UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
================
File No. ______________
CIK: 0001269022
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
PURSUANT TO SECTION 12 (b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934.
ATOMIC PAINTBALL, INC.
----------------------
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
TEXAS 75-2942917
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2460 WEST 26th AVENUE, SUITE 380-C
DENVER, COLORADO, 80211
(303) 380 2282
(TELEPHONE NUMBER, INCLUDING AREA CODE)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities to be registered pursuant to Section 12(g) of the Act: COMMON STOCK,
NO PAR VALUE
ATOMIC PAINTBALL, INC.
FORM 10-SB
TABLE OF CONTENTS
ITEM DESCRIPTION PAGE
Part I.
Item 1. Description of Business 3
Item 2. Management's Discussion and Analysis or Plan of 12
Item 3. Description of Properties 28
Item 4. Security Ownership of Certain Beneficial Owners and Management 28
Item 5. Directors and Executive Officers, Promoters and Control Persons 29
Item 6. Executive Compensation 31
Item 7. Certain Relationships and Related Transactions 32
Item 8. Description of Securities 34
Part II.
Item 1. Market Price of and Dividends on the Registrant's Common Equity 38
Item 2. Legal Proceedings 39
Item 3. Changes in and Disagreements With Accountants 39
Item 4. Recent Sales of Unregistered Securities 39
Item 5. Indemnification of Directors and Officers 40
Part F/S
Financial Statements
Part III.
Item 1. Index to Exhibits 61
Item 2. Description of Exhibits 61
Signatures 62
FORWARD-LOOKING STATEMENTS
In addition to historical information, some of the information presented in
this Registration Statement contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"). Although Atomic Paintball, Inc. ("Atomic Paintball" or the "Company,"
which may also be referred to as "we," "us" or "our") believes that its
expectations are based on reasonable assumptions within the bounds of its
knowledge of its business and operations: there can be no assurance that actual
results will not differ materially from our expectations. Such forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those anticipated, including but not limited
to, our ability to raise sufficient debt or equity financing to fund on going
operations and fully implement our proposed business plan, recruit senior
management with the skill and experience to implement our business plan
effectively, identify and acquire real estate in suitable locations on which to
build paintball parks, obtain the necessary planning approvals to build our
paintball parks, build our paintball parks that directly address market demand
in a cost effective manner, identify existing paintball parks we would wish to
acquire, negotiate successfully to acquire existing paintball parks we wish to
acquire, operate our paintball parks, whether we have built them ourselves or
acquired them, on a profitable basis, provide services and products in
connection with paintball sport activities at our facilities and through a
website on a profitable basis within a fiercely competitive market place, avoid,
or effectively insurance against, liability claims for personal injury incurred
by customers at our paintball parks or using paintball equipment we have
provided to them, successfully achieve a listing on the OTC Bulletin Board, or
be able to identify and successfully negotiate to acquire assets or businesses
in the paintball sector in return for shares of our common stock. Cautionary
statements regarding the risks, uncertainties and other factors associated with
these forward-looking statements are discussed on page 21 below. You are urged
to carefully consider these factors, as well as other information contained in
this Registration Statement on Form 10-SB.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
INTRODUCTION
We are a development stage corporation which plans to own and operate paintball
facilities and to provide services and products in connection with paintball
sport activities at our facilities and through a website. The website has not
been developed at this time.
We were incorporated in the Sate of Texas on May 8, 2001, as Atomic Paintball,
Inc.
Our mailing address is 2460 West 26th Avenue, Suite 380-C, Denver, Colorado,
80211 and our telephone number is 303-380-2282.
We largely exhausted our available funding during the fiscal year ended December
31, 2004 and were forced to reduce our operations to a subsistence level for
much of the fiscal year ended December 31, 2004 and the fiscal year ended
December 31, 2005. Subsequently, during the fiscal year ended December 31 2006,
we were able to raise sufficient interim funding and issue shares of our common
stock as compensation to certain consultants to accelerate the implementation of
our proposed business plan. However, so far we have been unable to raise the
substantial additional funding required to fully implement our proposed business
plan.
It is our current intention, within our existing level of interim funding, to
continue to implement our proposed business while at the same time seeking to
obtain a listing on the Over The Counter Bulletin Board (the "OTC Bulletin
Board"). We intend to attempt to build our business through the purchase of
paintball businesses and assets in return for the issue of shares of our common
stock and to achieve further funding through private placements of stock. There
can be no assurance we will be able to successfully complete any of these
proposed transactions.
At present, we have brought our financial books and records up to date,
appointed an experienced paintball executive as our non-executive director,
initiated an up date of our initial business plan to reflect recent developments
within the paintball sector and appointed a consultant to seek potential
acquisition targets within the paintball sector.
The details of our history are as follows:
We were incorporated in Texas on May 8, 2001, as Atomic Paintball, Inc.
We raised $76,000 in cash to be used as seed capital and with this equity began
conducting market research for the paintball industry and prospective paintball
field locations, leased a parcel of property as a potential paintball field
location and began improving the site, engaged auditors and counsel and
developed our business plan.
In February 2004, we filed a Form SB-2 and subsequently in August 2004, a Form
SB-2/A in an attempt to register some of our shares for sale to the general
public. The registration never became effective and we withdrew the request for
registration in November 2005.
We largely exhausted our available funding during the fiscal year ended December
31, 2004 and were forced to reduce our operations to a subsistence level for
much of the fiscal year ended December 31, 2004 and during the fiscal year ended
December 31, 2005.
In October 2005, our two founding shareholders and our existing director and
officers, Barbara J. Smith and Alton K. Smith ("the Smiths"), entered into a
mutual release agreement with us and our shareholders. Under the terms of the
agreement, the Smiths appointed Mark A. Armstrong as a new director, transferred
320,000 of their shares of common stock to Mr. Armstrong, and then submitted
their resignations as a director and officers. In return for their resignations
and their transfer of shares to Mr. Armstrong, the Company and its shareholders
irrevocably released the Smiths from any and all actions, complaints and
liabilities that may have been outstanding against the Smiths.
In August 2006, Mr. Armstrong appointed David J. Cutler as a new director and
subsequently resigned from the Board of Directors.
Mr. Cutler then undertook to use his best efforts to accelerate the
implementation of our business plan, settle our outstanding liabilities, bring
our financial statements up to date, seek a listing for us on the OTC Bulletin
Board, raise new equity and recruit a senior management team that would fully
implement our proposed business plan. If we were to be unable to raise
sufficient funds to grow our business organically but were able to obtain a
listing on the OTC Bulletin Board the intention was to build our business
through the purchase of paintball businesses and assets in return for the issue
of shares of our common stock. There could be no assurance that this sequence of
events could be successfully completed. In return for accepting his appointment
with us, Mr. Cutler was issued 2,530,376 shares of our common stock, making him
the Company's controlling shareholder.
Effective August 31, 2006, we retained a full time consultant to assist Mr.
Cutler in bringing our affairs up to date. Mr. Armstrong, our former director,
was issued 250,000 shares of our common stock as compensation for his services
as a director.
On September 15, 2006, Larry O'Donnell CPA, PC was appointed as our Independent
Registered Public Accounting Firm in succession to KBA Group LLP.
During September 2006, one of our creditors with outstanding liabilities of
$13,600 agreed to write off the entire balance we owed to him, other creditors
with outstanding liabilities totaling approximately $14,000 agreed to accept
approximately 324,000 shares of our common stock in full and final settlement of
their outstanding liabilities and shareholders holding 112,000 of our Series A
Convertible Preferred Shares converted these Convertible Preferred Shares into
224,000 shares of our common stock.
In December 2006, we appointed one consultant to update our existing business
plan to reflect current developments within the paintball sector and a second
consultant to seek out potential acquisitions for us within the paintball
sector. These consultants were each remunerated with 100,000 shares of our
common stock and deferred compensation payable upon the successful completion of
their assignments
During December 2006, we issued a further 50,000 shares of our common stock to
each of three consultants (150,000 shares in total) who assisted us in bringing
our affairs up to date and progressing the implementation of our business
strategy and 697,674 shares of our common stock to Mr. Cutler, our Chief
Executive Officer and director, to convert $30,000 of the debt he had provided
to us into equity.
In December 2006, we appointed Jeffrey L. Perlmutter as a non-executive
director. Mr. Perlmutter co-founded Pursuit Marketing, Inc., a $85 million
manufacturer and distributor of paintball game products. Mr. Perlmutter sold his
interest in Pursuit Marketing, Inc. in November 2006 and will now assist us in
implementing our proposed business plan. We issued Mr. Perlmutter 100,000 shares
of our common stock as consideration for his appointment as a non-executive
director.
In January and February 2007, shareholders holding 180,000 of our Series A
Convertible Preferred Shares converted these Convertible Preferred Shares into
360,000 shares of our common stock.
In March 2007, we issued a further 697,674 shares of our common stock to Mr.
Cutler, our Chief Executive Officer and director, to convert a further $30,000
of the debt for advances he had provided to us into equity.
In April and May 2007, we issued 800,000 shares of our common stock at $0.125
per share for total consideration of $100,000. Mr. Perlmutter, our non-executive
director, subscribed for 200,000 of these shares for total consideration of
$25,000.
In May 2007, Pennaluna & Co, a broker dealer, submitted a Form 15c-211 on our
behalf seeking to have our shares of common stock listed on the Pink Sheets. We
have received two sets of queries from the NASD and are finalizing a response to
the second set of queries. There can be no assurance that we shall be successful
in our attempts to obtain a listing on the Pink Sheets.
PLAN OF OPERATIONS
Our plan of operation is to progress our business plan to own and operate
paintball facilities and to provide services and products in connection with
paintball sport activities at our facilities and through a website, within our
existing level of interim funding, while at the same time seeking to obtain a
listing on the OTC Bulletin Board. We intend to implement our business plan, and
we will attempt to build our business through the purchase of paintball
businesses and assets in return for the issue of shares of our common stock, and
we intend to pursue further capital through private placements of stock. There
can be no assurance we will be able to successfully complete any of these
proposed transactions.
If we are successful in raising further equity financing, we plan to establish
corporate offices, hire senior management, conduct feasibility studies for real
estate acquisitions for paintball locations, purchase land and equipment for
operating paintball parks, purchase inventory for resale and develop our website
for marketing our paintball games and miscellaneous services via the Internet.
We will consider acquiring existing underperforming paintball parks where we can
create value through new capital expenditure and the application of state of the
art marketing and operating disciplines. We will also consider acquiring
existing, established, profitable paintball parks as a means of establishing
rapidly a critical mass of profitable operations. We would need to raise
substantial funds to complete this business plan and there can be no assurance
that we will be able to raise sufficient equity to fund our strategy.
There can be no assurance we will be able to raise sufficient debt or equity
financing to fund on going operations and fully implement our proposed business
plan, recruit senior management with the skill and experience to implement our
business plan effectively, identify and acquire real estate in suitable
locations on which to build paintball parks, obtain the necessary planning
approvals to build our paintball parks, build our paintball parks that directly
address market demand in a cost effective manner, identify existing paintball
parks we would wish to acquire, negotiate successfully to acquire existing
paintball parks we wish to acquire, operate our paintball parks, whether we have
built them ourselves or acquired them, on a profitable basis, provide services
and products in connection with paintball sport activities at our facilities and
through a website on a profitable basis within a fiercely competitive market
place, avoid, or effectively insurance against, liability claims for personal
injury incurred by customers at our paintball parks or using paintball equipment
we have provided to them, successfully achieve a listing on the OTC Bulletin
Board, be able to identify or successfully negotiate to acquire assets or
businesses in the paintball sector in return for shares of our common stock, or
that any stockholder will realize any return on their shares after any such
transactions have been completed.
Company Business Plan
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Paintball - The Sport
The evolution of paintball into the sport that it is today took place fairly
quickly in comparison to most other sports. Paintball is claimed by some to have
been the most exciting new attraction to hit the amusement industry in 20 years.
Today, the sport has over 9 million participants, male and female, young and
old, playing in more than 50 countries.
The use of paintball guns, or "markers" as they are referred to, began in the
early 1970s, when they were used as a tool for marking trees and livestock.
In 1981, twelve friends played the first recreational paintball game using these
industrial paintball guns on a field measuring over 100 acres. Typically in
these early years, the sport was played as a small group of friends getting
together in the woods to play total elimination games. Sometimes the friends
broke into teams to play each other, but most games were "every man for
himself." Over the years, recreational paintball has become more sophisticated.
Because more people were playing, and playing in teams rather than as
individuals, team play has become the standard. Different playing variations
began to form, the most popular being "capture the flag," but a variety of
offensive/defensive scenarios have also become popular. Also, as the number of
people interested in paintball grew, so did the development of the commercial
paintball industry. The development of commercial paintball fields allowed large
groups of people to meet in one place to play, and the business owners were
pushed to develop new and exciting ways to keep these paintballers entertained.
This drove the development of new scenarios and styles of playing. The biggest
style of play change to come about because of commercial fields was the
"bunker-style" game. Smaller fields let players start the action quicker,
instead of having to stalk through the woods for 15 minutes before seeing
anyone. Also, players purchased more paintballs when they were in a constant
firefight, which made the commercial fields more profitable. At its very core,
paintball is a very sophisticated game of "dodge ball" and "capture the flag."
The game is played with two teams starting on opposite ends of the arena trying
to reach two objectives. One, to "mark out" (i.e. hit with a paintball) as many
players from the opposing team as possible and second to "capture the flag" and
to reach other goals set by the parameters of the game. The game can be equated
to a "real world" interactive game of chess with the mental, but additionally a
physical, element of the game. Today, while commercial paintball fields are
commonplace, there are still a large number of people that prefer playing
paintball out in the woods. While "outlaw" paintball is generally much cheaper,
it is also more problematic than paying to play at a commercial field.
The first professional tournament was held in 1983 with the prizes that were
worth $14,000. Today, major tournaments have hundreds of thousands of dollars
worth of prizes.
Paintball - The Industry
According to the Sporting Goods and Manufacturers' Association, participation in
paintball in the last 5 years has shown a remarkable 66% increase, from 5.9
million to 9.8 million active participants. Active participants are defined as
individuals 6 years of age and older, who have participated in a game at least
once per year. The increase in the number of frequent participants, defined as
individuals 6 years of age and older who have participated on fifteen or more
occasions per year, is even more dramatic with 793,000 active participants in
1998 increasing to over 2,000,000 by 2004 - an increase of 153%. This makes
paintball the fastest growing segment of the sporting goods industry. In recent
years paintball has moved ahead of snowboarding as the fourth largest
alternative sport in the United States.
Approximately, 88% of participants are male, with an average age of 21, while
the average of age of female participants is 25 years old. The largest age
groups of participation for males are the 12 - 17 (37%) and the 18 - 24 (21%)
age groups. However, the male age group that has the highest mean number of days
for participation (10.6 days per year) is the 25-34 age group.
The average participant spends approximately $148 a year on equipment related to
the sport. Frequent participants, defined in this survey as those who play 20 or
more times a year, spend an average of $219 per year. Occasional and infrequent
players spend an average of $184 and $80 a year, respectively. Nearly 50% of the
expenditure is on paint, 35% is on accessories, 11% on markers and 4% on eye
protection. The equipment and accessory industry for paintball generates annual
revenue in excess of $260 million.
We believe other indications of the scale and popularity of the sport of
paintball are as follows:
Major magazines - 16 - with approximate circulation of 640,000 copies.
Paintball stores in the US. - approximately 2,000.
Paintball fields in the US - approximately 1,400.
Number of players worldwide - in excess of 16,000,000.
Number of competing teams in the US - 7,600.
Paintball products carried by K-Mart - 176.
Number of paintball web sites - 5,000.
Countries in which paintball is played - 140.
Number of paintball items listed on e-bay - 10,494.
Number of series or league events in the US - 325.
Paintball markers sold in the US per month - approximately 200,000.
Universities with paintball clubs / programs - 175.
Paintball - Current Status of Facilities
The first outdoor commercial paintball field started in 1982. The first indoor
paintball field followed in 1984. The fields allowed large groups of people to
meet in one place to play, and the business owners were pushed to develop new
and exciting ways to keep their customers entertained. This drove the
development of new scenarios and styles of play. Today there are more than 1,300
registered paintball fields in the US and it is believed that in total there are
approximately 2,500 paintball fields in the US and Canada.
The majority of these fields are small, family run, undercapitalized, "hobby"
businesses which offer only the most basic, primitive facilities and operate
without adequate marketing support or the operation of best business practices.
We believe that this market structure provides us with the ideal opportunity to
establish a chain of purpose built, aggressively marketed, professionally
operated paintball parks. Customers will be able to play the most innovative
gaming scenarios at the highest quality facilities, purchase all paintball
equipment and supplies they need and have the opportunity to eat, drink and
"hang out" at one convenient paintball park.
Our Proposed Facilities
Our proposed facilities will cover a 5-acre area and will offer 4 fully enclosed
paintball fields (1 tournament-sized and 3 smaller fields), a 2,000 square foot
building housing an on site shop for equipment and merchandise sales, an
equipment rental facility, a players' lounge, indoor restrooms, an
air-conditioned meeting room, a concession stand and 1,000 square feet of
covered picnic tables for dining and relaxing between games. An all weather
surface parking area for 200 vehicles will be available for customers.
The four netted, outdoor paintball playing areas, each approximately 75 x 150
feet in size, will offer different types of obstacles and various levels of
challenge. The netting will prevent any paintballs from leaving the playing
areas while at the same time reducing the impact of weather conditions on the
playing fields. This will allow the players and spectators to safely enjoy the
outdoor environment and the paintball activities while being sheltered from the
elements. An observation area will be established with bleacher seating between
playing areas so that friends and onlookers can view the games. This will also
provide a vantage point for the field operator to control and monitor the game
and enforce safety regulations.
