UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
================================================================================
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008.
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
COMMISSION FILE NO. 000-52856
ATOMIC PAINTBALL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED 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
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(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
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes |_| No |X|
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes |_| No |X|
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of
the Exchange Act. (check one):
Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |_|
Smaller reporting company |X|
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |X| No |_|
As of March 27, 2009 there were 7,488,804 shares of Common Stock of the
registrant issued and outstanding of which 2,963,080 were held by non-affiliates
of the registrant The aggregate market value of common stock held by
non-affiliates of the registrant as of March 27, 2009 was approximately
$370,385.
1
ATOMIC PAINTBALL, INC.
2008 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
ITEM DESCRIPTION PAGE
Part I.
Item 1. Business 3
Item 1A. Risk Factors 16
Item 1B. Unresolved Staff Comments 22
Item 2. Description of Properties 22
Item 3 Legal Proceedings 23
Item 4. Submission of Matters to a Vote of Security Holders 23
Part II.
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters, and Issuer Purchases of Equity Securities 23
Item 6. Selected Financial Data 25
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 25
Item7A Quantative and Qualitative Disclosures About Market Risk 31
Item 8. Financial Statements and Supplementary Data 31
Item 9 Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure 31
Item 9A. Controls and Procedures 31
Item 9B. Other Information 32
Part III.
Item 10. Directors, Executive Officers and Corporate Governance 32
Item 11. Executive Compensation 34
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 35
Item 13. Certain Relationships and Related Transactions and Director
Independence 35
Item 14. Principal Accountant Fees and Services 36
Part IV.
Item 15. Exhibits and Financial Statement Schedules 37
SIGNATURES 53
2
FORWARD-LOOKING STATEMENTS
In addition to historical information, some of the information presented in this
Annual Report on Form 10-K 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 ongoing
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, 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
18 below. You are urged to carefully consider these factors, as well as other
information contained in this Annual Report on Form 10-K and in our other
periodic reports and documents filed with the SEC.
PART I
ITEM 1. 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.
It is our current intention, within our existing level of interim funding, to
continue to implement our proposed business. 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.
BUSINESS HISTORY
We were incorporated in Texas on May 8, 2001, as Atomic Paintball, Inc.
We initially 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.
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.
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
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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.
During the years ended December 31, 2007 and 2008 we focused on completing those
actions necessary to the implement our business plan.
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 former
director, subscribed for 200,000 of these shares for total consideration of
$25,000.
On October 11, 2007, we filed a Form 10-SB12G with the Securities and Exchange
Commission (SEC) seeking to become a fully reporting company pursuant to Section
12 (g) of the Securities Exchange Act of 1934. The filing became effective on
December 10, 2007, at which time we succeeded in becoming a fully reporting
company pursuant to Section 12 (g) of the Securities Exchange Act of 1934.
In November 2007 we issued a further 40,000 shares of our common stock at $0.125
per share for total consideration of $5,000 to an accredited investor and
300,000 shares of our common stock, valued at $0.125 per share or $37,500, as
remuneration to our former director, Jeffery L. Perlmutter.
In December 2007, following our registration pursuant to Section 12 (g) of the
Securities Exchange Act of 1934 the remaining 8,000 shares of our Series A
Convertible Preferred Shares automatically converted into 16,000 shares of our
common stock.
In May 2008, Pennaluna & Co, a broker dealer, submitted a Form 15c-211 on our
behalf to FINRA seeking to have our shares of common stock listed on the OTC
Bulletin Board. In FINRA's response to the Form 15c-211 that was filed on our
behalf, FINRA took the position that, under their own interpretation of what
constitutes a "shell" company as opposed to a "development" stage company, we
constitute a "shell" company rather than a "development" stage company.
Accordingly FINRA instructed us to re-file our previous filings with the SEC
with the "box checked" on the first page to indicate we are a shell company (as
defined in Rule 12b-2 of the Exchange Act). Our management is in no doubt that
we were, and are, a development stage company as defined by Statement of
Financial Accounting Standards No 7 "Accounting and Reporting by Development
Stage Enterprises." Our management's belief that we were, and are, a development
stage company is supported by current SEC guidelines, our auditors and our
outside legal counsel. At the same time, our management recognizes FINRA's right
to apply its own definition to this issue. Accordingly, we amended our previous
filings with the SEC, where appropriate, in accordance with FINRA instructions,
by "checking the box" on the first page of each of our SEC filings to indicate
we are a shell company (as defined in Rule 12b-2 of the Exchange Act). Amending
our filings in this way, on the instruction of FINRA, in no way alters the fact
that we have, and continue to, consistently pursue 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.
Effective October 2008, FINRA approved shares of our common stock to trade on
both the Over the Counter Bulletin Board and the Pink Sheets under the trading
symbol "ATOC."
On March 31, 2009, Mr. Jeffrey Perlmutter resigned as a director.
It is our current intention, within our existing level of interim funding, to
continue to accelerate progress on the implementation of our proposed business.
We cannot make any assurances that we will be able to raise additional interim
financing.
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.
4
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.
PLAN OF OPERATIONS
Our plan of operations is to execute 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, we intend to commence our business plan. We
intend to pursue further capital through private placements of shares of our
common stock and we will also attempt 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.
OUR OBJECTIVES
Our specific objectives over the next twelve months are to:
i) seek to raise at least $250,000 in an initial private placement. We
are also seeking to raise an additional $250,000 that would allow us
to complete an initial "pilot" acquisition of a small paintball field;
ii) establish a database of existing paintball parks and related
businesses;
iii) establish a database of potential locations for new paintball parks;
iv) create a website in conjunction with an on-line directory of exiting
paintball parks to build our brand identity;
v) identify a management team of experienced paintball executives
committed to implementing our proposed business plan;
vi) develop list of criteria and a formal assessment process for
identifying, evaluating and prioritizing potential acquisition targets
to arrive at a short list of potential acquisitions we would like to
complete, subject to our ability to negotiate acceptable acquisition
terms;
vii) enter into negotiation with the owners of potential acquisition
targets we have short listed as meeting the criteria of the formal
assessment process as developed in item vii above and attempt to agree
purchase terms acceptable to us;
viii)sign purchase agreements, subject to funding, to acquire out
acquisition targets;
ix) prepare a comprehensive business plan for the proposed acquisition.
Consequently it is our overall objective that at the end of the initial twelve
months period, we will have developed a comprehensive business plan for a
carefully selected acquisition, supported by a committed management team, as a
basis to seek the funding necessary to complete the proposed acquisition. While
we have not considered any potential acquisitions at this stage, we anticipate
that we shall probably need to raise approximately another $250,000 to complete
an initial first "pilot" acquisition of a small paintball field and a $1-5
million in funding to complete a more substantial program of acquisitions.
There can be no assurance we will be able to successfully achieve any of these
initial objectives during the next twelve months or indeed, that if we do
successfully achieve the initial objectives we shall be able to raise the
additional funding required to complete any proposed acquisition.
We do not anticipate generating any revenue in the next twelve months of our
operations. Indeed we believe we will not generate any revenue from our
operations until we have completed our first acquisition. As we have not
identified any potential acquisition as yet, do not know the nature of our first
5
acquisition, or indeed whether we will be able to complete any such acquisition,
we have no basis on which to estimate when we will generate our first revenue or
the anticipated amount of revenue to be generated from our first acquisition.
Seek to Raise at Least $250,000 in an Initial Private Placement
We are seeking to raise at least $250,000 in an initial private placement to
fund the achievement of the initial objectives we have established for ourselves
over the next twelve months.
We propose using the funds raised in an initial private placement of $250,000 to
pay operating expenses in the following listed categories:
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
===========
The proposed allocation of funds by expense category is based on our current
assessment of the resources we will require to achieve our initial objectives.
Although we have identified specific applications for the funds anticipated to
be raised in an initial private placement, we will have complete discretionary
control over the actual utilization of said funds and there can be no assurance
as to the manner or time in which said funds will be utilized.
While we believe that an initial private placement of $250,000 will be
sufficient for us to achieve the initial objectives we have set for ourselves,
there can be no guarantee that we will not require further funds to achieve
these objectives.
We are also seeking to raise an additional $250,000 that would allow us to
complete an initial "pilot" acquisition of a small paintball field.
There can be no assurance that we will be able to raise the full amount of
$250,000 that we are initially seeking. Accordingly we have developed
contingency plans that we believe may allow us to achieve our initial objectives
in the advent that we are only able to raise 25%, 50% or 75% of our proposed
initial private placement.
