these artists' master recordings, we intend to produce and create additional master recordings for them and to use our track record to solicit additional artists to enter into exclusive contracts for similar recording and management purposes.
In the event that we successfully complete this offering (i.e., sale of either the minimum or maximum amount), Mr. Kepler, our sole officer, director and employee, believes that the net proceeds will provide us with sufficient funds to meet our requirements for approximately 12 months following the receipt of offering proceeds. See “Development Schedule and Milestones” below for a description of such requirements and related costs. In the event that we do not successfully raise the anticipated minimum offering amount, we will be unable to carry out our planned operations and will need to evaluate alternative sources of financing.
Depending on the success of our offering, we expect to generate revenues from royalties derived from licensing or distribution agreements covering the reproduction, marketing and sale of the master recordings. We also expect to generate revenues from management fees due us under agreements with the artists based on payments to them for live performances or other derivative uses of their work, including soundtracks, music videos, sale or license of original music to other artists, or advertisements. To date, no recording advances have been made and recording has not commenced due to the Company's inability to raise sufficient capital to fund recording costs.
Typically, record labels will negotiate royalty payments ranging from 2% to 7% of gross sales proceeds upon determining to market and distribute an artist's recordings, and will advance amounts against future royalties upon “signing” the artist. Subject to the payment schedule for advances set out below and our negotiations with the artists, we will be paid between 33 1/3% (for foreign sales) and 80% (for domestic sales) of the total royalty amount, with our percentage decreasing in relationship to higher royalty rates and advances negotiated with the record label that licenses the master recording.
Advances for new artists usually range from $50,000 to $500,000, and we expect advances to us and our artists will be at the low end of this range or lower, due to lack of recording history.
We are obliged to pay $25,000 to each of our artists currently under contract and we are entitled to be repaid the funds we pay for recording costs, with the royalty “split” applied to any excess amounts. We intend to pay the $25,000 advances with proceeds from this offering. In the event the advances are insufficient to pay our artists and reimburse us for recording costs, the artists will be paid from available funds prior to our repayment, but we will be entitled to receive all royalties thereafter until recording costs are recouped. Based on current retail pricing of recordings from $13.00 to $16.00, we anticipate gross royalties ranging from $0.26 to $1.12 per recording, and our portion of that sum to average between $0.21 to $0.37 per recording. In the event that our artists choose to cover songs written by other artists, we may be required to pay a portion of these royalties to the copyright owners. Royalty revenue streams will not commence until after all advances are repaid.
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In addition to royalties to be derived from recordings, we also expect to earn revenues from fees from our current artists, and possibly others under management contracts. As talent manager, we will earn fees ranging from 5% to 15% of the artist's revenues under contracts for live performances, personal appearances and the sale or license of the artist's publishing rights for work recorded by other artists during the term of the agreement. We intend to obtain personal management contracts with any future artists who want us to produce and market their recordings or assist them in arranging or booking live performances.
We are dependent on the skills and expertise of our artists and management in producing recordings that may appeal to record labels and the public. While our artists have a background in live performances, neither of them has significant experience in producing or recording their music, or any sales history for their recorded music. Our budgets for producing recordings for these artists do not provide for delays or contingencies, including the general disability of our artists or their inability to timely complete recording projects. Our overall capitalization is minimal and we have been dependent on non-recurring sources of revenues from performance fees paid to our artists and loans from management to pay operating and other expenses. As of December 31, 2007 our cash assets were $529 and we had outstanding aggregate indebtedness in the amount of $91,954. Furthermore, we had no accounts receivable and no revenue in the year ended December 31, 2007. Our auditors have qualified their audit opinion on our financial statements, expressing substantial doubt as to our ability to continue as a “going concern.”
Our business plan involves us in aspects of the music business that are very risky; public acceptance and popularity of artists' work is dependent on a variety of personal, subjective decisions by the listening public as well as the impact of any advertising or placement conducted by a distributor. Web-based file sharing programs, such as Limewire, and subscription services such as iTunes also impact music sales and revenues. Record labels release recordings by thousands of new artists in a variety of musical genres every year, and only a small number achieve commercial success.
Development Schedule and Milestones
Artist: Jeremiah Donnelly
Pre-production Summary
Jeremiah Donnelly has written sufficient material to record a full-length CD (i.e., 10 songs or more). G2 Ventures has completed photo shoots and developed photographs that will be used for marketing and promotional purposes.
Production
G2 Ventures plans to record tracks for Mr. Donnelly's full-length CD on or before completion of this offering. The recording process from start to finish is expected to take approximately 60-90 days. Mixing and mastering of these recordings should take an additional 30 days. These recording costs are expected to be $25,000 as specified in the USE OF PROCEEDS table. Mr. Donnelly's recording costs are lower than recording costs for bands with several members because he is a solo artist and he also has a hand in the production of his albums. Also, studio time is substantially lower than that of several member bands and Mr. Donnelly currently has an extensive library of recorded music from which the proposed CD can remix and re-release. After the mixing and mastering process is complete, the masters will be sent to a third party manufacturer where up to 1,000 units will be pressed. The cost for manufacturing 1,000 CD units is expected to be approximately $2,500 as specified in the USE OF PROCEEDS table.