In the 2,000 square feet building, the on site shop will display paintball
related products, clothing and accessories for player purchase with attendants
available to answer players' questions about product enhancements, assembly, and
repair of paintball equipment. Our rental facility will be located in the rear
of the building with visibility to the playing fields. The location of the
rental facility will decrease the amount of time a player spends refilling tanks
and purchasing more paint in order to return to play. The rental location will
house 200 to 300 rental guns, paintball masks, paint, and 6, eighty-pound carbon
dioxide tanks for refilling players' air guns.
Proposed Location For Paintball Facilities
The majority of existing paintball parks are located where they are, largely as
a matter of random chance. An individual with an interest in the sport of
paintball happens to own a piece of property that is not being used for anything
else and decides to make it into a paintball park.
We will build our proposed paintball facilities at locations established by
detailed feasibility studies of key demographic data. We have not yet selected
any site nor obtained financing for the development of these proposed
facilities.
We intend to engage architects and real estate consultants to conduct a
feasibility studies that will identify and assess the key logistical and
demographical factors that we need to consider in order to determine the
appropriate locations for each of our proposed facilities. The planned
feasibility studies will address such factors as:
1. major traffic areas;
2. highly populated areas;
3. established community centers;
4. business and governmental facilities;
5. other paintball facilities;
6. direct competitors; and
7. other high-traffic and high-profit companies
One of our goals is to make the sport of paintball more travel-friendly and
logistically convenient for our customers. We believe we can differentiate
ourselves from, and gain a competitive advantage over, the traditional "mom and
pop" and "hobby" operated paintball facilities which are typically located out
in the countryside, sometimes an hour away from the nearest major city, by
locating our facilities in close, convenient proximity to our major customer
demographics.
We also believe that by carefully locating our paintball parks in areas that are
likely to experience significant future appreciation in real estate values that
we will be able to create substantial value for our shareholder based on the
underlying appreciation of our real estate assets over and above the value
created through the creation or purchase of profitable paintball parks.
Proposed Sources of Revenue in the Paintball Industry
We intend to generate revenues through:
Session Fees:
We intend to charge $25 for a 4-hour paintball session.
Equipment Rental:
If a participant does not own their own equipment, they may rent the equipment
for an average fee of $20 per person per session. The standard rental equipment
package will include a paintball gun (referred to as a marker) and a mask.
Paintball Sales:
A large portion of our revenues will be generated through the sales of the
paintballs to be used during each paintball session. We believe that an average
paintball participant will spend $40 on paintballs during each session.
Equipment Sales:
Many players prefer to own their own equipment, such as guns (markers) and
masks. The prices for guns range from $40 for a low-end model to $1,600 for a
high-end model. The average price for a mask is $60. We intend to determine the
exact product mix that we will carry in our on site shops by conducting
extensive research on current sales trends in existing paintball shops and
websites.
Merchandise Sales:
On site shops will also carry a variety of Atomic Paintball merchandise
including hats, t-shirts, sweatshirts, beer mugs, shot glasses, key chains, etc.
The prices for this merchandise will vary depending on the product.
Concession Stands:
The concessions stands will carry a full range of snack foods typically found in
a convenience store environment including soda and water, chips, candy, etc.,.
The prices for this merchandise will vary depending on the product.
Website Sales:
Our website will not only sell the equipment and merchandise that is available
in our stores, but will also sell a far broader product range than will be
available at our stores. While our onsite stores will be restricted by the
limited physical space to maintain inventory on hand, the website will have no
such restrictions to the product range we can offer.
We believe that in addition to acting as a profit center in its own right, the
website will perform two other valuable functions for us:
1) The sales data generated by the website will help us to identify and
maintain at the optimum product mix for our on site stores, and
2) The website will serve as a valuable marketing tool for our paint
ball parks by advertising their physical locations, providing driving
directions, allowing potential customers to research our session fees
and rentals, join a league or learn more about the sport of paintball
and our operations.
Other Amenities:
While we shall provide other amenities, such as the players' lounge and picnic
areas, we do not intend to charge for the use of these facilities. We believe
that the provision of these amenities at each of our facilities it is essential
to providing the quality of customer experience to drive repeat business and
valuable referrals.
Anticipated pricing for the sale of our products and services is based on our
initial business plan which is now in the process of being updated. Actual
pricing will vary on a park by park basis based on local competitive pressures
and local demographics.
Acquisition Opportunities
- ----------------------------
We intend to attempt to raise the equity necessary to buy land in carefully
researched locations, in close, convenient, proximity to our major customer
demographics, build state of the art paintball facilities, and aggressively
market a professionally operated paintball experience to our targeted
demographic.
We believe that among the 2,500 existing paintball parks in North America and
Canada there may be opportunities to purchase certain existing paintball parks
that can be enhanced to provide our the full extent of our proposed product
offering to our targeted demographic for less than it would cost to build an
entirely new facility from scratch. In these situations, we would attempt to
acquire these parks and enhance them rather than look to build an entirely new
facility.
We will also consider acquiring existing, established profitable paint ball
parks as a means to rapidly establishing a critical mass of profitable
operations. There can be no assurance that we will be able to acquire such parks
at a price that would be acceptable to us.
If we are unable to raise sufficient equity to fully implement our proposed
strategy, we would also seek to acquire paintball assets for shares of our
common stock where we believe we can effectively add value to these paintball
assets in a cost effective manner through effective application of our proposed
process enhancements.
In implementing a structure for a particular business acquisition, we may become
a party to a consolidation, reorganization, joint venture, or licensing
agreement with another company or entity. We may also acquire stock or assets of
an existing business. Upon consummation of a transaction, it is probable that
our present management and stockholders will no longer be in control of us. In
addition, our sole director may, as part of the terms of the acquisition
transaction, resign and be replaced by new directors without a vote of our
stockholders, or sell his stock in us. Any such sale will only be made in
compliance with the securities laws of the United States and any applicable
state.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under application federal
and state securities laws. In some circumstances, as a negotiated element of the
transaction, we may agree to register all or a part of such securities
immediately after the transaction is consummated or at specified times
thereafter. If such registration occurs, it will be undertaken by the surviving
entity after it has successfully consummated a merger or acquisition and is no
longer considered an inactive company. The issuance of substantial additional
securities and their potential sale into any trading market which may develop in
our securities may have a depressive effect on the value of our securities in
the future. There is no assurance that such a trading market will develop.
While the actual terms of a transaction cannot be predicted, it is expected that
the parties to any business transaction will find it desirable to avoid the
creation of a taxable event and thereby structure the business transaction in a
so-called "tax-free" reorganization under Sections 368(a)(1) or 351 of the
Internal Revenue Code (the "Code"). In order to obtain tax-free treatment under
the Code, it may be necessary for the owner of the acquired business to own 80%
or more of the voting stock of the surviving entity. In such event, our
stockholders would retain less than 20% of the issued and outstanding shares of
the surviving entity. This would result in significant dilution in the equity of
stockholders.
As part of our investigation, we expect to meet personally with management and
key personnel, visit and inspect material facilities, obtain independent
analysis of verification of certain information provided, check references of
management and key personnel, and take other reasonable investigative measures,
to the extent of our limited financial resources and management expertise. The
manner in which we participate in an opportunity will depend on the nature of
the opportunity, the respective needs and desires of both parties, and the
management of the opportunity.
With respect to any acquisition, and depending upon, among other things, the
target company's assets and liabilities, our stockholders will in all likelihood
hold a substantially lesser percentage ownership interest in us following any
merger or acquisition. The percentage ownership may be subject to significant
reduction in the event we acquire a target company with assets and expectations
of growth. Any merger or acquisition can be expected to have a significant
dilutive effect on the percentage of shares held by our stockholders.
We will participate in a business opportunity only after the negotiation and
execution of appropriate written business agreements. Although the terms of such
agreements cannot be predicted, generally we anticipate that such agreements
will (i) require specific representations and warranties by all of the parties;
(ii) specify certain events of default; (iii) detail the terms of closing and
the conditions which must be satisfied by each of the parties prior to and after
such closing; (iv) outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants; (v) set forth remedies
on defaults; and (vi) include miscellaneous other terms.
As stated above, we will not acquire any entity which cannot provide independent
audited financial statements within a reasonable period of time after closing of
the proposed transaction. If such audited financial statements are not available
at closing, or within time parameters necessary to insure our compliance within
the requirements of the 1934 Act, or if the audited financial statements
provided do not conform to the representations made by that business to be
acquired, the definitive closing documents will provide that the proposed
transaction will be voidable, at the discretion of our present management. If
such transaction is canceled, the definitive closing documents will also contain
a provision providing for reimbursement for our costs associated with the
proposed transaction.
Competition
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The paintball industry is relatively new, continually changing and very
competitive. We expect competition in this business to intensify in the future.
If we fail to attract and retain a customer base we will not develop significant
revenues or market share. Going into business in the paintball industry is
relatively easy and new competitors enter this market at a relatively low cost.
In addition, the market for paintball gaming and paintball products is very
competitive and no clear leader has been established although a number of
companies have recently announced plans to open multiple paintball facilities in
other parts of the United States. We will compete with a variety of other
companies, including existing paintball product suppliers and paintball activity
fields and the online retail web sites of some traditional retailers who may
also sell paintball products and services, many of whom have much more money
than we do.
With respect to our proposed sales of paintball equipment and merchandise, there
are other companies across the country that retail paintball merchandise at
competitive prices both online and in retail stores. These companies offer
competitively priced basic paintball equipment, supplies and apparel, and we may
have difficulty competing with them.
We believe we are an insignificant participant among the firms that operate in
the paintball sector. There are many established paintball businesses that have
significantly greater financial and personnel resources and technical expertise
than we have. In view of our limited financial resources and limited management
availability, we will continue to be at a significant competitive disadvantage
compared to our competitors.
Investment Company Act 1940
- ----------------------------
Although we will be subject to regulation under the Securities Act of 1933, as
amended, and the 1934 Act, we believe we will not be subject to regulation under
the Investment Company Act of 1940 (the "1940 Act") insofar as we will not be
engaged in the business of investing or trading in securities. In the event we
engage in business combinations that result in us holding passive investment
interests in a number of entities, we could be subject to regulation under the
1940 Act. In such event, we would be required to register as an investment
company and incur significant registration and compliance costs. We have
obtained no formal determination from the SEC as to our status under the 1940
Act and, consequently, any violation of the 1940 Act would subject us to
material adverse consequences. We believe that, currently, we are exempt under
Regulation 3a-2 of the 1940 Act.
INTELLECTUAL PROPERTY
We do not hold any patents or patent applications.
EMPLOYEES
We have not had and do not currently have any salaried employees.
Our operations have been performed by our directors, officers, shareholders and
third party consultants.
At December 31, 2006, we had two directors responsible for progressing our
business plan. We had appointed one consultant to update our existing business
plan to reflect current developments within the paintball sector and a second
consultant to seek out potential acquisitions for us within the paintball
sector. These consultants were each remunerated with 100,000 shares of our
common stock and deferred compensation payable upon the successful completion of
their assignments.
FACTORS AFFECTING FUTURE PERFORMANCE
The factors affecting our future performance include our ability to raise
sufficient debt or equity financing to fund on going operations and fully
implement our proposed business plan, recruit senior management with the skill
and experience to implement our business plan effectively, identify and acquire
real estate in suitable locations on which to build paintball parks, obtain the
necessary planning approvals to build our paintball parks, build our paintball
parks that directly address market demand in a cost effective manner, identify
existing paintball parks we would wish to acquire, negotiate successfully to
acquire existing paintball parks we wish to acquire ,operate our paintball
parks, whether we have built them ourselves or acquired them, on a profitable
basis, provide services and products in connection with paintball sport
activities at our facilities and through a website on a profitable basis within
a fiercely competitive market place, avoid, or effectively insurance against,
liability claims for personal injury incurred by customers at our paintball
parks or using paintball equipment we have provided to them, successfully
achieve a listing on the OTC Bulletin Board, be able to identify or successfully
negotiate to acquire assets or businesses in the paintball sector in return for
shares of our common stock, or that any stockholder will realize any return on
their shares after any such transactions have been completed.
The factors affecting our future performance are further listed and explained
below under the section "Risk Factors" in Management's Discussion and Analysis
of Financial Condition and Results of Operations on page 21 below.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto and the other financial information
included elsewhere in this report. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward looking statements as a
result of any number of factors, including those set forth under "Risk Factors"
on page 21 and elsewhere in this report.
OVERVIEW
We are a development stage corporation which plans to own and operate paintball
facilities and to provide services and products in connection with paintball
sport activities at our facilities and through a website.
We largely exhausted our available funding during the fiscal year ended December
31, 2004, and were forced to reduce our operations to a subsistence level for
much of the fiscal year ended December 31, 2004 and during the fiscal year ended
December 31, 2005. Subsequently, during the fiscal year ended December 31 2006,
we were able to raise sufficient further interim funding and issue shares of our
common stock as compensation to certain consultants to accelerate the
implementation of our proposed business plan. However, so far we have been
unable to raise the substantial additional funding required to fully implement
our proposed business plan.
At present, , we have brought our financial books and records up to date,
appointed a highly experienced paintball executive as our non-executive
director, initiated an up date of our initial business plan to reflect recent
developments within the paintball sector and appointed a consultant to seek
potential acquisition targets within the paintball sector.
PLAN OF OPERATIONS
We intend to attempt to raise $250,000 in an initial private placement in late
2007 or early 2008 to fund our business plan.
Our proposed operating budget for the next twelve months is:
Accounting and legal expenses $ 10,000
Salaries and wages 100,000
Feasibility 50,000
Marketing 30,000
Development of website 10,000
Travel and administrative 25,000
Office expenses 25,000
-------------
$250,000
=============
If we are successful in raising further equity finance we plan to establish
corporate offices, hire senior management, conduct feasibility studies for real
estate acquisitions for paintball locations, purchase land and equipment for
operating paintball parks, purchase inventory for resale and develop our website
for marketing our paintball games and miscellaneous services via the Internet.
We will consider acquiring existing underperforming paintball parks where we can
create value through new capital expenditure and the application of state of the
art marketing and operating disciplines. We will also consider acquiring
existing, established, profitable paintball parks as a means of establishing
rapidly a critical mass of profitable operations. We would need to raise
substantial funds to complete this business plan and there can be no assurance
that we will be able to raise sufficient equity to fund our strategy.
There can be no assurance we will be able to raise sufficient debt or equity
financing to fund ongoing operations and implement our proposed business plan,
recruit senior management with the skill and experience to implement our
business plan effectively, identify and acquire real estate in suitable
locations on which to build paintball parks, obtain the necessary planning
approvals to build our paintball parks, build our paintball parks that directly
address market demand in a cost effective manner, identify existing paintball
parks we would wish to acquire, negotiate successfully to acquire existing
paintball parks we wish to acquire, operate our paintball parks, whether we have
built them ourselves or acquired them, on a profitable basis, provide services
and products in connection with paintball sport activities at our facilities and
through a website on a profitable basis within a fiercely competitive market
place, avoid, or effectively insurance against, liability claims for personal
injury incurred by customers at our paintball parks or using paintball equipment
we have provided to them, successfully achieve a listing on the OTC Bulletin
Board, be able to identify or successfully negotiate to acquire assets or
businesses in the paintball sector in return for shares of our common stock, or
that any stockholder will realize any return on their shares after any such
transactions have been completed.
Liquidity and Capital Resources
At September 30, 2007, we had total assets of $21,603 consisting solely of cash,
no operating business or other source of income, outstanding liabilities
totaling $67,564 and a stockholder' deficit of $45,962.
Consequently, we are now dependent on raising additional equity and/or, debt to
fund any negotiated settlements with our outstanding creditors and meet our
ongoing operating expenses. There is no assurance that we will be able to raise
the necessary equity and/or, debt that we will need to be able to negotiate
acceptable settlements with our outstanding creditors or fund our ongoing
operating expenses.
Since his appointment on August 31, 2006 and through June 30, 2007, Mr. Cutler,
our sole officer and a director, has made advances to us of $158,812 by way of a
loan. These funds are used to support our ongoing operating costs and settle
certain outstanding liabilities. In December 2006, Mr. Cutler converted $30,000
of his loan into 697,674 shares of common stock. In March 2007, Mr. Cutler
converted an additional $30,000 of his loan into an additional 697,674 shares of
our common stock. At September 30, 2007, the Company owed Mr. Cutler
approximately $36,611. There can be no assurance that Mr. Cutler will continue
to provide such financing on an ongoing basis
During the nine months ended September 30, 2007, we raised $100,000 in cash
through the private placement of 800,000 shares of our common stock at $0.125
per share. Mr. Perlmutter, a director of the Company, subscribed for 200,000 of
these shares in exchange for $25,000. There can be no assurance that we will be
able to secure additional financing on an ongoing basis.
Between January and February 2007, shareholders holding 180,000 of our Series A
Convertible Preferred Shares converted these Convertible Preferred Shares into
360,000 shares of our common stock.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2007 COMPARED TO THE
NINE MONTHS ENDED SEPTEMBER 30, 2006
Total Operating Expenses
During the nine months ended September 30, 2007, we recognized total operating
expenses of $109,668 compared to $127,072 during the nine months ended September
30, 2006, a decrease of $17,404.
During the nine months ended September 30, 2007, we were actively involved in
implementing our business plan and in association with those activities we
incurred director's remuneration, legal, accounting and consulting fees, travel
costs and other overhead expenses. By comparison during the nine months ended
September 30, 2006, we were operating on a subsistence basis until August 31,
2006 and incurred only nominal overhead expenses. However, effective August 31,
2006, we incurred directors' remuneration of $119,159 with the issuance of the
2,530,376 shares of our common stock we issued Mr. Cutler to accept his appoint
as a director and officer and 250,00 shares of our common stock we issued to Mr.