The following table shows how we intend to allocate funds if we raise only 25%,
50% or 75% of our planned private placement:
Expenditure Item 25% 50% 75% 100%
Accounting and legal expenses $ 10,000 $ 10,000 $ 10,000 $ 10,000
Salaries and wages 10,000 35,000 67,500 100,000
Feasibility 10,000 30,000 40,000 50,000
Marketing 10,000 20,000 30,000 30,000
Development of website 10,000 10,000 10,000 10,000
Travel and administrative 10,000 15,000 20,000 25,000
Office expenses 2,500 5,000 10,000 25,000
Total $ 62,500 $125,000 $187,500 $ 250,000
6
The impact of these various potential levels of funding on our ability to
achieve our initial objectives is considered in more detail below.
Establish a Database of Existing Paintball Parks and Related Businesses
We will initially obtain information about existing paintball parks from the
limited information available from:
- the existing online directories of paintball parks currently available
on the internet;
- "Yellow Pages" and other "hard copy" directories;
- advertisements by paintball parks in current and back issues of the
various paintball magazines;
- depending on the level of funding we are able to achieve, we may be
able to buy specially compiled marketing / mailing lists of paintball
parks, and similarly;
- depending on the level of funding we are able to achieve, we may run
advertisements in the paintball press soliciting information from
paintball parks to appear in a new, free, online directory of
paintball parks.
We will then contact each paintball park we have identified to request
information to be compiled into a comprehensive online directory of paintball
parks. The existing online directories of paintball parks are extremely
primitive - often out of date, with no more than a list of names, addresses and
a web link to the web page of each individual paintball park. We propose to
offer a modern, well designed, highly functional website that provides key
details of each participating paintball park on single web site. In addition to
the standard information of name, address and telephone number, we will also
provide details of size (acreage), number and size of playing areas, description
of the playing environment, available facilities, opening hours and prices.
Paintball parks will be allowed to add there own advertising / marketing
messages. Players will be encouraged to post comments on the parks they use. We
will aggressively drive traffic to the online directory from online search
engines and links with other general paintball web sites.
There will be no charge for paintball parks to appear in the directory.
Consequently, they will benefit from free marketing.
Similarly players seeking paintball parks where they can play will not be
charged for accessing the site. Consequently, they will benefit from being able
to find detailed information about paintball parks near their homes or in areas
where they intend to take vacations or attend business meetings.
We will benefit by compiling, and effectively leveraging, a database of existing
paintball parks that will allow us to identify and analyze:
- the current product offerings, customer service experiences and
business practices from a wide range of paintball parks;
- paintball parks which are no longer in business and that potentially
could be "revived" with new management and funding;
- underperforming paintball parks where we believe we could create added
value by providing new management expertise and funding;
7
- highly successful paintball parks where we will seek to learn and
replicate the basis of their success and potentially look to recruit
their senior management for our own operations.
The creation of the online database of existing paintball parks will allow us
rapidly to build knowledge of the paintball park industry, gain exposure to
paintball park management and owners and build a distinctive web site with
valuable content for a wide range of users.
The quality of the marketing materials we use to solicit data for the online
directory, the ability to use third party marketing consultants, our use of part
time or full time employees to compile the data will all be dependent on the
level of funding that we are able to achieve.
Establish a Database of Potential Locations for New Paintball Parks
We will initially obtain information about potential locations from new
paintball parks by:
- contacting real estate agents to assist us in identifying land owners
who may be interested in developing property they own as a paintball
park;
- depending on the level of our available funding, we may run
advertisements in both paintball and non-paintball magazines
soliciting land owners who may be interested in developing property
they own as a paintball park.
The quality of the marketing materials and the extent advertising we use to
solicit interested land owners will be dependent on the level of funding that we
are able to achieve.
Create a Website in Conjunction with an Online Directory of Existing Paintball
Parks to Build Our Brand Identity
Our objective is to build a website that builds a brand identity for our
business. We believe that developing our website in conjunction with an online
directory will achieve that. The online directory will create real value for
existing paintball park owners and players without costing them a cent. It will
prove that we are "in touch" with everything that is going on the paintball park
sector. We will ensure the website is well designed and highly functional. We
believe it will help us build rapid credibility for our organization.
The speed with which we develop our website, the sophistication of the website,
the use of third party consultants or part-time or full-time employees will all
be dependent on the level of funding that we are able to achieve.
Identify a Management Team of Experienced Paintball Executives Committed to
Implementing Our Proposed Business Plan
Identifying a management team committed to implementing our proposed business
plan as soon as we complete our first acquisition is critical to the success of
our business plan.
We will seek to identify such a management team as follows:
- when we identify highly successful paint ball parks, we will attempt
to acquire the park with its existing management in place. We believe
that we may be able to acquire and motivate such a management team by
bringing them into a public company which offers them challenges and
opportunities to practice their profession in a larger, more demanding
role than in their current situation;
- we will search for highly talented executives operating in existing,
under funded, paintball operations who have not been able to maximize
their potential through lack of opportunity in their current roles. We
believe that these individuals will be excited to seize the
opportunity of working in a pubic company looking to implement a rapid
growth business plan;
- we will advertise in paintball publications for management candidates;
8
- we will actively seek a real estate professional with experience of
obtaining planning consents and property development to be part of the
management team;
- if necessary, if we are unable to assemble the management team we are
seeking through our own contacts, depending of the level of funding
available to us, we will consider retaining a third party, head
hunting firm of consultants to identify appropriate candidates.
There is no guarantee that we will be successful in being able to attract the
quality of experienced management that we are seeking who will be prepared to
commit to join our unproven start up operation.
Identify, Evaluate and Prioritize Potential Acquisition Targets
We will attempt to identify potential acquisition targets by:
- direct mail to the paintball parks in our database;
- direct mail to land owners who commercial real estate realtor have
identified as potentially having an interest in developing land they
own as a paint ball park;
- contacting business brokers to refer solicit and refer paintball
business to us on a contingent basis;
- running advertisements in paintball and financial magazines seeking
acquisitions.
When we receive an expression of interest from a potential acquisition target we
will evaluate the potential target against a list of criteria we will have
established in conjunction with our prospective new management team.
Key factors in evaluating any potential acquisition will be:
- the location of the existing or potential paintball park.
We believe that proximity and convenient access to a critical
mass of our targeted demographic is critical to the long term
success of any paintball park. Other relevant factors include
proximity to other existing paint ball parks and, in respect of
new paintball parks, the likely planning considerations of
establishing a new park;
- anticipated requirement for new capital expenditure.
At one extreme, if we acquire an existing successful, profitable
paintball park, it may require little in the way of additional
capital expenditure. At the other extreme, if we acquire a green
field site, we will have to build an entire new facility,
including infrastructure. In between these two extremes we expect
to be able to acquire existing, under capitalized, paintball
parks that will need significant upgrades in the existing
facilities to achieve their true operating potential.
Assessing the anticipated risk and returns on these various
levels of potential capital expenditure will be a significant
challenge for our prospective management team;
- existing customer base / brand reputation.
New, green field sites, will need extensive sales and marketing
expenditure to develop customer awareness and establish a stable
growing customer base. For exiting paintball parks we will need
to assess the strength of their reputation and customer / brand
loyalty. We believe that even in existing profitable, successful
paintball businesses we will be able to increase customer numbers
through carefully targeted marketing aimed at key demographic
groups;
- the quality of existing management.
9
Particularly in our early acquisitions, the existence of talented
and successful management who wish to continue their employment
with us and rise to the new challenges we have to offer them will
be very attractive to us.
On the basis of a formalized process we will establish for evaluating potential
acquisitions, we will seek to arrive at, and maintain on an updated basis, a
prioritized short list of acquisitions ranked in the order in which we believe
can create most value for our shareholders.
There is no guarantee that we will be able to locate acquisition targets that we
believe will meet our minimum specified criteria and that we would wish to
acquire.
Our ability to use outside third party consultants to complete feasibility
studies will be dependent on the level of funding that we are able to achieve.
Negotiate with the Owners of Potential Acquisition Targets
Once we have established a short list of acquisitions we would like to make, we
will enter into negotiations with owners of the assets in question to establish
whether it is possible to negotiate terms that are mutually acceptable to both
parties.
At our stage of development, transactions that can be completed with a high
percentage of consideration comprising shares of our common stock and, or, owner
carried loan notes are particularly attractive to us.
At the same time, we recognize that we will be able to purchase businesses more
cheaply for cash we have generated from that sale of shares of our common stock
or from third party debt. We will also need to raise additional funding from
these sources to provide on going working capital and additional capital
investment for the businesses we acquire.