Marketing
When the inventory of compact discs is delivered, G2 Ventures plans to send out promotional packages to major record labels and related music industry personnel. An electronic press kit will be designed and created to distribute the master recordings. Design and creation of an electronic press kit for use in connection with marketing artist recordings is estimated to cost between $2,500 and $7,500. G2 Ventures also plans to commence a marketing campaign, which is expected to include live showcases and performances by the artist. G2 Ventures plans to test market the artist's product in certain retail locations as well as at live concert events. This entire process could take up to 180 days or longer. Cost to G2 Ventures is expected to be $1,200.
16
Artist: Nick Brisco
Pre-production Summary
Nick Brisco has written sufficient material to record a full length CD (i.e., 10 songs or more). G2 Ventures has not completed photo shoots for this artist. Currently, G2 Ventures is working on a logo and conceptual ideas for this artist.
Production
G2 Ventures plans to begin recording of Nick Brisco's full-length CD approximately 30 to 60 days after commencing recording for Jeremiah Donnelly. G2 Ventures plans to stagger the production and also the marketing and promotional schedules for both of our signed artists, to efficiently maximize exposure for each artist.
The recording process is expected to take approximately 60-90 days. Mixing and mastering the final recordings should take an additional 30 days. Our recording costs are expected to be $25,000. After the mixing and mastering process is complete the masters will be sent to a third party manufacturer where up to 1,000 units will be pressed. Our pressing costs are expected to be approximately $2,500.
Marketing
When the inventory of compact discs is delivered to G2 Ventures, we plan to send out promotional packages to major record labels and related music industry personnel. An electronic press kit will be designed and created to distribute the master recordings. Design and creation of an electronic press kit for use in connection with marketing artist recordings is estimated to cost between $2,500 and $7,500. We also plan to commence a marketing campaign, which is expected to include live showcases and performances by the artist. Additionally, we plan to test market the artist's product in certain retail locations as well as at live concert events. This entire process could take up to 180 days or longer. Cost to G2 Ventures is expected to be $1,200.
Plan of Operation
We are a thinly-capitalized development stage company, and will be reliant on the proceeds of this offering to conduct the initial activities under our business model and to fund our business operations over the next 12 months. No significant changes in the number of employees of the Company are planned. Of the $120,000 to $150,000 that we seek to raise, less than half will be allocated to pay recording costs for our artists and the costs of CD reproduction for marketing purposes, with the balance to costs of this offering, administrative expenses and, depending on the success of our offering, repayment of a portion of advances from Mr. Kepler, our sole officer, director and employee. In the event that neither of our artists are signed to distribution deals, or, if signed, their records do not sell in sufficient quantities to repay advances or generate appreciable revenue streams, it will be necessary for the Company to obtain additional funding, whether through additional loans from Mr. Kepler or others or by subsequent offerings of shares in public or private transactions.
As of December 31, 2007 we had approximately $529 in cash, no accounts receivable, and no current revenue generating contracts. Although our operating expenses are minimal, absent the success of this offering and commercial acceptance of our current artists, we must not only seek additional funding, but must also identify and sign additional recording artists; absent a proven track record, new funding or management contracts will be difficult.
Mr. Kepler, our sole officer, director and employee, intends to fund our operations by additional loans through the funding of this offering. In the event this offering is not successful, our business prospects are uncertain.
Budget
We intend to expend funds as set forth in the USE OF PROCEEDS section, which reflects our anticipated cost of doing business during the next 12 months.
17
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our voting capital stock as of the date of this Prospectus for (a) each person known by us to own beneficially five percent or more of any class of the voting capital stock, (b) each director and named executive officer who owns capital stock, and (c) all directors and executive officers as a group.
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percent of Class(2) |
Common Stock | All Executive Officers and Directors as a Group (1 person) | 3,300,000 | 94.29% |
Common Stock | Gust C. Kepler, President, Chief Executive Officer, Chief Financial Officer, Secretary, and sole Director 1810 Three Galleria Tower 13155 Noel Road Dallas, Texas 75240 | 3,300,000 | 94.29% |
| Nicole Evenson 4300 Horizon N. Pkwy, #1531 Dallas, Texas 75287 | 200,000 | 5.71% |
(1)
Except pursuant to applicable community property laws, each shareholder identified in the table possesses sole voting and investment power with respect to his or her shares.
(2)
The percentage is based on 3,500,000 shares of common stock outstanding as of May 5, 2008.
