Without realizing the offering proceeds, we will not be able to commence planned operations and implement our business plan. Please refer to the section, herein, titled “Management’s Discussion and Plan of Operation” for further information.
The Company intends to use the proceeds from this offering as follows:
| | | | | | | | | | |
| | | Maximum | | | | |
| Application Of Proceeds | | $ | | | % of
total | | | % of net
proceeds | |
| | | | | | | | | | | |
| Total Offering Proceeds | | | 25 ,000 | | | | 100 | % | | | 100 | % |
| | | | | | | | | | | | | |
| Escrow pending merger/acquisition | | | 22 ,500 | | | | 90 | % | | | 90 | % |
| | | | | | | | | | | | | |
| Total Use of Proceeds | | | 25 ,000 | | | | 100 | % | | | 100 | % |
The Company intends to use 100% of the proceeds from the Offering to merge with, or acquire a business. The Company does not intend to use any of the proceeds to pay administrative and/or operating expenses, or for any other purpose. The Company may withdraw up to 10% of the proceeds of this Offering prior to the anticipated merger or business acquisition and will use these funds to pay expenses associated with the merger or business acquisition. The remaining 90% of proceeds of this Offering will remain in escrow in accordance with the procedures set forth in Rule 419. Expenses associated with merging with or acquiring a business include advertising, mailing and shipping for due diligence materials, payments to third party non-affiliates, including bookkeepers, auditors, transfer agents, and others performing services to effect such merger, and possible travel. Befumo & Schaeffer, PLLC as escrow agent will receive no fee for services as escrow agent.
The Company has not identified any businesses for acquisition. While we have not identified any particular business sector, we intend to seek to acquire assets or shares of an entity actively engaged in a significant business activity. We have no particular acquisitions in mind and have not entered into any negotiations regarding such an acquisition. Neither our sole officer, director, promoter nor any affiliates thereof have engaged in any preliminary contact or discussions with any representative of any other company regarding the possibility of an acquisition or merger between us and such other company as of the date of this registration statement.
The offering price of the common stock has been arbitrarily determined and bears no relationship to any objective criterion of value. The price does not bear any relationship to our assets, book value, historical earnings or net worth. No valuation or appraisal has been prepared for our business. We cannot assure you that a public market for our securities will develop or continue or that the securities will ever trade at a price higher than the offering price.
"Dilution" represents the difference between the offering price of the shares of common stock and the net book value per share of common stock immediately after completion of the Offering. "Net book value" is the amount that results from subtracting total liabilities from total assets. In this Offering, the level of dilution is increased as a result of the relatively low book value of our issued and outstanding stock. Assuming all shares offered herein are sold, giving effect to the receipt of the maximum estimated proceeds of this Offering from shareholders net of the Offering expenses, our net book value will be $25,542 or $0.00204336 per share. Therefore, the purchasers of the common stock in this Offering will incur an immediate and substantial dilution of approximately $0.00795664 per share while our present stockholders will receive an increase of $0.00203794 per share in the net tangible book value of the shares they hold. This will result in a 79.6% dilution for purchasers of stock in this Offering.
The following table illustrates the dilution to the purchasers of the common stock in this Offering:
| | | Maximum | |
| | | Offering | |
| | | | |
| Offering Price Per Share | | $ | 0.01 | |
| Net Book Value Per Share Before the Offering as of June 30, 2011 | | $ | 0.0000542 | |
| Net Book Value Per Share After the Offering | | $ | 0.00204336 | |
| Net Increase to Original Shareholder | | $ | 0.00203794 | |
| Decrease in Investment to New Shareholders | | $ | 0.0079566 | |
| Dilution to New Shareholders (%) | | | 79.6 | % |
There is no public market for our common stock. Our common stock is currently held by one shareholder. Therefore, the current and potential market for our common stock is limited and the liquidity of our shares may be severely limited. To date, we have made no effort to obtain listing or quotation of our securities on a national stock exchange or association. We have not identified or approached any broker/dealers with regard to assisting us to apply for such listing. We are unable to estimate when we expect to undertake this endeavor or that we will be successful. In the absence of listing, no market is available for investors in our common stock to sell their shares. We cannot guarantee that a meaningful trading market will develop or that we will be able to get our common stock listed for trading.
If the stock ever becomes tradable, the trading price of our common stock could be subject to wide fluctuations in response to various events or factors, many of which are beyond our control. As a result, investors may be unable to sell their shares at or greater than the price at which they are being offered.
This Offering will be conducted on a minimum-maximum basis utilizing the efforts of Andrew J. Befumo, our sole officer and director. Potential investors include, but are not limited to, family, friends and acquaintances of Andrew J. Befumo. The intended methods of communication include, without limitation, telephone and personal contact. In their endeavors to sell this Offering, they will not use any mass advertising methods such as the internet or print media.
Funds received by the sales agent in connection with sales of our securities will be transmitted immediately into a n escrow account until the minimum sales threshold is reached. There can be no assurance that all, or any, of the shares will be sold.
Andrew J. Befumo will not receive commissions for any sales originated on our behalf. We believe that he is exempt from registration as a broker under the provisions of Rule 3a4-1 promulgated under the Securities Exchange Act of 1934. In particular, he:
1. Is not subject to a statutory disqualification, as that term is defined in Section 3(a)39 of the Act, at the time of his or her participation; and
2. Is not to be 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. Is not an associated person of a broker or dealer; and
4. Meets the conditions of the following:
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. Was not a broker or dealer, or associated persons of a broker or dealer, within the preceding 12 months; and
c. Did not participate in selling an offering of securities for any issuer more than once every 12 months other than in reliance on paragraphs within this section, except that for securities issued pursuant to rule 415 under the Securities Act of 1933, the 12 months shall begin with the last sale of any security included within one rule 415 registration.
Our sole officer and director, Andrew J. Befumo , will not p urchase any securities in this Offering.
There can be no assurance that all, or any, of the shares will be sold. As of this date, we have not entered into any agreements or arrangements for the sale of the shares with any broker/dealer or sales agent. However, if we were to enter into such arrangements, we will file a post effective amendment to disclose those arrangements because any broker/dealer participating in the Offering would be acting as an underwriter and would have to be so named herein.
In order to comply with the applicable securities laws of certain states, the securities may not be offered or sold unless they have been registered or qualified for sale in such states or an exemption from such registration or qualification requirement is available and with which we have complied. The purchasers in this Offering and in any subsequent trading market must be residents of such states where the shares have been registered or qualified for sale or an exemption from such registration or qualification requirement is available. As of this date, we have not identified the specific states where the offering will be sold. We will file a pre-effective amendment indicating which state(s) the securities are to be sold pursuant to this registration statement.
