UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________
FORM 10-K
_______________________________________________
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2012
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______.
Commission File Number:333-174261
______________________________________________
IMMOBILIARE GLOBAL INVESTMENTS, INC.
(Exact name of registrant as specified in its charter)
___________________________________________
Florida | | | 27-3943293 |
(State or other jurisdiction ofincorporation or organization) | | | (IRS Employer Identification No.) |
| | | |
13575 58th Street N., Suite 140 Clearwater, Florida | | | 33760 |
(Address of principal executive offices) | | | (Zip Code) |
Registrant’s telephone number, including area code:(602) 885-9792
_________________________________________
Securities registered under Section 12(b) of the Exchange Act:
Title of each class | | Name of each exchange on which registered |
N/A | | N/A |
Securities registered under Section 12(g) of the Exchange Act:None
____________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes x No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes x No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No
The aggregate market value of Common Stock held by non-affiliates of the Registrant on June 30, 2012, was $0 based on a $0 average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. (There was no bid or ask price of our common shares during this quarter).
As of as of April 15, 2013 the registrant had 44,575 shares of its Common Stock, $0.001 par value, outstanding.
TABLE OF CONTENTS
| | | Page |
| | | |
PART I. | | | |
Item 1. | Business | | 3 |
Item 1.A. | Risk Factors | | 8 |
Item 1.B. | Unresolved Staff Comments | | 8 |
Item 2. | Properties | | 9 |
Item 3. | Legal Proceedings | | 9 |
Item 4. | Mine Safety Disclosures | | 9 |
| | | |
PART II. | | | |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | 9 |
Item 6. | Selected Financial Data | | 10 |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operation | | 10 |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | | 13 |
Item 8. | Financial Statements and Supplementary Data | | 14 |
Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | | 27 |
Item 9A. | Controls and Procedures | | 27 |
Item 9B. | Other Information | | 28 |
| | | |
PART III. | | | |
Item 10. | Directors, Executive Officers and Corporate Governance | | 28 |
Item 11. | Executive Compensation | | 30 |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | 32 |
Item 13. | Certain Relationships and Related Transactions, and Director Independence | | 33 |
Item 14. | Principal Accounting Fees and Services | | 33 |
| | | |
PART IV. | | | |
Item 15. | Exhibits, Financial Statement Schedules | | 35 |
| | | |
| Signatures | | 36 |
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PART I
FORWARD LOOKING STATEMENTS
Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the sections “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should carefully review the risks described in this Annual Report on Form 10-K and in other documents we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.
Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
All references in this Form 10-K to the “Company,” “Immobiliare,” “we,” “us” or “our” are to Immobiliare Global Investments, Inc.
Item 1. Business
General Overview
Our Business
Our Company, Immobiliare Global Investments, Inc. (“Immobiliare” or “IGI”) is involved in real estate investments through our wholly owned subsidiary, Thomas Investment Holdings, LLC (“Thomas” or “TIH”), an Utah limited liability company. Thomas presently owns several parcels of real estate in Salt Lake City, Utah from which it receives rental income. For the next twelve (12) month period we propose to develop a state of the art self-storage facility totaling 53,400 square feet along with 900 units, located in Salt Lake City, Utah.
Our Statement of Organization:
We were incorporated in Florida on July 1, 2010, as Immobiliare Investors, Inc. On November 1, 2010 we amended our articles of incorporation and changed our name to Immobiliare Global Investments, Inc.
The Company reports its business under the following SIC Codes:
SIC Code Description
4220 Public Warehouse & Storage
Our principal executive offices are located at 13575 58th Street North, Suite 140, Clearwater, Florida 33760. Our telephone number is (602) 885-9792.
Description of Business
3
Our Company is involved in real estate investment through our wholly owned subsidiary, Thomas Investment Holdings, LLC, a Utah limited liability company (“Thomas”). Thomas presently owns several parcels of residential real estate in Salt Lake City, Utah from which it receives rental income. We propose to develop a state of the art self-storage facility totaling 53,400 square feet along with 900 units, located in Salt Lake City, Utah. We presently own the land upon which we intend to construct the self-storage facility.
Our History
We were incorporated in Florida on July 1, 2010, as Immobiliare Investors, Inc. On November 1, 2010 we amended our articles of incorporation and changed our name to Immobiliare Global Investments, Inc. Our principal executive offices are located at 13575 58th Street North, Suite 140, Clearwater, Florida 33760. Our telephone number is (602) 885-9792.
Our wholly-owned subsidiary, Thomas Investment Holdings, LLC, was organized as a limited liability company in Utah on September 23, 2003. The company acquired real property in Salt Lake City Utah and manages the properties as rentals.
On November 10, 2010, we entered into a Purchase and Sale Agreement with our Chief Executive Officer, A. Wayne Middleton, whereby we purchased all of the issued and outstanding membership units in Thomas Investment Holdings, LLC, for $812,500. As partial consideration for our acquisition of all issued and outstanding equity membership interests of Thomas Investment Holdings, LLC, we issued a promissory note to the seller (our Chief Executive Officer, Wayne Middleton and his brother, as his designee) in the principal amounts of $800,000. The Board of Directors unanimously approved the acquisition agreement, while Mr. Middleton abstained from voting on the transaction. The terms of the promissory note include interest only payments of $3,000 commencing January 2011 through maturity on November 10, 2014. There can be no assurance is that we will be able to generate sufficient revenues from business operations to make all payments due under the note on a timely basis, including the principal amounts of $800,000 which are due on November 10, 2014. The Promissory Note is secured by all real estate owned by the Company and the membership interest of Thomas. As additional consideration for the acquisition we agreed to issue 125,000 shares of our common stock at $0.10 per share to Wayne Middleton. Mr. Middleton directed that 25,000 shares of the common stock be issued to his designee, William Middleton. At the time of the transaction, Wayne Middleton was the sole member of Thomas Investment Holdings, LLC.
The acquisition of Thomas Investment Holdings, LLC was a reverse merger recorded as a recapitalization where the business activity of Thomas Investment Holdings, LLC is the survivor. The financial information for year-end 2010 contained herein reflects the business activity of Thomas Investment Holdings, LLC with our Company’s capital structure. The financial information for year-end 2009 reflects the business activity of Thomas Investment Holdings, LLC exclusively.
Mr. Middleton was one of the four original officers and directors of the Company. There were no other significant operations of the company before July 2010. Since inception of the Company, but prior to the merger with Thomas Investment Holdings LLC, the officers of the Company were negotiating with a few potential deals that were eventually deemed less favorable than the Thomas Investment acquisition. Mr. Middleton has broad authority to make operational and business decisions for the Company on a daily basis. However, the Board of Directors has the authority to over-rule any decisions of the CEO by a majority vote. Any significant decisions that would materially affect the Company will be voted on by a majority vote of the Board of Directors.
The steps to be taken for this storage facility construction project from beginning to end are set forth below. Any capital shortfalls from our projected use of proceeds section will require us to search for external financing that could take various forms, including debt financing. We can provide no assurances that any such external financing will be available on terms favorable to the Company or at all.
1. If funds are not committed in sufficient amounts through current fund raising options, the structure as envisioned will not be able to be constructed without additional financing. The exact nature, source(s), and timing of financing is very speculative to predict, but could include such financing structures as debt,convertible debt, additional equity issues, or any combination thereof from one or more sources. There is no guarantee that we can obtain additional financing to finish construction.
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2. Our next step will be to apply for a conditional use construction permit with the city. As this is an allowed use for the property under current zoning rules, we do not anticipate any material delays with this, but it would probably take a few weeks. The cost of this permit should be no more than a few hundred dollars. As part of the permitting process, the city will verify that the project conforms to all structural and zoning codes with the city and make any changes to the architectural plans as needed. We cannot estimate how much cost will be involved in any recommended architectural plan changes though it is part of a $350,000 line item in our Use of Proceeds table.
3. Once financing is obtained and a construction permit is issued by the city, the tenants in our current properties will be given a 30 day notice to vacate their units. All residential units are owned by Thomas Investments and all leases are on a month-to-month basis, which can be cancelled at any time for any reason.
4. All structures on the building site will undergo demolition. We are considering demolition as part of our engineering budget which is part of a $350,000 line item in our Use of Proceeds table.
5. All debris will be removed from the site. We are considering debris removal as part of our engineering budget which is part of a $350,000 line item in our Use of Proceeds table.
6. A commercial construction company will build the building according to specification and will be assisted by the chosen architectural and engineering firms. We have a budget for the cost of construction at $3,512,342 in our Use of Proceeds table.