DIRECTOR AND EXECUTIVE OFFICER
Gust Kepler, age 42, is our President, Chief Executive Officer, Chief Financial Officer, Secretary, and sole Director. Mr. Kepler has served as our sole officer and director since inception, and shall continue to serve as a director until his successor is elected and qualified. From September 2002 to April 2003, Mr. Kepler was the president and a director of G2 Companies, Inc., formerly named Hartland Investments, Inc., a company located in Dallas, Texas and engaged in the business of producing, licensing, acquiring, marketing, and distributing high quality recorded music for a variety of music formats. Prior to his involvement with G2 Companies, Inc., between October 1996 and August 2002, Mr. Kepler was the president of Parallax Entertainment, Inc. a company located in Dallas that was similarly engaged in the business of producing, licensing, acquiring, marketing, and distributing high quality recorded music for a variety of music formats. Other than Mr. Kepler 's involvement in both companies and the similarities of their businesses, there is no relationship whatsoever between Parallax Entertainment, Inc. and G2 Ventures or any predecessor. From 1990 to 1999, Mr. Kepler was the President and Chief Executive Officer of Glance Toys, Ltd., a company located in Dallas, Texas engaged in the business of manufacturing, marketing and sale of junior sporting goods and toys. From 1986 to 1990, Mr. Kepler was a partner in The Barbara Walsh Modeling and Talent Agency and a spin-off fashion print agency called Agency Models. Mr. Kepler has extensive knowledge and experience in the music and entertainment industries. Mr. Kepler's involvement in the music industry began in 1977 when he joined his first rock band at age 13. After playing in various bands throughout high school, Mr. Kepler played and produced various projects between 1985 and 1987. Mr. Kepler served as executive producer on his first full-length record for the band “Lead 48; in 1994. Later, through Parallax Entertainment, Mr. Kepler released Reed Easterwood'sPawn Shop from Heaven andThen Again by Fever in the Funkhouse, and won critical acclaim and numerous industry accolades. Mr. Kepler also acted as Executive Producer for the self-titled debut release of Hellafied Funk Crew's that received theDallas ObserverAward for two consecutive years in the Best Funk and Best Rap and Hip-Hop categories.
18
EXECUTIVE COMPENSATION
The following table addresses all compensation awarded to, earned by, or paid to our sole named executive officer for the fiscal years ended December 31, 2007, 2006 and 2005. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any.
Summary Compensation Table
| | | | | | | Nonquali- fied | | |
| | | | | | Non-Equity | Deferred | | |
| | | | | | Incentive | Compen- | All | |
Names Executive | | | | Stock | Option | Plan | sation | Other | |
Officer and | Year | Salary | Bonus | Awards | Awards | Compensation | Earnings | Compensation | Total |
Principal Position | Ended | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) |
| | | | | | | | | |
Gust Kepler | 2007 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
President, Chief Executive | 2006 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Officer, Chief Financial Officer, Secretary and Sole Director | 2005 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Narrative Disclosure to Summary Compensation Table
We did not pay any salaries in 2007 and we do not anticipate paying any salaries until we have adequate funds to do so.
Outstanding Equity Awardsat Fiscal Year End
None.
Compensation of Directors
Our directors do not currently receive any compensation for serving as members on the board of directors.
Employment Contracts
As of the date hereof, we have not entered into employment contracts with any of our officers and do not intend to enter into any employment contracts until such time as our board of directors deems it prudent to do so.
Indemnification
Under our Articles of Incorporation, we must indemnify and hold harmless directors, officers, employees, and agents of G2 Ventures, Inc., to the extent permitted by the Texas Business Corporation Act. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Texas.
Regarding indemnification for liabilities arising under the Securities Act, which may be permitted to directors or officers under Texas law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.
19
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
This is our initial public offering so there is currently no public trading market for our common stock. We hope to have a market maker attempt to have our common stock prices quoted on the over the counter bulletin board maintained by the Financial Industry Regulatory Authority. To be eligible to have our common stock quoted on the bulletin board, we will be required to file with the Securities and Exchange Commission periodic reports required by the Exchange Act and thus be a “reporting” company, a step we will accomplish upon the effective date of this registration statement.
None of our common stock is subject to outstanding options or rights to purchase, nor do we have any securities that are convertible into our common stock. We have not agreed to register any of our stock for anyone nor do we presently have in effect employee stock options or benefit plans that would involve the issuing of additional shares of our common stock. As of the date of this prospectus there were 3,500,000 shares issued and outstanding. All of these shares were issued in a private transaction without registration under the Act and are therefore restricted securities. Mr. Kepler, our sole officer, director and employee, owns 3,300,000 and Nicole Evenson owns 200,000 shares.
Under Rule 144 promulgated under the Securities Act, Mr. Kepler, our sole officer, director and employee, may sell up to 1% of the total outstanding shares (or an amount of shares equal to the average weekly reported volume of trading during the four calendar weeks preceding the sale) every three months provided that (1) current public information is available about us; (2) the shares have been fully paid for at least one year; (3) the shares are sold in a brokers' transaction or through a market-maker; and (4) the seller files a Form 144 with the SEC. Assuming the sale of the maximum number of shares in this offering, Mr. Kepler could sell up to 50,000 shares every three months.
Under Rule 144 promulgated under the Securities Act, Ms. Evenson, a non-affiliate, could sell all 200,000 of her shares since she has held them for over a year.
Shares purchased in this offering, which will be immediately resalable, and sales of all of our other shares after applicable restrictions expire, could have a depressive effect on the market price, if any, of our common stock and the shares we are offering.
We have never paid dividends and do not expect to declare any in the foreseeable future. Instead, we expect to retain all earnings for our growth. Although we have no specific limitations on our ability to pay dividends, investors should not purchase shares in this offering if their intent is to receive dividends.
DESCRIPTION OF SECURITIES
Common Stock
G2 Ventures. is authorized to issue 200,000,000 shares of common stock, par value $0.001 per share. Holders of common stock are entitled to one vote per share and to receive dividends or other distributions when and if declared by the Director. As of May 5, 2008, there were 3,500,000 shares of common stock outstanding held by two shareholders of record.
Our common stock does not have preemptive rights, meaning that our common shareholders' ownership interest would be diluted if additional shares of common stock are subsequently issued, and the existing shareholders are not granted the right, in the discretion of the Director, to maintain their percentage ownership interest in G2 Ventures. This lack of protection from dilution to minority shareholders could allow our Director to issue additional shares of our common stock to persons friendly with our existing management, thus preventing any change in control of G2 Ventures.