Armstrong for his services to us as a director.
Interest (Expense)
We recognized an interest expense of $3,473 during the nine months ended
September 30, 2007, compared to $1,970 during the nine months ended September
30, 2006, an increase of $1,503. This expense relates to the interest expense
accrued on the loan made to us by certain of our officers and shareholders. The
increase in the amount of interest between the two periods reflects the increase
in the principal balance of the loans made to us by our officers and
shareholders between the two periods.
Provision for Income Taxes
No provision for income taxes was required in the nine month periods ended
September 30, 2007 or 2006, as we generated tax losses in both periods.
Net Loss
We recognized a net loss of $113,140 for the nine months ended September 30,
2007 compared to a net loss of $129,043 for the nine months ended September 30,
2006, a decrease of $15,903, due to the factors described above.
CASH FLOW INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 COMPARED TO
THE NINE MONTHS ENDED SEPTEMBER 30, 2006
At September 30, 2007, we had total assets of $21,603, consisting solely of
cash, no operating business or other source of income, outstanding liabilities
of $67,564 and a stockholder' deficit of $45,962.
Net cash used in operations in the nine months ended September 30, 2007 was
$111,816 compared to $15,178 in the nine months ended September 30, 2006, an
increase of $96,638. In the nine months ended June 30, 2007, our net loss,
without any need for an adjustment for non-cash items, resulted in a negative
cash flow of $113,140, which was partially offset by a positive cash flow of
$1,324 generated from the net movement in our operating assets and liabilities.
This compares with a net loss, after adjustment for non-cash items, of $21,880
in the nine months ended September 30, 2006, which was largely offset by a
positive cash flow of $6,703 generated from the net movement in our operating
assets and liabilities.
No cash was provided by or used in investing activities during the nine months
ended September 30, 2007 or 2006.
Net cash provided by financing activities during the nine months ended September
30, 2007 was $133,375 compared to $15,164 net cash provided by financing
activities during the nine months ended September 30, 2006, an increase
$118,211. During the nine months ended September 30, 2007, we received $100,000
through the issuance of 800,000 shares of our common stock, at $0.125 per share
and a net $33,375 in loans from our director and sole officer, Mr. Cutler.
During the nine months ended September 30, 2006, we received $14,164 in loans
from our director and sole officer, Mr. Cutler and $1,000 by way of a loan from
one of our shareholders.
Consequently, we are now dependent on raising additional equity and/or debt to
fund any negotiated settlements with our outstanding creditors and meet our
ongoing operating expenses. There is no assurance that we will be able to raise
the necessary equity and/or debt that we will need to be able to negotiate
acceptable settlements with our outstanding creditors or fund our ongoing
operating expenses.
RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006 COMPARED TO
THE FISCAL YEAR ENDED DECEMBER 31, 2005
Operating Losses
During the year ended December 31, 2006, we recognized total operating losses of
$197,278 compared to $3,078 during the year ended December 31, 2005. The
increase of $194,200 was due to the increase operational activity in association
with the implementation of our business plan, as described herein.
General and administrative expenses incurred during the year ended December 31,
2006 were $210,685 compared to $2,195 for the year ended December 31, 2005, an
increase of $208,490. The increase in general and administrative expenses is
largely due to the fact that during the year ended December 31, 2006, we
incurred substantially increased directors and consultants costs as we
accelerated the implementation of our business plan from the subsistence level
that existed for much of the financial year ended December 31, 2005.
Approximately, $138,444 of the general and administrative costs incurred during
the year ended December 31, 2006, related to the value of shares of our common
stock issued to our directors and certain consultants in consideration of their
services to us.
Gain on Settlement of Liabilities
During the year ended December 31, 2006, we recognized a gain of $13,600 on the
settlement of liabilities. During the year ended December 31, 2006, one of our
creditors with outstanding liabilities of $13,600 agreed to write off the entire
balance we owed.
Interest Expense
Interest expense during the year ended December 31, 2006 was $2,904 compared
with the $3,070 for the year ended December 31, 2005.
Provision for Income Taxes
No provision for taxation was required during either the year ended December 31,
2006 or the year ended December 31, 2005 as we had taxable losses in both years.
Net Loss
We recognized a net loss during the year ended December 31, 2006 was $200,182
compared to $6,148 for the year ended December 31, 2005, an increase of
$194,034, due to the factors and activities set out above.
CASH FLOW INFORMATION FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
As of December 31, 2006, we had total assets of $80 of which $44 was cash and
$36 was another receivable, no operating business or other source of income,
outstanding liabilities of $62,901 and a stockholders' deficit of $62,822.
Cash flow used in by operating activities totaled $68,297 for the year ended
December 31, 2006 compared to $35 generated by operating activities for year
ended December 31, 2005, an increase of $68,332. The net loss, adjusted for
non-cash items, for during the year ended December 31, 2006 was $73,326 compared
to $4,196 during the year ended December 31, 2005, an increase of $69,130. This
increase was partially offset by a $798 increase in cash generated from the net
movement in operating assets and liabilities during the year ended December 31,
2006 as compared to the year ended December 31, 2005.
No cash flow was generated by or used in investment activities for the years
ended December 31, 2006 or 2005, as we had no investments to sell and no
available cash to purchase investments.
Cash flow generated by financing activities for the year ended December 31, 2006
was $68,290. The Company did not generate cash flows during the year ended
December 31, 2005. During the year ended December 31, 2006, we received $68,290
in loans from a director and a shareholder.
Consequently, we are now dependent on raising additional equity and, or, debt to
fund any negotiated settlements with our outstanding creditors and meet our
ongoing operating expenses. There is no assurance that we will be able to raise
the necessary equity and, or, debt that we will need to be able to negotiate
acceptable settlements with our outstanding creditors or fund our ongoing
operating expenses.
Since his appointment effective August 31, 2006 through June 30, 2007, Mr. David
J. Cutler, our sole officer and a director of ours, has made advances to us of
$120,323 by way of loan to fund our ongoing operating costs and settle certain
outstanding liabilities. In December 2006 Mr. Cutler converted $30,000 of his
loan to us into 697,674 shares of our common stock. In March 2007, Mr. Cutler
converted a further $30,000 of his loan to us into an additional 697,674 shares
of our common stock. There can be no assurance that Mr. Cutler will continue to
provide such financing on an ongoing basis.
CRITICAL ACCOUNTING POLICIES
Financial Reporting Release No. 60 requires all companies to include a
discussion of critical accounting policies and estimates used in the preparation
of their financial statements. On an on-going basis, we evaluate our critical
accounting policies and estimates. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable
under the circumstances, the results of which form our basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
Our significant accounting policies are described in Note 1 to our Financial
Statements on page 48. These policies were selected because they represent the
more significant accounting policies and methods that are broadly applied in the
preparation of our financial statements. However, it should be noted that we
intend to acquire a new operating business. The critical accounting policies and
estimates for such new operations will, in all likelihood, be significantly
different from our current policies and estimates.
OFF BALANCE SHEET ARRANGEMENTS, CONTRACTUAL OBLIGATIONS AND COMMERCIAL
COMMITMENTS
Financial Reporting Release No. 61 requires all companies to include a
discussion to address, among other things, liquidity, off-balance sheet
arrangements, contractual obligations and commercial commitments. Details of the
arrangements, contractual obligations and commercial commitments are described
in Note. 7 of our Financial Statements on page 55.
ACCOUNTING PRONOUNCEMENTS
In March 2005, the Financial Accounting Standards Board (FASB) Interpretation
No. 47 "FIN 47" was issued, which clarifies certain terminology as used in FASB
Statement No. 143, "Accounting for Asset Retirement Obligations." In addition it
clarifies when an entity would have sufficient information to reasonably
estimate the fair value of an asset retirement obligation. FIN 47 is effective
no later than the end of fiscal years ending after December 15, 2005. Early
adoption of FIN 47 is encouraged. We do not believe that the adoption of FIN 47
will have a material impact on our financial conditions or results of operation.
In May 2005, the FASB issued FASB Statement No. 154, which replaces APB Opinion
No.20 and FASB No. 3. This Statement provides guidance on the reporting of
accounting changes and error corrections. It established, unless impracticable
retrospective application as the required method for reporting a change in
accounting principle in the absence of explicit transition requirements to a
newly adopted accounting principle. The Statement also provides guidance when
the retrospective application for reporting of a change in accounting principle
is impracticable. The reporting of a correction of an error by restating
previously issued financial statements is also addressed by this Statement. This
Statement is effective for financial statements for fiscal years beginning after
December 15, 2005. Earlier application is permitted for accounting changes and
corrections of errors made in fiscal years beginning after the date this
Statement is issued. We do not believe that the adoption of FASB Statement No.
154 will have a material impact on our financial conditions or results of
operation.
In February 2006, the FASB issued FASB Statement No. 155, which is an amendment
of FASB Statements No. 133 and 140. This Statement; a) permits fair value
re-measurement for any hybrid financial instrument that contains an embedded
derivative that otherwise would require bifurcation, b) clarifies which
interest-only strip and principal-only strip are not subject to the requirements
of Statement 133, c) establishes a requirement to evaluate interests in
securitized financial assets to identify interest that are freestanding
derivatives or that are hybrid financial instruments that contain an embedded
derivative requiring bifurcation, d) clarifies that concentrations of credit
risk in the form of subordination are not embedded derivatives, e) amends
Statement 140 to eliminate the prohibition on a qualifying special-purpose
entity from holding a derivative financial instrument that pertains to a
beneficial interest other than another derivative financial instrument. This
Statement is effective for financial statements for fiscal years beginning after
September 15, 2006. Earlier adoption of this Statement is permitted as of the
beginning of an entity's fiscal year, provided the entity has not yet issued any
financial statements for that fiscal year. We does not believe that the adoption
of FASB Statement No. 155 will have a material impact on our financial
conditions or results of operation
In March 2006, the FASB issued FASB Statement No. 156, which amends FASB
Statement No. 140. This Statement establishes, among other things, that
accounting for all separately recognized servicing assets and servicing
liabilities. This Statement amends Statement 140 to require that all separately
recognized servicing assets and servicing liabilities be initially measured at
fair value, if practicable. This Statement permits, but does not require, the
subsequent measurement of separately recognized servicing assets and servicing
liabilities at fair value. An entity that uses derivative instruments to
mitigate the risks inherent in servicing assets and servicing liabilities is
required to account for those derivative instruments at fair value. Under this
Statement, an entity can elect subsequent fair value measurement to account for
its separately recognized servicing assets and servicing liabilities. By
electing that option, an entity may simplify its accounting because this
Statement permits income statement recognition of the potential offsetting
changes in fair value of those servicing assets and servicing liabilities and
derivative instruments Is the same accounting period. This Statement is
effective for financial statements for fiscal years beginning after September
15, 2006. Earlier adoption of this Statement is permitted as of the beginning of
an entity's fiscal year, provided the entity has not yet issued any financial
statements for that fiscal year. We do not believe that the adoption of FASB
Statement No. 156 will have a material impact on our financial conditions or
results of operation.
In September 2006, the FASB issued Statement of Financial Accounting Standard
(SFAS) No. 157, "Fair Value Measurements" ("SFAS No. 157"). SFAS No. 157 defines
fair value, establishes a framework for measuring fair value in generally
accepted accounting principles ("GAAP"), and expands disclosures about fair
value measurements. This statement applies under other accounting pronouncements
that require or permit fair value measurement where the FASB has previously
determined that under those pronouncements fair value is the appropriate
measurement. This statement does not require any new fair value measurements but
may require companies to change current practice. This statement is effective
for those fiscal years beginning after November 15, 2007 and to the interim
periods within those fiscal years. We believe that SFAS No. 157 should not have
a material impact on our financial position or results of operations
In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans" ("SFAS No. 158"). SFAS
No. 158 requires employers to recognize the overfunded or underfunded status of
a defined benefit postretirement plan as an asset or liability in its statement
of financial position, recognize changes in that funded status in the year in
which the changes occur through comprehensive income and measure a plan's assets
and its obligations that determine its funded status as of the end of the
employer's fiscal year. The provisions of SFAS No. 158 are effective for fiscal
years ending after December 15, 2006. We believe that SFAS No. 158 should not
have a material impact on our financial position or results of operations.
In June 2006, the FASB issued FIN No. 48, "Accounting for Uncertainty in Income
Taxes--an interpretation of FASB Statement No. 109." This Interpretation
prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return, and provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure, and
transition. This Interpretation is effective for fiscal years beginning after
December 15, 2006. We believe that FIN No. 48 should not have a material impact
on our financial position or results of operations
In September 2006, the SEC issued Staff Accounting Bulletin No. 108,
"Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements" ("SAB 108"). SAB 108
requires companies to evaluate the materiality of identified unadjusted errors
on each financial statements and related financial statement disclosure using
both the rollover approach and the iron curtain approach. The requirements of
SAB 108 are effective for annual financial statements covering the first fiscal
year ending after November 15, 2006. SFAS No. 158 has not had a material impact
on our financial position or results of operations.
EFFECTS OF INFLATION
Although we cannot accurately anticipate the effect of inflation on our
operations, we do not believe that inflation has had, or is likely in the future
to have, a material effect on our results or financial condition.
SUBSEQUENT EVENTS
None.
RISK FACTORS
RISKS ASSOCIATED WITH OUR COMPANY
WE ARE A DEVELOPMENT STAGE COMPANY, WITH NO SIGNIFICANT HISTORY OF OPERATIONS.
We were incorporated on May 8, 2001, and are, therefore, a start up company with
very little operating history. Consequently, our business plan is as yet
unproven.
SOME MAJOR COMPONENTS OF OUR BUSINESS STRATEGT HAVE NOT BEEN FULLY DEVELOPED AS
YET.
We have developed our strategy to own and operate paintball facilities and to
provide services and products in connection with paintball sport activities at
future facilities and through a website. However, due to lack of resources we
have not been able to complete or execute many components of our strategy at
this time including the demographic studies necessary to identify the optimum
locations for our future parks, the operating procedures to be adopted at our
parks or the marketing strategies necessary to drive foot traffic through the
parks. The development and implementation of these components will be
complicated and time consuming. There can be no assurance that we will
successfully develop all or any of these components. If we do not develop and
implement these components in a timely manner, our operating revenues may never
be developed.
COMPETITION IN THE PAINTBALL AND E-COMMERCE BUSINESS IS INTENSE AND WE MAY NOT
BE ABLE TO COMPETE AND SURVIVE.
The paintball industry is relatively new, ever changing and very competitive. We
expect competition in this business to intensify in the future. If we fail to
attract and retain a customer base we will not develop significant revenues or
market share. Going into business in the paintball industry is relatively easy
and new competitors enter this market at a relatively low cost. In addition, the
market for paintball gaming and paintball products is very competitive and no
clear leader has been established. We will compete with a variety of other
companies, including existing paintball product suppliers and paintball activity
fields and the online retail web sites of some traditional retailers who may
also sell paintball products and services, many of whom have many more resources
than we do.
A DECLINE IN PAINTBALL POPULARITY MAY ADVERSELY AFFECT OUR BUSINESS.
If paintball declines in popularity there is significant risk that the demand
for paintball parks and paintball related products will be negatively impacted
resulting in a decline of sales revenues, if any are ever developed. This
decline could result from adverse economic conditions which could negatively
affect disposable income, changes in leisure habits or changes in statutory
regulations effecting paintball parks or products.
WE HAVE A MINIMAL OPERATING HISTORY, SO INVESTORS HAVE NO WAY TO GAUGE OUR LONG
TERM PERFORMANCE.
We were incorporated on May 8, 2001, based on a concept to own and operate
paintball facilities and to provide services and products in connection with
paintball sport activities at our facilities and through a website. Our current
management team has been with us for less than twelve months. As evidenced by
our financial reports we have generated no revenue. We must be regarded as a new
or development venture with all of the unforeseen costs, expenses, problems, and
difficulties to which such ventures are subject. The venture must be considered
highly speculative.
WE CAN MAKE NO ASSURANCE OF SUCCESS OR PROFITABILITY IN THE FUTURE.
There is no assurance that we will ever operate profitably. There is no
assurance that we will generate revenues or profits in the future, or that the
market price of our shares of common stock will be increased thereby.
WE ARE NOT DIVERSIFIED AND WE WILL BE DEPENDENT ON ONLY ONE BUSINESS.
We currently have no plans to diversify our operations outside the paintball
sector. The concentration of our activities into just one sector may subject us
to economic fluctuations specific to the paintball industry and therefore
increase the risks associated with our operations.
WE HAVE NO ESTABLISHED OPERATING MANAGEMENT.
Our plan is to raise equity and then seek to recruit a management team with the
specific skills and experience required to implement our proposed business plan.
It will be more difficult to raise equity without an established management team
in place that it would have been if we already had such a team in place. Even if
we are successful in raising the necessary equity it will be difficult to
recruit a high quality team for a small start up operation. Once we have
recruited the management team there can be no guarantee that they will be
successful in implementing our business plan.
BECAUSE OF THE NATURE OF OUR PROPOSED ACTIVITIES, WE MAY BE SUBJECT TO LIABILITY
CLAIMS RESULTING FROM PERSONAL INJURIES AND MAY BE UNABLE TO OBTAIN OR MAINTAIN
ADEQUATE LIABILITY INSURANCE.
