SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
August 15, 2006
Date of Report
(Date of Earliest Event Reported)
G/O Business Solutions, Inc.
(Exact Name of Registrant as Specified in its Charter)
Colorado 000-24688 76-0025986
-------- --------- ----------
(State or other (Commission (IRS Employer
Jurisdiction) File No.) I.D. No.)
18205 Burkhardt
Tomball, Texas 77377
(Address of Principal Executive Offices)
(281) 290-6655
(Registrant's Telephone Number)
N/A
(Former Name or Former Address if changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the Registrant under any of
the following provisions (see general instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14-a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4 ))
Explanatory Note
On March 30, 2006, we filed a Form 10KSB for the fiscal year ended December
31, 2005 (amended by a filing of a Form 10-KSB/A filed August 1, 2006), which
reflects solely our business, which was inactive for the 2005 year ("2005
10-KSB").
On May 11, 2005 we filed a Form 10-QSB for the quarter ended March 31, 2006
which was amended by filing a Form 10-QSB/A filed May 12, 2006 ("March 31,
2006 10-QSB").
On August 1, 2006 we filed a Form 10-QSB for the quarter ended June 30, 2006
which was amended by filing a Form 10-QSB/A also in August 1, 2008 (the
"June 30, 2006 10-QSB").
On June 26, 2006 we filed a Form 8-K disclosing the letter of intent to enter
into a reorganization transaction with SH Celera Capital Corporation (the
"June 26 2006 8-K").
On July 7, 2006, we filed a Form 8-K disclosing the resignation of Michael
Caswell as a director and officer of our Company (the "July 7, 2006 8-K").
On August 9, 2006, we filed a Form 8-K disclosing the filing of Amended and
Restated Articles of Incorporation with the Secretary of State of Delaware,
thereby changing our name from G/O International, Inc. to G/O Business
Solutions, Inc." and reverse splitting our shares effective August 15, 2006,
in the ratio of 1 for 2. (the "August 9, 2006 8-K").
On August 15, 2006 we completed the Reorganization Transaction with SH Celera
Capital Corporation upon the terms as previously disclosed in the June 26,
2006 Form 8-K and as more fully set forth herein. This 8-K is filed in
compliance with Securities and Exchange Commission Release No. 33-8587 and
includes disclosure items required under Form 8-K as follows:
Section 1-Item 1.01 Entry into a Material Definitive Agreement; Section 2-
Item 2.01 Completion of Acquisition or Disposition of Assets; Section 3-Item
3.02 Unregistered Sale of Equity Securities; Section 5-Item 5.01 Changes in
Control of Registrant; Item 5.03 Amendments to Articles of Incorporation or
Bylaws; Change in Fiscal Year; and Section 5-Item 5.06 Change in Shell
Company Status. These items are set forth herein below.
In our Form 10KSB for the fiscal year ended December 31, 2005, we reported
that we were a "shell company." Accordingly, as a result of the
Reorganization Transaction which resulted in a change of control, in
compliance with Item 501(a)(8) of Form 8-K, we have included in this 8-K the
information that would be required if we were filing a general form of
registration of our securities on Form 10-SB under the reporting requirements
of Section 13 of the Exchange Act reflecting information regarding us and our
securities upon consummation of the Reorganization Transaction. Our 2005 10-
KSB, March 31, 2006 10-QSB and June 30, 2006 10-QSB contain our Financial
Information through June 30, 2006 and we have included in this Form 8-K, a
pro forma balance sheet as of March 15, 2006, and as of June 30, 2006,
reflecting the Reorganization Transaction. We have also included in this Form
8-K financial information of SH Celera Capital Corporation including audited
financial statements from inception through March 15, 2006, and unaudited
financial statements for the period from inception through June 30, 2006.
Item 101 Entry into a Material Definitive Agreement
(a) As previously reported in the June 26, 2006 8-K, which is incorporated
herein by reference, we entered into a letter of intent to enter into a
reorganization transaction with SH Celera Capital Corporation, a Maryland
corporation (Reorganization Transaction"), that is engaged in, among other
activities, providing business consulting services to client companies
engaged in various industries and at various stages of development ("SH
Celera"). On July 26, 2006 we entered into the definitive Reorganization
Plan and Agreement with SH Celera Capital respecting the Reorganization
Transaction, the closing of which is subject to the fulfillment of certain
conditions including the filing of this Form 8-K. The following are the
principal terms of the Reorganization Plan and Agreement:
(b) Pursuant to the Reorganization Plan and Agreement, we either have or
will:
(1) filed Amended and Restated Articles of Incorporation thereby changing
our name from G/O International, Inc. to "G/O Business Solutions,
Inc.", which became effective on or about August 1, 2006. A copy of
our Amended and Restated Articles of Incorporation has been filed as
Exhibit 3.1 to this Form 8-K. See Item 9.01 Exhibit 3.1;
(2) reverse split, effective August 15, 2006, our outstanding 8,650,372
shares of $0.01 par value per share common stock in the ratio of 1 for
2, resulting in a total of 4,325,186 shares of our common stock, $0.01
par value per share being outstanding, post-split;
(3) issue a total of 17,300,744 post-split shares of our $0.01 par
value per share common stock to SH Celera resulting in SH Celera owning
80% of our issued and outstanding shares of $0.01 par value per share
common stock;
(4) entered into a Facilities Administration and Operating Services
Agreement with SH Celera pursuant to which SH Celera has undertaken to
provide all facilities, administration and operating services necessary
for us to conduct a fee based business consulting practice under our
trade name "G/O Business Solutions, Inc." Further discussion regarding
the Facilities Administration and Operating Services Agreement is set
forth in the paragraph "Organization and Business-Facilities
Administration and Operating Services Agreement" herein below and a
copy of the Facilities Administration and Operating Services Agreement
has been filed as Exhibit 10.1 to this Form 8-K. See Item 9.01 Exhibit
10.1;
(5) undertaken to engage in providing fee based business consulting
services to company clients through the support provided by SH Celera
under the Facilities Administration and Operating Services Agreement.
Further discussion regarding the fee based business consulting business
in which we intend to engage is set forth in the paragraph
"Organization and Business-Consulting Services" herein below;
(6) Appointed Mr. George Jarkesy, to fill the vacancy created by the
resignation of Michael Caswell, who resigned as a member of our board
of directors and as an officer on July 5, 2006. Mr. Jarkesy will serve
as a member of our board of directors until the next election of
directors and as our chairman and chief executive officer. In
connection therewith, we executed and delivered an indemnification
agreement thereby agreeing to indemnify Mr. Jarkesy in the event
certain proceedings are threatened or commenced against Mr. Jarkesy.
Information regarding Mr. Jarkesy and a discussion regarding the
Indemnification of our directors and officers is set forth in the
paragraphs "Directors, Executive Officers, Promoters, Control Persons,
Compliance with Section 16(a) of the Exchange Act" and
"Indemnification of Directors and Officers and SH Celera," herein
below, and a copy of the form of the Indemnification Agreement executed
and delivered to Mr. Jarkesy has been filed as Exhibit 10.5 to this
Form 8-K. See Item 9.01 Exhibit 10.5;
(7) transferred to SH Celera, a total of 356,999 shares of Waterbury
Resources Ltd., which constitutes the balance of our interest in
Waterbury Resources, Ltd;
(8) entered into the Mutual Undertaking Agreement pursuant to which we
undertook to raise additional equity capital of not less than
$2,500,000 and up to $5,000,000 through the sale of a newly created
class of our shares of preferred stock (the "Contemplated Financing").
Further discussion regarding the Contemplated Financing is set forth in
the paragraph "Management Discussion and Analysis of Financial
Condition and Results of Operations-Future Funding" herein below and a
copy of the Mutual Undertaking Agreement has been filed as Exhibit 10.2
to this Form 8-K. See Item 9.01 Exhibit 10.2;
(9) entered into the Agreement to Assume Debt and Release, Waiver and
Novation Agreement pursuant to which SH Celera agreed to assume up to
$65,000 or our outstanding liabilities. A copy of the Agreement to
Assume Debt and Release, Waiver and Novation Agreement has been filed
as Exhibit 10.3 to this Form 8-K. See Item 9.01 Exhibit 10.3;
(10) entered into Assignment, Assumption and Confirmation Agreements
with SH Celera and two of its client companies pursuant to which we
received the assignment of all rights under the certain retainer
agreements between SH Celera and such client companies ("Assigned
Retainer Agreements") and assumed the obligation to perform the
services required thereunder for the consideration payable thereunder.
Further discussion regarding the Assignment, Assumption and
Confirmation Agreements and the Assigned Retainer Agreements is set
forth in the paragraphs "Management Discussion and Analysis of
Financial Condition and Results of Operations-Contractual
Obligations," herein below, and a copy of each of the Assignment,
Assumption and Confirmation Agreements has been filed as Exhibits
10.4(a) and 10.4(b) to this Form 8-K, See Item 9.01 Exhibits 10.4(a)
and 10.4(b); and
(11) received a capital contribution of $50,000 from SH Celera to be
used for working capital.
Each of the actions taken in connection with the Reorganization Transaction
were completed by our board of directors without first obtaining stockholder
approval based upon authority granted the our directors by the stockholders
in the Shareholders Meeting dated September 8, 2003 pursuant to the
definitive Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934, filed with the SEC on August 21, 2003 which by this
reference is incorporated herein, pursuant to which the stockholders approved
amending our Articles of Incorporation, as follows: (i) eliminating the
recitation of numerous specific powers of the Company in favor of a statement
that the Company can engage in any lawful business for which corporations are
organized under the Colorado Corporation and Association Act (the "Colorado
Law"); (ii) eliminating classes of common stock and increasing our authorized
shares from 20,000,000 shares of common stock to 55,000,000 authorized
shares, 50,000,000 of which are common and 5,000,000 of which are preferred;
(iii) allowing the Company to take action by the written consent of less than
all of the stockholders without a meeting, provided the requisite number of
votes necessary to effect the particular action have voted in favor of the
particular action in accordance with Colorado Law; (iv) codifying the
Colorado Law regarding the right of our Company to indemnify and hold
directors, executive officers and others harmless from certain liabilities
for actions taken on behalf of our Company; (v) allowing the Board of
Directors the authority to effect re-capitalizations in the form of forward
and reverse splits of our outstanding securities without stockholder
approval; and (vi) allowing our Board of Directors to change the name of our
Company without stockholder approval.
(c) pursuant to the Reorganization Plan and Agreement, SH Celera:
(1) assumed up to $65,000 of our outstanding debt pursuant to the
Agreement to Assume Debt and Release, Waiver and Novation Agreement
discussed in the paragraph "Management Discussion and Analysis of
Financial Condition and Results of Operations" and attached to this
Form 8-K as Exhibit 10.3. See Item 9.01 Exhibit 10.3;
(2) contributed to us $50,000 for use as working capital;
(3) entered into the Mutual Undertaking Agreement pursuant to which it
undertook to issue to us a total of 486,053 shares of its $0.001 par
value per share common stock upon fulfillment of the following
conditions: (a) we shall have a net worth of not less than $2,500,000,
(ii) SH Celera shall have: (a) registered its shares of common stock
under Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "34 Act"); (b) taken such steps as required to qualify
its shares of common stock as "Covered Securities" as defined in
Section 18 of the Securities Act of 1933, as amended (the "33 Act")
and (c) registered its shares of common stock issuable to us in the
Reorganization Transaction for distribution to our stockholders,
determined at the time of the Closing of the Reorganization
Transaction, pursuant to the 33 Act. Further discussion regarding SH
Celera's commitment to issue its shares to us for further distribution
to our stockholders is set forth in paragraph Management Discussion and
Analysis of Financial Condition and Results of Operations-Distribution
Policy herein below and a copy of the Mutual Undertaking Agreement has
been filed as Exhibit 10.2 to this Form 8-K. See Item 9.01 Exhibit
10.2;
(4) entered into Assignment, Assumption and Confirmation Agreements
pursuant to which it assigned to us all of its rights under the
Assigned Retainer Agreements and we assumed the obligation to perform
the services required thereunder for the consideration payable
thereunder. Further discussion regarding the Assignment, Assumption and
Confirmation Agreements and the Assigned Retainer Agreements is set
forth in the paragraphs "Management Discussion and Analysis of
Financial Condition and Results of Operations-Contractual Obligations"
and herein below and a copy of the Assignment, Assumption and
Confirmation Agreements has been filed as Exhibits 10.4(a) and 10.4(b)
to this Form 8-K, See Item 9.01 Exhibits 10.4(a) and 10.4(b); and
(5) entered into a Facilities Administration and Operating Services
Agreement ("FA&OS Agreement") thereby agreeing to provide us with the
facilities, administration and operating services necessary for us to
conduct a fee based business consulting practice under our trade name
"G/O Business Solutions, Inc." Further discussion regarding the
Facilities Administration and Operating Services Agreement is set forth
in the paragraph "Organization and Business-Facilities Administration
and Operating Services Agreement" herein below and a copy of the
Facilities Administration and Operating Services Agreement has been
filed as Exhibit 10.1 to this Form 8-K. See Item 9.01 Exhibit 10.1.
As of the closing of the Reorganization Transaction, and including our
currently outstanding shares on a post split basis, there are 21,625,930
post-Reorganization Transaction, outstanding shares of our common stock,
$0.01 par value per share.
The foregoing description of the various documents executed in connection
with the Reorganization Transaction and the transactions contemplated thereby
do not purport to be complete and are qualified in their entirety by
reference to the various documents filed herewith as Exhibits. See Item 9.01
Exhibits 10.1, 10.2, 10.3, 10.4(a), 10.4(b), and 10.5.
A copy of the Reorganization Plan and Agreement, including all material
exhibits and related instruments as described above, is filed as Exhibit 2.1
to this Form 8-K; the foregoing summary is modified in its entirety by such
Reorganization Plan and Agreement and each of the referenced exhibits and
related instruments. See Item 9.01, Exhibit 2.1.
Item 2.01 Completion of Acquisition or Disposition of Assets
(a) See Item 1.01 above.
(b) we completed the disposition of assets in the Reorganization
Transaction through the transfer to SH Celera of the 356,999
ordinary shares of Waterbury Resources, Ltd., which constituted
substantially all of our assets at the time of transfer.
(c) we have completed the acquisition of assets in the Reorganization
Transaction through SH Celera's:
(i) contribution of a total of $50,000 in capital for our use
as working capital;
(ii) assignment of its rights under the Assigned Retainer
Agreements including the right to receive payments
thereunder. Copies of the Assignment, Assumption and
Confirmation Agreements have been filed as Exhibits 10.4(a)
and 10.4(b) to this Form 8-K. See Item 9.01 Exhibits
10.4(a) and 10.4(b);
(iii) undertaking in the Mutual Undertaking Agreement, executed
in connection with the Reorganization Transaction, to issue
to us a total of 486,053 shares of its $0.001 par value per
share common stock upon fulfillment of the following
conditions: (a) we shall have a net worth of not less than
$2,500,000, (ii) SH Celera shall have: (a) registered in
shares of common stock under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "34
Act"); (b) taken such steps as required to qualify its
shares of common stock as "Covered Securities" as defined
in Section 18 of the Securities Act of 1933, as amended
(the "33 Act") and (c) registered its shares of common
stock for distribution to our stockholders, determined at
the time of the Closing of the Reorganization Transaction,
pursuant to the 33 Act. Further discussion regarding SH
Celera's commitment to issue its shares to us for further
distribution to our stockholders is set forth in the
paragraph "Management Discussion and Analysis of Financial
Condition and Results of Operations-Distribution Policy"
herein below and a copy of the Mutual Undertaking Agreement
has been filed as Exhibit 10.2 to this Form 8-K. See Item
9.01 Exhibit 10.2;
(d) All of the above listed transactions are significant given the
limited resources we possessed at the time of the Reorganization
Transaction.
Item 3.02 Unregistered Sales of Equity Securities
(a) See Items 1.01 and 2.01
(b) In connection with the Reorganization Transaction, we will issue to
SH Celera a total of 17,300,744 post-split shares of our $0.01 par value
per share common stock resulting in SH Celera owning 80% of our issued
and outstanding shares of $0.01 par value per share common stock.
(c) The source of the consideration used by SH Celera to acquire their
interests in our Company was:
(1) the assumption of up to $65,000 our outstanding debt as
outlined in Item 1.01(c)(1) above.
(2) the contribution of $50,000 in equity capital to be used as
working capital as outlined in Item 1.01(c)(2) above.
(3) the undertaking to issue to us, for further distribution to
our stockholders, determined as of the date of closing of the
Reorganization Transaction, 486,053 share of SH Celera's $0.001
par value per share common stock, upon the fulfillment of certain
conditions, as outlined in Item 1.01(c)(3) above.
(4) the assignment of all of SH Celera's rights in the Assigned
Retainer Agreements, as outlined in Item 1.01(c)(4) above.
(5) the mutual execution and delivery of the FA&OS Agreement,
thereby agreeing to provide us with the facilities,
administration and operating services necessary for us to conduct
a fee based business consulting practice under our trade name
"G/O Business Solutions, Inc," as outlined in Item 1.01(c)(5)
above.
Item 5.01 Changes in Control of Registrant
(a) See Items 1.01, 2.01 and 3.02 above.
(b) Pursuant to the Reorganization Plan and Agreement and by virtue of the
percentage of our common stock acquired by SH Celera under the Reorganization
Plan and Agreement, the Reorganization Transaction is deemed to have involved
a "change of control" of our Company.
The source of the consideration used by SH Celera to acquire their interests
in our Company was:
(1) the assumption of up to $65,000 our outstanding debt as
outlined in Item 1.01(c)(1) above.
(2) the contribution of $50,000 in equity capital to be used as
working capital as outlined in Item 1.01(c)(2) above.
(3) the undertaking to issue to us for further distribution to
our stockholders, determined as of the date of closing of the
Reorganization Transaction, 486,053 share of SH Celera's $0.001
par value per share common stock, upon the fulfillment of certain
conditions, as outlined in Item 1.01(c)(3) above.
(4) the assignment of all of SH Celera's rights in the Assigned
Retainer Agreements, as outlined in Item 1.01(c)(4) above.
(5) the mutual execution and delivery of the FA&OS Agreement,
thereby agreeing to provide us with the facilities,
administration and operating services necessary for us to conduct
a fee based business consulting practice under our trade name
"G/O Business Solutions, Inc," as outlined in Item 1.01(c)(5)
above.
In addition to the "control" acquired through the acquisition of our shares
of common stock by SH Celera, pursuant to the terms of the Reorganization
Plan and Agreement, Mr. George Jarkesy, the President and Chief Operating
Officer of SH Celera, was appointed as a member of our board of directors, to
fill the vacancy created by the resignation of Michael Caswell, who resigned
as a member of our board of directors and as an officer on July 5, 2006. Mr.
Jarkesy will serve as a member of our board of directors until the next
election of directors and as our chairman and chief executive officer. See
"Directors, Executive Officers, Promoters, Control Persons, Compliance with
Section 16(a) of the Exchange Act," herein below.
To the knowledge of our management and based upon a review of the stock
ledger maintained by our transfer agent and registrar, the following table
sets forth the beneficial ownership of persons who owned more than five
percent of our common stock prior to the closing of the Reorganization
Transaction, and the shareholdings of the then members of our management,
such computations being based upon the 8,650,372 pre-split shares of our
common stock that were then outstanding:
Michael Caswell
3637 W. Alabama Stockholder 220,000* 2.54%
Houston Texas 77027 Director
David M. Klausmeyer
10878 Westheimer, #178 Stockholder (3) 21,000 .24%
Houston, Texas 77042
Sand Hills General
Partners, LLC
18205 Burkhardt Stockholder (1)(2)(4) 6,400,000 75%
Tomball, Texas 77377
Sand Hills Partners
18205 Burkhardt
Tomball, Texas 77377 Stockholder 6,400,000 75%
John Ellis Stockholder,
41 E Broadway Director and Chairman
Irvington, New York Of SH Celera 6,400,000 75%
George Jarkesy Stockholder, Director, Chairman
18205 Burkhardt and Chief Executive Officer
Tomball, Texas 77377 6,400,000 75%
President and Chief
Operating Officer SH Celera
David Strawn Stockholder
2225 Barham Dr. Suite B Director and Chief
Escondido, California Executive Officer of
92029 SH Celera 6,400,000 75%
Brian Rodriguez Director, President
2202 Bluebonnet Dr.
Richardson, Texas 75082 Chief Financial Officer, 100,000 1.1%
Chief Valuation Officer
and Treasurer of SH Celera
All officers and Directors 320,000 3.6%
*30,000 of these shares are held in the name of M.L. Caswell Investments,
which is a "doing business as" name of Mr. Caswell.
Changes in Control.
Mr. David Klausmeyer, in connection with the sale of his interest in Sand
Hills General Partners, received the promissory note of Sand Hills Partners,
LLC in the principal amount of $1,500,000 that is secured by a pledge of 100%
of Sand Hills Partners, L.L.C.'s interest in and to Sand Hills General
Partners, which owns a total of 6,400,000 pre-split shares or 75% of our
outstanding shares of common stock. Such Note is further secured by a
guaranty and pledge of such shares by Sand Hills General Partners. See our 8-
K Current Report dated February 28, 2006, which is incorporated herein by
this reference. See Part III, Item 13. In the event of a default in the
payment of this Promissory Note to Mr. Klausmeyer, a change in control of our
Company could occur. See Part III, Item 11.
To the knowledge of our Company's management, there are no additional present
arrangements or pledges of our Company's securities which may result in a
change in control of our Company.