We are conducting a “Blank Check” offering subject to Rule 419 of Regulation C as promulgated by the U.S. Securities and Exchange Commission (the “S.E.C.”) under the Securities Act of 1933, as amended (the “Securities Act”). The net offering proceeds, after deduction for offering expenses and the securities to be issued to investors must be deposited in an escrow account (the “Deposited Funds” and “Deposited Securities,” respectively). While held in the escrow account, the deposited securities may not be traded or transferred. Except for an amount up to 10% of the deposited funds otherwise releasable under Rule 419, the deposited funds and the deposited securities may not be released until an acquisition meeting certain specified criteria has been consummated and a sufficient number of investors reconfirm their investment in accordance with the procedures set forth in Rule 419. Pursuant to these procedures, a new prospectus, which describes an acquisition candidate and its business and includes audited financial statements, will be delivered to all investors. We must return the pro rata portion of the deposited funds to any investor who does not elect to remain an investor. Unless a sufficient number of investors elect to remain investors, all investors will be entitled to the return of a pro rata portion of the deposited funds and none of the deposited securities will be issued to investors. In the event an acquisition is not consummated within 18 months of the effective date of this Prospectus, the deposited funds will be returned on a pro rata basis to all investors.
The proceeds from the sale of the shares in this Offering will be payable to Befumo & Schaeffer, PLLC Trust Account fbo Continental Alloy Wheel Corporation (“Escrow Account”) and will be deposited in a non-interest bearing escrow account maintained by an insured depository institution, as that term is defined in section 3(c)(2) of the Federal Deposit Insurance Act, pending the achievement of the Offering minimum of $15,000. No interest will be paid to any shareholder or to us. The Offering may terminate on the earlier of: (i) the date when the sale of all 2,500,000 shares is completed, (ii) or 180 days from the effective date of this Prospectus. If the Offering is not achieved within 180 days of the date of this Prospectus, all subscription funds will be returned to investors promptly without interest or deduction of fees. The Escrow Agent is serving without fee. [See Exhibit 99(a)].
Investors can purchase common stock in this offering by completing a Subscription Agreement [attached hereto as Exhibit 99(b)] and sending it together with payment in full. All payments must be made in United States currency either by personal check, bank draft, or cashier’s check. There is no minimum subscription requirement. All subscription agreements and checks are irrevocable. We expressly reserve the right to either accept or reject any subscription. Any subscription rejected will be returned to the subscriber within 5 business days of the rejection date.
COMMON STOCK
We are authorized to issue 75,000,000 shares of common stock, $0.001 par value and no shares of preferred stock. We have issued 10,000,000 shares of common stock to date held by one (1) shareholder of record.
The holders of our common stock:
1. Have equal ratable rights to dividends from funds legally available therefore, when, as and if declared by the Board of Directors;
2. Are entitled to share ratably in all of assets available for distribution to holders of common stock upon liquidation, dissolution, or winding up of corporate affairs;
3. Do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and
4. Are entitled to one vote per share on all matters on which stockholders may vote.
The SEC has adopted rules that regulate broker/dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange system). The penny stock rules require a broker/dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker/dealer also must provide the customer with bid and offer quotations for the penny stock, the compensation of the broker/dealer, and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker/dealer must make a special written determination that a penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These heightened disclosure requirements may have the effect of reducing the number of broker/dealers willing to make a market in our shares, reducing the level of trading activity in any secondary market that may develop for our shares, and accordingly, customers in our securities may find it difficult to sell their securities, if at all.
We have no current plans to either issue any preferred stock or adopt any series, preferences or other classification of preferred stock. The Board of Directors is authorized to (i) provide for the issuance of shares of the authorized preferred stock in series and (ii) by filing a certificate pursuant to the laws of Nevada, to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof, all without any further vote or action by the stockholders. Any shares of issued preferred stock would have priority over the common stock with respect to dividend or liquidation rights. Any future issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of the company without further action by the stockholders and may adversely affect the voting and other rights of the holders of common stock.
The issuance of shares of preferred stock, or the issuance of rights to purchase such shares, could be used to discourage an unsolicited acquisition proposal. For instance, the issuance of a series of preferred stock might impede a business combination by including class voting rights that would enable the holder to block such a transaction, or facilitate a business combination by including voting rights that would provide a required percentage vote of the stockholders. In addition, under certain circumstances, the issuance of preferred stock could adversely affect the voting power of the holders of the common stock. Although the Board of Directors is required to make any determination to issue such stock based on its judgment as to the best interests of stockholders, the Board of Directors could act in a manner that would discourage an acquisition attempt or other transaction that potentially some, or a majority, of the stockholders might believe to be in their best interests or in which stockholders might receive a premium for their stock over the then market price of such stock. The Board of Directors does not at present intend to seek stockholder approval prior to any issuance of currently authorized stock, unless otherwise required by law or stock exchange rules.
PREEMPTIVE RIGHTS
No holder of any shares of our stock has preemptive or preferential rights to acquire or subscribe for any unissued shares of any class of stock or any unauthorized securities convertible into or carrying any right, option or warrant to subscribe for or acquire shares of any class of stock not disclosed herein.
NON-CUMULATIVE VOTING
Holders 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 such event, the holders of the remaining shares will not be able to elect any directors.
CASH DIVIDENDS
As of the date of this Prospectus, we have not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of the Board of Directors and will depend upon earnings, if any, capital requirements and our financial position, general economic conditions, and other pertinent conditions. We do not intend to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in business operations.
REPORTS
After this Offering, we will make available to our shareholders annual financial reports certified by independent accountants, and may, at its discretion, furnish unaudited quarterly financial reports.
Andrew J. Befumo, Esq. is our sole Officer and Director, and a principal of Befumo & Schaeffer, PLLC, which is also legal counsel to the Company. Befumo & Schaeffer, PLLC, 1629 K Street, NW, Suite 300, Washington, DC 20006, have provided an opinion on the validity of the common stock to be issued pursuant to this Registration Statement. Befumo & Schaeffer, PLLC is also our Escrow Agent. Befumo & Schaeffer, PLLC has also been retained as special counsel to our Company for purposes of facilitating our efforts in securing registration before the Commission and eventual listing on the OTCBB.