7. The storage units will be marketed and leased with a goal to reach full capacity. We have a budget of $10,000 for sales and marketing and a working capital budget of $2,276,658.
8. With the current cash flow and additional external financing, the Company will seek to purchase other storage facilities in urban areas of this or other medium or large U.S. cities.
THE SELF-STORAGE CONCEPT
The self-storage industry had its beginnings in Texas in the late 1960’s and since then it has become a viable, worldwide business. Simply stated, the concept of self-storage provides an attractive solution to the growing need for temporary additional space for the residential market and for both small and large businesses.
In the past, self-storage was most often thought of as an option for industrial businesses only. Today, self-storage is actually utilized more for retail or residential use, and is more accurately considered as a retail business. Additional income is generated at self-storage facilities by offering climate-controlled units, tenants insurance, P.O. Boxes, locks and shipping boxes and packing supplies.
As with most commercial real estate, selecting the right location for a self-storage facility is very important. Choosing a self-storage site on a major arterial is beneficial to both residents and businesses in the immediate neighborhood. High visibility to drive-by traffic also contributes significantly to the success of a self-storage facility.
There are approximately 48,000 self-storage facilities in the United States; however, this number can be misleading. If all the facilities having less than 35,000 rentable square feet are excluded, the number of self-storage sites drops to about 27,500. Of these, only 17% are owned by the fifteen top operators in the nation.
ADVANTAGES OF SELF-STORAGE
- Unlike office, retail, or multi-family real estate properties, a significant transaction for self-storage facility in a typical market usually does not exceed $6 to $7 million, with land cost a typical facility is averaging approximately $4.5 million. Operating expenses in self-storage are easily managed. Real estate taxes usually comprise 15 to 20 per cent of the total expenses. Payroll, the largest single expense item, averages between 25 and 30 percent of the total expenses. The remaining expenses are spread over management fees, utilities, advertising, insurance premiums, costs for repairs and maintenance and miscellaneous office expense.
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- Self-storage is counter-cyclical. In times of slow economic growth, both business and residential tenants tend to downsize, but self-storage business tends to remain constant because tenants will use their self-storage units to store inventories, furniture and personal goods. However, we can provide no assurances and there are no guarantees that self-storage rental rates will always remain constant or increase. During periods of strong economic growth, tenants will characteristically increase inventories, move into or build larger homes and offices and utilize their self-storage space during this transition. Tenants will often rent on a permanent basis an extra unit for storage of inventory items or household goods such as holiday decorations and other seasonal, bulky possessions.
How long can we satisfy our cash requirements and will we need to raise additional funds in the next 12 months?
Our Plan of Operation for the next twelve months is to obtain financing to construct our self-storage facility and to raise capital to continue to expand our operations. Although we are not presently engaged in any capital raising activities, we anticipate that we may engage in one or more private offerings of our Company’s securities. We would most likely rely upon the transaction exemptions from registration provided by Regulation D, Rule 506 or conduct a private offering under Section 4(2) of the Securities Act of 1933.
In the event we raise additional capital, we will be able to implement our expansion in accordance with our business plan. We anticipate that we will use the funds raised to fund marketing activities and working capital. If we are unable to expand our operations within the next twelve months, we will likely see a decrease in the ability of increasing our revenues. We cannot guarantee that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then we may not be able to expand our operations. If adequate funds are not available, we believe that our officers and directors will contribute funds to pay for some of our expenses. However, we have not made any arrangements or agreements with our officers and directors regarding such advancement of funds. We do not know whether we will issue stock for the loans or whether we will merely prepare and sign promissory notes. If we are forced to seek funds from our officers or directors, we will negotiate the specific terms and conditions of such loan when made, if ever. None of our officers or directors is obligated to pay for our expenses. Moreover, none of our officers has specifically agreed to pay our expenses should we need such assistance.
The implementation of our business strategy is estimated to take approximately 12-18 months. Once we are able to secure funding, implementation will begin immediately. The major parts of the strategy to be immediately implemented will be the sales and marketing, office equipment and human resource procurement.
Summary of product research and development
We are not currently nor do we anticipate in the future to be conducting any research and development activities, other than the research to locate prime real estate areas.
Marketing Plan
Our marketing initiatives will include:
(a) utilizing direct response print advertisements placed primarily in small business, entrepreneurial, and special interest magazines;
(b) links to industry focused websites;
(c) affiliated marketing and direct mail
(d) presence at industry trade shows; and
(e) promoting our services and attracting businesses through our proposed website
(f) continue to nurture the relationships we have with our core customers that we have done business with
(g) seek additional customers coming into the marketplace and create relationships with them
Industry Overview
6
The storage industry in the U.S. includes two primary sectors: fixed-site self-storage and portable storage. Fixed-site self-storage is used primarily by individuals for the temporary storage of household items at a permanent facility. Portable storage is used primarily by businesses for secure, temporary storage at the customer’s location. The portable storage industry serves a broad range of industries, including construction, services, retail, manufacturing, transportation, utilities and government.
Fixed storage offers customers a secure, cost-effective and convenient alternative to constructing permanent warehouse space by providing additional space for higher levels of inventory, equipment or other goods on an as-needed basis. The fixed storage industry is highly fragmented and remains mostly local in nature.
The population density in the target area determines the competition reviewed in respect to the proposed facility. The greater the density surrounding the proposed facility, the more likely competitors with similar product will impact the subject facility.
The success of a self-storage facility is based on the following factors: location (demographics and traffic count), visibility, management, security, and accessibility, curb appeal, appearance and building structure. A lacking in one area can be offset by strength in other areas. However, if there are weaknesses in a number of the factors or if the facility does not compare well with the competition, the project will be forced to use price as the main competing factor, thus potentially reducing the success of the facility. Having the highest count in one area does not always produce the optimum result, such as a traffic count at highway usage levels, of over 60,000 cars per day past the main entrance of a facility, particularly at high speeds, can actually discourage business. Most successful self-storage facilities are in areas either growing or stable economically and demographically.
Also taken into consideration to determine the major competitors are any market barriers such as freeways, lakes, rivers, large open areas (airports, large recreation areas, landfills, etc.), railways and any other hindrance that make the facility hard to reach or separates one facility from another by segregating their market area.
Our Business Strategy
Our growth strategy consists of the following:
Obtain Permitting, Financing and Construct Our Self-Storage Facility. Initially, we intend to obtain all necessary permits to facilitate construction of our self-storage facility. Thereafter, we may find it necessary to obtain commercial financing to pay for the cost of construction of our self-storage facility. In our Use of Proceeds estimate, we project the cost of construction and permitting to be approximately $3,862,342, which we may be required to seek financing in such amount. We have not yet taken any steps to seek any additional financing.
Establish Existing Market and Increase Market Share. Our goal is to establish a significant market share in the self-storage market in Salt Lake City, Utah and thereafter continue to develop market share by raising market awareness of the availability and benefits of self-storage and making complementary in-market acquisitions.
- Increasing Market Awareness.Our marketing efforts will be designed to raise awareness of the availability and benefits of self-storage and thus expand product use by existing customers and attract new customers. Our management team intends to place increasing emphasis on our marketing efforts by creating a customer-focused culture and adjusting our organization to reward growth. Our marketing programs will include yellow pages advertising, as well as telemarketing, targeted mailings and trade shows.
- Engage in “In-Market” Acquisitions.We also plan to selectively pursue acquisitions of companies in our existing market. These “in-market” acquisitions are attractive because they immediately increase our customer base, add existing revenue-generating relationships, can be fully integrated quickly (in approximately one to three weeks). Presently we have not targeted any specific acquisition candidates or consummated any acquisitions. We have no current plans regarding specific acquisitions and there can be no assurances that any acquisitions will occur in the future.
Description of Property
7
Our wholly-owned subsidiary, Thomas Investment Holdings, LLC, owns several parcels of residential real property from which it receives rental income as well as property for development.
Descriptions of the properties are as follows:
1414 S. 900 West, Salt Lake City, UT – Rented House;
476 S. Concord, Salt Lake City, UT – Rented House;
345 N. 1200 West, Salt Lake City, UT – Rented House; and
1111 W. 900 South, Salt Lake City, UT – Rented House;
Property to be developed – 1376 – 1382 Major Street, Salt Lake City, UT – both have houses – rented – but zoned commercial – where the storage facility will be built.
1364 S. Major Street, Salt Lake City, UT - 12 mobile home park – also zoned commercial and where the storage facility will be built.