To the knowledge of our management and based upon a review of the stock
ledger maintained by our transfer agent and registrar, the following table
sets forth the beneficial ownership of persons who owned more than five
percent of our common stock following the closing of the Reorganization
Transaction, and the share holdings of the new members of our management,
such computations being based upon the 21,625,930 post-split shares of our
common stock that are or will be outstanding following the closing of the
Reorganization Transaction:
Name and Address Position Amount and Percent of
of Beneficial Owner Nature of Class Owned
Beneficial
Owner
SH Celera Capital Corporation
14360 Sylvanfield Dr
Houston, Texas 77014 Stockholder (1)(2)(4) 17,300,744 80%
David M. Klausmeyer
10878 Westheimer, #178
Houston, Texas 77042 Stockholder (3) 10,500 .0005%
Sand Hills General
Partners, LLC
18205 Burkhardt
Tomball, Texas 77377 Stockholder (1)(2)(4) 20,500,744 94.2%
Sand Hills Partners
18205 Burkhardt
Tomball, Texas 77377 Stockholder(1)(2)(4) 20,500,744 94.2%
John Ellis Stockholder(1)(2)(4),
41 E Broadway Director and Chairman
Irvington, New York of SH Celera 20,500,744 94.2%
George Jarkesy Stockholder, Director
18205 Burkhardt Chairman and CEO(1)(2)(4)
Tomball, Texas 77377
President and COO
SH Celera 20,500,744 94.2%
David Strawn Stockholder(1)(2)(4)
2225 Barham Dr. Suite B
Escondido, California 92029 Director and CEO
of SH Celera 20,500,744 94.2%
Brian Rodriguez Director, President
2202 Bluebonnet Dr.
Richardson, Texas 75082 Chief Financial
Officer, Chief
Valuation Officer
and Treasurer of SH
Celera 100,000 .47%
All officers and Directors
(1)(2)(4) 20,500,744 94.2%
(1) In addition to the 17,300,744 post-split share of our common stock to be
issued to SH Celera in the Reorganization Transaction, SH Celera has indirect
control over a total of 3,200,000 post-split shares of our common stock based
on the fact that Sand Hills Partners, LLC, a Delaware Limited Liability
("SHP"), that is owned equally by Messrs Ellis, Jarkesy and Strawn, controls
3,200,000 post-split shares of our common stock through its ownership of Sand
Hills General Partners, a Texas general partnership ("SHGP"), which owns a
total of 3,200,000 post-split share of our common stock.
(2) In addition to the 3,200,000 post-split shares of our common stock held
by SHGP, that are controlled by SHP through its ownership of SHGP, SHP owns
89% interest in SH Celera, which provides SHP and its members with the voting
control over 100% of the 17,300,744 post-split shares to be issued to SH
Celera in the Reorganization Transaction. Messrs. Ellis, Jarkesy and Strawn
are the members and equal owners of SHP. Additionally Mr. Ellis serves as SH
Celera's Chairman, Mr. Strawn serves as its Chief Executive Officer and Mr.
Jarkesy serves as its President and Chief Operating Officer. Accordingly a
total of 20,500,744 or 94.2% of the currently issued and outstanding shares
are controlled by SHP and its members, John Ellis, George Jarkesy and David
Strawn.
(3) David M. Klausmeyer is a former partner of Sand Hills General Partners
who has as security for a $1,500,000 Promissory Note of Sand Hill Partners
all of the 3,200,000 post-split shares of our company that is owned by Sand
Hills General Partners.
(4) SHGP, SH Celera and David Klausmeyer each have direct investment and
voting power with regard to the securities listed opposite its or his name.
However, as noted, SH Celera is controlled by Sand Hills Partners, LLC, which
also controls SHGP, which together, possess control over 20,500,744 shares of
our common stock
Changes in Control
Mr. David Klausmeyer, in connection with the sale of his interest in Sand
Hills General Partners, received the promissory note of Sand Hills Partners,
LLC in the principal amount of $1,500,000 (the "Promissory Note") that is
secured by a pledge of 100% of Sand Hills Partners, L.L.C.'s interest in and
to Sand Hills General Partners, which owns a total of 3,200,000 post-split
shares or 15% of our 21,625,930 post-split issued and outstanding shares of
common stock. Such Note is further secured by a guaranty and pledge of such
shares owned by Sand Hills General Partners. See our 8-K Current Report dated
February 28, 2006, which is incorporated herein by this reference. See Part
III, Item 13. In the event of a default in the payment of this Promissory
Note to Mr. Klausmeyer, a change in control of our Company could occur. See
Part III, Item 11.
To the knowledge of our Company's management, there are no additional present
arrangements or pledges of our Company's securities which may result in a
change in control of our Company.
Item 5.02 Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers
(a) See Items 1.01, 2.01 and 5.01 above.
(b) Michael Caswell resigned as a director and officer of the Company
on July 5, 2006. The vacancy resulting from Mr. Caswell's resignation was
filled by the appointment of Mr. George Jarkesy, who was also appointed as
our Chairman and Chief Executive Officer. Mr. Jarkesy will service as a
director until his successor is elected and qualified or until his
resignation or termination.
Item 5.03 Amendments to Articles of Incorporation, Bylaws, Change of Fiscal
Year
Pursuant to the Reorganization Plan and Agreement, we have amended our
Articles of Incorporation to change our name from "G/O International, Inc."
to "G/O Business Solutions, Inc." Such Amended and Restated Articles of
Incorporation were filed on August 1, 2006. A copy of our Amended and
Restated Articles of Incorporation are attached to this Form 8-K as Exhibit
3.1. See Item 9.01 Exhibit 3.1
Such Amendment and Restatement of our Articles was undertaken pursuant to
authority granted our board of directors in the stockholders meeting dated
September 28, 2003 pursuant to a Proxy Statement under Section 14(a) of the
Securities Exchange Act of 1934, that was filed with the SEC on August 21,
2003, which by this reference is incorporated herein ("September 28, 2003
Proxy Statement").
Item 5.06 Change in Shell Company Status
In our Form 10KSB for the fiscal year ended December 31, 2005, we reported
that we were a "shell company" as defined in Rule 12b-2 under the Exchange
Act. We believe that, as a result of the Reorganization Transaction,
including the assignment of the Assigned Retainer Agreements, the execution
and delivery of the Facilities Administration and Operating Services
Agreement, and our engaging in the business of providing the Consulting
Services, we are not longer a "shell company" as defined in Rule 12b-2 under
the Exchange Act.
The material terms of the Reorganization Transaction resulting in our change
of status from a "shell company" are set forth in Item 1.01, 2.01, 3.01 and
5.01 herein above.
Accordingly, as a result of the Reorganization Transaction, which resulted in
a change of control, in compliance with Item 501(a)(8) of Form 8-K, we have
included in this 8-K, the information that follows which is information that
would be required if we were filing a general form of registration of our
securities on Form 10-SB under the reporting requirements of Section 13 of
the Exchange Act reflecting information regarding us and our securities upon
consummation of the Reorganization Transaction including a pro forma balance
sheet as of March 15, 2006. Due to the material relationship between our
Company and SH Celera Capital Corporation, we have also included in this Form
8-K financial information of SH Celera Capital Corporation including audited
financial statements from inception through March 15, 2006, and unaudited
financial statements for the period from inception through June 30, 2006.
ORGANIZATION AND BUSINESS
Our Prior Business
Since the termination of our limited business operations conducted through
our then majority owned subsidiary, Waterbury Resources, Ltd., a corporation
organized under the laws of the Cayman Islands, BWI ("Waterbury"), we have
had no business operations. As a result of the Restructure of the Waterbury
Debt disclosed on our Form 8-K filed March 24, 2006 and the transfer of the
356,999 shares of Waterbury to SH Celera in the Reorganization Transaction,
we no longer own any shares of Waterbury. See Item 1.01 above.
For any historical information regarding the Company under any caption that
is not included below, please see: our 2005 10-KSB, duly filed with the
Securities and Exchange Commission on March 30,, 2006 and amended by filing
of a 10-KSB/A on August 1, 2006 (our "2005 10-KSB"); our 8-K respecting the
Restructure of the Waterbury Debt filed March 24, 2006 (the "March 24, 2006
8-K"); our 10-QSB Quarterly Report for the quarter ended March 31, 2005,
duly filed with the Securities and Exchange Commission on May 11, 2006 and
amended by filing of a 10-QSB/A on May 12, 2006 (the "March 31 10-QSB") our
10-QSB Quarterly Report for the quarter ended June 30, 2006, duly filed with
the Securities and Exchange Commission on August 1, 2006, and amended by
filing of a 10-QSB/A on August 1, 2006 (our "June 30, 2006 10-QSB"); our 8-K,
duly filed with the Securities and Exchange Commission on June 26, 2006
respecting the letter of intent to enter into a reorganization transaction
with SH Celera Capital Corporation (the "June 26, 2006 8-K"), our 8-K, duly
filed with the Securities and Exchange Commission on July 7, 2006, respecting
the resignation of Michael Caswell as a member of our board of directors and
as an officer (the "July 7, 2006 8-K"), our 8-K, duly filed with the
Securities and Exchange Commission on August 9, 2006, respecting filing of
our Amended and Restated Articles of Incorporation, changing our name to G/O
Business Solutions, Inc. (the "August 9, 2006 8-K"), all of which are
incorporated herein by reference. See Item 9.01.
Our New Business
Pursuant to the Reorganization Transaction, we have contracted with SH
Celera, which, as a result of the Reorganization Transaction, is the owner of
80% of our issued and outstanding shares of common stock, to provide fee
based consulting, advisory and outsource services to companies engaged in
various industries and at various stages of development. The services to be
provided will include:
* Consulting regarding Corporate Development Issues;
* Consulting regarding Merger and Acquisition Plan Development and
Procedures;
* Consulting regarding Market Divestiture and Special Situations
Planning and Procedures;
* Consulting regarding Growth Strategies and Logistics Planning,
Development and Procedures;
* Consulting regarding Succession Planning;
The foregoing services are hereinafter referred to collectively as the
"Consulting Services."
The Consulting Services will be conducted, initially through the resources
provided by SH Celera pursuant to the Facilities Administration and Operating
Services Agreement. See "The Facilities Administration and Operating
Services Agreement," herein below.
In addition, as opportunities arise, if we have sufficient resources, we will
seek to acquire companies engaged in providing business development and
financial services and products.
The Facilities Administration and Operating Services Agreement
The FA&OS Agreement is filed as Exhibit 10.1 to this Form 8-K ("FA&OS
Agreement"). The following description of the FA&OS Agreement and the
transactions contemplated thereby do not purport to be complete and is
qualified in its entirety by reference to the Facilities Administration and
Operating Services Agreement filed herewith as Exhibit 10.1. See Item 9.01
Exhibit 10.1.
Given our limited resources, in connection with the Reorganization
Transaction, we have entered into a FA&OS Agreement ("FA&OS Agreement") with
SH Celera pursuant to which SH Celera, the owner of 80% of our issued and
outstanding shares of common stock, has agreed to provide the facilities, the
administration and the ongoing provision of the Consulting Services to our
clients. Pursuant to the FA&OS Agreement, SH Celera provides:
Facilities, including all office space, staff, communications and
computing systems necessary to provide the Consulting Services. See
"Office and Facilities" herein below.
Administration, including all internal administrative tasks necessary
to provide the Consulting Services including scheduling, conferencing,
bookkeeping, filing, contract processing, accounts receivable and
payables, SEC reporting and compliance, human resources. See
"Administration of the Business of Providing the Consulting Services,"
herein below.
Fee Based Consulting Services, including those direct services
necessary to provide our clients the Consulting Services. See "The
Consulting Services" herein below.
Terms of the FA&OS Agreement
Payments and Compensation
A. Fixed Fees. Pursuant the FA&OS Agreement, SH Celera accrues a
monthly fixed fee of $10,000 in connection with the provision of the
Facilities and the Administrative Services they provide us, which are
paid first out of any cash fees earned in connection with the provision
of the Consulting Services. When funds are not available for the
payment of such fixed fees, such fees accrue and are paid on a first in
first out basis, when funds become available, before any distributions
are made to us.
B. Reimbursement of SH Celera's Staff Charges. In addition to the Fixed
Fees, we are responsible for the monthly payment of reimbursements of
the following SH Celera staff (SH Celera Staff Reimbursements'):
Brian Rodriguez $4,166
Dwayne Deslatte $6,250
C. Participation in Cash Consulting Fees. Upon full payment of all
accrued and currently due Fixed Fees, and deduction of the
Reimbursement of SH Celera Staff Charges we split all cash fees equally
with SH Celera.
D. Distribution of Non-Cash Compensation. We anticipate that, from time
to time, we will accept property or shares of a client company (Non-
Cash Compensation") as compensation in connection with the provision
of the Consulting Services. In connection with the acceptance of any
Non-Cash Compensation consisting of shares of a client company, we have
agreed with SH Celera to distribute any Non-Cash Compensation to our
stockholders through a dividend distribution that will be undertaken
upon completion of necessary steps to lawfully distribute such Non-Cash
Compensation. We have been advised by legal counsel that in order to
avoid potential classification as an investment company under Section 3
of the Investment Company Act of 1940 (the "ICA") it may be necessary
to complete such a dividend distribution of Non-Cash Compensation
consisting of shares of a client company, pursuant to a registration
under the Securities Act of 1933, as amended, which we will undertake,
if required. If we are required to undertake such a registration, we
will attempt to negotiate with the client company from whom we have
received such Non-Cash Compensation requiring them, as a condition to
our accepting such Non-Cash Compensation, to: (i) register their shares
under Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "34 Act"), (ii) qualify such shares as "Covered
Securities" under Section 18 of the Securities Act of 1933, as amended
(the "33 Act"), (iii) register such shares for distribution to our
stockholders pursuant to the 33 Act, and (iv) bear all costs associated
with such registration. We anticipate that, in each case, such
undertakings by a client company will be set forth in the retainer
agreement executed in connection with providing the Consulting Services
for Non-Cash Compensation.
Non-Solicitation, Non-Competition and Protection of Confidential
Information.
SH Celera has agreed in the Facilities Administration and
Operating Services Agreement that it will not, without our permission: (i)
solicit any client company for the purpose of performing any services similar
to the Consulting Services performed by us or (ii) enter into or assist
others in entering into any business that would offer or perform any services
similar to the Consulting Services performed by us. In addition, the FA&OS
Agreement contains mutual agreements regarding the protection of confidential
information by us and SH Celera.
Indemnification.
We have agreed to indemnify and hold harmless SH Celera, its directors,
officers, managers, partners, agents, employees, controlling persons, and any
other person or entity affiliated with any of them (collectively, the
"Indemnified Parties"), in connection with the performance of any of its
duties or obligations under the Facilities Administrative and Operating
Services Agreement and hold them harmless from and against all damages,
liabilities, costs and expenses (including reasonable attorneys' fees and
amounts reasonably paid in settlement) incurred by the Indemnified Parties in
or by reason of any pending, threatened or completed action, suit,
investigation or other proceeding arising out of or otherwise based upon the
performance of any of SH Celera's duties or obligations under the FA&OS
Agreement . Such indemnification and hold harmless will not apply to any
claims resulting from SH Celera's willful misfeasance, bad faith or negligence
in the performance of its duties or by reason of the reckless disregard of SH
Celera's duties and obligations under the Facilities Administration and
Operating Services Agreement; provided, however, that the maximum liability of
SH Celera or any other Indemnified Party is limited to the total compensation
paid to SH Celera under the Facilities Administration and Operating Services
Agreement.
Duration and Termination of the Facilities Administration and Operating
Services Agreement.
The FA&OS Agreement is effective for a period of two years, and
thereafter continues from year to year, but only so long as such continuance
is specifically approved at least annually by our Board of Directors and a
majority of those members of the our Board of Directors who are not parties to
the FA&OS Agreement or "interested persons;" provided, however, that the FA&OS
Agreement may be sooner terminated: (i) without the payment of any penalty, by
us upon vote of our Board of Directors, or by SH Celera, upon 60 days' written
notice to the other party, and (ii) automatically terminate at such time as
either: (a) we have raised not less than $2,500,000 in equity capital, or (b)
we have accumulated cash reserves equaling not less than one year's projected
required operating cash, as determined by our Board of Directors.
Assignment of Existing Consulting Services Retainer Agreements.
In connection with the Reorganization Transaction, SH Celera has, through the
Assignment, Assumption and Confirmation Agreements assigned to us all of its
right, title and interest in and to the outstanding retainer agreements it
has entered into with two existing client companies ("Existing Client
Companies").
Pursuant to the Assigned Retainer Agreements, we will undertake to
provide the business development consulting services to each of the Existing
Client Companies, as set forth in each such Assigned Retainer Agreement with
the Existing Client Companies. In consideration therefore, the Existing
Client Companies have agreed to pay certain ongoing cash fees and certain
share compensation, as set forth in "Managements Discussion and Analysis of
Financial Condition and Results of Operations." See "Managements Discussion
and Analysis of Financial Condition and Results of Operations."
Share Compensation
Each of the Existing Client Companies has agreed to deliver, as share
compensation, that number of shares of its common stock equal to 5% of each
client company's issued and outstanding shares of common stock determined at
the Effective Date of the registration of such shares under the Securities
Act of 1933, as amended (the "33 Act"), on a fully diluted basis, including
any additional shares of such client company's common stock that may be
issued pursuant to the registration of such shares under the 33 Act or
thereafter pursuant to any rights existing at the effective date of the
registration of such shares under the 33 Act.
In connection with the payment of the Share Compensation, each of the
Existing Client Companies, has executed and delivered an agreement pursuant
to which it has undertaken to: (1) register its shares under Section 13 of
the Exchange Act, (2) raise sufficient capital so as to qualify for listing
on an exchange that would qualify its shares as "Covered Securities," as
defined in Section 18 of the Securities Act, (3) prepare and file a listing
application with an exchange that would qualify its shares as "Covered
Securities," as defined in Section 18 of the Securities Act; and (4)
register the shares issuable as Share Compensation pursuant to the Securities
Act for distribution to our stockholders, determined by our board of
directors immediately prior to the effective date of the Securities Act
registration ("Client Undertaking Agreements").
There can be no assurance that these Existing Client Companies will be
successful in any of the foregoing steps necessary to distribute the shares
comprising the Share Compensation to our stockholders.
The Client Undertaking Agreements executed by each of the Existing
Client Companies contain certain liquidated damages, payable to us, in the
event that certain conditions are not timely met.
The Assignment, Assumption and Confirmation Agreements respecting each
Existing Client Company are filed as Exhibits 10.4(a) and 10.4(b) to this
Form 8-K. The foregoing description of the Assignment, Assumption and
Confirmation Agreement and the transactions contemplated thereby do not
purport to be complete and is qualified in its entirety by reference to the
Assignment, Assumption and Confirmation Agreements filed herewith as Exhibits
10.4(a) and 10.4(b). See Item 9.01 Exhibits 10.4(a) and 10.4(b). The Client
Undertaking Agreements are attached to the respective Assignment, Assumption
and Confirmation Agreements. See Item 9.01 Exhibits 10.4(a) and 10.4(b).
SH Celera Capital Corporation-Background
SH Celera Capital Corporation ("SH Celera") is a Maryland corporation that
was formed in December of 2005 by its founders to undertake locating,
evaluating, selecting, capitalizing and managing investments in companies
that present the opportunity, in the judgment of management, to realize, from
such investment, a short to medium term (6 to 18 months) cash return on
investment in excess of risk adjusted market rates, through investment
selection and structures that assure a highly predictable liquidity event. In
connection with it stated purpose to provide management to companies in which
it may acquire interests, SH Celera's management has also undertaken, among
other business activities, fee-based consulting, advisory and outsource
services to companies engaged in various industries and at various stages of
development. The services that the management of SH Celera provides include
fee based consulting services regarding:
* Corporate Development;
* Merger and Acquisition Planning (M&A Planning);
* Market Divestiture and Special Situations Consulting;
* Growth Strategies and Logistics- Review, Development and Implementation
Procedures;
* Succession Planning;
The foregoing services are hereinafter referred to collectively as the
"Consulting Services"
Since the time of its formation, the founders of SH Celera have completed the
following organizational steps necessary to conduct its proposed business:
(i) completed the formation of a board of directors. See "Directors,
Executive Officers, Promoters and Control Persons; Compliance with
Section 16(a) of the Exchange Act," herein below;
(ii) formed the requisite committees and adopted committee charters
including an Audit Committee, Compensation Committee and Corporate
Governance/Nomination Committee. See "Directors, Executive
Officers, Promoters and Control Persons; Compliance with Section
16(a) of the Exchange Act," herein below;
(iii) Adopted a Code of Ethics and Code of Business Conduct. See
"Directors, Executive Officers, Promoters and Control Persons;
compliance with Section 16(a) of the Exchange Act"" herein below; "
(iv) Recruited and hired management personnel qualified to conduct its
intended business, See "Directors, Executive Officers, Promoters
and Control Persons; Compliance with Section 16(a) of the Exchange
Act," herein below; "
(v) Commenced development of a proprietary project processing and data
storage system. See "FASTrack PPS" herein below;
(vi) Formed and recruited members of its Industry Advisory Committees.
See "Industry Advisory Committees," herein below;
(vii) Actively undertaken to provide fee based consulting services
of the nature assigned to and to be undertaken by the Company.
Pursuant to the FA&OS Agreement, the foregoing services will be performed by
SH Celera on our behalf under our trade name "G/O Business Solutions, Inc."
See "Organization and Business-Facilities Administration and Operating
Services Agreement," herein below.
In March of 2006 SH Celera completed the offering of a total of 1,500,000
shares of its $0.001 par value per share common stock, at an offering price
of $0.30 per share, for gross offering proceeds of $450,000 (the "Initial
Offering"). The Initial Offering was conducted as a private placement under
Section 4(2) of the Securities Act of 1933, as amended (the "33 Act").
The decision to complete the Reorganization Transaction and to commence the
business of providing the Consulting Services was made primarily to establish
both us and SH Celera as a vehicle through which the we will be able to: (1)
raise sufficient capital for further development of our business, (2) recruit
qualified staff and management with meaningful equity participation, (3)
attract potential client companies, and (4) acquire existing companies
engaged primarily in providing business development and financial services
and products.
The Consulting Services
Through SH Celera, its management and staff and our directors and officers,
we have commenced providing Consulting Services targeted to companies in
various industries and at various stages of development including.