DESCRIPTION OF BUSINESS
We were incorporated on December 28, 2010 under the laws of the State of Nevada, to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. We have not identified any particular business sector, but rather we intend to seek to acquire assets or shares of an entity actively engaged in a significant business activity. We have been in the developmental stage since inception and have no operations to date. Other than issuing shares to its original shareholder, we never commenced any operational activities.
We were formed by Andrew J. Befumo, the initial director, for the purpose of creating a corporation, which could be used to consummate a merger or acquisition. Mr. Befumo serves as President, Secretary, Treasurer and Sole Director. Mr. Befumo determined next to proceed with filing a Form S-1.
Mr. Befumo, elected to commence implementation of our principal business purpose, described below under “Plan of Operation.” As such, we can be defined as a “shell” company, whose sole purpose at this time is to locate and consummate a merger or acquisition with a private entity. The Company will utilize word of mouth to locate a merger or acquisition candidate. The Company must locate a merger or acquisition candidate within 18 months of the effectiveness of this registration or refund investors funds as described herein. It is anticipated that the most likely consideration for such merger or acquisition will be in common stock of the Company.
The proposed business activities described herein classify us as a “blank check” company. Many states have enacted statutes, rules and regulations limiting the sale of securities of “blank check” companies in their respective jurisdictions. We do not intend to undertake any efforts to cause a market to develop in the Company’s securities until such time as the Company has successfully implemented its business plan described herein. Accordingly, the shareholder has executed and delivered a “lock-up” letter agreement, affirming that he/she will not sell his/her respective shares of our common stock until such time as we have successfully consummated a merger or acquisition and we are no longer classified as a “blank check” company. In order to provide further assurances that no trading will occur in our securities until a merger or acquisition has been consummated, the shareholder has agreed to place his respective stock certificate in escrow, with an escrow agent who will not release these respective certificates until such time as a merger or acquisition has been successfully consummated. However, while we believe that the procedures established to preclude any sale of our securities prior to closing of a merger or acquisition will be sufficient, there can be no assurances that the procedures established herein will unequivocally limit any shareholder’s ability to sell their respective securities before such closing.
Number of Total Employees and Number of Full Time Employees
We are currently in the development stage. During this development period, we plan to rely exclusively on the services of our officer and director who will devote between 10 to 20 hours a month to establish business operations and perform or supervise the minimal services required at this time. We believe that our operations are currently on a small scale and manageable by us. There are no full or part-time employees. The responsibilities are mainly administrative at this time, as our operations are minimal.
DESCRIPTION OF PROPERTY
We share a corporate office located at 1629 K Street, NW, Suite 300, Washington, DC 20006 with the law firm of Befumo & Schaeffer, PLLC. Office space is provided free of charge by Befumo & Schaeffer, PLLC. There are currently no proposed programs for the renovation, improvement or development of the facilities currently in use.
LEGAL PROCEEDINGS
Within the previous 10 years, Andrew J. Befumo, our officer and director has not:
| (a) | been convicted in a criminal proceeding. |
| (b) | been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities. |
| (c) | been convicted of violating any federal or state securities or commodities law. |
There are no known pending legal or administrative proceedings against the Company.
No officer, director, significant employee or consultant has had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy filing or within two years prior to that time.
Market Price
As of the date of this Prospectus, there is no public market for our common stock. This Prospectus is a step toward creating a public market for our stock, which may enhance the liquidity of our shares. However, there can be no assurance that a meaningful trading market will develop. We make no representation about the present or future value of our common stock.
As of the date of this Prospectus,
1. There are no outstanding options or warrants to purchase, or other instruments convertible into our common equity.
2. There are currently 10,000,000 shares of our common stock held by our officer and director that are not eligible to be sold pursuant to Rule 144 under the Securities Act;
3. Other than the stock registered under this Registration Statement, there is no stock that has been proposed to be publicly offered resulting in dilution to current shareholder.
All of the presently outstanding shares of common stock (10,000,000) are “restricted securities” as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. The SEC has adopted final rules amending Rule 144, which became effective on February 15, 2008. Pursuant to the new Rule 144, one year must elapse from the time a “shell company”, as defined in Rule 405, ceases to be a “shell company” and files Form 10 information with the SEC, before a restricted shareholder can resell their holdings in reliance on Rule 144. Form 10 information is equivalent to information that a company would be required to file if it were registering a class of securities on Form 10 under the Securities and Exchange Act of 1934 (the “Exchange Act”). Under the amended Rule 144, restricted or unrestricted securities, that were initially issued by a reporting or non-reporting shell company or an Issuer that has at anytime previously a reporting or non-reporting shell company as defined in Rule 405, can only be resold in reliance on Rule 144 if the following conditions are met: (1) the issuer of the securities that was formerly a reporting or non-reporting shell company has ceased to be a shell company; (2) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (3) the issuer of the securities has filed all reports and material required to be filed under Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding twelve months (or shorter period that the Issuer was required to file such reports and materials), other than Form 8-K reports; and (4) at least one year has elapsed from the time the issuer filed the current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
The Company plans to have its stock quoted on the OTCBB. In order to be quoted on the OTCBB, an authorized market maker must file a Form 211 application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operated the OTCBB, nor can there by any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained.
At the present time, the Company is classified as a “shell company” under Rule 405 of the Securities Act. As such, all restricted securities presently held by the founders of the Company may not be resold in reliance on Rule 144 until: (1) the Company files Form 10 information with the SEC when it ceases to be a “shell company”; (2) the Company has filed all reports as required by Section 13 and 15(d) of the Securities Act for twelve consecutive months; and (3) one year has elapsed from the time the Company files the current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
HOLDERS
As of the date of this Prospectus, we have 10,000,000 shares of $0.001 par value common stock issued and outstanding held by one shareholder of record.
DIVIDENDS
We have neither declared nor paid any cash dividends on either our preferred or common stock. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and do not anticipate paying any cash dividends on our preferred or common stock. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be dependent upon then existing conditions, including its financial condition, results of operations, capital requirements, contractual restrictions, business prospects, and other factors that the Board of Directors considers relevant.
This section must be read in conjunction with the Audited Financial Statements included in this Prospectus.
