As filed with the Securities and Exchange Commission on November 14, 2014
Registration No.333-198435
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1/A
AMENDMENT NO. 1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SAFE LANE SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
COLORADO 3714 46-3892319
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(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
1624 MARKET STREET, SUITE #202, DENVER, COLORADO 80202/ PHONE (949) 825-6512
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(Address and telephone number of principal executive offices)
PAUL D. DICKMAN, CHIEF EXECUTIVE OFFICER, PRESIDENT AND CHAIRMAN OF THE BOARD
1624 MARKET STREET, SUITE #202, DENVER, COLORADO 80202/ PHONE (949) 825-6512
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(Name, address and telephone number of agent for service)
COPIES OF ALL COMMUNICATIONS TO:
Michael A. Littman, Attorney at Law
7609 Ralston Road, Arvada, CO, 80002 phone 303-422-8127 / fax 303-431-1567
Approximate date of commencement of proposed sale to the public: As soon as
possible after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
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Large accelerated filer [___] Accelerated filer [___]
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Non-accelerated filer [___] Smaller reporting company [_X_]
(Do not check if a smaller
reporting company)
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CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE PRICE(1) FEE
---------------------------- ------------- ---------------- ------------------ -------------
Common Stock for 22,768,273 $0.01 $227,682.73 $29.33 (2)
Distribution under Plan of
Liquidation
Common Stock for resale 22,768,273 $0.01 $227,682.73 $29.33 (2)
from the Distributees of
the Plan of Liquidation
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(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(a) under the Securities Act.
(2) Previously paid with the prior registration statement filed on August 28,
2014.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
ii
(SUBJECT TO COMPLETION)
PROSPECTUS
SAFE LANE SYSTEMS, INC.
22,768,273 SHARES OF COMMON STOCK UNDERLYING CONVERSION RIGHTS OF
CLASS "B" NON-VOTING FOR DISTRIBUTION TO DISTRIBUTEES
UNDER THE PLAN OF LIQUIDATION, UPON CONVERSION OF CLASS
"B" PREFERRED CONVERTIBLE NON-VOTING STOCK
AND 22,768,273 SHARES OF COMMON STOCK FOR RESALE BY DISTRIBUTEES OF
THE PLAN OF LIQUIDATION
We are registering:
(a) 22,768,273 common shares to be distributed to Distributees under the Plan
of Liquidation, upon conversion of Class "B" Preferred Convertible
Non-Voting Stock.
(b) 22,768,273 shares of common stock for resale by Distributees of the Plan of
Liquidation
We will NOT receive any proceeds from sales of shares by selling shareholders.
Pursuant to the Master I.P. Agreement, we agreed to issue up to 22,768,273
shares of our Class "B" Preferred Convertible Non-Voting Stock on a one-for-one
basis convertible up to 22,768,273 shares of our common stock to a Trustee for
Superior Traffic Control, Inc.'s ("STC") shareholders with the understanding and
agreement that we would file an S-1 Registration Statement for a) the
distribution of the common shares, pro-rata, to the shareholders of STC, and b)
for resale of such converted common shares issued to STC shareholders in public
market or private transactions. The terms of our Class "B" Preferred Convertible
Non-Voting Stock and the terms of the Trust provide that there can be no
conversion of our Class "B" Preferred Convertible Non-Voting Stock to common
stock unless and until a Registration Statement on Form S-1 under the Securities
Act of 1933 has been made effective.
Our selling shareholders plan to sell common shares at $0.01, until such time as
a market develops for any of the securities and thereafter at such prices as the
market may dictate from time to time. There is no market price for the stock and
our pricing is arbitrary with no relation to market value, liquidation value,
earnings or dividends. The price was arbitrarily set at $0.01 per share, based
on a speculative concept unsupported by any other comparables. We have set the
initial fixed price as follows:
TITLE PRICE PER SHARE
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Common Stock $0.01
At any time after a market develops, our security holders may sell their
securities in a market, at market prices or at any price in privately negotiated
transactions.
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK; SEE "RISK FACTORS" BEGINNING ON
PAGE 6 TO READ ABOUT FACTORS YOU SHOULD CONSIDER BEFORE BUYING SHARES OF THE
COMMON STOCK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") OR ANY STATE OR PROVINCIAL SECURITIES
COMMISSION, NOR HAS THE SEC OR ANY STATE OR PROVINCIAL SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
We intend to obtain a quotation for our stock in the future, but cannot make any
assurances that we will be approved for such quotation by FINRA. An application
has not yet been filed, nor is there any selected broker/dealer to file for
quotation on our behalf as of yet. Our common stock is presently not quoted on
any national securities exchange or the NASDAQ Stock Market or any other venue.
This offering will be on a delayed and continuous basis only after the
distribution upon conversion of Class "B" Preferred Convertible Non-Voting stock
to common and for sales of selling shareholders (distributes) shares. The
selling shareholders are not paying any of the offering expenses and we will not
receive any of the proceeds from the sale of the shares by the selling
shareholders. (See "Description of Securities - Shares").
-1-
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the date that the registration statement
relating to these securities, which has been filed with the Securities and
Exchange Commission, becomes effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
The date of this Prospectus is November 14, 2014.
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TABLE OF CONTENTS
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PART I - INFORMATION REQUIRED
IN PROSPECTUS Page No.
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ITEM 1. Front of Registration Statement and Outside Front Cover Page
of Prospectus
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ITEM 2. Prospectus Cover Page
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ITEM 3. Prospectus Summary Information, Risk Factors and Ratio of 4
Earnings to Fixed Charges
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ITEM 4. Use of Proceeds 20
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ITEM 5. Determination of Offering Price 20
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ITEM 6. Dilution 20
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ITEM 7. Selling Security Holders 21
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ITEM 8. Plan of Distribution 26
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ITEM 9. Description of Securities 26
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ITEM 10. Interest of Named Experts and Counsel 27
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ITEM 11. Information with Respect to the Registrant 27
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a. Description of Business 27
b. Description of Property 40
c. Legal Proceedings 40
d. Market for Common Equity and Related Stockholder Matters 40
e. Financial Statements 41
f. Selected Financial Data 42
g. Supplementary Financial Information 42
h. Management's Discussion and Analysis of Financial Condition 42
and Results of Operations
i. Changes In and Disagreements With Accountants on Accounting 47
and Financial Disclosure
j. Quantitative and Qualitative Disclosures About Market Risk 47
k. Directors and Executive Officers 47
l. Executive and Directors Compensation 50
m. Security Ownership of Certain Beneficial Owners and 53
Management
n. Certain Relationships, Related Transactions, Promoters And 54
Control Persons
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ITEM 11 A. Material Changes 55
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ITEM 12. Incorporation of Certain Information by Reference 56
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ITEM 12 A. Disclosure of Commission Position on Indemnification for 56
Securities Act Liabilities
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PART II - INFORMATION NOT
REQUIRED IN PROSPECTUS
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ITEM 13. Other Expenses of Issuance and Distribution 57
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ITEM 14. Indemnification of Directors and Officers 57
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ITEM 15. Recent Sales of Unregistered Securities 58
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ITEM 16. Exhibits and Financial Statement Schedules 59
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ITEM 17. Undertakings 60
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Signatures 61
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ITEM 3. PROSPECTUS SUMMARY INFORMATION, RISK FACTORS AND RATIO OF EARNINGS TO
FIXED CHARGES
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OUR COMPANY
Safe Lane Systems, Inc. ("Safe Lane Systems", "Safe Lane Systems," "We," "Us,"
"Our," or "Company" hereafter), was incorporated in the State of Colorado on
September 10, 2013. We were formed to engage in the sale of traffic safety
equipment. We may also engage in any other business permitted by law, as
designated by the Board of Directors of our Company.
We have licensed and sub-licensed I.P. for a spring traffic cone dispenser
designed to protect highway workers, first responders to vehicle collisions and
highway incidents, law enforcement personnel, towing operators, private and
public utility workers, as well as pedestrians and motorists. Our flagship
product, The Kone General Automatic Safety Cone Deployment System, is the
world's first and only portable safety cone dispensing system. Safe D-Ploy
Spring Cones are patented MUTCD (Manual on Uniform Traffic Control Devices)
compliant highway safety cones. We must commence manufacture and sales by
January 1, 2016. We cannot give any assurance that we will be able to comply
with this requirement of the license
We have begun initial minimal operations and are currently without revenue. We
have one contract employee at the present time, our CEO. During the year ended
December 31, 2013, the executive officers contributed their services and had not
begun to be compensated. Upon formation, the founder, our CEO and Chairman, Paul
D. Dickman, purchased 2,000,000 shares of the Company's common stock as a price
of $0.0005, per share for a total price of $1,000 and in addition he was granted
10,000,000 ($0.0001 par value) shares of Class "A" Super Majority Voting stock
for organizational services.
We have engaged a marketing consultant to develop a marketing and sales plan for
both the spring traffic cone and our automatic traffic cone dispenser. The
consultant's final marketing plan should be received and approved by the end of
the year. We expect to incur an additional $15,000 in fees prior to the plan
being finalized. We currently have sufficient capital to cover the expected
expense.
We have engaged and are currently under agreement with a globally recognized
manufacturer's representation firm, The Johander Company of Minneapolis, to help
guide us into retail markets, build a manufacturer's representative network, and
drive retail sales of our Spring Cone and Safe-D-ploy product accessories.
Johader was founded in 1987 by Bill Johander and remains a family business
operated by his daughter Jennifer who joined the company after a successful
career at Target Stores. We will pursue under a `pay for success' commission
structure the following existing Johander retail relationships including; Target
and Target.com, Bluestem Brands (Fingerhut), Meijer, Menard's, Home Depot,
Lowe's, Advance Auto, Sam's Club and Gander Mountain, Walmart, Costco, Dick's
Sporting Goods, Sports Authority, Academy Amazon, NAPA, Auto Zone, O'Reillys,
Pep Boys, AC Delco, ULine, Grainger, Gempler's, Toys R Us, and Streicher's.
Through this relationship we expect to have a new manufacture in place by the
end of the year at no additional costs until such time as manufacturing begins.
We plan to begin marketing our products in early 2015 based upon the
recommendation of our marketing consultants. We expect we will need to raise an
additional $1,000,000 in equity financing prior to implementing our full
marketing and sales plan. We owe a note payable of $160,000, which will need to
be paid within the year 2015.
We are in the developmental stage of our business. Since our incorporation
September 2013, we have been engaged in securing both exclusive and
non-exclusive license agreements for our key products, designing a marketing
plan, and lining up suppliers and manufacturers for production.
During the 2015 fiscal year, we intend to focus our efforts on our product
launch and marketing of the Kone General Automatic Safety Cone Deployment
System. We must commence manufacture and sales by January 1, 2016 or our
licenses will be in default.
Our Auditors have issued a going concern opinion and the reasons noted for
issuing the opinion are our lack of revenues or business and very modest
capital.
-4-
As of October 31, 2014, we had $75,000 in cash on hand. Our current monthly cash
burn rate is approximately $12,500, and it is expected that burn rate will
continue until significant additional capital is raised and our marketing plan
is executed. Once additional capital is raised to support our marketing efforts,
we expect to increase our monthly general and administrative cash burn rate to
approximately $25,000 per month until revenue is generated to offset this
expense. Based upon our current burn rate, we will use all current cash within
six months' time. However, we will need to raise an additional approximately
$1,000,000 to execute our plan of operations.
IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY
We qualify as an emerging growth company as that term is used in the JOBS Act.
An emerging growth company may take advantage of specified reduced reporting and
other burdens that are otherwise applicable generally to public companies. These
provisions include:
o A requirement to have only two years of audited financial statements
and only two years of related MD&A ;
o Exemption from the auditor attestation requirement in the assessment
of the emerging growth company's internal control over financial
reporting under Section 404 of the Sarbanes-Oxley Act of 2002;
o Reduced disclosure about the emerging growth company's executive
compensation arrangements; and
o No non-binding advisory votes on executive compensation or golden
parachute arrangements.
We have already taken advantage of these reduced reporting burdens in this
prospectus, which are also available to us as a smaller reporting company as
defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
In addition, Section 107 of the JOBS Act also provides that an emerging growth
company can take advantage of the extended transition period provided in Section
7(a)2(B) of the Securities Act of 1933, as amended (the "Securities Act") for
complying with new or revised accounting standards. We have elected to use the
extended transition period provided above and therefore our financial statements
may not be comparable to companies that comply with public company effective
dates.
We could remain an emerging growth company for up to five years, or until the
earliest of (i) the last day of the first fiscal year in which our annual gross
revenues exceed $1 billion, (ii) the date that we become a "large accelerated
filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the
market value of our common stock that is held by non-affiliates exceeds $700
million as of the last business day of our most recently completed second fiscal
quarter, or (iii) the date on which we have issued more than $1 billion in
non-convertible debt during the preceding three year period.
For more details regarding this exemption, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Critical Accounting
Policies."
Factors that make this offering highly speculative or risky are:
o There is no market for any securities;
o We have no revenues or sales;
o We are start up company;
o We have minimal experience in the traffic safety business as a
company;
o We are undercapitalized.
Our principal executive offices are located at 1624 Market Street, Suite #202,
Denver, Colorado 80202 and our telephone number is (949) 825-6512. We maintain a
website at WWW.SAFELANES.COM, such website is not incorporated into or a part of
this filing.
-5-
SUMMARY OF FINANCIAL INFORMATION
The Summary Financial Information presented below is at June 30, 2014.
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As at June 30, 2014
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Total Assets $6,062
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Current Liabilities $26,274
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Shareholders' Equity $(20,212)
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From September 10, 2013
(inception) to
June 30, 2014
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Revenues to December 31, 2013 and June 30, 2014 $0
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Net Loss at December 31, 2013 $ (1,000)
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Net Loss at the six months ended June 30, 2014 $ (23,739)
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As of December 31, 2013, the accumulated deficit was $(1,000). As of June 30,
2014, the accumulated deficit was $(24,724). We anticipate that we will operate
in a deficit position and continue to sustain net losses for the foreseeable
future.
The implied aggregate value of all common stock intended to be outstanding after
the conversion, based on price of $0.01 and the 22,768,273 shares to be issued
is $227,683.
THE OFFERING
22,768,273 SHARES OF COMMON STOCK UNDERLYING
CONVERSION RIGHTS OF CLASS "B" PREFERRED CONVERTIBLE NON-VOTING STOCK
FOR DISTRIBUTION TO DISTRIBUTEES UNDER THE PLAN OF LIQUIDATION
AND
22,768,273 SHARES OF COMMON STOCK FOR RESALE BY DISTRIBUTEES OF
THE PLAN OF LIQUIDATION
We are registering:
(a) 22,768,273 common shares to be distributed to Distributees under Plan
of Liquidation, upon conversion of Class "B" Preferred Convertible
Non-Voting Stock
(b) 22,768,273 shares of common stock for resale by Distributees of the
Plan of Liquidation
We will NOT receive any proceeds from sales of shares by selling shareholders.
Pursuant to the Master I.P. Agreement, we agreed to issue up to 22,768,273
shares of our Class "B" Preferred Convertible Non-Voting Stock on a one-for-one
basis convertible to 22,768,273 shares of our common stock to a Trustee for
Superior Traffic Control, Inc.'s ("STC") shareholders with the understanding and
agreement that we would file an S-1 Registration Statement for a) the
distribution of the common shares, pro-rata, to the shareholders of STC, and b)
for resale of such converted common shares issued to STC shareholders in public
market or private transactions. The terms of our Class "B" Preferred Convertible
Non-Voting Stock and the terms of the Trust provide that there can be no
conversion of our Class "B" Preferred Convertible Non-Voting Stock to common
stock unless and until a Registration Statement on Form S-1 under the Securities
Act of 1933 has been made effective.
Our common stock, only, will be transferable immediately after the closing of
this offering. (See "Description of Securities")
====================================================== =======================
Common shares outstanding before this offering 2,000,000
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Maximum common shares being offered by our existing
selling shareholders 22,768,273
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Maximum common shares outstanding after this offering 24,768,273
====================================================== =======================
We are authorized to issue 450,000,000 shares of common stock and 50,000,000
shares of preferred stock. Our current shareholders, officers and directors
collectively own 2,000,000 shares of restricted common stock and 10,000,000
-6-
shares of Class "A" Preferred Super Majority Voting Stock as of June 30, 2014.
These shares were issued in the following amounts and at the following prices:
---------------------------- ----------------------------- ---------------------
Number of Shares Consideration Price Per Share
---------------------------- ----------------------------- ---------------------
2,000,000 common Stock $1,000 $0.0005
---------------------------- ----------------------------- ---------------------
10,000,000 Class "A" Founder Services $0.0001
Preferred Super Majority
Voting Stock
---------------------------- ----------------------------- ---------------------
22,768,273 Class "B" Licenses $0.0001
Preferred Convertible
Non-Voting Stock
---------------------------- ----------------------------- ---------------------
There is currently no public market for our shares as it is presently not traded
on any market or securities exchange.
RISK FACTORS RELATED TO OUR COMPANY
Our securities, as offered hereby, are highly speculative and should be
purchased only by persons who can afford to lose their entire investment in us.
Each prospective investor should carefully consider the following risk factors,
as well as all other information set forth elsewhere in this prospectus, before
purchasing any of the shares of our common stock.
WE HAVE A LACK OF REVENUE HISTORY AND INVESTORS CANNOT VIEW OUR PAST PERFORMANCE
SINCE WE ARE A START-UP COMPANY.
We were formed on September 10, 2013 for the purpose of engaging in any lawful
business and adopted a plan to engage in the traffic safety business. We have
had no revenues since inception. We are not profitable and the business effort
is considered to be in an early development stage. We must be regarded as a new
or development venture with all of the unforeseen costs, expenses, problems,
risks and difficulties to which such ventures are subject. We should be
considered highly speculative.
WE HAVE LIMITED WORKING CAPITAL AND LIMITED CASH FUNDS.
Our capital needs are projected to be $1,000,000 during the next 12 months of
operations. Such funds are not committed, at this time in any amount. Within the
next six months additional financing requirements are projected to be $90,000.
We have a note payable agreement in place with our current lender that will
provide this funding need.
We will not receive any proceeds from the resale of the shares registered
hereby. We are registering 22,768,273 shares of common stock on behalf of our
shareholders for distribution and resale.
We have limited funds, and such funds may not be adequate to carry out the
business plan. We have limited funds (as of October 31, 2014, we had $75,000 in
cash on hand), and such funds may not be adequate to carry out the business
plan. The ultimate success of our Company may depend upon our ability to raise
additional capital. We have investigated the availability, source, or terms that
might govern the acquisition of additional capital. If additional capital is
needed, there is no assurance that funds will be available from any source or,
if available, that they can be obtained on terms acceptable to us. If not
available, our operations will be limited to those that can be financed with our
modest capital.
The ultimate success of our Company may depend upon our ability to raise
additional capital. Safe Lane Systems has investigated the availability, source,
or terms that might govern the acquisition of additional capital. If additional
capital is needed, there is no assurance that funds will be available from any
source or, if available, that they can be obtained on terms acceptable to Safe
Lane Systems. If not available, Safe Lane System's operations will be limited to
those that can be financed with its modest capital.
-7-
OUR OFFICERS AND DIRECTORS MAY HAVE CONFLICTS OF INTEREST WHICH MAY NOT BE
RESOLVED FAVORABLY TO US.
Certain conflicts of interest may exist between us and our officers and
directors. Our Officers and Directors have other business interests to which
they devote their attention and may be expected to continue to do so although
management time should be devoted to our business. As a result, conflicts of
interest may arise that can be resolved only through exercise of such judgment
as is consistent with fiduciary duties to us. See "Directors and Executive
Officers" (page 40), and "Conflicts of Interest" (page 42). Our officer is
spending part-time in this business - up to 10 hours per week.
WE MAY IN THE FUTURE ISSUE MORE SHARES WHICH COULD DILUTE CURRENT STOCKHOLDERS.
We may issue further shares as consideration for the cash or assets or services
out of our authorized but unissued common stock that would, upon issuance,
represent more equity of our Company. The result of such an issuance would be
those new stockholders and management would control our Company, and persons
unknown could replace our management at this time. Such an occurrence could
result in a greatly reduced percentage of ownership of our Company by our
current shareholders and distributes and their purchasers in the event of
resale, which could present significant risks to investors.
WE WILL INCUR SIGNIFICANT COSTS TO BE A PUBLIC COMPANY TO ENSURE COMPLIANCE WITH
U.S.. CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS AND WE MAY NOT BE ABLE TO
ABSORB SUCH COSTS.
We may incur significant costs associated with our public company reporting
requirements, costs associated with newly applicable corporate governance
requirements, including requirements under the Sarbanes-Oxley Act of 2002 and
other rules implemented by the Securities and Exchange Commission. We expect
these costs to be approximately $50,000-$75,000 per year. We expect all of these
applicable rules and regulations to significantly increase our legal and
financial compliance costs and to make some activities more time consuming and
costly. We also expect that these applicable rules and regulations may make it
more difficult and more expensive for us to obtain director and officer
liability insurance and we may be required to accept reduced policy limits and
coverage or incur substantially higher costs to obtain the same or similar
coverage. As a result, it may be more difficult for us to attract and retain
qualified individuals to serve on our board of directors or as executive
officers. We are currently evaluating and monitoring developments with respect
to these newly applicable rules, and we cannot predict or estimate the amount of
additional costs we may incur or the timing of such costs. In addition, we may
not be able to absorb these costs of being a public company which will
negatively affect our business operations.
WE ARE AN "EMERGING GROWTH COMPANY," AND ANY DECISION ON OUR PART TO COMPLY ONLY
WITH CERTAIN REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO "EMERGING GROWTH
COMPANIES" COULD MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS.
We are an "emerging growth company," as defined in the JOBS Act, and, for as
long as we continue to be an "emerging growth company," we expect and fully
intend to take advantage of exemptions from various reporting requirements
applicable to other public companies but not to "emerging growth companies,"
including, but not limited to, not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002,
reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a
nonbinding advisory vote on executive compensation and shareholder approval of
any golden parachute payments not previously approved. We could be an "emerging
growth company" for up to five years, or until the earliest of (i) the last day
of the first fiscal year in which our annual gross revenues exceed $1 billion,
(ii) the date that we become a "large accelerated filer" as defined in Rule
12b-2 under the Exchange Act, which would occur if the market value of our
common stock that is held by non-affiliates exceeds $700 million as of the last
business day of our most recently completed second fiscal quarter, or (iii) the
date on which we have issued more than $1 billion in non-convertible debt during
the preceding three year period.
In addition, Section 107 of the JOBS Act also provides that an "emerging growth
company" can take advantage of the extended transition period provided in
Section 7(a)2(B) of the Securities Act for complying with new or revised
-8-
accounting standards. In other words, an "emerging growth company" can delay the
adoption of certain accounting standards until those standards would otherwise
apply to private companies. We have elected to opt in to the extended transition
period for complying with the revised accounting standards. We have elected to
rely on these exemptions and reduced disclosure requirements applicable to
"emerging growth companies" and expect to continue to do so.
WE MAY NOT BE ABLE TO MEET THE FILING AND INTERNAL CONTROL REPORTING
REQUIREMENTS IMPOSED BY THE SEC WHICH MAY RESULT IN A DECLINE IN THE PRICE OF
OUR COMMON SHARES AND AN INABILITY TO OBTAIN FUTURE FINANCING.
As directed by Section 404 of the Sarbanes-Oxley Act, as amended by SEC Release
No. 33-8934 on June 26, 2008, the SEC adopted rules requiring each public
company to include a report of management on the company's internal controls
over financial reporting in its annual reports. In addition, the independent
registered public accounting firm auditing a company's financial statements may
have to also attest to and report on management's assessment of the
effectiveness of the company's internal controls over financial reporting. We
may be required to include a report of management on its internal control over
financial reporting. The internal control report must include a statement
o Of management's responsibility for establishing and maintaining
adequate internal control over its financial reporting;
o Of management's assessment of the effectiveness of its internal
control over financial reporting as of year end; and
o Of the framework used by management to evaluate the effectiveness of
our internal control over financial reporting.