To Entrepreneurial Start-Up Ventures-We offer expert advice to founders
seeking to resolve critical issues regarding:
* Selection of qualified professionals;
* Development of intellectual property rights and strategies;
* Development of comprehensive business and operating plans including
detailed start-up pro-forma statements;
* Development of marketing, operations, capital funding and
organization strategies;
* Development of entity structure, formation, organization and
operationalization;
* Recruitment of qualified management to fill critical management
positions including CEO's, and CFO's;
To Young Established Private Growth Companies-We offer expert advice to
stockholders and management seeking to drive growth through expansion or
acquisition, regarding:
* Development of internal growth and expansion strategies;
* Development of acquisition strategies;
* Performing due diligence review of acquisition targets;
* Preparation and management of acquisition process and transition
programs;
* Pre-IPO due diligence preparation;
To Mature Established Private Companies-We offer expert advice to
stockholders and management regarding:
* Development of strategies for creating stockholder liquidity;
* Development of spin-off, split-off or other divestiture strategies;
* Development of merger and acquisition strategies;
* Developing succession plans for private owners;
* Recruiting qualified senior management;
* Development of joint venturing and new market entry strategies;
* Locating and qualifying acquisition targets;
* Performing due diligence review of acquisition targets;
To Companies that are experiencing financial difficulties-we offer expert
advice to management regarding:
* Development of liquidation or debtor in possession strategies;
* Development of split-up, spin-off strategies or other divestiture
strategies;
* Valuations;
* Development of merger, acquisition or joint venture strategies;
* Creditor negotiation and negotiated repayment plans;
We offer the Consulting Services to client companies:
On a Retainer Basis, in which case, we receive regular payment to represent a
client company as an extension of one of more of its existing business
functions or to provide a function not otherwise performed by the client
company. This begins with a complete review of the client company's
situation, objectives, and constraints and if necessary, the development of
strategic and logistic plans necessary to meet the stated objectives within
the defined constraints. We then represent the client company quietly and
confidentially, in performing the agreed upon activities comprising the
function for the agreed upon period or our retainer.
On a Project Basis, which is proposed and billed on a per-project and per-
milestone basis. Project consulting provides a client company a means to
harness our experience and expertise to solve specific problems, develop
and/or implement plans, identify certain opportunities, or develop specific
information. Typically a project begins with a series of interviews with the
client company to identify the nature of the project, its scope,
deliverables, resources and milestones. We then place the project into a
computerized project management system that clearly defines the required
activities, the available resources and their assignments, the time line to
complete each activity and we prepare a gant chart showing the entire
timeline and critical path to complete the project. We then either
independently or in conjunction with the client company's staff undertake to
complete the defined activities necessary to complete the project.
In connection with providing the Consulting Services, we utilize a project
entry tracking and collaboration system being developed by SH Celera to
support the information gathering and storage process and collaboration
necessary to successfully identify and log potential client companies, and
related information respecting the sources of such client companies and to
provide an efficiently collaborate with client company's requests in
performing the Consulting Services. See "FASTrack PPS TM" herein below.
Marketing of the Consulting Services
The Consulting Services are marketed by SH Celera and our officers under our
trade name "G/O Business Solutions, Inc." In addition, SH Celera will
develop and operate a website, and prepare brochures and sales literature to
mail-out to companies that its sales staff have determined may utilize the
Consulting Services.
Location and Identification of potential Client Companies
SH Celera relies on its management team and members of its Industry Advisory
Committees to locate and identify potential client companies.
SH Celera's management relies upon their relationships with financial and
business professionals, universities, governmental agencies and various
associations, to which they are members.
SH Celera has established and intends to further establish Industry Advisory
Committees and has selected members that are both qualified experts within
their industrial fields and possess substantial resources including
relationships within both private and public sectors of our economy and the
global economy. Each of these Advisory Committee members have been
incentivized to provide referrals of potential client companies SH Celera,
and, in addition, will participate in varying levels in providing
professional consulting services.
The location and identification of potential client companies and all related
marketing and sales of the Consulting Services is managed by SH Celera
through its Chief Operations Officer, Mr. George Jarkesy, subject to the
authority of SH Celera's Executive Committee. Mr. Jarkesy, as our newly
appointed Chairman and Chief Executive Officer will act directly on our
behalf in the process of locating potential clients and marketing and selling
the Consulting Services.
To support the information gathering and computerized storage process
necessary to successfully identify and log potential client companies, and
related information respecting the sources of such opportunities SH Celera is
developing the "FASTrack Project Processing System TM" ("FASTrack PPS TM"), a
proprietary online project entry and data storage and processing system for
logging, storing and processing potential client companies and for logging,
storing and managing client sources and information. See FASTrack PPS.TM
Competition
Our primary competitors in providing the Consulting Services to client
companies include: law firms, accounting firms, large management consulting
firms such as McKinsey, Bain, Boston Consulting Group, and commercial and
investment banks. As a result, competition for potential client companies is
intense. Most if not all of our existing and potential competitors are
substantially larger and have considerably greater financial, technical and
marketing resources and experience than we do. For example, most competitors
will have larger staff with greater levels of expertise and experience
available to them. In addition, some of our competitors will have long term
relationships with existing clients that provide them the ongoing cash flow
necessary to further develop their business. We expect to use the industry
information gathered by SH Celera's management to identify companies that can
utilize our Consulting Services. In addition, we believe that the
relationships of SH Celera's management and members of its Industry Advisory
Committees will enable them to learn about, and compete effectively for,
client companies. For additional information concerning the competitive risks
we face, see "Risk Factors' We operate in a highly competitive market for
client companies."
FASTrack PPS TM
To support the information gathering and storage process necessary to
successfully identify and log potential client companies, and related
information respecting the sources of such client companies and to provide an
efficient means to process potential client company's requests as they are
presented, SH Celera has developed the "FASTrack Project Processing System
TM" ("FASTrack PPS TM"), a proprietary online project entry and data storage
and processing system for logging, storing and processing client company
leads and contacts and for logging, storing and managing potential client
company sources.
The FASTrack PPS TM data base has been designed to: (1) store all previously
logged project information for future reference, (2) catalog and store
readily accessible research and reference materials including materials that
may be input by a outside project source or one of SH Celera's team members,
(3) catalog and store readily accessible form documents, and (4) catalog and
store project source information. The data base has been designed as a
resource center both for SH Celera's internal teams, its directors and
Industry Advisory Members.
The FASTrack PPS TM has been designed to allow quick and accurate logging and
management of new projects. Basic information gathered from a client company
may be logged into the system through an extranet portal and immediately
brought to the attention of the Project Manager, who is in charge of managing
the project through its completion, while effectively interfacing with the
client company.
Once a project is logged into the FASTrack PPS, a detailed computerized
project task manager program is immediately populated and delivered to the
Project Manager. The project task manager program populates a project
tracking program that sets forth all tasks necessary to move a newly entered
project through to completion, and allows the Project Manager to assign
resources and develop time lines, which are plotted on a gant chart to show
the critical path to completion of the project. Further, the Project Task
Manager program logs percentage of completion allowing anyone with access to
the program to monitor and manage the progress of a logged project. The
Project Task Manager program is utilized: (1) in internally managing a
project and (2) in interfacing with the client company to assist them in
managing their resources and timelines.
FASTrack PPS TM has been designed to allow client companies access through an
extranet portal that may be logged into from any location through the
Internet. This provides (i) management, directors, and Industry Advisory
Members the ability to both monitor and assist client companies and, if they
are participating in any of the providing any of the services, access the
same information as team members responsible for such performing the tasks
associated with such functions (ii) client companies to monitor the progress
of projects.
Staff
We do not employ any staff. All staff is provided by SH Celera under the
FA&OS Agreement. SH Celera currently employs three full time staff members and
foresees hiring additional employees as cash flow permits. SH Celera will seek
to pass the costs associated with employees on to client companies through
consulting and other fees, charged client companies in connection with
providing the Consulting Services. SH Celera will use consultants, attorneys
and accountants as necessary, which costs will be passed on to client
companies.
Industry Advisory Committees
SH Celera has developed Industry Advisory Committees and its management is in
the process of recruiting Industry Advisory Committee members in order to
obtain in-depth expertise, experience and access to resources in various
areas of science and industry. The expertise, experience and resources of
members of these Industry Advisory Committees will be drawn upon by SH
Celera's management in: (i) locating potential client companies, (ii)
assisting in providing the Consulting Services to client companies, and (iii)
serving on boards and as officers of client companies. In an effort to
broaden the potential fields in which SH Celera possesses expertise,
experience, and to access additional resources, SH Celera's management
intends to constantly meet with and evaluate experts in various fields of
science and industry for membership on one of its Industry Advisory
Committees. To date SH Celera have formed the following Advisory Committees:
Financial Services and Products
Life Sciences
Technology
Real Estate
Construction and Building Products
Turn Around and Distressed Assets
Manufacturing
Marketing
Media
Gas, Oil and Energy
International Resources and Support
Administration of the Business of Providing the Consulting Services
SH Celera has agreed to perform or oversee, or arrange for, the performance
of the administrative services necessary for the operation of our business of
providing the Consulting Services. Such administrative services include
clerical, bookkeeping and record keeping services at the Office Facility and
such other administrative services as SH Celera, subject to review by our
Board of Directors, determine to be necessary or useful to conducting our
business of providing the Consulting Services. In addition, SH Celera, on our
behalf, upon review and prior written approval by our Board of Directors, has
agreed to arrange for the services of and oversee, accountants, attorneys,
insurers, banks and such other persons in any such other capacity deemed to
be necessary or desirable for the us to conduct our business of providing the
Consulting Services.
SH Celera has also agree to be responsible for the financial and other
records that we are required to maintain and to supervise the preparation of
all reports and other materials required to be filed with the SEC and any
other regulatory authority, subject to review by our Board of Directors. SH
Celera has also agreed to overseeing the preparation and filing of our tax
returns, and the printing and dissemination of reports to our stockholders,
and generally oversee the payment of our expenses and the performance of
administrative and professional services rendered to us by others.
We will be responsible for bearing all costs and expenses that are incurred
in our operations and transactions including, but are not limited to, those
relating to: expenses payable to third parties, including agents, consultants
or other advisors, in monitoring our financial and legal affairs and in
monitoring our operations; interest payable on debt, if any, incurred to
finance our operations; offerings of our common stock and other securities;
fees payable to third parties, including agents, consultants or other
advisors, relating to, or associated with performing consulting services;
transfer agent and custodial fees; federal and state registration fees; all
costs of registration and listing our shares on any securities exchange;
federal, state and local taxes; independent directors' fees and expenses;
costs of preparing and filing reports or other documents required by the SEC;
costs of any reports, proxy statements or other notices to our stockholders,
including printing costs; our cost of directors and officers/errors and
omissions liability insurance, and any other insurance premiums; direct costs
and expenses of administration, including printing, mailing, long distance
telephone, copying, secretarial and other staff, independent auditors and
outside legal costs; and all other expenses incurred by us or by SH Celera,
on our behalf, in connection with administering our business of providing the
Consulting Services.
Offices and Facilities
We do not possess any offices or facilities. All offices and facilities,
including equipment necessary to conduct the business of providing the
Consulting Services are provided by SH Celera under the FA&OS Agreement
SH Celera's headquarters is located in Houston Texas where it rents a 3,600
square foot building that it leases at a rental of $3,000 per month on a one
year lease. Mr. Jarkesy, SH Celera's President and Chief Operating Officer
and our newly appointed Chairman and Chief Executive Officer resides in
Tomball, Texas and Mr. Brian Rodriguez, a member of our board of directors
and our President resides in Richardson, Texas and will operate from SH
Celera's offices in Houston, Texas . Mr. Strawn, SH Celera's Chief Executive
Officer, resides in Escondido, California and works from his office located
in Escondido California. Mr. Ellis, SH Celera's Chairman, resides in
Irvington, New York and works from his home office located in Irvington, New
York. SH Celera has agreed to reimburse each of Mr. Strawn and Mr. Ellis
$2,500 for their office rental, computing and communication systems and costs
and office supplies. SH Celera's New York, Houston and San Diego offices are
connected through an internet web server system operating: Microsoft
Sharepoint Portal, Microsoft Project, Word, Excel, Power Point, along with an
SQL database server. SH Celera is also in the process of developing the FAST
Track PSS TM which will allow SH Celera's management and staff to manage and
process both incoming clients and client sources and existing projects
through a server system connected through the web and will provide client
companies with direct access via the internet to various planning and
collaboration tools. See "FASTrack PPS.TM"
Pursuant to the Facilities Administration and Operating Services Agreement,
SH Celera has agreed to provide us with offices facilities located at 14360
Sylvanfield Road, Houston Texas 77014 ("Facilities"). Such offices are
equipped with:
(i) A telephone system with one voice line, one fax line and an
answering service available to us.
(ii) A computing system with a dedicated terminal connected through
the Internet with a T-1 Line. We are provided with access to one
access seat to SH Celera's MS Sharepoint Portal Server and a
corresponding portal, and, in addition, SH Celera has agreed, for
additional charges, at cost, to develop additional intranet and
extranet portals for our client companies. In addition, SH Celera has
agreed to provided access to its MS Office Suite and application
tools contained therein;
(iii) Any staff we may employ are provided access to all common areas
within the Facility including lunch room areas, restroom areas,
common reception area, board room, and parking areas. All areas are
provided routine janitorial services.
(iv) SH Celera has agreed to post a sign in its lobby identifying us
by name as resident within the Facility.
To the extent that we require additional space or equipment access, SH Celera
has agreed to accommodate such requests, if available, and will adjust the
monthly charges based upon the amount of additional space or equipment usage
required.
Patents and Intellectual Property
We do not own any patents or intellectual property. The trade name "G/O
Business Solutions, Inc." will be utilized by SH Celera to market our
services and products.
SH Celera has no patents or intellectual property other than its trade marks
FASTrack PPS TM, and the trade name "SH Celera Capital Corporation."
Insurance
We do not carry any directors and officers' liability insurance, but Colorado
Law provides for indemnification of the Company's officers and directors
under certain circumstances. See "Indemnification of Directors, Officers and
SH Celera," herein below. We do not carry any other insurance, but SH
Celera, under the FA&OS Agreement has agreed to name us as a co-insured under
its general liability policy.
SH Celera does not carry director and officer liability insurance, but
Maryland law provides for indemnification of a company's officers and
directors under certain circumstances. See "Indemnification of Directors and
Officers and SH Celera," herein below.
SH Celera carries general liability insurance and loss insurance on its
equipment in the following amounts: Business personal property - $75,000,
Money & securities - $10,000, and Business liability up to $2,000,000.
Litigation
We are not subject to any litigation at this time and our directors are not
aware of any threatened or pending litigation or grounds upon which any
litigation could be filed.
SH Celera is not subject to any litigation at this time and its directors are
not aware of any threatened or pending litigation or grounds upon which any
litigation could be filed.
Contemplated Financing
We have undertaken in the Mutual Undertaking Agreement executed in connection
with the Reorganization Transaction to commence raising not less than
$2,500,000 and up to $5,000,000 in an equity financing transaction pursuant
to which we would sell a newly created class of preferred stock with the
following rights, duties and preferences: (i) a stated value equal to the
price per share paid for the shares of preferred stock plus accumulated and
unpaid dividends, (ii) a dividend preference equal to a fixed annual
percentage rate (to be determined by our board of directors) multiplied times
the stated value of each share of preferred stock, which shall be cumulative
and paid before any dividends respecting any other class of shares ("Fixed
Rate Dividend") plus a fixed percentage participation in distributions to
stockholders, (to be determined by the our board of directors), which shall
be paid at the time of any distribution to any of our stockholders, (iii) a
liquidation preference equal to the stated value plus any accumulated and
unpaid Fixed Rate Dividends, (iv) a securitization of the stated value and a
portion of the Fixed Rate Dividend through the purchase and deposit by the
Company of a fixed rate financial instrument suitable to the purchaser(s) of
the preferred stock, and (v) representation on our board of directors or the
right to attend an observe, at the discretion of the majority of the holders
of the preferred stock.
We intend to immediately undertake steps necessary to complete the offer and
sale of our preferred stock in the Contemplated Financing, which will be
conducted as private offering of "restricted securities" as defined in Rule
144 to "accredited investors" only pursuant to Section 4(2) of the Securities
Act of 1933, as amended (the "Securities Act").
We currently have no arrangements or understanding that will assure that we
can successfully complete the Contemplated Financing and no assurance can be
given that we will be able to do so. We have provided our directors with
broad discretion, subject to the approval of SH Celera, to determine the
terms upon which our shares of Preferred Stock are sold and the rights and
privileges granted to purchasers of the shares of Preferred Stock, including,
but not limited to: (i) the price per share, (ii) the granting of conversion
features, (iii) the fixed dividend rate, (iv) the nature of the
securitization including the coverage ratio on the Stated Value and the
differential on the dividend rate, and (v) the percentage participation in
future dividends and distributions to our stockholders. There can be no
assurance that we will be successful in raising additional capital through
the sale of these shares of Preferred Stock or that if successful, they will
be placed on terms that are beneficial to our then existing stockholders. See
"Risk Factors' The Terms of the Preferred Stock, to be offered in the
Contemplated Financing, are subject to the discretion of our board of
directors" and "We may need to raise additional capital to both sustain and
or grow our operations" herein below.
The foregoing description of the Mutual Undertaking Agreement and the
attached exhibits and schedules do not purport to be complete and is
qualified in its entirety by reference to the Mutual Undertaking Agreement
filed with this Form 8-K as Exhibit 10.2. See Item 9.01 Exhibit 10.2
Effects of Existing or Probable Governmental Regulations
Sarbanes-Oxley Act
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of
2002 (the "Sarbanes-Oxley Act"). The Sarbanes-Oxley Act imposes a wide
variety of new regulatory requirements on publicly-held companies and their
insiders. Many of these requirements will affect us. For example:
* Our chief executive officer and chief financial officer must now certify
the accuracy of all of our periodic reports that contain financial
statements;
* Our periodic reports must disclose our conclusions about the effectiveness
of our disclosure controls and procedures; and* We may not make any loan
to any director or executive officer and we may not materially modify any
existing loans.
The Sarbanes-Oxley Act has required us to review our current procedures and
policies to determine whether they comply with the Sarbanes-Oxley Act and the
new regulations promulgated thereunder. We will continue to monitor our
compliance with all future regulations that are adopted under the Sarbanes-
Oxley Act and will take whatever actions are necessary to ensure that we are
in compliance.
Penny Stock
Our common stock is a currently a "penny stock" as defined in Rule 3a51-1 of
the Securities and Exchange Commission. Penny stocks are defined as stocks:
* with a price of less than five dollars per share;
* that are not traded on a "recognized" national exchange;
* whose prices are not quoted on the NASDAQ automated quotation system;
or in issuers with net tangible assets less than $2,000,000, if the
issuer has been in continuous operation for at least three years, or
$5,000,000, if in continuous operation for less than three years, or
with average revenues of less than $6,000,000 for the last three years.
Section 15(g) of the Exchange Act and Rule 15g-2 of the Securities and
Exchange Commission require broker/dealers dealing in penny stocks to provide
potential investors with a document disclosing the risks of penny stocks and
to obtain a manually signed and dated written receipt of the document before
making any transaction in a penny stock for the investor's account. You are
urged to obtain and read this disclosure carefully before purchasing any of
our shares.
Rule 15g-9 of the Securities and Exchange Commission requires broker/dealers
in penny stocks to approve the account of any investor for transactions in
these stocks before selling any penny stock to that investor. This procedure
requires the broker/dealer to:
* get information about the investor's financial situation, investment
experience and investment goals;
* reasonably determine, based on that information, that transactions in
penny stocks are suitable for the investor and that the investor can
evaluate the risks of penny stock transactions;
* provide the investor with a written statement setting forth the basis on
which the broker/dealer made his or her determination; and
* receive a signed and dated copy of the statement from the investor,
confirming that it accurately reflects the investors' financial situation,
investment experience and investment goals.
* Compliance with these requirements may make it harder for our
stockholders to resell their shares.
Reporting Obligations
Section 14(a) of the Exchange Act requires all companies with securities
registered pursuant to Section 12(g) of the Exchange Act to comply with the
rules and regulations of the Securities and Exchange Commission regarding
proxy solicitations, as outlined in Regulation 14A. Matters submitted to
stockholders of our Company at a special or annual meeting thereof or
pursuant to a written consent will require our Company to provide our
stockholders with the information outlined in Schedules 14A or 14C of
Regulation 14; preliminary copies of this information must be submitted to
the Securities and Exchange Commission at least 10 days prior to the date
that definitive copies of this information are forwarded to our stockholders.
We are also required to file annual reports on Form 10-KSB and quarterly
reports on Form 10-QSB with the Securities Exchange Commission on a regular
basis, and will be required to timely disclose certain material events (e.g.,
changes in corporate control; acquisitions or dispositions of a significant
amount of assets other than in the ordinary course of business; and
bankruptcy) in a current report on Form 8-K.
Shell Company Regulations
We believe that, as a result of the Reorganization Transaction, we are not a
"Shell Corporation" as defined in Rule 12b-2 of the Exchange Act. See Item
5.06 Change in Shell Corporation Status, hereinabove. However, there can be
no assurance that the SEC will agree with our reclassification given the
start-up nature of our intended business and the limited resources possessed
by SH Celera.
If we continue to be regulated as a "Shell Company as defined in Rule 12b-2
of the Exchange Act, we will be subject to recent amendments to Form 8-K by
the Securities and Exchange Commission (as set forth in Release No. 33-8587)
regarding shell companies and transactions with shell companies require the
filing of all information about an acquired company that would have been
required to have been filed had any such company filed a Form 10 or 10-SB
Registration Statement with the Securities and Exchange Commission, along
with required audited, interim and pro-forma financial statements, within
four business days of the closing of any such transaction. These new
regulations also deny the use of Form S-8 for the registration of securities
of a shell company, and limit the use of this Form to a reorganized shell
company until the expiration of 60 days from when any such entity is no
longer considered to be a shell company. This prohibition could further
restrict opportunities for us to acquire companies that may already have
stock option plans in place that cover numerous employees. In such an
instance, there may be no exemption from registration for the issuance of
securities in any business combination to these employees, thereby
necessitating the filing of a registration statement with the Securities and
Exchange Commission to complete any such reorganization, and incurring the
time and expense costs normally avoided by reverse reorganizations.
It is the position of the Securities and Exchange Commission that shares of
our common stock that are owned by our promoters, directors, executive
officers and 10% stockholder or their transferees must be resold pursuant to
an effective registration statement that is filed with the Securities and
Exchange Commission; and that the resale exemptions provided by Rule 144 for
the resale of "restricted securities" are not available for the resale of
these persons' securities.
Small Business Issuer
The integrated disclosure system for small business issuers adopted by the
Securities and Exchange Commission in Release No. 34-30968 and effective as
of August 13, 1992, substantially modified the information and financial
requirements of a "Small Business Issuer," defined to be an issuer that has
revenues of less than $25,000,000; is a U.S. or Canadian issuer; is not an
investment company; and if a majority-owned subsidiary, the parent is also a
small business issuer; provided, however, an entity is not a small business
issuer if it has a public float (the aggregate market value of the issuer's
outstanding securities held by non-affiliates) of $25,000,000 or more. We are
deemed to be a "small business issuer."