PLAN OF OPERATION
We intend to seek , in exchange for our securities, to acquire assets or shares of an entity actively engaged in a significant business activity : a business with annual revenues in excess of $1,000,000. We have no particular acquisitions in mind and have not entered into any negotiations regarding such an acquisition. Neither our sole officer, director, promoter nor any affiliates thereof have engaged in any preliminary contact or discussions with any representative of any other company regarding the possibility of an acquisition or merger between us and such other company as of the date of this registration statement. We will not proceed with a transaction with a target entity, unless audited financial statements of such entity will be available. The audited financial statement s will be filed on a post-effective amendment to the registration statement, and the investors in this offering will be afforded the opportunity to reconfirm pursuant to the provisions of Rule 419 prior to closing of such a transaction.
We have no full time employees. Mr. Befumo has agreed to allocate a portion of his time to our activities, without compensation. We anticipate that our plan can be implemented by our officer devoting approximately 10 to 20 hours per month to the business affairs and consequently, conflicts of interest may arise with respect to the limited time commitment by such officer. See “DIRECTORS, EXECUTIVE OFFICERS.”
We are filing this registration statement on a voluntary basis because our primary attraction as a merger partner or acquisition vehicle will be its status as an SEC reporting company. Any business combination or transaction will likely result in a significant issuance of shares and substantial dilution to our present stockholders.
Our Articles of Incorporation provides that we may indemnify our officers and/or directors for liabilities, which can include liabilities arising under the securities laws. Therefore, our assets could be used or attached to satisfy any liabilities subject to such indemnification. See “INDEMNIFICATION OF DIRECTORS AND OFFICERS.”
GENERAL BUSINESS PLAN
Our purpose is to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of an Exchange Act registered corporation. 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. This discussion of the proposed business is purposefully general and is not meant to be restrictive of virtually unlimited discretion to search for and enter into potential business opportunities. We anticipate that we will be able to participate in only one potential business venture because we have nominal assets and limited financial resources. See “Financial Statements.” This lack of diversification should be considered a substantial risk to shareholders because it will not permit us to offset potential losses from one venture against gains from another.
We may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.
The primary method we will use to find potential merger or acquisition candidates will be word of mouth to locate companies, which are looking to merge with a public shell.
We anticipate that the selection of a business opportunity in which to participate will be complex and extremely risky. Management will need to identify potential target companies seeking the perceived benefits of a publicly registered corporation. Such perceived benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, providing liquidity (subject to restrictions of applicable statutes) for all shareholders and other factors. Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Additionally, because a target company will be required to provide substantially the same information and documentation to complete a business combination as would be required on such target company’s own registration statement, there may be little or no real benefit to such target company pursuing a transaction with our Company.
We will continue to have no capital with which to provide the owners of business opportunities with any significant cash or other assets. However, we believe that we will be able to offer owners of acquisition candidates the opportunity to take advantage of the perceived benefits of merging with a public entity . The owners of the business opportunities will, however, incur significant legal and accounting costs in connection with the acquisition of a business opportunity, including the costs of preparing Form 8-K’s, 10-K’s, agreements and related reports and documents. The Securities Exchange Act of 1934 (the Exchange Act), specifically requires that any merger or acquisition candidate comply with all applicable reporting requirements, which include providing audited financial statements to be included within the numerous filings relevant to complying with the 34 Act. Nevertheless, our officer and director has not conducted market research and are not aware of statistical data which would support the perceived benefits of a merger or acquisition transaction for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or under the supervision of our officer and director, who is not a professional business analyst. We intend to concentrate on identifying preliminary prospective business opportunities, which may be brought to its attention through present associations of our sole officer and director . In analyzing prospective business opportunities, we will consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development, or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact our proposed activities; the potential for growth or expansion; the potential for profit; the perceived public recognition or acceptance of products, services, or trades; name identification; and other relevant factors. We will meet personally with management and key personnel of the business opportunity as part of their investigation. To the extent possible, we intend to utilize written reports and personal investigation to evaluate the above factors. We will not acquire or merger with any company for which audited financial statements cannot be obtained within a reasonable period of time after closing of the proposed transaction.
While not especially experienced in matters relating to the Acquired/Merged business, we will rely upon their own efforts in accomplishing our business purposes. It is not anticipated that any outside consultants or advisors, other than legal counsel and accountants, will be utilized by us to effectuate our business purposes described herein. However, if we do retain such an outside consultant or advisor, any cash fee earned by such party will need to be paid primarily by the prospective merger/acquisition candidate, as we will have limited, if any, cash assets with which to pay such obligation. There have been no discussions, understandings, contracts or agreements with any outside consultants and none are anticipated in the future. In the past, we have never used outside consultants or advisors in connection with a merger or acquisition.
We will not restrict our search for any specific kind of firms, but may acquire a venture which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its corporate life. It is impossible to predict at this time the status of any business in which we may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which we may offer. However, we do not intend to obtain funds in one or more private placements to finance the operation of any acquired business opportunity until such time as we have successfully consummated such a merger or acquisition. We do not have any plans to conduct any offerings under Regulation S.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, we may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. On the consummation of a transaction, it is probable that the present management and shareholders will no longer be in control of our Company. In addition, our director may, as part of the terms of the acquisition transaction, resign and be replaced by new directors without a vote of our shareholders.
It is anticipated that any securities issued in any such reorganization would be issued in reliance upon exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of its transaction, we may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. If such registration occurs, of which there can be no assurance, it will be undertaken by the surviving entity after we have successfully consummated a merger or acquisition and we are no longer considered a “shell” company. Until such time as this occurs, we will not attempt to register any additional securities. The issuance of substantial additional securities and their potential sale into any trading market which may develop in our securities may have a depressive effect on the value of our securities in the future, if such a market develops, of which there is no assurance.
While the actual terms of a transaction to which we may be a party cannot be predicted, it may be expected that the parties to the business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the acquisition in a so-called “tax- free” reorganization under Sections 368a or 351 of the Internal Revenue Code (the “Code”).
With respect to any merger or acquisition, a negotiation with target company management is expected to focus on the percentage of the Company, which target company shareholders would acquire in exchange for all of their shareholdings in the target company. Depending upon, among other things, the target company’s assets and liabilities, our shareholders will in all likelihood hold a substantially lesser percentage ownership interest in our company following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event we acquire a target company with substantial assets. Any merger or acquisition effected by us can be expected to have a significant dilutive effect on the percentage of shares held by our then-shareholders.
We will participate in a business opportunity only after the negotiation and execution of appropriate written agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require some specific representations and warranties by all of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by each of the parties prior to and after such closing, will outline the manner of bearing costs, including costs associated with our attorneys and accountants, will set forth remedies on default and will include miscellaneous other terms.