Upon any liquidation, dissolution or winding-up of G2 Ventures, our assets, after the payment of debts and liabilities and any liquidation preferences of, and unpaid dividends on, any class of preferred stock then outstanding, will be distributed pro-rata to the holders of the common stock. The holders of the common stock have no right to require us to redeem or purchase their shares.
20
The holders of common stock are entitled to share equally in dividends, if and when declared by our Director, out of funds legally available therefore, subject to the priorities given to any class of preferred stock which may be issued.
No Cumulative Voting
Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors. After this offering is completed, assuming the sale of all of the shares of common stock, Gust Kepler, our sole officer, director and employee, will own approximately 67% of our outstanding shares and be able to elect all of our directors.
Preferred Stock
G2 Ventures is authorized to issue 1,000,000 shares of preferred stock, $.001 par value per share. We have no preferred shares issued and outstanding. However, the Director may later determine to issue our preferred stock. The preferred stock may be created and issued in one or more series and with such designations, rights, preferences and restrictions as shall be stated and expressed in the resolution(s) providing for the creation and issuance of such preferred stock. If preferred stock is issued and we are subsequently liquidated or dissolved, the preferred shareholders would have preferential rights to receive a liquidating distribution for their shares prior to any distribution to common shareholders.
Although we have no present intent to do so, we could issue shares of preferred stock with such terms and privileges that a third party acquisition of G2 Ventures could be difficult or impossible, thus entrenching our existing management in control of G2 Ventures indefinitely.
Dividend Policy
To date, we have not paid any dividends. The payment of dividends, if any, on our common stock in the future is within the sole discretion of our Director and will depend upon our earnings, capital requirements, financial condition, and other relevant factors. Our sole officer, director and employee, Mr. Kepler, does not intend to declare any dividends on the common stock in the foreseeable future, but instead intends to retain all earnings, if any, for use in our business operations.
Transfer Agent
We will use Securities Transfer Corporation located at 2591 Dallas Parkway, Suite102, Frisco, Texas 75034 as our transfer agent.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND CORPORATE GOVERNANCE
During the period beginning September 26, 2002 (inception of G2 Companies, Inc.) through December 31, 2007, the Company received cash operating advances in the aggregate principal amount of $110,750 (which includes operating advances assumed from G2 Companies, Inc.) from Mr. Kepler, our sole officer, director and employee. Since December 31, 2007 Mr. Kepler has advanced the Company an additional $10,610 for accounting and printing fees. The advances are non-interest bearing, unsecured and are payable, subject to restrictions on repayment from proceeds of this Offering and in the Kepler Agreement, upon demand as funds are available. During the period September 26, 2002 (inception of G2 Companies, Inc.) through December 31, 2002, $17,796 of the advances was contributed by the shareholder as additional paid in capital, and $1,000 has been repaid by the Company to date. As of December 31, 2007, the total unpaid principal balance due Mr. Kepler for advances was $91,9 54.
In April 1, 2003, we acquired most of the assets and assumed certain liabilities of G2 Companies, Inc. a corporation incorporated under the laws of the State of Delaware as “Hartland Investment, Inc.” on May 26, 1998. Yarek Bartosz was the only promoter of G2 Companies, Inc. from its inception until September 29, 2002, when Mr. Kepler acquired control. Mr. Kepler paid Mr. Bartosz $100.00 for 1,157,900 shares of common stock or 92.7% of the total outstanding shares. Mr. Bartosz retained 15,100 shares of common stock or 1.21% of the total outstanding shares. As a result of the transaction, Mr. Kepler became the principal shareholder, president and sole director of Hartland Investments, Inc. (G2 Companies, Inc.) in September 2002 and remained in those positions until we acquired its operations in April 2003. A Certificate of Amendment to the Articles of Incorporation of Hartland Investments, Inc. effecting the change of its name to G2 Companie s, Inc. is dated December 13, 2002.
21
Mr. Kepler acquired Hartland Investments, Inc. (i.e., G2 Companies, Inc.) in order to begin operations as an independent recording company. Mr. Kepler was the principal shareholder, president and sole director of G2 Companies from September 2002, until we acquired its operations in April 2003. The acquisition of operations (i.e., acquisition of most of its assets and assumption of certain liabilities pursuant to the Sale of Assets Agreement dated April 1, 2003) from G2 Companies, Inc. was not conducted at “arm's-length” due to Mr. Kepler's interest as the principal shareholder, president and sole director of both companies.
On April 1, 2003, we issued 3,500,000 shares of restricted common stock to Gust Kepler, our sole officer, director and employee, at a price of approximately $0.007713 per share, in exchange for forgiveness of certain debt in the amount of $26,994 assumed by us from G2 Companies, Inc.
Mr. Kepler is our only promoter. He has received nothing of value nor will he receive anything of value in his capacity as a promoter.
Director Independence
Gust Kepler, our sole director, is also our sole officer and employee. As such he would not qualify as an “independent” director within the meaning of the rules and regulations of NASDAQ. Because of our current stage of development, we do not have any standing audit, nominating or compensation committees, or any committees performing similar functions.