Furthermore, our independent registered public accounting firm may be required
to file its attestation on whether it believes that we have maintained, in all
material respects, effective internal control over financial reporting.
While we expect to expend significant resources in developing the necessary
documentation and testing procedures required by Section 404 of the
Sarbanes-Oxley Act, there is a risk that we may not be able to comply timely
with all of the requirements imposed by this rule. In the event that we are
unable to receive a positive attestation from our independent registered public
accounting firm with respect to our internal controls, investors and others may
lose confidence in the reliability of our financial statements and our stock
price and ability to obtain equity or debt financing as needed could suffer.
In addition, in the event that our independent registered public accounting firm
is unable to rely on our internal controls in connection with its audit of our
financial statements, and in the further event that it is unable to devise
alternative procedures in order to satisfy itself as to the material accuracy of
our financial statements and related disclosures, it is possible that we would
be unable to file our Annual Report on Form 10-K with the SEC, which could also
adversely affect the market price of our Common Stock and our ability to secure
additional financing as needed.
THE JOBS ACT ALLOWS US TO DELAY THE ADOPTION OF NEW OR REVISED ACCOUNTING
STANDARDS THAT HAVE DIFFERENT EFFECTIVE DATES FOR PUBLIC AND PRIVATE COMPANIES.
Since, we have elected to use the extended transition period for complying with
new or revised accounting standards under Section 102(b)(1) of the JOBS Act,
this election allows us to delay the adoption of new or revised accounting
standards that have different effective dates for public and private companies
until those standards apply to private companies. As a result of this election,
our financial statements may not be comparable to companies that comply with
public company effective dates.
OUR COMMON SHARES WILL NOT INITIALLY BE REGISTERED UNDER THE EXCHANGE ACT AND AS
A RESULT WE WILL HAVE LIMITED REPORTING DUTIES WHICH COULD MAKE OUR COMMON STOCK
LESS ATTRACTIVE TO INVESTORS.
Our common shares are not registered under the Exchange Act. As a result, we
will not be subject to the federal proxy rules and our directors, executive
officers and 10% beneficial holders will not be subject to Section 16 of the
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Exchange Act. In additional our reporting obligations under Section 15(d) of the
Exchange Act may be suspended automatically if we have fewer than 300
shareholders of record on the first day of our fiscal year. Our common shares
are not registered under the Securities Exchange Act of 1934, as amended, and we
do not intend to register our common shares under the Exchange Act for the
foreseeable future, provided that, we will register our common shares under the
Exchange Act if we have, after the last day of our fiscal year, more than either
(i) 2000 persons; or (ii) 500 shareholders of record who are not accredited
investors, in accordance with Section 12(g) of the Exchange Act. As a result,
although, upon the effectiveness of the registration statement of which this
prospectus forms a part, we will be required to file annual, quarterly, and
current reports pursuant to Section 15(d) of the Exchange Act, as long as our
common shares are not registered under the Exchange Act, we will not be subject
to Section 14 of the Exchange Act, which, among other things, prohibits
companies that have securities registered under the Exchange Act from soliciting
proxies or consents from shareholders without furnishing to shareholders and
filing with the Securities and Exchange Commission a proxy statement and form of
proxy complying with the proxy rules. In addition, so long as our common shares
are not registered under the Exchange Act, our directors and executive officers
and beneficial holders of 10% or more of our outstanding common shares will not
be subject to Section 16 of the Exchange Act. Section 16(a) of the Exchange Act
requires executive officers and directs, and persons who beneficially own more
than 10% of a registered class of equity securities to file with the SEC initial
statements of beneficial ownership, reports of changes in ownership and annual
reports concerning their ownership of common shares and other equity securities,
on Forms 3, 4 and 5, respectively. Such information about our directors,
executive officers, and beneficial holders will only be available through this
(and any subsequent) registration statement, and periodic reports we file
thereunder. Furthermore, so long as our common shares are not registered under
the Exchange Act, our obligation to file reports under Section 15(d) of the
Exchange Act will be automatically suspended if, on the first day of any fiscal
year (other than a fiscal year in which a registration statement under the
Securities Act has gone effective), we have fewer than 300 shareholders of
record. This suspension is automatic and does not require any filing with the
SEC. In such an event, we may cease providing periodic reports and current or
periodic information, including operational and financial information, may not
be available with respect to our results of operations.
BECAUSE OUR COMMON STOCK IS NOT REGISTERED UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, OUR REPORTING OBLIGATIONS UNDER SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, MAY BE SUSPENDED AUTOMATICALLY IF
WE HAVE FEWER THAN 300 SHAREHOLDERS OF RECORD ON THE FIRST DAY OF OUR FISCAL
YEAR.
Our common stock is not registered under the Exchange Act, and we do not intend
to register our common stock under the Exchange Act for the foreseeable future
(provided that, we will register our common stock under the Exchange Act if we
have, after the last day of our fiscal year, $10,000,000 in total assets and
either more than 2,000 shareholders of record or 500 shareholders of record who
are not accredited investors (as such term is defined by the Securities and
Exchange Commission), in accordance with Section 12(g) of the Exchange Act). As
long as our common stock is not registered under the Exchange Act, our
obligation to file reports under Section 15(d) of the Exchange Act will be
automatically suspended if, on the first day of any fiscal year (other than a
fiscal year in which a registration statement under the Securities Act has gone
effective), we have fewer than 300 shareholders of record. This suspension is
automatic and does not require any filing with the SEC. In such an event, we may
cease providing periodic reports and current or periodic information, including
operational and financial information, may not be available with respect to our
results of operations.
OUR ARTICLES OF INCORPORATION PROVIDE FOR INDEMNIFICATION OF OFFICERS AND
DIRECTORS AT OUR EXPENSE AND LIMIT THEIR LIABILITY WHICH MAY RESULT IN A MAJOR
COST TO US AND HURT THE INTERESTS OF OUR SHAREHOLDERS BECAUSE CORPORATE
RESOURCES MAY BE EXPENDED FOR THE BENEFIT OF OFFICERS AND/OR DIRECTORS.
Our By-Laws include provisions that eliminate the personal liability of the
directors of the Company for monetary damages to the fullest extent possible
under the laws of the State of Florida or other applicable law. These provisions
eliminate the liability of directors to the Company and its stockholders for
monetary damages arising out of any violation of a director of his fiduciary
duty of due care. Under Florida law, however, such provisions do not eliminate
the personal liability of a director for (i) breach of the director's duty of
loyalty, (ii) acts or omissions not in good faith or involving intentional
misconduct or knowing violation of law, (iii) payment of dividends or
repurchases of stock other than from lawfully available funds, or (iv) any
transaction from which the director derived an improper benefit. These
provisions do not affect a director's liabilities under the federal securities
laws or the recovery of damages by third parties.
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REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT AND COMPLIANCE WITH THE
SARBANES-OXLEY ACT OF 2002, INCLUDING ESTABLISHING AND MAINTAINING ACCEPTABLE
INTERNAL CONTROLS OVER FINANCIAL REPORTING, ARE COSTLY AND MAY INCREASE
SUBSTANTIALLY.
The rules and regulations of the SEC require a public company to prepare and
file periodic reports under the Exchange Act, which will require that the
Company engage legal, accounting, auditing and other professional services. The
engagement of such services is costly. Additionally, the Sarbanes-Oxley Act of
2002 (the "Sarbanes-Oxley Act") requires, among other things, that we design,
implement and maintain adequate internal controls and procedures over financial
reporting. The costs of complying with the Sarbanes-Oxley Act and the limited
technically qualified personnel we have may make it difficult for us to design,
implement and maintain adequate internal controls over financial reporting. In
the event that we fail to maintain an effective system of internal controls or
discover material weaknesses in our internal controls, we may not be able to
produce reliable financial reports or report fraud, which may harm our overall
financial condition and result in loss of investor confidence and a decline in
our share price.
As a public company, we will be subject to the reporting requirements of the
Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act of 2010 and other
applicable securities rules and regulations. Despite recent reforms made
possible by the JOBS Act, compliance with these rules and regulations will
nonetheless increase our legal and financial compliance costs, make some
activities more difficult, time-consuming or costly and increase demand on our
systems and resources, particularly after we are no longer an "emerging growth
company." The Exchange Act requires, among other things, that we file annual,
quarterly, and current reports with respect to our business and operating
results.
WE ARE NOT DIVERSIFIED AND WE WILL BE DEPENDENT ON ONLY ONE BUSINESS.
Because of the limited financial resources that we have, it is unlikely that we
will be able to diversify our operations. Our probable inability to diversify
our activities into more than one area will subject us to economic fluctuations
within the traffic safety industry and therefore increase the risks associated
with our operations due to lack of diversification.
WE WILL DEPEND UPON MANAGEMENT BUT WE WILL HAVE LIMITED PARTICIPATION OF
MANAGEMENT (WHICH COULD BE DETRIMENTAL TO THE BUSINESS.).
We currently have two individuals who are serving as our officers and directors
for up to 10 hours per week each on a part-time basis. Our directors are also
acting as our officers. Our directors and officers are, or may become, in their
individual capacities, officers, directors, controlling shareholder and/or
partners of other entities engaged in a variety of businesses. We will be
heavily dependent upon our officers skills, talents, and abilities, as well as
several consultants to us, to implement our business plan, and may, from time to
time, find that the inability of the officers, directors and consultants to
devote their full-time attention to our business results in a delay in progress
toward implementing our business plan. Once we achieve more funding - other
consultants may be employed on a part-time basis under a contract to be
determined. See "Management." Because investors will not be able to manage our
business, they should critically assess all of the information concerning our
officers and directors.
WE MAY BE UNABLE TO OBTAIN AND RETAIN APPROPRIATE PATENT AND TRADEMARK
PROTECTION OF OUR PRODUCTS AND SERVICES.
We may seek to protect our intellectual property rights (if any) through
patents, trademarks, trade names, trade secrets and a variety of other measures.
However, these measures may be inadequate to protect our intellectual property
(to the extent we have any) or other proprietary information.
o Trade secrets may become known by third parties. Our trade secrets or
proprietary technology may become known or be independently developed
by competitors.
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o Rights to patents applications and trade secrets may be invalidated.
Disputes may arise with third parties over the ownership of our
intellectual property rights. Patents may be invalidated, circumvented
or challenged, and the rights granted under the patent application
that provide us with a competitive advantage may be nullified.
o Problems with future patent applications. Pending or future patent
applications may not be approved, or the scope of the granted patent
may be less than the coverage sought.
o Infringement claims by third parties. Infringement, invalidity, right
to use or ownership claims by third parties or claims for
indemnification may be asserted by third parties in the future. If any
claims or actions are asserted against us, we can attempt to obtain a
license for that third party's intellectual property rights. However,
the third party may not provide a license under reasonable terms, or
may not provide us with a license at all.
o Litigation may be required to protect any intellectual property
rights. Litigation may be necessary to protect our intellectual
property rights and trade secrets, to determine the validity of and
scope of the rights of third parties or to defend against claims of
infringement or invalidity by third parties. Such litigation could be
expensive, would divert resources and management's time from our sales
and marketing efforts, and could have a materially adverse effect on
our business, financial condition and results of operations.
WE ARE NOT DIVERSIFIED AND WE WILL BE DEPENDENT ON ONLY ONE BUSINESS.
Because of the limited financial resources that we have, it is unlikely that we
will be able to diversify our operations. Our probable inability to diversify
our activities into more than one area will subject us to economic fluctuations
within the traffic cone industry and therefore increase the risks associated
with our operations due to lack of diversification.
WE CAN GIVE NO ASSURANCE OF SUCCESS OR PROFITABILITY TO OUR STOCKHOLDERS.
There is no assurance that we will ever operate profitably. There is no
assurance that we will generate revenues or profits, or that the market price of
our common stock will be increased thereby.
WE HAVE AUTHORIZED AND DESIGNATED A CLASS "A" PREFERRED SUPER MAJORITY VOTING
STOCK, WHICH HAVING VOTING RIGHTS SUPERIOR TO OUR COMMON STOCK.
Class "A" Preferred Super Majority Voting Stock (the "Class "A" Preferred
Stock") of which 10,000,000 shares of preferred stock have been authorized for
the class and the shares have a deemed purchase price at $0.0001 per share. At
the date of filing this Registration Statement, all 10,000,000 Class "A"
Preferred shares have been issued to our CEO, Paul D. Dickman. The holder of the
Class "A" Preferred Stock has the ability to vote equivalent of 60% of our
common stock in any vote of the common stockholders. The Class "A" Preferred
Stock would have a voting equivalent of 60%, if issued at this time.
WE HAVE AUTHORIZED DESIGNATED AND ISSUED A CLASS "B" PREFERRED CONVERTIBLE
NON-VOTING STOCK, WHICH HAVE NO VOTING RIGHT UNTIL CONVERTED TO COMMON.
Class "B" Preferred Convertible Non-Voting Stock (the "Class "B" Preferred
Stock") of which 30,000,000 shares of preferred stock have been authorized for
the class and the shares have a deemed purchase price at $.0001 per share. The
Class "B" Preferred Stock are to have voting rights equivalent to their
conversion rate, one (1) share of Class "B" Preferred Stock equals one (1) share
of common stock. At this time, 22,768,273 shares of the Class "B" Preferred
Stock have been issued.
Holders of the Class "B" Preferred Stock shall have no right to vote on any
matter with holders of Common Stock and may not vote on any action, except an
action which might change the rights and privileges of Class "B" Preferred
Convertible Non-Voting Stock.
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WE HAVE AGREED TO INDEMNIFICATION OF OFFICERS AND DIRECTORS AS IS PROVIDED BY
COLORADO STATUTES.
Colorado Statutes provide for the indemnification of our directors, officers,
employees, and agents, under certain circumstances, against attorney's fees and
other expenses incurred by them in any litigation to which they become a party
arising from their association with or activities our behalf. We will also bear
the expenses of such litigation for any of our directors, officers, employees,
or agents, upon such person's promise to repay us therefore if it is ultimately
determined that any such person shall not have been entitled to indemnification.
This indemnification policy could result in substantial expenditures by us that
we will be unable to recoup.
OUR DIRECTORS' LIABILITY TO US AND STOCKHOLDERS IS LIMITED
Colorado Statutes exclude personal liability of our directors and our
stockholders for monetary damages for breach of fiduciary duty except in certain
specified circumstances. Accordingly, we will have a much more limited right of
action against our directors that otherwise would be the case. This provision
does not affect the liability of any director under federal or applicable state
securities laws.
BURDEN TO INVESTORS.
The financial risk of our activities will be borne primarily by existing
shareholders, who will have contributed a significantly greater portion of our
capital, than prior investors.
We will incur expenses in connection with SEC Filing Requirements and we may not
be able to meet such costs, which could jeopardize our filing status with the
SEC. Those costs are estimated to be $50,000 to 75,000 per year additional.
We will incur legal and accounting expenses as a result of being a public
company in order to meet the filing requirements under the Securities and
Exchange Act of 1934 ("34 Act"). We will see an increase in legal and accounting
expenses as a result of such requirements. These costs can increase
significantly if we are subject to comment from the SEC on its filings and/or is
required to file supplemental filings for transactions and activities. If we are
not compliant in meeting the filing requirements of the SEC, we could lose its
status as a 1934 Act Company, which could compromise its ability to raise funds
and to ever achieve trading status on the OTCBB.
RISK FACTORS RELATING TO OUR BUSINESS
Any person or entity contemplating an investment in the securities offered
hereby should be aware of the high risks involved and the hazards inherent
therein. Specifically, the investor should consider, among others, the following
risks:
WE HAVE A LIMITED OPERATING HISTORY. IF WE FAIL TO GENERATE REVENUES AND PROFITS
IN THE FUTURE, WE MAY EXHAUST OUR CAPITAL RESOURCES AND BE FORCED TO DISCONTINUE
OPERATIONS.
We were organized in 2013 and have a limited operating history. The potential
for us to generate profits depends on many factors, including the following:
o our ability to secure adequate funding to facilitate the anticipated
business plan and goals of the Company;
o the size and timing of future client contracts, milestone achievement,
service delivery and client acceptance;
o success in developing, maintaining and enhancing strategic
relationships with potential business partners;
o actions by competitors towards the development and marketing of
technologies, products and services that will compete directly with
ours;
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o the costs of maintaining and expanding operations; and
o our ability to attract and retain a qualified work force.
We cannot assure you that we will achieve any of the foregoing factors or
realize profitability in the immediate future or at any time.
We expect operating results to fluctuate significantly in the future as a result
of a variety of factors, many of which are outside of our control. Factors that
may adversely affect our operating results include, among others, demand of our
products, the budgeting cycles of potential customers, lack of enforcement of or
changes in governmental regulations or laws, the amount and timing of capital
expenditures and other costs relating to the expansion of our operations, the
introduction of new or enhanced products and services by us or our competitors,
the timing and number of new hires, changes in our pricing policy or those of
our competitors, the mix of products, increases in the cost of raw materials,
technical difficulties, incurrence of costs relating to product design changes,
general economic conditions, and market acceptance of our products. As a
strategic response to changes in the competitive environment, we may from time
to time make certain pricing, service or marketing decisions or business
combinations that could have a material adverse effect on our business, results
of operations and financial condition. Any seasonality is likely to cause
quarterly fluctuations in our operating results, and there can be no assurance
that such patterns will not have a material adverse effect on our business,
results of operations and financial condition. We may be unable to adjust
spending in a timely manner to compensate for any unexpected revenue shortfall.
BECAUSE OF THE PRODUCTS AND SERVICES WE OFFER AND WILL OFFER, WE MAY BECOME
SUBJECT TO SIGNIFICANT PRODUCT LIABILITY EXPOSURE.
We will be dependent on third party suppliers for various components used in our
current technology and products. Some of the components that we procure from
third party suppliers include engineering, manufacturing, and sales, some of
which are the sole source of the components. The cost, quality and availability
of components are essential to the successful production and sale of our
products. Any significant disruption in the source of these components could
seriously impact production of our products and seriously harm our ability to
market these products.
IF WE ARE UNABLE TO COMPETE EFFECTIVELY WITH EXISTING OR NEW COMPETITORS, OUR
RESULTING LOSS OF COMPETITIVE POSITION COULD RESULT IN PRICE REDUCTIONS, FEWER
CUSTOMER ORDERS, REDUCED MARGINS AND LOSS OF MARKET SHARE.
There are numerous competitors in the market places in which we will be
marketing our products and we expect competition to increase in the future. Many
of our competitors may have significantly greater financial, technical and
marketing resources than we do. These competitors may be able to respond more
rapidly to new or emerging technologies or changes in customer requirements.
They may also be able to devote greater resources to the development, promotion
and sale of their products. Increased competition could result in price
reductions, fewer customer orders, reduced margins and loss of market share. Our
failure to compete successfully against current or future competitors could
seriously harm our business, financial condition and results of operations.
WE MAY NOT BE ABLE TO MANAGE FUTURE GROWTH EFFECTIVELY, WHICH COULD ADVERSELY
AFFECT OUR OPERATIONS AND FINANCIAL PERFORMANCE.
The ability to manage and operate our business as we execute our development and
growth strategy will require effective planning. Significant rapid growth could
strain management and internal resources and cause other problems that could
adversely affect our financial performance. We expect that our efforts to grow
will place a significant strain on personnel, management systems, infrastructure
and other resources. Our ability to manage future growth effectively will also
require us to successfully attract, train, motivate, retain and manage new
employees and continue to update and improve our operational, financial and
management controls and procedures. Further, our ability to successfully offer
our products and implement our business plan in a rapidly evolving market
requires an effective planning and management process. We plan to increase the
scope of our operations domestically and our anticipated growth in future
operations will continue to place, a significant strain on our management
systems and resources. If we do not manage our growth effectively, our
operations could be adversely affected, resulting in slower growth and a failure
to achieve or sustain profitability.
-14-
CHANGING TRAFFIC SAFETY STANDARDS COULD IMPACT OUR PRODUCT SALES EFFORTS.
The federal and state standards for traffic management are subject to ongoing
changes and such changes may have an impact in the future on our products that
cannot be determined.
WE INTEND TO RELY ON OUTSIDE CONSULTANTS, MANUFACTURERS AND SUPPLIERS.
We intend to rely on the experience of outside consultants, manufacturers and
suppliers. In the event that one or more of these consultants, manufacturers, or
suppliers terminates with us, or becomes unavailable, suitable replacements will
need to be obtained and there is no assurance that such replacement could be
obtained under conditions favorable to us.
WE MAY RELY ON STRATEGIC RELATIONSHIPS TO PROMOTE OUR PRODUCT.
As a recently formed company, we intend to rely on strategic partnerships with
outside companies and individuals to promote our products, thus making the
future success of our business particularly contingent on the efforts of other
parties. Our products are designed to serve several markets. An important part
of our strategy is to promote acceptance of our products through product
alliances with distributors who we feel could assist us with our promotion
strategies. Our dependence on outside distributors, however, raises potential
risks with respect to the future success of our business. Our success is
dependent on the successful completion and commercial deployment of our products
and on the future commitment of our distributors to our products and technology.
WE WILL RELY ON SUPPLIERS, MANUFACTURERS AND OTHERS.
We intend to rely on key vendors and suppliers to provide high quality products
and services on a consistent basis. We must use outside facilities and contract
manufacturers to produce and prove products which include manufacturing
facilities, warehouses, shippers, testing companies and other critical vendor
partners. Our future success will be contingent on the efforts and performance
of these relationships. We may have difficulty in locating or using alternative
resources should supply problems arise with any one supplier. An interruption or
reduction in the source of supply of any of the component materials, or an
unanticipated increase in vendor prices, could materially affect our operating
results and damage customer relationships as well as our business.
WE DETERMINED AN ARBITRARY OFFERING PRICE.
The offering price of our shares under this Registration Statement was
arbitrarily determined and does not necessarily bear any relationship to the
assets, book value, earnings (loss) or our net worth and should not be
considered to be an indication of the actual value of our Company.
OUR MINORITY SHAREHOLDERS WILL NOT HAVE ANY CONTROL OF OUR COMPANY.
The common stock registered hereby will represent a majority of our outstanding
stock after its conversion but will remain limited in voting power due to the
Class "A" Super Majority Voting Preferred stock held by management. Accordingly,
it could be difficult for the investors hereunder to effectuate control over our
affairs and it should be assumed that our officers, directors and Class "A"
Super Majority Voting Preferred shareholders will be able, by virtue of their
voting control and stock holdings, to control our affairs and policies
permanently. As a result, these stockholders will possess dominant influence
over us, giving them the ability, among other things, to elect a majority of our
Board of Directors and approve significant corporate transactions. Such share
ownership and control may also have the effect of delaying or preventing a
change in our control, impeding a merger, consolidation, takeover or other
business combination involving us or discourage a potential acquirer from making
a tender offer or otherwise attempting to obtain control of us which could have
a material adverse effect on the market price of our common stock.
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OUR SHARES WILL HAVE LIMITED TRANSFERABILITY. ABSENCE OF PUBLIC MARKET:
NON-TRANSFERABILITY AND NON-LIQUIDITY OF INVESTMENT.
The shares distributed or resold pursuant to this Registration while registered
for resale, may have extremely limited liquidity because our common shares are
not approved for trading or quotation, and if we become approved brokerage
houses have imposed severe restrictions upon penny stock trading. Until that
time, there will be no market for the shares registered hereunder. An investor
may be unable to liquidate an investment in the common stock and should be
prepared to bear the economic risk of an investment in our stock for an
indefinite period. In addition an investor should be able to withstand the total
loss of their or its investment.
OUR MANAGEMENT HAS BROAD DISCRETION IN BUDGET USAGE.