The Securities and Exchange Commission, state securities commissions and the
North American Securities Administrators Association, Inc. ("NASAA") have
expressed an interest in adopting policies that will streamline the
registration process and make it easier for a small business issuer to have
access to the public capital markets.
Possible Inadvertent Investment Company subject to regulation under the
Investment Company Act of 1940, as amended
We have been advised by legal counsel that we may inadvertently become
subject to the Investment Company Act of 1940 in accepting shares of a client
company, as payment for fees. To avoid this possible outcome, we have agreed
with SH Celera, in the FA&OS Agreement, that any property, including shares
of a client company, received as fees, or otherwise, will be distributed
directly to our stockholders as a dividend distribution. This will require
the client company issuing such shares to: (1) first register such shares
with the SEC pursuant to the Securities Act and (2) qualify such shares as
"Covered Securities", at the time of such distribution, for issuance under
Section 18 of the Securities Act, thereby precluding State review and
approval of such distribution. These requirements may serve to limit the
number of client companies willing or qualified to issue their shares for our
Consulting Services.
RISK FACTORS
We are subject to the risks inherent in any undercapitalized company pursuing
a new line of business services and products, including, among other risk
factors, the following:
We are engaging in a new business with no operating history
We have entered into the Facilities Administration and Operating Services
Agreement (the "FA&OS Agreement") with SH Celera, pursuant to which we have
undertaken to commence providing the Consulting Services, initially through
SH Celera's management and staff, provided under the FA&OS Agreement, and,
upon fulfillment of certain conditions, independent of SH Celera. Although SH
Celera and its management and the limited management we will possess, as a
result of the Reorganization Transaction, possess experience in the area of
providing services such as those we intend to provide, we are undertaking a
new business and there can be no assurance that we will be successful in this
undertaking. For example, as a result of our limited operating history, we
may not be able to correctly estimate our future operating expenses, which
could lead to cash shortfalls. Our budgeted expense levels are based in part
on our expectations concerning future revenues. We may be unable to adjust
our operations in a timely manner to compensate for any unexpected shortfall
in revenues. Accordingly, a significant shortfall in demand for our services
would decrease our revenues and could have an immediate and material adverse
effect on our business, results of operations and financial condition. To the
extent that expenses precede or are not rapidly followed by increased
revenue, our business, results of operations and financial condition may be
materially adversely affected. Further, because we are just commencing this
new business, there is no history of performance by which a potential
purchaser of our shares may evaluate our performance, or the performance of
SH Celera's management and staff under the FA&OS Agreement. Accordingly, it
is impossible to determine the results of operations or the value of our
shares.
SH Celera is recently formed and has limited performance history
SH Celera was formed in December of 2005 and has, since the date of
formation, conducted limited business operations. Consequently, there exists
limited history by which a potential investor in our shares may judge the
performance of the senior management and staff of SH Celera, and its ability
to accurately estimate the potential revenues and expenses associated with
providing the Consulting Services. See "Organization and Business-SH Celera
Capital Corporation," herein above.
Our business plan and proposed strategy has not been independently evaluated
We have not obtained any independent evaluation of our business plan and
proposed business strategy. There can be no assurance that our proposed
strategy will generate sufficient revenues and capital to continue in
business.
We may need to raise additional capital to both sustain and or grow our
operations
Our business plan requires and we have committed to raise external capital
through the sale of shares of a newly created class of our Preferred Stock in
the Contemplated Financing. In addition to the funds raised in the
Contemplated Financing, unless we can become profitable with the existing
resources we possess, including sources of funds we have available, certain
fees assigned to us in the Reorganization Transaction under the Assigned
Retainer Agreements, or through our ongoing provision of Consulting Services,
pursuant to the FA&OS Agreement, we will require additional capital to
sustain operations and we may need access to additional capital or additional
debt financing to expand our business. In addition, to the extent that we
have a working capital deficit and cannot offset the deficit from profitable
operations we may have to raise capital to repay the deficit and provide more
working capital to permit growth in revenues. We cannot assure you that
financing, whether from external sources or related parties, will be
available if needed or on favorable terms. Our inability to obtain adequate
financing will result in the need to reduce the pace of business operations.
Any of these events could be materially harmful to our business and may
result in a lower stock price.
The terms of the Preferred Stock, to be offered in the Contemplated
Financing, are subject to the discretion of our board of directors
Although the general terms of the Preferred Stock to be offered in the
Contemplated Financing are set forth in the Mutual Undertaking Agreement, the
precise right, privileges and preferences of these shares of Preferred Stock
have not yet been determined by our board of directors and will likely be
negotiated directly with potential purchasers of such shares of Preferred
Stock. Terms that may be negotiated, among others include, but are not
limited to: (i) the price per share, (ii) the granting and nature of
conversion features, (iii) the fixed dividend rate, (iv) the nature of the
securitization including the coverage ratio on the stated value and the
differential on the dividend rate, and (v) the percentage participation in
future dividends and distributions to our stockholders. There can be no
assurance that we will be successful in raising additional capital through
the sale of these shares of Preferred Stock or that, if successful, they will
be placed on terms that are beneficial to our then existing stockholders.
There can be no assurance that the terms negotiated by our board of directors
will be beneficial to the holders of our common stock and that such terms
will not result in substantial dilution to the holders of our common stock,
or substantially reduce the potential value of shares held by the holders of
our common stock.
Future issuances of our common stock or other securities, including our
authorized preferred stock, may dilute the per share book value of our common
stock or have other adverse consequences to our common stockholders.
Our board of directors has the authority, without the action or vote of our
stockholders, to issue all or part of 28,374,070 authorized but unissued
shares of our common stock. If issued, these common shares would represent
approximately 132% of our outstanding common stock. Our business strategy
includes investment in and acquisition of businesses using the resources
available to us, including our common stock. We expect to make acquisitions
in the future using our common stock. Additionally, we anticipate granting
additional options or restricted stock awards to our employees and directors
in the future. We may also issue additional securities, through public or
private offerings, in order to raise capital to support our growth, including
in connection with possible acquisitions. Future issuances of our common
stock will dilute the percentage of ownership interest of current
stockholders and could decrease the per share book value of our common stock.
In addition, option holders may exercise their options at a time when we
would otherwise be able to obtain additional equity capital on more favorable
terms.
Pursuant to our Articles of Incorporation, our board of directors is
authorized to issue, without action or vote of our stockholders, up to
5,000,000 shares of "blank check" preferred stock, meaning that our board of
directors may, in its discretion, cause the issuance of one or more series of
preferred stock and fix the designations, preferences, powers and relative
participating, optional and other rights, qualifications, limitations and
restrictions thereof, including the dividend rate, conversion rights, voting
rights, redemption rights and liquidation preference, and to fix the number
of shares to be included in any such series. The preferred stock so issued
may rank superior to the common stock with respect to the payment of
dividends or amounts upon liquidation, dissolution or winding-up, or both. In
addition, the shares of preferred stock may have class or series voting
rights.
The authorization and issuance of "blank check" preferred stock could have
an anti-takeover effect detrimental to the interests of our stockholders
Our Amended and Restated Articles of Incorporation allow our board of
directors to issue preferred stock with rights and preferences set by the
board without further stockholder approval. The issuance of shares of this
"blank check" preferred stock could have an anti-takeover effect detrimental
to the interests of our stockholders. For example, in the event of a hostile
takeover attempt, it may be possible for management and the board to impede
the attempt by issuing the preferred shares, thereby diluting or impairing
the voting power of the other outstanding shares of common stock and
increasing the potential costs to acquire control of us. Our board of
directors has the right to issue any new shares, including preferred shares,
without first offering them to the holders of common stock as they have no
preemptive rights.
We are dependent upon SH Celera's management, staff and key personnel and
their access to future client companies for our future success
We will depend on the skill and network of business contacts of the senior
management of SH Celera. For a description of SH Celera's senior management
team, see "Directors and Executive Officers" herein below. We will also
depend, to a significant extent, on SH Celera's access to the strategic
information and access to new client companies generated by SH Celera's
senior management. Until we develop our own staff and management team, the
senior management of SH Celera will be responsible for identifying,
evaluating, negotiating, structuring, closing and monitoring potential client
companies for whom we will provide the Consulting Services and, upon our
retention by a client company, the staff of SH Celera will perform the
consulting services specified in the retainer agreement negotiated with a
client company. Our future success will, therefore, depend on the continued
service of the senior management and the staff of SH Celera. The departure of
any of the senior managers of SH Celera, or of a significant number of the
staff of SH Celera, could materially adverse affect our ability to profitably
engage in providing the Consulting Services. In addition, we can offer no
assurance that SH Celera will continue to provide the services under the
FA&OS Agreement, as it is cancellable on 60 days prior notice, or that we
will continue to have access to new client companies or information and
potential client company referrals from SH Celera's senior management.
SH Celera possesses limited resources
SH Celera was recently formed in December of 2005 and since the date of
formation has raised only $450,000 through the sale of its common stock.
Accordingly, SH Celera has limited staff and limited operating capital to
defray the costs associated with providing the facilities, administrative
services and to hire staff to perform the operating services required under
the FA&OS Agreement. Consequently, if the business we are undertaking does
not produce sufficient cash flow from providing the Consulting Services, or
if we are unable to raise additional operating capital, independent of SH
Celera, we may be required to limit our business or, possibly, even terminate
our business, as a result of the lack of operating capital.
We will operate in a highly competitive market for client companies
We will compete in a highly competitive market for client companies in
providing the Consulting Services. Our primary competitors in providing
services, such as the Consulting Services, to client companies include: law
firms, accounting firms, large management consulting firms such as McKinsey,
Bain, Boston Consulting Group, and commercial and investment banks. As a
result, competition for potential client companies is intense. Most if not
all of our existing and potential competitors are substantially larger and
have considerably greater financial, technical and marketing resources and
experience than we do. For example, most competitors will have larger staff
with greater levels of expertise and experience available to them. In
addition, some of our competitors will have long term relationships with
existing clients that provide them the ongoing cash flow necessary to further
develop their business. We expect to use the industry information gathered by
SH Celera's senior management to identify companies that can utilize our
Consulting Services. In addition, we believe that the relationships of SH
Celera's senior management and members of its Industry Advisory Committees
will enable them to learn about, and compete effectively for client
companies.
Certain of our stockholders, directors and executive officers have and will
continue to have substantial ownership in us which will limit other
stockholder's ability to influence the outcome of key transactions, including
a change of control
Our principal stockholder, SH Celera, and its directors and executive
officers and entities affiliated with them own and control approximately
94.2% of our outstanding shares of common stock. As a result, SH Celera
acting alone or with these other stockholders, will be able to control
matters requiring approval by our stockholders, including the election of
directors, the approval of mergers or other business combination
transactions. These stockholders or their affiliates may acquire additional
equity in the future. The concentration of ownership may also have the effect
of delaying, preventing or deterring a change of control of the Company,
could deprive our stockholders of an opportunity to receive a premium for
their common stock as part of a sale of the Company and might ultimately
affect the market price of our common stock.
Two members of our board of directors, who also serve as our officers, are
also officers of SH Celera.
George Jarkesy, who is a member of our board of directors and our chairman
and chief executive officer and Brian Rodriguez, who is also a member of our
board of directors and our president and chief financial officer are also
officers of SH Celera, with Mr. Jarkesy servicing as SH Celera's president
and chief operating officer and Mr. Rodriguez serving as SH Celera's chief
financial officer, chief valuation officer and treasurer. As a consequence,
Messrs. Jarkesy and Rodriguez possess a direct conflict of interest
respecting any matters that may jointly concern the Company and SH Celera, to
the extent that the interests of the Company differ from those of SH Celera.
To the extent that such conflicts may arise, both Messrs. Jarkesy and
Rodriguez will comply with Colorado law and our Bylaws, and will refrain from
participation in any decisions undertaken by our board of directors, leaving
the balance of the disinterested directors to determine the decision of the
Company. Until additional board members are selected, the Company will not
possess independent board members to make such decisions.
The Reorganization Transaction and the ancillary documents entered into in
connection therewith were not negotiated by independent parties at arms
length
The terms of the Reorganization Transaction including the terms contained in
the Reorganization Plan and Agreement, the FA&OS Agreement, the Mutual
Undertaking Agreement, the Agreement to Assume Debt and Release, Waiver and
Novation Agreement and the Assignment Assumption and Confirmation Agreements,
were not negotiated by independent parties at arms-length. Conversely, the
Reorganization Transaction, as set forth in these various agreements was
structured and documented by the members of Sand Hills Partners, LLC, which
controls 94.2% of our outstanding shares at the time these transactions were
structured and documented. Accordingly, it is reasonable to assume that the
Reorganization Transaction was designed and executed principally to benefit
the members of Sand Hills Partners, LLC.
We must continue to meet the OTCBB continued listing requirements or we risk
delisting.
Our securities are currently listed for trading on the Over the Counter
Bulletin Board (OTCBB). We must continue to satisfy OTCBB's continued listing
requirements or risk delisting of our securities which would have an adverse
effect on our business. If our securities are de-listed from the OTCBB, it
may trade on the pink or gray sheet market, which may be a less liquid
market. In such case, our stockholders' ability to trade, or obtain
quotations of the market value of, shares of our common stock would be
severely limited because of lower trading volumes and transaction delays.
These factors could contribute to lower prices and larger spreads in the bid
and ask prices for our securities.
Limited and sporadic public market for our common stock
There has been a limited and sporadic public market for our common stock and
there can be no assurance that an active trading market for our common stock
will develop in the future. As a result, this could adversely affect our
stockholder's ability to sell our common stock in the near future, or at all.
Our common stock has experienced, and is likely to experience in the future,
significant price and volume fluctuations that could adversely affect the
market price of our common stock without regard to our operating performance.
In addition, we believe that factors such as quarterly fluctuations in our
financing results and changes in the overall economy or the condition of the
financial markets could cause the price of our common stock to fluctuate
substantially. Substantial fluctuations in our stock price could
significantly reduce the price of our stock.
Our stock price has been volatile and may fluctuate in the future
The price of our common stock that will prevail in the market may be
substantially less than the price a stockholder may pay for such shares,
depending on many factors, some of which are beyond our control and may not
be directly related to our operating performance. These factors include the
following:
* our performance and prospects;
* the depth and liquidity of the market for our securities;
* sales by selling stockholders of outstanding shares;
* investor perception of us;
* price and volume fluctuations in the overall stock market from time to
time;
* significant volatility in the market price and trading volume of
securities of companies providing services such as the Consulting
Services;
* changes in regulatory policies or tax guidelines with respect regulation
of our business;
* actual or anticipated changes in our earnings or fluctuations in our
operating results or changes in the expectations of securities analysts;
* general economic conditions and trends;
* loss of a major funding source; or
* departures of key personnel.
Public stock markets have experienced, and are currently experiencing,
substantial price and trading volume volatility. These broad market
fluctuations may adversely affect the market price of our securities. In
addition, fluctuations in our stock price may have made our stock attractive
to momentum, hedge or day-trading investors who often shift funds into and
out of stocks rapidly, exacerbating price fluctuations in either direction
particularly when viewed on a quarterly basis.
In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
brought against that company. Due to the potential volatility of our stock
price, it may therefore be the target of securities litigation in the future.
Securities litigation could result in substantial costs and divert our
management's attention and resources from our business.
If a substantial number of shares of our common stock become available for
sale and are sold in a short period of time, the market price of our common
stock could decline
If our stockholders sell substantial amounts of our common stock in the
public market, the market price of our common stock could decrease. We
currently have 21,625,930 shares of common stock outstanding. Of these
shares, 1,095,186 shares held by current stockholders are shares that are
freely tradable in public markets.
Penny stock rules could make it hard to resell shares of our common stock and
impose significant restrictions on broker-dealers
The "penny stock" rules limit trading of securities not traded on NASDAQ or
a recognized stock exchange, or securities which do not trade at a price of
$5.00 or higher, in that brokers making trades in those securities must make
a special suitability determination for purchasers of the security, and
obtain the purchaser's consent prior to sale. The application of these rules
may make it difficult for our stockholder to resell shares of our common
stock.
Financial projections
Any projections and related assumptions relied upon by our management in the
development or our business plan and related budgets were based on
information about circumstances and conditions existing as of the date such
business plans, and budgets were developed. The projections and estimated
financial results are based on estimates and assumptions that are inherently
uncertain and, though considered reasonable by us, are subject to significant
business, economic, and competitive uncertainties and contingencies, all of
which are difficult to predict and many of which are beyond the control of
our management. Accordingly, there can be no assurance that the projected
results will be realized or that actual results will not be significantly
lower than projected. The inherent uncertainties in results increase
materially for years closer to the end of the projected periods. Neither we
nor any other person or entity assumes any responsibility for the accuracy or
validity of the projections.
We have agreed to indemnify and advance cost to our Directors, Officers and
SH Celera in providing the Facilities Administrative and Operating Services
The Colorado Business Corporation Act (the "Act") allows indemnification of
directors, officers, employees and agents of a company against liabilities
incurred in any proceeding in which an individual is made a party because he
was a director, officer, employee or agent of the company if such person
conducted himself in good faith and reasonable believed his actions were in,
or not opposed to, the best interests of the company, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. A person must be found to be entitled to indemnification under
this statutory standard by procedures designed to assure that disinterested
members of the board of directors have approved indemnification or that,
absent the ability to obtain sufficient numbers of disinterested directors,
independent counsel or stockholders have approved the indemnification based
on a finding that the person has met the standard. Indemnification is limited
to reasonable expenses.
Because we do not have sufficient capital to purchase insurance covering
directors, officers and advisors in performing their roles, we have been
required to enter into indemnification agreements with each individual who
serves as a director, officer and/or advisor to the Company, and we have
provided indemnification to SH Celera under the FA&OS Agreement.
The Indemnification Agreements we have executed and delivered to our
directors and officers provide that we must indemnify, to the fullest extent
permitted by Colorado law but subject to certain exceptions, any of our
directors, officers who are made or threatened to be made a party to a
proceeding, by reason of the person serving or having served in their
capacity with us. We may also be required to advance expenses of defending
any proceeding to an officer or director. At present, there is no pending
litigation or proceeding involving any of our directors or officers where
indemnification will be required or permitted. See "Indemnification of
Directors and Officers and SH Celera," herein below
The indemnification provided SH Celera under the FA&OS Agreement provides
that we must indemnify and hold harmless SH Celera, its directors, officers,
managers, partners, agents, employees, controlling persons, and any other
person or entity affiliated with any of them (collectively, the "Indemnified
Parties"), in connection with the performance of any of its duties or
obligations under the FA&OS Agreement and hold it harmless from and against
all damages, liabilities, costs and expenses (including reasonable attorneys'
fees and amounts reasonably paid in settlement) incurred by the Indemnified
Parties in or by reason of any pending, threatened or completed action, suit,
investigation or other proceeding arising out of or otherwise based upon the
performance of any of SH Celera's duties or obligations under the FA&OS
Agreement. Such indemnification and hold harmless will not apply to any
claims resulting from SH Celera's willful misfeasance, bad faith or
negligence in the performance of its duties or by reason of the reckless
disregard of SH Celera's duties and obligations under the FA&OS Agreement;
provided, however, that the maximum liability of SH Celera or any other
Indemnified Party is limited to the total compensation paid to SH Celera
under the Facilities Administration and Operating Services Agreement.
If legal actions are commenced against any of these individuals, including
possible legal actions by one of our stockholders, we may be required to
advance funds and or pay damages incurred as the result of such legal action
from funds that would otherwise be available for operations, thereby reducing
funds available for operations, and possibly resulting in our complete
failure, due to inadequate funding following such payouts.
We have undertaken to raise and will need to raise not less than $2,500,000
in the Contemplated Financing to receive the shares of SH Celera for
distribution to our stockholders
We have undertaken in the Mutual Undertaking Agreement to raise not less than
$2,500,000 and up to $5,000,000 through the sale of a newly created class of
our preferred stock. Additionally, SH Celera's undertaking to issue to us for
further distribution to our stockholders 486,053 shares of SH Celera's common
stock is conditioned, in part upon our success in raising not less than
$2,500,000 in the Contemplated Financing We have not received any undertaking
or commitment to raise the funds in the Contemplated Financing, and we can
offer no assurance that we will be able to complete the Contemplated
Financing or that we will complete it upon terms that will be favorable to
the then holders of shares of common stock. See "The Terms of the Preferred
Stock To be Offered in the Contemplated Financing Are Subject to the
Discretion of our Board of Directors" herein above.
We do not anticipate paying cash dividends on common shares in the
foreseeable future
Since our inception we have not paid any cash dividends to the holders of our
common stock and we do not anticipate paying any cash dividends on to holders
of our common stock in the foreseeable future. We expect that if we have
future cash earnings, such earnings will be used for working capital and to
finance growth.
As a public company, our business is subject to numerous reporting
requirements that are currently evolving and could substantially increase our
operating expenses and divert management's attention from the operation of
our business
The Sarbanes-Oxley Act of 2002, which became law in July 2002, has required
changes in some of our corporate governance, securities disclosure and
compliance practices. In response to the requirements of that Act, the SEC
and the American Stock Exchange have promulgated new rules and listing
standards covering a variety of subjects. Compliance with these new rules and
listing standards has significantly increased our legal and financial and
accounting costs, and we expect these increased costs to continue. In
addition, the requirements have taxed a significant amount of management's
and the Board's time and resources. Likewise, these developments may make it
more difficult for us to attract and retain qualified members of our board of
directors, particularly independent directors, or qualified executive
officers.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward-looking Statement
Statements made in this Form 8-K which are not purely historical are forward-
looking statements with respect to our goals, plan objectives, intentions,
expectations, financial condition, results of operations, future performance
and business, including, without limitation, (i) our ability to raise
capital, and (ii) statements preceded by, followed by or that include the
words "may", "would", "could", "should", "expects", "projects",
"anticipates", "believes", "estimates", "plans", "intends", "targets" or
similar expressions.
Forward-looking statements involve inherent risks and uncertainties, and
important factors (many of which are beyond our control) that could cause
actual results to differ materially from those set forth in the forward-
looking statements, including the following, general economic or industry
conditions, nationally and/or in the communities in which we conduct
business, changes in the interest rate environment, legislation or regulatory
requirements, conditions of the securities markets, our ability to raise
capital, changes in accounting principles, policies or guidelines, financial
or political instability, acts of war or terrorism, other economic,
competitive, governmental, regulatory and technical factors affecting our
operations, products, services and prices.