LEGAL PROCEEDINGS
There are no legal proceedings currently pending or threatened against us.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our Articles of Incorporation provide that we must indemnify and hold harmless directors, officers, employees, and agents of G2 Ventures, Inc., as and to the extent permitted by the Texas Business Corporation Act. One of our officers or directors could take the position that this duty on our behalf to indemnify the director or officer may include the duty to indemnify the officer or director for the violation of securities laws.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to our Articles of Incorporation, Bylaws, Texas laws or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by one of our directors, officers, or control persons, and the successful defense of any action, suit or proceeding) is asserted by such director, officer or control person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
EXPERTS
The financial statements included in the registration statement on Form S-1 have been audited by Turner, Stone & Company, LLP, independent certified public accountants and independent registered public accounting firm, to the extent and for the periods set forth in their report, and are included herein in reliance upon the authority of said firm as experts in auditing and accounting.
22
LEGAL MATTERS
The validity of the shares of common stock offered under this prospectus will be passed on for us by Munck Butrus Carter, P.C., Dallas, Texas.
23
G2 Ventures, Inc.
(A Development Stage Company)
Financial Statements
and
Report of Independent Registered Public Accounting Firm
For the Year Ended December 31, 2007 and 2006
and
Period September 26, 2002 (inception) through December 31, 2007
F-1
C O N T E N T S
| |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | F-3 |
| |
BALANCE SHEET | F-4 |
| |
STATEMENTS OF OPERATIONS | F-5 |
| |
STATEMENTS OF STOCKHOLDERS' DEFICIT | F-6 |
| |
STATEMENTS OF CASH FLOWS | F-7 |
| |
NOTES TO FINANCIAL STATEMENTS | F-8 - F-12 |
F-2
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
G2 Ventures, Inc.
Dallas, Texas
We have audited the accompanying balance sheet of G2 Ventures, Inc. (a development stage company) as of December 31, 2007, and the related statements of operations, stockholders' deficit, and cash flows for the years ended December 31, 2007 and 2006 and the period from September 26, 2002 (inception) through December 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of G2 Ventures, Inc. at December 31, 2007, and the results of its operations and its cash flows for the above referenced periods in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As also discussed in Note 1 to the financial statements, the Company has continuing losses from operations and has no working capital both of which raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Turner, Stone & Company, L.L.P.
Certified Public Accountants
April 2, 2008
F-3
G2 VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 2007
Assets
Current assets: | | |
Cash | $ | 529 |
| | |
Total current assets | $ | 529 |
| | |
| | |
| | |
Liabilities and Stockholders' Deficit |
| | |
Current liabilities: | | |
Accounts payable | $ | 10,100 |
| | |
Stockholder advances | | 91,954 |
| | |
Total current liabilities | | 102,054 |
| | |
Commitments and contingencies (Note 2) | | |
| | |
Stockholders' deficit: | | |
Preferred stock, $.001 par value, 1,000,000 shares authorized, no shares issued and outstanding, no rights or preferences determined | | - |
Common stock, $.001 par value, 200,000,000 shares authorized, 3,500,000 shares issued and outstanding | | 3,500 |
Additional paid in capital | | 41,290 |
Deficit accumulated during the development stage | | (146,315) |
| | |
Total stockholders' deficit | | (101,525) |
| | |
| $ | 529 |
The accompanying notes are an integral part of the financial statements.
F-4
G2 VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
AND THE PERIOD SEPTEMBER 26, 2002 (INCEPTION) THROUGH
DECEMBER 31, 2007
| | Year Ended | | Year Ended | | Cumulative |
| | December 31, | | December 31 | | From |
| | 2007 | | 2006 | | Inception |
| | | | | | |
| | | | | | |
Revenues | $ | - | $ | 8,000 | $ | 129,807 |
Cost of revenues | | - | | 6,800 | | 116,631 |
| | - | | 1,200 | | 13,176 |
Operating expenses: | | | | | | |
| | | | | | |
General and administrative | | 46,707 | | 4,811 | | 159,491 |
| | | | | | |
Loss before income taxes | | (46,707) | | (3,611) | | (146,315) |
| | | | | | |
Provision for income taxes | | - | | - | | - |
| | | | | | |
Net loss | $ | (46,707) | $ | (3,611) | $ | (146,315) |
| | | | | | |
| | | | | | |
| | | | | | |
Net loss per share | $ | (.01) | $ | (.00) | | |
| | | | | | |
Weighted average shares outstanding | | 3,500,000 | | 3,500,000 | | |
The accompanying notes are an integral part of the financial statements.