W e will not acquire or merge with any entity which cannot provide independent audited financial statements within a reasonable period of time after negotiation of the proposed transaction. Upon effectiveness of this registration statement we will be subject to all of the reporting requirements included in the Exchange Act. Included in these requirements is our affirmative duty to file independent audited financial statements as part of our Form 8-K to be filed with the Securities and Exchange Commission upon consummation of a merger or acquisition, as well as our audited financial statements included in its annual report on Form 10-K. We have an additional obligation to provide audited financial statements with respect to a reconfirmation offering under Rule 419 prior to closing any proposed transaction. If such audited financial statements are not available within time parameters necessary to insure our compliance with the requirements of Rule 419, , the transaction will be delayed or terminated.
Our officer and shareholder has verbally agreed that he will advance any additional funds which may be needed for operating capital and for costs in connection with searching for or completing an acquisition or merger. This person has also agreed that such advances will be made interest free without expectation of repayment unless the owners of the business which we acquire or merge with agree to repay all or a portion of such advances. There is no dollar cap on the amount of money which such person will advance to us. We will not borrow any funds from anyone for the purpose of repaying advances made by the shareholder, and we will not borrow any funds to make any payments to the Company’s promoters, management or their affiliates or associates.
There is no plan to complete a merger with, or acquisition of, any entity in which our management serve as officer, director or partner, or in which he or his family members own or hold any ownership interest. The need for shareholder approval will not be a factor in our evaluation of business opportunities, and because our sole officer and director will continue to own a majority of our common shares after completion of this Offering, he will continue to have control over all matters requiring stockholder approval. Once a business transaction is consummated with a target company, our sole officer and director may no longer control a majority of our common shares.
There are no arrangements, agreements or understandings between non-management individuals and us under which non-management can conduct the Company’s affairs.
COMPETITION
We will remain an insignificant participant among the firms which engage in the acquisition of business opportunities. There are many established venture capital and financial concerns which have significantly greater financial and personnel resources and technical expertise than us. In view of our combined extremely limited financial resources and limited management availability, we will continue to be at a significant competitive disadvantage compared our competitors.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements.
RESULTS OF OPERATIONS
The Company has earned no significant revenue or profits to date, and the Company anticipates that it will continue to incur net losses for the foreseeable future. The Company incurred a net loss of $3,777 for the period of December 28, 2010 (inception) to June 30, 2011, which consisted of incorporation costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its expenses and costs thus far through equity financing. As of June 30, 2011, the Company had cash of $542
The Company incurred a net loss of $3,777 for the period of December 28, 2010 (inception) to June 30, 2011. The losses are a result of organizational expenses and expenses associated with setting up a Company structure in order to begin implementing its business plan. The Company anticipates that until these procedures are completed, it will not generate revenues, and may continue to operate at a loss thereafter, depending upon the performance of the business.
(iii) The Company has limited financial resources available, which has had an adverse impact on the Company’s liquidity, activities and operations. There is no assurance that the Company will be able to raise sufficient funding to develop its business plan.
The Company as a whole may continue to operate at a loss for an indeterminate period thereafter, depending upon the performance of its new businesses. The Company may determine that it cannot raise sufficient capital to support its business on acceptable terms, or at all. Accordingly, there can be no assurance that any additional funds will be available on terms acceptable to the Company or at all.
Since inception until the present time, the principal independent auditor for the Company has neither resigned (nor declined to stand for reelection) nor have been dismissed. The independent accountant for the Company is Child, Van Wagoner & Bradshaw, PLLC, 5296 South Commerce Drive, Suite 300 Salt Lake City, Utah 84107.
Directors are elected by the stockholders to a term of one year and serve until a successor is elected and qualified. Officers are appointed by the Board of Directors to a term of one year and serve until a successor is duly elected and qualified, or until removed from office. Our Board of Directors does not have any nominating, auditing or compensation committees.
The following table sets forth certain information regarding our executive officer and director as of the date of this Prospectus:
| | | | |
| Name | Age | Position | Period of Service(1) |
| | | | |
Andrew J. Befumo (2) | 47 | President, Secretary, Treasurer, and Director | Inception December 28, 2010 to Current |
Notes:
(1) Our directors will hold office until the next annual meeting of the stockholders, typically held on or near the anniversary date of inception, and until successors have been elected and qualified. At the present time, our officer was appointed by our director and will hold office until resignation or removal from office.
(2) Andrew J. Befumo has outside interests and obligations to other than Continental Alloy Wheel Corporation He intends to spend approximately 10 to 20 hours per month on our business affairs. At the date of this Prospectus, Continental Alloy Wheel Corporation is not engaged in any transactions, either directly or indirectly, with any persons or organizations considered promoters.
BACKGROUND OF DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Andrew J. Befumo, CEO, CFO, President, Secretary, Treasurer, Director
Andrew J. Befumo , a ge 47, holds a law degree from William & Mary School of Law and a Bachelor of Science degree from the Pennsylvania State University. From January 2008 – present, he has been a managing partner of the law firm of Befumo & Schaeffer, PLLC , a Washington, DC law firm specializing in federal securities law. From March 2006 – November 2006, he served as Director of Legal Affairs for Xcelplus International, Inc, a leading edge alternative fuels group. After leaving XcelPlus, Mr. Befumo worked for Belmont Partners, LLC, an international financial consulting firm, as General Counsel from December 2006 – January 2008. Mr. Befumo also served as a director of Incoming, Inc., a renewable energy company engaged in the production and distribution of biodiesel and renewable fuels, from November 2009 until July 1, 2010.
Mr. Befumo has a comprehensive and diverse background encompassing business, legal and technical vocations. He is a member in good standing of the District of Columbia Bar, and is also licensed to practice before the United States Patent and Trademark Office.
Board Committees
We have not yet implemented any board committees as of the date of this Prospectus except for the audit committee.
Directors
However, in no event may we have less than one director. Although we anticipate appointing additional directors, we have not identified any such person or any time frame within which this may occur.
| Summary Compensation Table |
| | | | | | | | | | | | | | | | | | | |
| | | Annual Compensation | | | | | | | | | | | Long-Term Compensation | | | | | |
Name and Principal Position | | Year | | | Salary ($) | | | Bonus ($) | | | Other Annual Compensation
($) | | | Restricted Stock Awards ($) | | | Securities Underlying
Options (#) | | | LTIP
Payouts
($) | | | All Other Compensation ($) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Andrew J. Befumo | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Officer and Director | | | 2010 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
DIRECTORS’ COMPENSATION
Directors are not entitled to receive compensation for services rendered to us or for each meeting attended except for reimbursement of out-of-pocket expenses. There are no formal or informal arrangements or agreements to compensate directors for services provided as a director.