We expect to use our limited capital for general corporate purposes, including
working funds, capital expenditures, promotional and marketing expenditures and
to fund anticipated operating losses. In addition, we may use an unspecified
portion of any future capital raised to acquire or invest in complementary
products, IP and technologies if a favorable opportunity to make such an
acquisition or investment arises. In the ordinary course of business, we expect
to evaluate potential acquisitions of products and technologies, which
complement our business model. In addition, from time to time, we will evaluate
the usage of cash to determine whether the then existing uses and apportionment
should be changed. Accordingly, our management will have broad discretion in the
application of our budgets. The failure of our management to apply funds
effectively could have a material adverse effect on our business, results of
operations and financial condition.
OUR SUCCESS DEPENDS UPON COMPLIANCE WITH OUR MASTER I.P. LICENSE AGREEMENT.
In the second quarter of 2014, we entered into a Master I.P. License Agreement
relating to the safety cone dispenser and flexible marker device with Superior
Traffic Controls, Inc., a California corporation who is the owner of certain
intellectual property relating to each of the aforesaid devices. Therefore, this
agreement is exclusive as it relates to the safety cone dispensing device and
non-exclusive as it relates to the flexible marker device. In the event that we
do not meet certain conditions in the Master I.P. License Agreement, we could
lose our right to manufacture and distribute the cone dispenser. Our success
will depend significantly upon this license agreement and the proprietary
technologies covered by said license agreement.
OUR CEO HAS AN INCENTIVE TO GENERATE REVENUES, BUT WHICH MAY REDUCE OUR
PROFITABILITY.
Paul Dickman, our CEO is entitled to an 8% administrative fee on our total
billings. This fee is substantial enough that it might be the difference between
profitability on revenues and unprofitability, which could negatively impact our
profitability, and therefore or investors.
FORWARD LOOKING STATEMENTS AND ASSOCIATE RISKS.
This Prospectus contains certain forward-looking statements, including among
others: (i) the projected time for commencing operations; (ii) anticipated
trends in our financial condition and results of operations; (iii) our business
strategy for its plan of operations; and (iv) our ability to distinguish itself
from its current and future competitors. These forward-looking statements are
based largely on our current expectations and are subject to a number of risks
and uncertainties. Actual results could differ materially from these forward
looking statements. In addition to other risks described elsewhere in this "Risk
Factors" discussion, important factors to consider in evaluating such
forward-looking statements include (i) changes to external competitive market
factors or in our internal budgeting process which might impact trends in our
results of operations; (ii) anticipated working capital or other cash
requirements; (iii) changes in our business strategy or an inability to execute
our strategy due to unanticipated changes in the industry in which we will
operate; and (iv) various competitive factors that may prevent us form competing
successfully in the marketplace. In light of these risks and uncertainties, many
of which are described in greater detail elsewhere in this "Risk Factors"
discussion, there can be no assurance that the events predicted in
forward-looking statements contained in this Prospectus will in fact transpire.
-16-
OUR CONTINUATION AS A GOING CONCERN IS DEPENDENT ON ADDITIONAL FINANCING, AS OUR
OPERATIONS ARE CAPITAL INTENSIVE AND FUTURE CAPITAL EXPENDITURES ARE EXPECTED TO
BE SUBSTANTIAL.
Our future success is dependent on our ability to attract additional capital and
ultimately, upon our ability to develop future profitable operations. There can
be no assurance that we will be successful in obtaining such financing, or that
it will attain positive cash flow from operations. Management believes that
actions future actions to be taken to revise our operating and financial
requirements may provide the opportunity for us to continue as a going concern.
RISK FACTORS RELATED TO OUR STOCK
NO PUBLIC MARKET EXISTS FOR OUR COMMON STOCK AT THIS TIME, AND THERE IS NO
ASSURANCE OF A FUTURE MARKET.
There is no public market for our common stock, and no assurance can be given
that a market will develop or that a shareholder ever will be able to liquidate
his investment without considerable delay, if at all. If a market should
develop, the price may be highly volatile. Factors such as these discussed in
the "Risk Factors" section may have a significant impact upon the market price
of the shares offered hereby. Due to the low price of our securities, many
brokerage firms may not be willing to effect transactions in our securities.
Even if a purchaser finds a broker willing to effect a transaction in our
shares, the combination of brokerage commissions, state transfer taxes, if any,
and any other selling costs may exceed the selling price. Further, many lending
institutions will not permit the use of our shares as collateral for any loans.
OUR STOCK, IF EVER LISTED, WILL IN ALL LIKELIHOOD BE THINLY TRADED AND AS A
RESULT YOU MAY BE UNABLE TO SELL AT OR NEAR ASK PRICES OR AT ALL IF YOU NEED TO
LIQUIDATE YOUR SHARES.
The shares of our common stock, if ever listed, may be thinly-traded. We are a
small company which is relatively unknown to stock analysts, stock brokers,
institutional stockholders and others in the investment community that generate
or influence sales volume, and that even if we came to the attention of such
persons, they tend to be risk-averse and would be reluctant to follow an
unproven, early stage company such as ours or purchase or recommend the purchase
of any of our securities until such time as we became more seasoned and viable.
As a consequence, there may be periods of several days or more when trading
activity in our securities is minimal or non-existent, as compared to a seasoned
issuer which has a large and steady volume of trading activity that will
generally support continuous sales without an adverse effect on Securities
price. We cannot give you any assurance that a broader or more active public
trading market for our common Securities will develop or be sustained, or that
any trading levels will be sustained. Due to these conditions, we can give
stockholders no assurance that they will be able to sell their shares at or near
ask prices or at all if they need money or otherwise desire to liquidate their
securities.
OUR COMMON STOCK MAY BE VOLATILE, WHICH SUBSTANTIALLY INCREASES THE RISK THAT
YOU MAY NOT BE ABLE TO SELL YOUR SECURITIES AT OR ABOVE THE PRICE THAT YOU MAY
PAY FOR THE SECURITY.
If we are able to obtain an exchange listing of our common stock in the future,
because of the possible price volatility, you may not be able to sell your
shares of common stock when you desire to do so. The inability to sell your
securities in a rapidly declining market may substantially increase your risk of
loss because of such illiquidity and because the price for our securities may
suffer greater declines because of our price volatility.
The price of our common stock that will prevail in the market after this
offering may be higher or lower than the price you may pay. Certain factors,
some of which are beyond our control, that may cause our share price to
fluctuate significantly include, but are not limited to the following:
o Variations in our quarterly operating results;
o Loss of a key relationship or failure to complete significant
transactions;
o Additions or departures of key personnel; and
o Fluctuations in stock market price and volume.
Additionally, in recent years the stock market in general, has experienced
extreme price and volume fluctuations. In some cases, these fluctuations are
unrelated or disproportionate to the operating performance of the underlying
-17-
company. These market and industry factors may materially and adversely affect
our stock price, regardless of our operating performance. In the past, class
action litigation often has been brought against companies following periods of
volatility in the market price of those companies common stock. If we become
involved in this type of litigation in the future, it could result in
substantial costs and diversion of management attention and resources, which
could have a further negative effect on your investment in our stock.
IF WE CANNOT PAY THE NOTE PAYABLE FOR $160,000 IT COULD SUBJECT US TO A LAWSUIT
AND POTENTIAL JUDGMENT
We owe a note for $160,000 and if we do not pay the note, the holder could sue
on the note and obtain a judgment and levy and execute on our assets, which
could cause our business to fail.
THE REGULATION OF PENNY STOCKS BY THE SEC AND FINRA WILL DISCOURAGE THE
TRADABILITY OF OUR SECURITIES.
We are a "penny stock" company, as our stock price is less than $5.00 per share.
Even if we were able to obtain an exchange listing for our stock, we cannot make
an assurance that we will be able to maintain a stock price greater than $5.00
per share and if the share price was to fall to such prices, that we wouldn't be
subject to the "Penny Stocks" rules. None of our securities currently trade in
any market and, if ever available for trading, will be subject to a Securities
and Exchange Commission rule that imposes special sales practice requirements
upon broker-dealers who sell such securities to persons other than established
customers or accredited stockholders. For purposes of the rule, the phrase
"accredited stockholders" means, in general terms, institutions with assets in
excess of $5,000,000, or individuals having a net worth in excess of $1,000,000
or having an annual income that exceeds $200,000 (or that, when combined with a
spouse's income, exceeds $300,000). For transactions covered by the rule, the
broker-dealer must make a special suitability determination for the purchaser
and receive the purchaser's written agreement to the transaction prior to the
sale. Effectively, this discourages broker-dealers from executing trades in
penny stocks. Very few brokers now affect such trades. Consequently, the rule
will affect the ability of purchasers in this offering to sell their securities
in any market that might develop therefore because it imposes additional
regulatory burdens on penny stock transactions.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange
Act of 1934, as amended. Because our securities constitute "penny stocks" within
the meaning of the rules, the rules would apply to us and to our securities. The
rules will further affect the ability of owners of shares to sell our securities
in any market that might develop for them because it imposes additional
regulatory burdens on penny stock transactions.
Investors should be aware that, according to Securities and Exchange Commission,
the market for penny stocks has suffered in recent years from patterns of fraud
and abuse. Such patterns include (i) control of the market for the security by
one or a few broker-dealers that are often related to the promoter or issuer;
(ii) manipulation of prices through prearranged matching of purchases and sales
and false and misleading press releases; (iii) "boiler room" practices involving
high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (iv) excessive and undisclosed bid-ask differentials and markups
by selling broker-dealers; and (v) the wholesale dumping of the same securities
by promoters and broker-dealers after prices have been manipulated to a desired
consequent investor losses. Our management is aware of the abuses that have
occurred historically in the penny stock market. Although we do not expect to be
in a position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to our securities.
Investors in penny stocks have limited remedies in the event of violations of
penny stock rules. While the courts are always available to seek remedies for
fraud against us, most, if not all, brokerages require their customers to sign
mandatory arbitration agreements in conjunctions with opening trading accounts.
Such arbitration may be through an independent arbiter. Stockholders may file a
complaint with FINRA against the broker allegedly at fault, and FINRA may be the
arbiter, under FINRA rules. Arbitration rules generally limit discovery and
provide more expedient adjudication, but also provide limited remedies in
damages usually only the actual economic loss in the account. Stockholders
should understand that if a fraud case is filed an against a company in the
courts it may be vigorously defended and may take years and great legal expenses
and costs to pursue, which may not be economically feasible for small
stockholders.
-18-
Without arbitration agreements, specific legal remedies available to
stockholders of penny stocks include the following:
If a penny stock is sold to the investor in violation of the
requirements listed above, or other federal or states securities laws, the
investor may be able to cancel the purchase and receive a refund of the
investment.
If a penny stock is sold to the investor in a fraudulent manner, the
investor may be able to sue the persons and firms that committed the fraud for
damages.
The fact that we are a penny stock company will cause many brokers to refuse to
handle transactions in the stocks, and will discourage trading activity and
volume, or result in wide disparities between bid and ask prices. These may
cause stockholders significant illiquidity of the stock at a price at which they
may wish to sell or in the opportunity to complete a sale. Stockholders will
have no effective legal remedies for these illiquidity issues.
WE WILL PAY NO FORESEEABLE DIVIDENDS IN THE FUTURE.
We have not paid dividends on our common stock and do not ever anticipate paying
such dividends in the foreseeable future. Stockholders whose investment criteria
are dependent on dividends should not invest in our common stock.
RULE 144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE EFFECT ON OUR STOCK PRICE.
All of the outstanding shares of common stock are held by our present officers,
and directors, stockholders as "restricted securities" within the meaning of
Rule 144 under the Securities Act of 1933, as amended. As restricted shares,
these shares may be resold only pursuant to an effective registration statement
or under the requirements of Rule 144 or other applicable exemptions from
registration under the Act and as required under applicable state securities
laws. Rule 144 provides in essence that a person who has held restricted
securities for six months may, under certain conditions, sell every three
months, in brokerage transactions, a number of shares that does not exceed the
greater of 1.0% of a company's outstanding common stock or the average weekly
trading volume during the four calendar weeks prior to the sale. There is no
limit on the amount of restricted securities that may be sold by a non-affiliate
after the owner has held the restricted securities for a period of six months. A
sale under Rule 144 or under any other exemption from the Act, if available, or
pursuant to subsequent registration of shares of common stock of present
stockholders, may have a depressive effect upon the price of the common stock in
any market that may develop.
OUR STOCKHOLDERS MAY SUFFER FUTURE DILUTION DUE TO ISSUANCES OF SHARES FOR
VARIOUS CONSIDERATIONS IN THE FUTURE.
There may be substantial dilution to our stockholders as a result of future
decisions of the Board to issue shares without shareholder approval for cash,
services, or acquisitions.
ANY SALES OF OUR COMMON STOCK, IF IN SIGNIFICANT AMOUNTS, ARE LIKELY TO DEPRESS
THE MARKET PRICE OF OUR SECURITIES.
Assuming all of the shares of common stock under this Registration Statement are
sold by the selling security holders registered hereby, we would have 22,768,273
shares that are freely tradable, and in the market float.
Unrestricted sales of 22,768,273 shares of stock by our selling stockholders
could have a significant negative impact on our share price, and the market for
our shares.
ANY NEW POTENTIAL INVESTORS IN OUR STOCK MAY SUFFER A DISPROPORTIONATE RISK AND
THERE MAY BE IMMEDIATE DILUTION OF EXISTING INVESTOR'S INVESTMENTS IF THE PRICE
IS SIGNIFICANTLY LOWER THAN OTHER INVESTORS BASIS.
Our present shareholders have acquired their securities at a cost significantly
less than that which the investors purchasing after this Registration may pay
for their stock in the market. Therefore, any new potential investors will bear
significant risk of loss.
-19-
WE HAVE DETERMINED AN ARBITRARY OFFERING PRICE OF OUR SHARES.
The price of our shares has been determined arbitrarily by us with no
established criteria of value. There is no direct relationship between these
prices and our assets, book value, lack of earnings, shareholder's equity, or
any other recognized standard of value of our business. The offering price
should NOT be considered an indication of the actual value of the shares or
securities.
ITEM 4. USE OF PROCEEDS
-----------------------
We will not receive any proceeds from the sale of the shares being registered on
behalf of our selling shareholders.
We may raise additional funds through a private placement of shares of our
common stock. At this time there is no committed source for such funds and we
cannot give any assurances of being able to raise such funds. We can assure that
we will require additional funds to carry out our business plan. The
availability and terms of any future financing will depend on market and other
conditions.
Our lack of funds could and would severely limit our operations, and might
render us unable to carry out our business plan.
The monies we have been loaned by a third party is anticipated to pay some
expenses of this registration statement, which is estimated to be $47,000.
ITEM 5. DETERMINATION OF OFFERING PRICE
---------------------------------------
We have no established market for our common stock.
Our selling shareholders plan to sell shares at a fixed price per share, until
such time as a market develops for any of the securities and thereafter at such
prices as the market may dictate from time to time. There is no market price for
the stock and our pricing is arbitrary with no relation to market value,
liquidation value, earnings or dividends.
----------------------------------- -------------------------------------------
TITLE PER SECURITY
----------------------------------- -------------------------------------------
Common Stock $0.01
----------------------------------- -------------------------------------------
We have arbitrarily determined our offering price for shares to be sold pursuant
to this offering at $0.01. We are authorized to issue 450,000,000 shares of
$0.001 par value voting common stock and 50,000,000 shares of Preferred Stock of
which 10,000,000 shares are authorized as Class "A" Super Majority Voting Stock
and 30,000,000 shares are authorized as Class "B" Preferred Convertible
Non-Voting Stock. 10,000,000 Class "A" Super Majority Voting shares are issued
and outstanding. 22,768,273 Class "B" Preferred Convertible Non-Voting shares
are issued and outstanding. There were a total of 2,000,000 shares of common
stock and 10,000,000 Class "A" Super Majority Voting shares issued during the
period of September 10, 2013 (inception) through December 31, 2013. During the
period of January 1, 2014 through June 30, 2014, a total of 22,768,273 Class "B"
Preferred Convertible Non-Voting shares were authorized to be issued.
The share price bears no relationship to any criteria of goodwill value, asset
value, market price or any other measure of value and were arbitrarily
determined in the judgment of our Board of Directors.
ITEM 6. DILUTION
----------------
The following table sets forth with respect to existing shareholders, the number
of our shares of common stock purchased the percentage ownership of such shares,
the total consideration paid, the percentage of total consideration paid and the
average price per share. All percentages are computed based upon cumulative
shares and consideration assuming sale of all shares in the line item as
compared to maximum in each previous line.
-20-
SHARES PURCHASED TOTAL CONSIDERATION
----------------------- (2) AVERAGE
NUMBER PERCENT AMOUNT PERCENT PRICE/SHARE
(1) (2)
----------------------------------------------------------
Conversion Shares 22,768,273 91.9% (4) (4) (4)
Existing Shareholders 2,000,000 8.1% $1,000 100% $0.0005
(3)(5)
--------------
(1) Relates to the total numbers of common shares issued and outstanding,
including shares being registered, assuming conversion of the
Preferred to common stock.
(2) Indeterminate/settlement shares
(3) Does not include Class "A" Super Majority Voting Preferred held by
Paul Dickman.
(4) No cash consideration given.
(5) Does not include 1,000,000 warrants to Michael Zalle issuable under
his consulting agreement.
"Net tangible book value" is the amount that results from subtracting the total
liabilities and intangible assets from the total assets of an entity. Dilution
occurs because we determined the offering price based on factors other than
those used in computing book value of our stock. Dilution exists because the
book value of shares held by existing stockholders is lower than the offering
price offered to new investors.
As at June 30, 2014, the net tangible book value of our stock was $(0.0002) per
share.
ITEM 7. DISTRIBUTION AND SELLING SECURITY HOLDERS
-------------------------------------------------
Pursuant to the Master I.P. Agreement, we agreed to issue up to 30,000,000
(resulting in issuing 22,768,273) shares of our Class "B" Preferred Convertible
Non-Voting Stock on a convertible one-for-one basis to 22,768,273 shares of our
common stock under a Plan of Liquidation to a Trustee for STC's shareholders
with the understanding and agreement that we would file an S-1 Registration
Statement for a) the distribution of the common shares, pro-rata, to the
shareholders of STC, and b) for resale of such converted common shares issued to
STC shareholders in public market or private transactions. The terms of our
Class "B" Preferred Convertible Non-Voting Stock and the terms of the Plan of
Liquidation provide that there can be no conversion of our Class "B" Preferred
Convertible Non-Voting Stock to common unless and until a Registration Statement
on Form S-1 under the Securities Act of 1933 has been made effective.
The selling shareholders will obtain their shares of our common stock from
Trustee under Plan of Liquidation effective upon Registration hereunder as set
forth in "B" below.
Distributor under Plan of Liquidation
NUMBER OF
PERSON WITH VOTING COMMON SHARES AFFILIATE
NAME OF THE ENTITY CONTROL BEING REGISTERED (A) OF COMPANY?
----------------------- ----------------------- -------------------- -----------
STC Plan of Liquidation Trustee, Jeff Huitt (d) 22,268,273 (b)(c)
(Upon Registration)
-----------------------
(a) Underlying Conversion of Class "B" Preferred
(b) Yes, prior to conversion and distribution
(c) No, upon distribution.
(d) Class "B" Preferred are Non-Voting as to the governance of the
Company.
-21-
A. Distribution under Plan of Liquidation
All of the securities listed below are being registered in this Registration
Statement for distribution.
