UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) or 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
AHIMSA CAPITAL CORP.
(Exact name of registrant as specified in its charter)
| Florida | 27-4117304 |
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
| 7567 Imperial Dr., No. 502 Boca Raton, Florida | 33433 |
| (Address of principal executive offices) | (Zip Code) |
Issuer’s telephone number: (561) 512-0655
Copies to:
Michael H. Hoffman, Esq.
Law Offices of Michael H. Hoffman, P.A.
1521 Alton Rd., Suite 284
Miami, Fl 33139
Telephone: (786) 280-7575
Facsimile: (305) 865-3430
Securities to be registered under Section 12(b) of the Act:
Securities to be registered under Section 12(g) of the Act:
Common Stock, no par value
(Title of class)
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 o | Accelerated filer o |
Non-accelerated filer o | Smaller reporting company x |
| (Do not check if a smaller reporting company) |
Ahimsa Capital Corp.
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. BUSINESS.
General
The name of our company is Ahimsa Capital Corp. (the “Company”, “our”, “us” or “we”). We were incorporated under the laws of the State of Florida on November 29, 2010. We are a developmental stage company and have no revenues to date. Since inception, our activities have been limited to actions related to our organization and the preparation of this registration statement on Form 10 (the “Registration Statement”). The Company’s sole organizational efforts to date include solely engaging (i) Lake & Associates CPA’s, LLC, as its auditors, (ii) Law Offices of Michael H. Hoffman, P.A., as its attorneys, and (iii) 123Edgar Direct, Inc., as its financial printer, in connection with the filing this Registration Statement. We ar e a “shell” company conducting no business operations, other than our efforts to seek merger partners or acquisition candidates; however, the Company has not yet commenced any efforts to seek such merger partners or acquisition candidates. We have no full-time employees and neither own nor lease any real estate nor vehicles.
We were created to effect a merger, exchange of capital stock, asset acquisition or other similar business combination (a “Business Combination”) with an operating or development stage business (the “Target Business”) which desires to utilize our status as a reporting corporation under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We are authorized to issue 100,000,000 shares of common stock (the “Common Stock”), pursuant the Articles of Incorporation of the Company, of which 3,000,000 shares are currently issued and outstanding. We have a shareholder base consisting of only one (1) shareholder. None of the shares of Common Stock issued to such shareholder have been registered under the Securities Act of 1933, as amended (the “Securities Act”). See “ Description of Securities”. Pursuant to a resolution of our board of directors, we will not enter into any Business Combination until the Target Business has obtained the requisite audited financial statements required to be included in a report on Form 8-K to be filed by us with the Securities and Exchange Commission pursuant to the requirements of Form 8-K and the Exchange Act and the applicable rules and regulations thereunder.
Upon the effectiveness of this Registration Statement, we intend to seek potential business opportunities and effectuate a Business Combination with a Target Business with growth potential which, in the opinion of our sole officer and director, could provide a return on investment to our sole shareholder in the form of cash compensation and/or the potential for capital appreciation in the form of continuing equity ownership. Our efforts in identifying prospective Target Businesses are expected to include businesses in the United States and abroad. While we may, under certain circumstances, seek to effect Business Combinations with more than one Target Business, as a result of our limited resources, we will, in all likelihood, have the ability to effect only a single Business Combination. We may effect a Business Combination with a Target Business which may be financially unstable or in its early stages of development or growth. We will not restrict our search to any specific business, industry or geographical location, and we may participate in a business venture of virtually any kind or nature. Our sole officer and director may become involved in management of the Target Business and/or may hire qualified but as yet unidentified individuals to manage such Target Business. There are no acquisitions, business combinations, or mergers pending or which have occurred involving the Company. Presently, we have no plans, proposals, agreements, understandings or arrangements of any kind or nature whatsoever to acquire or merge with any specific business or company, and we have not identified any specific business or company for investigation and evaluation.
Our discussion of the proposed business under this caption and throughout this Registration Statement is purposefully general and is not meant to restrict our virtually unlimited discretion to search for and enter into potential business opportunities.
“Shell” Corporation
Background
We have conducted no business operations to date and expect to conduct none in the future, other than our efforts to effectuate a Business Combination. We, therefore, can be characterized as a “shell” corporation. As a “shell” corporation, we face risks inherent in the investigation, acquisition, or involvement in a new business opportunity. Further, as a “development stage” or “start-up” company, we face all of the unforeseen costs, expenses, problems, and difficulties related to such companies, including whether we will continue to be a going concern entity for the
foreseeable future. We are dependent upon the efforts of our sole officer and director to effectuate a Business Combination.
Due to our limited capital resources, the consummation of a Business Combination will likely involve the acquisition of, or merger or consolidation with, a company that may or may not need substantial additional capital, and also desires to establish a public trading market for its shares of capital stock, while avoiding what it might deem to be the adverse consequences of undertaking a public offering itself, such as the time delays and significant expenses incurred to comply with the various Federal and state securities laws that regulate initial public offerings. A Target Business might desire, among other reasons, to
| ● | create a public market for shares of capital stock in order to enhance liquidity for shareholders, |
| ● | facilitate raising capital through the private into public sale of securities, commonly referred to as a “PIPE” transaction, |
| ● | facilitate raising capital through the public sale of securities of which the existence of a public market for such securities may exist, and/or |
| ● | acquire additional assets through the issuance of securities rather than for cash. |
No trading market in our securities presently exists and we have no plans on registering any securities under the Securities Act or state blue sky laws for the foreseeable future. In light of the restrictions concerning shell companies contained in many state blue sky laws and the regulations thereunder, it is not likely that a trading market will be created in our securities until such time as a Business Combination occurs with a Target Business. No assurances are given that subsequent to such a Business Combination that a trading market in our securities will develop, or, if such a trading market is developed, that it can be maintained with liquidity. We presently have 100,000,000 shares of Common Stock authorized, of which 3,000,000 are currently issued and outstanding. None of these outstanding shares have been registered under the Se curities Act, and all of which are deemed to be “restricted securities”, as that term is defined under Rule 144 promulgated under the Securities Act, because such shares were issued in a private placement transaction to one “accredited investor” not involving a public offering. These shares cannot be resold under Rule 144 but must be registered under the Securities Act. As of the date hereof, we have not provided to any shareholder registration rights to register under the Securities Act any shares of Common Stock of the Company. See “Market Price of and Dividends on the Registrant's Common Equity and Related Shareholder Matters”.
We cannot estimate the time that it will take to effectuate a Business Combination. It could be time consuming; possibly in excess of many months or years. Additionally, no assurance can be made that we will be able to effectuate a Business Combination on favorable terms, or, if such a Business Combination can be effected at all. We might identify and effectuate a Business Combination with a Target Business which proves to be unsuccessful for any number of reasons, many of which are due to the fact that the Target Business is not identified at this time. If this occurs, the Company and its sole shareholder might not realize any type of profit.
There are relatively low barriers to becoming a blank check company or shell company, thereby increasing the competitive market for a small number of business opportunities.