All S. Major Street properties are contiguous and represent approximately 0.85 acre for the proposed storage facility. The leases from all properties are leased on a month-to-month basis. All structures on the properties to be constructed are owned by the Company and can be demolished at will by the Company as soon as such properties are vacated and financing for construction is in place. The properties where the storage units are to be built are already zoned for that type of use and are not anticipated to have any material hindrances to obtain a construction permit expeditiously.
Five (5) of the six (6) above properties are mortgaged. The total outstanding balance on the mortgages as of December 31, 2012 was $850,830.
Our business is presently operated at 13575 58th Street North, Suite 140, Clearwater, Florida 33760. Our telephone number is (602) 885-9792.
Regulatory Matters
Our operations are compliant with all governmental regulations, as applicable.
Employees
As of March 31, 2013, we had no full time employees or part-time employees.
Property
We utilize office space in Clearwater, Florida that is leased by a shareholder of the Company for an unrelated matter. There are no costs to the Company for this space which serves as our corporate headquarters.
Available Information
All reports of the Company filed with the SEC are available free of charge through the SEC’s website at www.sec.gov. In addition, the public may read and copy materials filed by the Company at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. The public may also obtain additional information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.
Item 1A. Risk Factors
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
8
We utilize office space in Clearwater, Florida that is leased by a shareholder of the Company for an unrelated matter. There are no costs to the Company for this space which serves as our corporate headquarters.
Item 3. Legal Proceedings
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of March 15, 2013, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations except as follows:
There are no other proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market for Common Equity
Market Information
Our common stock is not quoted yet on the OTC Bulletin Board. Accordingly, there is no present market for our securities.
As of April 1, 2013, we had 48 shareholders of record of our common stock and 44,575 shares issued and outstanding.
The Company’s transfer agent is Clear Trust, LLC, located at 16540 Pointe Village Drive, Suite 206, Lutz, Florida 33558.
Dividend Distributions
We have not historically and do not intend to distribute dividends to stockholders in the foreseeable future.
Securities authorized for issuance under equity compensation plans
The Company does not have any equity compensation plans.
Penny Stock
Our common stock is considered "penny stock" under the rules the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market System, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the Commission, that:
- contains a description of the nature and level of risks in the market for penny stocks in both public offerings and secondary trading;
- contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities' laws; contains a brief, clear, narrative description of
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a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;
- contains a toll-free telephone number for inquiries on disciplinary actions;
- defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and
- contains such other information and is in such form, including language, type, size and format, as the Commission shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with:
- bid and offer quotations for the penny stock;
- the compensation of the broker-dealer and its salesperson in the transaction;
- the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the marker for such stock; and
- monthly account statements showing the market value of each penny stock held in the customer's account.
In addition, the penny stock rules that require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgement of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.
Related Stockholder Matters
None.
Purchase of Equity Securities
None.
Item 6. Selected Financial Data.
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report.
Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Description of the Company
Our Company is involved in real estate investments through our wholly owned subsidiary, Thomas Investment Holdings, LLC (“Thomas” or “TIH”), a Utah limited liability company. Thomas presently owns several parcels of real estate in Salt Lake City, Utah from which it receives rental income. For the next twelve (12) month period we propose to develop a state of the art self-storage facility totaling 53,400 square feet along with 900 units, located in Salt Lake City, Utah.
The Company was incorporated in Florida on July 1, 2010, as Immobiliare Investors, Inc. On November 1, 2010 we amended our articles of incorporation and changed our name to Immobiliare Global Investments, Inc.
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On February 8, 2012, the Company became effective with the SEC. As of this filing, the Company has not filed with FINRA for its trading symbol.
On August 28, 2012, we effected a one (1) for 1,000 reverse stock split of our issued and outstanding common stock. As a result, our issued and outstanding common stock decreased from 44,575,000 shares to 44,575 shares of common stock, all with a par value of $0.001.
The Company has one wholly-owned subsidiary, Thomas Investment Holdings, LLC.
The following Management Discussion and Analysis should be read in conjunction with the consolidated financial statements and accompanying notes included in this Form 10-K.
Executive Summary
For the year ended December 31, 2012, we reported rental income of $128,706, an increase of $12,196, or 10.5%, over the $116,510 reported for the year ended December 31, 2011. Operating and interest expenses, which include all interest, depreciation, selling, general and administrative costs, increased $34,434, or 10.6%, to $358,578 for the year ended December 31, 2012 as compared to $324,144 for the year ended December 31, 2011. Net loss for the year ended December 31, 2012 was $229,872 compared to net loss of $215,834 for the year ended December 31, 2011.
Results of Operations
The following summary of our results of operations should be read in conjunction with our consolidated financial statements for the years ended December 31, 2012 and 2011.
Our operating results for the periods ended September 30, 2012 and 2011 are summarized as follows:
| | | | |
| | | Year Ended December 31, | |
| | | 2012 | | | 2011 | |
| Revenue | $ | 128,706 | | $ | 116,510 | |
| Operating expenses | | 265,022 | | | 232,185 | |
| Net operating loss | | (136,316 | ) | | (115,675 | ) |
| Interest expenses | | 93,556 | | | 91,959 | |
| Provision for income tax | | - | | | (8,200 | ) |
| Net Loss | $ | (229,872 | ) | $ | (215,834 | ) |
Revenue
We earned revenues of $128,706 for the year ended December 31, 2012 compared to revenues of $116,510 for the year ended December 31, 2011.
Expenses
Our total expenses for the years ended December 31, 2012 and 2011 are outlined in the table below:
| | | | |
| | | Year Ended December 31, | |
| | | 2012 | | | 2011 | |
| General and administrative | $ | 223,369 | | $ | 136,418 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Stock based compensation | | 12,500 | | | 40,000 | |
| Depreciation and amortization | | 29,153 | | | 30,767 | |
| Abandoned project costs | | - | | | 25,000 | |
| Interest expense | | 93,556 | | | 91,959 | |
| Total | $ | 358,578 | | $ | 324,144 | |
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Expenses for the year ended December 31, 2012, increased by 10.6% as compared to the comparative period in 2011 primarily as a result of a one time commitment for legal fees related to our recent S-1 Registration filing with the SEC. A significant portion of expenses for the year ended December 31, 2012, $175,000, resulted from the legal fees that were due when our S-1 became effective on February 8, 2012.
Liquidity and Capital Resources
General
At December 31, 2012 we had cash and cash equivalents of $2,035. We have historically met our cash needs through a combination of cash flows from operating activities, proceeds from private placements of our securities and loans. Our cash requirements are generally for selling, general and administrative activities. We believe that our cash balance is not sufficient to finance our cash requirements for expected operational activities, capital improvements, and partial repayment of debt through the next 12 months.
Our operating activities used cash of $13,082 for the year ended December 31, 2012, compared to cash used by operating activities of $43,630 during the same period in 2011. The principal elements of cash flow from operations for the year ended December 31, 2012 included a net loss of $229,872 offset by depreciation and amortization, $29,153, stock-based compensation, 12,500, prepaid expenses, $125,179, and accounts payable and accrued expenses, $49,958.
Cash generated in our financing activities was $9,039 for the year ended December 31, 2012, compared to cash generated in financing activities of $50,599 during the comparable period in 2011. This decrease was primarily attributed to the sale of common stock for $50,000, in the previous period.
Cash used in investing activities during the year ended December 31, 2012 was $0 compared to $955 during the same period in 2011.
Liquidity and Financial Condition
Working Capital | | | | | | | | | |
| | At | | | At | | | | |
| | December 31, | | | December 31, | | | Increase/ | |
| | 2012 | | | 2011 | | | (Decrease) | |
Current Assets | $ | 3,438 | | $ | 132,660 | | $ | (129,222 | ) |
Current Liabilities | $ | 215,228 | | $ | 128,390 | | $ | 86,838 | |
Working Capital (deficit) | $ | (211,790 | ) | $ | 4,270 | | $ | (216,060 | ) |
Cash Flows | | | | | | |
| | Year Ended | | | Year Ended | |
| | December 31, | | | December 31, | |
| | 2012 | | | 2011 | |
Net Cash Used by Operating Activities | $ | (13,082 | ) | $ | (43,630 | ) |
Net Cash Used by Investing Activities | $ | - | | $ | (955 | ) |
Net Cash Provided by Financing Activities | $ | 9,039 | | $ | 50,599 | |
Net Increase (Decrease) in Cash During the Period | $ | (4,043 | ) | $ | 6,014 | |
We will require additional funds to fund our budgeted expenses in the future. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on their investment in our common stock. Further, we may continue to be unprofitable. We may need to raise additional funds in the future in order to proceed with our budgeted expenses. Additionally, there is no assurance that any party will advance additional funds to us in order to enable us to sustain our plan of operations or to repay our liabilities.