------------------------------- -------------------- ------------------------ ---------------------- ----------------------
NAME SECURITIES BY EACH COMMON SHARES TO BE COMMON % OWNED UPON SHARES OWNED AFTER
SHARE-HOLDER DISTRIBUTED FOR REGISTRATION (AFTER DISTRIBUTION
BEFORE OFFERING SHAREHOLDERS ACCOUNT DISTRIBUTION) (1) (ASSUMING
(POST CONVERSION FROM DISTRIBUTION OF ALL
"B" PREFERRED) SHARES REGISTERED)
------------------------------ -------------------- ------------------------ ---------------------- ----------------------
STC Plan of Liquidation - 22,268,273 22,268,273 88% 0%
Trustee, Jeff Huitt (2)
------------------------------- -------------------- ------------------------ ---------------------- ----------------------
B. Distributees Shares Registered for Resale as Selling Shareholders
------------------------------- -------------------- ------------------------ ------------------- ------------------
NAME SECURITIES BY EACH COMMON SHARES OFFERED % OWNED BEFORE SHARES OWNED
SHARE-HOLDER FOR SHAREHOLDERS OFFERING (AFTER AFTER OFFERING
BEFORE OFFERING ACCOUNT (POST DISTRIBUTION) (1) (ASSUMING SALE
CONVERSION FROM "B" OF ALL SHARES
PREFERRED) REGISTERED)
------------------------------- -------------------- ------------------------ ------------------- ------------------
Goldstein, Jonathan 5,000 5,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Swantz, H. Eugene 5,000 5,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
V & M Construction (2) 5,000 5,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Pearce, Sean 7,500 7,500 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Pearce, Ramoura 8,875 8,875 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Ashcraft, Steven 10,000 10,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Boicourt, Galvin 10,000 10,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Davies, Wayne L. 10,000 10,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Delbert Shafer 10,000 10,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Frederick, John and 10,000 10,000 >1% 0
Dabrowski, Sandra
------------------------------- -------------------- ------------------------ ------------------- ------------------
Hershey, Carl 10,000 10,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Klein, Walter 10,000 10,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Maierhofer, Paul 10,000 10,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
McCarty, Tom 10,000 10,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Moore, George 10,000 10,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Riccardi, Santuccio 10,000 10,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Shafer, Delbert 10,000 10,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Violette, John 10,000 10,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Williams, Allen 12,000 12,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Boyd, Dan 12,500 12,500 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Hamlet, Joan 12,500 12,500 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Austin, Jonathan David 15,000 15,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Austin, Mary Caroline 15,000 15,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Austin, Olivia Kathryn 15,000 15,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Austin, Reece Nixon 15,000 15,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Austin, Tara Montgomery 15,000 15,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Griesmer, David 15,000 15,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
McCone, Rhonda 15,000 15,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
-22-
------------------------------- -------------------- ------------------------ ------------------- ------------------
NAME SECURITIES BY EACH COMMON SHARES OFFERED % OWNED BEFORE SHARES OWNED
SHARE-HOLDER FOR SHAREHOLDERS OFFERING (AFTER AFTER OFFERING
BEFORE OFFERING ACCOUNT (POST DISTRIBUTION) (1) (ASSUMING SALE
CONVERSION FROM "B" OF ALL SHARES
PREFERRED) REGISTERED)
------------------------------- -------------------- ------------------------ ------------------- ------------------
McCone, Richard 15,000 15,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Colvin, Nelson 18,000 18,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Beatly, Larry 20,000 20,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Berscheit, Kenneth 20,000 20,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
The Entrust Group (2) 20,000 20,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Bryant, Jesse Lee 20,000 20,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Dettle, Robert 20,000 20,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Hitt, Lee and Carol 20,000 20,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Huber, Gary 20,000 20,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Kisch, Jason 20,000 20,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Laesch, Norhan 20,000 20,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Mercer, Ronald 20,000 20,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Novio, Michael 20,000 20,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Wright, Jean 20,000 20,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Wright, Jean - 1992 Revocable 20,000 20,000 >1% 0
Living Trust
------------------------------- -------------------- ------------------------ ------------------- ------------------
Buchanan, John 22,500 22,500 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Applestein, David 25,000 25,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Cook, Clyde 25,000 25,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Mather, Winton 25,000 25,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Miller, Terry 25,000 25,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Nanbudripad, Devi 25,000 25,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Patton, Brett 25,000 25,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Schatz, Robert 25,000 25,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Vatne, Dan 25,000 25,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Dabrowski, Sandra and 30,000 30,000 >1% 0
Frederick, John
------------------------------- -------------------- ------------------------ ------------------- ------------------
Hauer, Jay 30,000 30,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Meyers, George 30,000 30,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Mueller, Wayne 30,000 30,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Fong, Melvin 35,000 35,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Tanksley, Jeffrey 35,000 35,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Carter, Bryan 40,000 40,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Glass, William 40,000 40,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Kackley, Kevin 40,000 40,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Lu, Alice 40,000 40,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Mikula, Jim 40,000 40,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Munoz, Jose 40,000 40,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Rowan, Timothy 40,000 40,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Merklin, James 45,000 45,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Bakke, Danan 50,000 50,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Cravens, Glen 50,000 50,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Geiger Family Trust (2) 50,000 50,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Land, Kenneth 50,000 50,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Otto, Stephan W. 50,000 50,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Pacella, Robert 50,000 50,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Saylor, Edward 50,000 50,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
-23-
------------------------------- -------------------- ------------------------ ------------------- ------------------
NAME SECURITIES BY EACH COMMON SHARES OFFERED % OWNED BEFORE SHARES OWNED
SHARE-HOLDER FOR SHAREHOLDERS OFFERING (AFTER AFTER OFFERING
BEFORE OFFERING ACCOUNT (POST DISTRIBUTION) (1) (ASSUMING SALE
CONVERSION FROM "B" OF ALL SHARES
PREFERRED) REGISTERED)
------------------------------- -------------------- ------------------------ ------------------- ------------------
Wildermouth, Henry 50,000 50,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Neiman, Michael 51,750 51,750 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Johnson, Stan Jr. 55,000 55,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Peterson, Timothy 55,000 55,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Tibbets, Leonard 55,000 55,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Campbell, Bryan 60,000 60,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Finnila, Charles 60,000 60,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Lambert, John 60,000 60,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Marks, Robert 62,500 62,500 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Jennings, Keith 66,400 66,400 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
McLarney, Patrick 70,000 70,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Whittiker, Richard/Cameron 70,000 70,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Winn, Steven 75,000 75,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Palmer, Paul 80,000 80,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Siemens, Ron 80,000 80,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Appling, Terry 83,400 83,400 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Olsen, David 90,000 90,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Cook, Shirley 100,000 100,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Cravens, David 100,000 100,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Cravens, Deborah 100,000 100,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Kadolph, Michael 111,500 111,500 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Palmer, Trevor 120,000 120,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Downey, William J. 140,000 140,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
McCone, Robert 140,000 140,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Klozenbucher, Kevin 150,000 150,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
McCone, Renee 150,000 150,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Russell, Keitha & Haley, James 150,000 150,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Hussey, Joseph 152,500 152,500 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Bordenave, Lee 158,600 158,600 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Aaberg, Obert 200,000 200,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Essenburg, Roger 200,000 200,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Heisey, Paul 212,500 212,500 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Duclos, Richard (Trust FBO) 225,000 225,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
VanBalen, Henry 235,000 235,000 >1% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Ross, Curtis 250,000 250,000 1.00% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Galaxidas, Constantino 257,500 257,500 1.04% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Liston, John 260,000 260,000 1.05% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Stutzke, Dana 268,230 268,230 1.08% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Howen, Lovern 300,000 300,000 1.21% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Tigmo, Adrian 300,000 300,000 1.21% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Mishler, Jeanie and Steven 331,500 331,500 1.33% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Curtis, Arthur & C 345,000 345,000 1.39% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Andring, Michael 407,500 407,500 1.64% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Essenburg, Robert 417,800 417,800 1.68% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Geiger, Gordon 482,500 482,500 1.94% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
-24-
------------------------------- -------------------- ------------------------ ------------------- ------------------
NAME SECURITIES BY EACH COMMON SHARES OFFERED % OWNED BEFORE SHARES OWNED
SHARE-HOLDER FOR SHAREHOLDERS OFFERING (AFTER AFTER OFFERING
BEFORE OFFERING ACCOUNT (POST DISTRIBUTION) (1) (ASSUMING SALE
CONVERSION FROM "B" OF ALL SHARES
PREFERRED) REGISTERED)
------------------------------- -------------------- ------------------------ ------------------- ------------------
Cerritelli, Gus 510,000 510,000 2.05% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Hill, Edward Scott 545,000 545,000 2.20% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Essenburg Living Trust (2) 567,800 567,800 2.29% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Graves, James 590,000 590,000 2.38% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Nelson, Gaylord 596,000 596,000 2.40% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Root, Roger 620,000 620,000 2.50% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Myers, Richard 655,000 655,000 2.64% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Chastain, James 797,500 797,500 3.22% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Paukert, Thomas 800,000 800,000 3.23% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Chisholm, Richard & Virginia 1,092,250 1,092,250 4.41% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Klozenbucher, Kevin 1,550,000 1,550,000 6.25% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Millet, Donald 1,766,668 1,766,668 7.13% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
Austin, James 3,150,000 3,150,000 12.53% 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
------------------------------- -------------------- ------------------------ ------------------- ------------------
TOTAL 22,268,273 22,268,273 0
------------------------------- -------------------- ------------------------ ------------------- ------------------
MATERIAL RELATIONSHIPS
(1) Computed based upon total common shares outstanding post distribution.
(2) Beneficial Ownership Table Below
NAME OF THE ENTITY PERSON WITH VOTING NUMBER OF COMMON SHARES AFFILIATE
CONTROL BEING REGISTERED (A) OF COMPANY?
----------------------- -------------------- ----------------------- -----------
V & M Construction Sperry, David R. 5,000 No
The Entrust Group Black, John G. 20,000 No
Geiger Family Trust Geiger, Gordon 50,000 No
Essenburg Family Trust Essenburg, Roger 567,800 No
C. Trustee Shares Registered for Resale
------------------------------- -------------------- ------------------------ ---------------------- ------------------
NAME SECURITIES BY EACH COMMON SHARES OFFERED % OWNED AFTER SHARES OWNED
SHARE-HOLDER FOR SHAREHOLDERS DISTRIBUTION AFTER OFFERING
BEFORE OFFERING ACCOUNT (POST (ASSUMING SALE
CONVERSION FROM "B" OF ALL SHARES
PREFERRED) REGISTERED)
------------------------------- -------------------- ------------------------ ---------------------- ------------------
Trustee Shares, Jeff Huitt 500,000 500,000 0 0
------------------------------- -------------------- ------------------------ ---------------------- ------------------
None of the above listed shareholders are registered broker-dealers or are
associates of a registered broker-dealer. None of the above listed shareholders
are affiliates of any registered broker-dealers.
-25-
ITEM 8. PLAN OF DISTRIBUTION
----------------------------
Upon effectiveness of this registration statement, of which this prospectus is a
part, our existing selling shareholders may sell their securities at a fixed
price until a market develops or at any price in privately negotiated
transactions, after a market develops.
Our distributor (the Trustee) under the Plan of Liquidation may be deemed an
underwriter in this registration for distribution.
Our selling shareholders may be deemed underwriters in this registration.
The selling shareholders are not paying any of the offering expenses and we will
not receive any of the proceeds from the sale of the shares by the selling
shareholders.
ITEM 9. DESCRIPTION OF SECURITIES
---------------------------------
The securities being registered and/or offered by this Prospectus are common
shares.
COMMON STOCK
We are presently authorized to issue four hundred, fifty million (450,000,000)
shares of our $0.001 par value common shares. A total of 2,000,000 common shares
are deemed issued and outstanding as of August 27, 2014.
COMMON SHARES
All shares are equal to each other with respect to voting, liquidation, and
dividend rights. Special shareholders' meetings may be called by the officers or
director, or upon the request of holders of at least one-tenth (1/10th) of the
outstanding shares. Holders of shares are entitled to one vote at any
shareholders' meeting for each share they own as of the record date fixed by the
board of directors. There is no quorum requirement for shareholders' meetings.
Therefore, a vote of the majority of the shares represented at a meeting will
govern even if this is substantially less than a majority of the shares
outstanding. Holders of shares are entitled to receive such dividends as may be
declared by the board of directors out of funds legally available therefore, and
upon liquidation are entitled to participate pro rata in a distribution of
assets available for such a distribution to shareholders. There are no
conversion, pre-emptive or other subscription rights or privileges with respect
to any shares. Reference is made to our Articles of Incorporation and our
By-Laws as well as to the applicable statutes of the State of Colorado for a
more complete description of the rights and liabilities of holders of shares. It
should be noted that the board of directors without notice to the shareholders
may amend the By-Laws. Our shares do not have cumulative voting rights, which
means that the holders of more than fifty percent (50%) of the shares voting for
election of directors may elect all the directors if they choose to do so. In
such event, the holders of the remaining shares aggregating less than fifty
percent (50%) of the shares voting for election of directors may not be able to
elect any director.
CLASS "A" PREFERRED SUPER MAJORITY VOTING STOCK
On September 30, 2013 the Board authorized the Class "A" Preferred Super
Majority Voting Stock (the "Class "A" Preferred Stock") of which 10,000,000
shares of preferred stock have been authorized for the class and the shared have
a deemed purchase price of $0.0001 per share. The Class "A" Preferred Stock have
voting rights that are equal to 60% of the total stock outstanding at any time,
giving effective control of the Company to the holder of these shares.
We are presently authorized to issue ten million (10,000,000) class "A"
preferred $0.0001 par value Super Majority Voting shares. 10,000,000 shares of
Class "A" Super Majority Voting Preferred Stock are issued and outstanding at
August 27, 2014.
-26-
CLASS "B" PREFERRED CONVERTIBLE NON-VOTING STOCK
On April 30, 2014 the Board authorized the Class "B" Preferred Non-Voting
Convertible Stock (the "Class "B" Preferred Stock") of which 30,000,000 shares
of preferred stock have been authorized for the class and the shares have a
deemed purchase price at $0.01 per share. The Class "B" Preferred Stock has no
voting rights. At the conversion rate, one (1) share of Class "B" Preferred
Stock equals one (1) share of common stock. At this time, 22,768,273 shares of
the Class "B" Preferred Convertible Non-Voting Stock have been issued.
The Class "B" Preferred Non-Voting Convertible Stock will convert into common
stock only upon the registration with SEC being declared effective.
WARRANTS
The Company has issued 3,000,000 warrants to purchase shares of common stock of
which 1,000,000 are vested and 2,000,000 are subject to vesting, under certain
conditions of a Consulting Agreement to Michael Zalle.
TRANSFER AGENT
The Company has engaged Mountain Share Transfer, Inc., P.O. Box 191767, Atlanta,
Georgia 31119, phone (303)460-1149/ fax (404) 816-8830 as its transfer agent for
its securities.
ITEM 10. INTEREST OF NAMED EXPERTS AND COUNSEL
----------------------------------------------
We have not hired or retained any experts or counsel on a contingent basis, who
would receive a direct or indirect interest in us, or who is, or was, our
promoter, underwriter, director, officer or employee.
ITEM 11. INFORMATION WITH RESPECT TO THE REGISTRANT
---------------------------------------------------
A. DESCRIPTION OF BUSINESS
---------------------------
Safe Lane Systems, Inc. ("Safe Lane Systems", "Safe Lane Systems," "We," "Us,"
"Our," or "Company hereafter), was incorporated in the State of Colorado on
September 10, 2013. We were formed to engage in the sale of traffic safety
equipment. We may also engage in any other business permitted by law, as
designated by the Board of Directors of our Company.
We have licensed and sub-licensed I.P. for a portable automatic traffic cone
dispenser designed to protect highway workers, first responders to vehicle
collisions and highway incidents, law enforcement personnel, towing operators,
private and public utility workers, as well as pedestrians and motorists. Our
flagship product, The Kone General Automatic Safety Cone Deployment System, is
the world's first and only portable safety cone dispensing system. We also
intend to offer Safe D-Ploy Spring Cones MUTCD (Manual on Uniform Traffic
Control Devices) compliant highway safety cones, as part of our product line.
We have begun initial minimal operations and are currently without revenue. We
have one employee at the present time, our CEO and a consultant acting as our
marketing Vice-President. During the year ended December 31, 2013, the executive
officers contributed their services and have not begun to be compensated. Upon
formation, the founder, our CEO and Chairman Paul D. Dickman, was granted
2,000,000 shares for services engagement valued at $0.0001.
We are in the developmental stage of our business. Since our incorporation
September 2013, we have been engaged in securing both exclusive and
non-exclusive license agreements for our key products, taking over and
completing R&D, and lining up suppliers and manufacturers for production.
During the 2014 fiscal year, we intend to focus our efforts on our product
launch and marketing of the Kone General Automatic Safety Cone Deployment
System.
-27-
Our Auditors have issued a going concern opinion and the reasons noted for
issuing the opinion are our lack of revenues and very modest capital.
Factors that make this offering highly speculative or risky are:
o There is no market for any securities;
o We have no revenues or sales;
o We are start up company;
o We have minimal experience in the traffic safety business as a
company;
o We are undercapitalized.
Our principal executive offices are located at 1624 Market Street, Suite #202,
Denver, Colorado 80202 and our telephone number is (949) 825-6512. We maintain a
website at WWW.SAFELANES.COM, such website is not incorporated into or a part of
this filing.
COMPANY BUSINESS OVERVIEW
Our Company, Safe Lane Systems, Inc., was formed to develop the marketing and
contract the manufacturing of certain products resulting from development of IP
in design and manufacturing by Superior Traffic Controls, Inc. We licensed
certain IP under a Master License and a Sub License to capitalize the marketing
and contract manufacturing of certain products.
Safe Lane System's line-up features proprietary products, all of which have been
made available via exclusive and non-exclusive licensing agreements with
Superior Traffic Controls, Inc.
Safe Lane System's product offerings include both a commercial and consumer
safety cone product line, as well as an automatic safety cone dispenser, The
Kone General. These products represent the culmination of a research project
begun several years ago to address the critical need for safer roads, highways,
and city streets.
THE KONE GENERAL AUTOMATIC SAFETY CONE DISPENSER
The Kone General is our flagship product and is a patent pending device that can
be installed on a wide range of vehicles ranging, but not limited to, fire
engines, police cars, tow trucks, telecom vans, construction vehicles, federal,
state, and local transit vehicles, that automatically deploys traffic cones by
the operator of the attending vehicle. Management believes, the Kone General
Dispensing System is the world's first, and only portable, plug-and-play safety
cone dispenser. As the attending vehicle approaches an emergency, construction
area, job site, or auto accident, patented spring loaded safety cones are
automatically deployed at the touch of a button.
We licensed the IP for this "incident management" automatic cone dispenser (The
Kone General), which we intend to launch into markets. The Kone General
currently holds up to five, 18" or 28" MUTCD compliant cones. Design is
currently in progress to develop a magazine capable of increasing its capacity
by an additional 5-10 cones. The Kone General provides for a safer, highly
efficient, and more effective solution, addressing numerous issues in all areas
of incident management and highway worker safety.
The Kone General is currently designed in two models. Our first model has been
engineered specifically for the wired or wireless installation directly onto
service vehicles. This has come as a result of extensive research that
identified specific design parameters, exclusive to certain types of specialty
vehicles such as Fire Trucks.
The dimensional footprint of the unit provides for tremendous flexibility
relative to physical installation locations onto new vehicles, as well as for
retro-install applications onto existing fleet vehicles. Couple this with simple
electronics and seamless integration is easily accomplished.
-28-
Please see Exhibit 99.1 for graphics, (a) and (b)
The second model can be universally installed onto almost any vehicle via a
universal mounting apparatus tied to existing vehicle trailer hitch
configurations, and controlled via a wireless RF transmitter. Power to the unit
is provided using a standard trailer "pig-tail," eliminating the need for
professional installation, providing Kone General end users with 100%
"PLUG-AND-PLAY" functionality.
Please see Exhibit 99.1 for graphics, (c), (d) and (e)
AVAILABILITY
The Kone General product launch is intended for the first quarter of 2015. Both
models are scheduled undergoing beta and field testing that is necessary prior
to distribution and full product launch. Prior to our Kone General product
launch, several reliability tests will continue to be performed, as well as
environmental simulations that will help to identify any potential issues that
changes in climate may have on the reliable and consistent operation of the
unit. We intend to engage the field testing of the unit on fire engine and
emergency services vehicle applications in first quarter 2015.
SAFE LANE SYSTEM'S TRAFFIC SAFETY SPRING CONES AND ("TOTE") SYSTEMS
The basic safety cone design has not changed in over 65 years, until now. It is
only now with today's technology in spring manufacturing and with new reflective
materials that a retractable cone can be manufactured with the quality that can
meet both governmental regulations and industry demands.
-29-
The spring cone on which we have a non-exclusive distributorship (as a private
label) is designed to better serve U.S. workers that regularly use cones in
performing their daily work routines. We intend to attempt to introduce the
practicality of their use to millions of new customers in the consumer markets,
who traditionally have not considered using traffic cones before because of
storage and handling problems and relative inconvenience tied to cargo space
limitations. We do not have an exclusive right on this product and others may
manufacture, market and private label this product.
For example, four Safe Lane System cones can be stored in the same space needed
by a single standard PVC cone.
Please see Exhibit 99.2 for graphic, (f)
Now, over 250 million plus vehicle owners can consider easily carrying full
sized 28" safety cones for their protection while on the road, by utilizing our
consumer cone systems which can store a minimum of two cones in a space of just
16"x14"x4".
Our safety spring cone has the same form factor as a standard traffic cone, 28"
in height with a standard 14" x 14" square base (See Fig. 7).
The uniqueness of our cone's design lies in its ability for "perturbation," or
flexing from side to side, and up and down (See Fig. 3 and 5). These unique
features come as a result of the licensed product design, which incorporate
spring technology, a mesh material covering, state of the art reflective
materials, and a heavier base.
Please see Exhibit 99.2 for graphics, (Fig. 3), (Fig. 5), (Fig. 7)
-30-
When combined, these factors result in the prevention of the cones being knocked
over by passing vehicles (See Fig. 6), as well as from being blown over by
gusting winds. In addition, by utilizing spring technology, the cones are neatly
and efficiently stored in a compressed state, creating the desirable benefits of
space maximization, and ease of transport. We believe design puts our traffic
safety cone in the very fortunate position to cross over into several other
vertical target markets as well as in the consumer market segments.
Please see Exhibit 99.2 for graphic, (Fig. 6)
Recent changes in legislation require specific physical characteristics in
traffic cone use in the United States. The legislation is called The MANUAL ON
UNIFORM TRAFFIC CONTROL DEVICES, or MUTCD defines the standards used by road
managers nationwide to install and maintain traffic control devices on all
streets and highways. The MUTCD is published by the Federal Highway
Administration (FHWA) under 23 Code of Federal Regulations (CFR), Part 655,
Subpart F (http://mutcd.fhwa.dot.gov/ ). States and localities have left this
area to the Federal Highway Administration.
DESCRIPTION OF MUTCD COMPLIANT SPRING CONES BUNDLED IN THE KONE GENERAL
With regard to our Kone General Systems, the use of MUTCD compliant spring cones
come standard as included components of the device. This will ensure the Kone
General's compliance with all current legislation related to the use of traffic
safety cones on Federal highways. In a compressed condition, the cone measures
only 12" x 12" x 3 1/4" and weighs 5.5 pounds, compared to 8 up to 25 pounds for
traditional cones. The cone's reflective qualities are provided by applying
Reflexite's GP 800 reflective material, which is a patented product by
Reflexite, one of the world leaders in highway safety reflective materials. The
material generates a 500 Ra (candlepower) versus 250-300 candlepower for similar
types of applications. The GP 800's reflective sheeting material is ideal for
construction zones. Our cone is environmentally friendly, and can handle
high-speed impacts and heavy gusts of wind without displacing the cone. The
5-year total cost of ownership of our cone we believe is significantly less than
that of a standard traffic cone, is more functional, takes up a fraction of the
space of a standard cone, and is less than half the weight. Our cones which we
intend to sell are designed as MUTCD compliant.
CONSUMER PRODUCTS
We intend to develop a line of consumer cones in various sizes and
configurations for the retail sector. The 2-10 cone safety systems are ideally
suited for personal transportation safety since they take up very little room in
a personal vehicle. A cone system with wheels and a capacity of 25-40 cones is
in development. These will be targeted at schools for their crossing areas,
parking lots, play grounds and sport fields.
We have identified a unique niche for the marketing and sale of its safety cones
and tote systems by crossing over into the marketing and promotional industries.
Our management believes that significant profits can be generated by doubling
its safety cones and systems as marketing, advertising, and promotional tools.
This can be easily accomplished by placing branded logos, custom embroidery,
and/or silk-screening onto our safety cones. This integration of signage, logos,
or promotional messages, instantly transforms the our safety cone into a
powerful branding tool for companies, municipalities, hotels, restaurants, theme
parks, outdoor arenas, stadiums, and any number of entities wishing to get their
message across. To date, there hasn't been any use of traffic cones as
advertising mediums or for any other form of product placement or branding.
The parking industry would be a direct line into these market segments. Many
restaurants, hotels, commercial buildings, and public parking areas source
traffic control and parking responsibilities to third party lot management and
valet parking companies.
-31-
OUR PROPOSED PRODUCTS:
(1) Consumer Cone Systems (bundles or "totes"): This product will be
manufactured and marketed immediately at retail and discount construction
supply, hardware and automotive outlets. Big box retailers, for example, Lowes,
Ace Hardware, Home Depot and Sears in the U.S. total over 8,000 outlets. Smaller
outlets easily exceed 60,000 in the U.S. As stated in the Market Analysis
Summary, above, according to the U.S. Department of Labor, Bureau of Statistics
there are over 10 million employees in occupations that regularly use safety
cones in their workday activities, all of which are targeted customers for this
product.
Further, our Safe D-Ploy cone systems are designed to be marketed to both auto
manufacturers, and motorists to be carried in all types of vehicles as part of
the spare tire assembly.
(2) Kone General System: Our Kone General system has been designed to dispense
five to seven safety cones. The dispenser systems offer an important business
tool to private/ public providers of "incident management" services such police,
fire/medical, tow and repair activities. These service providers need to set up
temporary secure areas on streets, roads, sidewalks or highways to handle
traffic control incidents. Additionally, public utilities, telephone and
telecommunications companies like Verizon and AT&T need to establish similar
safe areas for their road-site workers when providing essential services, such
as telephone line repair. Collectively, the potential market for private/public
vehicles needing a cone dispensing system exceeds 12 million. Our other
potential markets for the Kone General are road painting, striping and asphalt
contractors. Usually, these contractors use 18" cones, and therefore would
require a redesign of the existing Kone General to provide the capability of
handling smaller sized 18" cones. This product will be pursued next year.
Presently, only 28" cones are available. 18" and 36" cones can be ordered, but
delivery will take longer because there are no immediate plans to maintain an
existing inventory of these cones.
(3) Stand-alone Perturbation Safety Cone: The safety cone will be initially sold
as a component to the cone dispensing system (an extra 5 pack of safety spring
cones will be offered and marketed as an "up sell" to purchasers of the Kone
General for the purposes of having spare cones on hand), and other systems as an
alternative and space saving vehicle safety solution.
However, before doing so for on-highway use several issues must be resolved.
First, a magazine system capable of increasing the Kone General's capacity to
10-20 cones needs to be perfected. Design work is in progress, and proof of
concept has been resolved. Additional funding to complete prototypes is
required. Second, regulatory analysis needs to be completed to identify state
regulations and standards requiring additional state and local government
testing and approval. Presently, the cone meets federal standards as a Category
I directional device. The company is able to self certify the cone's compliance
with federal regulations, but in many states we must still comply with
additional requirements before the product can be marketed for federal highway
usage. States requiring additional testing must be identified and the approval
process researched. The company needs to prioritize the states needing
additional testing based upon market potential, user interest, the time needed,
and difficulty of meeting compliance standards.
At this time we are not addressing to international markets.