There are relatively low barriers to becoming a blank check company or shell company. A newly incorporated company with a single stockholder and sole officer and director may become a blank check or shell company by voluntarily subjecting itself to the SEC reporting requirements by filing and seeking effectiveness of a Form 10, thereby registering its common stock pursuant to Section 12(g) of the Securities Act of 1934 with the SEC. A Form 10 registration statement goes effective by lapse of time 60 days after the original filing date, pursuant to Section 12(g)(1) of the Exchange Act and, upon the expiration of this 60 day time period, a registrant will be subject to the reporting requirements under the Exchange Act and the registration statement is automatically deemed effective. The relative ease and low cost with which a company c an become a blank check or shell company can increase the already highly competitive market for a limited number of businesses that will consummate a successful business combination.
Unspecified Industry and Target Business
We will seek to acquire a Target Business without limiting ourselves to a particular industry. In seeking a Target Business, we will consider, without limitation, businesses which
(i) offer or provide services or develop, manufacture or distribute goods in the United States or abroad, including, without limiting the generality of the foregoing, in the following areas: technology; real estate; health care; health products; educational services; environmental services; consumer-related products and services (including amusement, entertainment, video games, gaming and/or recreational services); personal care services; voice and data information processing; and telecommunication equipment manufacturers or
(ii) are engaged in wholesale or retail distribution of various products.
To date, we have not selected any particular industry or any Target Business in which to concentrate our Business Combination efforts. Accordingly, we are only able to make general disclosures concerning the risks and hazards of effectuating a Business Combination with a Target Business since there is presently no current basis for us to evaluate the possible merits or risks of the Target Business or the particular industry in which we may ultimately operate. Any Target Business that is selected will be required to have audited financial statements prior to the consummation of a Business Combination consistent with the requirements of Form 8-K and the Exchange Act and the rules and regulations thereunder.
To the extent that we effect a Business Combination with a financially unstable company or an entity in its early stage of development or growth (including entities without established records of sales or earnings), we will become subject to numerous risks and uncertainties inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, to
the extent that we effect a Business Combination with a Target Business in an industry characterized by a high level of risk, we will become subject to the currently unascertainable risks of that industry. An extremely high level of risk frequently characterizes certain industries which experience rapid growth. Although our sole officer and director will endeavor to evaluate the risks inherent in a particular industry or Target Business, there can be no assurances that we will properly ascertain or assess all significant risk factors.
Probable Lack of Business Diversification
As a result of our limited resources, in all likelihood, we will have the ability to effect only a single Business Combination. Accordingly, our prospects for success will be entirely dependent upon the future performance of a single business. Unlike certain entities that have the resources to consummate several Business Combinations or entities operating in multiple industries or multiple segments of a single industry, it is highly unlikely that we will have the resources to diversify our operations or benefit from spreading risks or offsetting losses. Our probable lack of diversification could subject us to numerous economic, competitive and regulatory developments, any or all of which may have a material adverse impact upon the particular industry in which we may operate subsequent to consummation of a Business Combination. The prospec ts for our success may become dependent upon the development or market acceptance of a single or limited number of products, processes or services. Accordingly, there can be no assurance that the Target Business will prove to be commercially viable.
Limited Ability to Evaluate Target Business’ Management
While our ability to successfully effect a Business Combination will be dependent upon certain key personnel, the future role of such personnel in the Target Business cannot presently be stated with any certainty. There can be no assurance that our sole officer and director will remain associated in any operational capacity with us following a Business Combination. Moreover, there can be no assurances that our sole officer and director will have any experience or knowledge relating to the operations of the particular Target Business. Furthermore, although we intend to scrutinize the management team of a prospective Target Business in connection with evaluating the desirability of effecting a Business Combination with such Target Business, there can be no assurances that our assessment of such management team will prove to be correct, espe cially since our sole officer and director is not a professional business analyst. See “Directors, Executive Officers, Promoters and Control Persons”.
Accordingly, we will be completely dependent on the ability of the management team of the Target Business who are unidentifiable as of the date hereof. In addition, there can be no assurances that such future management team will have the necessary skills, qualifications or abilities to manage a public company. We may also seek to recruit additional managers to supplement the incumbent management team of the Target Business. There can be no assurances that we will have the ability to recruit such additional managers, or that such additional managers will have the requisite skill, knowledge or experience necessary or desirable to enhance the incumbent management team.
Opportunity for Shareholder Evaluation or Approval of Business Combinations
Our non-affiliate shareholders, if any, will, in all likelihood, not receive nor otherwise have the opportunity to evaluate any financial or other information which will be made available to us in connection with selecting a potential Business Combination until after we have entered into an agreement to effectuate a Business Combination. Such agreement to effectuate a Business Combination, however, will be subject to shareholder approval pursuant to applicable law. As a result, our non-affiliate
shareholders, if any, will be almost entirely dependent on the judgment and experience of our sole officer and director and her advisors in connection with the selection and ultimate consummation of a Business Combination. In addition, under Florida law, the form of Business Combination could have an impact upon the availability of dissenters’ rights (i.e., the right to receive fair payment with respect to our Common Stock) to shareholders disapproving the proposed Business Combination. See “Description of Business – ‘Shell Corporation’” “- Conflicts of Interest” and “Certain Relationships and Related Transactions”.
Selection of a Target Business and Structuring of a Business Combination
We anticipate that the selection of a Target Business will be complex and risky because of competition for such business opportunities among all segments of the financial community. The nature of our search for the acquisition of a Target Business will require maximum flexibility inasmuch as we will be required to consider various factors and circumstances which may preclude meaningful direct comparison among the various business enterprises to be investigated by us. Investors should recognize that the possible lack of diversification among our acquisitions may not permit us to offset potential losses from one venture against profits from another. We have virtually unrestricted flexibility in identifying and selecting a prospective Target Business. In addition, in evaluating a prospective Target Business, our sole officer and director wil l consider, among other factors, the following factors which are not listed in any particular order:
| ● | financial condition and results of operations of the Target Business; |
| ● | growth potential and projected financial performance of the Target Business and the industry in which it operates; |
| ● | experience and skill of management and the availability of additional personnel of the Target Business; |
| ● | capital requirements of the Target Business; |
| ● | the availability of a transaction exemption from the registration requirements of the Securities Act for any potential Business Combination; |
| ● | the location of the Target Business; |
| ● | competitive position of the Target Business; |
| ● | stage of development or lifecycle of the products, processes or services of the Target Business, if any; |
| ● | degree of current or potential market acceptance of the products, processes or services of the Target Business, if any; |
| ● | proprietary features, intellectual property rights and trade secrets of the Target Business, if any; |
| ● | regulatory environment of the industry in which the Target Business operates; |
| ● | costs associated with effecting the Business Combination; and |
| ● | equity interest, and possible management participation, in the Target Business. |
The foregoing criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular Business Combination will be based, to the extent relevant, on the above factors as well as other objective and subjective criteria deemed relevant by us in connection with effecting a Business Combination consistent with our business objective. In many instances, it is anticipated that the historical operations of a Target Business may not necessarily be indicative of the potential for such Target Business’ future prospects.
We will be dependent upon the owners of a Target Business to identify any such problems which may exist and to implement, or be primarily responsible for the implementation of, necessary changes. Because we may engage in a Business Combination with a newly organized firm or with a firm which is entering a new phase of growth, we will incur further risks, because in many instances, management of the Target Business will not have proven its abilities or effectiveness, the eventual market for the products or services of the Target Business will likely not be established, and the Target Business may not be profitable subsequent to a Business Combination.
Our limited funds and the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a Target Business before we commit capital or other resources. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if we had more funds available to us, would be desirable. We will be particularly dependent in making decisions upon information provided by the promoters, owners, sponsors, or others associated with the business opportunity seeking our participation.