There is no guarantee that we will be able to negotiate acceptable acquisition
terms for businesses or assets we would wish to purchase.
Sign Purchase Agreements, Subject to Funding, to Acquire Our Acquisition Targets
Unless we can complete acquisitions for consideration comprising 100% of shares
of our common stock and, or, owner financed loan notes, we intend to attempt
enter into binding purchase agreements, subject to funding, to acquire our
acquisition targets.
These agreements will be for a term that will give us sufficient time to
complete a business plan and raise the funding necessary to complete the
acquisition in question.
We recognize that certain owners of assets that we would wish to purchase will
not be prepared to sign such agreements in which case we will do our best to
fund such acquisitions based on the circumstances in which we find ourselves.
Prepare a Comprehensive Business Plan for the Proposed Acquisition.
When we have "locked in" the terms of a specific acquisition, subject to
funding, we will then prepare a business plan as a basis to raise the funding
for the proposed acquisition.
The business plan will include all relevant historic information about the
target acquisition, our proposed business plan for the acquisition target,
profiles of the management team we have assembled to implement our strategy and
details of the funding we are seeking to raise to complete the acquisition.
While we have not considered any potential acquisitions at this stage, we
anticipate that we shall probably need to raise approximately $250,000 to
complete an initial first "pilot" acquisition of a small paintball field and
$1-5 million in funding to complete our first acquisition.
We will seek investment partners in order to raise the necessary funds to
acquire our first paintball park and provide us with the necessary working
capital for the acquired business. Such potential partners will include banks,
investment funds, high net worth individuals and broker dealers.
10
There is no guarantee that we will be able to raise the funding that we require
to complete our targeted acquisition or provide us with the necessary working
capital for the acquired business.
ANTICIPATED TIME TABLE FOR ACHIEVING OUR OBJECTIVES
Given the current difficult market conditions we are unable to forecast when, or
if, we shall be able to achieve our objectives.
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 latest statistics
issued in early 2008:
- there are 5.5 million paintball participants in the US, 2.3 million of
which have participated for 8 or more years.
- in 2007, 2% of the total US population were paintball participants
once or more per year.
- the number of paintball participants increased by an average of 20.4%
between 2006 and 2007.
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- 83% of all paintball participants are male.
- 56% of all paintball participants are under 25 years old.
- 42% of all paintball participants have a household income of at least
$75,000
There is strong anecdotal evidence, but no available statistical information,
that since these statistics were issued, the current recession has had a severe
negative impact on the level of paintball industry with both participation and
spending levels greatly reduced.
We believe that this deterioration in current market conditions may offer us
unique opportunities to acquire paintball assets and heavily discounted prices.
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.
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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.
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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)Thewebsite 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.
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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.
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Competition
- ------------
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 are subject to regulation under the Securities Act of 1933, as
amended, and the 1934 Act, we believe we are 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
At December 31, 2008, we did not have any salaried employees.
ITEM 1A. RISK FACTORS
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.
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SOME MAJOR COMPONENTS OF OUR BUSINESS STRATEGY 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.
THE CURRENT DECLINE IN PAINTBALL POPULARITY MAY ADVERSELY AFFECT OUR BUSINESS.
Participation in the sport of paintball has decreased in the last few years, if
this decline is permanent 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
17
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, THAT 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 and Corporate
Governance" (page 39), and "Conflicts of Interest." (page 39).
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 December 31, 2008 we had outstanding liabilities of approximately $172,557.
We had $2,492 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.
18
WE HAVE INCURRED SIGNIFICANT LOSSES AND ANTICIPATE FUTURE LOSSES, AND OUR
AUDITORS HAVE ISSUED A "GOING CONCERN" QUALIFICATION IN THEIR OPINION.
At December 31, 2008, we had an accumulated deficit of $606,855 and a
stockholders' deficit of $170,065. 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, 2008, and 2007 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 insufficient 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 is 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.
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.
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IF WE GROW OUR BUSINESS THROUGH ACQUISITIONS WE CREATE CERTAIN ADDITIONAL
BUSINESS RISKS.
We are seeking 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
THE REGULATION OF PENNY STOCKS BY SEC AND FINRA MAY HAVE AN EFFECT ON THE
TRADABILITY OF OUR SECURITIES.
Our securities are currently listed on the Over the Counter Bulletin Board and
the Pink Sheets. Our shares are 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.
20
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
and the Pink Sheets, 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 CHIEF EXECUTIVE OFFICER HAS THE ABILITY TO EFFECTIVELY CONTROL SUBSTANTIALLY
ALL ACTIONS TAKEN BY STOCKHOLDERS
Mr. Cutler, an officer and director of the Company owns in excess of our 50% of
our issued and outstanding common stock and 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. We are registering all of our outstanding Shares so officers,
21
directors and affiliates will be able to sell their Shares if this Registration
Statement becomes effective. Rule 144 provides in essence that a person who has
held restricted securities for six months may, under certain conditions, sell
every three months, in brokerage transactions, a number of Shares that does not
exceed the greater of 1.0% of a company's outstanding common stock or the
average weekly trading volume during the four calendar weeks prior to the sale.
There is no limit on the amount of restricted securities that may be sold by a
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, 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
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.
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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
ITEM 2. DESCRIPTION OF PROPERTIES
Our mailing address is 2460 West 26th Avenue, Suite 380-C, Denver, Colorado,
80211. We do not pay rent for the use of this mailing address. We do not believe
it will be necessary to maintain an office at any time in the foreseeable future
in order to carry out our plan of operations described herein.
22
ITEM 3.LEGAL PROCEEDINGS
We were not subject to any legal proceedings during the years ended December 31,
2008 and 2007 and, to the best of our knowledge, no legal proceedings are
pending or threatened.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted for a vote of our security holders during the years
ended December 31, 2008 and 2007.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information.
The Company's Common Stock is presently traded on the over-the-counter market on
the OTC Bulletin Board maintained by the Financial Industry Regulatory Authority
("FINRA"). In October 2008, Atomic Paintball received approval from FINRA to
begin trading on the over the counter bulletin board under the symbol "ATOC."
The shares of the Company's stock were not publicly traded prior to October
2008.
The following table sets forth the range of high and low sales prices for the
Company's common stock since it was approved for trading. These prices represent
inter-dealer prices without adjustments for mark-up, mark-down, or commission
and do not necessarily reflect actual transactions.
Stock Quotations.
High Low
2008:
Quarter Ended December 31, 2008 $0.35 $0.25
Last Reported Price.
On March 27, 2007, the last reported bid price of our shares of common stock
reported on the OTC Bulletin Board and the Pink Sheets was $0.125 per share.
Holders.
There are approximately 70 holders of record of Atomic Paintball's common stock
as of December 31, 2008.
Our transfer agent is Mountain Share Transfer, Inc., 1625 Abilene Drive,
Broomfield, Colorado, 80020. The 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.
Future cash dividends will be determined by our board of directors based upon
our earnings, financial condition, capital requirements and other relevant
factors.
23
Recent Sales of Unregistered Securities
We made the following unregistered sales of its securities from January 1, 2007
through December 31, 2008.
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 former
director, subscribed for 200,000 of these shares for total consideration of
$25,000.
In November 2007, we issued a further 40,000 shares of our common stock at
$0.125 per share for total consideration of $5,000 to an accredited investor and
300,000 shares of our common stock, valued at $0.125 per share or $37,500, as
remuneration to our former director, Jeffery L. Perlmutter.
In December 2007, following our registration pursuant to Section 12 (g) of the
Securities Exchange Act of 1934 the remaining 8,000 shares of our Series A
Convertible Preferred Shares automatically converted into 360,000 shares of our
common stock.
Exemption From Registration Claimed
- -----------------------------------
All of the sales by Atomic Paintball of its unregistered securities were made in
reliance upon Section 4(2) of the Securities Act of 1933, as amended (the "1933
Act"). The entity listed above that purchased the unregistered securities was an
existing shareholder, known to the Company and its management, through
pre-existing business relationships, as a long standing business associate. The
entity was provided access to all material information, which it requested, and
all information necessary to verify such information and was afforded access to
the Company's management in connection with the purchases. The purchaser of the
unregistered securities acquired such securities for investment and not with a
view toward distribution, acknowledging such intent to the Company. All
certificates or agreements representing such securities that were issued
contained restrictive legends, prohibiting further transfer of the certificates
or agreements representing such securities, without such securities either being
first registered or otherwise exempt from registration in any further resale or
disposition.