We have aligned our intended manufacturing and production per-engineering
criteria with international suppliers but focused today on the Domestic markets.
Specifically, the Safe D-Ploy Cone product and Kone General are being bid
through international manufacturers who supply global companies including mass
market retailers under private label. Foreign laws and regulations do vary and
we acknowledge this as a business reality and potential barrier to entry. The
market opportunity and cost associated with modifying our MUTD United States
compliant cone to meet the foreign markets among many factors in consideration.
It's a future plan based on expected demand after successful United Stated
market penetration. Sales, Marketing, Manufacturing and Distribution, as will as
operational costs and ongoing finance, will be fully assessed before determining
if each foreign market is worth the investment of time, capital and other
resources.
-32-
Potential future commercial products utilizing the safety cone:
o barricade
o barrel
o cone w/ sign
o Kone General (large capacity)
o Kone General magazine
o cone collector system (large capacity)
Buyers/Users:
o Law Enforcement
o Fire/medical emergency response
o Government Road Maintenance
o Construction
o Building/Ground Maintenance
o Consumers
o Utilities
o OEM
o School/ Athletics
Any one or all products may be used at some time by the above-mentioned
buyers/users. For example, all buyers/users may need in varying quantities
safety cones for their business, for recreation uses and for their business
and/or personal vehicles.
SALES AND MARKETING PLAN
Sales Planning is a critical element to any business. Having a proper plan in
place will accomplish several objectives but the most critical in our opinion
are: drive profitable sales, avoid conflict between sales channels, and promote
the activity with volume incentives. We believe we have structured a revenue
model for our sales channel (wholesale, value added resale, and retail (on-line
and brick & mortar). In the highway safety products industry, stocking
distributors are key, because when a contractor or agency needs cone products,
it is on an instant need basis and shipment needs to be immediate. We have
explored the need to develop a relationship with a leading warehouse
distributor, a global leader who supplies many channels including Amazon.com to
facilitate order delivery.
Marketing, brand/product awareness, and clear value proposition are areas of
great importance at this stage of the business. We intend to implement a plan
around the core externally facing elements: Brand identity (logos, color
palette, design elements, tag lines, etc.), Digital (Website, Social media like
Linkedin/Facebook Pages, Twitter, Google, You Tube Channels), and Print
Literature (Corporate collateral, Product collateral, Channel Support
literature, Direct Mail, etc.)
We are also working on license agreements of complimentary products that can be
"add on" sales to existing customer and open new markets as well.
FACTS AND STATISTICS RELATED TO OUR PRODUCT DESIGNS
The National Highway Traffic Safety Administration confirmed Nov. 14 that U.S.
highway deaths rose by 4 percent in 2012 from the previous year, as the agency
released the 2012 Fatality Analysis Reporting System (FARS) data. The increase
to 33,561 deaths in 2012 -- 1,082 more fatalities than in 2011 -- and most of
them involved motorcyclists and pedestrians. Deaths for both of those categories
increased for the third consecutive year in 2012.
Key 2012 statistics include:
o Fatalities among pedestrians increased 6.4 percent from 2011. The data
showed the large majority of pedestrian deaths occurred in urban
areas, at non-intersections, at night, and many involved alcohol.
-33-
o Motorcyclist fatalities increased 7.1 percent year over year. NHTSA
reported 10 times as many riders died not wearing a helmet in states
without a universal helmet law than in states with those laws.
o Large-truck occupant fatalities also rose for the third consecutive
year, by 8.9 percent from 2011.
o Deaths in crashes involving drunk drivers rose 4.6 percent to 10,322
in 2012, and most of those crashes involved drivers with a blood
alcohol concentration of .15 or higher.
A preliminary total of 4,405 fatal work injuries were recorded in the United
States in 2013, lower than the revised count of 4,628 fatal work injuries in
2012, according to results from the Census of Fatal Occupational Injuries (CFOI)
conducted by the U.S. Bureau of Labor Statistics. The rate of fatal work injury
for U.S. workers in 2013 was 3.2 per 100,000 full-time equivalent (FTE) workers,
compared to a final rate of 3.4 per 100,000 in 2012.
Since 2011, CFOI has identified whether fatally-injured workers were working as
contractors at the time of the fatal incident. In 2013, 734 decedents were
identified as contractors, above the 715 reported in 2012. Workers who were
working as contractors at the time of their fatal injury accounted for 17
percent of all cases in 2013.
The number of fatal work injuries among firefighters was considerably higher in
2013, rising from 18 in 2012 to 53 in 2013. The large increase resulted from a
few major incidents in which multiple fatalities were recorded, including the
Yarnell Hill wildfires in Arizona which claimed the lives of 19 firefighters.
Fatal transportation incidents were lower by 10 percent in 2013, but still
accounted for about 2 out of every 5 fatal work injuries in 2013. (See chart 1.)
Of the 1,740 transportation-related fatal injuries in 2013, nearly 3 out of
every 5 (991 cases) were roadway incidents involving motorized land vehicles.
Non-roadway incidents, such as a tractor overturn in a farm field, accounted for
another 13 percent of the transportation-related fatal injuries. About 16
percent of fatal transportation incidents (284 cases) in 2013 involved
pedestrians who were struck by vehicles. Forty-eight of these occurred in work
zones.
FATAL OCCUPATIONAL INJURIES BY EVENT OR EXPOSURE, 2012-2013
2012 2013
------- -------
TRANSPORTATION INCIDENTS ...................................... 1,923 1,740
Roadway incidents involving motorized land vehicle ............ 1,153 991
Roadway collision with other vehicle .......................... 565 517
Roadway collision - moving in same direction .................. 124 127
Roadway collision - moving in opposite directions, oncoming ... 204 178
Roadway collision - moving perpendicularly .................... 134 124
Roadway collision with object other than vehicle .............. 338 288
Vehicle struck object or animal on side of roadway ............ 318 270
Roadway non-collision incident ................................ 247 182
Jack-knifed or overturned, roadway ............................ 202 157
Non-roadway incidents involving motorized land vehicles ....... 233 223
Non-roadway non-collision incident ............................ 175 178
Jack-knifed or overturned, non-roadway ........................ 115 116
Pedestrian vehicular incident ................................. 293 284
Pedestrian struck by vehicle in work zone ..................... 65 48
Rail vehicle incidents ........................................ 38 41
Water vehicle incidents ....................................... 63 60
Aircraft incidents ............................................ 127 133
MARKET ANALYSIS SUMMARY
In addition to the consumer cone described above, we have also specifically
targeted a niche market consisting of "incident management" type vehicles, such
as police, fire/medical and tow service vehicles as ideal users of its cone
dispensing system. According to the National Highway Traffic Safety
Administration, it is estimated that this market, together with repair and
utility vehicles, exceeds 12 million in the US market.
Today, not only in the United States, but globally, road accidents and traffic
related deaths are increasing. Our highways are becoming more dangerous despite
-34-
government and industry efforts to make vehicles safer and stronger. The fact
is, more vehicles, both large and small are taking up shrinking lane space on
our highways. With increased demand for additional travel lanes, state and
federal governments have encroached into road shoulder right of way area to
solve the need for more traffic lanes. Government efforts to expand right of way
areas are regularly the subject of litigation by special interest groups, which,
in turn, drives road construction costs beyond capabilities and can result in
years of delay and snarled roads. In many urban areas, roadways have been
widened to expand across the entire breath of right of way leaving no safe
shoulder area for disabled vehicles or road police action. Furthermore, any
necessary repair or construction work on a roadway can create hazardous risks
for workers, long traffic delays for motorists and increased opportunities for
serious traffic accidents.
A large portion of the safety cones we hope to market pursuant to this business
plan result from the anticipated acceptance and sale of our consumer cone line.
According to the United States Department of Labor, Bureau of Statistics,
Occupational Data, in 2001 there were over 10 million individuals employed in
industries where the use of traffic safety cones is a standard workday practice.
Although safety cones are used for multiple purposes by many different types of
business and industries, we believe there has never been a safety cone that has
been more user friendly in terms of ease of handling, storage, performance,
weight, and convenience.
We believe there has never been a similar product that is durable, flexible,
rugged and functional. We hope that the our cone will generate new consumer
base. For example, the very user-friendly cone could be a safety device for
family personal vehicles, which rarely have carried cones in the past.
Safety cones on highways weigh between 8 to 25 pounds, and stand from 18" to 36"
high. Placing these cones on the highway is almost always done by hand putting
workers in danger of being struck by passing cars. According to the California
Department of Transportation (CalTrans), 166 CalTrans employees have been killed
in the line of duty with many deaths coming as a remit of errant vehicles
entering highway work zones.
The majority of these accidents were the result of speeding and inattentive
drivers. In 2002, there were over 1,000 work zone fatalities nationwide, as well
as 8,374 work zone injuries. Further, according to the Federal Highway
Administration, three worker fatalities occur nationally in all cone zones every
five days. Many accidents occurred as a result of drivers running over a cone
and losing control of their automobiles.
The public works employee is also at risk while placing these cones on the
highway and during the retrieval process. Another added hazard is when safety
cones are struck by a car and thrown into traffic, resulting in a public works
employee or highway patrol officer having to cross traffic to retrieve them.
Traffic cones are often stored on trucks making them difficult to load and
unload. Many repetitive motion injuries have occurred as a result of the
constant gripping and the awkward cone placement postures, especially to the
shoulder area (flexion of 127-138 degrees).
An evaluation of U.S. Census Bureau Statistics for employment indicates over 10
million individuals are employed in professions, which regularly use safety
cones in their daily work. Even a casual observer on any day will notice
hundreds of safety cones riding in the trunk bed of pickup trucks and utility
vehicles. Safety cones are universally used by all sorts of people for all sorts
of purposes, despite the fact that they take up too much space, often stick
together and are difficult and heavy to handle.
We believe traffic safety is a growing business. Our Safe D-ploy Spring Cone and
Kone General System are unique in the marketplace, and are more than
specifically designed for traffic safety, but adaptive enough so that we hope to
qualify them as the industry standard in numerous alternate applications.
Our interviews with consumers indicated that there is a potential consumer
market which is ready for our cone models. We believe there are many inherent
advantages of using our safety cone instead of a standard PVC cone, such as; it
will not blow over, weighs less, will not stick together, ships and handles
easier, and if hit by a vehicle and projected into the roadway or work zone,
will do less physical damage to people and personal property, as is currently
the case with standard rubber safety cones.
The construction industry in general and road construction, in particular, uses
and replaces several million cones each year. Government regulations require the
use of safety cones at work sites throughout the country. For these companies,
our products may offer important advantages over standard PVC cones in the fact
that our cones can be repaired with interchangeable parts at a fraction of the
cost of a new cone.
-35-
New government regulations, both in the U.S. and internationally, require
different colored cones to indicate various conditions or situations, such as
hazardous materials and school areas. We intend to offer its cones in various
colors to meet industry needs.
SALES STRATEGY
We intend to sell its Safe D-Ploy product line to customers generated by the
Company both internally, as well as through reputable, established distributor
networks. We intend to actively seek distributor networks, with existing
clientele consistent with our target market of particular buyers/users.
We will also sell through independent manufacturer's representatives on a case-
by-case or market-by-market basis. Outside of our expansive internal plans to
launch that have been previously mentioned, our main strategy is to communicate
the unique and desired attributes of our cone, Kone General and consumer systems
to a broad segment of the North American Market during the first year and to
expand it internationally in our second and third year.
We believe we have a unique and innovative product line. The basic traffic
safety cone has not been changed in over 60 years. As a result of technology and
the reduction in material cost and labor, we intend to market our products to a
growing market segment with a well-defined list of cost and functional benefits.
We intend to communicate our high value proposition to the distribution network
as well as end users through personal selling, targeted print advertising and
improved communications capabilities via a sophisticated website.
We plan to be active in traffic control and other industry trade associations,
and attend trade shows and exhibitions. Our trade show presence is a big part of
our deployment strategy, beginning with the goal to feature our product line at
the FDIC trade show which is held annually in Indianapolis, IN.
Furthermore, foreign markets need to be considered a high priority and
distributors will be sought to market not only the Kone General but also all our
products internationally. We will consider offering Distributors exclusive
selling rights in their markets for various segments of the trade for one to
three years. In return our Distributors will pay a license fee for said
exclusivity. Our sales agreement will call for the Distributor to clearly
identify its markets, and time frame as to when those markets will have product.
If after an agreed upon time period those accounts are not being stocked with
our product or products, then we will have the right to seek another Distributor
to service the specific market(s).
MILESTONES REACHED TO DATE
We have completed these milestones in our business plan progression:
o Obtained the exclusive rights (via exclusive licensing agreements
entered into between our Company and the I.P. holder) to both
manufacture and distribute our primary product(s).
o Secured non-exclusive licensing rights to related ancillary products
that we intend to market in both the consumer and commercial market
segments.
o Secured USPTO trademark protection of the branded product name of our
flagship product and related components, Safe D-ploy Spring ConeTM and
The Kone GeneralTM
o Developed our website (www.safelanesystems.com), marketing materials,
brochures, sales aids, and product demonstration videos to be used to
market the Company's products.
o Acquired all intellectual property related to technical and CAD, 2D,
and 3D drawings in preparation for mass manufacture of the Kone
General Automatic Safety Cone Dispenser.
o Acquired value engineering of the Kone General to significantly reduce
the unit CGS.
-36-
Our Goals for the next year are as follows:
FUTURE MILESTONES
------------------ -------------------------------------------------------------
4th Quarter 2014 We plan to complete three milestones by December 31, 2014.
The first is completing our S-1 registration of our current
shareholders. The second milestone is to finalize our
primary manufacturing and distribution partner. The third
milestone is to finalize our marketing plan which we plan to
execute through 2015. All of the objectives are currently in
the process of being accomplished, and we believe we have
adequate funding at this time to complete each of these
objectives
------------------ -------------------------------------------------------------
1st Quarter 2015 We will need additional capital contributions to fund the
roll out of the marketing plan. The primary focus in the 1st
quarter of 2015 is to raise a minimum of an additional
$1,000,000 to fund ongoing operations and roll out of our
marketing plan.
------------------ -------------------------------------------------------------
2nd Quarter 2015 We will continue to expand our marketing and sales efforts
by hiring additional sales staff and making strategic
investments in marketing campaigns. This growth is
contingent on success in raising the additional capital in
the previous quarter.
------------------ -------------------------------------------------------------
3rd Quarter 2015 We expect that by the third quarter of 2015 we will be able
to generate revenue. The goal is contingent upon being able
to roll out our planned marketing efforts by raising
sufficient additional funding as mentioned in the previous
quarters.
------------------ -------------------------------------------------------------
COMPETITION, MARKETS, AND REGULATION
COMPETITION
Our dispenser is the world's first portable safety cone dispenser design known
to exist, and we have yet to identify any competitors as of the writing of this
summary. Note: Other automatic safety cone dispensing systems currently exist.
However, systems currently sold in the marketplace are designed for mass cone
deployment (i.e. road striping applications), are not portable, require the
purchase of heavy equipment, dedicated specialty vehicles, and are very
expensive. Safety cones are manufactured by many PVC and injection molding
companies, and they are all price competitive for basic expandable units and
constitute significant price/per unit competition for our cones.
MARKETS
Primary target market segments include highway departments, private/public
utilities, fire/ems, law enforcement, trucking/transportation, telecomm, vehicle
parking industry, construction, and the military. Calculation of market size is
difficult to determine due to the uniqueness of the product, as well as being
first to market over several vertical market segments.
APPLICABLE REGULATIONS IN THE INDUSTRY
The leading cause of highway construction worker injuries and fatalities is
contact with construction vehicles, objects, and equipment. These injuries and
deaths are preventable through a number of good practices. (Source:
http://ops.fhwa.dot.gov/wz/workersafety/)
As our highway infrastructure ages, many transportation agencies are focusing on
rebuilding and improving existing roadways. This means more roadwork is being
performed on roadways that are open to traffic. At the same time, traffic
-37-
continues to grow and create more congestion, particularly in urban areas. To
avoid major queues during peak travel periods, urban areas are seeing more night
work. The combination of more work done alongside increasingly heavier traffic
and greater use of night work can result in increased safety considerations for
highway workers. However, there are regulations and available resources on good
practices that can help workers perform their jobs safely.
Work zones are a necessary part of maintaining and upgrading our highway system.
The combination of more work zones and heavier traffic volumes means work zones
are having a greater effect on roadway systems. The American public has cited
work zones as second only to poor traffic flow in causing dissatisfaction with
the roadway system.
Note: The following are significant statements on Regulations and Rules in the
highway safety industry
The FHWA Work Zone Mobility and Safety Program is working to "make work zones
work better" by providing transportation practitioners with high-quality
products, tools, and information that can be of value in planning, designing,
and implementing safer, more efficient, and less congested work zones. The Work
Zone Mobility and Safety Web site serves as a central location for work
zone-related resources and is updated with new information and resources on a
frequent basis. These resources include:
o Comprehensive information and guidance for implementing the Work Zone
Safety and Mobility Rule (23 CFR 630 Subpart J).
o Peer-to-Peer Program that provides State and Local transportation
agencies easy access to knowledgeable peers across a range of work
zone issues, at no cost to these agencies.
o Best Practices Guidebook, which includes recommended "state of the
practice" approaches, procedures, and technologies for work zone
mobility and safety management, collected from State and Local
transportation agencies.
o Work Zone Self Assessment, used by each FHWA Division Office and
partner State on an annual basis to measure their current
state-of-practice and identify future work zone quality improvement
efforts.
o Work zone training courses, to help practitioners plan, design, and
implement safe and effective work zones.
o Current news related to work zones, from both national and
international sources.
o Publications and studies on a variety of work zone topics, including
work zone ITS, traffic analysis tools for work zones, contracting
methods, construction strategies, public information and outreach for
work zones, and others.
WORKER SAFETY FOR HIGHWAY CONSTRUCTION STANDARD
ANSI/ASSE A10.47-2009: Work Zone Safety for Highway Construction became
effective on February 24, 2010 and applies to workers engaged in construction,
utility work, maintenance, or repair activities on any area of a highway. It
covers practices including Flagger Safety, Runover/Backover Prevention,
Equipment Operator Safety, Illumination, Personal Protective Equipment, and
more.
WORK ZONE TRAFFIC MANAGEMENT
Managing traffic during construction is necessary to minimize traffic delays,
maintain motorist and worker safety, complete roadwork in a timely manner, and
maintain access for businesses and residents. Effective work zone traffic
management includes assessing work zone impacts and documenting strategies for
mitigating the impacts in a transportation management plan (TMP). The Work Zone
Safety and Mobility Rule requires TMPs for all Federal-aid highway projects.
(Source: http://ops.fhwa.dot.gov/wz/traffic_mgmt/index.htm)
-38-
WORK ZONE SAFETY AND MOBILITY RULE
The Work Zone Safety and Mobility Rule (Rule) was published on September 9, 2004
in the Federal Register. All state and local governments that receive
federal-aid funding were required to comply with the provisions of the rule no
later than October 12, 2007. The Rule updated and broadened the former
regulation at 23 CFR 630 Subpart J to address more of the current issues
affecting work zone safety and mobility. The changes to the regulation
encouraged the broader consideration of the safety and mobility impacts of work
zones across project development and the implementation of strategies that help
manage these impacts during project delivery.
(Source: http://ops.fhwa.dot.gov/wz/resources/final_rule.htm)
TEMPORARY TRAFFIC CONTROL
FHWA has published several documents and studies regarding temporary traffic
control in highway maintenance.
o Field Guide on Installation and Removal of Temporary Traffic Control
(TTC) for Safe Maintenance and Work Zone Operations (PDF 845) -
Provides field personnel with introductory guidance on proper setup
and operation of TTC zones, which improves the safety of those working
near traffic.
o Work Zone Safety: Temporary Traffic Control for Maintenance Operations
(PDF 283KB) - Provides seven fundamental principles for setting up TTC
Zones to protect workers and incident responders and allow for the
safe and efficient movement of road users.
o Work Zone Positive Protection Toolbox (PDF 961KB) - Describes various
types of positive protection devices and provides guidance on where
and how each is typically used. These devices may be used to help
protect road users from entering hazardous areas in work zones and to
shield workers and pedestrians.
(Source: http://ops.fhwa.dot.gov/wz/workersafety/index.htm)
The Temporary Traffic Control Devised Rule (Subpart K of 23 CFR 630) provides
guidance for devices, AND WE BELIEVE OUR PRODUCTS MEET THE REQUIREMENTS OF THE
RULE.
SELECTED FEDERAL REGULATIONS.
ss.630.1102 Purpose.
To decrease the likelihood of highway work zone fatalities and injuries to
workers and road users by establishing minimum requirements and providing
guidance for the use of positive protection devices between the work space and
motorized traffic, installation and maintenance of temporary traffic control
devices, and use of uniformed law enforcement officers during construction,
utility, and maintenance operations, and by requiring contract pay items to
ensure the availability of funds for these provisions. This subpart is
applicable to all Federal-aid highway projects, and its application is
encouraged on other highway projects as well.
ss.630.1110 Maintenance of temporary traffic control devices.
To provide for the continued effectiveness of temporary traffic control devices,
each agency shall develop and implement quality guidelines to help maintain the
quality and adequacy of the temporary traffic control devices for the duration
of the project. Agencies may choose to adopt existing quality guidelines such as
those developed by the American Traffic Safety Services Association (ATSSA) or
other state highway agencies. A level of inspection necessary to provide ongoing
compliance with the quality guidelines shall be provided.
TITLE TO PROPERTIES.
None.
We have an exclusive License and a non-exclusive Sub-License for certain
Intellectual Property associated with the Kone dispenser and the Kone design,
respectively.
-39-
BACKLOG OF ORDERS.
We currently have no orders for sales at this time.
GOVERNMENT CONTRACTS.
We have no government contracts.
COMPANY SPONSORED RESEARCH AND DEVELOPMENT.
We are not conducting any research, although our products and future products
may be in development.
NUMBER OF PERSONS EMPLOYED.
As of August 27, 2014, we have no employees and 2 independent consultants. Our
officers are spending part-time in this business - up to 10 hours per week.
B. DESCRIPTION OF PROPERTY
--------------------------
DESCRIPTION OF PROPERTIES/ASSETS/OIL AND GAS PROSPECTS/PATENTS
------- ------------------------- ------------------------
(a) Real Estate. None.
------- ------------------------- ------------------------
(b) Title to properties. None.
------- ------------------------- ------------------------
(c) Oil and Gas Properties. None.
------- ------------------------- ------------------------
(d) Patents. See below.
------- ------------------------- ------------------------
The Kone General is currently protected by U.S. [(Application Pending) Pub. No.:
US 2007/0183874 A1, Aug. 9, 2007] It is sublicensed by us from Superior Traffic
Controls, who holds the License from the Patent holder. Superior Traffic also
owns certain technology, the "IP", which include designs, drawings and specs
necessary to more efficiently manufacture and assemble the dispenser and such
"IP" is included in our Sublicense from Superior Traffic. The Quick Deploy
Spring Cone (US Patent No.:6,766,760 B2 July 27, 2004) are also protected by
International Patents, respectively.
The patent holder is under exclusive license agreement with a third party
licensee to manufacture and distribute the 28" MUTCD compliant spring cones.
They are currently trademarked under the name Quick Deploy Spring Cone. These
products are intended to be marketed and sold by Safe Lane Systems via a
separate distributor agreement with the licensee (www.viz-con.com, and
www.traffixdevices.com) at price points not to exceed their current wholesale
catalogue prices. This is not a license, but rather a distribution arrangement.
C. LEGAL PROCEEDINGS
--------------------
We anticipate that we (including any future subsidiaries) will from time to time
become subject to claims and legal proceedings arising in the ordinary course of
business. It is not feasible to predict the outcome of any such proceedings and
we cannot assure that their ultimate disposition will not have a materially
adverse effect on our business, financial condition, cash flows or results of
operations. As of this filing date, we are not a party to any pending legal
proceedings, nor are we aware of any civil proceeding or government authority
contemplating any legal proceeding.
D. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
-----------------------------------------------------------
MARKET INFORMATION
Currently there is no public trading market for our stock, and we have not
applied to have the common stock quoted for trading in any venue.
-40-
We might try to obtain a listing for our stock on an exchange in the future, but
cannot make any assurances that we will be approved for such listing, as the
exchanges have certain listing requirements that we would have to meet. Such
listing requirements at a minimum include, but are not limited to:
- Stockholders' equity of at least $4,000,000 and/or 2 years of
operating history and/or pre-tax income of at least $750,000 in our
last fiscal year or two of the last three fiscal years;
- Be able to meet certain distribution requirements; and
- Be able to meet certain market values of publicly held shares and
aggregate market values of the shares.
RULES GOVERNING LOW-PRICE STOCKS THAT MAY AFFECT OUR SHAREHOLDERS' ABILITY TO
RESELL SHARES OF OUR COMMON STOCK
We are a "penny stock" company, as our stock price is less than $5.00 per share.
If we are able to obtain an exchange listing for our stock, we cannot make an
assurance that we will be able to maintain a stock price greater than $5.00 per
share and if the share price was to fall to such prices, that we wouldn't be
subject to the Penny Stocks rules.
The penny stock rules require broker-dealers, prior to a transaction in a penny
stock not otherwise exempt from the rules, to make a special suitability
determination for the purchaser to receive the purchaser's written consent to
the transaction prior to sale, to deliver standardized risk disclosure documents
prepared by the SEC that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer must also
provide the customer with current bid and offer quotations for the penny stock.
In addition, the penny stock regulations require the broker-dealer to deliver,
prior to any transaction involving a penny stock, a disclosure schedule prepared
by the SEC relating to the penny stock market, unless the broker-dealer or the
transaction is otherwise exempt. A broker-dealer is also required to disclose
commissions payable to the broker-dealer and the registered representative and
current quotations for the securities. Finally, a broker-dealer is required to
send monthly statements disclosing recent price information with respect to the
penny stock held in a customer's account and information with respect to the
limited market in penny stocks.
HOLDERS
As of August 27, 2014, we have 1 stockholder of record of our common stock.
DIVIDENDS
As of the filing of this registration statement, we have not paid any dividends
to stockholders. There are no restrictions which would limit our ability to pay
dividends on common equity or that are likely to do so in the future. The
Colorado Revised Statutes, however, do prohibit us from declaring dividends
where, after giving effect to the distribution of the dividend; we would not be
able to pay our debts as they become due in the usual course of business; or our
total assets would be less than the sum of the total liabilities plus the amount
that would be needed to satisfy the rights of stockholders who have preferential
rights superior to those receiving the distribution.
E. FINANCIAL STATEMENTS
-----------------------
The following is a complete list of the financial statements filed as a part of
this Report.
o Audited financial statements of Safe Lane Systems, Inc. as of and for
the year ended December 31, 2013 and as of and for the period from
September 10, 2013 (inception) through December 31, 2013 (pages F-1
through F-9)
o Unaudited financial statements of Safe Lane Systems, Inc. as of and
for the three and six months ended June 30, 2014 and 2013 (pages F-1
through F-10)
-41-
SAFE LANE SYSTEMS, INC.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2013 AND FOR THE PERIOD
FROM SEPTEMBER 10, 2013 (INCEPTION) THROUGH DECEMBER 31, 2013
(AUDITED)
F-1
INDEX TO THE FINANCIAL STATEMENTS
SAFE LANE SYSTEMS, INC.
PAGE
----
Report of Independent Registered Public F-3
Accounting Firm
Balance Sheet F-4
Statement of Operations F-5
Statement of Cash Flows F-6
Statement of Shareholder's Equity (Deficit) F-7
Notes to Financial Statements F-8
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Safe Lanes Systems, Inc.:
We have audited the accompanying balance sheet of Safe Lanes Systems, Inc.,
("the Company") as of December 31, 2013 and the related statement of operations,
stockholders' equity (deficit) and cash flows for the year then ended, and for
the period from September 10, 2013 (inception) through December 31, 2013. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with 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, 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 statement referred to above present fairly, in all
material respects, the financial position of Safe Lane Systems, Inc., as of
December 31, 2013, and the results of its operations and its cash flows for the
year then ended, and for the period from September 10, 2013 (inception) through
December 31, 2013 in conformity with generally accepted accounting principles in
the United States of America.
The company is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audit included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the Company's internal control over financial
reporting. Accordingly, we express no such opinion.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's significant operating losses raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ B F Borgers CPA PC
Denver, CO
August 28, 2014
F-3
SAFE LANE SYSTEMS, INC.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31,
2013
-------------------
ASSETS
CURRENT ASSETS
Cash $ 1,000
-------------------
TOTAL CURRENT ASSETS 1,000
-------------------
TOTAL ASSETS $ 1,000
===================
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ -
TOTAL CURRENT LIABILITIES -
-------------------
STOCKHOLDERS' EQUITY (DEFICIT)
Class A preferred super majority voting stock, $0.0001 par value;
10,000,000 shares authorized, issued and outstanding 1,000
Common stock, $0.0001 par value;
500,000,000 shares authorized;
2,000,000 issued and outstanding 200
Additional paid-in capital 800
Accumulated (deficit) during Development Stage (1,000)
-------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) $ 1,000
-------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 1,000
===================
The accompanying notes are an integral part of these financial statements
F-4
SAFE LANE SYSTEMS, INC.
STATEMENT OF OPERATIONS
SEPTEMBER 10,
2013
(INCEPTION)
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
2013 2013
--------------- ----------------
REVENUE $ - $ -
--------------- ----------------
EXPENSES
General and Administrative - -
Stock based compensation expense 1,000 1,000
--------------- ----------------
TOTAL EXPENSES 1,000 1,000
--------------- ----------------
INCOME FROM OPERATIONS (1,000) (1,000)
OTHER INCOME (EXPENSE)
Interest - -
--------------- ----------------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (1,000) (1,000)
PROVISION FOR INCOME TAX - -
--------------- ----------------
NET INCOME (LOSS) $ (1,000) $ (1,000)
=============== ================
NET INCOME (LOSS) PER SHARE (BASIC AND DILUTED) $ (0.00) $ (0.00)
=============== ================
Weighted average number of common shares outstanding 2,000,000 2,000,000
The accompanying notes are an integral part of these financial statements
F-5
SAFE LANE SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
PERIOD SEPTEMBER 10, 2013
ENDED (INCEPTION)
DECEMBER 31, THROUGH DECEMBER 31,
2013 2013
---------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES $ (1,000) $ (1,000)
Net income
Adjustments to reconcile net income to
net cash provided by (used for)
operating activities:
Stock issued for services 1,000 1,000
Changes in operating assets and liabilities
- -
---------------- ------------------
NET CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES - -
---------------- ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -
---------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Seed Capital from Founder (in return for 2,000,000 shares) 1,000 1,000
---------------- ------------------
NET CASH PROVIDED BY (USED FOR) 1,000 1,000
FINANCING ACTIVITIES
---------------- ------------------
NET INCREASE (DECREASE) IN CASH 1,000 1,000
CASH AT BEGINNING OF PERIOD - -
---------------- ------------------
CASH AT END OF PERIOD $ 1,000 $ 1,000
================ ==================
The accompanying notes are an integral part of these financial statements
F-6
SAFE LANE SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT
Additional
Common Stock Preferred Stock Paid-in Accumulated Stockholders'
Shares Amount Shares Amount Capital Earnings Equity
------------ --------- ----------- ------------ ------------ ----------- ------------
Balances at September 10, 2013
(Inception) - $ - - $ - $ - $ $ -
September 10, 2013 2,000,000 shares
of common stock issued for $1,000 to
founder at 0.0005 per share
2,000,000 $ 200 $ 800 $ 1,000
September 10, 2013 10,000,000 shares
of class A preferred stock 10,000,000 $ 1,000 $ 1,000
Net loss for period (1,000) $ (1,000)
------------ --------- ----------- ------------ ------------ ------------ ------------
Balances at December 31, 2013 2,000,000 $ 200 10,000,000 $ 1,000 $ 800 $ (1,000) $ 1,000
============ ========= =========== ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements
F-7
SAFE LANE SYSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
--------------------------------------------------------------------------------
SAFE LANE SYSTEMS, INC. (the "Company"), was incorporated in the State of
Colorado on September 10, 2013. The Company was formed to engage in the sale of
traffic safety equipment. The Company may also engage in any other business
permitted by law, as designated by the Board of Directors of the Company.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
INCOME TAX
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 ("SFAS 109"). Under SFAS 109 deferred taxes are provided on a
liability method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss carry-forwards and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
FISCAL YEAR
The Company employs a fiscal year ending December 31.
NET INCOME (LOSS) PER SHARE
The net income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon the conversion of the Company's
preferred stock (if any), are not included in the computation if the effect
would be anti-dilutive and would increase the earnings or decrease loss per
share.
REVENUE RECOGNITION
The Company is currently in the Development stage and has no revenues. Revenue
will be recognized on an accrual basis as earned once operations commence.
F-8
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Upon formation, the Company sold the founder 2,000,000 shares of $0.0001 par
value common stock for $1,000 cash. Also upon formation, the Company paid the
founder stock based compensation for services rendered of 10,000,000 shares of
$0.0001 par value class A preferred super majority voting stock. These preferred
shares have a stated value of par value of $0.0001. The holder of the Class
Stock shall have the right to vote on any matter with holders of Common Stock
and may vote as required on any action, which Colorado law provides may or must
be approved by vote or consent of the holders of the specific series of voting
preferred shares and the holders of common shares. The Record Holders of the
Class "A" Preferred Shares shall have that number of votes equal to that number
of common shares which is not less than 60% of the vote required to approve any
action, which Colorado law provides may or must be approved by vote or consent
of the holders of other series of voting preferred shares and the holders of
common shares or the holders of other securities entitled to vote, if any
FINANCIAL INSTRUMENTS
The carrying value of the Company's financial instruments, including cash and
cash equivalents, as reported in the accompanying balance sheet, are stated at
fair value.
GOING CONCERN AND MANAGEMENTS' PLANS
As shown in the accompanying financial statements for the Year ended December
31, 2013, the Company has a limited operating history.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, however, the above conditions raise
substantial doubt about the Company's ability to do so. The financial statements
do not include any adjustment to reflect the possible future effect on the
recoverability and classification of assets or the amounts and classifications
of liabilities that may result should the Company be unable to continue as a
going concern.
The Company has plans in place to remove this threat through the issuance of
notes payable and/or a private common stock offering. However, the
Company will need to generate more than the expenses of the Offering in order to
have enough capital to execute its business plan.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company has reviewed all recently issued but not yet effective accounting
pronouncements and does not believe the future adoption of any such
pronouncements may be expected to cause a material impact on its financial
condition or results of operations.
SUBSEQUENT EVENTS
The Company evaluates events and transactions after the balance sheet date but
before the financial statements are issued. Through the date of this filing, the
Company has received an additional $150,000 towards funding of its note payable
and currently has a balance outstanding of $160,000.
Subsequent to year end the Company obtained a sublicense and license agreement
that gave them the exclusive rights to a patented product, the "Kone General".
In return for this product the Company issued 22,768,273 shares of class B
preferred nonvoting convertible shares to a trust for the original intellectual
property and patent holders.
F-9
SAFE LANE SYSTEMS, INC.
UNAUDITED FINANCIAL STATEMENTS OF SAFE LANE SYSTEMS, INC.
AS OF AND FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013
F-1
INDEX TO THE FINANCIAL STATEMENTS
SAFE LANE SYSTEMS, INC.
PAGE
----
Balance Sheet F-3
Statement of Operations F-4
Statement of Cash Flows F-5
Statement of Shareholder's Equity (Deficit) F-6
Notes to Financial Statements F-7
F-2
SAFE LANE SYSTEMS, INC.
BALANCE SHEET
(UNAUDITED) (AUDITED)
JUNE 30, DECEMBER 31,
2014 2013
-------------- -------------------
ASSETS
CURRENT ASSETS
Cash [NOTE 1] $ 3,684 $ 1,000
-------------- -------------------
TOTAL CURRENT ASSETS 3,684 1,000
-------------- -------------------
Fixed assets
Intangible asset patent sublicense, net [NOTE 1] 2,143 -
-------------- -------------------
Total fixed assets 2,143 -
TOTAL ASSETS $ 5,827 $ 1,000
============== ===================
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities [NOTE 1] $ 16,274 $ -
Unsecured, short-term notes payable [NOTE 1] 10,000 -
-------------- -------------------
TOTAL CURRENT LIABILITIES $ 26,274 $ -
============== ===================
STOCKHOLDERS' EQUITY (DEFICIT)
Class A supervoting preferred stock, $0.0001 par value; [NOTE 1]
10,000,000 shares authorized, issued and outstanding 1,000 1,000
Class B nonvoting preferred stock, $0.0001 par value; [NOTE 1]
30,000,000 shares authorized; 22,768,273 issued and outstanding 2,277
Common stock, $0.0001 par value; [NOTE 1]
500,000,000 shares authorized;
2,000,000 issued and outstanding 200 200
Additional paid-in capital 800 800
Accumulated earnings (Deficit) (24,724) (1,000)
-------------- -------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (20,447) 1,000
-------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 5,827 $ 1,000
============== ===================
The accompanying notes are an integral part of these financial statements
F-3
SAFE LANE SYSTEMS, INC.
STATEMENT OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED
(UNAUDITED) (UNAUDITED)
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2014 2013 2014 2013
------------------------ ---------------------------
REVENUE $ - $ - $ - $ -
------------------------ ---------------------------
EXPENSES
Professional and contractor expense 21,600 - 21,600 -
Stock based compensation expense - - - -
General and Administrative 2,050 - 2,050 -
------------------------ ---------------------------
TOTAL EXPENSES 23,650 - 23,650 -
------------------------ ---------------------------
(LOSS) FROM OPERATIONS (23,650) - (23,650) -
OTHER INCOME (EXPENSE)
Interest (74) - (74) -
------------------------ ---------------------------
(LOSS) BEFORE PROVISION FOR INCOME TAXES (23,724) - (23,724) -
PROVISION FOR INCOME TAX - - - -
------------------------ ---------------------------
NET INCOME (LOSS) (23,724) - $ (23,724) $ -
======================== ===========================
NET INCOME (LOSS) PER SHARE (BASIC AND DILUTED) $ (0.01) - $ (0.01) $ -
======================== ===========================
Weighted average number of common shares outstanding 2,000,000 - 2,000,000 -
The accompanying notes are an integral part of these financial statements
F-4
SAFE LANE SYSTEMS, INC.
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED
(UNAUDITED) (UNAUDITED)
JUNE 30, 2014 JUNE 30, 2013
------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ (23,724) $ -
Adjustments to reconcile net income to
net cash provided by (used for)
operating activities:
Amortization 134 -
Stock based compensation - -
Changes in operating assets and liabilities
Accounts payable 16,200 -
------------------------------------
Other accrued liabilities 74
------------------------------------
NET CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES $ (7,316) -
------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -
------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Seed capital from founder (for 2,000,000 common shares)
Cash raised by issuance of short term notes payable at 4% 10,000 -
------------------------------------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES 10,000 -
------------------------------------
NET INCREASE (DECREASE) IN CASH 2,684 -
CASH AT BEGINNING OF PERIOD 1,000 -
------------------------------------
CASH AT END OF PERIOD $ 3,684 $ -
====================================
The accompanying notes are an integral part of these financial statements
F-5
SAFE LANE SYSTEMS, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT (UNAUDITED)
Preferred Stock Preferred Stock Additional
Common Stock Class A Class B Paid-in Accumulated Stockholders'
Shares Amount Shares Amount Shares Amount Capital Earnings Equity
----------- ------------------ ----------- ------ --------- ------ --------- -------------- -------------
Balances at
September 10,
2013 (Inception) - $ - $ - $ -
September 10,
2013 2,000,000
shares of
common stock
issued for
$1,000 to
founder at
$.0001 per share 2,000,000 $ 200 $ 800 $ 1,000
September 10,
2013 10,000,000
shares of Class
A, $0.0001 par
value preferred
stock to
founder for
services 10,000,000 $1,000 $ 1,000
Net loss for
the period (1,000) (1,000)
Balance at
December 31,
2013 2,000,000 $ 200 10,000,000 $1,000 $ 800 $ (1,000) $ 1,000
=========== ================== =========== ====== ========== ====== ========= =========== ===========
May 1, 2014
22,768,273
shares of
Class "B"
$0.0001 par
value preferred
stock issued
for sub-license
agreement
valued at $2,277 22,768,273 $2,277 $ 2,277
=========== ================== =========== ====== ========== ====== ========= =========== ===========
Net loss for
the period (23,724) $ (23,724)
=========== ================== =========== ====== ========== ====== ========= =========== ===========
Balance at
June 30, 2014 2,000,000 $ 200 10,000,000 $1,000 22,768,273 $2,277 $ 800 $(24,724) $ (20,447)
=========== ================== =========== ====== ========== ====== ========= =========== ===========
The accompanying notes are an integral part of these financial statements
F-6
SAFE LANE SYSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2014
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
--------------------------------------------------------------------------------
SAFE LANE SYSTEMS, INC. (the "Company"), was incorporated in the State of
Colorado on September 10, 2013. The Company was formed to engage in the sale of
traffic safety equipment. The Company may also engage in any other business
permitted by law, as designated by the Board of Directors of the Company. During
the second quarter of 2014 the Company secured a perpetual license to all of the
intellectual property of Superior Traffic Control in exchange for the issuance
of nonvoting convertible stock in the company.
Basis of Presentation - The accompanying financial statements have been prepared
in accordance with Generally Accepted Accounting Principles in the United States
of America ("GAAP") and pursuant to the rules and regulations of the Securities
and Exchange Commission for interim financial information and the instructions
to Form 10-Q and Article 10 of Regulation S-X. The results of operations for the
quarter June 30, 2014 shown in this report are not necessarily indicative of
results for the full year ending June 30, 2014. In the opinion of the Company's
management, the information contained herein reflects all adjustments necessary
for a fair presentation of the Company's results of operations, financial
position and cash flows. All such adjustments are of a normal, recurring nature.
Reclassifications - Certain amounts in the prior period's financial statements
have been reclassified to conform to the current quarter's presentation and to
correct prior period errors.
CASH AND CASH EQUIVALENTS
Cash Flows - During the six months ending June 30, 2014, the Company primarily
utilized cash proceeds from an unsecured short term loan to fund its operations.
Cash flows provided by operations for the period ended June 30, 2014 and 2013
were $7,316 and $0, respectively The Company considers all highly liquid
investments with an original maturity of three months or less as cash
equivalents. As of June 30, 2014, the Company had cash and cash equivalents of
$3,684 as compared to cash and cash equivalents of $1,000 as of December 31,
2013.
IMPAIRMENT OF LONG-LIFE ASSETS
In accordance with ASC Topic 360, the Company reviews its long-lived assets,
including property, plant and equipment, for impairment whenever events or
changes in circumstances indicate that the carrying amounts of the assets may
not be fully recoverable. If the total of the expected undiscounted future net
cash flows is less than the carrying amount of the asset, a loss is recognized
for the difference between the fair value and carrying amount of the asset. No
impairment was deemed necessary as of June 30, 2014 and December 31, 2013.
INTANGIBLE ASSETS, PATENTS
During the second quarter of 2015 fiscal year the Company acquired the exclusive
license rights and intellectual property for the patent of the Kone General
device which expires July 2022. As payment for the license rights the company
agreed to issue 22,768,273 shares of Class "B" Preferred Convertible Non-Voting
shares to the shareholders of the original license holders. The Company accounts
for its patent sub-license in accordance with ASC 350-30-30 "Intangibles -
goodwill and other" and 805-50-30 and 805-50-15 related to "Business
Combinations" by recognizing the fair value to the amount paid by the company
for the asset at the time of purchase. Since Safe Lanes Systems has a limited
operating history management determined to use par value as the value recognized
for the transaction. Since the patent has a predetermined, finite life span, the
cost of the asset will be recognized on a straight line basis over the remaining
F-7
life of the patent. In addition each period the Company will evaluate the
intangible asset for impairment. As of June 30, 2014 no impairment was deemed
necessary.
June 30, December 31,
2014 2013
-------------- ---------------
Patents $ 2,527 $ -
Less: accumulated amortization (149) -
-------------- ---------------
$ 2,378 $ -
============== ===============
Depreciation expense for the six months ended June 30, 2014 and 2013 was $149
and $0 respectively.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities are comprised of the following at June
30, 2014, accounts payable of contract and professional fees payable of $16,200
and accrued liabilities of $74 and $0 at December 31, 2013.
UNSECURED, SHORT-TERM NOTES PAYABLE
The Company obtained an unsecured, short-term note of $250,000 at 4% from the
original holder of the license to the Kone-General patent in the second quarter
of 2014. As of June 30, 2014 the Company had received funding of $10,000 on the
note payable and had recognized $74 in accrued interest expense.
STOCKHOLDERS' EQUITY
At June 30, 2014 , the Company was authorized to issue 450,000,000 shares of
common stock, $0.0001 par value per share. In addition, 50,000,000 shares of
$.0001 par value preferred stock were issued. As of June 30, 2014, 10,000,000
shares of Class A preferred super majority voting stock, $.0001 par value and
30,000,000 shares of Class "B" Preferred Convertible Non-Voting shares, $.0001
par value were authorized. All common stock shares have full dividend rights.
However, it is not anticipated that the Company will be declaring distributions
in the foreseeable future.
Upon formation, the Company sold the founder 2,000,000 shares of $0.0001 par
value common stock for $1,000 cash. Also upon formation, the Company paid the
founder stock based compensation for services rendered of 10,000,000 shares of
$0.0001 par value Class "A" Preferred Super Majority Voting stock. These
preferred shares have a stated value of par value of $0.0001, and were valued at
$1,000. The holder of the Class Stock shall have the right to vote on any matter
with holders of Common Stock and may vote as required on any action, which
Colorado law provides may or must be approved by vote or consent of the holders
of the specific series of voting preferred shares and the holders of common
shares. The Record Holders of the Class "A" Preferred Shares shall have that
number of votes equal to that number of common shares which is not less than 60%
of the vote required to approve any action, which Colorado law provides may or
must be approved by vote or consent of the holders of other series of voting
preferred shares and the holders of common shares or the holders of other
securities entitled to vote, if any
Upon execution of a patent sublicense agreement the Company issued 22,768,273
shares of its Class "B" Preferred Convertible Non-Voting stock to a trustee on
behalf of shareholders of the original license agreement. These shares will
convert into regular common stock upon the company registering the underlying
shares with the SEC and listing of the shares on a recognized exchange.
F-8
Professional and contractor expenses are comprised of the following in the three
and six months ended June 30, 2014:
June 30, 2014
----------------------------
Contract management fees $16,200
Other professional fees $5,400
----------------------------
$21,600
============================
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
INCOME TAX
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 ("SFAS 109"). Under SFAS 109 deferred taxes are provided on a
liability method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss carry-forwards and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
FISCAL YEAR
The Company employs a fiscal year ending December 31.
NET INCOME (LOSS) PER SHARE
The net income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon the conversion of the Company's
preferred stock (if any), are not included in the computation if the effect
would be anti-dilutive and would increase the earnings or decrease loss per
share.
REVENUE RECOGNITION
The Company currently has no revenues. Revenue will be recognized on an accrual
basis as earned once operations commence.
FINANCIAL INSTRUMENTS
The carrying value of the Company's financial instruments, including cash and
cash equivalents, as reported in the accompanying balance sheet, are stated at
fair value.