We may become involved in various lawsuits incidental to our business, some of
which may relate to claims allegedly resulting in injury or death. Significantly
increased product liability claims continue to be asserted successfully against
manufacturers and distributors of sports equipment throughout the United States
resulting in general uncertainty as to the nature and extent of liability for
personal injuries. In recent years, product liability insurance has become much
more expensive, more restrictive and more difficult to obtain. While we intend
to obtain liability insurance, there can be no assurance that we will be able to
obtain or maintain liability insurance coverage sufficient to cover any
successful liability claims made against us. Any claims substantially in excess
of our insurance coverage, or any substantial claim not covered by insurance,
could have a material adverse effect on our financial condition and results of
operations
BECAUSE INSIDERS CONTROL OUR ACTIVITIES, THET MAY CAUSE US TO ACT IN A MANNER
THAT IS MOST BENEFICIAL TO THEM AND NOT TO OUTSIDE SHAREHOLDERS, WHICH COULD
CAUSE US NOT TO TAKE ACTIONS THAT OUTSIDE INVESTORS MIGHT VIEW FAVORABLY.
Our executive officers, directors, and holders of 5% or more of our outstanding
common stock beneficially own approximately 83% of our outstanding common stock.
As a result, they effectively control all matters requiring director and
stockholder approval, including the election of directors, the approval of
significant corporate transactions, such as mergers and related party
transaction. These insiders also have the ability to delay or perhaps even
block, by their ownership of our stock, an unsolicited tender offer. This
concentration of ownership could have the effect of delaying, deterring or
preventing a change in control of our company that you might view favorably.
OUR DIRECTORS MAY HAVE CONFLICTS OF INTEREST WHICH MAY NOT BE RESOLVED FAVORABLY
TO US.
Certain conflicts of interest may exist between our directors and us. Our
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, Executive Officers, Promoters and
Control Persons" (page 30), and "Conflicts of Interest." (page 30).
WE MAY DEPEND UPON OUTSIDE ADVISORS, WHO MAY NOT BE AVAILABLE ON REASONABLE
TERMS AND AS NEEDED.
To supplement the business experience of our officers and directors, we may be
required to employ accountants, technical experts, appraisers, attorneys, or
other consultants or advisors. Our Board without any input from stockholders
will make the selection of any such advisors. Furthermore, it is anticipated
that such persons may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to us. In the event we consider it necessary to
hire outside advisors, we may elect to hire persons who are affiliates, if they
are able to provide the required services.
WE HAVE A SUBSTANTIAL BALANCE OF OUTSTANDING LIABILITIES.
At September 30, 2007 we had outstanding liabilities of approximately $68,000.
We had approximately $22,000 in cash, no active operating business or our source
of income from which to repay these creditors. Accordingly we must attempt to
negotiate acceptable settlements with these outstanding creditors and then
attempt to raise debt and, or, equity funding to finance the payment of the
agreed settlements. There can be no assurance that we shall be able to negotiate
acceptable settlements with our outstanding creditors or that we shall be able
to raise the necessary debt and, or, equity finance to fund any such agreed
settlements.
WE HAVE INCURRED SIGNIFICANT LOSSES AND ANTICIPATE FUTURE LOSSES, AND OUR
AUDITORS HAVE ISSUED A "GOING CONCERN" QUALIFICATION IN THEIR OPINION.
At September 30, 2007, we had an accumulated deficit of approximately $440,000
and a stockholders' deficit of approximately $41,000. Future losses are likely
to occur as we have no sources of income to meet our operating expenses. As a
result of these, among other factors, we received a report on our consolidated
financial statements for the years ended December 31, 2006 and 2005 from our
Independent Registered Public Accounting Firms that include an explanatory
paragraph stating that there is substantial doubt about our ability to continue
as a going concern.
OUR EXISTING FINANCIAL RESOURCES ARE INSUFFICIENT TO MEET OUR ONGOING OPERATING
EXPENSES.
We have no sources of income at this time and no existing cash balances to meet
our ongoing operating expenses. In the short term, unless we are able to raise
additional debt and, or, equity we shall be unable to meet our ongoing operating
expenses. No assurances can be given that we will be successful in raising
equity, starting or acquiring operations, generating revenues or reaching or
maintaining profitable operations.
WE INTEND TO RAISE NEW EQUITY.
We need to raise substantial new equity to implement our proposed business to
own and operate paintball facilities and to provide services and products in
connection with paintball sport activities at our facilities and through a
website. No assurances can be given that we will be successful in raising
equity, starting or acquiring operations, generating revenues or reaching or
maintaining profitable operations.
IF WE FAIL TO RAISE NEW EQUITY, WE MAY BE UNABLE TO ACQUIRE PAINTBALL BUSINESSES
AND OR ASSETS FOR SHARES OF OUR COMMON STOCK.
Our proposed business to own and operate paintball facilities and to provide
services and products in connection with paintball sport activities at future
facilities and through a website, within our existing level of interim funding,
while at the same time seeking to obtain a listing on the OTC Bulletin Board. No
assurances can be given that we will be successful in raising equity, starting
or acquiring operations, generating revenues or reaching or maintaining
profitable operations.
If we fail to raise sufficient equity to fund the organic growth of our
business, our strategy to acquire an operating business through the purchase of
paintball businesses and assets in return for the issue of shares of our common
stock. Successful implementation of this strategy depends on our ability to
identify a suitable acquisition candidate, acquire such company on acceptable
terms and integrate its operations. In pursuing acquisition opportunities, we
compete with other companies with similar strategies. Competition for
acquisition targets in our chosen sector may result in increased prices of
acquisition targets and a diminished pool of companies available for
acquisition. Acquisitions involve a number of other risks, including risks of
acquiring undisclosed or undesired liabilities, acquired in-process technology,
stock compensation expense, diversion of management attention, potential
disputes with the seller of one or more acquired entities and possible failure
to retain key acquired personnel. Any acquired entity or assets may not perform
relative to our expectations. Our ability to meet these challenges has not been
established.
SCARCITY OF, AND COMPETITION FOR, BUSINESS OPPORTUNITIES AND COMBINATIONS.
We believe we are an insignificant participant among the firms which engage in
the acquisition of business opportunities in the paintball sector. There are
many businesses in the paintball sector that have significantly greater
financial and personnel resources and technical expertise than we have. Nearly
all such entities have significantly greater financial resources, technical
expertise and managerial capabilities than us and, consequently, we will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, we will also compete
in seeking merger or acquisition candidates with numerous other small public
companies. In view of our limited financial resources and limited management
availability, we will continue to be at a significant competitive disadvantage
compared to our competitors.
IF WE GROW OUR BUSINESS THROUGH ACQUISITIONS WE CREATE CERTAIN ADDITIONAL
BUSINESS RISKS.
If we have obtained a listing on the OTC Bulletin Board, we will also seek to
build our business through the purchase of paintball businesses and assets in
return for the issue of shares of our common stock. However, if an acquisition
is completed, it may be on terms that have a material adverse effect on your
investment. Moreover, there can be no assurance that the anticipated economic,
operation and other benefits of any future acquisitions will be achieved or that
we will be able to successfully integrate acquired businesses in a timely manner
without substantial costs, delays or other operational or financial problems.
The difficulties of such integration may initially be increased by the necessity
of integrating personnel with disparate business backgrounds and cultures. In
addition, acquisitions may involve the expenditure of significant funds. Failure
to effectively integrate the acquired companies may adversely affect our ability
to secure new business or retain our existing customers. Customer
dissatisfaction or performance problems at a single acquired company could have
an adverse effect on our reputation as a whole, resulting in increased
difficulty in marketing our products and services or acquiring companies in the
future. In addition, there can be no assurance that the acquired companies will
operate profitably. Acquisitions also involve a number of additional risks,
including diversion of management attention, potential loss of key customers or
personnel, risks associated with unanticipated problems, liabilities or
contingencies, and risks of entering markets in which we have limited or no
direct expertise. The occurrence of some or all of the events described in these
risks would have a material adverse effect on our business, operating results,
financial condition and stock price.
WE HAVE NOT EXECUTED ANY FORMAL AGREEMENT TO RAISE EQUITY OR FOR A BUSINESS
COMBINATION OR OTHER TRANSACTION AND HAVE ESTABLISHED NO STANDARDS FOR RAISING
EQUITY OF COMPLETING BUSINESS COMBINATIONS.
We have not executed any formal arrangement, agreement or understanding with
respect to raising equity, engaging in a merger with, joint venture with or
acquisition of a private or public entity. There can be no assurance that we
will be successful in raising equity or identifying and evaluating suitable
business opportunities or in concluding a business combination. There is no
assurance we will be able to raise equity or negotiate a business combination on
terms favorable, if at all. We have not established a specific length of
operating history or specified level of earnings, assets, net worth or other
criteria which we will require a target business opportunity to have achieved,
and without which we would not consider a business combination. Accordingly, we
may enter into a business combination with a business opportunity having no
significant operating history, losses, limited or no potential for earnings,
limited assets, negative net worth or other negative characteristics.
RISK FACTORS RELATED TO OUR STOCK
THERE IS NO PUBLIC MARKET FOR OUR SHARES AND SHOULD BE CONSIDERED AN ILLIQUID
INVESTMENT.
There is currently no market for any of our shares and no assurances are given
that a public market for such securities will develop or be sustained if
developed. We have an application filed on our behalf by a market maker for
approval of our shares of common stock to be listed on the Pink Sheets. It is
our intention to have an application filed on our behalf by a market maker for
our shares of common stock to be quoted on the OTC Bulletin Board quotation
system subject to effectiveness of the Registration Statement. There is no
guarantee that our shares of common stock will ever trade on the OTC Bulletin
Board or in any other venue. Consequently investors may not be able to readily
sell of any shares purchased
WE ARE NOT LISTED ON ANY PUBLICLY QUOTED STOCK EXCHANGE
Failure to obtain a listing on the OTC Bulletin Board will adversely effective
our ability to raise new equity or to acquire another entity with experienced
management and opportunities for growth in return for shares of our common stock
in an attempt to create value for our shareholders.
WE ARE NOT A REPORTING COMPANY AT THIS TIME, BUT WILL BECOME ONE DUE TO THIS
REGISTRATION.
There is no trading market for our Common Stock. We will be subject to the
reporting requirements under the Securities and Exchange Act of 1934, Section
13a, after the effectiveness of this registration statement under Section 12(g).
As a result, Shareholders will have access to the information required to be
reported by publicly held companies under the Exchange Act and the regulations
thereunder. We intend to provide our Shareholders with quarterly unaudited
reports and annual reports containing financial information prepared in
accordance with generally accepted accounting principles audited by independent
certified public accountants.
THE REGULATION OF PENNY STOCKS BY SEC AND NASD MAY HAVE A CHILLING EFFECT ON THE
TRADABILITY OF OUR SECURITIES.
Our securities do not trade in any market and, if they are 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 investors.
For purposes of the rule, the phrase "accredited investors" 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. Consequently, the rule may
affect the ability of broker-dealers to sell our securities and also may affect
the ability of purchasers in this offering to sell their securities in any
market that might develop therefore.
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 may further affect the ability of owners of Shares to sell our securities
in any market that might develop for them.
Shareholders 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.
OUR STOCK 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 may be thinly-traded on the OTC Bulletin Board,
meaning that the number of persons interested in purchasing our shares of common
stock at or near ask prices at any given time may be relatively small or
non-existent. This situation is attributable to a number of factors, including
the fact that we are a small company which is relatively unknown to stock
analysts, stock brokers, institutional investors 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 our shares of Common Stock 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 shares of Common Stock 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 shares of Common
Stock will develop or be sustained, or that any trading levels will be
sustained. Due to these conditions, we can give investors no assurance that they
will be able to sell their shares of Common Stock at or near ask prices or at
all if you need money or otherwise desire to liquidate your shares of common
stock of our Company.
OUR BUSINESS IS HIGHLY SPECULATIVE AND THE INVESTMENT IS THEREFORE VERY RISKY.
Due to the speculative nature of our business, it is possible that the
investment in the shares of our Common Stock offered hereby will result in a
total loss to the investor. Investors should be able to financially bear the
loss of their entire investment. Investment should, therefore, be limited to
that portion of discretionary funds not needed for normal living purposes or for
reserves for disability and retirement.
DILUTION TO STOCKHOLDERS MAY OCCUR THROUGH REDUCTION OF PERCENTAGE SHARE
OWNERSHIP FOLLOWING RAISING ADDITIONAL EQUITY OR SHARE ISSUANCES RELATING TO ANY
BUSINESS COMBINATION.
Our primary plan of operation is based upon raising further equity or completing
a business combination with a private concern which, in all likelihood, would
result in us issuing securities to new stockholders. The issuance of previously
authorized and unissued shares of our common stock would result in reduction in
percentage of shares owned by present and prospective stockholders and may
result in a change in control or management. In addition, any issue of new
equity, merger or acquisition can be expected to have a significant dilutive
effect on the percentage of the shares held our stockholders.
OUR CHIEF EXECUTIVE OFFICER HAS THE ABILITY TO EFFECTIVELY CONTROL SUBSTANTIALLY
ALL ACTIONS TAKEN BY STOCKHOLDERS.
Mr. Cutler, currently our director, Chief Executive Officer and Chief Financial
Officer owns in excess of our 50% of our share capital and consequently is able
to effectively control substantially all actions taken by our stockholders,
including the election of directors. Such concentration of ownership could also
have the effect of delaying, deterring or preventing a change in control that
might otherwise be beneficial to stockholders and may also discourage
acquisition bids for us and limit the amount certain investors may be willing to
pay for shares of common stock.
LOSS OF CONTROL BY OUR PRESENT MANAGEMENT AND STOCKHOLDERS MAY OCCUR UPON
ISSUANCE OF ADDITIONAL SHARES.
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 a majority of our voting power and equity. The result of such an
issuance would be those new stockholders and management would control us, and
persons unknown could replace our management at this time. Such an occurrence
would result in a greatly reduced percentage of ownership of us by our current
Shareholders.
RULE 144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE EFFECT ON OUR STOCK PRICE.
All of the outstanding Shares of Common Stock held by our present officers,
directors, and affiliate stockholders are "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 one year 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
nonaffiliate after the owner has held the restricted securities for a period of
two years. 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.
THE PRICE OF OUR COMMON STOCK COULD BE HIGHLY VOLATILE.
Our intention is for our shares of common stock to become listed on the OTC
Bulletin Board. If we do obtain a listing on the OTC Bulletin Board it is likely
that our common stock will be subject to price volatility, low volumes of trades
and large spreads in bid and ask prices quoted by market makers. Due to the low
volume of shares traded on any trading day, persons buying or selling in
relatively small quantities may easily influence prices of our common stock.
This low volume of trades could also cause the price of our stock to fluctuate
greatly, with large percentage changes in price occurring in any trading day
session. Holders of our common stock may also not be able to readily liquidate
their investment or may be forced to sell at depressed prices due to low volume
trading. If high spreads between the bid and ask prices of our common stock
exist at the time of a purchase, the stock would have to appreciate
substantially on a relative percentage basis for an investor to recoup their
investment. Broad market fluctuations and general economic and political
conditions may also adversely affect the market price of our common stock. No
assurance can be given that an active market in our common stock will develop or
be sustained. If an active market does not develop, holders of our common stock
may be unable to readily sell the shares they hold or may not be able to sell
their shares at all.
WE DO NOT ANTICIPATE PAYING CASH DIVIDENDS ON OUR COMMON STOCK.
We do not anticipate paying any cash dividends on our common stock in the
foreseeable future.
ITEM 3. DESCRIPTION OF PROPERTIES
Our mailing address is 2460 West 26th Avenue, Suite 380-C, Denver, Colorado,
80211.
Following the resignation of Mark A. Armstrong and the appointment if David J.
Cutler as our director in August 2006, we moved our mailing address to 2460 West
26th Avenue, Suite 380-C, Denver, Colorado, 80211.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information regarding beneficial
ownership of our common stock, as of September 30, 2007 by:
o each person who is known by us to own beneficially more than 5% of our
outstanding common stock,
o each of our named executive officers and directors, and
o all executive officers and directors as a group.
NUMBER OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OUTSTANDING (6)
---------------------------------------- ------------- ---------------
David J. Cutler (1) 3,925,724 54.3%
Jeffrey L. Perlmutter (1) 300,000 4.1%
------------ ------------
All officers and directors as a group. 4,225,724 58.4%
Mark A. Armstrong (2) 615,162 8.5%
J. H. Brech, LLC (3) 405,162 5.6%
Mark Margolis (4) 400,500 5.5%
Barbara J. Smith (5) 367,200 5.1%
(1) c/o 2460 West 26th Avenue, Suite 380-C, Denver, Colorado, 80211.
(2) 1902 Hunter Ridge Drive, Grapevine, Texas, 76051
(3) 1101 E. Duke Street, Hugo, Oklahoma, 74743.
(4) 3395 Forest Trace Drive, Dacula, GA, 30019
(5) 219 Josey Lane, Red Oak, Texas, 75154.
Includes 87,200 shares issuable under a promissory note due to Mrs. Smith.
(6) Based upon 7,236,004 shares of common stock issued and outstanding.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
NAME AGE POSITION
David J. Cutler 52 President, Chief Executive Officer,
Jeffrey L. Perlmutter 51 Director
David J. Cutler - President, Chief Executive Officer, Chief Financial Office and
Director. Mr. Cutler became our director and officer in August 2006. Mr. Cutler
has more than 20 years of experience in international finance, accounting and
business administration. He held senior positions with multi-national companies
such as Reuters Group Plc and the Schlumberger Ltd. and has served as a director
for two British previously publicly quoted companies -- Charterhall Plc and
Reliant Group Plc. From March 1993 until 1999, Mr. Cutler was a self-employed
consultant providing accounting and financial advice to small and medium-sized
companies in the United Kingdom and the United States. Mr. Cutler was Chief
Financial Officer and subsequently Chief Executive Officer of Multi-Link
Telecommunications, Inc., a publicly quoted voice messaging business, from 1999
to 2005. Since April 2005, Mr. Cutler has been Chief Executive Officer, Chief
Financial Officer and a director of Aspeon, Inc., a publicly listed shell
company. Since March 2006 Mr. Cutler has been Chief Executive Officer, Chief
Financial Officer and a director of Concord Ventures, Inc. (formerly Cavion
Technologies, Inc.), a publicly listed shell company. Mr. Cutler has a masters
degree from St. Catherine College in Cambridge, England and qualified as a
British Chartered Accountant and as Chartered Tax Advisor with Arthur Andersen &
Co. in London. He was subsequently admitted as a Fellow of the UK Institute of
Chartered Accountants. Since arriving in the United States Mr. Cutler has
qualified as a Certified Public Accountant, a Fellow of the AICPA Institute of
Corporate Tax Management, a Certified Valuation Analyst of the National
Association of Certified Valuation Analysts and obtained an executive MBA from
Colorado State University.