Penny Stock.
Penny Stock Regulation Broker-dealer practices in connection with transactions
in "penny stocks" 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.
24
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 7. Stockholders'
Deficit of our Financial Statements on page 61 below.
ITEM 6. SELECTED FINANCIAL AND OPERATING DATA
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are
not required to provide information required by this Item.
ITEM 7. 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. We believe that our
expectations are based on reasonable assumptions within the bounds of our
knowledge of our 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 o 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, 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. . You are urged to carefully consider these factors, as well as other
information contained in this Annual Report on Form 10-K and in our other
periodic reports and documents filed with the SEC.
OVERVIEW
We are a development stage corporation, incorporated on May 8, 2001 in the State
of Texas, 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.
On October 11, 2007, we filed a Form 10-SB12G with the Securities and Exchange
Commission (SEC) seeking to become a fully reporting company pursuant to Section
12 (g) of the Securities Exchange Act of 1934. The filing became effective on
December 10, 2007, at which time we succeeded in becoming a fully reporting
company pursuant to Section 12 (g) of the Securities Exchange Act of 1934.
In May 2008, Pennaluna & Co, a broker dealer, submitted a Form 15c-211 on our
behalf to FINRA seeking to have our shares of common stock listed on the OTC
Bulletin Board. In FINRA's response to the Form 15c-211 that was filed on our
behalf, FINRA took the position that, under their own interpretation of what
constitutes a "shell" company as opposed to a "development" stage company, we
constitute a "shell" company rather than a "development" stage company.
Accordingly FINRA instructed us to re-file our previous filings with the SEC
with the "box checked" on the first page to indicate we are a shell company (as
defined in Rule 12b-2 of the Exchange Act). Our management is in no doubt that
we were, and are, a development stage company as defined by Statement of
Financial Accounting Standards No 7 "Accounting and Reporting by Development
Stage Enterprises." Our management's belief that we were, and are, a development
stage company is supported by current SEC guidelines, our auditors and our
outside legal counsel. At the same time, our management recognizes FINRA's right
to apply its own definition to this issue. Accordingly, we amended our previous
25
filings with the SEC, where appropriate, in accordance with FINRA instructions,
by "checking the box" on the first page of each of our SEC filings to indicate
we are a shell company (as defined in Rule 12b-2 of the Exchange Act). Amending
our filings in this way, on the instruction of FINRA, in no way alters the fact
that we have, and continue to, consistently pursue 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.
In October 2008, FINRA approved shares of our common stock to trade on both the
Over the Counter Bulletin Board and the Pink Sheets under the trading symbol
"ATOC."
On March 31, 2009, Mr. Jeffrey Perlmutter resigned as a director.
It is our current intention, within our existing level of interim funding, to
continue to accelerate progress on the implementation of our proposed business.
PLAN OF OPERATIONS
We intend to attempt to raise $250,000 in an initial private placement to fund
our business plan.
Our proposed operating budget 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
=============
We are also seeking to raise an additional $250,000 that would allow us to
complete an initial "pilot" acquisition of a small paintball field.
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, 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.
26
Liquidity and Capital Resources
At December 31, 2008, we had total assets of $2,492 consisting of cash, no
operating business or other source of income, outstanding liabilities totaling
$172,557 and a stockholder' deficit of $170,065.
In our financial statements for the fiscal years ended December 31, 2008 and
2007, the Report of the Independent Registered Public Accounting Firm includes
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern. Our financial statements for the fiscal years ended
December 31, 2008 and 2007, have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. At December 31, 2008, we had a
working capital deficit of $170,065 and reported an accumulated deficit of
$606,855.
It is our current intention to seek to raise the debt and/or equity financing to
meet ongoing operating expenses and fully implement our proposed business plan.
There is no assurance that this series of events will be satisfactorily
completed.
The United States and the global business community is experiencing severe
instability in the commercial and investment banking systems which is likely to
continue to have far-reaching effects on the economic activity in the country
for an indeterminable period. The long-term impact on the United States economy
and the Company's operating activities and ability to raise capital cannot be
predicted at this time, but may be substantial.
During the year ended December 31, 2007, we raised $105,000 in cash through the
private placement of 840,000 shares of our common stock at $0.125 per share. Mr.
Perlmutter, a former 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.
Since his appointment on August 31, 2006 and through December 31, 2008, Mr.
Cutler, our sole officer and a director, has made advances to us of $237,687 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 December 31, 2008, the Company owed Mr. Cutler
$113,486. There can be no assurance that Mr. Cutler will continue to provide
such financing on an ongoing basis
RESULTS OF OPERATIONS
FISCAL YEAR ENDED DECEMBER 31, 2008 COMPARED TO THE FISCAL YEAR ENDED DECEMBER
31, 2007
General and Administrative Expenses
During the year ended December 31, 2008, we incurred $105,905 in general and
administrative expenses compared to $162,577 in the year ended December 31,
2007, a decrease of $56,672.
During the year ended December 31, 2007, we incurred substantial consulting and
professional fees in bringing our affairs up to date as no financial statements
had been produced since December 2003. By the year ended December 31, 2008, our
affairs were once again current and no additional costs were required in respect
to prior periods.
Operating Loss
In the year ended December 31, 2008, we recognized an operating loss of $105,905
compared to $162,577 in the year ended December 31, 2007, a decrease of $56,672,
due to the factors as discussed above.
Interest Expense
We recognized an interest expense of $6,868 during the year ended December 31,
2008 compared to $4,393 during the year ended December 31, 2007, an increase of
$2,475. This interest expense relates to the interest accrued on the loan made
27
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
Loss before Income Tax
In the year ended December 31, 2008 we recognized a loss before income tax of
$112,774 compared to a loss before income tax of $166,969 in the year ended
December 31, 2007, a decrease of $54,195 due to the factors discussed above.
Provision for Income Taxes
No provision for income taxes was required in the years ended December 31, 2008
or 2007, as we generated tax losses in both years.
Net Loss and Comprehensive Loss
In the year ended December 31, 2008 we recognized a net loss of $112,774
compared to a net loss of $166,969 in the year ended December 31, 2007, a
decrease of $54,195 due to the factors discussed above
The comprehensive loss was identical to the net loss in both the years ended
December 31, 2008 and 2007.
CASH FLOW INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2008 COMPARED TO THE YEAR
ENDED DECEMBER 31, 2007
At December 31, 2008, we had total assets of $2,492 consisting of cash, no
operating business or other source of income, outstanding liabilities totaling
$172,557 and a stockholder' deficit of $170,065.
In our financial statements for the fiscal years ended December 31, 2008 and
2007, the Report of the Independent Registered Public Accounting Firm includes
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern. Our financial statements for the fiscal years ended
December 31, 2008 and 2007, have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. At December 31, 2008, we had a
working capital deficit of $170,065 and reported an accumulated deficit of
$606,855.
It is our current intention to seek to raise the debt and/or equity financing to
meet ongoing operating expenses and fully implement our proposed business plan.
There is no assurance that this series of events will be satisfactorily
completed
Net cash used in operations in the year ended December 31, 2008 was $80,600
compared to $127,202 in the year ended December 31, 2007, a decrease of $46,602.
In the year ended December 31, 2008, our net loss, without any need for
adjustment for non-cash items, resulted in a negative cash flow of $(112,774) ,
which was partially offset by a positive cash flow of $32,173 generated from the
net movement in our operating assets and liabilities. This compares with a net
loss, after adjustment for non-cash items, of $(129,469) in the year ended
December 31, 2007, which was partially offset by a positive cash flow of $2268
generated from the net movement in our operating assets and liabilities.
No cash was provided by or used in investing activities during the years ended
December 31, 2008 and 2007.
Net cash provided by financing activities during the year ended December 31,
2008 was $68,875 compared to $141,375 net cash provided by financing activities
during the year ended December 31, 2007, a decrease $72,500. During the year
ended December 31, 2007, we received $68,875 in loans from our director and sole
officer, Mr. Cutler During the year ended December 31, 2007, we received
$105,000 through the issuance of 840,000 shares of our common stock, at $0.125
per share and a net $36,375 in loans from our director and sole officer, Mr.
Cutler.
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.
28
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.
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 the financial
statements on page 52 below. 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. 61requires 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. 8 to
the financial statements on page 63 below.