Accordingly, results actually achieved may differ materially from expected
results in these statements. Forward-looking statements speak only as of the
date they are made. We do not undertake, and specifically disclaims, any
obligation to update any forward-looking statements to reflect events or
circumstances occurring after the date of such statements.
Plan of Operations
Overview
As a result of the Reorganization Transaction we were able to repay a total
of $65,000 of our outstanding liabilities and we received operating capital
of $50,000 from SH Celera. In addition, we entered into the Facilities
Administration and Operating Services Agreement with SH Celera, pursuant to
which we are provided the facilities, administrative services and operating
services necessary to immediately commence providing fee based business
development consulting services ("Consulting Services") under our name "G/O
Business Solutions, Inc." Additionally, we received an assignment of all of
SH Celera's rights under the Assigned Retainer Agreements, thereby providing
us with two client companies and the fees payable pursuant to this Assigned
Retainer Agreements including cash fees totaling $152,000, payable in
installments totaling up to a maximum of $29,000 per month over the next
twelve months. In addition, we have received an undertaking from these client
companies to issue additional "Share Compensation" which will be distributed
directly to our stockholders determined on a record date declared by our
board of directors, immediately prior to the registration of such shares for
distribution under the Securities Act of 1933, as amended (the "33 Act").
See "Future Funding" herein below.
Accordingly, we intend to immediately commence provide those Consulting
Services required under the Assigned Retainer Agreements for the fees payable
thereunder and to seek additional client companies desiring to obtain the
provision of the Consulting Services, on a fee basis, as they are identified
and presented by the management of SH Celera. See "Organization and
Business-The Consulting Services,", herein above.
Future Funding
We have undertaken in the Mutual Undertaking Agreement, executed in
connection with the Reorganization Transaction, to commence raising not less
than $2,500,000 and up to $5,000,000 in an equity financing transaction
pursuant to which we would sell a newly created class of preferred stock with
the following rights, duties and preferences: (i) a stated value equal to the
price per share paid for the shares of preferred stock plus accumulated and
unpaid dividends, (ii) a dividend preference equal to a fixed annual
percentage rate (to be determined by our board of directors) multiplied times
the stated value of each share of preferred stock, which shall be cumulative
and paid before any dividends respecting any other class of shares ("Fixed
Rate Dividend") plus a fixed percentage participation in distributions to
stockholders, (to be determined by the our board of directors), which shall
be paid at the time of any distribution to any of our stockholders, (iii) a
liquidation preference equal to the stated value plus any accumulated and
unpaid Fixed Rate Dividends, (iv) a securitization of the stated value and a
portion of the Fixed Rate Dividend through the purchase and deposit by the
Company of a fixed rate financial instrument suitable to the purchaser(s) of
the preferred stock, and (v) representation on our board of directors or the
right to attend and observe, at the discretion of the majority of the holders
of the preferred stock.
We intend to immediately undertake steps necessary to complete the offer and
sale of our preferred stock in the Contemplated Financing, which will be
conducted as a private offering of "restricted securities" as defined in Rule
144 to "accredited investors" only pursuant to Section 4(2) of the Securities
Act of 1933, as amended (the "Securities Act").
We currently have no arrangements or understanding that will assure that we
can successfully complete the Contemplated Financing and no assurance can be
given that we will be able to do so. We have provided our directors with
broad discretion, subject to the approval of SH Celera, to determine the
terms upon which our shares of Preferred Stock are sold and the rights and
privileges granted to purchasers of the shares of Preferred Stock, including,
but not limited to: (i) the price per share, (ii) the granting and nature of
conversion features, (iii) the fixed dividend rate, (iv) the nature of the
securitization including the coverage ratio on the stated value and the
differential on the dividend rate, and (v) the percentage participation in
future dividends and distributions to our stockholders. There can be no
assurance that we will be successful in raising additional capital through
the sale of these shares of Preferred Stock or that, if successful, they will
be placed on terms that are beneficial to our then existing stockholders.
There can be no assurance that the terms negotiated by our board of directors
will be beneficial to the holders of our common stock and that such terms
will not result in substantial dilution to the holders of our common stock,
or substantially reduce the potential value of shares held by the holders of
our common stock. See Risk Factors "The terms of the Preferred Stock, to be
offered in the Contemplated Financing, are subject to the discretion of our
board of directors," herein above.
The foregoing description of the Client Undertaking Agreements do not purport
to be complete and is qualified in its entirety by reference to the Client
Undertaking Agreements attached to the Assignment, Assumption and
Confirmation Agreements entered into with each Existing Client Company filed
with this Form 8-K as Exhibits 10.4(a) and 10.4(b). See Item 9.01 Exhibits
10.4(a) and 10.4(b).
Revenues
Cash Compensation
We plan to generate revenue in the form of consulting fees through our
performance of the Consulting Services. Under the existing Assigned Retainer
Agreements, we have been assigned cash fees totaling $152,000, payable in
installments totaling up to a maximum of $29,000 per month over the next
twelve months.
Non-Cash Compensation
In addition, in the Assigned Retainer Agreement, we have received the
assignment of Non-Cash Compensation in the form of shares of each of the
client companies equal to 5% of the client company's issued and outstanding
shares of common stock determined at the Effective Date of the registration
of such shares under the Securities Act of 1933, as amended (the "33 Act"),
on a fully diluted based, including any additional shares of such client
company's common stock that may be issued pursuant to the registration of
such shares under the 33 Act or thereafter pursuant to any rights existing at
the effective date of the registration of such shares under the 33 Act. In
connection with the issuance of the Non-Cash Compensation, each Existing
Client Company has entered into an agreement pursuant to which it has
undertaken: (i) to complete any additional financings necessary to qualify
its shares of common stock as a "Covered Securities" as defined in Section
18 of the 33 Act, (2) complete the registration of its shares of common stock
under Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "34
Act"), (iii) complete an application for listing of its shares of common
stock on an exchange or other listing market that would qualify such shares
of common stock as a "Covered Security" under Section 18 of the 33 Act, and
(iv) register the shares issued as Non-Cash Compensation under the 33 Act for
distribution to our stockholders determined at the time of the registration
of the shares comprising the Share Compensation issuable for distribution to
our stockholders.
There can be no assurance that the client company will be successful in
any of the foregoing steps necessary to distribute the shares comprising the
Share Compensation to our stockholders.
The Client Undertaking Agreements contain certain penalties including
cash fees payable to us, in the event that the Existing Client Companies fail
to perform the undertaking within prescribed times.
The foregoing description of the Client Undertaking Agreements do not purport
to be complete and is qualified in its entirety by reference to the Client
Undertaking Agreements attached to the Assignment, Assumption and
Confirmation Agreements entered into with each Existing Client Company filed
with this Form 8-K as Exhibits 10.4(a) and 10.4(b). See Item 9.01 Exhibits
10.4(a) and 10.4(b).
Expenses
Reorganization, Operating, Contemplated Financing and Distribution
Expenses
Reorganization Expenses. Pursuant to the Reorganization Plan and
Agreement, SH Celera bore all costs related to the Reorganization
Transaction, including the cost associated with the preparation of all
documents including this Form 8-K.
Operating Expenses. Pursuant to the FA&OS Agreement, SH Celera has
agreed to provide the Facilities the Administrative Services and the
Operating Services, as described in "Organization and Business-The
Facilities Administration and Operating Services Agreement". However,
pursuant to the FA&OS Agreement we will be responsible for (1) payment of the
monthly $10,000 fixed fee, (2) reimbursement of the SH Celera Staff
Reimbursements amounting to $10,416 per month, and (3) the costs and expenses
that are incurred in our operation and transactions including, but are not
limited to, those relating to: expenses payable to third parties, including
agents, consultants or other advisors, in monitoring our financial and legal
affairs and in monitoring our operations; interest payable on debt, if any,
incurred to finance us; offerings of our common stock and other securities;
fees payable to third parties, including agents, consultants or other
advisors, relating to, or associated with performing consulting services;
transfer agent and custodial fees; federal and state registration fees; all
costs of registration and listing our shares on any securities exchange;
federal, state and local taxes; independent directors' fees and expenses;
costs of preparing and filing reports or other documents required by the SEC;
costs of any reports, proxy statements or other notices to stockholders,
including printing costs; our director's fees, cost of directors and
officers/errors and omissions liability insurance, and any other insurance
premiums; direct costs and expenses of administration, including printing,
mailing, long distance telephone, copying, secretarial and other staff,
independent auditors and outside legal costs; and all other expenses incurred
by us or SH Celera, on our behalf in connection with providing the
administration or the operating services.
We estimate that within several months the total monthly cash requirements
may increase to $60,000.
The foregoing description of the FA&OS Agreement and the attached exhibits
and schedules do not purport to be complete and is qualified in its entirety
by reference to the Facilities Administration and Operating Services
Agreement filed with this Form 8-K as Exhibit 10.1. See Item 9.01 Exhibit
10.1
Contemplated Financing Expenses. Pursuant to the Mutual Undertaking
Agreement, we have agreed, at our cost and expense, to undertake the
Contemplated Financing. See "Future Funding" herein above. We anticipate
that the costs associated with the Contemplated Financing will be
approximately: $25,000 for legal, which we will pay out of offering proceeds
and $10,000 for printing, binding and meetings with potential investors,
which will be paid directly out of operating capital. There can be no
assurance that we will be successful in completing the Contemplated
Financing, in which case, we will be required to pay legal costs and will
have expended approximately $35,000 in funds, with no offsetting increase in
operating capital.
Share Compensation Distribution Expenses. In connection with the
potential distribution of Share Compensation to our stockholders under the
Assigned Retainer Agreement, we have obtained in the Client Undertaking
Agreements with such client company an agreement with such client company
that all costs associated with the "Qualifying Financing", the Exchange Act
Registration, the Securities Act Registration and the Listing Application
will be borne by the client company. We, therefore, do not anticipate
expending any significant amount of available working capital to complete
such distribution of Share Compensation.
The foregoing description of the Assignment, Assumption and Confirmation
Agreements and the attached exhibits and schedules do not purport to be
complete and is qualified in its entirety by reference to the Assignment,
Assumption and Confirmation Agreements filed with this Form 8-K as Exhibits
10.4(a) and 10.4(b). See Item 9.01 Exhibits 10.4(a) and 10.4(b).
Financial condition, liquidity and capital resources
We will generate cash, initially, primarily from the fees paid by the client
companies under the Assigned Retainer Agreement, assigned to us by SH Celera
in the Reorganization Transaction, and, thereafter, from payments made in
connection with providing on-going Consulting Services to those client
companies that may retain us for such purposes. We estimate monthly cash
receipts of $15,000 based on the Assigned Retainer Agreement and we will
expend approximately $20,416 per month in Fixed Fees, SH Celera Staff
Reimbursements, leaving a negative balance of $5,416 per month, which must be
recouped in full after which we are entitled to retain 50% or of the Net
Operating Cash Flow, which will not occur until we develop additional monthly
cash flow sufficient to offset the monthly $20,416. Based upon our current
cash balance of $50,000 contributed by SH Celera pursuant to the
Reorganization Transaction, we will, unless unforeseen expenses arise, be able
to operate, without raising additional operating capital or developing
additional sources of cash flow through retainer agreements for approximately
5-7 months.
If we are successful in raising additional equity funding through the
Contemplated Financing, the amount of additional operating capital we receive
will depend on the amount of securitization we are required to provide, and
the price differential at which we are able to purchase the securities
necessary to provide the securitization. We currently have no arrangements or
understanding that will assure that we can successfully complete the
Contemplated Financing and no assurance can be given that we will be able to
do so. We have agreed to provide our directors with broad discretion, subject
to the approval of SH Celera, to determine the terms upon which our shares of
Preferred Stock are sold and the rights and privileges granted to purchasers
of the shares of Preferred Stock. See "Future Funding" herein above and see
"Risk Factors - The terms of the Preferred Stock, to be offered in the
Contemplated Financing, are subject to the discretion of our board of
directors," herein above.
Until we have raised additional capital our available capital will be limited
to the $50,000 capital contribution of SH Celera and any additional operating
capital generated through the Assigned Retainer Agreements and any other
retainer agreements we may be able to generate.
Any compensation received under the Assigned Retainer Agreements as Share
Compensation will be directly distributed to our stockholders upon completion
of the steps necessary to complete such distributions, and will not increase
our liquidity or capital resources. See "Distribution Policy," herein below.
Distribution Policy
We intend to retain all cash compensation earned in providing the Consulting
Services for future use as operating capital, and do not anticipate paying
any cash dividends to our stockholders in the foreseeable future.
In the Reorganization Transaction, as set forth more fully in the Mutual
Undertaking Agreement, SH Celera, upon meeting certain criteria defined as a
Qualifying Event, (which is defined as development of assets and a financial
structure that, taken together, would qualify the shares of SH Celera's
$0.001 par value per share common stock for listing on an exchange or trading
market that, upon such qualification, would qualify SH Celera's $0.001 par
value per share common stock, upon approval, as a "Covered Security," as
defined in Section 18 of the Securities Act), SH Celera has undertaken to
register for distribution to our stockholders, determined at the time of the
Closing of the Reorganization Transaction, a total of 486,053 shares of its
$0.001 par value per share common stock. We can offer no assurance, however,
that SH Celera will meet the criteria defined as the Qualifying Event, that
it will be successful in registering such shares, or upon registration and
distribution, that such shares of SH Celera will have any value. In the event
that SH Celera is unsuccessful in registering the share by the defined
deadlines, it is required to pay us a $50,000 fee unless such failure results
primarily from delays of the SEC or other regulatory body in connection with
the Securities Act Registration, in which case, SH Celera, as of the Due
Date, unless the Due Date is mutually extended by us and SH Celera, shall
have no further obligation to issue the it shares of common stock.
In addition, in the Assigned Retainer Agreements, the Existing Client
Companies have each agreed to take those action necessary to distribute it's
shares of common stock, payable as Share Compensation, to our stockholders,
determined at the time of the immediately prior to the Effective Date of the
Securities Act Registration, and we have undertaken in the FA&OS Agreement to
obtain similar undertakings from future client companies in connection with
receipt of Share Compensation received for providing Consulting Services. In
the case of the Client Undertaking Agreement received from the client company
and any additional undertakings that may be obtained from future client
companies, a record date will be designated by our board of directors; a
registration statement will be prepared by the client company and filed with
the SEC. Upon comment and approval of the registration statement by the SEC,
the securities of the client company will be distributed to our stockholders
of record on the noticed record date.
Upon the direct distribution of such securities of a client company to our
stockholders, each of our stockholders receiving such securities will be
required to execute their own timing decision as to when to sell such
securities.
The foregoing description of the Assignment, Assumption and Confirmation
Agreements and the attached exhibits and schedules do not purport to be
complete and is qualified in its entirety by reference to the Assignment,
Assumption and Confirmation Agreements filed with this Form 8-K as Exhibits
10.4(a) and 10.4(b). See Item 9.01 Exhibits 10.4(a) and 10.4(b).
Contractual Obligations
We have entered into the FS&OS Agreement pursuant to which we have agreed to
pay SH Celera: (i) a fixed fee of $10,000 per month (ii) SH Celera's Staff
Reimbursement of $10,416 per month and (ii) 50% of operating cash flow after
payment of the Fixed Fee and SH Celera's Staff Reimbursements . In addition,
we will be responsible for the payment of all other expenses of our
operations. See "Organization and Business-Facility Administration and
Operating Services Agreement," herein.
In addition, we have undertaken, at our expense, to complete the Contemplated
Financing, which we estimate will cost approximately $35,000.
We have also assumed responsibility to perform the Consulting Services under
the Assigned Retainer Agreements, which will initially be performed by staff
of SH Celera, until such time as the FA&OS Agreement is terminated, at which
time we will be solely responsible for performing such services, utilizing
our staff and resources. Such termination of the FA&OS Agreement can occur
upon 60 days' written notice by SH Celera; or will occur automatically, at
such time as either: (i) we have raised not less than $2,500,000 in equity
capital, or (ii) we have accumulated cash reserves equaling not less than one
year's projected required operating cash, as determined by the our board of
directors.
The foregoing description of the Assignment, Assumption and Confirmation
Agreements and the attached exhibits and schedules do not purport to be
complete and is qualified in its entirety by reference to the Assignment,
Assumption and Confirmation Agreements filed with this Form 8-K as Exhibits
10.4(a) and 10.4(b). See Item 9.01 Exhibits 10.4(a) and 10.4(b).
DESCRIPTION OF PROPERTY
We have no property. Pursuant to the FA&OS Agreement, we are provided a
principal executive office at the headquarters of SH Celera located at 14360
Sylvanfield Drive, Houston, Texas 77014, which includes a single office and
access to the common areas along with access to the conference room.
SH Celera does not own any properties. Its currently leases approximately
3,600 square feet of office space located at 14360 Sylvanfield Drive,
Houston, Texas 77014. In addition, an Escondido, California office is
provided by Mr. Strawn, SH Celera's chief executive officer, without charge.
SH Celera's management believes that the office space in Houston, Texas, will
be adequate to meet both of our needs for approximately 2 years, after which
additional space will be needed.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of August 15, 2006,
regarding beneficial ownership of the shares of our common stock following
the completion of the Reorganization Transaction (including the 1 for 2
reverse split) by: (i) each person known by us to own more than five percent
of our outstanding common stock, (ii) each of our executive officers and
directors, and (iii) all of our executive officers and directors as a group.
The information presented is based upon 21,625,930 shares of our common stock
being issued and outstanding on such date.
Name and Address Position Amount and Percent of Class
of Beneficial Owner Nature of Owned
Beneficial
Owner
SH Celera Capital Corporation
14360 Sylvanfield Dr
Houston, Texas 77014 Stockholder
(1)(2)(4) 17,300,744 80%
David M. Klausmeyer
10878 Westheimer, #178
Houston, Texas 77042 Stockholder (3) 10,500 .0005%
Sand Hills General
Partners, LLC
18205 Burkhardt
Tomball, Texas 77377 Stockholder
(1)(2)(4) 20,500,744 94.2%
Sand Hills Partners
18205 Burkhardt
Tomball, Texas 77377 Stockholder
(1)(2)(4) 20,500,744 94.2%
John Ellis Stockholder
41 E Broadway (1)(2)(4),
Irvington, New York Director and
Chairman of SH
Celera 20,500,744 94.2%
George Jarkesy Stockholder
18205 Burkhardt Director,
Tomball, Texas 77377 Chairman and
Chief Executive
Officer, (1)(2)(4)
President and
Chief Operating
Officer SH Celera 20,500,744 94.2%
David Strawn Stockholder
2225 Barham Dr. Suite B (1)(2)(4)
Escondido, California 92029
Director and Chief
Executive Officer
of SH Celera 20,500,744 94.2%
Brian Rodriguez Director, President
2202 Bluebonnet Dr.
Richardson, Texas 75082 Chief Financial
Officer, Chief
Valuation Officer
and Treasurer of SH
Celera 100,000 .47%
All officers and Directors 20,480,744 95%
(1) In addition to the 17,300,744 post-split share of our common stock to be
issued to SH Celera in the Reorganization Transaction, SH Celera has indirect
control over a total of 3,200,000 post-split shares of our common stock based
on the fact that Sand Hills Partners, LLC, a Delaware Limited Liability
("SHP"), that is owned equally by Messrs Ellis, Jarkesy and Strawn, controls
3,200,000 post-split shares of our common stock through its ownership of Sand
Hills General Partners, a Texas general partnership ("SHGP"), which owns a
total of 3,200,000 post-split share of our common stock.
(2) In addition to the 3,200,000 post-split shares of our common stock held
by SHGP, that are controlled by SHP through its ownership of SHGP, SHP owns
89% interest in SH Celera, which provides SHP and its members with the voting
control over 100% of the 17,300,744 post-split shares to be issued to SH
Celera in the Reorganization Transaction. Messrs. Ellis, Jarkesy and Strawn
are the members and equal owners of SHP. Additionally Mr. Ellis serves as SH
Celera's Chairman, Mr. Strawn serves as its Chief Executive Officer and Mr.
Jarkesy serves as its President and Chief Operating Officer. Accordingly a
total of 20,500,744 or 94.2% of the currently issued and outstanding shares
are controlled by SHP and its members, John Ellis, George Jarkesy and David
Strawn.
(3)David M. Klausmeyer is a former partner of Sand Hills General Partners who
has as security for a $1,500,000 Promissory Note of Sand Hill Partners all of
the 6,400,000 pre-split shares of our company that is owned by Sand Hills
General Partners.
(4) SHGP, SH Celera and David Klausmeyer each have direct investment and
voting power with regard to the securities listed opposite its or his name.
However, as noted, SH Celera is controlled by Sand Hills Partners, LLC, which
also controls SHGP, which together, possess control over 20,500,744 shares of
our common stock
Changes in Control
Mr. David Klausmeyer, in connection with the sale of his interest in Sand
Hills General Partners, received the promissory note of Sand Hills Partners,
LLC in the principal amount of $1,500,000 (the "Promissory Note") that is
secured by a pledge of 100% of Sand Hills Partners, L.L.C.'s interest in and
to Sand Hills General Partners, which owns a total of 3,200,000 post-split
shares or 15% of our 21,625,930 post-split issued and outstanding shares of
common stock. Such Note is further secured by a guaranty and pledge of such
shares owned by Sand Hills General Partners. See our 8-K Current Report dated
February 28, 2006, which is incorporated herein by this reference. See Part
III, Item 13. In the event of a default in the payment of this Promissory
Note to Mr. Klausmeyer, a change in control of our Company could occur. See
Part III, Item 11.
To the knowledge of our Company's management, there are no additional present
arrangements or pledges of our Company's securities which may result in a
change in control of our Company.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT
Although our business is operated under the direction of our board of
directors and officers, we have entered into the FA&OS Agreement with SH
Celera pursuant to which our primary business will be operated and controlled
by SH Celera, subject to the discretion and monitoring of our board of
directors and officers. Accordingly, the following discussion includes a
description of both our directors and officers and SH Celera's directors and
officers.
Identification of the Company's Directors and Executive Officers
The following table sets forth the names of all current directors and
executive officers of our Company. These persons will serve until the next
annual meeting of stockholders (to be held at such time as called by the
board of directors) or until their successors are elected or appointed and
qualified, or their prior resignation or termination.
Name Age Position
George Jarkesy 31 Director Chairman and Chief Executive Officer
Brian Rodriguez 36 Directors, President, Treasurer
(1) These persons presently serve in the capacities indicated.
(2) Mr. Jarkesy also serves as the president and chief operating officer
of SH Celera.