12
Contractual Obligations
As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.
Going Concern
The Company sustained net losses of $229,872 and used cash in operating activities of $13,082 for the year ended December 31, 2012. The Company had a working capital deficiency, stockholders’ deficiency and accumulated deficit of $211,790, $1,026,826 and $474,326, respectively, at December 31, 2012. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving capital from third parties. No assurance can be given that the Company will be successful in these efforts.
Critical Accounting Policies
Land and Buildings
Land and buildings are stated at cost net of accumulated depreciation. Land is not depreciated. Depreciation on buildings is computed using the straight-line method over the estimated useful lives of the buildings, generally twenty-seven and a half years. Depreciation begins in the month of acquisition or when constructed buildings are ready for their intended use.
Costs of renewals and improvements which substantially extend the useful life of the buildings are capitalized. Upon retirement, sale or other disposition, the cost and accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is included in operations. Maintenance and repairs are expensed as incurred.
Revenue Recognition
Revenue is recognized when rental income is received due to the uncertainty associated with collecting the income. Lessors are generally on a month to month rental basis.
Earnings (Loss) per Share
Basic earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares outstanding during the period. Diluted earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares. During the years ended December 31, 2012 and 2011, there were no common stock equivalents outstanding.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
As the Company is a “smaller reporting company,” this item is inapplicable.
13
Item 8. Financial Statements and Supplementary Data.
Immobiliare Global Investments, Inc. and Subsidiary
INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2012 AND 2011
| Page |
| |
Report of Independent Registered Public Accounting Firm | 15 |
| |
Consolidated Balance Sheets | 16 |
| |
Consolidated Statements of Operations | 17 |
| |
Consolidated Statements of Cash Flows | 18 |
| |
Consolidated Statement of Stockholder’s Deficit | 19 |
| |
Notes to Audited Consolidated Financial Statements | 20 |
14
| | 2451 N. McMullen Booth Road Suite.308 Clearwater, FL 33759 855.334.0934 Toll free |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Immobiliare Global Investments, Inc.
We have audited the accompanying balance sheet of Immobiliare Global Investments, Inc. as of December 31, 2012 and 2011, and the related statement of operations, stockholders’ deficiency, and cash flows for the years then ended. 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 audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits 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 audits 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 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 Immobiliare Global Investments, Inc. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended 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 shown in the accompanying financial statements, the Company has significant net losses and cash flow deficiencies. Those conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding those matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ DKM Certified Public Accountants
DKM Certified Public Accountants
Clearwater, Florida
April 16, 2013
15
Immobiliare Global Investments, Inc.
Consolidated Balance Sheets
As at December 31,
| 2012 | | 2011 |
ASSETS | | | | |
Current Assets | | | | | |
Cash | $ | 2,035 | | $ | 6,078 |
Prepaid legal fees and escrow funds | | 1,403 | | | 126,582 |
| | | | | |
Total Current Assets | | 3,438 | | | 132,660 |
| | | | | |
Land and buildings, net of accumulated depreciation of $241,826 and $213,295, respectively | | 822,861 | | | 851,392 |
Intangibles | | - | | | 622 |
Other assets | | 2,300 | | | 2,300 |
| | | | | |
Total Assets | $ | 828,599 | | $ | 986,974 |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | | | | | |
Liabilities | | | | | |
Current Liabilities | | | | | |
Current portion of mortgage notes payable | $ | 20,641 | | $ | 12,280 |
Accounts payable | | 50,000 | | | - |
Line of credit | | 4,834 | | | 5,115 |
Loans from related parties | | 44,876 | | | 16,076 |
Accrued related party compensation | | 84,000 | | | 84,000 |
Accrued interest | | 10,777 | | | 10,819 |
State tax payable | | 100 | | | 100 |
| | | | | |
Total Current Liabilities | | 215,228 | | | 128,390 |
| | | | | |
Other Liabilities | | | | | |
Mortgage notes payable | | 830,189 | | | 858,030 |
Acquisition note payable to stockholders | | 800,000 | | | 800,000 |
Tenant deposits | | 10,008 | | | 10,008 |
| | | | | |
Total Liabilities | | 1,855,425 | | | 1,796,428 |
| | | | | |
Stockholders’ Deficiency | | | | | |
Preferred stock, $0.0001 par value, 100,000,000 shares authorized; 100,000 shares issued and outstanding, respectively | | 10 | | | 10 |
Common stock, $0.001 par value, 400,000,000 shares authorized; 44,575 and 64,525 shares issued and outstanding, respectively | | 45 | | | 65 |
Additional paid-in capital | | (552,555) | | | (565,075) |
Accumulated deficit | | (474,326) | | | (244,454) |
Total Stockholders’ Deficiency | | (1,026,826) | | | (809,454) |
| | | | | |
Total Liabilities and Stockholders’ Deficiency | $ | 828,599 | | $ | 986,974 |
| | | | | |
The notes are an integral part of these audited consolidated financial statements.
16
Immobiliare Global Investments, Inc.
Consolidated Statements of Operations
For the Years Ended December 31,
| | | | |
| | | | | | | | 2012 | | | 2011 |
| | | | | | | | | | | |
Rental income | | | | | | | $ | 128,706 | | $ | 116,510 |
| | | | | | | | | | | |
Operating Expenses: | | | | | | | | | | | |
General and administrative | | | | | | | | 223,369 | | | 136,418 |
Stock based compensation | | | | | | | | 12,500 | | | 40,000 |
Depreciation and amortization | | | | | | | | 29,153 | | | 30,767 |
Abandoned project costs | | | | | | | | - | | | 25,000 |
Total operating expenses | | | | | | | | 265,022 | | | 232,185 |
| | | | | | | | | | | |
Net operating income (loss) | | | | | | | | (136,316) | | | (115,675) |
Interest expenses | | | | | | | | 93,556 | | | 91,959 |
| | | | | | | | | | | |
Net loss before taxes | | | | | | | | (229,872) | | | (207,634) |
Provision for income tax | | | | | | | | - | | | (8,200) |
| | | | | | | | | | | |
Net loss | | | | | | | $ | (229,872) | | $ | (215,834) |
| | | | | | | | | | | |
Loss per share, primary and dilutive | | | | | | | $ | (4.56) | | $ | (3.34) |
| | | | | | | | | | | |
Weighted average shares outstanding, primary and dilutive | | | | | | | | 50,357 | | | 64,525 |
The notes are an integral part of these audited consolidated financial statements.
17
Immobiliare Global Investments, Inc |
Consolidated Statement of Stockholders' Deficit |
| | | | | | | | | | | | | | |
| | | | | | | | | | Additional | | | | Stock |
| | Preferred Stock | | Common Stock | | Paid in | | Accumulated | | Holders' |
| | Shares | | Amount | | Shares | | Amount | | Capital | | Deficit | | Deficit |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Balance - December 31, 2010 | | 100,000 | $ | 10 | | 60,325 | $ | 61 | $ | (655,071) | $ | (28,620) | $ | (683,620) |
| | | | | | | | | | | | | | |
Stock issued for officer compensation | | - | | - | | 4,000 | | 4 | | 39,996 | | - | | 40,000 |
| | | | | | | | | | | | | | |
Stock issued for cash | | - | | - | | 200 | | - | | 50,000 | | - | | 50,000 |
| | | | | | | | | | | | | | |
Net loss for the year | | - | | - | | - | | - | | - | | (215,834) | | (215,834) |
| | | | | | | | | | | | | | |
Balance - December 31, 2011 | | 100,000 | | 10 | | 64,525 | | 65 | | (565,075) | | (244,454) | | (809,454) |
| | | | | | | | | | | | | | |
Stock cancelled by former directors | | - | | - | | (20,000) | | (20) | | 20 | | - | | - |
| | | | | | | | | | | | | | |
Stock issued for officer compensation | | - | | - | | 50 | | - | | 12,500 | | - | | 12,500 |
| | | | | | | | | | | | | | |
Net loss for the year | | - | | - | | - | | - | | - | | (229,872) | | (229,872) |
| | | | | | | | | | | | | | |
Balance – December 31, 2012 | | 100,000 | $ | 10 | | 44,575 | $ | 45 | $ | (552,555) | $ | (474,326) | $ | (1,026,826) |
| | | | | | | | | | | | | | |
The notes are an integral part of these audited consolidated financial statements.