ACCOUNTING PRONOUNCEMENTS
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an Amendment of FASB
Statement No. 115." This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. Most of the
provisions of SFAS No. 159 apply only to entities that elect the fair value
option. However, the amendment to SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities" applies to all entities with
available-for-sale and trading securities. SFAS No. 159 is effective as of the
beginning of an entity's first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157, "Fair Value Measurements." The adoption of this
statement is not expected to have a material effect on our financial statements.
In March 2007, the FASB ratified the Emerging Issues Task Force ("EITF") Issue
No. 06-11, Accounting for Income Tax Benefits of Dividends on Share Based
Payment Awards ("EITF 06-11"). EITF 06-11 requires companies to recognize the
income tax benefit realized from dividends or dividend equivalents that are
charged to retained earnings and paid to employees for nonvested
equity-classified employee share-based awards as an increase to additional
paid-in capital. EITF 06-11 is effective for fiscal years beginning after
September 15, 2007. The adoption of EITF 06-11 is not expected to have a
material effect on our financial statements.
In June 2007, the FASB ratified EITF Issue No. 07-03, Accounting for
Nonrefundable Advance Payments for Goods and Services Received for Use in Future
Research and Development Activities ("EITF 07-03"). EITF 07-03 requires
companies to defer nonrefundable advance payments for goods and services and to
expense that advance payment as the goods are delivered or services are
rendered. If the company does not expect to have the goods delivered or services
performed, the advance should be expensed. EITF 07-03 is effective for fiscal
years beginning after December 15, 2007. The adoption of EITF 07-03 is not
expected to have a material effect on our financial statements.
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business
Combinations, or SFAS No. 141R. SFAS No. 141R will change the accounting for
business combinations. Under SFAS No. 141R, an acquiring entity will be required
29
to recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS No. 141R will
change the accounting treatment and disclosure for certain specific items in a
business combination. SFAS No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008.
Accordingly, any business combinations we engage in will be recorded and
disclosed following existing GAAP until January 1, 2009. We expect SFAS No. 141R
will have an impact on accounting for business combinations once adopted but the
effect is dependent upon acquisitions at that time. We are still assessing the
impact of this pronouncement.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements--An Amendment of ARB No. 51, or SFAS No. 160.
SFAS No. 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after
December 15, 2008. We believe that SFAS 160 should not have a material impact on
our financial position or results of operations.
In December 2007, the Emerging Issues Task Force issued EITF No. 07-1,
Accounting for Collaborative Arrangements. EITF No. 07-1 requires that
transactions with third parties (i.e., revenue generated and costs incurred by
the partners) should be reported in the appropriate line item in each company's
financial statement and includes enhanced disclosure requirements regarding the
nature and purpose of the arrangement, rights and obligations under the
arrangement, accounting policy, amount and income statement classification of
collaboration transactions between the parties. EITF No. 07-1 is effective
January 1, 2009 and shall be applied retrospectively to all prior periods
presented for all collaborative arrangements existing as of the effective date.
The Company does not expect that the adoption of EITF No. 07-1 will have a
material effect on its consolidated results of operations or financial
condition.
In March 2008, the FASB issued FAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133. FAS
No. 161 changes the disclosure requirements for derivative instruments and
hedging activities. Entities are required to provide disclosures about (a) how
and why derivative instruments are used, (b) how derivative instruments and
related hedged items are accounted for under FAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, and its related interpretations,
and (c) how derivative instruments and related hedged items affect the entity's
financial position, financial performance, and cash flows. FAS No. 161 is
effective January 1, 2009. The Company does not expect that the adoption of FAS
No. 161 will have a material effect on its consolidated results of operations or
financial condition.
In April 2008, the FASB issued FSP FAS 142-3, "Determination of the Useful Life
of Intangible Assets" ("FSP FAS 142-3"). FSP FAS 142-3 amends the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under FASB Statement
No. 142, "Goodwill and Other Intangible Assets." FSP FAS 142-3 also requires
expanded disclosure related to the determination of intangible asset useful
lives. FSP FAS 142-3 is effective for financial statements issued for fiscal
years beginning after December 15, 2008, and interim periods within those fiscal
years. The Company does not expect that the adoption of FSP FAS 142-3 will have
a material effect on its consolidated results of operations or financial
condition.
In May 2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1 "Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)" (FSP APB 14-1). FSP APB 14-1 requires the
issuer of certain convertible debt instruments that may be settled in cash (or
other assets) on conversion to separately account for the liability (debt) and
equity (conversion option) components of the instrument in a manner that
reflects the issuer's non-convertible debt borrowing rate. FSP APB 14-1 is
effective for fiscal years beginning after December 15, 2008 on a retroactive
basis and will be adopted by the Company in the first quarter of fiscal 2009.
The Company does not expect the adoption of FSP APB 14-1 to have a material
effect on its results of operations and financial condition.
In June 2008, the Financial Accounting Standards Board ("FASB") issued FASB
Staff Position ("FSP") EITF 03-6-1, "Determining Whether Instruments Granted in
Share-Based Payment Transactions are Participating Securities." This FSP
provides that unvested share-based payment awards that contain nonforfeitable
rights to dividends or dividend equivalents (whether paid or unpaid) are
participating securities and shall be included in the computation of earnings
30
per share pursuant to the two-class method. The FSP is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. Upon adoption, companies are required
to retrospectively adjust earnings per share data (including any amounts related
to interim periods, summaries of earnings and selected financial data) to
conform to provisions of this FSP. The Company does not anticipate the adoption
of FSP EITF 03-6-1 will have a material impact on its results of operations,
cash flows or financial condition.
SUBSEQUENT EVENTS
On March 31, 2009, Mr. Jeffrey Perlmutter resigned as a director.
ITEM 7A. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are
not required to provide information required by this Item.
ITEM 8. FINANCIAL STATEMENTS
Our financial statements are included herein commencing on page 46.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
We have not had any disagreements with our auditors.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain a system of disclosure controls and procedures (as defined in
Securities Exchange Act Rule 13a-15(f)) that is designed to provide reasonable
assurance that information that is required to be disclosed is accumulated and
communicated to management timely. At the end of the period covered by this
report, we carried out an evaluation under the supervision of our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures pursuant to
Securities Exchange Act Rule 13a-15. Based on that evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective in timely alerting them to material
information required to be disclosed in the our periodic filings with the SEC.
Management's Annual Report On Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting, as
defined in Exchange Act Rule 13a-15(f), is a process designed by, or under the
supervision of, our principal executive and principal financial officers and
effected by our Board of Directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that:
o Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of our
assets;
o Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations
of our management and directors; and
31
o Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use of disposition of our assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.
Our management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2008. Based on this assessment, management believes
that as of December 31, 2008, our internal control over financial reporting is
effective based on those criteria.
This annual report does not include an attestation report of the company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the company's
registered public accounting firm pursuant to temporary rules of the SEC to
provide only management's report in this annual report.
Changes in Internal Control Over Financial Reporting
During our most recent fiscal quarter, there has been no change in our internal
control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)
under the Securities Exchange Act) that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
Item 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Effective December 31, 2008, our directors and officers were:
NAME AGE POSITION
David J. Cutler 53 President, Chief Executive Officer
Jeffrey L. Perlmutter 52 Director (resigned 3/31/09)
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
32
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 - Former 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. Priorto 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. Mr. Perlmutter resigned on March 31, 2009.
On March 31, 2009, Mr. Jeffrey Perlmutter resigned as a director.
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.
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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires our Officers and
Directors, and persons who own more than 10% of a registered class of our equity
securities, to file reports of ownership and changes in ownership with the SEC.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file. Based
33
solely on our review of copies of such reports received, and representations
from certain reporting persons, we believe that, during the fiscal year ended
December 31, 2008, all Section 16(a) filing requirements applicable to our
officers, directors and greater than 10% beneficial owners were filed in
compliance with all applicable requirements
CODE OF ETHICS
A code of ethics relates to written standards that are reasonably designed to
deter wrongdoing and to promote;
- Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
- Full, fair, accurate, timely and understandable disclosure in reports
and documents that are filed with, or submitted to, the SEC and in
other public communications made by an issuer;
- Compliance with applicable governmental laws, rules and regulations;
- The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
- Accountability for adherence to the code.