GOING CONCERN AND MANAGEMENTS' PLANS
As shown in the accompanying financial statements for the period ended June 30,
2014, the Company has a limited operating history.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, however, the above conditions raise
substantial doubt about the Company's ability to do so. The financial statements
do not include any adjustment to reflect the possible future effect on the
F-9
recoverability and classification of assets or the amounts and classifications
of liabilities that may result should the Company be unable to continue as a
going concern.
The Company has plans in place to remove this threat through the issuance of
notes payable and/or a private common stock offering. However, the Company will
need to generate more than the expenses of the Offering in order to have enough
capital to execute its business plan.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company has reviewed all recently issued but not yet effective accounting
pronouncements and does not believe the future adoption of any such
pronouncements may be expected to cause a material impact on its financial
condition or results of operations. In June 2014, the FASB issued ASU 2014-10,
"Development Stage Entities (Topic 915)". The guidance eliminates the definition
of a development stage entity thereby removing the incremental financial
reporting requirements from U.S. GAAP for development stage entities, primarily
presentation of inception to date financial statements. The provision of the
amendments are effective for the Company's calendar year 2014, however, early
adoption is permitted and, accordingly, we have elected to implement the
guidance in our second quarter 2014 financial statements.
RELATED PARTY TRANSACTIONS
The Company pays its Chief Executive Officer, Paul Dickman, through Mr Dickman's
consulting company. For the year ended December 31, 2013 and quarter ended June
30, 2014, management fees were $0 and $16,200 respectively.
SUBSEQUENT EVENTS
The Company evaluates events and transactions after the balance sheet date but
before the financial statements are issued. Through the date of this filing, the
Company has received an additional $150,000 towards funding of its note payable
and currently has a balance outstanding of $160,000.
Subsequent to year end the company executed an employment agreement with an
individual to fulfill the role of Marketing VP. Part of the compensation package
agreed upon was warrants exercisable at $0.20. Total potential compensation was
three million (3,000,000) warrants with one million (1,000,000) warrants being
vested upon employment agreement being executed and the other two million
(2,000,000) warrants being vested upon the company reaching certain milestones.
F-10
F. SELECTED FINANCIAL INFORMATION
---------------------------------
Not applicable.
G. SUPPLEMENTARY FINANCIAL INFORMATION
--------------------------------------
Not applicable.
H. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
--------------------------------------------------------------------------------
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR AUDITED
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN. FORWARD-LOOKING
STATEMENTS ARE STATEMENTS NOT BASED ON HISTORICAL INFORMATION AND WHICH RELATE
TO FUTURE OPERATIONS, STRATEGIES, FINANCIAL RESULTS OR OTHER DEVELOPMENTS.
FORWARD LOOKING STATEMENTS ARE NECESSARILY BASED UPON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND OUR CONTROL AND MANY
OF WHICH, WITH RESPECT TO FUTURE BUSINESS DECISIONS, ARE SUBJECT TO CHANGE.
THESE UNCERTAINTIES AND CONTINGENCIES CAN AFFECT ACTUAL RESULTS AND COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD LOOKING
STATEMENTS MADE BY, OR ON OUR BEHALF. WE DISCLAIM ANY OBLIGATION TO UPDATE
FORWARD-LOOKING STATEMENTS.
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S REPORT ON THE COMPANY'S
FINANCIAL STATEMENTS AS OF DECEMBER 31, 2013, AND FOR EACH OF THE YEARS IN THE
TWO-YEAR PERIOD THEN ENDED, INCLUDES A "GOING CONCERN" EXPLANATORY PARAGRAPH,
THAT DESCRIBES SUBSTANTIAL DOUBT ABOUT THE COMPANY'S ABILITY TO CONTINUE AS A
GOING CONCERN.
PLAN OF OPERATIONS
We had no operations prior to September 2013 and we did not have any revenues
during the years ended December 31, 2013. We did not recognize any income in the
years ended December 31, 2013. We have minimal capital, moderate cash and only
our intangible assets which consist of our business plan, relationships and
contacts and sublicense agreement to manufacture and market the Kone General and
Spring Cone. We are illiquid and need cash infusions from investors or
shareholders to provide capital, or loans from any sources, none of which have
been arranged nor assured.
Our plan of operations is as follows:
1st Quarter 2015
We intend to utilize approximately 100,000 in capital to invest in
prototypes pre-production, travel and engagement, deposits and initial
marketing. Our important goals in this time period is to engage in a
manufacturing agreements, and to commence marketing efforts.
Our milestone in this time period will be whether we enter into a
manufacturing agreement. We will need to raise additional debt or equity capital
for funding during this period.
2nd Quarter 2015
We intend to commence manufacturing on limited scale and continue
marketing, upon established of a firm deliver date. We believe we will spend
about $100,000 on marketing and general and administrative in this quarter. We
will need to arrange funding for operations and for the product manufacturing
through either debt or equity capital, probable through a private placement, but
there is no committed source a this time.
Our milestones will be whether we can achieve (1) limited manufacturing
with a firm delivery date, and (2) whether we can achieve sales. If we are
unable to achieve either or both of such milestones we will have to extend into
the following quarter.
-42-
3rd Quarter 2015
Increased sales emphasis will dominate our business assuming that the
manufacturing relationship has been proven. We believe we will spend $150,000 on
marketing and general and administrative. Our dominant milestone is the
achievement of significant sales increases over prior quarter.
We will need to achieve a private placement of debt or equity to continue
our business efforts move of which is currently committed. If we have orders we
hope to partially finance manufacturing with some type or accounts receivable
financing, which is not yet arranged and of which there can be no assurance.
4th Quarter 2015
Assuming any success in prior quarters with sales and deliveries, our
emphasis in this quarter will again be to increase sales. We believe we will use
approximately $250,000 on marketing and general and administrative. We will
increase sales staff in expanded nationwide marketing efforts, with resulting
expense increases.
Our dominant milestones will be sales and deliveries from sales, and we
intend to focus on continuing to build sales.
We will need to seek private placements of debt or equity capital in order
to fund operations, and there is no commitment to fund any amounts at this time.
Our Budget for operations in the next year is as follows:
--------------------------------------------------------------- -------------
Working capital $300,000
Marketing and sales 250,000
General and administrative expenses 275,000
Audit and legal fees 45,000
Offering commissions and expenses 130,000
--------------------------------------------------------------- -------------
Total expenses $1,000,000
--------------------------------------------------------------- -------------
The Company may change any or all of the budget categories in the execution of
its business model. None of the line items are to be considered fixed or
unchangeable. The Company may need substantial additional capital to support its
budget.
We intend to conduct a private offering raise up to one million dollars
($1,000,000) in the next twelve months with a structure not yet determined as
debt or equity. As of August 27, 2014, the Company had sold no shares. We cannot
give any assurances that we will be able to raise the full $1,000,000 to fund
the budget. Further, we will need to raise additional funds to support not only
our expected budget, but our continued operations. We cannot make any assurances
that we will be able to raise such funds or whether we would be able to raise
such funds with terms that are favorable to us.
Our independent registered public accounting firm's report on our financial
statements as of December 31, 2014, includes a "going concern" explanatory
paragraph that describes substantial doubt about our ability to continue as a
going concern.
OFF BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements.
-43-
Our Budget for operations in next year is as follows:
Working capital $300,000
Marketing and sales 250,000
General and administrative expenses 275,000
Audit and legal fees 45,000
Offering commissions and expenses 130,000
-------------
Total expenses $1,000,000
We will need substantial additional capital to support our proposed future
traffic cone operations. We have NO revenues. We have NO committed source for
any funds as of date here. No representation is made that any funds will be
available when needed. In the event funds cannot be raised when needed, we may
not be able to carry out our business plan, may never achieve sales or royalty
income, and could fail in business as a result of these uncertainties. If our
initial prospect appears uneconomical after evaluation we will seek other
prospects it the area to acquire or farm into.
We many also consider a private placement or public offering of our common
stock, if the market conditions allow at the time. No price, schedule or terms
for such an offering has been determined at this time. We expect to expend funds
on a quarterly basis, as follows:
3rd Quarter 2014 $50,000
4th Quarter 2014 150,000
1st Quarter 2015 350,000
2nd Quarter 2015 450,000
------------
TOTAL $1,000,000
RESULTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2013 COMPARED TO THE YEAR ENDED DECEMBER 31,
2012
During the year ended December 31, 2013 and 2012, we did not have revenues or
expenses due to our lack of operations, as explained above.
FOR THE SIX MONTHS ENDED JUNE 30, 2014 COMPARED TO THE SIX MONTH ENDED JUNE 30,
2013
During the six months ended June 30, 2014 and 2013, the Company did not
recognize any revenues from it operational activities. Management does not
anticipate recognizing any revenues until the fourth quarter of 2014.
During the six months ended June 30, 2014, the Company incurred operational
expenses of $23,650. During the six months ended June 30, 2013, the Company
incurred operational expenses of $0 as the Company was not in existence in the
six months ended June 30, 2013.
During the six months ended June 30, 2014, the Company recognized a net loss of
$23,724 compared to a net loss of $0 during the six months ended June 30, 2013.
LIQUIDITY
DECEMBER 31, 2013
We had $3,684 cash at December 31, 2013. Our only other asset at June 30, 2014
was the intangible sublicense agreement to Manufacture and Market the Kone
General and Spring Cone. We will be reliant upon shareholder loans or private
placements of our equity and debt to fund any kind operations. We have secured a
-44-
commitment to fund $250,000 in debt from the original license holder, Superior
Traffic Control's Inc. to fund our initial operations. As of the date of this
filing they have funded $160,000 of that obligation.
JUNE 30, 2014
At June 30, 2014, the Company had total current assets of $3,684, consisting of
$3,684 in cash. At June 30, 2014, total current liabilities were $26,277,
consisting of $16,274 in accounts payable and accrued expenses, and $10,000 due
to our note holders. At June 30, 2014, the Company had working capital deficit
of $22,590.
During the six months ended June 30, 2014, the Company used $7,316 in funds in
it operational activities. During the six months ended June 30, 2014, the
Company recognized a net loss of $23,724 which was adjusted for $134 in
amortization expense. During the six months ended June 30, 2013, the Company
used $0 in its operations as it had not begun operations at that time.
During the six months ended June 30, 2014, the Company generated $10,000 in its
financing activities, from payment on loan obligation from Superior Traffic
Controls, discussed above.
On April 1, 2014 the Company entered into a note payable with Superior Traffic
Controls, Inc. The Note Payable, with a face value of $250,000, bears interest
at 4% per annum and matures on March 31, 2015. At June 30, 2014 and December 31,
2013, the convertible advance was recorded at $10,000 and $0, respectively.
Accrued interest related to this advance was $74 and $0 at June 30, 2014 and
December 31, 2013, respectively, and is included in accounts payable and accrued
expenses on the balance sheet.
SHORT TERM.
On a short-term basis, we do not generate any revenue or revenues sufficient to
cover operations. Based on prior history, we will continue to have insufficient
revenue to satisfy current and recurring liabilities as it seeks explore.
No commitments to provide additional funds have been made by our management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to us to allow it to cover our expenses as they may be
incurred.
CAPITAL RESOURCES
We have only common stock and notes payable as our capital resource.
NEED FOR ADDITIONAL FINANCING
We do not have capital sufficient to meet our cash needs. We will have to seek
loans or equity placements to cover such cash needs. Once full business
operations commences, our needs for additional financing is likely to increase
substantially.
Within the next twelve months we will need to secure an additional $1,000,000 in
financing to implement our plan of operations. After the twelve month period we
will need to secure an additional $1,500,000 in financing to fully implement our
plan of operations. If we are unable to secure required funding, it may be
unable to continue operations.
No commitments, excluding the $250,000 note payable, have been made to provide
additional by our management or other stockholders. Accordingly, there can be no
assurance that any additional funds will be available to us to allow it to cover
our expenses as they may be incurred.
MATERIAL AGREEMENTS
We have a License (Master IP License) which requires us to commence Sales and
Manufacture under the License by January 1, 2016. Similarly our Sub License (non
-45-
exclusive) provides that we must commence sales/manufacturing by January 1,
2016. We have no assurance that we can achieve such requirements given our
limited capital and staff.
CRITICAL ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
IMPAIRMENT OF LONG-LIFE ASSETS
In accordance with ASC Topic 360, the Company reviews its long-lived assets,
including property, plant and equipment, for impairment whenever events or
changes in circumstances indicate that the carrying amounts of the assets may
not be fully recoverable. If the total of the expected undiscounted future net
cash flows is less than the carrying amount of the asset, a loss is recognized
for the difference between the fair value and carrying amount of the asset.
INTANGIBLE ASSETS, PATENTS
The Company accounts for its patent sub-license in accordance with ASC 350-30-30
"Intangibles - goodwill and other" and 805-50-30 and 805-50-15 related to
"Business Combinations" by recognizing the fair value to the amount paid by the
company for the asset at the time of purchase. Since Safe Lanes Systems has a
limited operating history management determined to use par value as the value
recognized for the transaction. Since the patent has a predetermined, finite
life span, the cost of the asset will be recognized on a straight line basis
over the remaining life of the patent. In addition each period the Company will
evaluate the intangible asset for impairment.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
INCOME TAX
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 ("SFAS 109"). Under SFAS 109 deferred taxes are provided on a
liability method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss carry-forwards and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
FISCAL YEAR
The Company employs a fiscal year ending December 31.
NET INCOME (LOSS) PER SHARE
The net income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon the conversion of the Company's
preferred stock (if any), are not included in the computation if the effect
would be anti-dilutive and would increase the earnings or decrease loss per
share.
-46-
REVENUE RECOGNITION
The Company is currently in the Development stage and has no revenues. Revenue
will be recognized on an accrual basis as earned once operations commence.
FINANCIAL INSTRUMENTS
The carrying value of the Company's financial instruments, including cash and
cash equivalents, as reported in the accompanying balance sheet, are stated at
fair value.
STOCK-BASED COMPENSATION
The Company adopted the provisions of and accounts for stock-based compensation
using an estimate of value in accordance with the fair value method. Under the
fair value recognition provisions of this statement, stock-based compensation
cost is measured at the grant date based on the fair value of the award and is
recognized as expense on a straight-line basis over the requisite service
period, which generally is the vesting period. The Company elected the
modified-prospective method, under which prior periods are not revised for
comparative purposes. The valuation method applies to new grants and to grants
that were outstanding as of the effective date and are subsequently modified.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of accounts payable is considered to be representative of
respective fair values because of the short-term nature of these financial
instruments.
I. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES
--------------------------------------------------------------------------------
Not applicable.
J. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------
Not applicable.
K. DIRECTORS AND EXECUTIVE OFFICERS
-----------------------------------
NAME AGE POSITION TERM
--------------- --- ------------------------------------ ----------------
Paul D. Dickman 34 Chief Executive Officer, President,
Chief Financial Officer, Annual
Director and Chairman
Michael Zalle 39 Vice-President of Marketing Annual
Our officers are elected by the board of directors at the first meeting after
each annual meeting of our stockholders and hold office until their successors
are duly elected and qualified under our bylaws.
The directors named above will serve until the next annual meeting of our
stockholders. Thereafter, directors will be elected for one-year terms at the
annual stockholders' meeting. Officers will hold their positions at the pleasure
of the board of directors absent any employment agreement. There is no
arrangement or understanding between our directors and officers and any other
person pursuant to which any director or officer was or is to be selected as a
director or officer.
-47-
BIOGRAPHICAL INFORMATION
PAUL D. DICKMAN, CHIEF EXECUTIVE OFFICER, PRESIDENT, CHIEF FINANCIAL OFFICER
DIRECTOR AND CHAIRMAN OF THE BOARD SINCE INCEPTION (SEPTEMBER 10, 2013)
Paul D. Dickman, age 34, started his career in retail sales and then developed
his expertise in the accounting profession through his work as an auditor and
consultant with several large, regional public accounting firms. He started his
career with Cherry Bekaert & Holland in Greenville, SC, where he was employee
from 2003 to 2005. He then worked for Hein and Associates, LLP from 2005 through
2008. From 2008 to 2010 he worked for the commercial real estate investment
firm, Northstar Commercial Partners, LLC as a property/project manager. Mr.
Dickman, started his own professional service firm in 2010 with a focus on
assisting small private companies raise capital and manage the transition from
being privately owned to publicly owned and traded.
Paul Dickman graduated with a Bachelor of Science degree in Financial Management
from Bob Jones University before completing his CPA certification in 2005 in
South Carolina. In addition to studying finance and accounting, he received a
minor in Communications and was highly involved in scholastic debate throughout
his educational years.
Mr. Dickman has served as the Chief Financial Officer for the publicly traded
company Chineseinvestors.com, Inc. from 2009 through 2014, during which time
they raised over $3,000,000 in equity investment. In addition, Mr. Dickman is a
partial owner of a railroad track construction company and several other
businesses where he has held various managerial rolls.
MICHAEL ZALLE, VICE-PRESIDENT OF MARKETING SINCE INCEPTION (SEPTEMBER 10, 2013)
Mr. Zalle, age 39, has been Vice President Sales and Marketing / Board of
Directors Member for Squire Tech Solutions, LLC from 2008 to Present. Squire
Tech Solutions provides managed satellite networks and remote mobility for
critical commercial and public safety requirements. From 2002-2008 he was a
Director of Sales with IP Access International of San Juan Capistrano,
California. Mr. Zalle attended San Francisco State University/Cal State Long
Beach studying Business Management (1993-1995). He attended Long Beach State
University (1997-1999), Business Management Undergraduate Studies. He then
attended Pepperdine University, The George L. Graziadio School of Business and
Management (1999-2000).
Michael Zalle has 20+ years of sales, marketing, and business development
management in demanding sales environments.
OTHER ADVISORS AND CONSULTANTS
ALAN SAULSBURY
Mr. Saulsbury was a fourth generation fire fighter, and has been involved with
the fire service since early childhood; his career has spanned over 50 years in
many facets of the industry. After attending Oklahoma State University School of
Fire Protection, he joined Improved Risk Mutual Insurance as a fire protection
engineer for 9 years. He was a firefighter in Stillwater, Oklahoma and is
presently a 'life member' of the Homer, N.Y. Fire Department.
He has held an active involvement for over 35 years with the Fire Apparatus
Manufacturers' Association (FAMA), served as Technical Committee chair person,
President and Board Member. For over 30 years, has been taken an extremely
active role in the NFPA #1901 apparatus committee and chaired and developed the
NPFA #1911 Standard for In-Service Fire Apparatus Testing and Maintenance and
presently attends all meetings and participates in task committee activities on
several standards. He has a working knowledge of NFPA #1901, #1906, #414, #1911,
and #1912 standards.
Presently, Mr. Saulsbury is President of Fire Apparatus Consulting Services in
Homer, New York. The company specializes in professional consulting services for
several fire apparatus and fire equipment manufacturers in North America.
-48-
CONFLICTS OF INTEREST - GENERAL.
Our directors and officers are, or may become, in their individual capacities,
officers, directors, controlling shareholder and/or partners of other entities
engaged in a variety of businesses. Thus, there exist potential conflicts of
interest including, among other things, time, efforts and corporation
opportunity, involved in participation with such other business entities. While
the officers and directors of our business are engaged full time in our business
activities, the amount of time they devote to other business may be up to
approximately 30 hours per week.
CONFLICTS OF INTEREST - CORPORATE OPPORTUNITIES
Certain of our officers and directors may be directors and/or principal
stockholders of other companies and, therefore, could face conflicts of interest
with respect to potential acquisitions. In addition, our officers and directors
may in the future participate in business ventures, which could be deemed to
compete directly with us. Additional conflicts of interest and non-arms length
transactions may also arise in the future in the event our officers or directors
are involved in the management of any firm with which we transact business. Our
Board of Directors has adopted a policy that we will not seek a merger with, or
acquisition of, any entity in which management serve as officers or directors,
or in which they or their family members own or hold a controlling ownership
interest. Although the Board of Directors could elect to change this policy, the
Board of Directors has no present intention to do so. In addition, if we and
other companies with which our officers and directors are affiliated both desire
to take advantage of a potential business opportunity, then the Board of
Directors has agreed that said opportunity should be available to each such
company in the order in which such companies registered or became current in the
filing of annual reports under the Exchange Act subsequent to January 1, 2013.
Our officers and directors may actively negotiate or otherwise consent to the
purchase of a portion of their common stock as a condition to, or in connection
with, a proposed merger or acquisition transaction. It is anticipated that a
substantial premium over the initial cost of such shares may be paid by the
purchaser in conjunction with any sale of shares by our officers and directors
which is made as a condition to, or in connection with, a proposed merger or
acquisition transaction. The fact that a substantial premium may be paid to our
officers and directors to acquire their shares creates a potential conflict of
interest for them in satisfying their fiduciary duties to us and our other
stockholders. Even though such a sale could result in a substantial profit to
them, they would be legally required to make the decision based upon the best
interests of us and our other stockholders, rather than their own personal
pecuniary benefit.
STAFFING
As of August 27, 2014, we have no employees and 2 independent consultants. Our
officers are now spending part-time in this business - up to 10 hours per week.
This lean staffing is possible in this phase because of our determination to
outsource most operating functions. Our staff positions will be filled as budget
allows and business demands require, and the positions may be altered in
response to business needs.
-49-
L. EXECUTIVE AND DIRECTORS COMPENSATION
---------------------------------------
COMPENSATION
The following table sets forth certain information concerning compensation of
the President and our most highly compensated executive officers for the fiscal
year ended December 31, 2013:
SUMMARY EXECUTIVES COMPENSATION TABLE
IN DOLLARS
-------------------- -------- --------- ------ -------- -------- ------------ -------------- ------------ ---------
Non-equity Non-qualified
incentive deferred
Contract Stock Option plan compensation All other
Name & Position Payments Bonus awards awards compensation earnings compensation Total
Year ($) ($) ($) ($) ($) ($) ($) ($)
-------------------- -------- --------- ------ -------- -------- ------------ -------------- ------------ ---------
Paul D. Dickman, 2013 - - 1,000 - - - - $1,000
CEO, President,
Chairman (1)(2)
-------------------- -------- --------- ------ -------- -------- ------------ -------------- ------------ ---------
Michael Zalle,
Vice-President of 2013 - - - - - - - -
Marketing
-------------------- -------- --------- ------ -------- -------- ------------ -------------- ------------ ---------
(1) Safe Lane Systems, Inc. was incorporated on September 10, 2013. As
Founder, Mr. Dickman received 10,000,000 shares of Class "A" Preferred
Super Voting Majority shares at par value of $0.0001 par value.
(2) The $1,000 stock award to Mr. Dickman of 10,000,000 shares of Class
"A" Preferred Super Voting Majority shares were calculated based upon
the aggregate grant date fair value computed in accordance with FASB
ASC Topic 718 per disclosure on the 12/31/13 audited financial
statements, notes to the financial statements, "Statement of
Stockholders' Equity (Deficit). These Class "A" Preferred shares
represent no underlying ownership of the company itself, and are
solely a voting interest in the Company, bear no dividends, and have
no market value as none of our shares, preferred or common are traded
n any venue, therefore they were valued based upon the stated value
within the certificate of designation approved by our Company board.
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
Subsequent to June 30, 2014, we engaged Michael Zalle and issued 1,000,000
shares of common stock to him with unvested Options for 2,000,000 shares subject
to continued engagement as an officer and successful sales efforts.