Jeffrey L. Perlmutter - Director. Mr. Perlmutter became our director in December
2006. Mr. Perlmutter co-founded Pursuit Marketing, Inc., a $85 million
manufacturer and distributor of paintball game products, and sold his interest
in Pursuit Marketing, Inc. in November 2006 and will now assist us in
implementing our proposed business plan. Prior to founding Pursuit Marketing,
Inc., Mr. Perlmutter was a business analyst at Dunn & Bradstreet and
subsequently an account executive at M. Lowenstein Corp selling textiles to
clothing manufacturers in the midwest region of the United States. Mr.
Perlmutter has a Bachelor of Science degree from Syracuse University School of
Management
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
each officer and director of our business is engaged in business activities
outside of our business, they devote to our business such time as they believe
to be necessary.
CONFLICTS OF INTEREST - CORPORATE OPPORTUNITIES
Presently no requirement contained in our Articles of Incorporation, Bylaws, or
minutes which requires officers and directors of our business to disclose to us
business opportunities which come to their attention. Our officers and directors
do, however, have a fiduciary duty of loyalty to us to disclose to us any
business opportunities which come to their attention, in their capacity as an
officer and/or director or otherwise. Excluded from this duty would be
opportunities which the person learns about through his involvement as an
officer and director of another company. We have no intention of merging with or
acquiring an affiliate, associate person or business opportunity from any
affiliate or any client of any such person.
FAMILY RELATIONSHIPS
There are no family relationships among our current officers and/or directors.
COMMITTEES OF THE BOARD OF DIRECTORS
In the ordinary course of business, the board of directors maintains a
compensation committee and an audit committee.
The primary function of the compensation committee is to review and make
recommendations to the board of directors with respect to the compensation,
including bonuses, of our officers and to administer the grants under our stock
option plan.
The functions of the audit committee are to review the scope of the audit
procedures employed by our independent auditors, to review with the independent
auditors our accounting practices and policies and recommend to whom reports
should be submitted, to review with the independent auditors their final audit
reports, to review with our internal and independent auditors our overall
accounting and financial controls, to be available to the independent auditors
during the year for consultation, to approve the audit fee charged by the
independent auditors, to report to the board of directors with respect to such
matters and to recommend the selection of the independent auditors.
In the absence of a separate audit committee our board of directors functions as
audit committee and performs some of the same functions of an audit committee,
such as recommending a firm of independent certified public accountants to audit
the annual financial statements; reviewing the independent auditors
independence, the financial statements and their audit report; and reviewing
management's administration of the system of internal accounting controls.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation paid
by the Company to the President and the Company's two most highly compensated
executive officers for the fiscal years ended December 31, 2006 and 2005 (the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Noneequity Nonqualified
incentive deferred
Stock Option plan compensation All other
Salary Bonus awards awards compensation earnings compensation Total
Name & Position Year ($) ($) ($) ($) ($) ($) ($) ($)
- ----------------- ---------- ---------- ---------- ---------- ---------- --------------- --------------- -------------- -----------
David J.
Cutler, CEO,
CFO (1) 2006 $60,000 $-0- $108,444 $ -0- $ -0- $-0- $-0- $168,444
Mark A. 2006 $-0- $-0- $ -0- $10,714 $ -0- $ -0- $ -0- $10,714
Armstrong
(1) On August 31, 2006, Mr. Cutler became our sole officer. At that time,
Mr. Cutler was issued 2,530,376 shares of common stock, valued at
$108,444, in return for accepting his appointment with us.
During the year ended December 31, 2006, we accrued a salary expense of
$60,000 for Mr. Cutler although no payments were made to Mr. Cutler in
respect of this accrual in 2006.
During the year ended December 31, 2006 Mr. Cutler was issued 697,674
shares of common stock to convert $30,000 of the debt he had provided
to us into equity, these shares are not part of the table above.
(2) Mr. Armstrong served as our sole officer from October 2005 through
August 31, 2006. During the year ended December 31, 2006, Mr. Armstrong
was issued 250,000 shares of common stock with a value of $10,714 in
return for his services as our sole director and officer.
Subsequent to his resignation as our sole director and officer, Mr.
Armstrong was issued with 50,000 shares of common stock, valued at
$2,143, for his ongoing services in bringing our affairs up to date and
implementing the our business strategy, these shares are not part of
the above table.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
During the year ended December 31, 2006, the Company's sole officer was not
granted any equity awards and did hold any outstanding equity awards.
DIRECTORS' COMPENSATION
The following table sets forth certain information concerning compensation paid
to the Company's directors during the year ended December 31, 2006:
Nonqualified
Non-equity deferred
Fees earned or incentive compensation All other
paid in cash Stock awards Option awards plan earnings compensation Total
Name ($) ($) ($) compensation ($) ($) ($)
($)
- ------------------ ---------------- ---------------- ---------------- --------------- ---------------- ---------------- ------------
David J. Cutler $ 60,000 $ 108,444 $ -0- $ -0- $ -0- $ -0- $ 168,444
- ------------------ ---------------- ---------------- ---------------- --------------- ---------------- ---------------- ------------
Jeffrey L. $ -0- $ 4,286 $ -0- $ -0- $ -0- $ -0- $ 4,286
- ------------------ ---------------- ---------------- ---------------- --------------- ---------------- ---------------- ------------
Mark A. $ -0- $ 10,714 $ -0- $ -0- $-0- $ -0- $ 10,714
- ------------------ ---------------- ---------------- ---------------- --------------- ---------------- ---------------- ------------
(1) On August 31, 2006, Mr. Cutler became our sole director. At that time,
Mr. Cutler was issued 2,530,376 shares of common stock, valued at
$108,444, in return for accepting his appointment with us.
During the year ended December 31, 2006 we accrued a salary expense of
$60,000 for Mr. Cutler although no payments were made to Mr. Cutler in
respect of this accrual in 2006.
During the year ended December 31, 2006 Mr. Cutler was issued 697,674
shares of common stock to convert $30,000 of the debt he had provided
to us into equity, these shares are not part of the table above.
(2) Mr. Perlmutter was appointed as a non-executive director of the Company
on December 22, 2006. At the time of the appointment, Mr. Perlmutter
was issued 100,000 shares of common stock with a value of $4,286.
(3) Mr. Armstrong served as our sole from October 2005 through August 31,
2006. During the year ended December 31, 2006, Mr. Armstrong was issued
250,000 shares of common stock with a value of $10,714 in return for
his services as our sole director and officer.
Subsequent to his resignation as our sole director and officer, Mr.
Armstrong was issued with 50,000 shares of common stock, valued at
$2,143, for his ongoing services in bringing our affairs up to date and
implementing the our business strategy, these shares are not part of
the above table.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our founders were our first President and sole director, Barbara J. Smith, and
our first Vice President and Secretary, Alton K. Smith, who were husband and
wife. Subsequent to their resignations as our director and officers they have
divorced.
On May 8, 2001, we issued a total of 200,000 shares of our common stock to our
founders in exchange for an initial investment of $1,000 to cover our
organizational expenses. Barbara J. Smith, an officer and director of the
Company, received 120,000 shares of our common stock in exchange for her initial
investment of $600 and Alton K. Smith, an officer of the Company, received
80,000 shares of our common stock in exchange for his initial investment of
$400.
On June 20, 2001, we issued a total of 600,000 shares of our common stock to
Barbara J. Smith and Alton K. Smith, officers and a director of the Company, in
exchange for services valued at $6,000. Barbara J. Smith received 360,000 shares
of our common stock in exchange for her services valued at $3,600 and Alton K.
Smith received 240,000 shares of our common stock in exchange for his services
valued at $2,400.
Barbara J. Smith, an officer, director and shareholder of the Company loaned a
total of $10,900 between April and July of 2002 to the Company, to pay for
further research and development and for general corporate overhead. The note
bore interest at an annual rate of 6.5% and was repayable in full in July 15,
2004. The note was convertible into shares of our common stock at $0.125 per
share. This loan has not been repaid and Mrs. Smith has declined to convert the
outstanding balance into shares. Accordingly, the entire balance of the loan
continues to be outstanding and we continue to accrue interest on the balance
outstanding.
In April 2002, we entered into a Lease Agreement with Alton K. Smith, one of our
officers, for a lease of property in Ellis County, Texas for use in our
paintball games. The term of the lease was for one year, with three renewal
terms of one year each. The rental payments were to be $1 for every person
engaging in "Paintball Play Revenues," which included rentals, concessions,
fees, or other revenues relating to paintball activities conducted on this
leased property. Payments were not made to Mr. Smith under the lease. We were
also responsible for payment of one half of the taxes on the leased property,
which amounted to $300 in the fiscal year 2003. The lease was renewed in the
fiscal year ended December 31, 2003, but was not renewed during the fiscal year
ended December 31, 2004.
Mr. Alton K. Smith, an officer of the Company, loaned the Company $10,000 in
October 2003, to pay for further research and development and for general
corporate overhead. This loan bore interest at an annual rate of 8% and was
payable on demand. This note and accrued interest was repaid in April 2004, out
of the proceeds of the private placement. In November 2003, Mr. Smith loaned
$7,500, pursuant to a promissory note which bore interest at an annual rate of
8%. This note and accrued interest were repaid in December 2003 out of the
proceeds of a private placement.
During the year ended December 31, 2003, we granted stock options under the 2003
Stock Incentive Plan to Mrs. Barbara Smith and Mr. Alton Smith, officers, a
director and shareholders of the Company to purchase a total of 2,000,000 shares
of common stock at an exercise price of $0.125 per share. These options were to
vest over a 5 year period, with 60% vesting in the first year and 10% in each of
the next four years and were to expire in 2013. In October 2005, all outstanding
options were cancelled, unexercised.
In July 2004, a holder of our Series A Convertible Preferred Shares advanced to
us, by way of loan note $7,500. The note accrued interest at 8% annually. In
September 2006, the principal balance and accrued interest was converted into
281,459 shares of our common stock.
In October 2005, our two founding shareholders and existing director and
officers, Barbara J. Smith and Alton K. Smith ("the Smiths"), entered into a
mutual release agreement with the Company and our shareholders. Under the terms
of the agreement, the Smiths appointed Mark A. Armstrong, as a new director, and
transferred 320,000 of their shares of common stock to Mr. Armstrong and then
submitted their resignations as a director and officers. In return for their
resignations and the transfer of shares to Mr. Armstrong, we and our
shareholders irrevocably released the Smiths from any and all actions,
complaints and liabilities that may have been outstanding against the Smiths by
us and our shareholders.
In August 2006, Mr. Armstrong appointed David J. Cutler as a new director and
then resigned as a director and officer of the Company. Mr. Cutler to undertook
to use his best efforts to accelerate the implementation of our business plan,
settle our outstanding liabilities, bring our financial statements up to date,
seek a listing for us on the OTC Bulletin Board, raise new equity and recruit a
senior management team that would fully implement our proposed business plan. If
we were to be unable to raise sufficient funds to grow our business organically
but were able to obtain a listing on the OTC Bulletin Board the intention was to
build our business through the purchase of paintball businesses and assets in
return for the issue of shares of our common stock. There could be no assurance
that this sequence of events could be successfully completed. In return for
accepting his appointment with us, Mr. Cutler was issued with 2,530,376 shares
of our common stock making him our controlling shareholder.
On August 31, 2006, Mr. Armstrong, our former director, was issued 250,000
shares of our common stock as compensation for his services as a director.
In September 2006, one of our founding shareholders and a former officer of
ours, Alton K. Smith, was issued 17,918 shares of our common stock as payment
for $768 expenses he had incurred on our behalf.
In December 2006 we issued:
- 100,000 shares of our common stock to one of our existing shareholders,
J. H. Brech, LLC., to seek out potential acquisitions for us within the
paintball sector
- 50,000 shares of our common stock to both Mark A. Armstrong, a former
director of ours, and Charles E Webb, an existing shareholder of ours,
for their assistance in bringing our affairs up to date and progressing
the implementation of our business strategy,
- 697,674 shares of our common stock to Mr. Cutler, our Chief Executive
Officer and director, to convert $30,000 of the debt he had provided to
us into equity, and
- 100,000 shares of our common stock to Mr. Perlmutter as consideration
for his appointment as a non-executive director.
In March 2007, Mr. Cutler, our Chief Executive Officer and a director, converted
a further $30,000 of the debt for advances he had provided to us into 697,674
shares of our common stock.
In May 2007, Mr. Perlmutter, our non-executive director, subscribed for 200,000
shares of our common stock at a price of $0.125 per share for total
consideration of $25,000.
ITEM 8. DESCRIPTION OF SECURITIES
We currently have the following securities outstanding:
Authorized Issued and Outstanding
Preferred Stock, no par value 2,000,000 8,000
Series A Convertible Preferred Stock: 400,000 8,000
Common Stock: 10,000,000 7,132,804
Stock options: 2,000,000 0
Convertible Promissory Note: 87,200 shares of our Common
Stock are issuable in satis-
faction of an outstanding
promissory note from one of
our shareholder's and former
officer and director,
Barbara J. Smith, at the
note holder's option.
Preferred Stock
In October 2003, our Board of Directors adopted a resolution to authorize the
issuance (in series) of up to 2,000,000 shares of preferred stock with no par
value. Our board of directors may determine to issue shares of our preferred
stock. If done, the preferred stock may be created and issued in one or more
series and with such designations, rights, preference and restrictions as shall
be stated and expressed in the resolution(s) providing for the creation and
issuance of such preferred stock. If preferred stock is issued and we are
subsequently liquidated or dissolved, the preferred stock would be entitled to
our assets, to the exclusion of the common stockholders, to the full extent of
the preferred stockholders' interest in us.
Beginning in October 2003, we conducted a private offering of 800,000 shares of
Series A Convertible Preferred Stock of Atomic Paintball at a purchase price of
$0.25 per share. These shares were offered and sold to a limited number of
accredited investors, without public solicitation. A total of eight individuals
purchased shares from us for a total of $75,000. The offering was completed on
February 15, 2004. The federal exemption we relied upon in issuing these
securities was Rule 506 under of the Securities Act. The Rule 506 exemption was
available to us because we did not publicly solicit any investment in us. We
also gave all of these investors the opportunity to ask questions of and receive
answers from us as to all aspects of our business as well as access to such
information as they deemed necessary to fully evaluate an investment in us.
The Series A Convertible Preferred Stock ("Series A Preferred") has no par value
and has a liquidation preference of $0.25 per share. The Series A Preferred is
convertible into shares of our common stock at a conversion rate of 2:1, and
will automatically convert into common stock upon the effectiveness of any
registration statement filed by us with the Securities and Exchange Commission.
As at September 30, 2007, only 8,000 shares of our Series A Convertible
Preferred Shares were still outstanding, held by a single shareholder.
Common Stock
We are authorized to issue 10,000,000 shares of common stock, no par value per
share. The holders of common stock are entitled to one vote per share for the
election of directors and with respect to all other matters submitted to a vote
of stockholders. Shares of common stock do not have cumulative voting rights,
which means that the holders of more than 50% of such shares voting for the
election of directors can elect 100% of the directors if they choose to do so.
Our common stock does not have preemptive rights, meaning that our common
shareholders' ownership interest would be diluted if additional shares of common
stock are subsequently issued and the existing shareholders are not granted the
right, in the discretion of the Board of Directors, to maintain their ownership
interest in us.
Upon any liquidation, dissolution or winding-up of us, our assets, after the
payment of debts and liabilities and any liquidation preferences of, and unpaid
dividends on, any class of preferred stock then outstanding, will be distributed
pro-rata to the holders of the common stock. The holders of the common stock do
not have preemptive or conversion rights to subscribe for any of our securities
and have no right to require us to redeem or purchase their shares.
The holders of Common Stock are entitled to share equally in dividends, if and
when declared by our Board of Directors, out of funds legally available
therefore, subject to the priorities given to any class of preferred stock which
may be issued.
Stock Options
On October 21, 2003, we adopted a stock purchase plan entitled "2003 Stock
Incentive Plan" to attract and retain selected directors, officers, employees
and consultants to participate in our long-term success and growth through an
equity interest in us. We have been authorized to make available up to 2,000,000
shares of our common stock for grant as part of the long term incentive plan.
All outstanding options were cancelled, unexercised, effective October 2005,
with the resignation of the two officers subject to and covered by the Plan.
DECEMBER 31, 2006 DECEMBER 31, 2005
WEIGHTED WEIGHTED
AVERAGE AVERAGE
OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE
FOR OPTIONS GRANTED AT FAIR MARKET
VALUE ON THE DATE OF GRANT:
Options outstanding beginning of
period................ 0 $0.000 2,000,000 $0.125
Granted.......................... -- -- -- --
Exercised........................ -- -- -- --
Canceled......................... -- -- (2,000,000) 0.125
----------- ------- ------------ ----------
Options outstanding................ 0 $0.000 0 $0.000
=========== ======= ============ ==========
Options exercisable................ 0 $0.000 0 $0.000
=========== ======= ============ ==========
As permitted under the SFAS No. 123, Accounting for Stock-Based Compensation, we
account for our stock-based compensation in accordance with the provisions of
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees. As such, compensation expense is recorded on the date of grant if the
current market price of the underlying stock exceeds the exercise price. Certain
pro forma net income and EPS disclosures for employee stock option grants are
also included in the notes to the financial statements as if the fair value
method as defined in SFAS No. 123 had been applied. Transactions in equity
instruments with non-employees for goods or services are accounted for by the
fair value method.