In connection with our evaluation of a prospective Target Business, our sole officer and director anticipates that she will conduct a due diligence review which will encompass, among other things, meetings with incumbent management and inspection of facilities, as well as review of financial or other information which will be made available to us. The time and costs required to select and evaluate a Target Business, including conducting a due diligence review, negotiating relevant agreements and preparing requisite documents for filing pursuant to applicable Federal securities laws, state blue sky laws, foreign securities laws, if any, and corporation laws cannot presently be ascertained with any degree of certainty.
Our sole officer and director intends to devote not more than five hours per week of her time to our operations, and, accordingly, consummation of a Business Combination may require a greater period of time than if she devoted her full time to our affairs. However, our sole officer and director will devote such time as she deems reasonably necessary, to carry out the business and affairs of the Company, including the evaluation of potential Target Businesses and the negotiation of a Business Combination and, as a result, the amount of time devoted to our business and affairs may vary significantly depending upon, among other things, whether we have identified a Target Business or are engaged in active negotiations of a Business Combination. Any costs incurred in connection with the identification and evaluation of a prospective Target Business with which a Business Combination is not ultimately consummated will result in a loss to the Company and reduce the amount of capital available to otherwise complete a Business Combination or for the resulting entity to utilize. In the event we deplete our cash reserves, we might be forced to cease operations and a Business Combination might not occur.
We anticipate that we will locate and make contact with Target Businesses primarily through the reputation and efforts of our sole officer and director and representatives, who intend to meet personally with existing management and key personnel, visit and inspect material facilities, assets, products and services belonging to such prospects, or undertake such reasonable investigation as they deem appropriate. Our sole officer and director and our representatives have a network of business contacts and believe that prospective Target Businesses will be referred to us through this network of contacts.
We also expect that many prospective Target Businesses will be brought to our sole officer and director’s attention from various other non-affiliated sources, including securities broker-dealers, investment bankers, venture capitalists, bankers, and other members of the financial community. We have neither the present intention, nor does the present potential exist for us, to consummate a Business Combination with a Target Business in which our sole officer and director or her affiliates or associates, directly or indirectly, have a pecuniary interest, although no existing corporate policies would prevent this from occurring. Although there are no current plans to do so, we may engage the services of professional firms that specialize in finding business acquisitions and pay a finder's fee or other compensation. Since we have no cur rent plans to utilize any outside consultants or advisors to assist in a Business Combination, no policies have been adopted regarding use of such consultants or advisors, the criteria to be used in selecting such consultants or advisors, the services to be provided, the term of service, or regarding the total amount of fees that may be paid. However, because of our limited resources, it is likely that any such fee we agree to pay would be paid in cash and/or shares of our Common Stock. In no event will we pay a finder's fee or commission to any officer or director or to any entity with which they are affiliated for such service. Moreover, in no event shall we issue any of our securities to any of our sole officer and director or promoters, if any, or any of their respective affiliates or associates, in connection with activities designed to locate a Target Business.
As a general rule, Federal and state tax laws and regulations have a significant impact upon the structuring of business combinations. We will evaluate the possible tax consequences of any prospective Business Combination and will endeavor to structure a Business Combination so as to achieve the most favorable tax treatment for us, the Target Business and their respective stockholders. There can be no assurance that the Internal Revenue Service or relevant state tax authorities will ultimately assent to our proposed tax treatment of a particular Business Combination.
To the extent the Internal Revenue Service or any relevant state tax authorities ultimately prevail in recharacterizing the tax treatment of a Business Combination, there may be adverse tax consequences to us, the Target Business and their respective stockholders. Tax considerations, as well as other relevant factors, will be evaluated in determining the precise structure of a particular Business Combination, which could be effected through various forms of a merger, consolidation or stock or asset acquisition.
Although we have no commitments as of the date of this registration statement to issue any shares of Common Stock, preferred stock, options or warrants or other equity consideration, we will, in all likelihood, issue a substantial number of additional securities in connection with the consummation of a Business Combination. To the extent that such additional securities are issued, dilution to the interests of our sole shareholder will inevitably occur. Additionally, if a substantial number of shares of Common Stock are issued in connection with the consummation of a Business Combination, a change in our control will occur which will also likely affect, among other things, our ability to utilize net operating loss carry forwards, if any.
Any such change in control will likely result in the resignation or removal of our sole officer and director. If there is a change in the person serving as sole officer and director, no assurance can be given as to the experience or qualifications of our new management. Our sole officer and director considers it likely that in order to consummate a Business Combination, a change in control will ultimately occur; therefore, she anticipates offering not less than a controlling interest to a Target Business in order to effectuate a Business Combination.
Our sole officer and director may actively negotiate for or otherwise consent to the disposition of any portion of her Common Stock as a condition to or in connection with a Business Combination.
Therefore, it is possible that the terms of any Business Combination will provide for the sale of all or any portion of the shares of Common Stock owned beneficially by our sole officer and director. It is likely that none of our other shareholders, if any, will be afforded the right to sell their shares of Common Stock in connection with a Business Combination pursuant to the same terms that our sole officer and director, who is also the beneficial owner of all of our outstanding shares of Common Stock, will be provided.
There are currently no limitations relating to our ability to borrow funds to increase the amount of capital available to us to effect a Business Combination or otherwise finance the operations of the Target Business. However, our limited resources and lack of operating history could make it difficult for us to borrow additional funds from other sources. The amount and nature of any borrowings by us will depend on numerous considerations, including our capital requirements, potential lenders' evaluation of our ability to meet debt service on borrowings and the then prevailing conditions in the financial markets, as well as general economic conditions. We do not have any arrangements with any bank or financial institution to secure additional financing and there can be no assurance that such arrangements, if required or otherwise sought, w ould be available on terms commercially acceptable or otherwise in our best interests. Our inability to borrow funds required to effect or facilitate a Business Combination, or to provide funds for an additional infusion of capital into a Target Business, may have a material adverse effect on our financial condition and future prospects, including the ability to effect a Business Combination. To the extent that debt financing ultimately proves to be available, any borrowings may subject us to various risks traditionally associated with indebtedness, including the risks of interest rate fluctuations and insufficiency of cash flow to pay principal and interest. Furthermore, a Target Business may have already incurred debt financing and, therefore, all the risks inherent thereto.
If our securities are issued as part of an acquisition, such securities are required to be issued either in reliance upon exemptions from registration under applicable Federal or state securities laws or registered for public distribution. We intend to primarily target only those companies where an exemption from registration would be available; however, since the structure of the Business Combination has yet to be determined, no assurances can be made that we will be able to rely on such exemptions. Registration of securities typically requires significant costs and time delays are typically encountered. In addition, the issuance of additional securities and their potential sale in any trading market which might develop in our Common Stock, of which there is presently no trading market and no assurances can be given that one will develop , could depress the price of our Common Stock in any market which may develop in our Common Stock. Further, such issuance of additional securities would result in a decrease in the percentage ownership of our sole shareholder.
Due to our small size and limited amount of capital, our ability to raise additional capital, if and when needed, could be constrained. Until such time as any enterprise, product or service which we acquire generates revenues sufficient to cover operating costs, it is conceivable that we could find ourselves in a situation where we need additional funds in order to continue our operations. This need could arise at a time when we are unable to borrow funds and when market acceptance for the sale of additional shares of our Common Stock does not exist. See "Management's Discussion and Analysis or Plan of Operation".