18
Immobiliare Global Investments, Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31,
| |
| | 2012 | | | 2011 |
Cash Flows from Operating Activities: | | | | | |
Net loss | $ | (229,872) | | $ | (215,834) |
Adjustments to reconcile net income to net cash provided by operations: | | | | | |
Depreciation and amortization | | 29,153 | | | 30,767 |
Stock-based and non-cash compensation | | 12,500 | | | 40,000 |
Changes in assets and liabilities: | | | | | |
Prepaid expenses and escrow funds | | 125,179 | | | (1,582) |
Deferred tax asset | | - | | | 8,200 |
Accounts payable and accrued expenses | | 49,958 | | | 94,819 |
Net cash (Used) Provided by Operating Activities | | (13,082) | | | (43,630) |
| | | | | |
Cash Flows from Investing Activities: | | | | | |
Purchase of property and equipment | | - | | | (955) |
Net cash Used by Investing Activities | | - | | | (955) |
| | | | | |
Cash Flows from Financing Activities: | | | | | |
Proceeds from issuance of common stock | | - | | | 50,000 |
Proceeds from related party loans | | 28,800 | | | 16,076 |
Payments on mortgage notes payable | | (19,480) | | | (16,339) |
Net proceeds from line of credit | | (281) | | | 862 |
Net cash (Used) provided by Financing Activities | | 9,039 | | | 50,599 |
| | | | | |
Net increase (decrease) in cash | | (4,043) | | | 6,014 |
| | | | | |
Cash at beginning of period | | 6,078 | | | 64 |
| | | | | |
Cash end of period | $ | 2,035 | | $ | 6,078 |
| | | | | |
Supplemental Cash Flow Disclosure: | | | | | |
Interest paid | $ | 93,598 | | $ | 81,140 |
Taxes paid | $ | - | | $ | - |
| | | | | |
Non Cash Disclosure: | | | | | |
Stock issued for compensation | $ | 12,500 | | $ | 40,000 |
The notes are an integral part of these audited consolidated financial statements.
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Immobiliare Global Investments, Inc. and Subsidiary
Notes to Audited Consolidated Financial Statements
December 31, 2012 and 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business Activity
Immobiliare Global Investments, Inc. (the “Company” or “Immobiliare”) was incorporated on July 1, 2010 in the State of Florida and commenced operations on that day. Thomas Investment Holdings, Inc., (“Thomas”) was a privately-held limited liability company that was organized on April 23, 2004 in the State of Utah. Effective November 10, 2010 the companies, completed the purchase and sale agreement between Thomas and Immobiliare and the member of Thomas, pursuant to which Immobiliare acquired all of the membership shares of Thomas by issuing 125,000 shares of common stock to the selling members and notes payable to the previous member of Thomas in the amount of $800,000 for a total consideration of $812,500. Consummation of the merger did not require a vote of the Immobiliare shareholders. As a result of the acquisition, the shareholders of Thomas did not own a majority of the voting stock of Immobiliare and Thomas is a wholly owned subsidiary of Immobiliare. The previous majority shareholder of Thomas is a material shareholder, although not a majority shareholder, and the President and CEO of Immobiliare.
Although Thomas became a wholly owned subsidiary of Immobiliare in the merger, for financial reporting purposes Thomas is treated as "accounting acquirer" because its previous majority shareholder continued to own a material interest in Immobiliare and is the President and CEO of Immobiliare. Accordingly, the historical consolidated financial statements prior to the date of merger that are included in these consolidated financial statements for comparative purposes are the financial statements of Thomas. In accounting for this reverse merger, the legal share capital is that of Immobiliare (the legal parent). In consolidation, the original investment in Thomas has been recorded as a distribution to the former owners of Thomas.
The Company operates in the real estate industry, primarily in the area of investing in land and buildings to earn rental income in Salt Lake City, Utah.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Thomas Investment Holdings, LLC. All significant intercompany balances and transactions have been eliminated in these consolidated financial statements. The original investment by Immobiliare in Thomas has been recorded as a distribution to the former owners of Thomas.
Basis of Accounting
The unaudited financial statement and notes are presented in accordance with accounting principles generally accepted in the United States of America (GAAP). These interim financial statements include all adjustments that, in the opinion of management, are necessary in order to make the financial statements not misleading.
Use of estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include the amortization period for intangible assets, valuation and impairment of intangible assets, depreciable lives of the real property and the valuation allowance on deferred tax assets.
Cash and Cash Equivalents
Cash equivalents are generally comprised of certain highly liquid investments with maturities of three months or less.
Concentrations of Credit Risk
20
The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of temporary cash investments and trade accounts receivable. The Company maintains its cash balances at a financial institution. At times such investments may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash. The Company believes it is not exposed to any significant credit risk on trade accounts receivable because the Company routinely assesses the financial strength of its customers before extending credit.
Land and Buildings
Land and buildings are stated at cost net of accumulated depreciation. Land is not depreciated. Depreciation on buildings is computed using the straight-line method over the estimated useful lives of the buildings, generally twenty-seven and a half years. Depreciation begins in the month of acquisition or when constructed buildings are ready for their intended use.
Costs of renewals and improvements which substantially extend the useful life of the buildings are capitalized. Upon retirement, sale or other disposition, the cost and accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is included in operations. Maintenance and repairs are expensed as incurred.
Intangible Assets
Intangible assets with finite lives consist of capitalized loan costs and are amortized using the straight-line method over their estimated useful lives.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to the difference between the bases of certain assets and liabilities for financial reporting and income tax reporting. Valuation allowances are established, if necessary, to reduce the deferred tax asset to the amount that will more likely than not be realized.
Upon completion of the November 10, 2010 transaction with Immobiliare, Thomas ceased to be treated as a partnership for income tax purposes, resulting in (1) the imposition of income tax at the corporate level instead of the individual member level and (2) the inability to continue to elect to be taxed on a Cash Basis resulting in a potential transitional income tax liability. The potential liability is subject to special transitional rules that may allow such amounts, once they have been determined, to be paid over a four year period pursuant to the IRS code. The former members of the limited liability company have undertaken to provide such assistance as may be necessary to minimize the Company's exposure to such potential tax liability.
Revenue Recognition
Revenue is recognized when rental income is received due to the uncertainty associated with collecting the income. Lessors are generally on a month to month rental basis.
Earnings (Loss) per Share
Basic earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares outstanding during the period. Diluted earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares. During the years ended December 31, 2012 and 2011, there were no common stock equivalents outstanding.
NOTE 2 - GOING CONCERN
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company sustained net losses of $229,872 and used cash in operating activities of $13,082 for the year endedDecember 31, 2012. The Company had a working capital deficiency, stockholders’ deficiency and accumulated deficit of $211,790, $1,026,826 and $474,326, respectively, at December 31, 2012. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving capital from third parties. No assurance can be given that the Company will be successful in these efforts.
21
The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 3 - LAND AND BUILDINGS
Land and buildings consisted of the following:
| December 31, 2012 | | December 31, 2011 |
| |
| | | | | |
Land | $ | 285,371 | | $ | 285,371 |
Buildings and improvements, at cost | | 778,361 | | | 778,361 |
Furniture | | 955 | | | 955 |
| | 1,064,687 | | | 1,064,687 |
Less: accumulated depreciation | | (241,826) | | | (213,295) |
Land and Buildings, net | $ | 822,861 | | $ | 851,392 |
Depreciation expense was $29,153 and $30,767 for the years ended December 31, 2012 and 2011.
NOTE 4 - INTANGIBLES
Intangibles at December 31, 2012 and 2011 consisted of:
| December 31, 2012 | | December 31, 2011 |
| |
| | | | | |
Capitalized costs | $ | 6,915 | | $ | 6,915 |
Less: accumulated amortization | | (6,915) | | | (6,293) |
Intangibles, net | $ | - | | $ | 622 |
Amortization of capitalized loan fees was $622 for the year ended December 31, 2012.
NOTE 5 - PREPAID LEGAL EXPENSE AND CONTINGENT LIABILITY
During 2010 the founding stockholders of the Company engaged the services of an attorney to assist them in the preparation and filing of Form S-1 with the Securities and Exchange Commission (“SEC”) to register as an issuer under the Securities and Exchange Acts. In connection with the filing of this registration statement the founding stockholders agreed to pay the attorney $125,000 for the preparation and filing of Form S-1. In return for the prepayment of $125,000 in legal fees the founding stockholders were issued 60,000 shares of the Company’s common stock which was the initial stock issuance for Immobiliare Global Investments, Inc.