EMPLOYMENT CONTRACTS AND OFFICERS’ COMPENSATION
Since our incorporation on December 28, 2010, we have not paid any compensation to any officer, director or employee. We do not have employment agreements. Any future compensation to be paid will be determined by the Board of Directors, and, as appropriate, an employment agreement will be executed. We do not currently have plans to pay any compensation until such time as it maintains a positive cash flow.
STOCK OPTION PLAN AND OTHER LONG-TERM INCENTIVE PLAN
We currently do not have existing or proposed option or SAR grants.
The following table sets forth certain information as of the date of this Offering with respect to the beneficial ownership of our common stock by all persons known to us to be beneficial owners of more than 5% of any such outstanding classes, and by each director and executive officer, and by all officers and directors as a group. Unless otherwise specified, the named beneficial owner has, to our knowledge, either sole or majority voting and investment power.
| | | | | | Amount of | | | | |
| | | | | | Beneficial | | | Percent of Class | |
Title Of Class Name, Title and Address of Beneficial Owner of Shares | | Ownership(2) Offering | | | Offering (3) | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Andrew J. Befumo | | Common Stock | | | | 10,000,000 | | | | 100 | % | | | 87 | % |
Footnotes
(1) The address of each executive officer and one director is c/o Continental Alloy Wheel Corporation, PO Box 717, Culpeper, VA 22701
(2) As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or share investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of a security).
(3) Assumes the sale of the maximum amount of this Offering (1,500,000 shares of common stock). The aggregate amount of shares to be issued and outstanding after the Offering is 11,500,000.
On or about December 28, 2010, Andrew J. Befumo, our officer and director, paid $289 in expenses involved with the incorporation of Continental Alloy Wheel Corporation with personal funds and performed services on behalf of Continental Alloy Wheel Corporation. Upon the Company’s inception, Mr. Befumo was also issued 10,000,000 shares of common stock, par value $0.001 per share, for $1,000 cash. The issuance was exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act.
During the six-month period ended June 30, 2011, Mr. Befumo contributed $3,319 to fund certain operating expenses. This amount has been recorded in additional paid-in capital as of June 30, 2011.
The price of the common stock issued to Andrew J. Befumo was arbitrarily determined and bore no relationship to any objective criterion of value. At the time of issuance, the Company was recently formed or in the process of being formed and possessed no assets.
Andrew J. Befumo, the company’s sole shareholder, officer and director is the only promoter of the company.
1. After this Offering, we will furnish shareholders with audited annual financial reports certified by independent accountants, and may, in its discretion, furnish unaudited quarterly financial reports.
2. After this Offering, we will file periodic and current reports with the Securities and Exchange Commission as required to maintain the fully reporting status.
3. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E. Washington D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our SEC filings will also be available on the SEC’s Internet site. The address of that site is: http://www.sec.gov
The Securities and Exchange Commission’s Policy on Indemnification
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the company pursuant to any provisions contained in its Articles of Incorporation, Bylaws, 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 Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by a director, officer or controlling person of 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 our legal counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether indemnification is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Continental Alloy Wheel Corporation
(A Development Stage Company)
For the Period from
December 28, 2010 (Inception)
to June 30, 2011
Continental Alloy Wheel Corporation
(A Development Stage Company)
Index to the Financial Statements
For the Period from December 28, 2010
(Inception) to June 30, 2011
Continental Alloy Wheel Corporation
(A Development Stage Company)
| | | June 30, 2011 | | | December 31, 2010 | |
| | | (Unaudited) | | | | |
| | | | | | | |
| ASSETS | | | | | | |
| Cash | | $ | 542 | | | $ | — | |
| Subscriptions Receivable | | | — | | | | 1,000 | |
| Total assets | | | 542 | | | | 1,000 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | | — | | | | 289 | |
| Total current liabilities | | | — | | | | 289 | |
| | | | | | | | | |
| Stockholders’ Equity | | | | | | | | |
| Common Stock, par value $.001, 75,000,000 shares authorized, 10,000,000 shares issued and outstanding | | | 10,000 | | | | 10,000 | |
| Additional paid-in capital | | | (5,681 | ) | | | (9,000 | ) |
| Deficit accumulated during the development stage | | | (3,777 | ) | | | (289 | ) |
| Total stockholders’ equity | | | 542 | | | | 711 | |
| | | | | | | | | |
| Total liabilities and stockholders’ equity | | $ | 542 | | | $ | 1,000 | |
See accompanying notes to the unaudited financial statements.
Continental Alloy Wheel Corporation
(A Development Stage Company)
| | | For the Three Month
Period Ended
June 30, 2011 | | | For the Six Month
Period Ended
June 30, 2011 | | | For the Period from
December 28, 2010
(Inception) to
June 30, 2011 | |
| | | | | | | | | | |
| Revenues: | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | |
| Selling, general and administrative | | | 1,970 | | | | 3,488 | | | | 3,777 | |
| Operating loss before income taxes | | | (1,970 | ) | | | (3,488 | ) | | | (3,777 | ) |
| | | | | | | | | | | | | |
| Income tax (expense) benefit | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | |
| Net loss available to common stockholders | | $ | (1,970 | ) | | $ | (3,488 | ) | | $ | (3,777 | ) |
| | | | | | | | | | | | | |
| Basic and diluted loss per common share | | $ | (0.00 | ) | | $ | (0.00 | ) | | | | |
| | | | | | | | | | | | | |
| Weighted average shares outstanding | | | 10,000,000 | | | | 10,000,000 | | | | | |
See accompanying notes to the unaudited financial statements.
Continental Alloy Wheel Corporation
(A Development Stage Company)
| | | Common Stock | | | | | | | | | | |
| | | Shares | | | Amount | | | Additional Paid-In
Capital | | | Deficit
Accumulated
During the
Exploration Stage | | | Total
Stockholders’
Equity | |
| | | | | | | | | | | | | | | | |
| Balance, December 28, 2010 (Inception) | | | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Net loss for year ended December 31, 2010 | | | — | | | | — | | | | — | | | | (289 | ) | | | (289 | ) |
| Common stock subscriptions issued at $.001 per share | | | 10,000,000 | | | | 10,000 | | | | (9,000 | ) | | | — | | | | 1,000 | |
| Balance, December 31, 2010 | | | 10,000,000 | | | | 10,000 | | | | (9,000 | ) | | | (289 | ) | | | 711 | |
| Loss for the six months ended June 30, 2011 | | | — | | | | — | | | | — | | | | (3,488 | ) | | | (3,488 | ) |
| Contributed capital | | | — | | | | — | | | | 3,319 | | | | — | | | | 3,319 | |
| Balance, June 30, 2011 | | | 10,000,000 | | | $ | 10,000 | | | $ | (5,681 | ) | | $ | (3,777 | ) | | $ | 542 | |
See accompanying notes to the unaudited financial statements.