Conflicts of Interest
Our sole officer and director is not required to commit her full time to our affairs and, accordingly, such person may have a conflict of interest in allocating management time among various business activities. Our sole officer and director may engage in other business activities similar and dissimilar to those we are engaged in with any limitations or restrictions applicable to such activities. To the extent that such persons engage in such other activities, they will have possible conflicts of interest in diverting opportunities to other companies, entities or persons with which they are or may be associated or have an
interest, rather than diverting such opportunities to us. As no policy has been established for the resolution of such a conflict, we could be adversely affected should our sole officer and director choose to place her other business interests before ours. No assurance can be given that such potential conflicts of interest will not cause us to lose potential opportunities. Our sole officer and director may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities with which they are affiliated. Our sole officer and director may have conflicts of interest in determining which entity a particular business opportunity should be presented. Accordingly, as a result of multiple business affiliations, our sole officer and director may have similar legal obligations relatin g to presenting certain business opportunities to multiple entities. In addition, conflicts of interest may arise in connection with evaluations of a particular business opportunity by the board of directors with respect to the foregoing criteria. There can be no assurances that any of the foregoing conflicts will be resolved in our favor. We may also consider Business Combinations with entities owned or controlled by persons other than those persons described above. There can be no assurances that any of the foregoing conflicts will be resolved in our favor.
Our sole officer and director may actively negotiate for or otherwise consent to the disposition of all or any portion of the shares of Common Stock held by the sole shareholder, as a condition to, or in connection, with a Business Combination. Therefore, it is possible that the terms of any Business Combination will provide for the sale of all or a portion of the shares of Common Stock held by such shareholder. In the event that such a sale occurs, the Company's sole officer and director intends to approve the Business Combination pursuant to Section 607.0902(2)(d)(7) of the Florida Business Corporation Act, which will have the effect of removing the transaction from the purview of the control-share acquisition statute promulgated under Section 607.0902 of the Florida Business Corporation Act. Thus, it is likely that no other shareholder s, if any, will be afforded the right to sell shares of Common Stock in connection with a Business Combination pursuant to the same terms that our sole shareholder will be provided. Also, such other shareholders, if any, will not be afforded an opportunity to approve or consent to the purchase of all or any portion of the shares of Common Stock being sold by our sole shareholder, whose shares are beneficially owned by our sole officer and director. See “Description of Business – ‘Shell Corporation’” and “- Selection of a Target Business and Structuring of a Business Combination”.
Investment Company Act and Other Regulation
We may participate in a Business Combination by purchasing, trading or selling the securities of such Target Business. We do not, however, intend to engage primarily in such activities.
Specifically, we intend to conduct our activities so as to avoid being classified as an “investment company” under the Investment Company Act of 1940 (the “Investment Act”), and, therefore, to avoid application of the costly and restrictive registration and other provisions of the Investment Act, and the regulations promulgated thereunder.
Our plan of business may involve changes in our capital structure, corporate structure, management team, the board of directors, voting control by our sole shareholder and business prospects and plans, especially if we consummate a Business Combination, as discussed above. Each of these areas is regulated by the Investment Act, in order to protect purchasers of investment company securities. Since we will not register as an investment company, shareholders will not be afforded these protections.
Any securities which we might acquire in exchange for our Common Stock will be “restricted securities” within the meaning of the Securities Act. If we elect to resell such securities, such sale cannot proceed unless a registration statement has been declared effective by the Securities and Exchange Commission or an exemption from registration is available under the Securities Act. Section 4(1) of the Securities Act, which exempts sales of securities not involving a public distribution by persons other than an issuer,
underwriter or dealer, would in all likelihood be available to permit a private sale. Although our plan of operation does not contemplate the resale of an acquired Target Business’ securities, if such a sale were to be necessary, we would be required to comply with the provisions of the Securities Act to effect such resale.
Any Business Combination that we consummate may be in an industry which is regulated or licensed by Federal, state or local authorities. Compliance with such regulations can be expected to be a time consuming and expensive process.
Penny Stock Regulations - State Blue Sky restrictions - Restrictions on Marketability
The Securities and Exchange Commission has adopted regulations which generally define a “penny stock” to be any equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities may be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors, which are, 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 spouse. For transactions covered by this rule, the broker-dealers must make a special suitability determination for the purchase and receive the purchaser's writt en agreement of the transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell our securities and also may affect the ability of any shareholder to sell shares of Common Stock in the secondary market.
In addition, the Securities and Exchange Commission has adopted a number of rules to regulate “penny stocks”. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and 15g-9 under the Exchange Act. Because our securities may from time to time, and at the present time, constitute "penny stocks" within the meaning of these rules, the rules would apply to the Company and to its securities. These rules may further affect the ability of our sole shareholder and other shareholders, if any, to sell their shares in any public market which might develop.
Shareholders should be aware that, according to Securities and Exchange Commission Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include the following:
| ● | control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; |
| ● | manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; |
| ● | “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; |
| ● | excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and |
| ● | the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. |
We are aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, our sole officer and director will strive within the confines of practical limitations and applicable laws and regulations to prevent the described patterns from being established with respect to our securities.
Competition
We expect to encounter intense competition from other entities having a business objective similar to ours. Many of these entities are well-established and have extensive experience in connection with identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater financial, marketing, technical, personnel and other resources than us, and there can be no assurances that we will have the ability to compete successfully. Our financial resources will be extremely limited in comparison to those of many of our competitors. This inherent competitive limitation could compel us to select certain less attractive Target Businesses for a Business Combination. There can be no assurances that such Target Businesses will permit us to meet our stated business objective. Our sole officer and direc tor believes, however, that our status as a reporting public entity could give us a competitive advantage over privately held entities having a similar business objective to ours in acquiring a Target Business with significant growth potential on favorable terms.
Uncertainty Of Competitive Environment Of Target Business
In the event that we succeed in effecting a Business Combination, we will, in all likelihood, become subject to intense competition from competitors of the Target Business. In particular, certain industries which experience rapid growth frequently attract an increasingly larger number of competitors, including competitors with increasingly greater financial, marketing, technical and other resources than the initial competitors in the industry. The degree of competition characterizing the industry of any prospective Target Business cannot presently be ascertained. There can be no assurances that, subsequent to a Business Combination, we will have the resources to compete effectively, especially to the extent that the Target Business is in a high-growth industry.
Federal Securities Laws Compliance
Under the Federal securities laws, companies reporting under the Exchange Act must furnish shareholders certain information about significant acquisitions, which information may require audited financial statements for a Target Business with respect to one or more fiscal years, depending upon the relative size of the acquisition. Consequently, our policy is to only effect a Business Combination with a Target Business that has available the requisite audited financial statements. See “Description of Securities-General”.
Facilities
Our principal office is located at the personal residence of our sole officer and director at7567 Imperial Drive, No. 502, Boca Raton, Florida 33433. We occupy this space rent-free. We believe these facilities are adequate to serve our needs until such time as a Business Combination occurs. We expect to be able to utilize these facilities, free of charge, until such time as a Business Combination occurs. See “Description of Property” and “Certain Relationships and Related Transactions”.