Due to the limited scope of our current operations, we have not adopted a
corporate code of ethics that applies to our principal executive officer,
principal accounting officer, or persons performing similar functions
ITEM 11. 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 years ended December 31, 2008 and 2007 (the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
- ----------------------------- --------- ------------- --------- ----------- ------------ --------------- --------- ----------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS STOCK OPTIONS NONQUALIFIED ALL TOTAL
AWARDS AWARDS ($) DEFERRED OTHER ($)
COMPEN-SATION COMP
($)
- ----------------------------- --------- ------------- --------- ----------- ------------ --------------- --------- ----------
David J Cutler, 2008 $60,000 - - - - - $60,000
Director, President, Chief 2007 $90,000 - - - - - $90,000
Executive Officer, Chief 2006 $60,000 - $108,444(1) - - - $168,444
Financial Officer
- ----------------------------- --------- ------------- --------- ----------- ------------ --------------- --------- ----------
(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, 2007 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.
During the year ended December 31, 2006 Mr. Cutler was issued 697,674 shares of
common stock to convert $30,000 of the debt he had provided to us into equity,
these shares are not part of the table above.
34
DIRECTORS' COMPENSATION
The following table sets forth certain information concerning compensation paid
to the Company's directors during the year ended December 31, 2008:
- ----------------------- -------- -------------- ---------- --------- ------------------ ------------------ -------------- ----------
Name Year Fees Earned Stock Options Non-Equity Nonqualified All Other Total
Or Paid-in Awards Awards Incentive Plan Deferred Compen-sation ($)
Cash ($) ($) Compensation Compensation ($)
($) ($) ($)
- ----------------------- -------- -------------- ---------- --------- ------------------ ------------------ -------------- ----------
David J Cutler, 2008 0 0 0 0 0 $60,000 $60,000
Director, President,
Chief Executive Officer,
Chief Financial
Officer (1)
- ----------------------- -------- -------------- ---------- --------- ------------------ ------------------ -------------- ----------
Jeffrey L Perlmutter, 2008 0 0 0 0 0 0 0
Director
resigned 3/31/09
- ----------------------- -------- -------------- ---------- --------- ------------------ ------------------ -------------- ----------
(1) Mr. Cutler's other compensation of $60,000 consists of his salary as an
officer of the Company.
On March 31, 2009, Mr. Jeffrey Perlmutter resigned as a director.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information regarding beneficial
ownership of our common stock, as of December 31, 2008 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 (4)
----------------------------------------- ------------------- -------------
David J. Cutler (1) 3,925,724 51.8%
Jeffrey L. Perlmutter (1)(6) 600,000 7.9%
------------ ------------
All officers and directors as a group. 4,525,724 59.7%
Mark A. Armstrong (2) 615,162 8.1%
J. H. Brech, LLC (3) 405,162 5.3%
Mark Margolis (4) 400,500 5.3%
(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) Based upon 7,576,004 shares of common stock issued and outstanding on
December 31, 2008. This includes 87,200 shares of common stock issued under
a promissory note.
(6) Mr. Perlmutter resigned as a director effective March 31, 2009.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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.
35
In May 2007, Mr. Perlmutter, our former director, subscribed for 200,000 shares
of our common stock at a price of $0.125 per share for total consideration of
$25,000.
During the year ended December 31, 2007, Mr. Perlmutter, our former director,
was issued 300,000 shares of common, valued at $37,500, for his services to us
as a former director.
Barbara J. Smith, formerly an officer, director and currently a 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.
Since his appointment on August 31, 2006 and through December 31, 2008, Mr.
Cutler, our sole officer and a director, has made advances to us of $237,687 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 December 31, 2008, the Company owed Mr. Cutler
$113,486. There can be no assurance that Mr. Cutler will continue to provide
such financing on an ongoing basis
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
We incurred $2,775 audit fees with our auditor, Larry O'Donnell, CPA, PC, during
the fiscal year ended December 31, 2008 ($7,600 - 2007).
Tax Fees
We did not incur any tax fees with our auditor, Larry O'Donnell, CPA, PC, in the
fiscal years ended December 31, 2008 and 2007.
All Other Fees
We incurred $1,100 in other fees with our auditor, Larry O'Donnell, CPA, PC, in
the fiscal years ended December 31, 2008 ($375 - 2007) in respect the review of
our quarterly financial statements.
It is the role of the Audit Committee, or in the absence of an audit committee,
the Board of Directors, to consider whether, and determine that, the auditor's
provision.
36
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed as part of this Annual Report on Form 10-K, in
accordance with Item 601 of Regulation S-K:
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
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act*
32.1 Certification of Principal Executive Officer pursuant to Section 906 of
the Sarbanes-Oxley Act *
* Filed herewith.
37
INDEX TO FINANCIAL STATEMENTS
PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 39
BALANCE SHEET
As of December 31, 2008 and 2007 40
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2008 and 2007 and the Period
from Inception (May 8, 2001) through December 31, 2008 41
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
The Period from Inception (May 8, 2001) through December 31, 2008 42
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2008 and 2007 and the Period
from Inception (May 8, 2001) through December 31, 2008 43
NOTES TO FINANCIAL STATEMENTS 45
38
Larry O'Donnell, CPA, P.C.
Telephone (303) 745-4545 2228 South Fraser Street
E-mail: larryodonnellcpa@msn.com Unit 1
www.larryodonnellcpa.com Aurora, Colorado 80014
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. as of
December 31, 2008 and 2007 and the related statements of operations,
stockholders' deficit, and cash flows for the years ended December 31, 2008 and
2007. 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, 2008 and 2007 and the results of its operations and cash flows for
the years ended December 31, 2008 and 2007 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 had suffered significant losses, had a working capital
deficit as of December 31, 2008 and 2007 and no ongoing source of income.
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 28, 2009
39
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31,
2008 2007
----------- -----------
ASSETS
Current Assets
Cash & Cash Equivalents $ 2,492 $ 14,217
Prepaid Expenses & Other - 361
----------- -----------
Total Current Assets 2,492 14,578
----------- -----------
TOTAL ASSETS $ 2,492 $ 14,578
=========== ===========
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable $ 32,007 $ 7,014
Accrued Expenses 14,986 8,166
Loans from Shareholders 125,564 56,689
----------- -----------
Total Liabilities, all current 172,557 71,869
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' (DEFICIT)
Preferred Stock, no par value: 2,000,000 shares authorized
Series A Convertible Preferred Stock, no par value; 400,000 shares authorized - -
no shares issued and outstanding as at December 31, 2008 and 2007 and
188,000 shares issued and outstanding at December 31, 2006 with a
$0.25 per share liquidation preference.
Common Stock, no par value: 10,000,000 shares authorized, 436,790 436,790
7,488,804 shares issued and outstanding as at December 31, 2008 and 2007
Deficit accumulated during the development stage. (606,855) (494,082)
----------- -----------
Total Stockholders' Deficit (170,065) (57,291)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 2,492 $ 14,578
=========== ===========
See accompanying Notes to Financial Statements.
40
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FROM INCEPTION
YEAR ENDED (May 8, 2001)
DECEMBER 31, THROUGH DECEMBER 31,
2008 2007 2008
--------------- ------------ -------------
OPERATING EXPENSES
General and Administrative $ 105,905 $ 162,577 $ 593,321
Depreciation and amortization - - 6,835
Gain on Settlement of Liabilities - - (13,600)
--------------- ------------ -------------
Total Operating Expenses 105,905 162,577 586,555
OPERATING LOSS (105,905) (162,577) (586,555)
OTHER INCOME (EXPENSE)
Interest Expense (6,868) (4,393) (20,300)
--------------- ------------ -------------
Net Loss before Income Taxes (112,774) (166,969) (606,855)
Income tax expense - - -
--------------- ------------ -------------
NET LOSS $ (112,774) $ (166,969) $ (606,855)
=============== ============ =============
NET LOSS PER COMMON SHARE
Basic & Diluted ($0.02) ($0.02)
=============== ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic & Diluted 7,488,804 7,132,804
=============== ===============
See accompanying Notes to Financial Statements.