The per-share weighted-average grant date fair value of all stock options
granted during 2003 was $0.04, using the Black-Scholes option-pricing model.
The following assumptions were used in calculating the fair value of the
options: expected volatility 0%, risk free rate of 3.31%, no dividend yield and
expected life of 5 years. The weighted average remaining contractual life of the
outstanding options and the options exercisable is approximately 10 years.
Convertible Note
Our first President and then sole director, Barbara J. Smith, loaned us a total
of $10,900 between April and July of 2002, to pay for further research and
development and for general corporate overhead. This loan bears interest at an
annual rate of 6.5%, was repayable in full on July 15, 2004 and was convertible
at Ms. Smith's option into shares of our common stock at $0.125 per share. These
monies are still owed, and Ms. Smith has declined to convert the outstanding
balance into shares. Accordingly, the entire balance of the loan continues to be
outstanding and we continue to accrue interest on the balance outstanding.
PART II
ITEM 1. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market Information.
There is currently no public trading market for any of our shares and there can
be assurances that a public market for such securities will develop or be
sustained if developed.
In May 2007, Pennaluna & Co, a broker dealer, submitted a Form 15c-211 on our
behalf seeking to have our shares of common stock listed on the Pink Sheets.
Following the submission of the Form 15c-211, we were issued a trading symbol
"ATOC" but our shares have not as yet been authorized to trade. We have received
two sets of queries from the NASD and we are finalizing a response to the second
set of queries. There can be no assurance that we shall be successful in our
attempts to obtain a listing on the Pink Sheets.
By the filing of this Registration Statement we hope to become a fully reporting
company. There can be no assurance that this Registration Statement will ever
become effective. Even if the Registration Statement becomes effective and we
become a reporting company, our shares will still not become listed on the Pink
Sheets or the OTC Bulletin Board until we receive NASD approval. There can be no
assurance we will receive NASD approval for our shares to trade.
Holders. As of September 30, 2007, we had approximately 50 shareholders.
Our transfer agent is Mountain Share Transfer, Inc., 1625 Abilene Drive,
Broomfield, Colorado, 80020, and their telephone number is 303-460-1149.
Dividends. We have not paid or declared cash distributions or dividends on our
shares of common stock and do not intend to pay cash dividends in the
foreseeable future.
Penny Stock Regulation Broker. In the event we are successful in obtaining a
listing for our shares of common stock it is likely that our shares will be
subject to broke dealer practices in connection with transactions in "penny
stocks" that are regulated by certain penny stock rules adopted by the
Securities and Exchange Commission. Penny stocks generally are equity securities
with a price of less than $5.00. Excluded from the penny stock designation are
securities registered on certain national securities exchanges or quoted on
NASDAQ, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange/system or sold to
established customers or accredited investors.
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the risks
in the penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in connection with the transaction, and the
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules. As our securities have become subject to the penny stock
rules, investors may find it more difficult to sell their securities.
Stock Incentive Plans -- details concerning the activities and status of our
stock incentive plans during the period are set out in Note 9. Stockholders'
Deficit of our Financial Statements on page 57 below.
ITEM 2. LEGAL PROCEEDINGS
No legal proceedings are pending or threatened to the best of our Company's
knowledge.
ITEM 3. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
KBA Group LLP audited our financial statements for the years ended December 31,
2003, 2002 and 2001.
KBA Group LLP, former auditor for the Company, resigned as auditor on September
15, 2006. Larry O'Donnell, CPA PC was subsequently engaged as auditor for
Company.
The Change of Accountants was approved by the Board of Directors. No audit
committee exists other than the members of the Board of Directors.
In connection with audit of the two most recent fiscal years and through the
date of termination of the accountants, no disagreements exist with any former
accountant on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope of procedure, which disagreements if not
resolved to the satisfaction of the former accountant would have caused them to
make reference in connection with his report to the subject of the
disagreement(s).
The audit report by Larry O'Donnell, CPA PC, for the fiscal years ended 2005 and
2006, contained an opinion which included a paragraph discussing uncertainties
related to continuation of the Registrant as a going concern. Otherwise, the
audit report by Larry O'Donnell, CPA PC for the years 2005 and 2006, did not
contain an adverse opinion or disclaimer of opinion, nor was qualified or
modified as to uncertainty, audit scope, or accounting principles.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In October 2005, our two founding shareholders and existing director and
officer, Barbara J. Smith and Alton K. Smith (`the Smiths'), entered into a
mutual release agreement with us and our shareholders. Under the terms of the
agreement the Smiths appointed Mark A. Armstrong as a new director, transferred
320,000 of their shares to Mr. Armstrong and then submitted their resignations
as a director and officer. In return for their resignations and their transfer
of shares to Mr. Armstrong, we and our shareholders irrevocably released the
Smiths from any and all actions, complaints and liabilities that may have been
outstanding against the Smiths by us and our shareholders.
In August 2006, Mr. Armstrong appointed David J. Cutler as a new director of
ours and subsequently resigned. Mr. Cutler to undertook to use his best efforts
to accelerate the implementation of our business plan, settle our outstanding
liabilities, bring our financial statements up to date, seek a listing for us on
the OTC Bulletin Board, raise new equity and recruit a senior management team
that would fully implement our proposed business plan. If we were to be unable
to raise sufficient funds to grow our business organically but were able to
obtain a listing on the OTC Bulletin Board the intention was to build our
business through the purchase of paintball businesses and assets in return for
the issue of shares of our common stock. There could be no assurance that this
sequence of events could be successfully completed. In return for accepting his
appointment with us, Mr. Cutler was issued with 2,530,376 shares of our common
stock making him our controlling shareholder.
Effective August 31, 2006, Mr. Armstrong, our former director and officer, was
issued 250,000 shares of our common stock as compensation for his services as a
director.
In September 2006, one of our founding shareholders and a former officer of
ours, Alton K. Smith, was issued 17,918 shares of our common stock as payment
for $768 expenses he had incurred on our behalf.
In September 2006, one of our existing preferred shareholders was issued with
281,459 shares of our common stock as payment for a loan and accrued interest of
$12,063 which he had made to us.
In December 2006, we issued:
- 100,000 shares of our common stock to one of our existing share-
holders, J. H. Brech, LLC., to seek out potential acquisitions for us
within the paintball sector,
- 50,000 shares of our common stock to both Mark A. Armstrong, a former
director of ours, and Charles E Webb, an existing shareholder of ours,
for their assistance in bringing our affairs up to date and progressing
the implementation of our business strategy,
- 697,674 shares of our common stock to Mr. Cutler, our Chief Executive
Officer and director, to convert $30,000 of the debt he had provided to
us into equity, and
- 100,000 shares of our common stock to Mr. Perlmutter as consideration
for his appointment as a non-executive director.
In March 2007, Mr. Cutler, our Chief Executive Officer and director, converted a
further $30,000 of the debt he had provided to us into 697,674 shares of our
common stock.
In April and May 2007, we issued 800,000 shares of our common stock at $0.125
per share for total consideration of $100,000. Mr. Perlmutter, our non-executive
director, subscribed for 200,000 of these shares for total consideration of
$25,000.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Nine of our Bylaws provides that we shall indemnify our officers or
directors against expenses incurred in connection with the defense of any action
in which they are made parties by reason of being our officers or directors,
except in relation to matters as to which such director or officer shall be
adjudged in such action to be liable for negligence or misconduct in the
performance of his duty. One of our officers or directors could take the
position that this duty on our behalf to indemnify the director or officer may
include the duty to indemnify the officer or director for the violation of
securities laws.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to our directors, officers and controlling
persons pursuant to our Articles of Incorporation, Bylaws, Texas law or
otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by one of our directors, officers or controlling
persons, and the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by a controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
PART F/S
Audited financial statements for the financial years ended December 31, 2006 and
2005, together with unaudited financial statements for the nine months ended
September 30, 2007 and 2006, as set out below on pages 42 to 61.
ATOMIC PAINTBALL, INC.
(A DEVELOPMEMT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM............... 43
BALANCE SHEETS
At September 30, 2007 (unaudited), December 31, 2006 (audited)
and 2005 (audited).................................................... 44
STATEMENTS OF OPERATIONS
For the six months ended September 30, 2007 and 2006 (unaudited),
the years ended December 31, 2006 (audited) and 2005 (audited)
and the period from Inception (May 8, 2001) through September 30,
2007 (unaudited)...................................................... 45
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the nine months ended September 20, 2007 (unaudited), the years
ended December 31, 2006 (audited) and 2005 (audited) and the period
from Inception (May 8, 2001) through September 30, 2007 (unaudited).. 46
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2007 and 2006 (unaudited),
the years ended December 31, 2006 (audited) and 2005 (audited) and
the period from Inception (May 8, 2001) through September 30, 2007
(unaudited)........................................................... 47
NOTES TO FINANCIAL STATEMENTS....................................... 48
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Atomic Paintball, Inc.
Denver, Colorado
I have audited the accompanying balance sheets of Atomic Paintball, Inc. (a
development stage company) as of December 31, 2006 and 2005 and the related
statements of operations, stockholders' deficit, and cash flows for the years
ended December 31, 2006 and 2005 and for the period from inception (May 8, 2001)
through December 31, 2006. These financial statements are the responsibility of
the Company's management. My responsibility is to express an opinion on these
financial statements based on my audits.
I conducted my audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audits provide a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Atomic Paintball, Inc. as of
December 31, 2006 and 2005 and the results of it's operations and cash flows for
the years ended December 31, 2006 and 2004 and for the period from inception
(May 8, 2001) through December 31, 2006 in conformity with accounting principles
generally accepted in the United States.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company is in the development stage, has not generated revenue
since inception, has suffered significant losses, had a working capital deficit
as of December 31, 2006 and 2005 and currently has no funds to execute its
business plan. Management's plans to address these matters are also included in
Note 2 to the financial statements. These conditions raise substantial doubt
about the Company's 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/ Larry O'Donnell CPA, PC
Larry O'Donnell CPA, PC
Aurora, Colorado
March 15, 2006
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
2007 2006 2005
(unaudited) (audited) (audited)
-----------------------------------------
ASSETS
Current Assets
Cash & Cash Equivalents $ 21,603 $ 44 $ 50
Other Receivables 0 36 0
-----------------------------------------
Total Current Assets 21,603 80 50
Property and Equipment, Net 0 0 2,012
-----------------------------------------
TOTAL ASSETS $ 21,603 $ 80 $ 2,062
=========================================
LIABILITIES & STOCKHOLDERS' (DEFICIT)
Current Liabilities
Accounts Payable $ 6,600 $ 9,784 $ 22,822
Accrued Expenses 7,275 2,804 4,646
Loans from Shareholders 53,689 50,314 19,523
-----------------------------------------
Total Current Liabilities 67,564 62,901 46,992
Total Liabilities 67,564 62,901 46,992
-----------------------------------------
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' (DEFICIT)
Preferred Stock,no par value: 2,000,000 shares authorized
Series A Convertible Preferred Stock, no par value; 400,000 shares 2,000 47,000 75,000
authorized, 8,000, 188,000 and 300,000 shares issued and outstanding
as at September 30, 2007, December 31, 2006 and 5005 respectively,
with a $0.25 per share liquidation preference.
Common Stock, no par value: 10,000,000 shares authorized, 7,132,804, 392,290 217,290 7,000
5,275,130 and 800,000 shares issued and outstanding as at September 30,
2007, December 31, 2006 and 2005 respectively.
Deficit accumulated during the development stage. (440,252) (327,112) (126,930)
-----------------------------------------
Total Stockholders' (Deficit) (45,962) (62,822) (44,930)
-----------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 21,603 $ 80 $ 2,062
=========================================
See accompanying Notes to Financial Statements.
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006,
THE YEAR ENDED DECEMBER 31, 2006 AND 2005
AND THE PERIOD FROM INCEPTION (MAY 8, 2001) THROUGH SEPTEMBER 30, 2007
FROM INCEPTION
FOR THE NINE MONTHS ENDED FOR THE YEARS ENDED (May 8, 2001)
SEPTEMBER 30, DECEMBER 31, THROUGH SEPTEMBER 30,
2007 2006 2006 2005 2007
(unaudited) (unaudited) (audited) (audited) (unaudited)
----------------------------------------------------------------------------------
OPERATING EXPENSES
General and Administrative $ 109,668 $ 140,480 $ 210,685 $ 2,195 $ 434,505
Depreciation and amortization 0 192 193 883 6,835
Gain on Settlement of Liabilities 0 (13,600) (13,600) 0 (13,600)
---------------------------------------------------------- -------------
Total Operating Expenses 109,668 127,072 197,278 3,078 427,740
OPERATING (LOSS) (109,668) (127,072) (197,278) (3,078) (427,740)
Interest Expense (3,473) (1,970) (2,904) (3,070) (12,511)
---------------------------------------------------------- -------------
(Loss) before Income Taxes (113,140) (129,043) (200,182) (6,148) (440,252)
---------------------------------------------------------- -------------
NET LOSS $ (113,140)$ (129,043)$ (200,182)$ (6,148) (440,252)
========================================================== =============
NET LOSS PER COMMON SHARE
Basic & Diluted ($0.02) ($0.11) ($0.10) ($0.01) ($0.27)
========================================================== =============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic & Diluted 6,537,891 1,143,059 1,940,830 800,000 1,639,650
========================================================== =============
See accompanying Notes to Financial Statements.
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FROM INCEPTION (MAY 8, 2001) THROUGH SEPTEMBER 30, 2007
Preferred Stock Common Stock (Accumulated deficit)
during
Shares Amount Shares Amount Development Stage Total
# $ # $ $ $
Balance at May 8, 2001
(date of inception) - - - - - -
Issuance of common stock
for cash on May 8, 2001 - - 200,000 1,000 - 1,000
at $0.005 per share
Issuance of common stock
for services on June 20,
2001 at $0.01 per share - - 600,000 6,000 - 6,000
Net loss for the period
from inception (May 8, 2001) - - - - (6,815) (6,815)
through December 31, 2001
-------- -------- --------- -------- ----------- ----------
Balance at December 31, 2001 - - 800,000 7,000 (6,815) 185
Net loss for the year ended
December 31, 2002 - - - - (4,155) (4,155)
-------- -------- --------- -------- ----------- ----------
Balance at December 31, 2002 - - 800,000 7,000 (10,970) (3,970)
Issuance of Series A Convertible
Preferred Stock for cash 116,000 29,000 - - - 29,000
during October and November 2003
at $0.25 per share
Net loss for the year ended
December 31, 2003 - - - - (47,656) (47,656)
-------- -------- --------- -------- ----------- ----------
Balance at December 31, 2003 116,000 29,000 800,000 7,000 (58,626) (22,626)
Issuance of Series A Convertible
Preferred Stock for cash
during February 2004 at $0.25
per share 184,000 46,000 - - - 46,000
Net loss for the year ended
December 31, 2004 - - - - (62,156) (62,156)
-------- -------- --------- -------- ----------- ----------
Balance at December 31, 2004 300,000 75,000 800,000 7,000 (120,782) (38,782)
Net loss for the year ended
December 31, 2005 - - - - (6,148) (6,148)
-------- -------- --------- -------- ----------- ----------
Balance at December 31, 2005 300,000 75,000 800,000 7,000 (126,930) (44,930)
Issuance of common stock for services
on August 31, 2006 at $0.042857 per
share - - 2,780,376 119,159 - 119,159
Issuance of common stock in settlement
of debt on September 8, 2006 - - 323,080 13,846 - 13,846
at $0.042857 per share
Conversion of Series A Convertible
Preferred into Common Stock on a 1:2 (112,000) (28,000) 224,000 28,000 - 0
basis during September 2006
Issuance of common stock for services
on December 1, 2006 at $0.042857 - - 100,000 4,286 - 4,286
per share
Issuance of common stock for services
on December 8, 2006 at $0.042857 - - 100,000 4,286 - 4,286
per share
Issuance of common stock for services
on December 18, 2006 at $0.042857 - - 150,000 6,429 - 6,429
per share
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FROM INCEPTION (MAY 8, 2001) THROUGH SEPTEMBER 30, 2007
Preferred Stock Common Stock (Accumulated deficit)
during
Shares Amount Shares Amount Development Stage Total
# $ # $ $ $
Issuance of common stock in settle-
ment of debt on December 19, 2006 at - - 697,674 30,000 - 30,000
$0.042857 per share
Issuance of common stock for services
on December 22, 2006 at - - 100,000 4,286 - 4,286
$0.042857 per share
Net loss for the year ended December
31, 2006 - - - - (200,182) (200,182)
-------- -------- --------- -------- ----------- ----------
Balance at December 31, 2006 188,000 47,000 5,275,130 217,290 (327,112) (62,822)
Conversion of Series A Convertible
Preferred Stock into Common Stock on (144,000) (36,000) 288,000 36,000 - 0
a 1:2 basis on January 18 & 23, 2007
Conversion of Series A Convertible
Preferred Stock to Common Stock on a (36,000) (9,000) 72,000 9,000 - 0
1:2 basis on February 5, 2007
Issuance of common stock in settlement
of debt on March 29, 2007 at - - 697,674 30,000 - 30,000
$0.042857 per share
Issuance of common stock for cash in
April 2007 at $0.125 per share - - 400,000 50,000 - 50,000
Issuance of common stock for cash
on May 2007 at $0.125 per share - - 400,000 50,000 - 50,000
Net loss for the nine months ended
September 30, 2007 - - - - (113,140) (113,140)
-------- -------- --------- -------- ----------- ----------
Balance at September 30, 2007 8,000 $ 2,000 7,132,804 $392,290 $ (440,252) $ (45,962)
======== ======== ========= ======== =========== ==========
See accompanying Notes to Financial Statements.