(3) Mr. Rodriguez also serves as the chief financial officer, chief
valuation officer and treasurer of SH Celera.
(4) For Messrs. Jarkesy and Rodriguez Biographical information see below
following the identification of SH Celera directors and executive
officers
Identification of the Directors and Executive Officers of SH Celera Capital
Corporation
SH Celera directors have been divided into two groups interested directors
and independent directors as defined under the National Association of
Securities Dealers, Inc. definition:
Name Age Position
Independent Directors
Christian Hahn 43 Director
Robert Gow 72 Director
Dale Spradling 53 Director
Name Age Position
Interested Directors
John Ellis 53 Director, Chairman
David Strawn 55 Director, Chief Executive Officer,
Secretary, General Counsel
Executive Officers of SH Celera who are not Directors
Information regarding executive officers of SH Celera who are not directors is
as follows:
Name Age Position
George Jarkesy 31 President, Chief Operating Officer
Brian Rodriguez 36 Chief Financial Officer, and Chief
Valuation Officer and Treasurer
Dwayne Deslatte 36 Executive VP Business Research and
Analysis
Each executive officer has the same address as SH Celera, c/o SH Celera
Capital Corporation, 14360 Sylvanfield Dr., Houston, Texas 77014.
Biographical Information
Name Background Information
Christian Hahn Mr. Hahn serves as a member of SH Celera's board of
directors and as chairman of its compensation committee.
Mr. Hahn is Senior Vice President of Commercial Banking
at The Right Bank for Texas, N.A. with over ten years of
experience in developing lower middle market bank
portfolios. He previously was Vice President of Corporate
Banking at the Bank of Texas, N.A. from 2001 to 2005, and
has worked in banking with Sterling Bank and Compass
Bank. Mr. Hahn started his career in the 1980 as a Real
Estate Appraiser and was a Senior Real Estate Closer with
Riddle and Brown, P.C. in the late 1980 . He received a
B.B.A. in Finance from Stephen F. Austin State
University.
Robert Gow Mr. Gow serves as a member of SH Celera's board of
directors and chairman of its Corporate Governance and
Nomination Committee. Mr. Gow is a Tau Beta Phi graduate
of Yale University School of Engineering. He was
Financial Vice President & CFO, Executive Vice President,
President of Zapata Corporation, a New York Stock
Exchange listed company. Mr. Gow was recruited to Zapata
by the company co-founder, former president George Bush.
During his tenure at Zapata, the company earnings per
share increased at a compound annual rate of 52% and the
share price increased 44-fold. Subsequently, Mr. Gow has
acted as founder and/or CEO of companies in the fields of
alternative energy strategies, biotechnology, and
nanotechnology. He served for eight years as an adjunct
professor at the Graduate School of Business
Administration at Rice University. For the last five
years he has divided his time between managing his
investments in Houston, Texas and Xixim, his hacienda and
plantation in the Yucatan, which is believed to be the
largest commercial grower of bamboo in the Western
Hemisphere.
Dale Spradling Mr. Spradling, Ph.D., CPA, serves as a member of SH
Celera's board of directors and chairman of its Audit
Committee. Since 1996 Dr. Spradling also known as "Mr. Tax"
has engaged clients in tax consulting, professional
education, and financial transactions. He was Vice
President of Finance and Administration from 1990 to 1996
of Life Forms, Inc., in The Woodlands, Texas. From 1987
to 1990 Dr. Spradling was an Associate Professor of
Accounting at California State University-Sacramento. In
the early 1980's he established the accounting partnership
of Freidman and Spradling, CPA . Dr. Spradling started
his career as a Revenue Agent with the Internal Revenue
Service and then as a Senior Tax Accountant with Touche,
Ross & Co. He is the author of four books, three journal
articles, and fourteen continuing education
presentations.
John Ellis Mr. Ellis serves as both chairman and a member of SH
Celera's board of directors. Over the course of the last
three years, Mr. Ellis has helped a number of promising
companies secure financing, including Adam Aircraft
(www.adamair.com), Vectrix (www.vectrixusa.com), HR Smart
(www.hrsmart.com) and Forster Drilling Corporation. Prior
to working in the financial advisory services arena, Mr.
Ellis was a columnist for Fast Company Magazine, Inside
Magazine and the op-ed page of The Boston Globe. His work
for Fast Company was twice nominated for a National
Magazine Award. His work at the Boston Globe was
nominated for the Pulitzer Prize for commentary in 1999.
From 2002-2004, Mr. Ellis was a Senior Fellow at the
Combating Terrorism Center at West Point and lectured
extensively on the threat of chemical, biological and EMP
warfare. His essay on chemical and biological warfare was
published by the West Point CTC in 2003 and has since
been republished and widely circulated in academic and
military circles. In January 2005, President George W.
Bush awarded Mr. Ellis the Department of Defense's
Outstanding Civilian Service Award -- the US military's
highest civilian honor -- for his work at West Point and
for the US Army. Throughout the 1990s, Mr. Ellis
maintained an active consulting practice, focusing on
media and financial services. A graduate of Yale
University, and a former Appleman Fellow at Harvard
University, Mr. Ellis lives in Westchester County, New
York with his wife Susan, a senior executive at the
Omnicom Group of Companies, and their two children.
David Strawn Mr. Strawn serves as a member of SH Celera's board of
directors and as its chief executive officer, secretary
and chief legal counsel. Mr. Strawn has, over the past 26
years, engaged principally in the practice of securities
law including representing registered broker dealers,
venture capital investors, public reporting companies,
issuers in private and IPO transactions, private and
public companies in acquisition transactions, foreign
broker-dealers and has participated in the development of
an online trading system providing both order execution
in trading securities and an online investment banking
platform. In addition, Mr. Strawn, over these years, has
participated in the strategic planning and development of
start-up companies engaged in numerous business
activities, including: healthcare, biosciences, financial
services, telecommunication and transportation. Mr.
Strawn graduated from Portland State University, summa
cum laude, with a degree in finance in 1977 and from the
University of Arizona-Arizona School of Law, with honors,
with a Juris Doctorate degree in 1980.
Information about Executive Officers of SH Celera Who Are Not Directors of SH
Celera
The following information pertains to executive officers who are not directors
of SH Celera. Certain of SH Celera's executive officers, including Messrs.
Jarkesy and Rodriguez serve as our directors, managers, and/or officers.
Name Background Information
George Jarkesy Mr. Jarkesy serves as a member of our Board of Directors
and as our Chief Executive Officer and as SH Celera's
President and Chief Operating Officer. Mr. Jarkesy
started his career in the financial industry with
Josephthal Lyon and Ross, a New York Stock Exchange
member. Mr. Jarkesy has founded and built companies
engaged in financial consulting, real estate investments,
real estate management, employee leasing, light steel
manufacturing, livestock management and biotechnology.
Mr. Jarkesy individually and through one of his
companies' has successfully invested in three public
biotechnology companies and was a co-founder of
PharmaFrontiers Corporation. Also Mr. Jarkesy has had
successful investments in VOIP, Internet Security, and
Gaming. Mr. Jarkesy expanded his investments in 1999 to
China and has had minor successes on other international
investments. Jarkesy & Company has been an active
participating member of National Investment Bankers
Association since 1996. Mr. Jarkesy has provided
consulting to numerous venture capital firms and to
investment banking departments of small to medium sized
securities broker-dealers. Mr. Jarkesy is the vice
president of the board for the Society of St. Vincent
DePaul in the Galveston-Houston Diocese of the Catholic
Church and is also on the Board of the Jarkesy
Foundation, Inc.
Brian Rodriguez Mr. Rodriguez serves as a member of our Board of
Directors and as our President and as SH Celera's Chief
Financial Officer, Chief Valuation Officer and Treasurer.
Mr. Rodriguez has served as an accounting and finance
consultant for Jefferson Wells from October, 2004 to the
present. From March, 2002 to October, 2004, Mr. Rodriguez
served as Controller and then Director of Finance for JP
Mobile Inc., a privately held wireless software company
based in Dallas. Mr. Rodriguez served as Controller for
ChipData Incorporated from March, 2001 to March, 2002.
Prior to that Mr. Rodriguez was a consultant with Parson
Consulting from April, 1999 to March, 2001. Mr. Rodriguez
has been a Certified Public Accountant in the State of
Texas since May, 1995. Mr. Rodriguez began his career in
the Business Assurance practice of Cooper & Lybrand in
Dallas, Texas. Mr. Rodriguez holds a B.B.A. from Texas
A&M University.
Dwayne Deslatte Mr. Deslatte serves as SH Celera's Executive Vice
President-Business Research and Analysis. Mr. Deslatte
has worked as a private consultant in business
development and project management with private and
public companies since 2003. In 2004, Mr. Deslatte served
on the board of directors of Sportan United Industries,
which was renamed PharmaFrontiers after a merger with a
company of the same name. Mr. Deslatte is also a
Registered Nurse who worked in general surgery with Texas
Children's Hospital from 2001 to 2005. From January 2000
until April 2001 Mr. Deslatte worked in orthopedic
nursing at St. Joseph's Hospital. Mr. Deslatte received a
B.S. in Nursing, cum laude, from Texas Women's University
and a B.A. in History from Texas A&M University. While at
Texas A&M University, Mr. Deslatte served in the Corps of
Cadets for four years. He is a member of Sigma Theta Tau
Honor Society.
Family Relationships
There are no family relationships between any directors or executive officers
of our Company or SH Celera, either by blood or by marriage.
Involvement in Certain Legal Proceedings
During the past five years and to the knowledge of management, no present or
former director, person nominated to become a director, executive officer,
promoter or control person of our Company or SH Celera:
(1) Was a general partner or executive officer of any business by or
against which any bankruptcy petition was filed, whether at the time of
such filing or two years prior thereto;
(2) Was convicted in a criminal proceeding or named the subject of a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) Was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from or otherwise limiting his
involvement in any type of business, securities or banking activities:
(4) Was found by a court of competent jurisdiction in a civil action or by
the Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated any federal or state securities or commodities
law, and the judgment has not been reversed, suspended, or vacated.
Compliance with Section 16(a) of the Exchange Act.
All reports required to be filed pursuant to Section 16(a) of the Exchange
Act have been filed with respect to the Reorganization Transaction and the
resulting change of control referenced in Items 1.01 and 5.01 on a timely
basis.
Code of Ethics
Our Company has adopted a Code of Ethics which was attached to our 2003
Annual Report on Form 10-KSB as Exhibit 14. See Part III, Item 13.
SH Celera adopted a Code of Ethics which is filed as Exhibit 14.1 with this
Form 8-K. See Item 9.01 Exhibit 14.1.
Audit Committee
We have no audit committee and believe, based upon our limited operations,
that one is not necessary. If and when operations require, we will review
these requirements.
SH Celera has formed an Audit Committee that currently consists of Messrs.
Dale Spradling, who is considered "independent" under the National
Association of Securities Dealers, Inc.'s definition. Mr. Spradling serves as
the chairman of SH Celera's Audit Committee.
SH Celera's Audit Committee selects its independent auditors, reviews with
such independent auditors the planning, scope and results of their audit of
SH Celera's financial statements and the fees for services performed, reviews
with the independent auditors the adequacy of internal control systems,
reviews SH Celera's annual financial statements and reviews our audit reports
and financial statements.
Compensation Committee
We have not established a Compensation Committee because we believe that our
two member board of directors is able to effectively manage the issues
normally considered by a Compensation Committee. If and when operations
require, we will review these requirements.
SH Celera has formed a Compensation Committee that currently consists of
Messrs. Hahn who is considered "independent" under the National Association
of Securities Dealers, Inc.'s definition. Mr. Hahn serves as the chairman of
SH Celera's Compensation Committee.
SH Celera's Compensation Committee determines the compensation for SH
Celera's officers based upon recommendations from management.
Nominating and Corporate Governance Committee
We have not established a Nominating and Corporate Governance Committee
because we believe that our two member board of directors is able to
effectively manage the issues normally considered by a Nominating and
Corporate Governance Committee. If and when further operations require, we
will review these requirements.
SH Celera has formed a Corporate Governance/Nominating Committee that
currently consists of Mr. Robert Gow, who is considered "independent" under
the National Association of Securities Dealers, Inc.'s definition. Mr. Gow
serves as chairman of SH Celera's Corporate Governance/Nominating Committee.
SH Celera's Corporate Governance/Nominating Committee is responsible for
selecting, researching and nominating directors for election by SH Celera's
stockholders, selecting nominees to fill vacancies on its board of directors
or a committee of its board of directors, developing and recommending to the
board of directors a set of corporate governance principles and overseeing
the evaluation of SH Celera's board of directors and SH Celera's management.
Executive Committee
In addition to these committees, SH Celera has formed an Executive Committee
comprised of Messrs. Ellis, Jarkesy and Strawn, each executive officers of SH
Celera. Messrs. Ellis and Strawn are also members of SH Celera's board of
directors and are interested directors under the National Association of
Securities Dealers, Inc.'s definition. Mr. Ellis serves as the chairman of
the Executive Committee.
SH Celera's Executive Committee has been delegated, through its charter, the
responsibility for all operations of SH Celera's business that may be
lawfully delegated by SH Celera's board of directors.
On January 30, 2006 SH Celera's Executive Committee met for the first time to
establish guidelines and proceeds and to develop the logistics necessary to
implement the Company's business plan.
Additional Committees
As noted, we have not organized any standing committees, due to the limited
nature of our operations. If our operations require, we will consider
developing the necessary committees, including possible ad-hoc committees
SH Celera's management and board of directors anticipate forming additional
ad-hoc committees as required. SH Celera's board of directors has determined
that it would be in the best interests of both SH Celera and the Company to
develop various Industry Advisory Committees, comprised of members that are
qualified experts within their industrial fields and possess access to
substantial resources, and accordingly has undertaken to form industry
advisory committees.
SH Celera's Industry Advisory Committees
SH Celera has developed Industry Advisory Committees and its management is in
the process of recruiting Industry Advisory Committee members in order to
obtain in-depth expertise, experience and access to resources in various
areas of science and industry. The expertise, experience and resources of
members of these Industry Advisory Committees will be drawn upon by SH
Celera's management in: (i) locating potential client companies, (ii)
assisting in providing the Consulting Services to client companies, and (iii)
serving on boards and as officers of client companies. In an effort to
broaden the potential fields in which SH Celera possesses expertise,
experience, and to access additional resources, SH Celera's management
intends to constantly meet with and evaluate experts in various fields of
science and industry for membership on one of its Industry Advisory
Committees. To date SH Celera has formed the following Advisory Committees:
ADVISORY COMMITTEES
* Construction Committee
* Financial Committee
* GEO Gas, Energy & Oil Committee
* International Resources Committee
* Life Science Committee
* Manufacturing Committee
* Marketing Committee
* Media Committee
* Real Estate Committee
* Technology Committee
Each Industry Advisory Committee has been formed pursuant to a charter, and
is subject to the authority of SH Celera's board of directors. In connection
with joining an Industry Advisory Committee, each member must agree in
writing to abide by SH Celera's Code of Ethics, and its Code of Business
Conduct.
EXECUTIVE COMPENSATION
For information on the Company and our directors and executive officers
compensation prior to the closing of the Reorganization Transaction, please
see our 2005 10-KSB that is incorporated by reference in Item 9.01.
Cash Compensation our of Executive Officers and Directors
We do not have any commitments to pay any cash salaries or other cash
compensation directly to any of our directors and/or officers in connection
with their performance of such duties in such capacities.
Pursuant to the Facilities Administration and Operating Services Agreement,
we are required to reimburse SH Celera in connection with monthly salaries
paid by SH Celera to the following individuals in the following amounts:
Name Amount
Brain Rodriguez* $4,166
Dwayne Deslatte $6,250
* Mr. Rodriguez serves as a member of our board of directors and as our
president and treasurer.
Stock Option Plans
We have not adopted any stock option plans.
Compensation of Directors
At a special meeting of our Company's Board of Directors, held October 4,
1995, our Board of Directors unanimously resolved to pay to each director of
our Company 10,000 shares of "restricted securities" (common stock) valued at
$0.01 per share, for each year or partial year of service, commencing on the
date of the resolution. Effective October 29, 1997, Our Board of Directors
resolved to increase the amount of annual compensation to 20,000 shares of
"restricted securities" (common stock), valued at $0.01 per share. As of the
date of the Reorganization Transaction, 160,000 "unregistered" and
"restricted" shares have been issued to each of the following directors of
our Company, pursuant to this resolution: Jack L. Burns; Michael L. Caswell;
and Sam Bono; however, Mr. Burn's compensation was increased to 40,000 shares
per year for calendar years commencing in 2003. The shares issued during the
years ended December 31, 2000, were valued at $0.25 per share to coincide
with the cash price of other securities sold by our Company at that time. The
shares issued during the years ended December 31, 2001, were valued at $0.35
per share; and the shares issued during the year ended December 31, 2004,
2003 and 2002 were valued at $0.10. The shares issued during the year ended
December 31, 2005, were valued at $0.15.
Upon agreeing to serve as a member of our board of directors and as
president, Mr. Rodriguez received a total of 20,000 shares of restricted
securities, valued at $3,000. Mr. Rodriguez will receive an additional
100,000 shares of restricted securities and will be paid 20,000 additional
shares for each year he serves as member of the Board of Directors as
provided in the October 29, 1997 resolutions.
Termination of Employment and Change of Control Arrangement
There are no employment contracts, compensatory plans or arrangements,
including payments to be received from our Company, with respect to any
director or executive officer of our Company which would in any way result in
payments to any such person because of his or her resignation, retirement or
other termination of employment with our Company, any change in control of
the Company, or a change in the person's responsibilities following a change
in control of our Company.
Bonuses and Deferred Compensation
None.
Compensation Pursuant to Plans
None.
Pension Table
None; not applicable.
Other Compensation
None.
Employment Contracts
We have not entered into any employment contract with any of our officers and
directors. In connection with the Reorganization Transaction, we have agreed
to reimburse SH Celera $50,000 of the total $100,000 annual salary paid to
Mr. Rodriguez, and $75,000 of the total $75,000 annual salary paid to Mr.
Deslatte under the Facilities Administration and Operating Services Agreement
in connection with their services in providing the Consulting Services. For
further information regarding the FA&OS Agreement, see "Organization and
Business-Facilities Administration and Operating Services Agreement" or
refer to the Facilities Administration and Operating Services Agreement
attached to this Form 8-K as Exhibit 10.1. See Item 9.01 Exhibit 10.1.
Indemnification Agreements
We have entered into indemnification agreements with each of our directors
and officers. Under the terms of these indemnification agreements, We have
agreed to indemnify each of these persons against damages, expenses and
costs, and in certain cases advance expenses and costs in the event of legal
actions that may be brought against them in their capacity in serving the
Company. See "Indemnification of Directors and Officers and SH Celera,"
herein after.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Control of the Company
Upon completion of the Reorganization Transaction, SH Celera owned and
controlled, directly, 17,300,744 or 80% of our outstanding post-split shares
of common stock. Sand Hills Partners, L.L.C., a Delaware limited liability
company ("SHP") owns 8,250,000 or approximately 89% of the issued and
outstanding shares of common stock of SH Celera, thereby providing SHP
control over SH Celera and control over the 17,300,744 post-split shares of
our common stock. In addition, SHP owns Sand Hills General Partners, a Texas
General Partnership ("SHGP"), which owns a total of 3,200,000 post-split
shares of our common stock acquired in the connection with the restructure of
the Waterbury Debt as disclosed in the March 24, 2006 8-K, which is
incorporated herein by this reference See Item 9.01 March 24, 2006 8-K. As a
consequence of its control over SH Celera and SHGP, SHP possesses total
control over 20,500,744 shares of our common stock or approximately 94.2%.
SHP is owned and controlled by Mr. John Ellis, who is a member of SH Celera's
board of directors and its chairman, Mr. David Strawn, who is a member of SH
Celera's board of directors and its chief executive officer and secretary and
Mr. George Jarkesy, who is SH Celera's president and chief operating officer
and a member of our board of directors and our chairman and chief executive
officer. Consequently, these individuals, through their ownership of SHP will
to a great extent be in a position to influence decisions of our board of
directors in matters including both SH Celera's and their own compensation
and to approve affiliated transactions, if any. These individuals both in
their capacity as officers of SH Celera and as our controlling shareholders
will act fairly and in full compliance with their fiduciary obligations.
There can be no assurance, however, that we will not, as a result of the
conflict of interest described above, possibly enter into arrangements under
terms less favorable than we could have obtained had it been dealing with
unrelated persons.
Certain of Our Directors and Officers are Also Officers of SH Celera
Both Mr. George Jarkesy, a member of our board of directors and our chairman
and chief executive officer and Mr. Brian Rodriguez, a member of our board of
directors and our president and chief financial officer also serve as
executive officers of SH Celera, Mr. Jarkesy serving as its president and
chief operating officer, and Mr. Rodriguez as its chief financing officer and
chief valuation officer. Accordingly, each of these individuals posses a
direct conflict of interests under the Facilities Administration and
Operating Services Agreement and the Mutual Undertaking Agreement.
The Reorganization Transaction and the ancillary documents entered into in
connection therewith were not negotiated by independent parties at arms
length
The terms of the Reorganization Transaction including the terms contained in
the Reorganization Plan and Agreement, the FA&OS Agreement, the Mutual
Undertaking Agreement, the Agreement to Assume Debt and Release, Waiver and
Novation Agreement and the Assignment, Assumption and Confirmation Agreement,
were not negotiated by independent parties at arms-length. Conversely, the
Reorganization Transaction, as set forth in these various agreements was
structured and documented by the members of Sand Hills Partners, LLC, which
controls approximately 94.2% of our outstanding shares at the time these
transactions were structured and documented. Accordingly, it is reasonable to
assume that the Reorganization Transaction was designed and executed
principally to benefit the members of Sand Hills Partners, LLC.
Other Business Ventures
Although we have obtained direct covenants from SH Celera that it will not,
without our permission: (i) solicit any client company for the purpose of
performing any of the Consulting Services performed by us in competition with
us, (ii) enter into or assist others in entering into any business in
competition with us that would offer or perform the Consulting Services or
(iii) utilize any confidential information belonging to us, individuals who
are our officers, directors, consultants and advisors or officers, directors,
consultants and advisors to SH Celera may engage for their own account, or for
the account of others, in other business ventures for which we shall not be
entitled to any interest. We may, at some time in the future, compete for the
management services of our officers and directors. These officers and
directors may be placed in a position where their decision will favor other
operations in which they are associated over those of the Company resulting in
a conflict of interest. It should also be noted that it might be expedient for
them to favor one operation over another since their participation in such
operations will vary.