The $125,000 advanced to the attorney by the Stockholders on behalf of the Company has been recognized as prepaid legal fees at December 31, 2011. The registration statement was deemed to be effective by the SEC on February 8, 2012. The entire amount was charged to operations on that date.
Upon effective date of the registration statement by the SEC (February 8, 2012), the agreement with the attorney calls for an additional payment of $50,000 that will be paid by the Company.
22
NOTE 6 - LINE OF CREDIT PAYABLE
The Company has a line of credit with a local credit union for $6,000. The line of credit is unsecured, bears interest at 18% per annum and matures annually. At December 31, 2012 and 2011 the balance drawn on the line of credit was $4,834 and $5,115, respectively. At December 31, 2012, the Company had $1,166 of credit available on this line.
NOTE 7 - INCOME TAXES
During the years ended December 31, 2012 and 2011, the Company had losses of $229,872 and $215,834, respectively. The losses generated $0 in deferred federal and state income tax provisions using a blended income tax rate of 37.25% after an allowance for deferred tax asset realization.
The components of income tax expense attributable to continuing operations for the years ended December 31, 2012 and 2011 are as follows:
| | 2012 | | 2011 |
Deferred federal and state income tax benefit | | $ | 78,100 | | $ | 66,500 |
| | | | | | |
Current state income tax benefit | | | 7,500 | | | 6,500 |
Change in allowance for deferred tax assets | | | (85,600) | | | (81,200) |
| | | | | | |
Provision for income tax | | $ | - | | $ | 8,200 |
Our tax returns for 2009 – 2011 are open to audit by the Internal Revenue Services. The net operating losses begin expiring in 2031.
NOTE 8 - ACQUISITION NOTES PAYABLE TO STOCKHOLDERS
The former member of Thomas was given a note as consideration for the membership of Thomas Investment Holdings, Inc. together with 125,000 shares of restricted common stock of the Company. The note bears interest at 4.5%, and is payable in monthly interest only installments from January 1, 2011. The notes must be repaid by November 10, 2014 or the membership interests of Thomas Investment Holdings, Inc. must be returned to the holders. The notes are secured by membership interests in Thomas Investments, LLC and by the individual real properties owned by Thomas Investments, LLC and operated by the Company. Wayne Middleton has designated a portion of this note to be payable to William Middleton under the same terms.
Acquisition note payables at December 31, 2012 and 2011 are as follows:
| | | December 31, 2012 | | | December 31, 2011 |
Note payable to Wayne Middleton, due November 10, 2014, with monthly payments of interest only, secures by membership interest in Thomas Investment Holdings and real estate. $80,000 of this note is designated as payable to William Middleton under the same terms. | | | $ | 800,000 | | | $ | 800,000 |
| | | | | | | | |
NOTE 9 - MORTGAGE NOTES PAYABLE
The Company issued a number of mortgage notes to acquire property. These notes are generally payable in monthly installments of interest and principle and secured by property in and around Salt Lake City, Utah (SLC). Mortgage note payables at December 31, 2012 and 2011 are as follows:
23
| | | December 31, 2012 | | | December 31, 2011 |
Note to a credit union, interest at 6%, due in monthly installments of $1,876, including interest, secured by a home and duplex on Major St, SLC and maturing May 2014 | | | $ | 234,569 | | | $ | 242,735 |
| | | | | | | | |
Note to a finance company, interest at 6.63%, due in interest only installments of $496, including interest, secured by 1414 S 900 W, SLC and maturing in November 2034 | | | | 89,825 | | | | 89,825 |
| | | | | | | | |
Note to a finance company, interest at 9.75%, due in monthly installments of $206, including interest, secured by 1414 S 900 W, SLC and maturing August 2020 | | | | 22,572 | | | | 22,833 |
| | | | | | | | |
Note to a bank, interest at 6.75%, due in interest only installments of $526, including interest, secured by 476 S Concord, SLC and maturing November 2035 | | | | 93,597 | | | | 93,597 |
| | | | | | | | |
Note to a finance company, interest at 11.5%, due in monthly installments of $248, including interest, secured by 476 S Concord, SLC and maturing November 2020 | | | | 24,006 | | | | 24,209 |
| | | | | | | | |
Note to a bank, interest at 7.38%, due in interest only installments of $587, including interest, secured by 345 N 1200 W, SLC and maturing November 2035 | | | | 87,003 | | | | 87,605 |
| | | | | | | | |
Note to a finance company, interest at 10%, due in monthly installments of $158, including interest, secured by 345 N 1200 W, SLC and maturing November 2035 | | | | 17,021 | | | | 17,206 |
| | | | | | | | |
Note to a bank, interest at 7.38%, due in interest only installments of $699, including interest, secured by 1111 W 900 S, SLC and maturing November 2035 | | | | 85,128 | | | | 85,817 |
| | | | | | | | |
Note to a finance company, interest at 10%, due in monthly installments of $155, including interest, secured by 1111 W 900 S, SLC and maturing November 2035 | | | | 16,459 | | | | 16,666 |
| | | | | | | | |
Note to a credit union, interest at 5%, due in monthly installments of $1,546, including interest, secured by land and buildings on Major St, SLC and maturing April 2026 | | | | 180,650 | | | | 189,918 |
| | | | | | | | |
Total mortgage notes receivable | | | | 850,830 | | | | 870,310 |
Less current portion of mortgage notes payable | | | | 20,641 | | | | 12,280 |
| | | | | | | | |
Long-term portion of mortgage notes payable | | | $ | 830,189 | | | $ | 858,030 |
Aggregate maturities of mortgage notes payable for each of the next five years is as follows:
| 2013 | | | $ | 20,641 |
| 2014 | | | | 238,559 |
| 2015 | | | | 13,410 |
| 2016 | | | | 14,200 |
| 2017 | | | | 15,100 |
| Thereafter | | | | 548,920 |
| | | | | |
| | | | $ | 850,830 |
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NOTE 10 - EQUITY
Preferred Stock Rights and Privileges
The Company is authorized to issue 100,000,000 of preferred stock with a par value of $0.0001 per share. Currently there are a total of 100,000 shares of Preferred "C" shares outstanding. There are no Preferred “A” or “B” shares designated at this time. Each Preferred "C" Share is entitled to cast five thousand (5,000) votes. These shares were issued in proportional amounts to the original founding stockholders, no payment was received. The class "C" preferred stock has no equity conversion rights. The shares contain a restriction on transferability which prohibits the transfer of the shares without prior written approval of the Board of Directors of the Company.
There were no preferred shares issued during the years ended December 31, 2012 and 2011.
Common Stock issues
The Company is authorized to issue up to 400,000,000 shares of common stock with a par value of $0.001 per share.
Effective August 28, 2012, the Company effected a 1 for 1,000 reverse split on its common stock outstanding, under which each stockholder of record on that date received one (1) new share of the Corporation’s $0.001 par value common stock for every one thousand (1,000) old shares owned.
During the years ended December 31, 2012 and 2011, the Company had transactions in shares of its common stock as follows, retroactively adjusted to give effect to the 1 for 1,000 reverse split:
In January 2011, the Company issued 1,000 shares each to the four directors as compensation for services. This stock was valued at $10,000 per director.
On March 31, 2011, the Company issued 80 shares to an unrelated party for $20,000 cash.
On April 25, 2011, the Company issued 120 shares to an unrelated party for $30,000 cash.
On March 15, 2012, the Company issued 50 shares to an officer of the Company as compensation for services. This stock was valued at $12,500.
On April 16, 2012, former directors of the Company cancelled 20,000 of their shares.
NOTE 11 – RELATED PARTY TRANSACTIONS
During the year ended December 31, 2012, the Company made a total of $18,000 in interest payments on the acquisition notes payable to two stockholders. Another $6,000 of interest was accrued as of December 31, 2012.
The directors of the Company had agreements providing them compensation of $7,000 per month starting in January 2011. Each of the four directors accrued $21,000 in compensation for the first quarter. The board agreed to stop these accruals as of April 1, 2011 until further notice. None of this compensation has been paid. The accrued salary is shown on the balance sheet as accrued compensation and the expense is shown on the statement of operations for the year ended December 31, 2011 as part of the general and administrative operating expenses.
From time to time an officer may pay an expense for or loan money to the Company with the expectation of beingreimbursed. These loans are temporary in nature, do not accrue interest and are unsecured. At December 31, 2012 and 2011, the Company owed $44,876 and $16,076 to officers for temporary loans, respectively.