Employees
As of the date of this Registration Statement, we are in the development stage and currently have no employees, other than our sole officer and director. Our sole officer and director serves on a part-time basis. We expect to use consultants, attorneys and accountants as necessary, and do not anticipate a need to engage any other employees, so long as we our seeking and evaluating Target Businesses. The need for employees and their availability will be addressed in connection with the decision whether or not to acquire a Target Business, or participate in a specific Business Combination.
ITEM 2. FINANCIAL INFORMATION.
Summary Financial Data.
The following table presents our summary financial data. We derived the following historical summary financial data from our audited financial statements. The summary financial data should be read in conjunction with the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operation.”
Summary Financial Data
November 29, 2010 (inception) through December 31, 2010 | ||||
| Sales | $ | - | ||
| Net loss | $ | (2,570 | ) | |
| Working capital | $ | 430 | ||
| Total assets | $ | 3,000 | ||
| Long-term debt and capital lease obligations | $ | - | ||
| Shareholders’ equity | $ | 430 | ||
| Basic and diluted earnings per common share | $ | - | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
We are presently a development stage company conducting no business operations, other than our efforts to effect a Business Combination with a Target Business, which we consider to have significant growth potential. To date, we have neither engaged in any operations nor generated any revenue. We receive no cash flow from operating activities. We will carry out our plan of operation, as discussed above. See “Description of Business”. We cannot predict to what extent our liquidity and capital resources, if any, will be diminished prior to the consummation of a Business Combination or whether our capital will be further depleted by the operating losses, if any, of the Target Business, that may effectuate a Business Combination with us.
Presently, we are not in a position to meet our cash requirements for the remainder of the fiscal year or for the next 12 months. We do not generate any cash revenue or receive any type of cash flow. From inception to the date of this Registration Statement, our sole officer and director has committed to make loans to us on an as needed basis in the form of promissory notes. Our operating costs, which include accounting and legal professional fees and costs for filings reports with the SEC, are likely to
approximate $5,000 to $7,500 during the next 12 months. Such capital will cover the costs of us staying in business, but not permit us to expand our business, other than through a Business Combination. It is likely that a Business Combination might not occur during the next 12 months. In the event we cannot meet our operating costs prior to the effectuation of a Business Combination, we may cease operations and a Business Combination may not occur. The continuation of our business is dependant upon our ability to obtain adequate financing arrangements, effectuate a Business Combination and, ultimately, engage in future profitable operations.
Prior to the occurrence of a Business Combination, we may be required to raise capital through the sale or issuance of additional securities in order to ensure that we can meet our operating needs or to effectuate a Business Combination. As of the date of this Registration Statement, no commitments of any kind to provide additional funds have been made by our sole officer and director, sole shareholder or any other third parties. There are no agreements or understandings of any kind with respect to any loans from such persons or entities to be made to us. Accordingly, there can be no assurances that any additional funds will be available to us to allow us to cover our expenses. In the event we can no longer borrow funds, and we elect to raise additional capital prior to the effectuation of a Business Combination, we expect to do so throug h the private placement of restricted securities rather than going through a public offering. We do not currently contemplate making a Regulation S offering.
As of the date of this Registration Statement, our current available funds will not be sufficient to continue maintaining our reporting status as a public company. Management believes if we cannot maintain our reporting status as a public company, we will have to cease all efforts directed towards the Company. As such, any investments previously made in the Company would be lost in their entirety. We currently have no external sources of liquidity, such as arrangements with banks or credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.
Going Concern
Our auditor has raised substantial doubt as to our ability to continue as a going concern, as expressed in its opinion on our financial statements included in this prospectus and in Note 1 to the Company’s financial statements. We commenced operations on November 29, 2010 and have realized minimal revenues and operated at a loss since inception. As of December 31, 2010, we had working capital of $430 and an accumulated deficit of $(2,570). Existing cash resources are currently not expected to provide sufficient funds through the upcoming year. These factors have led to our auditor’s conclusion that it has substantial doubt as to our ability to continue as a going concern.
Our ability to continue as a going concern is dependent upon our ability to generate profitable business operations in the future and/or obtaining the necessary financing to meet our obligations and repay our liabilities. To date, we have operated at a loss and remained in business through the issuance of shares of our common stock. We will require a minimum of $5,000 to $7,500 of available capital over the next 12 months to cover the expenses associated with this filing and the reporting and other compliance requirements involving being a public company, including accounting fees, legal fees, Edgarization filing fees and general office and administrative expenses. Management's plan to continue as a going is based on us obtaining additional capital resources, including proceeds from private financings and/or loans fr om our sole officer and director and sole shareholder.
Material Commitments
There were no material commitments for the period from November 29, 2010, our inception, through December 31, 2010.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Quantitative and Qualitative Disclosures About Market Risk.
We have not utilized any derivative financial instruments such as futures contracts, options and swaps, forward foreign exchange contracts or interest rate swaps and futures. We believe that adequate controls are in place to monitor any hedging activities. We do not have any borrowings and, consequently, we are not effected by changes in market interest rates. We do not currently have any sales or own assets and operate facilities in countries outside the United States and, consequently, we are not effected by foreign currency fluctuations or exchange rate changes. Overall, we believe that our exposure to interest rate risk and foreign currency exchange rate changes is not material to our financial condition or results of operations.
ITEM 3. PROPERTIES.
The principal office of the Company is located at 7567 Imperial Drive, No. 502, Boca Raton, Florida 33433, at the personal residence of our president. This space is provided to us rent-free. We believe these facilities are adequate to serve our needs until such time as a Business Combination, if any, occurs. We expect to be able to utilize these facilities, free of charge, until such time as a Business Combination, if any, occurs.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of January 10, 2011, the number and percentage of shares of our outstanding common stock which are beneficially owned, directly or indirectly by our sole shareholder and sole officer and director. We determine beneficial ownership based on the rules of the Securities and Exchange Commission. In general, beneficial ownership includes shares over which a person has sole or shared voting or investment power and shares which the person has the right to acquire within 60 days of January 10, 2011. Unless otherwise indicated, the person set forth below has sole voting and investment control over the following shares beneficially owned.
Name and Address Of Beneficial Owner | Shares Beneficially Owned | Percent of Class: | ||
Talles Investments, Inc. 7567 Imperial Dr. No. 502 Boca Raton, Flordia 33433 | 3,000,000 | 100% | ||
All Executive Officers and Directors As A Group (1 person) (1) | 3,000,000 | 100% |
___________
| (1) | Ellen Talles, our President, Secretary, Treasurer and sole director, maintains sole voting and investment control of the shares held by Talles Investments, Inc. As a result, Ms. Talles is deemed to beneficially own all of the shares of Common Stock held by Talles Investments, Inc. |
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
The following table sets forth certain information with respect to our sole officer and director.
| Name | Age | Position | ||
| Ellen Talles | 63 | President, Secretary, Treasurer, Director |
Ellen J. Talles, is a retail sales associate and has served in various retail sales, marketing and consulting positions for over 30 years. Since January 2005, Ms. Talles has served as a retail sales associate at Saks Fifth Avenue. From November 1999 until March 2004, Ms. Talles was an assistant store manager at Lulu’s of Boca Raton, a retail clothing store establishment. From July 2006 until June 2008, Ms. Talles served as the sole officer and director of Sadhana Equity Investment, Inc., a “shell” corporation filing reports under the Exchange Act. From February 2006 until July 2006, Ms. Talles served as the sole officer and director of Kokopelli Capital Corp., a “shell” corporation filing reports under the Exchange Act. From June 2005 until December 2005, Ms. Talles served as the sole officer and director of Quetzal Capital I, Inc., a “shell” corporation filing reports under the Exchange Act. Except as set forth above, Ms. Talles has no other management experience with a public shell company or blank check company.