F-5
G2 VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
AND THE PERIOD SEPTEMBER 26, 2002 (INCEPTION) THROUGH
DECEMBER 31, 2007
| Preferred Stock | | | | | | | | Additional | | | | |
| | | | Common Stock | | Paid-In | | Accumulated | | |
| Shares | | Amount | | Shares | | Amount | | Capital | | Deficit | | Total |
| | | | | | | | | | | | | |
Balance at September 26, 2002 | - | $ | - | | - | $ | - | $ | - | $ | - | $ | - |
Contributed capital | - | | - | | - | | - | | 17,796 | | - | | 17,796 |
Net loss | | | | | | | | | | | (40,739) | | (40,739) |
| | | | | | | | | | | | | |
Balance at December 31, 2002 | - | | - | | - | | - | | 17,796 | | (40,739) | | (22,943) |
| | | | | | | | | | | | | |
Issuance of common stock | | | | | | | | | | | | | |
for cash on August 12, 2003 | - | | - | | 3,500,000 | | 3,500 | | 23,494 | | - | | 26,994 |
Net loss | | | | | | | | | | | (25,149) | | (25,149) |
| | | | | | | | | | | | | |
Balance at December 31, 2003 | - | | - | | 3,500,000 | | 3,500 | | 41,290 | | (65,888) | | (21,098) |
Net loss | - | | - | | - | | - | | - | | (13,548) | | (13,548) |
| | | | | | | | | | | | | |
Balance at December 31, 2004 | - | | - | | 3,500,000 | | 3,500 | | 41,290 | | (79,436) | | (34,646) |
Net loss | - | | - | | - | | - | | - | | (16,561) | | (16,561) |
| | | | | | | | | | | | | |
Balance at December 31, 2005 | - | | - | | 3,500,000 | | 3,500 | | 41,290 | | (95,997) | | (51,207) |
Net loss | - | | - | | - | | - | | - | | (3,611) | | (3,611) |
| | | | | | | | | | | | | |
Balance at December 31, 2006 | - | | - | | 3,500,000 | | 3,500 | | 41,290 | | (99,608) | | (54,818) |
Net loss | - | | - | | - | | - | | - | | (46,707) | | (46,707) |
Balance at December 31, 2007 | - | $ | - | | 3,500,000 | $ | 3,500 | $ | 41,290 | $ | (146,315) | $ | (101,525) |
The accompanying notes are an integral part of the financial statements.
F-6
G2 VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2007AND 2006
AND THE PERIOD SEPTEMBER 26, 2002 (INCEPTION) THROUGH
DECEMBER 31, 2007
Reconciliation of Net Loss to Net Cash
Used in Operating Activities
| | | | | | Cumulative |
| | Dec. 31, | | Dec. 31, | | From |
| | 2007 | | 2006 | | Inception |
| | | | | | |
Net loss | $ | ( 46,707) | $ | (3,611) | $ | (146,315) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | |
Increase (decrease) in deferred revenue | | - | | (8,000) | | - |
Increase (decrease) in accounts payable | | 10,100 | | - | | 10,100 |
| | | | | | |
Net cash used in operating activities | | (36,607) | | (11,611) | | (136,215) |
| | | | | | |
Cash flows from financing activities: | | | | | | |
Proceeds from issuance of common stock | | - | | - | | 26,994 |
Stockholder advances | | 36,607 | | 5,000 | | 110,750 |
Repayments to Stockholder | | - | | (1,000) | | (1,000) |
| | | | | | |
Net cash provided by financing activities | | 36,607 | | 4,000 | | 136,744 |
| | | | | | |
Net increase (decrease) in cash | | (-) | | (7,611) | | 529 |
| | | | | | |
Cash at beginning of period | | 529 | | 8,140 | | - |
| | | | | | |
Cash at end of period | $ | 529 | $ | 529 | $ | 529 |
| | | | | | |
| | | | | | |
Supplemental Disclosure of Non Cash |
Investing and Financing Activities |
| | | | | | Cumulative |
| | Dec. 31, | | Dec. 31, | | From |
| | 2007 | | 2006 | | Inception |
Stockholder advances forgiven as additional paid in capital | $ | - | $ | - | $ | 17,796 |
The accompanying notes are an integral part of the financial statements.
F-7
G2 VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and business
G2 Ventures, Inc. (the Company) was incorporated on March 21, 2003 in the State of Texas. Effective April 1, 2003, the Company acquired the operations and assets of G2 Companies, Inc.(G2C) (formerly Hartland Investments, Inc.) a Delaware corporation, the controlling interest in which was owned by the Company's principal shareholder, Gust Kepler. In this related party transaction, G2C assigned its two artist contracts to the Company in consideration of the shareholders forgiveness of approximately $18,000 in loans to G2C as additional paid-in capital and the assumption by the Company of $20,000 of advances payable to the shareholder. G2C is, therefore, a “predecessor” of the Company.
For financial reporting purposes the transaction has been treated as a recapitalization of G2C with the Company being the legal survivor and G2C being the accounting survivor and the operating entity. That is, the historical financial statements prior to April 1, 2003 are those of G2C and its operations, even though they are labeled as those of the Company. Retained earnings of G2C related to its operations, is carried forward after the recapitalization. Operations prior to the recapitalization are those of the accounting survivor, G2C, which began September 26, 2002. Upon completion of the transaction, the financial statements become those of the operating company, with adjustments to reflect the changes in equity structure and receipt of the assets and liabilities of G2C.
Development stage activities
The Company is presently in the development stage with no significant revenues from operations. Accordingly, all of the Company's operating results and cash flows reported in the accompanying financial statements are considered to be those related to development stage activities and represent the ‘cumulative from inception' amounts from its development stage activities reported pursuant to Statement of Financial Accounting Standards (SFAS) No. 7,Accounting and Reporting by Development Stage Enterprises.
Basis of presentation and going concern uncertainty
The financial statements of the Company have been prepared assuming the Company will continue as a going concern. However, the Company has incurred continuing operating losses and has no working capital. These conditions give rise to substantial doubt about the Company's ability to continue as a going concern. Management is continuing to seek additional equity capital to fund its operations while continuing to generate additional revenues to absorb operating expenses. Management believes that these steps will provide the Company with adequate funds to sustain its growth and continued existence. There is, however, no assurance that the steps taken by management will meet all of the Company's needs or that is will continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Revenue recognition
The Company enters into arrangements with performing artists either to sell the artists' music for which the Company receives a royalty or to manage the artist for which the Company receives a management fee on commission. Revenue is recognized when music is sold or commissions are earned unless the collectibility is not reasonably assured.