Continental Alloy Wheel Corporation
(A Development Stage Company)
| | | For the Six Month
Period Ended
June 30, 2011 | | | For the Period
from December 28,
2010 (Inception) to
June 30, 2011 | |
| | | | | | | |
| Cash flows from operating activities: | | | | | | |
| Net loss | | $ | (3,488 | ) | | $ | (3,777 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
| Increase (decrease) in accounts payable | | | (289 | ) | | | — | |
| Net cash used in operating activities | | | (3,777 | ) | | | (3,777 | ) |
| | | | | | | | | |
| Cash flows from investing activities: | | | — | | | | — | |
| Net cash provided by investing activities | | | — | | | | — | |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Cash received from stock subscriptions receivable | | | 1,000 | | | | 1,000 | |
| Contributed capital | | | 3,319 | | | | 3,319 | |
| Net cash provided by financing activities | | | 4,319 | | | | 4,319 | |
| | | | | | | | | |
| Net increase in cash | | | 542 | | | | 542 | |
| Cash at beginning of period | | | — | | | | — | |
| Cash at end of period | | $ | 542 | | | $ | 542 | |
| | | | | | | | | |
| Supplemental Disclosures: | | | | | | | | |
| Cash paid for interest | | $ | — | | | $ | — | |
| Cash paid for income taxes | | $ | — | | | $ | — | |
See accompanying notes to the unaudited financial statements.
Continental Alloy Wheel Corporation
(A Development Stage Company)
For the Period from December 28, 2010 to June 30, 2011
Continental Alloy Wheel Corporation (the “Company”) was incorporated on December 28, 2010 in the State of Nevada. The Company’s accounting and reporting policies conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal year end is December 31. The Company is defined as a “shell” company, whose sole purpose at this time is to locate and consummate a merger or acquisition with a private entity. The Company will utilize word of mouth to locate a merger or acquisition candidate. The Company must locate a merger or acquisition candidate within 18 months of the effectiveness of this registration or refund investors’ funds as described herein. It is anticipated that the most likely consideration for such merger or acquisition will be in common stock of the Company. To date, the Company’s activities have been limited to its formation, minimal operations, and the raising of equity capital.
DEVELOPMENT STAGE COMPANY
The Company is considered to be in the development stage as defined in ASC 915 “ Accounting and Reporting by Development Stage Enterprises. ” The Company’s efforts have been devoted primarily to raising capital, borrowing funds and attempting to implement its planned, principal activities.
| 2) | SIGNIFICANT ACCOUNTING POLICIES |
USE OF ESTIMATES
The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s periodic filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of the Company.
Continental Alloy Wheel Corporation
(A Development Stage Company)
Notes to the Financial Statements (Unaudited)
For the Period from December 28, 2010 to June 30, 2011
| 2) | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had no cash and cash equivalents as of December 31, 2010.
NET INCOME OR (LOSS) PER SHARE OF COMMON STOCK
The Company has adopted ASC 260 “Earnings per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.
As of June 30, 2011, the Company had issued 10,000,000 shares of common stock (see Note 3). The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
CONCENTRATIONS OF CREDIT RISK
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables it will likely incur in the near future. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2009, the FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive
Continental Alloy Wheel Corporation
(A Development Stage Company)
Notes to the Financial Statements (Unaudited)
For the Period from December 28, 2010 to June 30, 2011
| 2) | SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Statement of Financial Accounting Standards (“SFAS”) No. 165 (ASC Topic 855), “Subsequent Events,” SFAS No. 166 (ASC Topic 810), “Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140,” SFAS No. 167 (ASC Topic 810), “Amendments to FASB Interpretation No. 46(R),” and SFAS No. 168 (ASC Topic 105), “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles- a replacement of FASB Statement No. 162” were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial statements would not have been significant.
Accounting Standards Update (“ASU”) ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures – Overall, ASU No. 2009-13 (ASC Topic 605), Multiple Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU’s No. 2009-2 through ASU No. 2010-08 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.
AUTHORIZED STOCK
The Company has authorized 75,000,000 of common shares with a par value of $.001 per share. Each share entitles the holder to one vote, in person or proxy, on any matter on which action of the shareholder of the Company is sought.
CAPITAL CONTRIBUTIONS
During the six-month period ended June 30, 2011, the Company’s President and Director contributed $3,319 to fund certain operating expenses. This amount has been recorded in additional paid-in capital as of June 30, 2011.
Continental Alloy Wheel Corporation
(A Development Stage Company)
Notes to the Financial Statements (Unaudited)
For the Period from December 28, 2010 to June 30, 2011
| 3) | STOCKHOLDERS’ EQUITY (CONTINUED) STOCK SUBSCRIPTIONS In December, 2010, the Company’s Board of Directors agreed to issue 10,000,000 shares of common stock at $.0001 to its President and Director in consideration of $1,000. As the cash proceeds were realized by the Company in January 2011, the Company recorded $1,000 in stock subscriptions as of December 31, 2010. |
| 4) | PROVISION FOR INCOME TAXES The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under ASC 718-740-20 to give effect to the resulting temporary differences which may arise from differences in the basis of fixed assets, depreciation methods, allowances, and start-up costs based on the income taxes expected to be payable in future years. Minimal development stage deferred tax assets arising as a result of net operating loss carry forwards have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Operating loss carry forwards totaled $3,777 for the period from December 28, 2010 (Inception) through June 30, 2011 and will begin to expire in 2030. Accordingly deferred tax assets of approximately $1,511 were offset by a valuation allowance. The Company adopted the provisions of uncertain tax positions as addressed in ASC 740-10-65-1, on December 31, 2004. As a result of the implementation of ASC 740-10-65-1, the Company recognized approximately no increase in the liability for unrecognized tax benefits. The Company has no tax position at June 30, 2011 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented. The Company had no accruals for interest and penalties at December 31, 2010. The Company’s utilization of any net operating loss carry forward may be unlikely as a result of its intended development stage activities. . |
Continental Alloy Wheel Corporation
(A Development Stage Company)
Notes to the Financial Statements (Unaudited)
For the Period from December 28, 2010 to June 30, 2011
| 5) | GOING CONCERN AND LIQUIDITY CONSIDERATIONS The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of June 30, 2011 the Company has an accumulated deficit of $3,777. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the next twelve months. The ability of the Company to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations, and its ability to implement its planned, principal activities. In response to these problems, management intends to raise additional funds through public or private placement offerings. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
| 6) | SUBSEQUENT EVENTS The Company has evaluated its subsequent events from the balance sheet date through September 21, 2011 and determined that there are no additional events to disclose. |
The following table sets forth the costs and expenses payable by CONTINENTAL ALLOY WHEEL in connection with the sale of the common stock being registered. Our president, Andrew Befumo, has agreed to pay all costs and expenses in connection with this Offering of common stock. The estimated expenses of issuance and distribution, assuming the proceeds are raised, are set forth below.