41
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FROM INCEPTION (MAY 8, 2001) THROUGH DECEMBER 31, 2008
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 at $0.005 per share - - 200,000 1,000 - 1,000
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) through December 31, 2001 - - - - (6,815) (6,815)
-------- -------- --------- -------- ----------- ----------
Balance at December 31, 2001 - - 800,000 7,000 (6,815) 185
Net loss for the year ended December 31, - - - - (4,155) (4,155)
2002
-------- -------- --------- -------- ----------- ----------
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 at - - 323,080 13,846 - 13,846
$0.042857 per share
Conversion of Series A Convertible
Preferred Stock into Common Stock on
a 1:2 basis during September 2006 (112,000) (28,000) 224,000 28,000 - 0
Issuance of common stock for services
on December 1, 2006 at $0.042857 per
share - - 100,000 4,286 - 4,286
Issuance of common stock for services
on December 8, 2006 at - - 100,000 4,286 - 4,286
$0.042857 per share
42
ATOMIC PAINTBALL, INC. ...Continued
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FROM INCEPTION (MAY 8, 2001) THROUGH DECEMBER 31, 2008
Preferred Stock Common Stock (Accumulated deficit)
during
Shares Amount Shares Amount Development Stage Total
# $ # $ $ $
-------- -------- --------- -------- ----------- ----------
Issuance of common stock for services
on December 18, 2006 at - - 150,000 6,429 - 6,429
$0.042857 per share
Issuance of common stock in settlement
of debt on December 19, 2006 at - - 697,674 30,000 - 30,000
$0.042857 per share
Issuance of common stock for - - 100,000 4,286 - 4,286
services on December 22, 2006 at
$0.042857 per share
Net loss for the year ended December - - - - (200,182) (200,182)
31, 2006
-------- -------- --------- -------- ----------- ----------
Balance at December 31, 2006 188,000 47,000 5,275,130 217,290 (327,112) (62,822)
Conversion of Series A Convertible (144,000) (36,000) 288,000 36,000 - -
Preferred Stock into Common Stock
on a 1:2 basis on January 18 & 23, 2007
Conversion of Series A Convertible (36,000) (9,000) 72,000 9,000 - -
Preferred to Common Stock on a 1:2
basis on February 5, 2007
Issuance of common stock in settlement - - 697,674 30,000 - 30,000
of debt on March 29, 2007 at $0.042857
per share
Issuance of common stock for cash - - 400,000 50,000 - 50,000
April 2007 at $0.125 per share
Issuance of common stock for cash on - - 400,000 50,000 - 50,000
May 2007 at $0.125 per share
Issuance of common stock for cash in - - 40,000 5,000 - 5,000
November 2007 at $0.125 per share
Issuance of common stock for services - - 300,000 37,500 - 37,500
in November 2007 at $0.125 per share
Conversion of Series A Convertible (8,000) (2,000) 16,000 2,000 - -
Preferred Stock into Common Stock on
a 1:2 basis on February 5, 2007
Net loss for the year ended December - - - - (166,969) (166,969)
31, 2007
-------- -------- --------- -------- ----------- ----------
Balance at December 31, 2007 - - 7,488,804 436,790 (494,082) (57,291)
Net loss for the year ended December - - - - (112,774) (112,774)
31, 2008
-------- -------- --------- -------- ----------- ----------
Balance at December 31, 2008 - - 7,488,804 $436,790 $ (606,855) $ (170,065)
======== ======== ========= ======== =========== ==========
See accompanying Notes to Financial Statements.
43
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FROM INCEPTION
Year Ended (May 8, 2001)
DECEMBER 31, THROUGH DECEMBER 31,
2008 2007 2008
---------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES
NET LOSS $ (112,774)$ (166,969) $ (606,855)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES
Depreciation - - 6,835
Loss on Disposal of Fixed Assets - - 3,464
Issuance of Common Stock For Services - 37,500 181,944
Gain on Settlement of Liabilities - - (13,600)
CHANGES IN OPERATING ASSETS & LIABILITIES
Decrease in Prepaid Expenses 361 - -
Decrease in Other Receivables - (325) -
Increase (Decrease) in Accounts Payable 24,993 (2,770) 45,607
Increase in Accrued Expenses 6,819 5,363 14,986
--------------------------- -------------
Total Cash Flow Used In Operating Activities (80,600) (127,202) (367,620)
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets - - (10,299)
------------ ----------- -------------
Total Cash Flow Used In Investing Activities - - (10,299)
CASH FLOW FROM FINANCING ACTIVITIES
Advances Under Loans From Shareholders 68,875 36,375 199,411
Net Proceeds from Issuance of Common Stock - 105,000 106,000
Net Proceeds from Issuance of Preferred Stock - - 75,000
------------ ----------- -------------
Total Cash Flow Provided by Financing Activities 68,875 141,375 380,411
NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS $ (11,725)$ 14,173 $ 2,492
============ =========== =============
Cash and Cash Equivalents at the beginning of the period $ 14,217 $ 44 $ -
============ =========== =============
Cash and Cash Equivalents at the end of the period $ 2,492 $ 14,217 $ 2,492
============ =========== =============
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid for interest $ - $ - $ 207
============ =========== =============
Cash paid for income tax $ - $ - $ -
============ =========== =============
See accompanying Notes to Financial Statements.
44
ATOMIC PAINTBALL, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 2008 AND 2007
1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations -- We are a development stage corporation incorporated on
May 8, 2001 in the State of Texas 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.
During the years ended December 31, 2007 and 2008 we focused on completing those
actions necessary to the implement our business plan.
On October 11, 2007, we filed a Form 10-SB12G with the Securities and Exchange
Commission (SEC) seeking to become a fully reporting company pursuant to Section
12 (g) of the Securities Exchange Act of 1934. The filing became effective on
December 10, 2007, at which time we succeeded in becoming a fully reporting
company pursuant to Section 12 (g) of the Securities Exchange Act of 1934.
In November 2007 we issued a further 40,000 shares of our common stock at $0.125
per share for total consideration of $5,000 to an accredited investor and
300,000 shares of our common stock, valued at $0.125 per share or $37,500, as
remuneration to our former director, Jeffery L. Perlmutter.
In December 2007, following our registration pursuant to Section 12 (g) of the
Securities Exchange Act of 1934 the remaining 8,000 shares of our Series A
Convertible Preferred Shares automatically converted into 16,000 shares of our
common stock.
In May 2008, Pennaluna & Co, a broker dealer, submitted a Form 15c-211 on our
behalf to FINRA seeking to have our shares of common stock listed on the OTC
Bulletin Board. In FINRA's response to the Form 15c-211 that was filed on our
behalf, FINRA took the position that, under their own interpretation of what
constitutes a "shell" company as opposed to a "development" stage company, we
constitute a "shell" company rather than a "development" stage company.
Accordingly FINRA instructed us to re-file our previous filings with the SEC
with the "box checked" on the first page to indicate we are a shell company (as
defined in Rule 12b-2 of the Exchange Act). Our management is in no doubt that
we were, and are, a development stage company as defined by Statement of
Financial Accounting Standards No 7 "Accounting and Reporting by Development
Stage Enterprises." Our management's belief that we were, and are, a development
stage company is supported by current SEC guidelines, our auditors and our
outside legal counsel. At the same time, our management recognizes FINRA's right
to apply its own definition to this issue. Accordingly, we amended our previous
filings with the SEC, where appropriate, in accordance with FINRA instructions,
by "checking the box" on the first page of each of our SEC filings to indicate
we are a shell company (as defined in Rule 12b-2 of the Exchange Act). Amending
our filings in this way, on the instruction of FINRA, in no way alters the fact
that we have, and continue to, consistently pursue 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.
In October 2008, FINRA approved shares of our common stock to trade on both the
Over the Counter Bulletin Board and the Pink Sheets under the trading symbol
"ATOC."
It is our current intention, within our existing level of interim funding, to
continue to accelerate progress on the implementation of our proposed business.
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
45
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
Significant Accounting Policies
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 - Our 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.
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 years ended December 31,
2008 and 2007.
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
years ended December 31, 2008 and 2007.
46
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 years ended December 31, 2008 and 2007 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 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 February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an Amendment of FASB
Statement No. 115." This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. Most of the
provisions of SFAS No. 159 apply only to entities that elect the fair value
option. However, the amendment to SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities" applies to all entities with
available-for-sale and trading securities. SFAS No. 159 is effective as of the
beginning of an entity's first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157, "Fair Value Measurements." The adoption of this
statement is not expected to have a material effect on our financial statements.
In March 2007, the FASB ratified the Emerging Issues Task Force ("EITF") Issue
No. 06-11, Accounting for Income Tax Benefits of Dividends on Share Based
Payment Awards ("EITF 06-11"). EITF 06-11 requires companies to recognize the
income tax benefit realized from dividends or dividend equivalents that are
charged to retained earnings and paid to employees for nonvested
equity-classified employee share-based awards as an increase to additional
paid-in capital. EITF 06-11 is effective for fiscal years beginning after
September 15, 2007. The adoption of EITF 06-11 is not expected to have a
material effect on our financial statements.