There are no agreements or understandings for Ms. Talles, our sole officer and director, to resign at the request of another person or act on behalf of, or at the discretion of, any other person. There are no agreements or understandings for Ms. Talles to devote her sole and exclusive efforts to the management of our business. Ms. Talles plans to maintain her current profession as a retail sales associate, and cannot devote her sole and exclusive efforts to the management of our business. Until such time as a Business Combination occurs, our sole officer and director does not expect any change in our management.
There are no acquisitions, business combinations, or mergers pending or which have occurred involving the Company. Presently, we have no plans, proposals, agreements, understandings or arrangements of any kind or nature whatsoever to acquire or merge with any specific business or company, and we have not identified any specific business or company for investigation and evaluation.
ITEM 6. EXECUTIVE COMPENSATION.
Executive Compensation
No officer will receive any salary or other compensation in connection with being employed by, or providing services to, us. There are no employment or consulting agreements with our sole officer and director in any form whatsoever.
Compensation of Directors
No director receives any type of compensation from us for serving as a director. Until we effectuate a Business Combination, it is not anticipated that any director will receive any compensation other than reimbursement for out-of-pocket expenses incurred on our behalf. See “Certain Relationships and Related Transactions”.
We have no stock option, retirement, pension, or profit-sharing programs for the benefit of directors, but the Board of Directors may recommend adoption of one or more such programs in the future. No other arrangements are presently in place regarding compensation to our sole officer and director for her services as a director or for committee participation or special assignments. Our sole officer and director will hold office until her successor is elected and qualified or until her resignation in the manner provided in our bylaws.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Our sole officer and director, who is also deemed to beneficially own all of the shares of Common Stock held by the sole shareholder, may actively negotiate for or otherwise consent to the disposition of any portion of the outstanding shares of Common Stock, as a condition to or in connection with a Business Combination. Therefore, it is possible that the terms of any Business Combination will provide for the sale of some or all of the shares of Common Stock held by the sole shareholder. However, it is probable that other shareholders, if any, of the Company will not be afforded the right to sell all or a portion of their shares of Common Stock, if any, in connection with a Business Combination pursuant to the same terms that our sole shareholder will be provided. Also, such other shareholders, if any, will not be afforded an opportunity to approve or consent to the sale of the sole shareholder's shares of Common Stock in connection with a Business Combination. See “Description of Business - Shell Corporation” and “- Selection of a Target Business and Structuring of a Business Combination”. It is more likely than not that any sale of securities by our sole shareholder to an acquisition candidate would be at a price substantially higher than that originally paid by such sole shareholder. Any payment to such sole shareholder in the context of an acquisition involving us would be determined entirely by largely
unforeseeable terms of a future agreement with an unidentified business entity. See “Description of Business - Shell Corporation” and “- Selection of a Target Business and Structuring of a Business Combination”.
It is not currently anticipated that any salary, consulting fee, or finder's fee shall be paid to any of our sole officer and director, or to any other promoter or affiliate, if any. Neither our sole officer and director nor any promoter or affiliate, if any, will have any direct or indirect material interest in any Target Business proposed to be acquired by us.
ITEM 8. LEGAL PROCEEDINGS.
We are not a party to any legal proceedings, nor are we aware of any threatened litigation whatsoever.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
Market Information
Our common stock has not been registered with the Securities and Exchange Commission or any state securities agency or authority. No public trading market presently exists for our shares of Common Stock, and there are no present plans, proposals, arrangements or understandings with any person with regard to the development of any trading market in any of our securities. No assurances can be made that a trading market for our Common Stock will ever develop. No shares of Common Stock have been registered for resale under the blue sky laws of any state. The holders of shares of Common Stock, and persons who may desire to purchase shares of Common Stock in any trading market that might develop in the future, should be aware that there may be significant state blue sky law restrictions upon the ability of shareholders to sell their shares and of purchasers to purchase the shares of Common Stock. Some jurisdictions may not allow the trading or resale of blind pool or “blank-check” securities under any circumstances. Accordingly, shareholders should consider the secondary market for our securities to be an extremely limited market for the resale of our securities, until such time that a trading market for our shares of common stock has developed, if any.
None of our shares of Common Stock are presently subject to outstanding options or warrants to purchase, or securities convertible into our common equity. There is one (1) shareholder of our Common Stock holding 3,000,000 shares, and such shares are beneficially owned by our sole officer and director. All of these shares are “restricted securities”, as that term is defined under Rule 144 promulgated under the Securities Act, in that such shares were issued in a private transaction not involving a public offering. These shares cannot be resold under Rule 144 but must be registered under the Securities Act. The Company has not provided to any shareholder registration rights to register under the Securities Act any shareholder's shares for sale.
Neither the Company, our sole officer and director, nor our sole shareholder have, at the present time, any plans, proposals, arrangements, understandings or intention of selling any unissued or outstanding shares of Common Stock in the public market subsequent to a Business Combination. Nevertheless, in the event that substantial amounts of Common Stock are sold in the public market subsequent to a Business Combination, such sales may adversely affect the price for the sale of the Company's equity securities in any trading market which may develop, if at all. No prediction can be made as to the effect, if any, that market sales of restricted shares of Common Stock or the availability of such shares for sale will have on the market prices prevailing from time to time, if any.
Dividends
We have not paid any dividends on our Common Stock to date and do not presently intend to pay cash dividends prior to the consummation of a Business Combination. The payment of cash dividends in the future, if any, will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to the consummation of a Business Combination. The payment of any dividends subsequent to a Business Combination will be within the discretion of our then existing board of directors. It is the present intention of our sole director to retain all earnings, if any, for use in our business operations and, accordingly, the board of directors does not anticipate paying any cash dividends in the foreseeable future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
On November 29, 2010, we issued an aggregate of 3,000,000 shares of our Common Stock in a private offering exempt from the registration under the Securities Act pursuant to Section 4(2) thereof for the total consideration of $3,000, or $0.001 per share, to one investor, Talles Investments, Inc. The investor represented its intention to acquire the securities for investment only and not with a view to sell the securities in connection with any distribution thereof and an appropriate restrictive legend was affixed to the share certificate. We believe that the investor was an “accredited investor”, as that term is defined in Rule 501 promulgated under the Securities Act.
ITEM 11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED.
General
We are authorized to issue 100,000,000 shares of Common Stock. As of the date hereof, 3,000,000 shares of Common Stock are issued and outstanding, held of record by one (1) shareholder, Talles Investments, Inc.
We have elected not to be governed by Florida statute Sections 607.0901 and 607.0902, which govern affiliated transactions and control share acquisitions, respectively. By virtue of this election, non-affiliated shareholders, if any, will be less likely to be given an opportunity to vote upon any type of acquisition or reorganization.