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006,
THE YEAR ENDED DECEMBER 31, 2006 AND 2005
AND THE PERIOD FROM INCEPTION (MAY 8, 2001) THROUGH SEPTEMBER 30, 2007
FROM INCEPTION
FOR THE NINE MONTHS ENDED FOR THE YEAR ENDED (May 8, 2001)
SEPTEMBER 30, DECEMBER 31, THROUGH SEPTEMBER 30,
2007 2006 2006 2005 2007
(unaudited)(unaudited)(audited) (audited) (unaudited)
------------------------------------------------------------------
CASH FLOW PROVIDED BY / (USED IN) OPERATING ACTIVITIES
NET LOSS $ (113,140) (129,043)$ (200,182)$ (6,148) $ (440,252)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY / (USED IN) OPERATING ACTIVITIES
Depreciation 0 192 193 883 6,835
Loss on Disposal of Fixed Assets 0 1,411 1,819 1,069 3,464
Issuance of Common Stock For Services 0 119,159 138,444 0 144,444
Gain on Settlement of Liabilities 0 (13,600) (13,600) 0 (13,600)
CHANGES IN OPERATING ASSETS & LIABILITIES
Decrease/(Increase) in Other Receivables 36 0 (36) 78 (0)
(Decrease)/Increase in Accounts Payable (3,183) 4,835 6,908 1,167 26,547
(Decrease)/Increase in Accrued Expenses 4,472 1,868 (1,843) 2,985 7,275
------------------------------------------- -----------
Total Cash Flow (used in) / provided by
Operating Activities (111,816) (15,178) (68,297) 35 (265,287)
Purchase of Fixed Assets 0 0 0 0 (10,299)
CASH FLOW FROM INVESTING ACTIVITIES
------------------------------------------- -----------
Total Cash Flow provided by Investing Activities 0 0 0 0 (10,299)
CASH FLOW FROM FINANCING ACTIVITIES
Advances Under Loans From Shareholders 33,375 15,164 68,290 0 121,189
Net Proceeds from Issuance of Common Stock 100,000 0 0 0 101,000
Net Proceeds from Issuance of Preferred Stock 0 0 0 0 75,000
------------------------------------------- -----------
Total Cash Flow provided by Financing Activities 133,375 15,164 68,290 0 297,189
$ 21,559 (14)$ (6)$ 35 $ 21,603 $
=========================================== ===========
INCREASE / (DECREASE) IN CASH & CASH EQUIVALENTS $ 44 50 $ 50 $ 15 $ 0 $
=========================================== ===========
$ 21,603 36 $ 44 $ 50 $ 21,603 $
=========================================== ===========
Cash and Cash Equivalents at the beginning
of the period
Cash and Cash Equivalents at the end of
the period
$ 0 0 $ 0 $ 140 $ 207 $
------------------------------------------- -----------
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION $ 0 0 $ 0 $ 0 $ 0 $
------------------------------------------- -----------
Cash paid for interest
See accompanying Notes to Financial Statements.
ATOMIC PAINTBALL, INC.
(A DEVELOPMANT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:
Atomic Paintball, Inc. was incorporated on May 8, 2001 in the State of Texas.
Nature of Operations -- We are a development stage corporation which plans to
own and operate paintball facilities and to provide services and products in
connection with paintball sport activities at our facilities and through a
website. The website has not been developed at this time.
We largely exhausted our available funding during the fiscal year ended December
31, 2004 and were forced to reduce our operations to a subsistence level for
much of the fiscal year ended December 31, 2004 and the fiscal year ended
December 31, 2005. Subsequently, during the fiscal year ended December 31 2006,
we were able to raise sufficient further interim funding and issue shares of our
common stock as compensation to certain consultants to accelerate the
implementation of our proposed business plan. However, so far we have been
unable to raise the substantial additional funding required to fully implement
our proposed business plan.
It is our current intention, within our existing level of interim funding, to
continue to accelerate progress on the implementation of our proposed business
while at the same time seeking to obtain a listing on the OTC Bulletin Board. We
believe that a listing on the OTC Bulletin Board will enable us to raise
sufficient new equity to fully implement our business plan, or alternatively, if
we are unable to raise sufficient new equity to fully implement our business
plan, once we have obtained a listing on the OTC Bulletin Board we will be able
to build our business through the purchase of paintball businesses and assets in
return for the issue of shares of our common stock. There can be no assurance we
will be able to successfully complete any of these proposed transactions.
At present, we have brought our financial books and records up to date,
appointed a highly experienced paintball executive as our non-executive
director, initiated an up date of our initial business plan to reflect recent
developments within the paintball sector, appointed a consultant to seek
potential acquisition targets within the paintball sector and intend to launch a
website to sell paintball products shortly.
If we are successful in raising further equity finance we plan to establish
corporate offices, hire senior management, conduct feasibility studies for real
estate acquisitions for paintball locations, purchase land and equipment for
operating paintball parks, purchase inventory for resale and develop our website
for marketing our paintball games and miscellaneous services via the Internet.
We will consider acquiring existing underperforming paintball parks where we can
create value through new capital expenditure and the application of state of the
art marketing and operating disciplines. We will also consider acquiring
existing, established, profitable paintball parks as a means of establishing
rapidly a critical mass of profitable operations. We would need to raise
substantial funds to complete this business plan and there can be no assurance
that we will be able to raise sufficient equity to fund our strategy.
Cash and Cash Equivalents -- Cash and cash equivalents consist of cash and
highly liquid debt instruments with original maturities of less than three
months.
Property and Equipment- Property and equipment are recorded at cost.
Depreciation is provided using the straight line method over the estimated
useful lives of the related assets. Amortization of leasehold improvements is
computed using the straight-line method over the shorter of the remaining lease
term or the estimated useful life of the improvement.
The useful lives of property and equipment for purposes of computing
depreciation are:
Leasehold Improvements 1 year
Equipment 7 years
Computer Equipment 5 years
Expenditures for maintenance and repairs are charged to operations as incurred,
while betterments that extend the useful lives of the assets are capitalized.
Assets held by the Company are periodically reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.
Deferred Costs and Other -- Offering costs with respect to issue of common
stock, warrants or options by us were initially deferred and ultimately offset
against the proceeds from these equity transactions if successful or expensed if
the proposed equity transaction is unsuccessful.
Impairment of Long-Lived and Intangible Assets -- In the event that facts and
circumstances indicated that the cost of long-lived and intangible assets may be
impaired, an evaluation of recoverability was performed. If an evaluation was
required, the estimated future undiscounted cash flows associated with the asset
were compared to the asset's carrying amount to determine if a write-down to
market value or discounted cash flow value was required.
Financial Instruments -- The estimated fair values for financial instruments was
determined at discrete points in time based on relevant market information.
These estimates involved uncertainties and could not be determined with
precision. The carrying amounts of notes receivable, accounts receivable,
accounts payable and accrued liabilities approximated fair value because of the
short-term maturities of these instruments. The fair value of notes payable
approximated to their carrying value as generally their interest rates reflected
our effective annual borrowing rate.
Income Taxes -- Through September 30, 2003, we elected to be treated as an "S"
Corporation for federal tax purposes. Accordingly, we were generally not subject
to federal income taxes. Our income or loss was included in the shareholder's
respective income tax returns.
Effective October 1, 2003, upon issuance of Series A Preferred Stock, we
converted to a "C" Corporation. As such, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Had we been a C Corporation for income tax purposes effective
January 1, 2002, the accompanying statements of operations would not have been
affected
Revenue Recognition - We expect to generate revenue from providing facilities,
services and products in connection with paintball sport activities. Revenues
will be recognized as services and products are delivered. We are currently in
the development stage and had no revenue during the nine months ended September
30, 2007 and 2006, the year ended December 31, 2006 and 2005.
Comprehensive Income (Loss) -- Comprehensive income is defined as all changes in
stockholders' equity (deficit), exclusive of transactions with owners, such as
capital investments. Comprehensive income includes net income or loss, changes
in certain assets and liabilities that are reported directly in equity such as
translation adjustments on investments in foreign subsidiaries and unrealized
gains (losses) on available-for-sale securities.
There were no differences between our comprehensive loss and net loss during the
nine months ended September 30, 2007 and 2006, the year ended December 31, 2006
and 2005.
Income (Loss) Per Share -- The income (loss) per share is presented in
accordance with the provisions of Statement of Financial Accounting Standards
(SFAS) No. 128, Earnings Per Share. SFAS No. 128 replaced the presentation of
primary and fully diluted earnings (loss) per share (EPS) with a presentation of
basic EPS and diluted EPS. Basic EPS is calculated by dividing the income or
loss available to common stockholders by the weighted average number of common
stock outstanding for the period. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. Diluted EPS was the same as Basic EPS
for during the nine months ended September 30, 2007 and 2006, the year ended
December 31, 2006 and 2005 as we had losses in all periods since our inception
and, therefore, the effect of all additional potential common stock would be
antidilutive.
Stock-Based Compensation -- As permitted under the SFAS No. 123, Accounting for
Stock-Based Compensation, we account for our stock-based compensation in
accordance with the provisions of Accounting Principles Board (APB) Opinion No.
25, Accounting for Stock Issued to Employees. As such, compensation expense is
recorded on the date of grant if the current market price of the underlying
stock exceeds the exercise price. Certain pro forma net income and EPS
disclosures for employee stock option grants are also included in the notes to
the financial statements as if the fair value method as defined in SFAS No. 123
had been applied. Transactions in equity instruments with non-employees for
goods or services are accounted for by the fair value method.
Use of Estimates -- The preparation of our consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in these
financial statements and accompanying notes. Actual results could differ from
those estimates. Due to uncertainties inherent in the estimation process, it is
possible that these estimates could be materially revised within the next year.
Recently Issued Accounting Pronouncements -- In March 2005, the Financial
Accounting Standards Board (FASB) Interpretation No. 47 "FIN 47" was issued,
which clarifies certain terminology as used in FASB Statement No. 143,
"Accounting for Asset Retirement Obligations." In addition it clarifies when an
entity would have sufficient information to reasonably estimate the fair value
of an asset retirement obligation. FIN 47 is effective no later than the end of
fiscal years ending after December 15, 2005. Early adoption of FIN 47 is
encouraged. We do not believe that the adoption of FIN 47 will have a material
impact on our financial conditions or results of operation.
In May 2005, the FASB issued FASB Statement No. 154, which replaces APB Opinion
No.20 and FASB No. 3. This Statement provides guidance on the reporting of
accounting changes and error corrections. It established, unless impracticable
retrospective application as the required method for reporting a change in
accounting principle in the absence of explicit transition requirements to a
newly adopted accounting principle. The Statement also provides guidance when
the retrospective application for reporting of a change in accounting principle
is impracticable. The reporting of a correction of an error by restating
previously issued financial statements is also addressed by this Statement. This
Statement is effective for financial statements for fiscal years beginning after
December 15, 2005. Earlier application is permitted for accounting changes and
corrections of errors made in fiscal years beginning after the date this
Statement is issued. We do not believe that the adoption of FASB Statement No.
154 will have a material impact on our financial conditions or results of
operation.
In February 2006, the FASB issued FASB Statement No. 155, which is an amendment
of FASB Statements No. 133 and 140. This Statement; a) permits fair value
remeasurement for any hybrid financial instrument that contains an embedded
derivative that otherwise would require bifurcation, b) clarifies which
interest-only strip and principal-only strip are not subject to the requirements
of Statement 133, c) establishes a requirement to evaluate interests in
securitized financial assets to identify interest that are freestanding
derivatives or that are hybrid financial instruments that contain an embedded
derivative requiring bifurcation, d) clarifies that concentrations of credit
risk in the form of subordination are not embedded derivatives, e) amends
Statement 140 to eliminate the prohibition on a qualifying special-purpose
entity from holding a derivative financial instrument that pertains to a
beneficial interest other than another derivative financial instrument. This
Statement is effective for financial statements for fiscal years beginning after
September 15, 2006. Earlier adoption of this Statement is permitted as of the
beginning of an entity's fiscal year, provided the entity has not yet issued any
financial statements for that fiscal year. We does not believe that the adoption
of FASB Statement No. 155 will have a material impact on our financial
conditions or results of operation
In March 2006, the FASB issued FASB Statement No. 156, which amends FASB
Statement No. 140. This Statement establishes, among other things, that
accounting for all separately recognized servicing assets and servicing
liabilities. This Statement amends Statement 140 to require that all separately
recognized servicing assets and servicing liabilities be initially measured at
fair value, if practicable. This Statement permits, but does not require, the
subsequent measurement of separately recognized servicing assets and servicing
liabilities at fair value. An entity that uses derivative instruments to
mitigate the risks inherent in servicing assets and servicing liabilities is
required to account for those derivative instruments at fair value. Under this
Statement, an entity can elect subsequent fair value measurement to account for
its separately recognized servicing assets and servicing liabilities. By
electing that option, an entity may simplify its accounting because this
Statement permits income statement recognition of the potential offsetting
changes in fair value of those servicing assets and servicing liabilities and
derivative instruments Is the same accounting period. This Statement is
effective for financial statements for fiscal years beginning after September
15, 2006. Earlier adoption of this Statement is permitted as of the beginning of
an entity's fiscal year, provided the entity has not yet issued any financial
statements for that fiscal year. We do not believe that the adoption of FASB
Statement No. 156 will have a material impact on our financial conditions or
results of operation.
In September 2006, the FASB issued Statement of Financial Accounting Standard
(SFAS) No. 157, "Fair Value Measurements" ("SFAS No. 157"). SFAS No. 157 defines
fair value, establishes a framework for measuring fair value in generally
accepted accounting principles ("GAAP"), and expands disclosures about fair
value measurements. This statement applies under other accounting pronouncements
that require or permit fair value measurement where the FASB has previously
determined that under those pronouncements fair value is the appropriate
measurement. This statement does not require any new fair value measurements but
may require companies to change current practice. This statement is effective
for those fiscal years beginning after November 15, 2007 and to the interim
periods within those fiscal years. We believe that SFAS No. 157 should not have
a material impact on our financial position or results of operations
In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans" ("SFAS No. 158"). SFAS
No. 158 requires employers to recognize the overfunded or underfunded status of
a defined benefit postretirement plan as an asset or liability in its statement
of financial position, recognize changes in that funded status in the year in
which the changes occur through comprehensive income and measure a plan's assets
and its obligations that determine its funded status as of the end of the
employer's fiscal year. The provisions of SFAS No. 158 are effective for fiscal
years ending after December 15, 2006. We believe that SFAS No. 158 should not
have a material impact on our financial position or results of operations.
In June 2006, the FASB issued FIN No. 48, "Accounting for Uncertainty in Income
Taxes--an interpretation of FASB Statement No. 109." This Interpretation
prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return, and provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure, and
transition. This Interpretation is effective for fiscal years beginning after
December 15, 2006. We believe that FIN No. 48 should not have a material impact
on our financial position or results of operations
In September 2006, the SEC issued Staff Accounting Bulletin No. 108,
"Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements" ("SAB 108"). SAB 108
requires companies to evaluate the materiality of identified unadjusted errors
on each financial statements and related financial statement disclosure using
both the rollover approach and the iron curtain approach. The requirements of
SAB 108 are effective for annual financial statements covering the first fiscal
year ending after November 15, 2006. SFAS No. 158 has not had a material impact
on our financial position or results of operations.
Business Segments -- In June 1997, the Financial Accounting Standards Board
issued SFAS No. 131, Disclosures About Segments of an Enterprise and Related
Information ("SFAS No. 131"). SFAS No. 131 changes the way public companies
report segment information in annual financial statements and also requires
those companies to report selected segment information in interim financial
reports to stockholders. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. We used the
management approach for segment disclosure, which designates the internal
organization that is used by management for making operating decisions and
assessing performance as the source of our reportable segments. As a development
stage, company we believe our operations during the nine months ended September
30, 2007 and 2006, and the year ended December 31, 2006 and 2005 only one
segment and as such, adoption of SFAS No. 131 does not impact the disclosures
made in our financial statements.
2. GOING CONCERN AND LIQUIDITY:
As of September 30, 2007, we had $21,603 cash on hand, $21,603 of assets, no
operating business or other source of income, outstanding liabilities of
approximately $67,564 and a stockholder' deficit of approximately $45,962.
As of December 31, 2006, we had $44 cash on hand, $80 of assets, no operating
business or other source of income, outstanding liabilities of approximately
$62,901 and a stockholder' deficit of approximately $62,822.
Consequently we are now dependent on raising additional equity and, or, debt to
fund any negotiated settlements with our outstanding creditors and meet our
ongoing operating expenses. There is no assurance that we will be able to raise
the necessary equity and, or, debt that we will need to be able to negotiate
acceptable settlements with our outstanding creditors or fund our ongoing
operating expenses.
Since his appointment effective August 31, 2006 through June 30, 2007 Mr. David
J. Cutler, our Chief Executive Officer, Chief Financial Officer and a director
of ours, has made advances to us of $158,812 by way of loan to fund our ongoing
operating costs and settle certain outstanding liabilities. In December 2006 Mr.
Cutler converted $30,000 of his loan to us into 697,674 shares of our common
stock. In March 2007 Mr. Cutler converted a further $30,000 of his loan to us
into an additional 697,674 shares of our common stock. There can be no assurance
that Mr. Cutler will continue to provide such financing on an ongoing basis.
During the nine months ended September 30, 2007 we raised $100,000 in cash
through the placement of 800,000 share of our common stock at $0.125 per share.