(REMAINDER OF PAGE LEFT BLANK INTENTIONALLY)
-50-
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table sets forth certain information concerning outstanding equity
awards held by the Chief Executive Officer, Chief Financial and the Company's
most highly compensated executive officers for the fiscal year ended December
31, 2013 (the "Named Executive Officers"):
------------ ---------------------------------------------------------- -----------------------------------------
OPTION AWARDS STOCK AWARDS
------------ ------------ ------------- ----------- --------- --------- ---------- --------- --------- ----------
Equity Equity
incentive incentive
plan plan
awards: awards:
Market Number Market
value of or
Equity of unearned payout
incentive shares shares, value of
plan Number of units unearned
awards: of units or shares,
Number of Number of shares of other units or
securities Number of securities or units stock rights others
underlying securities underlying of stock that that rights
unexercised underlying unexercised Option that have have that
options unexercised unearned exercise Option have not not not have not
(#) options (#) options price expiration vested vested vested vested
Name exercisable unexercisable (#) ($) date (#) ($) (#) ($)
------------ ------------ ------------- ----------- --------- --------- ---------- --------- --------- ----------
Paul D. 0 0 0 0 0 0 0 0 0
Dickman,
CEO,
President
and
Chairman
------------ ------------ ------------- ----------- --------- --------- ---------- --------- --------- ----------
Michael 1,000,000 0 0 0 0 2,000,000 0 0 0
Zalle,
Vice-President
of
Marketing
------------ ------------ ------------- ----------- --------- --------- ---------- --------- --------- ----------
DIRECTOR COMPENSATION
All of the Company's officers and/or directors will continue to be active in
other companies. All officers and directors have retained the right to conduct
their own independent business interests.
The Company does not pay any Directors fees for meeting attendance.
The following table sets forth certain information concerning compensation paid
to the Company's directors during the year ended December 31, 2013:
-------------- ------- ------------ ---------- --------- ---------------- ----------------- ---------------- ----------
FEES NON-QUALIFIED
EARNED OR NON-EQUITY DEFERRED
NAME YEAR PAID IN STOCK OPTION INCENTIVE PLAN COMPENSATION ALL OTHER
(1) CASH AWARDS AWARDS COMPENSATION EARNINGS COMPENSATION TOTAL
($) ($) ($) ($) ($) ($) ($)
-------------- ------- ------------ ---------- --------- ---------------- ----------------- ---------------- ----------
Paul D. 2013 $-0- $-0- $-0- $-0- $-0- $-0- $-0-
Dickman
-------------- ------- ------------ ---------- --------- ---------------- ----------------- ---------------- ----------
(1) Safe Lane Systems, Inc. was incorporated on September 10, 2013.
-51-
EMPLOYMENT AGREEMENTS
We have employment/consultant agreements as of August 27, 2014, with our key
officers, as listed below. Described below are the compensation packages our
Board approved for our executive officers. The compensation agreements were
approved by our board based upon recommendations conducted by the board.
STOCK OPTIONS
--------------- ----------------------- -------------- -------------------------
ANNUAL
NAME POSITION COMPENSATION VESTED UNVESTED
--------------- ----------------------- -------------- ------------ -----------
Paul D. Dickman CEO, President, $60,000 (2) 0 0
Director and Chairman
--------------- ----------------------- -------------- ------------ -----------
Michael Zalle Vice-President of $60,000 1,000,000 2,000,000
Marketing @ $0.20 @$0.20 (1)
--------------- ----------------------- -------------- ------------ -----------
(1) Subsequent to June 30, 2014, we engaged Michael Zalle and issued
1,000,000 shares of common stock to him with unvested Options for
2,000,000 shares subject to continued engagement as an officer and
successful sales efforts.
(2) Mr. Dickman is also entitled to an administrative fee of 8% of total
billings.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
There are employment contracts, compensatory plans or arrangements, including
payments to be received from us, with respect to any of our directors or
executive officers 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 us. These agreements do not provide for payments to be made as a result of
any change in control of us, or a change in the person's responsibilities
following such a change in control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our board of directors in our entirety acts as the compensation committee for
Safe Lane Systems, Inc.
All of our officers and/or directors will continue to be active in other
companies. All officers and directors have retained the right to conduct their
own independent business interests.
It is possible that situations may arise in the future where the personal
interests of the officers and directors may conflict with our interests. Such
conflicts could include determining what portion of their working time will be
spent on our business and what portion on other business interest. To the best
ability and in the best judgment of our officers and directors, any conflicts of
interest between us and the personal interests of our officers and directors
will be resolved in a fair manner which will protect our interests. Any
transactions between us and entities affiliated with our officers and directors
will be on terms which are fair and equitable to us. Our Board of Directors
intends to continually review all corporate opportunities to further attempt to
safeguard against conflicts of interest between their business interests and our
interests.
We have no intention of merging with or acquiring an affiliate, associated
person or business opportunity from any affiliate or any client of any such
person.
-52-
M. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AS OF AUGUST
27, 2014
--------------------------------------------------------------------------------
The following table sets forth information with respect to the beneficial
ownership of Safe Lane System's outstanding common stock by:
o each person who is known by Safe Lane Systems to be the beneficial
owner of five percent (5%) or more of Safe Lane Systems common stock;
o Safe Lane Systems Chief Executive Officer and financial officer, its
other executive officers, and each director as identified in the
"Management -- Executive Compensation" section; and
o all of the Company's directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock and options, warrants
and convertible securities that are currently exercisable or convertible within
60 days of the date of this document into shares of the Company's common stock
are deemed to be outstanding and to be beneficially owned by the person holding
the options, warrants or convertible securities for the purpose of computing the
percentage ownership of the person, but are not treated as outstanding for the
purpose of computing the percentage ownership of any other person.
The information below is based on the number of shares of Safe Lane System's
common stock that we believe was beneficially owned by each person or entity as
of August 27, 2014.
OFFICERS AND DIRECTORS
TITLE OF CLASS NAME OF BENEFICIAL OWNER (1) AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
OWNER CLASS (2)
----------------------- ------------------------------------------- ------------------- ---------------
Common shares Paul D. Dickman, CEO, President, Director 2,000,000 8%
and Chairman
Common shares Michael Zalle, Vice-President of 0 0
Marketing (3)
----------------------- ------------------------------------------- ------------------- ---------------
Common shares All Directors and Executive Officers as a 2,000,000 8%
Group (2 persons)
----------------------- ------------------- ---------------
(1) The address of each person listed below, unless otherwise indicated,
is c/o Safe Lane Systems, Inc., 1624 Market Street, Suite #202,
Denver, Colorado 80202.
(2) Based upon 24,768,273 shares issued and outstanding on a fully diluted
basis and conversion of the Class "B" Preferred Convertible Non-Voting
Stock.
(3) Mr. Zalle has 1,000,000 shares vested at $0.20 per share and 2,000,000
shares unvested at $0.20 per share.
-53-
GREATER THAN 5% STOCKHOLDERS
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNER CLASS (1)
----------------------- ------------------------------------------- ------------------- ---------------
Common shares Paul D. Dickman, CEO, President and 2,000,000 8%
Chairman (2)
----------------------- ------------------------------------------- ------------------- ---------------
Common shares STC Plan of Distribution - Jeff Huitt, 22,768,273 91.9%
Trustee
-----------------------
(1) Based upon 24,768,273 shares issued and outstanding on a fully diluted
basis and conversion of the Class "B" Preferred Convertible Non-Voting
Stock.
Rule 13d-3 under the Securities Exchange Act of 1934 governs the determination
of beneficial ownership of securities. That rule provides that a beneficial
owner of a security includes any person who directly or indirectly has or shares
voting power and/or investment power with respect to such security. Rule 13d-3
also provides that a beneficial owner of a security includes any person who has
the right to acquire beneficial ownership of such security within sixty days,
including through the exercise of any option, warrant or conversion of a
security. Any securities not outstanding which are subject to such options,
warrants or conversion privileges are deemed to be outstanding for the purpose
of computing the percentage of outstanding securities of the class owned by such
person. Those securities are not deemed to be outstanding for the purpose of
computing the percentage of the class owned by any other person.
N. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS, PROMOTERS AND CONTROL PERSONS
-----------------------------------------------------------------------------
Other than the stock transactions discussed above, we have not entered into any
transaction nor are there any proposed transactions in which any founder,
director, executive officer, significant shareholder of our company or any
member of the immediate family of any of the foregoing had or is to have a
direct or indirect material interest.
No person who may, in the future, be considered a promoter of this offering,
will receive or expect to receive assets, services or other considerations from
us except those persons who are our salaried employees or directors. No assets
will be, nor expected to be, acquired from any promoter on behalf of us. We have
not entered into any agreements that require disclosure to the shareholders.
We have employment agreements as of August 27, 2014, with our key officers, as
listed below. Described below are the compensation packages our Board approved
for our executive officers. The compensation agreements were approved by our
board based upon recommendations conducted by the board.
During the period of September 10, 2013 (inception) through December 31, 2013,
we issued 2,000,000 shares of our common stock to the CEO and Chairman and
founder, Paul D. Dickman, at a sale price of $0.0005 per share. Subsequent to
June 30, 2014, we engaged Michael Zalle and issued 1,000,000 warrants to
purchase our shares of common stock at $0.20 and additional unvested Warrants to
purchase 2,000,000 shares subject to continued engagement as an officer and
successful sales efforts milestones.
(1) Safe Lane Systems, Inc. was incorporated on September 10, 2013. As Founder,
Mr. Dickman received 10,000,000 shares of Class "A" Preferred Super Voting
Majority shares at par value of $0.0001 par value.
-54-
The $1,000 stock award to Mr. Dickman of 10,000,000 shares of Class "A"
Preferred Super Voting Majority shares were calculated based upon the aggregate
grant date fair value computed in accordance with FASB ASC Topic 718 per
disclosure on the 12/31/13 audited financial statements, notes to the financial
statements, "Statement of Stockholders' Equity (Deficit). These Class "A"
Preferred shares represent no underlying ownership of our Company itself, and
are solely a voting interest in our Company, bear no dividends, and have no
market value as none of our shares, preferred or common are traded n any venue,
therefore they were valued based upon the stated value within the certificate of
designation approved by our Company board.
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
Subsequent to June 30, 2014, we engaged Michael Zalle and issued 1,000,000
shares of common stock to him with unvested Options for 2,000,000 shares subject
to continued engagement as an officer and successful sales efforts.
The additional major factors that were included in determining the initial sales
price to our founders were the lack of liquidity since there was no present
market for our stock and the high level of risk considering our lack of
operating history.
STOCK OPTIONS
--------------- ----------------------- -------------- -------------------------
ANNUAL
NAME POSITION COMPENSATION VESTED UNVESTED
--------------- ----------------------- -------------- ------------ -----------
Paul D. Dickman CEO, President, $60,000 (3) 0 0
Director and Chairman
--------------- ----------------------- -------------- ------------ -----------
Michael Zalle Vice-President of $60,000 1,000,000 2,000,000
Marketing @ $0.20 @$0.20 (1)
--------------- ----------------------- -------------- ------------ -----------
(1) Subsequent to June 30, 2014, we engaged Michael Zalle and issued
1,000,000 shares of common stock to him with unvested Options for
2,000,000 shares subject to continued engagement as an officer and
successful sales efforts.
(2) Mr. Dickman is also entitled to an administrative fee of 8% of total
billings.
DIRECTOR INDEPENDENCE
Our board of directors undertook its annual review of the independence of the
directors and considered whether any director had a material relationship with
us or our management that could compromise his ability to exercise independent
judgment in carrying out his responsibilities. As a result of this review, the
board of directors affirmatively determined that Messrs. Dickman and Zalle are
not "independent" as such term is used under the rules and regulations of the
Securities and Exchange Commission.
There are no promoters being used in relation to this offering. No person who
may, in the future, be considered a promoter of this offering, will receive or
expect to receive assets, services or other considerations from us. No assets
will be, nor expected to be, acquired from any promoter on behalf of us. We have
not entered into any agreements that require disclosure to the shareholders.
ITEM 11A. MATERIAL CHANGES
--------------------------
None.
-55-
ITEM 12. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
----------------------------------------------------------
Not applicable.
ITEM 12A. DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
--------------------------------------------------------------------------------
The Colorado Business Corporation Act requires us to indemnify officers and
directors for any expenses incurred by any officer or director in connection
with any actions or proceedings, whether civil, criminal, administrative, or
investigative, brought against such officer or director because of his or her
status as an officer or director, to the extent that the director or officer has
been successful on the merits or otherwise in defense of the action or
proceeding. The Colorado Business Corporation Act permits a corporation to
indemnify an officer or director, even in the absence of an agreement to do so,
for expenses incurred in connection with any action or proceeding if such
officer or director acted in good faith and in a manner in which he or she
reasonably believed to be in or not opposed to the best interests of us and such
indemnification is authorized by the stockholders, by a quorum of disinterested
directors, by independent legal counsel in a written opinion authorized by a
majority vote of a quorum of directors consisting of disinterested directors, or
by independent legal counsel in a written opinion if a quorum of disinterested
directors cannot be obtained.
The Colorado Business Corporation Act prohibits indemnification of a director or
officer if a final adjudication establishes that the officer's or director's
acts or omissions involved intentional misconduct, fraud, or a knowing violation
of the law and were material to the cause of action. Despite the foregoing
limitations on indemnification, the Colorado Business Corporation Act may permit
an officer or director to apply to the court for approval of indemnification
even if the officer or director is adjudged to have committed intentional
misconduct, fraud, or a knowing violation of the law.
The Colorado Business Corporation Act also provides that indemnification of
directors is not permitted for the unlawful payment of distributions, except for
those directors registering their dissent to the payment of the distribution.
According to our bylaws, we are authorized to indemnify our directors to the
fullest extent authorized under Colorado Law subject to certain specified
limitations.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and persons controlling
us pursuant to the foregoing provisions or otherwise, we are advised that, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
-56-
[OUTSIDE BACK COVER PAGE OF PROSPECTUS]
DEALER PROSPECTUS DELIVERY REQUIREMENTS
EACH DEALER MUST DELIVER A PROSPECTUS TO THE PURCHASER OF THESE SECURITIES AT OR
PRIOR TO SALE.
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
-----------------------------------------------
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
----------------------------------------------------
We have expended, or will expend fees in relation to this registration statement
as detailed below:
================================================================= ===========
EXPENDITURE ITEM AMOUNT
----------------------------------------------------------------- -----------
Attorney Fees $35,000
----------------------------------------------------------------- -----------
Audit Fees $7,500
----------------------------------------------------------------- -----------
Transfer Agent Fees $2,000
----------------------------------------------------------------- -----------
SEC Registration and Blue Sky Registration fees (estimated) $1,000
----------------------------------------------------------------- -----------
Printing Costs and Miscellaneous Expenses (estimated) $1,500
----------------------------------------------------------------- -----------
TOTAL $47,000
================================================================= ===========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
--------------------------------------------------
Our officers and directors are indemnified as provided by the Colorado Revised
Statutes and the bylaws.
Under the Colorado Revised Statutes, director immunity from liability to a
company or its shareholders for monetary liabilities applies automatically
unless it is specifically limited by a company's Articles of Incorporation. Our
Articles of Incorporation do not specifically limit the directors' immunity.
Excepted from that immunity are: (a) a willful failure to deal fairly with us or
our shareholders in connection with a matter in which the director has a
material conflict of interest; (b) a violation of criminal law, unless the
director had reasonable cause to believe that his or her conduct was lawful or
no reasonable cause to believe that his or her conduct was unlawful; (c) a
transaction from which the director derived an improper personal profit; and (d)
willful misconduct.
Our bylaws provide that it will indemnify the directors to the fullest extent
not prohibited by Colorado law; provided, however, that we may modify the extent
of such indemnification by individual contracts with the directors and officers;
and, provided, further, that we shall not be required to indemnify any director
or officer in connection with any proceeding, or part thereof, initiated by such
person unless such indemnification: (a) is expressly required to be made by law,
(b) the proceeding was authorized by the board of directors, (c) is provided by
us, in sole discretion, pursuant to the powers vested under Colorado law or (d)
is required to be made pursuant to the bylaws.
Our bylaws provide that it will advance to any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director or officer of us, or is or was
serving at the request of us as a director or executive officer of another
company, partnership, joint venture, trust or other enterprise, prior to the
final disposition of the proceeding, promptly following request therefore, all
expenses incurred by any director or officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under the bylaws or otherwise.
Our bylaws provide that no advance shall be made by us to an officer except by
reason of the fact that such officer is or was our director in which event this
paragraph shall not apply, in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, if a determination is reasonably and
promptly made: (a) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or (b) if such
quorum is not obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent
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legal counsel in a written opinion, that the facts known to the decision-making
party at the time such determination is made demonstrate clearly and
convincingly that such person acted in bad faith or in a manner that such person
did not believe to be in or not opposed to the best interests of us.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
------------------------------------------------
We have sold securities since inception (September 10, 2013) without registering
the securities under the Securities Act of 1933 as shown in the following
tables:
SHARES ISSUED IN PRIVATE OFFERINGS
Since our inception in September 10, 2013 through August 27, 2014, we have
issued shares of our common stock in offerings as set forth below.
------------------------------ ------------- -----------------------------------
NUMBER OF SHARES & CLASS CONSIDERATION NAME
------------------------------ ------------- -----------------------------------
2,000,000 Common $1,000 Paul D. Dickman, CEO, President,
Director and Chairman
------------------------------ ------------- -----------------------------------
SHARES ISSUED FOR COMPENSATION OR SERVICES
Since our inception, September 10, 2013 through August 27, 2014, we have issued
shares of our stock in exchange for services to the individuals and the amounts
set forth below.
--------------------------- ---------------- ----------------------------------
NUMBER OF SHARES & CLASS CONSIDERATION NAME
--------------------------- ---------------- ----------------------------------
10,000,000 Class "A" Super Founder Services Paul D. Dickman, CEO, President,
Majority Voting Preferred Director and Chairman
--------------------------- ---------------- ----------------------------------
EXEMPTION FROM REGISTRATION CLAIMED
All of the sales by us of the unregistered securities listed immediately above
were made by us in reliance upon Section 4(a)(5) of the Act. The individual
listed above received the unregistered securities as our management. He was
founder and had access to all material information. The unregistered securities
were acquired for investment purposes and not with a view toward distribution,
acknowledging such intent. All certificates or agreements representing such
securities were issued containing restrictive legends, prohibiting further
transfer of the certificates or agreements representing such securities, without
such securities either being first registered or otherwise exempt from
registration in any further resale or disposition.
--------------------------------- -------------- -----------------------
NUMBER OF SHARES & CLASS CONSIDERATION NAME
--------------------------------- -------------- -----------------------
22,768,273 Class "B" Non-Voting Licenses Jeff Huitt, Trustee
Convertible Preferred
--------------------------------- -------------- -----------------------
We issued to Jeff Huitt, Trustee, under a Plan of Liquidation 22,768,273 Class
"B" Non-Voting Convertible Preferred Shares.
All of the sales by us of the unregistered securities listed immediately above
were made by us in reliance upon Section 4(a)(5) of the Act in consideration of
Licenses. The individual listed above received the unregistered securities as
our management. He was founder and had access to all material information. The
unregistered securities were acquired for investment purposes and not with a
view toward distribution, acknowledging such intent. All certificates or
agreements representing such securities were issued containing restrictive
legends, prohibiting further transfer of the certificates or agreements
representing such securities, without such securities either being first
registered or otherwise exempt from registration in any further resale or
disposition.
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
---------------------------------------------------
-------------- ------------------------------------------------------------------------ ---------------------------
EXHIBIT NO. DESCRIPTION
-------------- ------------------------------------------------------------------------ ---------------------------
3(i).1 Articles of Incorporation of Safe Lane Systems, Inc. - 9/10/13 Previously Filed
-------------- ------------------------------------------------------------------------ ---------------------------
3(i).2 Articles of Amendment - 8/18/14 Previously Filed
-------------- ------------------------------------------------------------------------ ---------------------------
3(i).3 Articles of Amendment - 8/19/14 Previously Filed
-------------- ------------------------------------------------------------------------ ---------------------------
3(ii).1 Bylaws of Safe Lane Systems, Inc. Previously Filed
-------------- ------------------------------------------------------------------------ ---------------------------
5.1 Opinion re: Legality Filed Herewith
-------------- ------------------------------------------------------------------------ ---------------------------
10.1 Master I.P. License with Superior Traffic Controls, Inc. Previously Filed
-------------- ------------------------------------------------------------------------ ---------------------------
10.2 Sub-License Agreement with Superior Traffic Controls, Inc. Previously Filed
-------------- ------------------------------------------------------------------------ ---------------------------
10.3 Employment Agreement with Paul D. Dickman, CEO, President, Director Previously Filed
and Chairman
-------------- ------------------------------------------------------------------------ ---------------------------
10.4 Employment Agreement with Michael Zalle, Vice-President of Marketing Previously Filed
-------------- ------------------------------------------------------------------------ ---------------------------
10.5 Certificate of Designation of Class "A" Preferred Super Majority Previously Filed
Voting Stock
-------------- ------------------------------------------------------------------------ ---------------------------
10.6 Certificate of Designation of Class "B" Preferred Convertible Previously Filed
Non-Voting Stock
-------------- ------------------------------------------------------------------------ ---------------------------
10.7 Form of Promissory Note from Safe Lane Systems, Inc. to Superior Previously Filed
Traffic Controls, Inc.
-------------- ------------------------------------------------------------------------ ---------------------------
10.8 Form of Warrant Previously Filed
-------------- ------------------------------------------------------------------------ ---------------------------
10.9 Plan of Liquidation Previously Filed
-------------- ------------------------------------------------------------------------ ---------------------------
10.10 Amendment to Master IP License Filed Herewith
-------------- ------------------------------------------------------------------------ ---------------------------
10.11 Sub-License Agreement with Superior Traffic Controls, Inc. (executed Filed Herewith
copy)
-------------- ------------------------------------------------------------------------ ---------------------------
10.12 Amended Plan of Liquidation Filed Herewith
-------------- ------------------------------------------------------------------------ ---------------------------
23.1 Consent of Attorney Filed Herewith
-------------- ------------------------------------------------------------------------ ---------------------------
23.2 Consent of Independent Registered Public Accounting Firm Filed Herewith
-------------- ------------------------------------------------------------------------ ---------------------------
99.1 Graphics, (a), (b), (c), (d) and (e) Filed Herewith
-------------- ------------------------------------------------------------------------ ---------------------------
99.2 Graphics, (f), (Fig. 3), (Fig. 5), (Fig. 6), (Fig. 7) Filed Herewith
-------------- ------------------------------------------------------------------------ ---------------------------
(1) Incorporated by reference from the exhibits included in the Company's
Form S-1 filed with the Securities and Exchange Commission
(www.sec.gov), dated August 28, 2014.
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ITEM 17. UNDERTAKINGS
---------------------
We hereby undertake the following:
To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after the
effective date of this registration statement, or most recent
post-effective amendment, which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement
or any material change to such information in the registration
statement.
That, for the purpose of determining any liability under the Securities Act,
each post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
To remove from registration by means of a post-effective amendment any of the
securities being registered hereby which remain unsold at the termination of the
Offering.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to the directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of the directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of the directors, officers, or controlling
persons in connection with the securities being registered, we will unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
For the purposes of determining liability under the Securities Act of 1933 to
any purchaser, if the Registrant is subject to Rule 430C, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an
offering, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to such
date of first use.
The undersigned registrant undertakes that in a primary offering of securities
of the undersigned registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of
any of the following communications, the undersigned registrant will be a seller
to the purchaser and will be considered to offer or sell such securities to such
purchaser.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-1 and authorized this Registration
Statement to be signed on our behalf by the undersigned, thereunto duly
authorized, in the City of Denver, State of Colorado, on November 14, 2014.
SAFE LANE SYSTEMS, INC.
/s/ Paul D. Dickman November 14, 2014
-------------------------------------------------------------
Paul D. Dickman
(Chief Executive Officer, President, Chief Financial
Officer and Principal Accounting Officer and Principal
Executive Officer)
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
/s/ Paul D. Dickman November 14, 2014
------------------------------------------------------------
Paul D. Dickman, Chief Executive Officer, President,
Principal Executive Officer, Chief Financial Officer,
Principal Accounting Officer, and Chairman of the Board
of Directors
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