RECENT SALES OF UNREGISTERED SECURITIES
For information regarding our sale of unregistered securities prior to the
closing of the Reorganization Transaction, please see our 2005 10-KSB that is
incorporated by reference in Item 9.01
Pursuant to the Reorganization Plan and Agreement, on July 31, 2006 we
authorized the issuance of 17,300,744 post-split shares of our $0.01 par
value per share common stock as "restricted securities" to SH Celera. See
Item 1.01 Entry into a Material Definitive Agreement herein above and Item
2.01 Changes in Control of Registrant.
These securities will be issued to SH Celera for the consideration enumerated
in Item 5.01 Changes in Control of Registrant herein above, pursuant to the
exemption from registration provided by Section 4(2) of the Securities Act of
1933, as amended.
DESCRIPTION OF SECURITIES
We have a total of 55,000,000 authorized shares, 50,000,000 of which are
common and 5,000,000 of which are preferred. There are no outstanding options
or warrants to purchase our stock, and no stock has been authorized for
issuance under any equity compensation plans. Under Colorado law, our
stockholders generally are not personally liable for our debts or
obligations.
Common Stock
All shares of our common stock have equal rights as to earnings, assets,
dividends and voting and, when they are issued, will be duly authorized,
validly issued, fully paid and nonassessable. Distributions may be paid to
the holders of our common stock if, as and when authorized by our Board of
Directors and declared by us out of funds legally available therefor. Shares
of our common stock have no preemptive, exchange, conversion or redemption
rights and are freely transferable, except where their transfer is restricted
by federal and state securities laws or by contract. In the event of a
liquidation, dissolution or winding up, each share of our common stock would
be entitled to share ratably in all of our assets that are legally available
for distribution after we pay all debts and other liabilities and subject to
any preferential rights of holders of our preferred stock, if any preferred
stock is outstanding at such time. Each share of our common stock is entitled
to one vote on all matters submitted to a vote of stockholders, including the
election of directors. Except as provided with respect to any other class or
series of stock, the holders of our common stock will possess exclusive
voting power. There is no cumulative voting in the election of directors,
which means that holders of a majority of the outstanding shares of common
stock can elect all of our directors, and holders of less than a majority of
such shares will be unable to elect any director.
Preferred Stock
Our Amended and Restated Articles of Incorporation allow our board of
directors to issue preferred stock with rights and preferences set by the
board without further stockholder approval. The issuance of shares of this
"blank check" preferred stock could have an anti-takeover effect detrimental
to the interests of our stockholders. For example, in the event of a hostile
takeover attempt, it may be possible for management and the board to impede
the attempt by issuing the preferred shares, thereby diluting or impairing
the voting power of the other outstanding shares of common stock and
increasing the potential costs to acquire control of us. Our board of
directors has the right to issue any new shares, including preferred shares,
without first offering them to the holders of common stock as they have no
preemptive rights.
Transfer Agent
Our transfer agent is American Registrar and Transfer Co. located at 342 East
900 South, Salt Lake City, Utah 84111
MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
PURCHASES OF EQUITY SECURITIES
Market Information
There has been no "established trading market" for shares of our Company's
common stock during the past five years. On or about September 1, 1995, we
obtained a listing on the OTC Bulletin Board of the National Association of
Securities Dealers, Inc. ("the NASD") under the trading symbol "GOII."
However, except as shown below, no bid or asked quotations have been
reflected since that time. There can be no assurance that a public market for
our Company's securities will develop.
As a result of our name change to "G/O Business Solutions, Inc., which was
effective on August 1, 2006, we were required to obtain another trading symbol
which was assigned effective August 15, 2006 as "GOSB".
The range of high and low bid quotations for our common stock during each
quarter beginning June 30, 2004 through June 30, 2006, and December 31, 2005,
is shown below. Prices are inter-dealer quotations as reported by the NASD (or
the NQB, LLC) and do not necessarily reflect transactions, retail markups,
mark downs or commissions.
Stock Quotes
Quarter Ended Bid High Bid Low
June 30, 2004 .20 .18
September 30, 2004 .18 .15
December 31, 2004 .17 .17
March 31, 2005 .17 .15
June 30, 2005 .15 .15
September 30, 2005 .15 .15
December 31, 2005 .15 .15
March 31, 2006 .15 .15
June 30, 2006 .51 .25
No assurance can be given that any "established trading market" will ever
commence, or continue, if one does commence. The resale of "restricted
securities" and other securities of our Company that are currently
outstanding or that may be issued in the future could have an adverse effect
on any such market that may commence or exist in the future. 1,095,186 shares
of our common stock that were issued and outstanding immediately prior to the
closing of the Reorganization Transaction have satisfied all requirements of
Rule 144 to be publicly traded.
On or after July 26, 2007, all of the remaining 20,530,744 shares of our
currently outstanding common stock will be available for public resale under
Rule 144, provided, however, the resale of certain of these shares will be
subject to certain volume restrictions for those shares that are held by
members of our management or other "affiliates" of our Company.
Generally, "restricted securities" can be resold under Rule 144 once they
have been held for at least one year (subparagraph (d) thereof), provided
that the issuer of the securities satisfies the "current public information"
requirements (subparagraph (c)) of the Rule; no more than 1% of the
outstanding securities of the issuer are sold in any three month period
(subparagraph (e)); the seller does not arrange or solicit the solicitation
of buyers for the securities in anticipation of or in connection with the
sale transaction and does not make any payment to anyone in connection with
the sales transaction except to the broker/dealer whom executes the trade or
trades in the securities (subparagraph (f)); the shares are sold in "brokers'
transactions" only (subparagraph (g)); the seller files a Notice on Form 144
with the Securities and Exchange Commission at or prior to the sales
transaction (subparagraph (h)); and the seller has a bona fide intent to sell
the securities within a reasonable time of the filing of such Form. Once two
years have lapsed, assuming the holder of the securities is not an affiliate"
of the issuer, unlimited sales can be made without further compliance with
the terms and provisions of Rule 144.
Holders
The number of record holders of our Company's common stock, as of July 26,
2006, was 769.
Dividends
Our Company has not declared any cash dividends with respect to our common
stock, and does not intend to declare cash dividends in the foreseeable
future. The present intention of management is to utilize all available funds
for the development of our Company's business. There are no material
restrictions limiting, or that are likely to limit, our Company's ability to
pay dividends on our common stock.
We anticipate that, from time to time, we will accept property or shares of a
client (Non-Cash Compensation") as compensation in connection with the
provision of the Consulting Services. In connection therewith, we have agreed
with SH Celera to distribute any Non-Cash Compensation to our shareholder
through a dividend distribution that will be undertaken upon completion of
necessary steps to lawfully distribute such Non-Cash Compensation. We have
been advised by legal counsel that in order to avoid potential classification
as an investment company under Section 3 of the Investment Company Act of
1940 (the "ICA") it may be necessary to complete such a dividend
distribution of certain Non-Cash Compensation comprised of shares of a client
company, pursuant to a registration under the Securities Act of 1933, as
amended, which we will undertake, if required. If we are required to
undertake such a registration, we will attempt to negotiate with the client
from whom we have received such Non-Cash Compensation requiring them, as a
condition to our accepting such Non-Cash Compensation, to bear all costs
associated with such registration, and to compensate both us and SH Celera
for the time and services rendered in connection with undertaking and
completing such dividend distribution.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.
During the two most recent fiscal years, our principal independent accountant
has not resigned, and was not dismissed, and we intend to utilize our
existing independent account in the foreseeable future to prepare and submit
financial statements on behalf of the Company.
During the two most recent fiscal years, SH Celera's principal independent
accountant has not resigned, and was not dismissed, and SH Celera intends to
utilize its existing independent account in the foreseeable future to prepare
and submit financial statements on behalf of SH Celera, with our independent
accounts performing the consolidation of the financial statements if
required.
INDEMNIFICATION OF DIRECTORS AND OFFICERS AND SH CELERA
Article VI of our Amended and Restated Articles of Incorporation provides
that we may indemnify any director, officer, employee, fiduciary or agent to
the full extent permitted by the Colorado Corporations and Associations Act
as in effect at the time of the conduct of such person.
Additionally Article X of our Amended and Restated Articles of Incorporation
provides that no director shall be liable to the company or any shareholder
for monetary damages for breach of fiduciary duty as a director, except for
any matter in respect of which such director (a) shall be liable under
Colorado Corporation and Association Section 7-108-402; (b) shall have
breached the directors' duty of loyalty to the Company or its shareholders;
(c) shall have not acted in good faith or, in failing to act, shall not have
acted in good faith; or (d) shall have acted or failed to act in a manner
involving intentional misconduct or knowing violation of law or (e) shall
have derived an improper personal benefit.
Colorado Corporation and Association Section 7-108-402 provides (1) If so
provided in the articles of incorporation, the corporation shall eliminate or
limit the personal liability of a director to the corporation or to its
shareholders for monetary damages for breach of fiduciary duty as a director;
except that any such provision shall not eliminate or limit the liability of
a director to the corporation or to its shareholders for monetary damages for
any breach of the director's duty of loyalty to the corporation or to its
shareholders, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, acts specified in
section 7-108-403, or any transaction from which the director directly or
indirectly derived an improper personal benefit. No such provision shall
eliminate or limit the liability of a director to the corporation or to its
shareholders for monetary damages for any act or omission occurring before
the date when such provision becomes effective.
(2) No director or officer shall be personally liable for any injury to
person or property arising out of a tort committed by an employee unless such
director or officer was personally involved in the situation giving rise to
the litigation or unless such director or officer committed a criminal
offense in connection with such situation. The protection afforded in this
subsection (2) shall not restrict other common-law protections and rights
that a director or officer may have. This subsection (2) shall not restrict
the corporation's right to eliminate or limit the personal liability of a
director to the corporation or to its shareholders for monetary damages for
breach of fiduciary duty as a director as provided in subsection (1) of this
section.
The Colorado Business Corporation Act (the "Act") allows indemnification of
directors, officers, employees and agents of a company against liabilities
incurred in any proceeding in which an individual is made a party because he
was a director, officer, employee or agent of the company if such person
conducted himself in good faith and reasonable believed his actions were in,
or not opposed to, the best interests of the company, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. A person must be found to be entitled to indemnification under
this statutory standard by procedures designed to assure that disinterested
members of the board of directors have approved indemnification or that,
absent the ability to obtain sufficient numbers of disinterested directors,
independent counsel or shareholders have approved the indemnification based
on a finding that the person has met the standard. Indemnification is limited
to reasonable expenses.
On January 24, 2006, we entered into an Indemnification Agreement with Brian
Rodriguez in connection with his agreement to join our board of directors and
serve as our president. A copy of the form of Indemnification Agreement is
attached to this Form 8-K as Exhibit 10.5. See Item 9.01 Exhibit 10.5
On July 26, 2006, pursuant to the Reorganization Transaction, we entered into
an Indemnification Agreement with George Jarkesy in connection with his
agreement to join our board of directors and service as our chairman and
chief executive officer. A copy of the form of Indemnification Agreement is
attached to this Form 8-K as Exhibit 10.5. See Item 9.01 Exhibit 10.5
Under the terms of these Indemnification Agreements, we have agreed to
indemnify each of these persons against damages, expenses and costs, and in
certain cases advance expenses and costs in the event of legal actions that
may be brought against them in their capacity in serving the Company.
The foregoing does not purport to be a complete description of the
Indemnification Agreements entered into with Messrs. Rodriguez and Jarkesy,
and is qualified in their entirety by reference to the Indemnification
Agreements delivered to Messrs. Rodriguez and Jarkesy the form of which is
filed herewith as Exhibits 10.5. See Item 9.01 Exhibit 10.5.
In addition to the Indemnification Agreements delivered to our directors and
officers, we have agreed, in FA&OS Agreement to indemnify and hold harmless
SH Celera, its directors, officers, managers, partners, agents, employees,
controlling persons, and any other person or entity affiliated with any of
them (collectively, the "Indemnified Parties"), in connection with the
performance of any of its duties or obligations under the Facilities
Administrative and Operating Services Agreement and hold them harmless from
and against all damages, liabilities, costs and expenses (including
reasonable attorneys' fees and amounts reasonably paid in settlement)
incurred by the Indemnified Parties in or by reason of any pending,
threatened or completed action, suit, investigation or other proceeding
arising out of or otherwise based upon the performance of any of SH Celera's
duties or obligations under the FA&OS Agreement. Such indemnification and
hold harmless will not apply to any claims resulting from SH Celera's willful
misfeasance, bad faith or negligence in the performance of its duties or by
reason of the reckless disregard of SH Celera's duties and obligations under
the Facilities Administration and Operating Services Agreement; provided,
however, that the maximum liability of SH Celera or any other Indemnified
Party is limited to the total compensation paid to SH Celera under the
Facilities Administration and Operating Services Agreement.
The foregoing does not purport to be a complete description of our
indemnification undertakings contained in the FA&OS Agreement and is
qualified in its entirety by reference to the FA&OS Agreement filed herewith
as Exhibit 10.1. See Item 9.01 Exhibit 10.1.
Item 9.01 Financial Statements and Exhibits
Our 2005 10-KSB, March 31, 2006 10-QSB and June 30, 2006 10-QSB contain our
Financial Information through June 30, 2006 and we have included in this Form
8-K, pro forma balance sheets as of March 15, 2006, and June 30, 2006
reflecting the Reorganization Transaction. We have also included in this Form
8-K financial information of SH Celera Capital Corporation including audited
financial statements from inception through March 15, 2006, and unaudited
financial statements for the period from inception through June 30, 2006.
(a) Financial Statement of SH Celera Capital Corporation
(i) Audited for the period from inception to the period ending March
15, 2006
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
SH Celera Capital Corporation
(a development stage company)
Houston, Texas
We have audited the accompanying balance sheet of SH Celera Capital
Corporation ("SH Celera") (a development stage company) as of March 15, 2006
and the related statements of expenses, changes in stockholders' equity and
cash flows for the period from inception (December 1, 2005) through March 15,
2006. These financial statements are the responsibility of SH Celera's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides 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 SH Celera as of March 15,
2006 and the results of its operations and cash flows for the period from
inception through March 15, 2006 conformity with accounting principles
generally accepted in the United States of America.
/s/Malone & Bailey, PC
MALONE & BAILEY, PC
www.malone-bailey.com
Houston, Texas
April 3, 2006
except for Note 9
which is dated August 15, 2006
SH Celera Capital Corporation
(a development stage company)
Balance Sheet
As of March 15, 2006
ASSETS
Current assets:
Cash $ 472,936
Marketable securities 675,000
---------------
TOTAL ASSETS $ 1,147,936
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Accounts payable - related parties $ 33,640
---------------
Total current liabilities 33,640
---------------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 100,000,000 shares
authorized; 9,180,000 shares issued and outstanding 9,180
Additional paid-in capital 1,336,036
Deficit accumulated during the development stage (230,920)
---------------
Total stockholders' equity 1,114,296
---------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,147,936
===============
See accompanying summary of accounting policies and notes to financial
statements.
SH Celera Capital Corporation
(a development stage company)
Statement of Expenses
For the Period from Inception (December 1, 2005) through March 15, 2006
OPERATING EXPENSES:
General and administrative $ 230,920
---------------
Total operating expenses 230,920
---------------
NET LOSS $ (230,920)
===============
Basic and diluted net loss per share $ (0.03)
Weighted average common shares outstanding 7,594,917
See accompanying summary of accounting policies and notes to financial
statements.
SH Celera Capital Corporation
(a development stage company)
Statement of Changes in Stockholders' Equity
For the Period from Inception (December 1, 2005) through March 15, 2006
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Par Capital Stage Total
Shares issued for investment 8,250,000 $8,250 $ 671,750 $ - $ 680,000
Shares issued for cash 750,000 750 449,250 - 450,000
Shares issued for exercise of
options and warrants 180,000 180 17,820 - 18,000
Option and warrant expense - - 197,216 - 197,216
Net loss - - - (230,920) (230,920)
--------- ------ ---------- -------- -----------
Balances, March 15, 2006 9,180,000 $9,180 $1,336,036$(230,920)$(1,114,296)
========= ====== ========== ======== ===========
See accompanying summary of accounting policies and notes to financial
statements.
SH Celera Capital Corporation
(a development stage company)
Statement of Cash Flows
For the Period from Inception (December 1, 2005) through March 15, 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$ (230,920)
Adjustments to reconcile net loss
to net cash used in operating activities:
Stock-based compensation expense 197,216
Change in:
Accounts payable- related parties 33,640
-----------------
Net cash used in operating activities (64)
-----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock 455,000
Proceeds from exercise of options and warrants 18,000
-----------------
Net cash provided by financing activities 473,000
-----------------
NET CHANGES IN CASH 472,936
CASH AND CASH EQUIVALENTS, beginning of period -
-----------------
CASH AND CASH EQUIVALENTS, end of period $ 472,936
=================
Supplementary information
Cash paid for:
Interest $ -
Income tax -
Non-cash investing and financing transactions:
Shares issued for Forster investment $ 675,000
See accompanying summary of accounting policies and notes to financial
statements.
SH CELERA CAPITAL CORPORATION
(a development stage company)
Notes to the Financial Statements
NOTE 1 - ORGANIZATION
SH Celera Capital Corporation ("SH Celera") was formed in December 2005 by
its founders to undertake locating, evaluating, selecting, capitalizing and
managing investments in companies that present the opportunity, in the
judgment of management, to realize, from such investment, a short to medium
term (6 to 18 months) cash return on investment in excess of risk adjusted
market rates, through investment selection and structures that assure a
highly predictable liquidity event.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates in Financial Statement Preparation. The preparation of
financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
Cash and Cash Equivalents. For purposes of the statement of cash flows, cash
equivalents include all highly liquid investments with original maturities of
three months or less.
Marketable Securities. SH Celera determines the appropriate classification
of its investments in debt and equity securities at the time of purchase and
reevaluates such determinations at each balance-sheet date. Marketable
securities are classified as held-to-maturity when SH Celera has the positive
intent and ability to hold the securities to maturity. Marketable securities
for which SH Celera does not have the intent or ability to hold to maturity
are classified as available-for-sale. Held-to-maturity securities are
recorded as either short term or long term on the balance sheet based on the
contractual maturity date and are stated at amortized cost. Marketable
securities that are bought and held principally for the purpose of selling
them in the near term are classified as trading securities and are reported
at fair value, with unrealized gains and losses recognized in earnings. Debt
and marketable equity securities not classified as held-to-maturity or as
trading, are classified as available-for-sale, and are carried at fair market
value, with the unrealized gains and losses, net of tax, included in the
determination of comprehensive income and reported in shareholders' equity.
Income Taxes. Income tax expense is based on reported earnings before income
taxes. Deferred income taxes reflect the impact of temporary differences
between assets and liabilities recognized for consolidated financial
reporting purposes and such amounts recognized for tax purposes, and are
measured by applying enacted tax rates in effect in years in which the
differences are expected to reverse.
The fair value of substantially all securities is determined by quoted market
prices. The estimated fair value of securities for which there are no quoted
market prices is based on similar types of securities that are traded in the
market.
Stock Options. SH Celera adopted SFAS No 123R for the transactions in which
an entity exchanges its equity instruments for goods or services. SFAS No
123R focuses primarily on accounting for transactions in which an entity
obtains employee services in share-based payment transactions. SFAS No.123R
requires that the fair value of such equity instruments be recognized as
expense in the historical financial statements as services are earned.
During the period from inception through March 15, 2006, SH Celera granted
150,000 options to two employees and the weighted average fair value of the
stock options granted during the period was $0.29. Variables used in the
Black-Scholes option-pricing model include (1) 3.5% risk-free interest rate,
(2) expected option life is the actual remaining life of the options as of
each year end, (3) expected volatility is 153.25% and (4) zero expected
dividends.
Basic and Diluted Net Loss Per Common Share. The basic net loss per common
share is computed by dividing the net loss by the weighted average number of
common shares outstanding. Diluted net loss per common share is computed by
dividing the net income adjusted on an "as if converted" basis, by the
weighted average number of common shares outstanding plus potential dilutive
securities. Basic and diluted loss per share is the same due to potential
dilutive securities had an anti-dilutive effect and were not included in the
calculation of diluted net income per common share.
Newly Issued Accounting Pronouncements. In February of 2006, the FASB issued
SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments", which
is intended to simplify the accounting and improve the financial reporting of
certain hybrid financial instruments (i.e., derivatives embedded in other
financial instruments). The statement amends SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", and SFAS No. 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities-a replacement of FASB Statement No. 125."
SFAS No. 155 is effective for all financial instruments issued or acquired
after the beginning of an entity's first fiscal year that begins after
September 15, 2006. SH Celera is currently evaluating the impact SFAS No. 155
will have on its financial statements, if any.
SH Celera does not expect the adoption of any other recently issued
accounting pronouncements to have a significant impact on its financial
position, results of operations or cash flow.
NOTE 3 - MARKETABLE SECURITIES
SH Celera obtained its first portfolio company as the result of contributions
made by its founding stockholders through their management company, Sand
Hills Partners L.L.C. On December 16, 2005, SH Celera received $5,000 cash
and, a total of 1,800,000 shares of the common stock of Forster Drilling
Corporation ("Forster"), a Nevada Corporation, from Sand Hills Partners and
issued 8,250,000 shares of its common stock to Sand Hills Partners.
Forster is engaged in the businesses of: (i) providing contract land drilling
services to independent and major oil and gas exploration and production
companies, (ii) acquiring and refurbishing used rotary drilling rigs, and
(iii) exploring for, development, production and sale of oil and natural gas.
SH Celera valued the 1,800,000 shares of Forster at $675,000 or the
equivalent of $0.375 per shares at the time of the contribution, based upon
what management believes are comparables for companies engaged in the same
business and based upon the fact that Forster recently completed an offering
of its shares of common stock at a price of $0.75 per share.
SH Celera's equity investment in Forster is classified as trading securities
and is carried at its fair value based on the estimated market prices of the
securities at December 16, 2005 and March 15, 2006. There were no net
realized and unrealized gains and losses on trading securities included in
net earnings due to the lack of stock transactions in this period.