There can be no assurance that we will be able to raise further such funding on
an ongoing basis
As a result of these, among other factors, we received a report on our
consolidated financial statements for the years ended December 31, 2006 and 2005
from our Independent Registered Public Accounting Firm that include an
explanatory paragraph stating that the accompanying financial statements have
been prepared assuming the Company will continue as a going concern. As
discussed in Note 2 to the financial statements, the Company is in the
development stage, has not generated revenue since inception, has suffered
significant losses, had a working capital deficit as of December 31, 2006 and
2005 and currently has no funds to execute its business plan. Management's plans
to address these matters are also included in Note 2 to the financial
statements. These conditions raise substantial doubt about the Company's ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
September 30, September 30, December 31, December 31,
2007 2007 2006 2005
Unaudited Unaudited Audited Audited
- ------------------------------------ ------------------ --------------------- -------------------- ----------------------
Leasehold Improvements $0 $ $ $ 0
- ------------------------------------ ------------------ --------------------- -------------------- ----------------------
Equipment 0 0 0 3,000
- ------------------------------------ ------------------ --------------------- -------------------- ----------------------
Computer 0 0 0 1,045
- ------------------------------------ ------------------ --------------------- -------------------- ----------------------
------ ----- ----- ---------
- ------------------------------------ ------------------ --------------------- -------------------- ----------------------
0 0 0 4,045
- ------------------------------------ ------------------ --------------------- -------------------- ----------------------
Less: accumulated depreciation 0 (0) (0) (2,033)
- ------------------------------------ ------------------ --------------------- -------------------- ----------------------
------ ----- ----- ---------
- ------------------------------------ ------------------ --------------------- -------------------- ----------------------
$0 $ 0 $ 0 $ 2,012
- ------------------------------------ ------------------ --------------------- -------------------- ----------------------
Property and equipment, net ==== === === =====
- ------------------------------------ ------------------ --------------------- -------------------- ----------------------
There was $0 and $192 depreciation expense during the nine months ended
September 30, 2007 and 2006, respectively, $193 and $883 for the years ended
December 31, 2006 and 2005, respectively.
During the year ended December 31 2006, an uninsured trailer, classified as
equipment, was stolen and the last of our computer equipment, which could no
longer be used in our business, was written off.
4. ACCOUNTS PAYABLE
The balances of Accounts Payable at September 30, 2007, December 31, 2006 and
2005 represent liabilities that were substantially over due as at the date of
these balance sheets but were still outstanding as we did not have the necessary
funding in to pay these liabilities.
In September 2006, we negotiated the full write off of liabilities with a
carrying value of $13,600 and converted a liability of $768 into 17,189 shares
of our common stock.
No interest accrual has been made in respect of these outstanding accounts
payable as we believe they will be settled at or below their current carrying
value on our balance sheet.
5. ACCRUED EXPENSES
The balances of Accrued Expenses at September 30, 2007, December 31, 2006, and
2005 represents accrued interest on loan notes provided to us by certain of our
shareholders.
Accrued interest of $3,237 as at December 31, 2005 was converted into shares of
our common stock in September 2006.
6. LOANS FROM SHAREHOLDERS
Our first President and then sole director, Barbara J. Smith, loaned us a total
of $10,900 between April and July of 2002, to pay for further research and
development and for general corporate overhead. This loan bears interest at an
annual rate of 6.5% and was repayable in full in July 15, 2004 and was
convertible at Ms. Smith's option into shares of our common stock at $0.125 per
share. This loan has not been repaid and Ms. Smith has declined to convert the
outstanding balance into shares. Accordingly the entire balance of the loan
continues to be outstanding and we continue to accrue interest on the balance
outstanding.
In July 2004, one of our Series A Convertible Preferred Shareholders advanced to
us $7,500 by way of loan note. Interest at 8% was accrued on the loan note until
September 2006 when the principal balance and accrued interest was converted
into 281,459 shares of our common stock.
Since his appointment effective August 31, 2006 through September 30, 2007 Mr.
David J. Cutler, our Chief Executive Officer, Chief Financial Officer and a
director of ours, has made advances to us of $158,812 by way of loan to fund our
ongoing operating costs and settle certain outstanding liabilities. In December
2006 Mr. Cutler converted $30,000 of his loan to us into 697,674 shares of our
common stock. In March 2007 Mr. Cutler converted a further $30,000 of his loan
to us into an additional 697,674 shares of our common stock.. Interest is
accrued on the outstanding balance of this loan at 8%. There can be no assurance
that Mr. Cutler will continue to provide such financing on an ongoing basis.
8. RELATED PARTY TRANSACTIONS
Our founders were our first President and sole director, Barbara J. Smith, and
our first Vice President and Secretary, Alton K. Smith, who were husband and
wife. Subsequent to their resignations as our director and officers, they have
divorced.
Effective May 8, 2001, we issued a total of 200,000 shares of our common stock
to our founders in exchange for an initial investment of $1,000 to cover our
organizational expenses. Barbara J. Smith received 120,000 shares of our common
stock in exchange for her initial investment of $600 and Alton K. Smith received
80,000 shares of our common stock in exchange for his initial investment of
$400.
On June 20, 2001, we issued a total of 600,000 shares of our common stock to
Barbara J. Smith and Alton K. Smith in exchange for services valued at $6,000.
Barbara J. Smith received 360,000 shares of our common stock in exchange for her
services valued at $3,600 and Alton K. Smith received 240,000 shares of our
common stock in exchange for his services valued at $2,400.
Our first President and sole director, Barbara J. Smith, loaned us a total of
$10,900 between April and July of 2002, to pay for further research and
development and for general corporate overhead. This loan bore interest at an
annual rate of 6.5% and was repayable in full in July 15, 2004 and was
convertible into shares of our common stock at $0.125 per share. This loan has
not been repaid and Barbara Smith has declined to convert the outstanding
balance into shares. Accordingly the entire balance of the loan continues to be
outstanding and we continue to accrue interest on the balance outstanding.
In April 2002, we entered into a Lease Agreement with Alton K. Smith, one of our
officers, for a lease of property in Ellis County, Texas for use in our
paintball games. The term of the lease was for one year, with three renewal
terms of one year each. The rental payments were to be one dollar for every
person engaging in "Paintball Play Revenues," which included rentals,
concessions, fees, or other revenues relating to paintball activities conducted
on this leased property. We never made any payments to Mr. Smith under the
lease. We were also responsible for payment of one half of the taxes on the
leased property, which amounted to $300 in the fiscal year 2003. The lease was
renewed in the fiscal year ended December 31, 2003 but was not renewed during
the fiscal year ended December 31, 2004.
In October 2005 our two founding shareholders and existing director and officer,
Barbara J. Smith and Alton K. Smith (`the Smiths'), entered into a mutual
release agreement with us and our of our shareholders. Under the terms of the
agreement the Smiths appointed Mark A. Armstrong as a new director of ours,
transferred 320,000 of their shares in us to Mr. Armstrong and then submitted
their resignations as a director and officer. In return for their resignations
and their transfer of shares in us to Mr. Armstrong, we and our shareholders
irrevocably released the Smiths from any and all actions, complaints and
liabilities that my have been outstanding against the Smiths by us and our
shareholders.
In August 2006, Mr. Armstrong appointed David J. Cutler as a new director of
ours and subsequently resigned. Mr. Cutler to undertook to use his best efforts
to accelerate the implementation of our business plan, settle our outstanding
liabilities, bring our financial statements up to date, seek a listing for us on
the OTC Bulletin Board, raise new equity and recruit a senior management team
that would fully implement our proposed business plan. If we were to be unable
to raise sufficient funds to grow our business organically but were able to
obtain a listing on the OTC Bulletin Board the intention was to build our
business through the purchase of paintball businesses and assets in return for
the issue of shares of our common stock. There could be no assurance that this
sequence of events could be successfully completed. In return for accepting his
appointment with us, Mr. Cutler was issued with 2,530,376 shares of our common
stock making him our controlling shareholder.
Effective August 31, 2006, Mr. Armstrong, our former director, was issued
250,000 shares of our common stock as compensation for his services as a
director.
In September 2006, one of our existing preferred shareholders was issued with
281,459 shares of our common stock as payment for a loan and accrued interest of
$12,063 which he had made to us.
In December 2006, we issued:
- 100,000 shares of our common stock to one of our existing shareholders,
J. H. Brech, LLC., to seek out potential acquisitions for us within the
paintball sector
- 50,000 shares of our common stock to both Mark A. Armstrong, a former
director of ours, and Charles E Webb, an existing shareholder of ours,
for their assistance in bringing our affairs up to date and progressing
the implementation of our business strategy,
- 697,674 shares of our common stock to Mr. Cutler, our Chief Executive
Officer and director, to convert $30,000 of the debt he had provided to
us into equity, and
- 100,000 shares of our common stock to Mr. Perlmutter as consideration
for his appointment as a non-executive director
In March 2007, Mr. Cutler, our Chief Executive Officer and director, converted a
further $30,000 of the debt he had provided to us into 697,674 shares of our
common stock.
In May 2007, Mr. Perlmutter, our non-executive director, subscribed for 200,000
shares of our common stock at a price of $0.125 per share for total
consideration of $25,000.
9. STOCKHOLDERS' DEFICIT:
Preferred Stock
In October 2003, our Board of Directors adopted a resolution to authorize the
issuance (in series) of up to 2,000,000 shares of preferred stock with no par
value. Our board of directors may determine to issue shares of our preferred
stock. If done, the preferred stock may be created and issued in one or more
series and with such designations, rights, preference and restrictions as shall
be stated and expressed in the resolution(s) providing for the creation and
issuance of such preferred stock. If preferred stock is issued and we are
subsequently liquidated or dissolved, the preferred stock would be entitled to
our assets, to the exclusion of the common stockholders, to the full extent of
the preferred stockholders' interest in us.
Beginning in October 2003, we conducted a private offering of 800,000 shares of
Series A Convertible Preferred Stock of Atomic Paintball at a purchase price of
$0.25 per share. These shares were offered and sold to a limited number of
accredited investors, without public solicitation. A total of eight individuals
purchased shares from us for a total of $75,000. The offering was completed on
February 15, 2004. The federal exemption we relied upon in issuing these
securities was Rule 506 under of the Securities Act. The Rule 506 exemption was
available to us because we did not publicly solicit any investment in us. We
also gave all of these investors the opportunity to ask questions of and receive
answers from us as to all aspects of our business as well as access to such
information as they deemed necessary to fully evaluate an investment in us.
The Series A Convertible Preferred Stock ("Series A Preferred") has no par value
and has a liquidation preference of $0.25 per share. The Series A Preferred is
convertible into shares of our common stock at a conversion rate of 2:1, and
will automatically convert into common stock upon the effectiveness of any
registration statement filed by us with the Securities and Exchange Commission.
During October and November of 2003, we issued 116,000 shares of Series A
Convertible Preferred Stock for $29,000.
During January and February 2004, we initially issued a total of 284,000 shares
of Series A Convertible Preferred Stock for an aggregate purchase price of
$71,000 although we were subsequently forced to cancel 100,000 of these shares
for non payment and consequently the final issuance was for 184,000 shares of
Series A Convertible Preferred Stock with an aggregate purchase price of
$46,000.
During September 2006 shareholders holding 112,000 of our Series A Convertible
Preferred Shares converted these Convertible Preferred Shares into 224,000
shares of our common stock.
During January and February 2007 shareholders holding 180,000 of our Series A
Convertible Preferred Shares converted these Convertible Preferred Shares into
360,000 shares of our common stock.
At September 30, 2007, only 8,000 shares of our Series A Convertible Preferred
Shares were still outstanding, held by a single shareholder.
Common Stock
We are authorized to issue 10,000,000 shares of common stock, no par value per
share. The holders of common stock are entitled to one vote per share for the
election of directors and with respect to all other matters submitted to a vote
of stockholders. Shares of common stock do not have cumulative voting rights,
which means that the holders of more than 50% of such shares voting for the
election of directors can elect 100% of the directors if they choose to do so.
Our common stock does not have preemptive rights, meaning that our common
shareholders' ownership interest would be diluted if additional shares of common
stock are subsequently issued and the existing shareholders are not granted the
right, in the discretion of the Board of Directors, to maintain their ownership
interest in us.
Upon any liquidation, dissolution or winding-up of us, our assets, after the
payment of debts and liabilities and any liquidation preferences of, and unpaid
dividends on, any class of preferred stock then outstanding, will be distributed
pro-rata to the holders of the common stock. The holders of the common stock do
not have preemptive or conversion rights to subscribe for any of our securities
and have no right to require us to redeem or purchase their shares.
The holders of Common Stock are entitled to share equally in dividends, if and
when declared by our Board of Directors, out of funds legally available
therefore, subject to the priorities given to any class of preferred stock which
may be issued.
At September 30, 2007 we had a total of 7,132,804 shares of common stock issued
and outstanding.
Stock Options
On October 21, 2003, we adopted a stock purchase plan entitled "2003 Stock
Incentive Plan" to attract and retain selected directors, officers, employees
and consultants to participate in our long-term success and growth through an
equity interest in us. We have been authorized to make available up to 2,000,000
shares of our common stock for grant as part of the long term incentive plan.
During 2003, we granted stock options under the 2003 Stock Incentive Plan to two
of our officers to purchase a total of 2,000,000 shares of the Company's common
stock at an exercise price of $0.125 per share. These options were to vest over
a five year period, with 60% vesting in the first year and 10% in each of the
next four years, and were to expire upon the tenth anniversary of the date of
grant. At December 31, 2003, there are 1,200,000 exercisable stock options. All
outstanding options were cancelled, unexercised, effective October 2005 with the
resignation of the two officers.
DECEMBER 31, 2006 DECEMBER 31, 2005
WEIGHTED WEIGHTED
AVERAGE AVERAGE
OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE
FOR OPTIONS GRANTED AT FAIR MARKET
VALUE ON THE DATE OF GRANT:
Options outstanding beginning of
period................ 0 $0.000 2,000,000 $0.125
Granted.......................... -- -- -- --
Exercised........................ -- -- -- --
Canceled......................... -- -- (2,000,000) 0.125
----------- ------- ------------ ----------
Options outstanding................ 0 $0.000 0 $0.000
=========== ======= ============ ==========
Options exercisable................ 0 $0.000 0 $0.000
=========== ======= ============ ==========
As permitted under the SFAS No. 123, Accounting for Stock-Based Compensation, we
account for our stock-based compensation in accordance with the provisions of
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees. As such, compensation expense is recorded on the date of grant if the
current market price of the underlying stock exceeds the exercise price. Certain
pro forma net income and EPS disclosures for employee stock option grants are
also included in the notes to the financial statements as if the fair value
method as defined in SFAS No. 123 had been applied. Transactions in equity
instruments with non-employees for goods or services are accounted for by the
fair value method.
The per-share weighted-average grant date fair value of all stock options
granted during 2003 was $0.04, using the Black-Scholes option-pricing model.
The following assumptions were used in calculating the fair value of the
options: expected volatility 0%, risk free rate of 3.31%, no dividend yield and
expected life of 5 years. The weighted average remaining contractual life of the
outstanding options and the options exercisable is approximately 10 years.
10. INCOME TAXES:
We have had losses since our Inception (May 8, 2001) through June 30, 2007 and
therefore have not been subject to federal or state income taxes. We have
accumulated tax losses available for carry forward of approximately $420,000.
The carry forward is subject to examination by the tax authorities and expires
at various dates through the year 2030. The Tax Reform Act of 1986 contains
provisions that limits the NOL carry forwards available for use in any given
year upon the occurrence of certain events, including significant changes in
ownership interest. Consequently following the issue of 55.1% of our total
authorized and issued share capital in August 2006 to Mr. Cutler, one of our
directors, our ability to use these losses is substantially restricted by the
impact of section 382 of the Internal Revenue Code.
11. SUBSEQUENT EVENTS:
None.
PART III
ITEM 1. INDEX TO EXHIBITS
The following exhibits are filed as part of this Registration Statement:
EXHIBIT
NUMBER DESCRIPTION AND METHOD OF FILING
3.1 Articles of Incorporation of Atomic Paintball, Inc
3.2 Amendment 1 to the Articles of Incorporation of Atomic Paintball, Inc
3.3 Amendment 2 to the Articles of Incorporation of Atomic Paintball, Inc
3.4 Bylaws of Atomic Paintball, Inc
3.5 Certificate of Designations for Series A Convertible Preferred Stock
4.1 Specimen certificate of the Common Stock of Atomic Paintball, Inc.
4.2 Promissory Note, dated July 1, 2003, payable to Barbara J. Smith.
4.3 Promissory Note, dated October 29, 2003, payable to Alton K. Smith.
4.4 Promissory Note, dated February 13, 2004, payable to the Registrant.
5.1 Opinion of Michael A Littman, Attorney at Law, as to the legality of
securities being registered
10.1 Lease Agreement, dated as of April 1, 2002, by and between Alton K. Smith
as Landlord, and Atomic Paintball, Inc. as Tenant
10.2 Atomic Paintball, Inc. 2003 Stock Incentive Plan
10.3 Stock Option Agreement between Barbara J. Smith and the Registrant, dated
October 21, 2003
10.4 Stock Option Agreement between Alton K. Smith and the Registrant, dated
October 21, 2003
10.5 Form of Subscription Agreement for Series A Convertible Preferred Stock
ITEM 2. DESCRIPTION OF EXHIBITS
See Item 1 above.
SIGNATURES
In accordance with the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
ATOMIC PAINTBALL, INC.
Date: October 9, 2007 By: /s/ DAVID J. CUTLER
-------------------
David J. Cutler
Chief Executive Officer, &
Chief Financial Officer
In accordance with the Securities Exchange Act of 1924, this report has been
signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ David J. Cutler Chief Executive Officer October 9, 2007
-----------------------
David J. Cutler &
Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Jeffrey Perlmutter Director October 11, 2007
----------------------