F-8
G2 VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Cash and cash flows
For purposes of these statements cash includes demand deposits, time deposits and short-term cash equivalent investments with original maturities of three months or less.
Management estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Accounts receivable
The Company's revenues and accounts receivable are generated from entertainment contracts entered into with its artists. Generally, 60% of the contract revenues are paid upon signing with the remaining balance generally paid within 30 days after the services have been performed. Account balances past due longer than 30 days are considered delinquent. The Company has not experienced any credit losses to date and management has determined that an allowance for bad debts is not necessary. Since inception, all of the Company's revenues are from one artist.
Advertising
Advertising dollars are invested in promotional material, website and logo development and are expensed as incurred. For the years ended December 31, 2007 and 2006 and the period September 26, 2002 (inception) through December 31, 2007, advertising expense totaled $0, $0, and $3,063.
Fair value of financial instruments
In accordance with the reporting requirements of SFAS No. 107,Disclosures About Fair Value of Financial Instruments, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this statement and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments. The estimated fair value of cash, accounts receivable and accounts payable approximate their carrying amounts due to the short maturity of these instruments. At December 31, 2007 and 2006, the Company did not have any other financial instruments.
Recent Accounting Pronouncements
During the year ended December 31, 2007, there were several new accounting pronouncements issued by the Financial Accounting Standards Board (FASB) the most recent of which was Statements on Financial Accounting Standards (SFAS) No. 160,Noncontrolling interests in Consolidated Financial Statements – an amendment of ARB No.51. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company's financial position or operating results.
In the opinion of management, this statement will have no material effect on the financial statements of the Company.
F-9
G2 VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Loss per share
Basic loss per share amounts are computed using the weighted-average number of common stock shares outstanding during the periods. Diluted loss per share amounts are not presented because there were no common equivalent share amounts outstanding during the periods.
Income Taxes
The Company uses the liability method of accounting for income taxes. Under this method, deferred income taxes are recorded to reflect the tax consequences on future years of temporary differences between the tax basis of assets and liabilities and their financial amounts at year-end. The Company provides a valuation allowance to reduce deferred tax assets to their net realizable value.
2. COMMITMENTS AND CONTINGENCIES
Operating leases
Since April 30, 2003, the Company has been using office space provided by its majority stockholder without charge.
Recording artist agreements
During December 2002, the Company entered into contracts with two recording artists, which granted the Company certain recording, distribution and copyrights of the artists. These contracts were renewed in June 2004. The initial terms of the agreements are for one album each. The agreements also grant the Company three irrevocable options for additional recordings. The agreements provide for the Company to advance initial recording funds of $10,000 to each artist for the first album. If the Company exercises its options for additional recordings, an additional advance is required for each album. The funds paid for the recording of each record are treated as advances on the royalties owed to artists, and are recouped by the Company from record sales, if any. These royalties will amount to approximately $1.00 per record sold. In addition, the Company will owe mechanical royalties to the copyright owners of each song for each record sold. These royalties will amount to approximately 80 cents for each album sold. As of December 31, 2007, no recording advances have been made and recording has not commenced due to the Company's inability to raise sufficient capital to fund recording costs (Note 1).
On March 17, 2007, the Company renewed its contract with artist Nick Brisco. This agreement provides for the Company to advance initial recordings funds of $25,000 to Mr. Brisco for the first album. All other previous terms and conditions of the recording agreement remain the same as the renewed contract dated June of 2004.
On June 30, 2007, the Company renewed its contract with artist Jeremiah Donnelly. This agreement provides for the Company to advance initial recordings funds of $25,000 to Mr. Donnelly for the first album. All other previous terms and conditions of the recording agreement remain the same as the renewed contract dated June of 2004.
On December 9, 2007 the Company again renewed its contract with artist Nick Brisco. This agreement provides for the Company to advance initial recordings funds of $25,000 to Mr. Brisco for the first album. All other previous terms and conditions of the recording agreement remain the same as the renewed contract dated March 17, 2007.
On March 31, 2008 the Company again renewed its contract with artist Jeremiah Donnelly. This agreement provides for the Company to advance initial recordings funds of $25,000 to Mr. Donnelly for the first album. All other previous terms and conditions of the recording agreement remain the same as the renewed contract dated June 30, 2007.
F-10
G2 VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Unfiled Federal Tax Returns
Since inception, the Company has not filed any federal tax returns. When such filings are made, the Company may be subject to failure to file penalties. The Company periodically assesses the liabilities and contingencies in connection with this matter based upon the latest information available. The Company estimates that the amount of penalties, if any, will not have a material effect on the results of operations, cash flows or financial position. No provisions have been made in the financial statements for such penalties, if any.
