U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934
RPM ADVANTAGE, INC.
(Name of Small Business Issuer in its charter)
NEVADA 87-0285684
(State or Other Jurisdiction of (IRS Employer ID Number)
Incorporation or Organization)
2500 WEST LOOP SOUTH, SUITE 340, HOUSTON, TEXAS 77027
(Address of Principal Executive Offices and Zip Code)
Issuer's telephone number: (713) 583-4225
Securities to be registered under Section 12(b) of the Act:
Title of each class to be so registered: Not Applicable
Name of each exchange on which each class is to be registered: Not Applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par Value $ .001
(Title of class)
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 definitions of large accelerated filer, accelerated filer,
and smaller reporting Company in Rule 12b-2 of the Exchange Act:
Large accelerated filer Accelerated filer [X]
Non Non-accelerated filer Smaller reporting Company
Table of Contents
The cross-reference table below identifies where the items required by
Form 10 can be found in the statement.
INDEX TO FORM 10
of
RPM ADVANTAGE, INC.
Item Number and Caption Page
PART I
Item 1. Description of Business. . . . . . . . . . . . . . . . . . . . . . 3
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Financial Information. . . . . . . . . . . . . . . . . . . . . . .14
Item 3. Description of Property. . . . . . . . . . . . . . . . . . . . .17
Item 4 Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . . . . . . . . 17
PART II
Item 5. Directors and Executive Officers . . . . . . . . . . . . . . . . .18
Item 6. Executive Compensation . . . . . . . . . . . . . . . . . . . . . .18
Item 7. Certain Relationships and Related Transactions
and Directors Independence. . . . . . . . . . . . . . . . . . . . 18
Item 8. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 19
Item 9. Market Price and Dividends for Registrant's
Common Equity and Related Shareholder Matters. . . . . . . . . . 19
PART III
Item 10. Recent sales of Unregistered Securities. . . . . . . . . . . . . 20
Item 11. Description of Registrant Securities
to be Registered. . . . . . . . . . . . . . . . . . . . . . . . 20
Item 12. Indemnification of Directors and Officers. . . . . . . . . . . . 20
Item 13. Financial Statements and Supplementary Data. . . . . . . . . . . 21
PART IV
Item 14. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. . . . . . . . . . . . . .21
Item 15 Financial Statement and Exhibits . . . . . . . . . . . . . . . . 21
EXPLANATORY NOTE
You should rely only on the information contained in this registration
statement or in a document referenced herein. We have not authorized
anyone to provide you with any other information. You should assume
that the information contained in this registration statement is
accurate only as of the date hereof except where a specific date is set
forth herein.
As used in this registration statement, unless the context otherwise requires,
the terms the Company, our Company, we, us, our, RPM, or RPMV
refer to RPM Advantage, Inc., a Neveda corporation.
FORWARD LOOKING STATEMENTS
The statements contained in this document that are not purely historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the Securities Act). Although we believe that the
expectations reflected in such forward-looking statements, including those
regarding future operations, are reasonable, we can give no assurance that such
expectations will prove to be correct. Forward-looking statements are not
guarantees of future performance and they involve various risks and
uncertainties. Forward-looking statements contained in this document include
statements regarding our proposed services, market opportunities and
acceptance, expectations for revenues, cash flows and financial performance,
and intentions for the future. Such forward-looking statements are included
under Item 1.Business and Item 2. Financial Information - Managements
Discussion and Analysis of Financial Condition and Results of Operation.
All forward-looking statements included in this document are made as of the
date hereof, based on information available to us as of such date, and we
assume no obligation to update any forward-looking statement. It is important
to note that such statements may not prove to be accurate and that our actual
results and future events could differ materally from those anticipated in
such statements. Among the factors that could cause actual results to differ
materially from our expectations are those described under Item 1. Business,
Item 1A. Risk Factors and Item 2. Financial Information - Managements
Discussion and Analysis of Financial Condition and Results of Operations.
All subsequent written and oral forward-looking statements attributable to
us or persons acting on our behalf are expressly qualified in their entirety
by this section and other factors included elsewhere in document.
We believe that it is important to communicate our future expectations to
our investors. However, there may be events in the future that we are not
able to accurately predict or control that may cause our actual results
and achievements to differ materially from the expectations we describe
in our forward-looking statements. The occurrence of any such events could
have a material adverse effect on our business, results of operations,
financial position, market growth, services, products and licenses.