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NOTE 12 – CONTINGENCIES
From time to time the Company may be a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations other than what is noted here.
Upon effective date of the registration statement by the SEC, which occurred on February 8, 2012, the agreement with the attorney calls for an additional payment of $50,000 that will be paid by the Company. This contingent fee has been recorded accordingly in accounts payable on the accompanying Consolidated Balance Sheets at December 31, 2012.
NOTE 13 – SUBSEQUENT EVENTS
In accordance with ASC 855-10, Company management reviewed all material events through the date of this report and determined that there are no material subsequent events to report.
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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
On December 17, 2012, the audit firm of Drake & Klein CPAs changed its name to DKM Certified Public Accountants. The change was reported to the PCAOB as a change of name. This is not a change of auditors for the Company.
There are no disagreements with our accountants on accounting and financial disclosure.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our chief executive officer and chief financial officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this annual report, has concluded that our disclosure controls and procedures were not effective and that material weaknesses described below exists in our internal control over financial reporting based on his evaluation of these controls and procedures as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the chief executive officer and chief financial officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Our evaluation of internal control over financial reporting includes using the COSO framework, an integrated framework for the evaluation of internal controls issued by the Committee of Sponsoring Organizations of the Treadway Commission, to identify the risks and control objectives related to the evaluation of our control environment.
Based on our evaluation under the frameworks described above, our management concluded that as of December 31, 2012, that our internal controls over financial reporting were not effective and that a material weakness exists in our internal control over financial reporting. The material weakness consists of controls associated with segregation of duties. To address the material weakness we performed additional analyses and other post-closing procedures to ensure that our consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Notwithstanding this material weakness, management believes that the financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial condition, result of operations and cash flows for the periods presented.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation requirements by the Company’s registered public accounting firm pursuant to an exemption provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Changes in Internal Control over Financial Reporting
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There was no change in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended December 31, 2012 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Limitations on the Effectiveness of Controls
The Company’s management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of the control system must reflect that there are resource constraints and that the benefits must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The following table sets forth information with respect to persons who are serving as directors and officers of the Company. Each director holds office until the next annual meeting of shareholders or until his successor has been elected and qualified.
Directors (1) and Executive Officers
Name | Age | Position |
Wayne Middleton | 41 | Chief Executive Officer, President, Secretary, Treasurer and Director |
Bradford P. Margetts | 46 | Chief Financial Officer |
(1) Our sole director will serve until the next annual shareholder meeting.
Biographies of Directors and Officers
Wayne Middleton
Our Chief Executive Officer, President, Secretary, Treasurer, and sole member of the Board of Directors, Wayne Middleton, age 41, has extensive work experience in the real estate and property management industry. From 2004 through the present, he has been the managing director of Thomas Investment Holdings, LLC of Salt Lake City, Utah. As managing director our Company and other entities, Mr. Middleton has engaged in property management oversight for dozens of rental units and commercial properties. Mr. Middleton has a Bachelor of Arts from the University of Utah and a Masters of Business Administration from Brigham Young University.
Mr. Middleton is one of the founders of the Company and will serve as a Director and as its President and Chief Executive Officer. He was appointed to these positions on July 2, 2010. We believe that Mr. Middleton’s experience in the real estate and property management industry as well as the managerial skills he developed during such tenure provides ample qualification for Mr. Middleton to serve as an officer and director for our Company.
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Bradford P. Margetts
Bradford P. Margetts, age 46, has 20 years of experience in accounting in the commercial real estate development, property management and home building industry. He has worked as CFO or Controller for various local and regional real estate investment companies. He has overseen financial reporting, audits, cash flow management and accounting departments for both private and public investors. Mr. Margetts has a Bachelor of Arts in Accounting from the University of Utah, a Masters of Business Administration from the University of Utah and has been a licensed Certified Public Accountant in the State of Utah since 1996.
Indemnification of Directors and Officers
Florida Corporation Law allows for the indemnification of officers, directors, and any corporate agents in terms sufficiently broad to indemnify such persons under certain circumstances for liabilities, including reimbursement for expenses, incurred arising under the 1933 Act. The Bylaws of the Company provide that the Company will indemnify its directors and officers to the fullest extent authorized or permitted by law and such right to indemnification will continue as to a person who has ceased to be a director or officer of the Company and will inure to the benefit of his or her heirs, executors and Consultants; provided, however, that, except for proceedings to enforce rights to indemnification, the Company will not be obligated to indemnify any director or officer in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized by the Board of Directors. The right to indemnification conferred will include the right to be paid by the Company the expenses (including attorney’s fees) incurred in defending any such proceeding in advance of its final disposition.
The Company may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Company similar to those conferred to directors and officers of the Company. The rights to indemnification and to the advancement of expenses are subject to the requirements of the 1940 Act to the extent applicable.
Furthermore, the Company may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Company or another company against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the Florida General Corporation Law.
Employment Agreements
Other than as set out below, we have no formal employment agreements with any of our employees, directors or officers.
Family Relationships
There are no family relationships between any of our directors, executive officers and proposed directors or executive officers.
Director Compensation
During the fiscal year ended December 31, 2011, the current and former directors were compensated in common stock valued at $10,000 each, or $40,000 collectively, and $21,000 each, or $84,000 collectively, was accrued, due to cash constraints. During the year ended December 31, 2012, there were no further accruals and the amount of $84,000 is still being accrued and will be paid when the Company has sufficient cash on hand.
Directors’ and Officers’ Liability Insurance
The Company does not have directors’ and officers’ liability insurance.
Code of Ethics
We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deterwrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of the code of ethics is attached as exhibit 14, to our Form S-1 as filed with the SEC on May 16, 2011. The Company will also provide to any person, without charge and upon request, a copy of the code of ethics. Any such request must be made in writing to the Company at, 13575 58th Street North, Suite 140, Clearwater, FL 33760.
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Board Committees
Audit Committee
The Company does not have an Audit Committee at this time.
Compensation Committee
The Company does not have a Compensation Committee at this time.
We expect our board of directors, in the future, to appoint an audit committee, a compensation committee, and a nominating committee and any other applicable committee, as applicable, and to adopt charters relative to each such committee. We intend to appoint such persons to committees of the board of directors as are expected to be required to meet the corporate governance requirements imposed by a national securities exchange, although we are not required to comply with such requirements until we elect to seek a listing on a national securities exchange.
Advisory Board
The Company does not have an Advisory Board at this time.
Compliance with Section 16(a) of the Exchange Act
The Company’s common stock is not registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, officers, directors and principal shareholders are not subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.
11. Executive Compensation.
The particulars of the compensation paid to the following persons:
| (a) | our principal executive officer; |
| | |
| (b) | each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended December 31, 2012 and 2011; |
| | |
| (c) | up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended December 31, 2012 and 2011, |
| | |
who we will collectively refer to as the named executive officers of the Company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than the principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year.
SUMMARY COMPENSATION TABLE |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) |
| | | | | | | | | |
Wayne Middleton(1) President, Chief Executive Officer, Secretary, Treasurer and Director | 2012 2011 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Bradford P. Margetts(2)Chief Financial Officer | 2012 2011 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Charles Irizarry(3) Vice President and director | 2012 2011 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| | | | | | | | | |
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(1) | Mr. Middleton was appointed President, Chief Executive Officer, Secretary, Treasurer and a Director of the Company on July 2, 2010. |
| |
(2) | Mr. Margetts was appointed Chief Financial Officer of the Company on September 2010. |
| |
(3) | Mr. Irizarry served as our Vice President and a Director of the Company from July 2, 2010 to April 16, 2012. |
There are no employment contracts with Messrs. Middleton or Margetts at this time. Nor are there any agreements for compensation in the future except for the salary and stock awards set forth above. A salary and stock options and/or warrants program may be developed in the future.
Wayne Middleton, our current sole director and Charles Irizarry, a former director, were paid stock and accrued directors’ fee as noted below.