Common Stock
Our holders of Common Stock are entitled to one vote for each share held of record on all matters to be voted on by shareholders. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors. By virtue of our sole officer and director's beneficial ownership of all of the issued and outstanding shares of Common Stock, our sole officer and director can elect all of the directors of the Company. Florida law permits the holders of the minimum number of shares necessary to take action at a meeting of shareholders (normally a majority of the outstanding shares) to take action by written consent without a meeting, provided notice is given to all other shareholders, if any. The holders of Common Stock are entitled to receive dividends when, as and if declared by the board of directors out of funds legally available therefor. In the event of liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the Common Stock. Holders of shares of Common Stock, as such, have no conversion, preemptive, redemption provisions or other subscription rights.
Dividends
We have not paid any dividends on our Common Stock and do not presently intend to pay cash dividends prior to the consummation of a Business Combination. The payment of cash dividends in the future, if any, will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to consummation of a Business Combination, if any. The payment of any dividends subsequent to a Business Combination, if any, will be within the discretion of our then existing board of directors. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, the board of directors does not anticipate paying any cash dividends in the foreseeable future.
Anti-Takeover Provisions
General
The Florida Business Corporation Act contains provisions designed to enhance the ability of our board of directors to respond to attempts to acquire control of the Company. These provisions may discourage takeover attempts which have not been approved by the board of directors. This could include takeover attempts that shareholders, if any, other than our sole shareholder, deem to be in their best interest. These provisions may adversely affect the price that a potential purchaser would be willing to pay for our outstanding shares of Common Stock. These provisions may deprive shareholders, other than our sole shareholder, of the opportunity to obtain a takeover premium for your shares of Common Stock. These provisions could make the removal of incumbent management more difficult. These provisions may enable a minority of our directors and the holders of a minority of our outstanding voting shares to prevent, discourage or make more difficult a merger, tender offer or proxy contest, even though the transactions may be favorable to the interests of shareholders. These provisions could also potentially adversely affect the market price of our shares of common stock, if any. Currently, we only have one officer and director and all of our outstanding shares of Common Stock are beneficially owned by such person.
Authorized but Unissued Stock
The authorized but unissued shares of our Common Stock will be available for future issuance without shareholder approval. These additional shares may be used for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans, if any. The existence of authorized, but unissued shares of Common Stock may enable our board of directors to issue shares of capital stock to persons friendly to our sole officer and director. This may have the effect of discouraging attempts to obtain control of the Company.
Evaluation of Acquisition Proposals
The Florida Business Corporation Act expressly permits our board of directors, when evaluating any proposed tender or exchange offer, any merger, consolidation or sale of substantially all of the assets of the Company, or any similar extraordinary transaction, to consider all relevant facts including, without limitation, the social, legal, and economic effects on the employees, customers, suppliers and other constituencies of the Company, and on the communities and geographical areas in which they operate. Our board of directors may also consider the amount of consideration being offered in relation to the then current market price, if any, for our outstanding shares of capital stock and our then current value in a freely-negotiated transaction. Our sole officer and director believes that these provisions are in the long-term best interes ts of the Company and our sole shareholder.
Florida Anti-Takeover Law
We are subject to (i) the Florida Control Share Act, which generally provides that shares acquired in excess of thresholds equaling 20%, 33% and more than 50% of a corporation's voting power will not possess any voting rights unless such voting rights are approved by a majority vote of the corporation's disinterested shareholders, and (ii) the Florida Fair Price Act, which generally requires approval by disinterested directors or supermajority approval by shareholders for certain specified transactions between a corporation and a holder of more than 10% of the outstanding shares of the corporation (or its affiliates).
These provisions could prohibit or delay the accomplishment of mergers or other takeover or change in control attempts. Accordingly, these provisions may discourage attempts to acquire the Company. Currently, we only have one officer and director and all of the outstanding shares of Common Stock are beneficially owned by such person.
Transfer Agent
We presently serve as our own transfer agent and registrar for our common stock.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our Bylaws contain the broadest form of indemnification for our sole officer and director permitted under Florida law. Our Bylaws generally provide as follows:
The Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by, or in the right of the Company) by reason of the fact that he or she is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust or other enterprise against expenses (including attorney’s fees), judgments, fines, amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, including any appeal thereof, if he or she acted in good faith in a manner he reasonably believed to be in , or not opposed to the best interests of the Company, and with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of no contenders or its equivalent shall not create, of itself, a presumption that the person did not act in good faith or in a manner which he or she reasonably believed to be in, or not opposed to, the best interests of the Company or, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.
To the extent that a director, officer, employee or agent of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in any defense of any claim, issue or matter therein, he or she shall be indemnified against expenses, including attorneys fees, actually and reasonably incurred by him in connection therewith.
Any indemnification shall be made only if a determination is made that indemnification of the director, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth above. Such determination shall be made either (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) by the shareholders who were not parties to such action, suit or proceeding. If neither of the above determinations can occur because the Board of Directors consists of a sole director or the Company is owned by a sole shareholder, which is controlled by the sole officer and director, then the sole officer and director or sole shareholder shall be allowed to make such determination.
Expenses incurred in defending any action, suit or proceeding may be paid in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided above upon receipt of any undertaking by or on behalf of the director, officer, employee or agent to repay such amount, unless it shall ultimately be determined that she is entitled to be indemnified by the Company.
The indemnification provided shall be in addition to the indemnification rights provided pursuant to Chapter 607 of the Florida Statutes, and shall not be deemed exclusive of any other rights to which any person seeking indemnification may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent of the Company and shall inure to the benefit of the heirs, executors and administrators of such a person.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
AHIMSA CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
NOVEMBER 29, 2010 (INCEPTION) THROUGH DECEMBER 31, 2010
INDEX TO FINANCIAL STATEMENTS
| Description | Page |
| F - 1 | |
| F - 2 | |
| F - 3 | |
| F - 4 | |
| F - 5 | |
| F - 6 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Ahimsa Capital Corp.
(A Development Stage Company)
We have audited the accompanying balance sheet of Ahimsa Capital Corp. (A Development Stage Company) as of December 31, 2010 and the related statements of operations, shareholders’ equity and cash flows for the period November 29, 2010 (Inception) through December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ahimsa Capital Corp. (A Development Stage Company) as of December 31, 2010, and the related statements of operations, shareholders’ equity and cash flows for the period November 29, 2010 (Inception) through December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred an operating loss, which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Lake & Associates CPA’ s, LLC
Lake & Associates CPA’ s, LLC
Schaumburg, Illinois
January 14, 2011
AHIMSA CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
DECEMBER 31, 2010
| ASSETS | ||||
| Current assets: | ||||
| Cash and equivalents | $ | 3,000 | ||
| Total Assets | $ | 3,000 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable and accrued expenses | $ | 2,570 | ||
| Total Liabilities | 2,570 | |||
| Shareholders’ Equity: | ||||
| Common Stock (no par value, | ||||
| 100,000,000 shares authorized; | ||||
| 3,000,000 issued and outstanding) | 3,000 | |||
| Deficit accumulated during the development stage | (2,570 | ) | ||
| Total Shareholders’ Equity | 430 | |||
| Total Liabilities and Shareholders’ Equity | $ | 3,000 | ||
The accompanying notes are an integral part of these financial statements.
AHIMSA CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
FOR THE PERIOD NOVEMBER 29, 2010 (INCEPTION) THROUGH DECEMBER 31, 2010
| REVENUE: | $ | - | ||
| EXPENSES: | ||||
| General and Administrative | $ | 2,570 | ||
| Total Expenses | $ | (2,570 | ) | |
| Net (loss) before Income Taxes | $ | (2,570 | ) | |
| Income Tax Expense | $ | - | ||
| Net (loss) | $ | (2,570 | ) | |
| Basic and diluted net (loss) per common share | $ | - | ||
| Weighted average number of common shares outstanding | 3,000,000 |
The accompanying notes are an integral part of these financial statements.