See Risk Factors within this registration statement. Further, since our
common stock is considered a penny stock, we are ineligible to rely on
the safe harbor for forward-looking statements provided in Section 27A
of the Securities Act of 1933, as amended (the Securities Act), and Section
21E of the Securities and Exchange Act of 1934, as amended (the Exchange
Act).
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
When this registration statement becomes effective, we will begin to file
periodic reports, proxy statements, information statements and other documents
with the United States Securities and Exchange Commission (the SEC). You may
read and copy this information, for a copying fee, at the SECs Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. More
information on the Public Reference Room can be obtained by calling the
SEC at 1-800-SEC-0330.
Our SEC filings will also be available to the public from commercial document
retrieval services, and at the web site maintained by the SEC at
http://www.sec.gov.
When this registration statement becomes effective, we will make
available, through a link to the SECs web site, electronic copies of the
materials we file with the SEC (including our annual reports on Form 10-K, our
quarterly reports on Form 10-Q, our current reports on Form 8-K, the Section 16
reports filed by our executive officers, directors and 10% stockholders, and
amendments to those reports). To receive paper copies of our SEC filings,
please contact us by mail at Investor Relations, RPM Advantage, Inc.,
2500 West Loop South Suite 340, Houston, Texas 77027 or by calling us at
(713) 583-4225.
PART I
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Item 1. Description of Business
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General
Our business address is 2500 West Loop South Suite 340, Houston, Texas 77027.
Our telephone number is (713) 583-4225.
RPM Advantage, Inc., (formerly Communitronics of America,Inc.)(the Company,
our Company, we, us, our, RPM Advantage, RPM, or RPMV)
was organized in the state of Utah on SEPTember 21, 1970 and
re-incorporated in Nevada in April 2006.
History
RPM Advantage traded on the Pink Sheets OTC Market under the symbol RPMV
from April 2006 through the date of an SEC-imposed two week temporary
trading halt on March 22, 2011. The SEC stated that the temporary halt was
due to the company had not filed its SEC annual or quarterly filings since
SEPTember 2006. a copy of this OIP can be found on the SEC website at the link:
http://www.sec.gov/litigation/suspensions/2011/34-64103-o.pdf
After the SEC temporary halted trading, it granted our Company
and the other companies identified in the action time to respond and resolve
any issues of compliance. RPM Advantage was the only company to respond.
As the result of the temporary trading halt, when the trading halt was
lifted on April 5, 2011 from the Companys securities trading under the
symbol RPMV, no live quotations were allowed to be made for the Companys
common stock by any broker or dealer until such broker or dealer filed a
Form 211 with the OTC Compliance Unit at the Financial Services Regulatory
Authority (FINRA). The company filed all deliquient filing and the
SEC then claimed that the filing had material errors, the company position
was that there was some typos and mistakes made while converting the filings
to the SEC Edgar System, but that all the filing were were correct. At no
time in the past six months of these proceeding did we recieve any official
notice from the Corporate Finance Division of the SEC in writting or any
other means that they viewed the typos and mistakes as material errors
Since then all the typos and mistakes have been corrected and numerious
amended filings have been filed with the SEC. These amended filing addressed
and corrected all the mistakes that the SEC Enforcement Division claimed
exisited.
The Enforcement Division continued to hold the position that the Company
filing were late and simple by this reason alone is enough to say that
they are deliquient, and further, that its the SEC position that the Company
12g registration be revoked and the Company should file a new form 10 in
order to cure any and all claimed deliquiences.
The Company believed that all its filings were current and that there are no
material ommisions,on November 8, 2011 the company entered into an Settlement
with enforcement to accept a revocation as the best course of action for its
shareholders and investors and to file this Form 10 in order to ensure
that it is in complete compliance with all necessary filings requirements.
A copy of this order can be found on the SEC website at the link:
http://www.sec.gov/litigation/admin/2011/34-65704.pdf
As of the date of this filing, our common stock is on the OTC Gray market
(the OTC Markets) under the symbol RPMV.
The Company is a independent operator in the Exploration and Production
(E & P) segment of oil an gas industry. The Company focus is on
secondary recovery leases that have known proven reserves and can have
their values increased by and through the application of new and
emerging enhanced recovery technologies. The Company considers itself
to be one operating segment.