Director Compensation
Name and principal position (1) | Year | Fees earned ($) | Stock Awards ($) | Option Award(s) ($) | Non-equity incentive Plan compensation ($) | Nonqualified deferred compensation earnings ($) | All other compen- sation ($) | Total ($) |
| | | | | | | | |
Wayne Middleton | 2012 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 2011 | 21,000 | 10,000 | 0 | 0 | 0 | 0 | 31,000 |
Charles Irizarry(2) | 2012 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 2011 | 21,000 | 10,000 | 0 | 0 | 0 | 0 | 31,000 |
David Skutt(2) | 2012 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 2011 | 21,000 | 10,000 | 0 | 0 | 0 | 0 | 31,000 |
Henrik Zohrabians(2) | 2012 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 2011 | 21,000 | 10,000 | 0 | 0 | 0 | 0 | 31,000 |
(1) | There are no employment contracts with Messrs. Middleton, Irizarry, Skutt or Zohrabians at this time. Nor are there any agreements for compensation in the future except for the salary and stock awards set forth above. A salary and stock options and/or warrants program may be developed in the future. In 2011, the Company issued each director 1 million shares of our common stock at $0.01 per share as compensation for services rendered in 2010 |
| |
(2) | Messrs. Irizarry, Skutt and Zohrabians served as Directors of the Company from July 2, 2010 to April 16, 2012. |
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Compensation Committee Interlocks and Insider Participation
Currently, our Board of Directors consists of Wayne Middleton. We are not actively seeking additional board members at this time. At present, the Board of Directors has not established any committees.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth certain information as of December 31, 2012 regarding the beneficial ownership of our common stock, taking into account the consummation of the Merger, by (i) each person or entity who, to our knowledge, beneficially owns more than 5% of our common stock; (ii) each executive officer and named officer; (iii) each director; and (iv) all of our officers and directors as a group. Unless otherwise indicated in the footnotes to the following table, each of the stockholders named in the table has sole voting and investment power with respect to the shares of our common stock beneficially owned. Except as otherwise indicated, the address of each of the stockholders listed below is: c/o 13575 58th Street N., Suite 140, Clearwater, Florida 33760.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of December 31, 2012 regarding the beneficial ownership of shares of our common stock with respect to stockholders who were known by us to be beneficial owners of more than 5% of our common stock, and our officers and directors, individually and as a group. Unless otherwise indicated, the beneficial owner has sole voting and investment power with respect to such shares of common stock.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (“SEC”) and generally includes voting or investment power with respect to securities. In accordance with the SEC rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially owned by the optionees, if applicable. Subject to community property laws, where applicable, the persons or entities named in the table below (See “Selling Security Holders”) have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them.
Beneficial Ownership – Common Stock
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class(1) |
Wayne Middleton P.O. Box 9948 Salt Lake City, UT 84109 | 14,900 common shares Direct ownership | 33.4% |
Bradford P. Margetts 9089 South 2100 East Sandy, UT 84093 | 50 common shares Direct ownership | 0.1% |
All Executive Officers and Directors as a Group(1) | 14,950 common shares | 33.5% |
| | |
Charles Irizarry 7558 W. Thunderbird Rd. #1-486 Peoria, AZ 85381 | 14,575 common shares Direct ownership | 32.7% |
David Skutt 18528 Stallion Crest Rd. Riverside, CA 92504 | 5,460 common shares Direct ownership | 12.2% |
Henrik Zohrabians 700 Palm Dr. #106 Glendale, CA 91202 | 5,970 common shares Direct ownership | 13.4% |
(1) The percentages are based on a total of 44,575 shares of common stock issued and outstanding.
32
Beneficial Ownership – Preferred Stock
Title of Class (1) | Name of Beneficial Owner | Amount | % of Class |
Preferred Stock Class C | Wayne Middleton P.O. Box 9948 Salt Lake City, UT 84109 | 25,000 | 25% |
Preferred Stock Class C | All Executive Officers and Directors as a Group (1) | 25,000 | 25% |
| | | |
Preferred Stock Class C | Charles Irizarry 7558 W. Thunderbird Rd. #1-486 Peoria, AZ 85381 | 25,000 | 25% |
Preferred Stock Class C | David Skutt 18528 Stallion Crest Rd. Riverside, CA 92504 | 25,000 | 25% |
Preferred Stock Class C | Henrik Zohrabians 700 Palm Dr. #106 Glendale, CA 91202 | 25,000 | 25% |
(1) Each Preferred “C” Share is entitled to cast five thousand (5,000) votes. The Class “C” Preferred Shares do not have equity conversion rights. The shares contain a restriction on transferability which prohibits the transfer of the shares without prior written approval of the Board of Directors of the Company. There are 100,000 Preferred “C” Shares authorized.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Transactions with Related Persons, Promoters and Certain Control Persons
Since inception, the cash account of Thomas was maintained in a membership bank where Wayne Middleton, who is the CEO, President and sole Director of Immobiliare Global Investments, Inc., is listed as the member. The account is titled in the name of the Thomas Investment Holdings, LLC.
In April 2011 an advance of $2,000 was made for the Company by our President, Wayne Middleton, for cash flow funding. The amount advanced was temporary in nature, in exchange for a demand note with no repayment terms and which is non-interest bearing.
On November 10, 2010, we entered into a Purchase and Sale Agreement with Wayne Middleton pursuant to which we purchased 100% of the membership interests of Thomas Investment Holdings, LLC, an Utah limited liability company, for $812,500. Consideration for the purchase consisted of $800,000 in notes and 125,000 shares of our restricted common stock at $0.10 per share. We have delivered a promissory note payable to Wayne Middleton in the amount of $800,000 having repayment terms of interest only payments at an effective interest rate of 4.5% and are callable on November 10, 2014. The promissory notes are secured by the real properties owned by Thomas Investment and the membership interest of Thomas. Wayne has designated $80,000 of the note to be payable to William Middleton under the same terms In November 2010, 100,000 shares of common stock were issued to Wayne Middleton and 25,000 shares were issued to William Middleton, his designee.
Director Independence
We do not presently have any independent directors. We consider independent directors to be individuals who are not employed by the Company in any capacity and who do not have any equity ownership interest in the Company. Our Board of Directors is comprised solely of our Chief Executive Officer and President, Wayne Middleton. We intend to seek independent directors for our board of directors when the market conditions improve and we are able to provide compensation for our Board of Director members.
Item 14. Principal Accounting Fees and Services.
33
The following table sets forth the fees billed by our principal independent accountants, DKM Certified Public Accountants (formerly Drake & Klein CPAs) for each of our last two fiscal years for the categories of services indicated.
| | Years Ended December 31, | |
Category | | 2012 | | | 2011 | |
Audit Fees | | $ | 8,000 | | | $ | 11,000 | |
Audit Related Fees | | | - | | | | - | |
Tax Fees | | | - | | | | - | |
All Other Fees | | | - | | | | - | |
Total | | $ | 8,000 | | | $ | 11,000 | |
Audit fees. Consists of fees billed for the audit of our annual financial statements and review of our interim financial information and services that are normally provided by the accountant in connection with year-end and quarter-end statutory and regulatory filings or engagements.
Audit-related fees. Consists of fees billed for services relating to review of other regulatory filings including registration statements, periodic reports and audit related consulting.
Tax fees. Consists of professional services rendered by our principal accountant for tax compliance, tax advice and tax planning.
Other fees. Other services provided by our accountants.
34
PART IV
Item 15. Exhibits, Financial Statement Schedules.
Exhibits
Exhibit No. | Description |
3.1 * | Articles of Incorporation, as Amended |
3.2 * | Bylaws of the Company |
14.1 * | Code of Ethics |
21.1 ** | Subsidiary of the Company |
31.1 ** | Certification of Chief Executive Officer of Immobiliare Global Investments, Inc. Required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 ** | Certification of Chief Financial Officer of Immobiliare Global Investments, Inc. Required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 ** | Rule 1350 Certifications of Chief Executive and Financial Officer |
101.INS ** | XBRL Instance Document |
| |
101.SCH ** | XBRL Taxonomy Extension Schema Document |
| |
101.CAL ** | XBRL Taxonomy Extension Calculation Linkbase Document |
| |
101.DEF ** | XBRL Taxonomy Extension Definition Linkbase Document |
| |
101.LAB ** | XBRL Taxonomy Extension Label Linkbase Document |
| |
101.PRE ** | XBRL Taxonomy Extension Presentation Linkbase Document |
(*) Previously filed with the Form S-1 filed on May 16, 2011 and is incorporated herein by reference.
(**) Filed herewith
XBRL Information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
Financial Statement Schedules
None
35
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Immobiliare Global Investments, Inc.
/s/ Wayne Middleton | | April 16, 2013 |
Wayne Middleton President Principal Executive Officer | | Date |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Wayne Middleton | | April 16, 2013 |
Wayne Middleton, Chief Executive Officer, President, Treasurer, Secretary, and Director (Principal Executive Officer) | | Date |
/s/ Bradford Margetts | | April 16, 2013 |
Bradford Margetts, Chief Financial Officer, (Principal Financial and Accounting Officer) | | Date |
36