AHIMSA CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS’ EQUITY
FOR THE PERIOD NOVEMBER 29, 2010 (INCEPTION) THROUGH DECEMBER 31, 2010
| Deficit | ||||||||||||||||
| Number | Accumulated | |||||||||||||||
| Of Common | Common | During | ||||||||||||||
| Shares | Stock | Development Stage | Total | |||||||||||||
| Balance at November 29, | ||||||||||||||||
| 2010, initial | ||||||||||||||||
| shareholder, | ||||||||||||||||
| $0.001/share | 3,000,000 | $ | 3,000 | - | $ | 3,000 | ||||||||||
| Net (loss) for | ||||||||||||||||
| the period | - | - | (2,570 | ) | (2,570 | ) | ||||||||||
| Balance at | ||||||||||||||||
| December 31, 2010 | 3,000,000 | $ | 3,000 | $ | (2,570 | ) | $ | 430 | ||||||||
The accompanying notes are an integral part of these financial statements.
AHIMSA CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
FROM NOVEMBER 29, 2010 (INCEPTION) THROUGH DECEMBER 31, 2010
| Operating Activities: | ||||
| Net loss | $ | (2,570 | ) | |
| Increase in accounts payable | 2,570 | |||
| Net cash used in operations | - | |||
| Financing Activities: | ||||
| Proceeds from issuance of common stock | 3,000 | |||
| Net increase in cash | 3,000 | |||
| Cash Beginning Balance | - | |||
| Cash Ending Balance | $ | 3,000 | ||
| Supplemental Disclosure of Cash Flow Information: | ||||
| Taxes paid | $ | - | ||
| Interest paid | $ | - | ||
| Non-cash Activities | $ | - | ||
The accompanying notes are an integral part of these financial statements.
AHIMSA CAPITAL CORP.
(A DEVELOPMENT STAGE COMPANY)
DECEMBER 31, 2010
NOTE 1 - ACCOUNTING POLICIES AND OPERATIONS
ORGANIZATION
Ahimsa Capital Corp.(the “Company”), a development stage company, was incorporated in Florida on November 29, 2010. The Company intends to serve as a vehicle to effect asset acquisition, merger, exchange of capital stock or other type of business combination with a domestic or foreign business. At December 31, 2010, the Company had not yet commenced any formal business operations and all activity to date related to the Company formation, capital stock issuance, professional fees with regard to proposed Securities and Exchange Commission filing and identification of businesses. The Company's fiscal year ends on December 31st.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared by the Company. The Company’s financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
The Company has not earned any revenue from operations. Accordingly, the Company's activities have been accounted for as those of a "Development Stage Enterprise" as set forth in ASC 915 “Development Stage Entities”, which was previously Financial Accounting Standards Board Statement No. 7 ("SFAS 7"). Among the disclosures required by SFAS 7 are that the Company's financial statements be identified as those of a development stage company, and that the statements of operations, shareholders' equity/(deficit) and cash flows disclose activity since the date of the Company's inception.
GOING CONCERN
The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unabl e to continue as a going concern.
MANAGEMENT’S PLAN TO CONTINUE AS A GOING CONCERN
The Company has met its historical working capital requirements from the sale of its capital shares. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plans to obtain such resources for the Company include (1) obtaining capital from the sale of its securities and (2) private financings and borrowings, including loans from our sole shareholder The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding sentence and eventually attaining profitable operations.
DEVELOPMENT STAGE RISK
The Company has earned no revenues from operations. Accordingly, the Company's activities have been accounted for as those of a "Development Stage Enterprise" as set forth in Accounting Standards Codification (“ASC”) 915 “Development Stage Entities”, which was previously Financial Accounting Standards Board Statement No. 7 (“SFAS 7”). Among the disclosures required by ASC 915 are that the Company’s financial statements be identified as those of a development stage company, and that the statements of operations, shareholders’ equity/(deficit) and cash flows disclose activity since the date of the Company’s inception.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents.
EARNINGS PER SHARE
The Company computes earnings per share in accordance with ASC 260, “Earnings Per Share”, which was previously Statement of Accounting Standards No. 128, "Earnings per Share (“SFAS No. 128”). Under the provisions of SFAS No. 128, basic earnings per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing the net income (loss) for the period by the weighted average number of common and potentially dilutive common shares outstanding during the period. There were no potentially dilutive common shares outstanding during the period.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
INCOME TAXES
The Company accounts for income taxes as outlined in ASC 740 “Income Taxes”, which was previously Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company considers that the carrying amount of financial instruments, including accounts payable, approximates fair value because of the short maturity of these instruments.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
SUBSEQUENT EVENTS
We evaluated subsequent events through the date and time our financial statements were issued on January 14, 2011.
NOTE 2 – SHAREHOLDER’S EQUITY
On November 29, 2010, the Company issued 3,000,000 shares of common stock to its initial shareholder in exchange for $3,000 in cash.
NOTE - 3 INCOME TAXES
The Company provides for income taxes under ASC 740, “Income Taxes”, which was previously Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.
SFAS No. 109 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 34% to the net loss before provision for income taxes for the following reasons:
| December 31, | ||||
| 2010 | ||||
| Income tax expense (asset) at statutory rate | $ | (874 | ) | |
| Valuation allowance | 874 | |||
| Income tax expense per books | $ | -0- | ||
Net deferred tax assets consist of the following components as of:
| December 31, | ||||
| 2010 | ||||
| NOL Carryover | $ | 2,570 | ||
| Valuation allowance | (2,570 | ) | ||
| Net deferred tax asset | $ | -0- | ||
Due to the change in ownership provisions of the Tax Reform Act of 1986, our net operating loss carry forward for the period November 29, 2010, our inception, through December 31, 2010 was $2,570, and for federal income tax reporting purposes is subject to annual limitations. This carryforward will expire in year 2030 if not utilized. Should a change in our ownership occur, the net operating loss carry forward may be limited as to its use in future years.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
The following financial statements are included herein:
(i) Balance Sheet as of December 31, 2010
(ii) Statement of Operations for the period November 29, 2010 (inception) through December 31, 2010
(iii) Statement of Shareholders’ Equity (Deficit) for the period November 29, 2010 (inception) through December 31, 2010
(iv) Statement of Cash Flows for the period November 29, 2010 (inception) through December 31, 2010
(b) Exhibits
The following Exhibits are filed herein:
Exhibit Number | Description | |
| 3.1 | Articles of Incorporation of Registrant* | |
| 3.2 | Bylaws of Registrant* | |
| 4.1 | Specimen of Common Stock Certificate* | |
| 4.2 | Instruments defining the rights of security holders (included in Exhbit 3.1) |
__________________
* Filed herewith
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
| AHIMSA CAPITAL CORP. | |
| Date: January 19, 2011 | By: /s/ Ellen Talles |
| Ellen Talles | |
| President, Secretary and | |
| Treasurer and Sole Director |
Ahimsa Capital Corp.
Index to Exhibits
Exhibit Number | Description | |
| 3.1 | ||
| 3.2 | ||
| 4.1 |
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