In June 2007, the FASB ratified EITF Issue No. 07-03, Accounting for
Nonrefundable Advance Payments for Goods and Services Received for Use in Future
Research and Development Activities ("EITF 07-03"). EITF 07-03 requires
companies to defer nonrefundable advance payments for goods and services and to
expense that advance payment as the goods are delivered or services are
rendered. If the company does not expect to have the goods delivered or services
47
performed, the advance should be expensed. EITF 07-03 is effective for fiscal
years beginning after December 15, 2007. The adoption of EITF 07-03 is not
expected to have a material effect on our financial statements.
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business
Combinations, or SFAS No. 141R. SFAS No. 141R will change the accounting for
business combinations. Under SFAS No. 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS No. 141R will
change the accounting treatment and disclosure for certain specific items in a
business combination. SFASNo. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008.
Accordingly, any business combinations we engage in will be recorded and
disclosed following existing GAAP until January 1, 2009. We expect SFAS No. 141R
will have an impact on accounting for business combinations once adopted but the
effect is dependent upon acquisitions at that time. We are still assessing the
impact of this pronouncement.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements--An Amendment of ARB No. 51, or SFAS No. 160.
SFAS No. 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after
December 15, 2008. We believe that SFAS 160 should not have a material impact on
our financial position or results of operations.
In December 2007, the Emerging Issues Task Force issued EITF No. 07-1,
Accounting for Collaborative Arrangements. EITFNo. 07-1 requires that
transactions with third parties (i.e., revenue generated and costs incurred by
the partners) should be reported in the appropriate line item in each company's
financial statement and includes enhanced disclosure requirements regarding the
nature and purpose of the arrangement, rights and obligations under the
arrangement, accounting policy, amount and income statement classification of
collaboration transactions between the parties. EITFNo. 07-1 is effective
January 1, 2009 and shall be applied retrospectively to all prior periods
presented for all collaborative arrangements existing as of the effective date.
The Company does not expect that the adoption of EITF No. 07-1 will have a
material effect on its consolidated results of operations or financial
condition.
In March 2008, the FASB issued FAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133. FAS
No. 161 changes the disclosure requirements for derivative instruments and
hedging activities. Entities are required to provide disclosures about (a) how
and why derivative instruments are used, (b) how derivative instruments and
related hedged items are accounted for under FAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, and its related interpretations,
and (c) how derivative instruments and related hedged items affect the entity's
financial position, financial performance, and cash flows. FAS No. 161 is
effective January 1, 2009. The Company does not expect that the adoption of FAS
No. 161 will have a material effect on its consolidated results of operations or
financial condition.
In April 2008, the FASB issued FSP FAS 142-3, "Determination of the Useful Life
of Intangible Assets" ("FSP FAS 142-3"). FSP FAS 142-3 amends the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under FASB Statement
No. 142, "Goodwill and Other Intangible Assets." FSP FAS 142-3 also requires
expanded disclosure related to the determination of intangible asset useful
lives. FSP FAS 142-3 is effective for financial statements issued for fiscal
years beginning after December 15, 2008, and interim periods within those fiscal
years. The Company does not expect that the adoption of FSP FAS 142-3 will have
a material effect on its consolidated results of operations or financial
condition.
In May 2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1 "Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)" (FSP APB 14-1). FSP APB 14-1 requires the
issuer of certain convertible debt instruments that may be settled in cash (or
other assets) on conversion to separately account for the liability (debt) and
equity (conversion option) components of the instrument in a manner that
reflects the issuer's non-convertible debt borrowing rate. FSP APB 14-1 is
effective for fiscal years beginning after December 15, 2008 on a retroactive
basis and will be adopted by the Company in the first quarter of fiscal 2009.
The Company does not expect the adoption of FSP APB 14-1 to have a material
effect on its results of operations and financial condition.
48
In June 2008, the Financial Accounting Standards Board ("FASB") issued FASB
Staff Position ("FSP") EITF 03-6-1, "Determining Whether Instruments Granted in
Share-Based Payment Transactions are Participating Securities." This FSP
provides that unvested share-based payment awards that contain nonforfeitable
rights to dividends or dividend equivalents (whether paid or unpaid) are
participating securities and shall be included in the computation of earnings
per share pursuant to the two-class method. The FSP is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. Upon adoption, companies are required
to retrospectively adjust earnings per share data (including any amounts related
to interim periods, summaries of earnings and selected financial data) to
conform to provisions of this FSP. The Company does not anticipate the adoption
of FSP EITF 03-6-1 will have a material impact on its results of operations,
cash flows or financial condition.
2. GOING CONCERN AND LIQUIDITY:
At December 31, 2008, we had total assets of $2,492 consisting of cash, no
operating business or other source of income, outstanding liabilities totaling
$172,557 and a stockholder' deficit of $170,065.
In our financial statements for the fiscal years ended December 31, 2008 and
2007, the Report of the Independent Registered Public Accounting Firm includes
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern. Our financial statements for the fiscal years ended
December 31, 2008 and 2007, have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. At December 31, 2008, we had a
working capital deficit of $170,065 and reported an accumulated deficit of
$606,855.
It is our current intention to seek to raise the debt and/or equity financing to
meet ongoing operating expenses and fully implement our proposed business plan.
There is no assurance that this series of events will be satisfactorily
completed
During the year ended December 31, 2007, we raised $105,000 in cash through the
private placement of 840,000 shares of our common stock at $0.125 per share. Mr.
Perlmutter, a former 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.
Since his appointment on August 31, 2006 and through December 31, 2008, Mr.
Cutler, our sole officer and a director, has made advances to us of $237,687 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 December 31, 2008, the Company owed Mr. Cutler
$113,486. There can be no assurance that Mr. Cutler will continue to provide
such financing on an ongoing basis
3. ACCOUNTS PAYABLE
The balances of Accounts Payable at December 31, 2008 and 2007 include certain
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.
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
4. ACCRUED EXPENSES
The balances of Accrued Expenses at December 31, 2008 and 2007 represents
accrued interest on loan notes provided to us by certain of our shareholders.
49
5. LOANS FROM SHAREHOLDERS
Our first President and then sole director, Barbara J. Smith, loaned us a total
of $10,900 between April and July 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.
Since his appointment on August 31, 2006 and through December 31, 2008, Mr.
Cutler, our sole officer and a director, has made advances to us of $237,687 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 December 31, 2008, the Company owed Mr. Cutler
$113,486. There can be no assurance that Mr. Cutler will continue to provide
such financing on an ongoing basis
6. RELATED PARTY TRANSACTIONS
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 former director, subscribed for 200,000 shares
of our common stock at a price of $0.125 per share for total consideration of
$25,000.
During the year ended December 31, 2007, Mr. Perlmutter, our former director,
was issued 300,000 shares of common, valued at $37,500, for his services to us
as a former director.
Barbara J. Smith, formerly an officer, director and currently a 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.
Since his appointment on August 31, 2006 and through December 31, 2008, Mr.
Cutler, our sole officer and a director, has made advances to us of $237,687 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 December 31, 2008, the Company owed Mr. Cutler
$113,486. There can be no assurance that Mr. Cutler will continue to provide
such financing on an ongoing basis
7. 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
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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.
In December 2007, following our registration pursuant to Section 12 (g) of the
Securities Exchange Act of 1934 the remaining 8,000 shares of our Series A
Convertible Preferred Shares automatically converted into 16,000 shares of our
common stock.
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.
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 former
director, subscribed for 200,000 of these shares for total consideration of
$25,000.
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In November 2007, we issued a further 40,000 shares of our common stock at
$0.125 per share for total consideration of $5,000 to an accredited investor and
300,000 shares of our common stock, valued at $0.125 per share or $37,500, as
remuneration to our former director, Jeffery L. Perlmutter.
In December 2007, following our registration pursuant to Section 12 (g) of the
Securities Exchange Act of 1934 the remaining 8,000 shares of our Series A
Convertible Preferred Shares automatically converted into 16,000 shares of our
common stock.
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.
No stock options were issued or outstanding during the years ended December 31,
2008 and 2007.
8. COMMITMENTS AND CONTINGENCIES:
No legal proceedings are pending or threatened to the best of our knowledge.
9. INCOME TAX
We have had losses since our Inception (May 8, 2001) through December 31, 2008
and therefore have not been subject to federal or state income taxes. We have
accumulated tax losses available for carry forward of approximately $607,000.
The carry forward is subject to examination by the tax authorities and expires
at various dates through the year 2028. 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.
10. SUBSEQUENT EVENTS
On March 31, 2009, Mr. Jeffrey Perlmutter resigned as a director.
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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: March 31, 2009 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, March 31, 2009
Chief Financial Officer
(Principal Financial and
Accounting Officer) and
Director
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