| | | | |
| Legal and Professional Fees | | $ | 1500 | |
| Accounting Fees | | | 3500 | |
| Total | | $ | 5,000 | |
Continental Alloy Wheel Corporation’s Articles of Incorporation and Bylaws provide for the indemnification of a present or former director or officer. CONTINENTAL ALLOY WHEEL CORPORATION indemnifies any director, officer, employee or agent who is successful on the merits or otherwise in defense on any action or suit. Such indemnification shall include, but not necessarily be limited to, expenses, including attorney’s fees actually or reasonably incurred by him. Nevada law also provides for discretionary indemnification for each person who serves as or at our request as an officer or director. We may indemnify such individual against all costs, expenses and liabilities incurred in a threatened, pending or completed action, suit or proceeding brought because such individual is a director or officer. Such individual must have conducted himself in good faith and reasonably believed that his conduct was in, or not opposed to, our best interests. In a criminal action, he must not have had a reasonable cause to believe his conduct was unlawful.
NEVADA LAW
Pursuant to the provisions of Nevada Revised Statutes 78.751, we shall indemnify any director, officer and employee as follows: Every director, officer, or employee of Continental Alloy Wheel Corporation shall be indemnified by us against all expenses and liabilities, including counsel fees, reasonably incurred by or imposed upon him/her in connection with any proceeding to which he/she may be made a party, or in which he/she may become involved, by reason of being or having been our director, officer, employee or agent or is or was serving at our request as our director, officer, employee or agent, partnership, joint venture, trust or enterprise, or any settlement thereof, whether or not he/she is a director, officer, employee or agent at the time such expenses are incurred, except in such cases wherein the director, officer, employee or agent is adjudged guilty of willful misfeasance or malfeasance in the performance of his/her duties; provided that in the event of a settlement the indemnification herein shall apply only when the Board of Directors approves such settlement and reimbursement as being for our best interests. We shall provide to any person who is or was a director, officer, employee or agent of the Corporation or is or was serving at our request as a director, officer, employee or agent of the corporation, partnership, joint venture, trust or enterprise, the indemnity against expenses of a suit, litigation or other proceedings which is specifically permissible under applicable law.
During the past three years, we have issued the following unregistered securities in private transactions without registering the securities under the Securities Act:
On December 28, 2010, Andrew J. Befumo, our officer and director, paid $289 for expenses involved with the incorporation of the Company with personal funds on behalf of the Company and provided services. He was also issued 10,000,000 shares of common stock of the Company, par value $0.001 per share, for $1,000 cash.
At the time of the issuance, Andrew J. Befumo was in possession of all available material information about us, as he is the only officer and director. On the basis of these facts, Continental Alloy Wheel Corporation claims that the issuance of stock to its founding shareholder qualifies for the exemption from registration contained in Section 4(2) of the Securities Act of 1933. We believe that the exemption from registration for these sales under Section 4(2) was available because:
● Andrew J. Befumo is our executive officer and thus had fair access to all material information about us before investing;
● There was no general advertising or solicitation; and
● The shares bear a restrictive transfer legend.
● All shares issued to Andrew J. Befumo.
● The price of the common stock issued to Andrew J. Befumo was arbitrarily determined and bore no relationship to any objective criterion of value. At the time of issuance, we were recently formed or in the process of being formed and possessed no assets.
The following Exhibits are filed as part of this Registration Statement, pursuant to Item 601 of Regulation S-K.
Exhibit
Number | | Document Description |
| 3.1 * | | Articles of Incorporation |
| 3.2 * | | Bylaws |
| 5.1 | | Opinion of the law firm of Befumo & Schaeffer, PLLC, regarding the legality if the securities being registered. |
| 10.1* | | Lockup Agreement |
| 23.2 | | Consent of the law firm of Befumo & Schaeffer, PLLC |
| 99.1(a) * | | Escrow Agreement |
| 99.1(b) * | | Subscription Agreement |
* Previously filed
a. The undersigned registrant hereby undertakes:
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 set forth 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 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
Provided however, That:
A. Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement; and
B. Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
2. That, for the purpose of determining any liability under the Securities Act of 1933, 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 shall be deemed 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. That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
i. If the Registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
5. That, for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant 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, the undersigned registrant 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 of the undersigned Registrant 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 the undersigned Registrant or used or referred to by the undersigned Registrant;
iii. The portion of any other free writing prospectus relating to the Offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and
iv. Any other communication that is an offer in the Offering made by the undersigned Registrant to the purchaser.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the 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, the Registrant 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 public policy as expressed in the Act and will be governed by the final adjudication of such issue.
a. The undersigned Registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act of 1933, 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 the Registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
2. For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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 authorized in the City of Las Vegas State of Nevada on September 23 , 2011.
CONTINENTAL ALLOY WHEEL CORPORATION
(Registrant)
By: /s/ Andrew J. Befumo
Andrew J. Befumo, President, Director, Principal Accounting Officer,
Principal Financial Officer, Chief Executive Officer, Secretary, Treasurer
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed b the following persons in the capacities and on the dates indicated.
By: /s/ Andrew J. Befumo
Andrew J. Befumo, President, Director, Principal Accounting Officer,
Principal Financial Officer, Chief Executive Officer, Secretary, and Treasurer
September 23, 2011
Dealer Prospectus Delivery Obligation
Until ___________ , all dealers that effect transactions in these securities, whether or not participating in this Offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