3. INCOME TAXES
The Company accounts for corporate income taxes in accordance with Statements of Financial Accounting Standards (SFAS) No. 109. Under SFAS No. 109, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. In addition, future tax benefits, such as those from net operating loss carry forwards, are recognized to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
A reconciliation of income tax (expense) benefit at the statutory federal rate of 34% to income tax (expense) benefit at the Company's effective tax rate for the years ended December 31, 2007 and 2006 and the period September 26, 2002 (inception) through December 31, 2007 is as follows:
| | | | | | Cumulative |
| | Dec. 31, | | Dec. 31, | | From |
| | 2007 | | 2006 | | Inception |
| | | | | | |
Tax benefit computed at statutory rate | $ | 15,880 | $ | 1,228 | $ | 49,747 |
Timing differences and other | | (933) | | 3,629 | | 813 |
Less valuation allowance | | (14,947) | | (4,857) | | (50,560) |
Income tax benefit | $ | - | $ | - | $ | - |
The significant components of the Company's deferred tax assets at December 31, 2007 and the period September 26, 2002 (inception) through December 31, 2007 are summarized as follows:
| | | | Cumulative |
| | Dec. 31, | | From |
| | 2007 | | Inception |
Deferred tax asset: | | | | |
Start-up costs | $ | - | $ | 13,851 |
Net operating loss carry forward | | 14,947 | | 36,709 |
Less valuation allowance | | (14,947) | | (50,560) |
Income tax benefit | $ | - | $ | - |
At December 31, 2007, the Company had approximately $108,000 of net operating losses available to offset future taxable income. These carry forwards expire between the years 2024 and 2027. There are no deferred tax liabilities.
F-11
G2 VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
4. RELATED PARTIES
During the years ended December 31, 2007 and 2006 and the period September 26, 2002 (inception) through December 31, 2007, the Company received cash operating advances of $36,607, 5,000, and $110,750 respectively, from the major stockholder of the Company and made repayments of $0, $1,000, and $1,000, respectively. The advances are non-interest bearing, unsecured and due upon demand as funds are available. During the period September 26, 2002 (inception) through December 31, 2002, $17,796 of the advances was forgiven by the stockholder as additional paid in capital.
F-12
ITEM 27.
EXHIBITS.
Exhibit No. | Description |
2.1(4) | Sale of Assets Agreement between G2 Ventures, Inc. and G2 Companies, Inc. |
3.1 (7) | Articles of Incorporation of G2 Ventures, Inc. |
3.2(6) | Bylaws of G2 Ventures, Inc. |
4.1(7) | Specimen Stock Certificate for Common Shares. |
5.1 (1) | Opinion of Munck Butrus Carter, P.C. |
10.1 (2) | Exclusive Recording Artist Agreement with Jeremiah Donnelly dated March 31, 2008. |
10.2 (3) | Exclusive Recording Artist Agreement with Nick Brisco dated December 9, 2007. |
10.3 (5) | Agreement between G2 Ventures, Inc. and Gust Kepler * |
23.1 (1) | Consent of Turner, Stone & Company, L.L.P. |
23.2 | Consent of Munck Butrus Carter, P.C (included in Exhibit 5.1) |
99.1 (5) | Subscription Agreement. |
| |
(1) | Filed herewith |
(2) | Filed as an exhibit to G2 Ventures's Form S-1 (Amendment No. 10 to Registration Statement Originally Filed on Form SB-2) filed April 4, 2008. |
(3) | Filed as an exhibit to G2 Ventures's Form SB-2 Amendment No. 9 filed January 16, 2008. |
(4) | Filed as an exhibit to G2 Ventures's Form SB-2 Amendment No. 8 filed October 26, 2007. |
(5) | Filed as an exhibit to G2 Ventures's Form SB-2 Amendment No. 6 filed October 12, 2006. |
(6) | Filed as an exhibit to G2 Ventures's Form SB-2 Amendment No. 2 filed July 6, 2004. |
(7) | Filed as an exhibit to G2 Ventures's Form SB-2 filed September 11, 2003. |
| |
* | Signifies a management agreement or compensatory plan or arrangement. |
ITEM 28.
UNDERTAKINGS.
We hereby undertake:
1.
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
i.
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
ii.
To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement; and
iii.
To include any additional or changed material information on the plan of distribution.
2.
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time to be the initial bona fide offering thereof.
3.
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
4.
For determining liability under the Securities Act of 1933 to any purchaser in the initial distribution of the securities offered herein, we undertake that in a primary offering of our securities pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, we will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
i.
Any preliminary prospectus or prospectus relating to the offering required to be filed pursuant to Rule 424;
ii.
Any free writing prospectus relating to the offering prepared by or on behalf of us or used or referred to by us;
iii.
The portion of any other free writing prospectus relating to the offering containing material information about us or our securities provided by or on behalf of us; and
iv.
Any other communication that is an offer in the offering made by us to the purchaser.
5.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against pub lic policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
6.
For determining any liability under the Securities Act of 1933 we shall treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by us under Rule 424(b)(1), or (4) or 497(h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective. For determining any liability under the Securities Act of 1933, we shall treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial bona fide offering of those securities.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Dallas, State of Texas, on the 8th day of May, 2008.
| G2 VENTURES , INC. |
| |
| By: | /s/ Gust Kepler |
| | Gust Kepler, President, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and sole member of the Board of Directors |
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| | /s/ Gust Kepler |
| | Gust Kepler, President, Principal Executive Officer, Principal |
| | Financial Officer, Principal Accounting Officer and sole |
| | member of the Board of Directors |
| | |
| | Date: May 8, 2008 |
S-1