NOTE 4 - STOCKHOLDERS' EQUITY
For the period from inception through March 15, 2006:
SH Celera issued 8,250,000 shares of its common stock to Sand Hills Partners
in exchange for $5,000 cash and, a total of 1,800,000 shares of the common
stock of Forster Drilling. (see Note 3 for details).
SH Celera sold 750,000 shares of its common stock for a total of $450,000.
Several warrant holders exercised their warrants to acquire 180,000 shares of
common stock and SH Celera received proceeds totaling $18,000.
NOTE 5 - MANAGEMENT AND BOARD OF DIRECTORS AGREEMENTS
During 2005, SH Celera entered into agreements with several individuals that
will comprise SH Celera's management and board of directors. These agreements
include annual compensation of approximately $485,000. These agreements also
granted options and warrants to purchase 300,000 shares of SH Celera's common
stock. See Note 8 for details.
NOTE 6 - RELATED PARTY TRANSACTIONS
SH Celera's Chief Financial Officer and Executive Vice President of Business
Research & Analysis have served as consultants to Sand Hills Partners. Sand
Hills Partners is owned and managed by SH Celera's founding stockholders and
executives.
SH Celera's President/Chief Operating Officer has provided office space to SH
Celera at no charge.
NOTE 7 - INCOME TAXES
SH Celera uses the liability method, where deferred tax assets and
liabilities are determined based on the expected future tax consequences of
temporary differences between the carrying amounts of assets and liabilities
for financial and income tax reporting purposes. During the period from
inception through March 15, 2006, SH Celera incurred net losses and,
therefore, has no tax liability. The net deferred tax asset generated by the
loss carry-forward has been fully reserved. The cumulative net operating loss
carry-forward is approximately $34,000 at March 15, 2006, and will expire
during the year 2026.
At March 15, 2006, deferred tax assets consisted of the following:
Deferred tax assets
Net operating losses $ 11,560
Less: valuation allowance (11,560)
----------------
Net deferred tax assets $ -
================
NOTE 8 - STOCK OPTIONS AND WARRANTS
Stock Options:
In January 2006, options to purchase 150,000 shares of common stock were
issued to two employees at an exercise price of $0.02 per share. The fair
value of $87,026 on these options has been expensed as of March 15, 2006.
Warrants:
In January 2006, warrants to purchase 150,000 shares of common stock were
issued to several directors at an exercise price of $0.10 per share. The fair
value of $75,130 on these warrants has been expensed as of March 15, 2006.
All of the warrants were exercised during February 2006.
In January and February 2006, warrants to purchase 70,000 shares of common
stock were issued to several advisory committee members at an exercise price
of $0.10 per share. The fair value of $35,060 on these warrants has been
expensed as of March 15, 2006. As of March 15, 2006, 30,000 warrants had been
exercised.
Summary information regarding options and warrants is as follows:
Weighted Weighted
Average Average
Exercise Exercise
Options Price Warrants Price
Period from inception
through March 15, 2006:
Granted 150,000 $ 0.02 220,000 $ 0.10
Exercised - - (180,000) 0.10
------- --------- ---------- -------
Outstanding at March 15,
2006 150,000 $ 0.02 40,000 $ 0.10
======= ========= ========== =======
Options and warrants outstanding and exercisable as of March 15, 2006:
Exercise Remaining Options Options Warrants Warrants
Price Life Outstanding Exercisable Outstanding Exercisable
$0.02 0.10 year 150,000 150,000 - -
0.10 0.13 year - - 40,000 40,000
------- ------- ------ ------
150,000 150,000 40,000 40,000
======= ======= ====== ======
NOTE 9 - SUBSEQUENT EVENTS
In May 2006, SH Celera executed a lease agreement to lease an office building
in Houston, Texas. This non-cancelable lease will terminate on May 1, 2007.
The lease calls for monthly rental payments of $3,000 and includes options
for SH Celera to extend the lease an additional three years. The lease also
includes an option for SH Celera to purchase the office building at will any
time during the lease.
On June 26, 2006, SH Celera entered into a letter of intent to enter into a
reorganization transaction with G/O Business Solutions, Inc., ("G/O"). Upon
closing of the proposed reorganization transaction, SH Celera will: (i)
assume up to $65,000 of the current liabilities of G/O, (ii) provide G/O with
working capital of $50,000, (iii) enter into a facilities administration and
operating services agreement with G/O, whereby G/O will compensate SH Celera
for facilities and labor provided to assist G/O in offering fee-based
business consulting services to third parties, (iv) commit to perform a 2-
for-1 reverse split and undertake to issue 486,053 post-split shares of its
$0.001 par value per share common stock to G/O, for further distribution to
the G/O stockholders, upon the fulfillment of certain conditions, and (v)
assign to G/O all of its rights under certain retainer agreements, entered
into by SH Celera, pursuant to which SH Celera has received the right to
receive certain fees in connection with providing fee based business
consulting services. Upon closing of the reorganization transaction, G/O
will (i) deliver to SH Celera a total of 17,300,744 newly issued post-split
shares of its $0.01 par value per share restricted common stock, (ii)
transfer to SH Celera a total of 356,999 shares of Waterbury Resources, Ltd.,
its minority-owned Cayman Islands subsidiary company; (iii) enter into the
facilities administration and operating services agreement (iv) enter into a
mutual undertaking agreement thereby agreeing to undertake a financing of not
less than $2,500,000 through the sale of its shares of preferred stock and
(iv) designate an appointee as a member of its board of directors.. As a
result, upon completion of the reorganization transaction, SH Celera will
have issued and outstanding a total of not greater than 9,235,000 shares of
its $0.001 par value per share common stock. Consequently, the 486,053 shares
of SH Celera's common stock, issuable to G/O for distribution to its
stockholders, upon fulfillment of certain conditions, if and when issued,
will represent 5% of the issued and outstanding shares of SH Celera's common
stock, assuming no additional shares are issued prior thereto. In addition,
SH Celera will own 80% of G/O, with the remaining 20% owned by the existing
stockholders of G/O. This transaction is closed on August 15, 2006.
On August 15, 2006, SH Celera adopted a 2-for-1 reverse stock split to reduce
the numbers of shares of common stock outstanding as of the close of business
August 7, 2006. Shares outstanding and net loss per shares presented in these
financial statements reflect the reverse split.
(ii) Unaudited for the period from inception to June 30, 2006
SH Celera Capital Corporation
(a development stage company)
Balance Sheets
(unaudited)
ASSETS
June 30, 2006 March 15, 2006
-------------------- ----------------
Current assets:
Cash $ 361,618 $ 472,936
Other current assets 7,480 -
Marketable securities 4,050,000 675,000
-------------------- ----------------
Total current assets 4,419,098 1,147,936
-------------------- ----------------
Fixed assets, net accumulated
depreciation of $2,115 30,541 -
Other assets 3,000 -
-------------------- ----------------
Total assets $ 4,452,639 $ 1,147,936
==================== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Accounts payable $ 26,839 $ -
Accounts payable - related parties - 33,640
Accrued expenses 14,777 -
Deferred revenue 40,000 -
-------------------- ----------------
Total current liabilities 81,616 33,640
-------------------- ----------------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value,
100,000,000 shares authorized;
9,235,000 and 9,180,000 shares
issued and outstanding 9,235 9,180
Additional paid-in capital 1,356,808 1,336,036
Earnings (deficit) accumulated during
the development stage 3,004,980 (230,920)
-------------------- ---------------
Total stockholders' equity 4,371,023 1,114,296
-------------------- ----------------
Total liabilities and stockholders'
equity $ 4,452,639 $ 1,147,936
==================== ================
SH Celera Capital Corporation
(a development stage company)
Statements of Operations
For the three For the six From inception
months ended months ended (December 1, 2005)
June 30, 2006 June 30, 2006 through June 30,
2006
Revenue:
Professional services $ 20,000 $ 20,000 $ 20,000
---------- ----------- -----------
Operating expenses:
General and administrative 144,571 391,195 391,195
Depreciation expense 1,983 2,115 2,115
----------- ----------- -----------
Total operating expenses 146,554 393,310 393,310
----------- ----------- -----------
Operating loss (126,554) (373,310) (373,310)
Other income:
Interest income 2,558 3,290 3,290
Gain on equity securities 3,375,000 3,375,000 3,375,000
----------- ----------- -----------
Net income $ 3,251,004 $ 3,004,980 $ 3,004,980
=========== =========== ===========
Basic net income per share $ 0.35 $ 0.33
Diluted net income per share 0.35 0.33
Weighted average common shares
outstanding 9,227,956 8,998,950
SH Celera Capital Corporation
(a development stage company)
Statements of Cash Flows
For the six From inception
months ended (December 1, 2005)
June 30, 2006 through June 30,
2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,004,980 $ 3,004,980
Adjustments to reconcile net loss
to net cash used in operating activities:
Stock-based compensation expense 212,543 212,543
Depreciation expense 2,115 2,115
Gain on equity securities (3,375,000) (3,375,000)
Change in:
Other current assets (7,480) (7,480)
Other assets (3,000) (3,000)
Accounts payable 26,839 26,839
Accrued expenses 14,777 14,777
Deferred revenue 40,000 40,000
----------- ------------
Net cash used in operating activities (84,226) (84,226)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (32,656) (32,656)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shares issued for investment 5,000 5,000
Proceeds from sale of common stock 450,000 450,000
Proceeds from exercise of options and warrants 23,500 23,500
----------- ------------
Net cash provided by financing activities 478,500 478,500
----------- ------------
NET CHANGES IN CASH 361,618 361,618
Cash and cash equivalents, beginning of period - -
----------- ------------
Cash and cash equivalent, end of period $ 361,618 $ 361,618
=========== ============
Supplementary information:
Cash paid for:
Interest $ - $ -
Income tax - -
Non-cash investing and financing transactions:
Shares issued for investment 675,000 675,000
SH CELERA CAPITAL CORPORATION
(a development stage company)
Notes to Financial Statements
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of SH Celera Capital
Corporation ("SH Celera"), (a development stage company), have been prepared
in accordance with accounting principles generally accepted in the United
States of America and the rules of the Securities and Exchange Commission
("SEC"), and should be read in conjunction with the audited financial
statements and notes thereto contained in SH Celera's latest Annual Report
filed with the SEC on Form 8-K. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the
interim periods presented have been reflected herein. The results of
operations for interim periods are not necessarily indicative of the results
to be expected for the full year. Notes to the financial statements that
would substantially duplicate the disclosure contained in the audited
financial statements for the most recent fiscal year, 2005, as reported in
Form 8-K, have been omitted
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition. SH Celera recognizes revenue under the provisions of
Staff Accounting Bulletin No. 104, "Revenue Recognition" ("SAB 104"). SAB
104 generally provides that revenue for time-based services be recognized
over the average length of the services being provided. For contracts whereby
we are required to achieve certain milestones and/or submit deliverables, SH
Celera recognizes revenues upon completion. The difference between payments
received for services and the amount recognized as revenue is recorded as
Deferred Revenue, which is included in Accrued Liabilities in our balance
sheet.
NOTE 3 - MARKETABLE SECURITIES
The composition of trading securities, classified as current assets, is as
follows at June 30, 2006:
Cost Fair Value
--------------- ---------------
Investment in Forster $ 675,000 $ 4,050,000
Gain on equity securities for the three and six months ended June 30, 2006
and for the period from inception through June 30, 2006, consists of the
following:
For the three For the six From inception
months ended months ended (December 1, 2005)
June 30, 2006 June 30, 2006 through June 30,
2006
Unrealized holding gain $ 3,375,000 $ 3,375,000 $ 3,375,000
NOTE 4 - STOCKHOLDERS' EQUITY
For the period from March 16, 2006 through June 30, 2006, several warrant
holders exercised their warrants to acquire 55,000 shares of common stock and
SH Celera received proceeds totaling $5,500.
NOTE 5 - STOCK WARRANTS
Warrants:
For the period from March 16, 2006 through June 30, 2006, warrants to
purchase 30,000 shares of common stock were issued to several advisory
committee members at an exercise price of $0.10 per share. The fair value of
$15,327 on these warrants has been expensed as of June 30, 2006. As of June
30, 2006, 60,000 warrants had been exercised.
NOTE 6 - SUBSEQUENT EVENTS
On July 27, 2006, Sand Hills Partners transferred 1,500,000 shares of common
stock of HoustonPharma, a Houston-based biotechnology company, to SH Celera
for no consideration. Sand Hills Partners is owned and managed by SH Celera's
founding stockholders and executives.
(b). Proforma consolidated financial information as of
(i) March 15, 2006
As a result of the Reorganization Transaction, the financial statements of SH
Celera and G/O must be consolidated. Accordingly, the following unaudited pro
forma financial statements have been prepared on a consolidated basis, from
information that has been derived from the financial statements of SH Celera
Capital Corporation ("SH Celera") at March 15, 2006 and G/O Business
Solutions, Inc. ("G/O") as of December 31, 2005 and adjusts such information
to give effect to the Reorganization Transaction between G/O Business
Solutions, Inc. ("G/O"), as if the Reorganization Transaction had occurred at
March 15, 2006. The pro forma financial statements are presented for
informational purposes only and do not purport to be indicative of the
financial condition that would have resulted if the acquisition Reorganization
Transaction had been consummated at March 15, 2006. The pro forma financial
statements should be read in conjunction with each company's consolidated
financial statements and related notes thereto contained herein and in G/O's
latest annual and quarterly reports filed with the SEC.
Pro forma consolidated condensed balance sheet:
SH Celera G/O
3/15/06 12/31/05 Adjustments Pro Forma
Assets:
Cash $ 472,936 $ - $ - $ 472,936
Marketable securities 675,000 - - 675,000
---------- -------- --------- ----------
Total assets $1,147,936 $ - $ - $1,147,936
========== ======== ========= ==========
Liabilities:
Accounts payable $ - $ 82,389 $ - $ 82,389
Accounts payable - related
parties 33,640 - - 33,640
Accrued interest - accounts
payable - 7,042 - 7,042
Notes payable - 408,500 - 408,500
Accrued interest - notes payable - 234,978 - 234,978
Advances from stockholders - 31,348 - 31,348
Accrued interest - advances
from stockholders - 6,040 - 6,040
----------- -------- --------- -----------
Total liabilities 33,640 770,297 - 803,937
----------- -------- --------- -----------
Stockholders' equity / (deficit):
Preferred stock, $0.01
par value, 5,000,000
shares authorized and
none Issued and outstanding - - - -
Common stock, $0.001 par
value, 100,000,000 shares
authorized and 9,180,000
shares issued and
outstanding 9,180 - (2) 486 9,666
Common stock, $0.01 par value,
50,000,000 shares authorized
and 4,325,186 shares
issued and outstanding - 43,252 (1) (43,252) -
Additional paid in capital 1,336,036 2,683,126 (1)(2,683,126) 1,335,550
(2) (486)
Retained deficit (230,920)(3,496,675)(1) 3,496,675 (1,001,217)
(1) (770,297)
---------- ---------- ---------- ----------
Total stockholders' deficit 1,114,296 (770,297) - 343,999
---------- ---------- ---------- ----------
Total liabilities and
stockholders' equity/(deficit)$1,147,936 $ - $ - $1,147,936
========== ========== ========== ==========
Notes to pro forma consolidated condensed financial statements:
(1) On the date of the reorganization, SH Celera assumed up to $65,000 of the
existing liabilities the liabilities of G/O and consolidates the equity of
G/O.
(2) Pursuant to the Reorganization Plan and Agreement and the Mutual
Undertaking Agreement executed in connection therewith, SH Celera undertook to
issue 486,053 shares of its $0.001 par value per share common stock to were
issued to G/O under the reorganization upon the fulfillment of a number of
conditions.
(ii) June 30, 2006
The following unaudited pro forma financial statements have been derived from
the financial statements of SH Celera Capital Corporation ("SH Celera at June
30, 2006 and adjusts such information to give effect to its reorganization
with G/O Business Solutions, Inc. ("G/O", as if the reorganization had
occurred at June 30, 2006. The pro forma financial statements are presented
for informational purposes only and do not purport to be indicative of the
financial condition that would have resulted if the acquisition had been
consummated at June 30, 2006. The pro forma financial statements should be
read in conjunction with each company's consolidated financial statements and
related notes thereto contained herein and in G/O's latest annual and
quarterly reports filed with the SEC.
Pro forma consolidated condensed balance sheet:
SH Celera G/O
6/30/06 6/30/06 Adjustments Pro Forma
Assets:
Cash $ 361,618 $ - $ - $ 361,618
Marketable securities 4,050,000 - - 4,050,000
Other current assets 7,480 - - 7,480
Property & Equipment (net) 30,541 - - 30,541
Other non-current assets 3,000 - - 3,000
---------- -------- -------- ----------
Total assets $4,452,639 $ - $ - $4,452,639
========== ======== ======== ==========
Liabilities:
Accounts payable $ 26,839 $ 60,223 $ - $ 87,062
Advances from stockholders - 35,838 - 35,838
Accrued interest advances
from stockholders - 7,462 - 7,462
Accrued expenses 14,777 - - 14,777
Deferred revenue 40,000 - - 40,000
---------- -------- -------- ---------
Total liabilities 81,616 103,523 - 185,139
---------- -------- -------- ---------
Stockholders equity / (deficit):
Preferred stock, $0.01 par
value, 5,000,000 shares
authorized and none Issued
and outstanding - - - -
Common stock, $0.001 par
value, 100,000,000 shares
authorized and 9,235,000
shares issued and outstanding 9,235 - (2) 486 9,721
Common stock, $0.01 par value,
50,000,000 shares authorized
and 4,325,186 shares issued
and outstanding - 43,252 (1) (43,252) -
Additional paid in capital 1,356,808 3,371,973 (1)(3,371,973)1,356,322
- (2) (486) -
Retained deficit 3,004,980(3,518,748)(1) 3,518,748 2,901,457
- - (1) (103,523) -
---------- --------- ---------- ---------
Total stockholders deficit 4,371,023 (103,523) - 4,267,500
---------- --------- ---------- ---------
Total liabilities and
stockholders equity /(deficit) $4,452,639 $ - $ -$4,452,639
========== ========= ========== =========
Notes to pro forma consolidated condensed financial statements:
(1) On the date of the reorganization, SH Celera assumed up to $65,000 of the
existing liabilities the liabilities of G/O and consolidates the equity of
G/O.
(2) Pursuant to the Reorganization Plan and Agreement and the Mutual
Undertaking Agreement executed in connection therewith, SH Celera undertook to
issue 486,053 shares of its $0.001 par value per share common stock to were
issued to G/O under the reorganization upon the fulfillment of a number of
conditions.
(c) Registrants Exhibits
Ex. Document
2.1 Reorganization Plan and Agreement
Schedule A List of SH Celera Subsidiaries
Schedule B List of SH Celera Assets
Schedule C List of SH Celera permits, trademarks etc.
Schedule D List of SH Celera Material Contracts
Schedule E List of SH Celera Equipment
Schedule F SH Celera Exceptions to Title
Schedule G SH Celera list of insurance
Schedule H List of SH Celera management and staff
Schedule I List of SH Celera Litigation
Schedule J SH Celera List of Exceptions to representations
Schedule K G/O Subsidiaries
Schedule L G/O 34 Act Registration Materials
Exhibit A SH Celera Financial Statements
Exhibit B SH Celera Investment Letter-G/O Shares
Exhibit C SH Celera Investment Letter-Waterbury Shares
Exhibit D Facilities Administration and Operating Services
Agreement See Exhibit 10.1
Exhibit E Mutual Undertaking Agreement. See Exhibit 10.2
Exhibit F Agreement to Assume Debt and Release, Waiver and
Novation. See Exhibit 10.3
Exhibit G-Assignment, Assumption and Confirmation Agreements See
Exhibits 10.4(a) and 10.4(b)
3.1 Amended and Restated Articles of Incorporation
4.1 Mutual Undertaking Agreement
10.1 Facilities Administrative and Operating Services Agreement
10.2 Mutual Undertaking Agreement
10.3 Agreement to Assume Debt and Release, Waiver and Novation
10.4(a) Assignment Assumption and Confirmation Agreement
10.4(b) Assignment Assumption and Confirmation Agreement
10.5 Form of Indemnification Agreement
14 SH Celera Capital Corporation Code of Ethics
Incorporated by Reference
Form 10-KSB Annual Report Explanatory Note, Organization and Business-Our
for the year ended Prior Business, Executive Compensation
December 31, 2005,
filed with the Recent Sale of Unregistered Securities
Securities and Exchange
Commission on March 30, 2006. Organization and Business-Our Prior Business
Form 10-QSB Quarterly Report Explanatory Note, Organization and Business-Our
filed with the Securities and Prior Business, Executive Compensation.
Exchange Commission
on May 12, 2006. Recent Sale of Unregistered Securities
Organization and Business-Our Prior Business
Form 10-QSB Quarterly Report Explanatory Note, Organization and Business-Our
filed with the Securities and Prior Business, Executive Compensation.
Exchange Commission on August
1, 2006. Recent Sale of Unregistered Securities
Organization and Business-Our Prior Business
Form 8-K Current Report filed Item 5.01 Changes in Control of Registrant,
with the Securities and Organization and Business-Our Prior Business
Exchange Commission
February 28, 2005.
Form 8-K Current Report filed Item 1.01 Entry Into a Material Definitive
with the Securities and Agreement.
Exchange Commission on
June 26, 2006. Organization and Business-Our Prior Business
Form 8-K Current Report filed Explanatory Note, Organization and Business-Our
with the Securities and Prior Business.
Exchange Commission on
July 7, 2006. Executive Compensation. Recent Sale of
Unregistered Securities.
Organization and Business-Our Prior Business
Form 8-K Current Report Filed Explanatory Note, Organization and Business-Our
with the Securities and Prior Business, Executive Compensation. Recent
Exchange Commission on Sale of Unregistered Securities.
August 9, 2006 Organization and Business-Our Prior Business
Proxy Statement pursuant to Item 1.01 Entry Into a Material Definitive
Section 14(a) of the Exchange Agreement, Item 5.03 Amendments to Articles of
Act Filed with the SEC Incorporation Bylaws, change of Fiscal Year
August 21, 2003.
Exhibit 4 Code of Ethics to Directors, Executive Officers, Promoters, and
Form 10-KSB Annual Report for Control persons; compliance with Section 16(a)
the year ended December 31, of the Exchange Act.
2003 filed with the
Securities and Exchange
Commission on April
24, 2004.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, as
amended, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: 8/15/2006 G/O Business Solutions, Inc.
X /s/Brian Rodriguez
Brian Rodriguez, President