RPM Advantage's overall business strategy is to continue growing in its
existing markets as well as to enter similar, adjacent markets by acquiring
new leases or acquiring other oil and gas companies.
We presently do not have employees engaged in the daily operation and drilling
of oil wells. We do not anticipate hiring additional professionals or others in
the near future to evaluate, drill or operate our wells. Instead, we expect to
hire independent contractors to perform these functions on a project-by-project
basis. We hope to compensate such independent contractors for their services
through the issuance of equity or with funds received from any funding
arrangement in the future.
The Company has limited financial resources available, which has had an adverse
impact on the Company's activities and operations. Additional funding would
allow the development of future wells, and pay for expenditures for exploration
and development, general administrative costs, and possible entrance into
strategic arrangements with a third parties. We plan to raise capital through
the sale of equity or convertible debt securities and/or through loans from our
stockholders and/or third parties. There can be no assurance that additional
funds will be available to us on favorable terms, or at all. If adequate funds
are not available within the next 12 months, we may be required to curtail our
operations significantly or obtain funds through entering into arrangements
with collaborative partners or others that may require us to relinquish
rights to certain of our assets that we would not otherwise relinquish.
Petroleum Industry Background
The petroleum industry includes the global processes of exploration,
extraction, refining, transporting (often by oil tankers and pipelines),
and marketing petroleum products. The largest volume products of the
industry are fuel oil and gasoline (petrol). Petroleum is also the raw
material for many chemical products, including pharmaceuticals, solvents,
fertilizers, pesticides, and plastics. The industry is usually divided
into three major components: upstream, midstream and downstream.
Midstream operations are usually included in the downstream category.
According to the U.S. Energy Information Administrations (EIA)
Petroleum is vital to many industries, and is of importance to the
maintenance of industrial civilization itself, and thus is a critical
concern for many nations. The United States consumed 25% of the
oil produced in 2007. The production, distribution, refining, and
retailing of petroleum taken as a whole represents the world's largest
industry in terms of dollar value.
Oil Industry - Overview
The price of oil is a function of oils supply and demand, among other factors.
Throughout 2010, and 2009 oil prices swung materially as demand contracted in
light of the global recession.
According to the U.S. Energy Information Administrations (EIA) Short-Term
Energy Outlook, dated March 8, 2011, West Texas Intermediate (WTI) crude oil
spot prices averaged $88.58 per barrel in February 2011, slightly lower
than the January 2011 average, while over the same time period the
estimated average cost of all crude oil to U.S. refineries increased by
about $4.50 per barrel to $92.50. EIA projects that the WTI spot prices
will rise to an average of $105 per barrel in December 2011 and remain at
about that level through 2012. The report can be accessed at the following
link: http://www.eia.doe.gov/emeu/steo/pub/contents.html.
The market for oil and gas is dependent upon a number of factors beyond our
control, which at times cannot be accurately predicted. These factors include
the proximity of wells to, and the capacity of, natural gas pipelines, the
extent of competitive domestic production and imports of oil and gas, the
availability of other sources of energy, fluctuations in seasonal supply and
demand, and governmental regulation. In addition, there is always the
possibility that new legislation may be enacted, which would impose price
controls or additional excise taxes upon crude oil or natural gas, or both.
Oversupplies of natural gas can be expected to recur from time to time and may
result in the gas producing wells being shut-in. Imports of natural gas may
adversely affect the market for domestic natural gas.
The market price for crude oil is significantly affected by policies adopted by
the member nations of Organization of Petroleum Exporting Countries (OPEC).
Members of OPEC establish prices and production quotas among themselves for
petroleum products from time to time with the intent of controlling the current
global supply and consequently price levels. We are unable to predict the
effect, if any, that OPEC or other countries will have on the amount of, or the
prices received for, crude oil and natural gas.
Gas prices, which were once effectively determined by government regulations,
are now largely influenced by competition. Competitors in this market include
producers, gas pipelines and their affiliated marketing companies, independent
marketers, and providers of alternate energy supplies, such as residual fuel
oil. Changes in government regulations relating to the production,
transportation and marketing of natural gas have also resulted in significant
changes in the historical marketing patterns of the industry. Generally, these
changes have resulted in the abandonment by many pipelines of long-term
contracts for the purchase of natural gas, the development by gas producers of
their own marketing programs to take advantage of new regulations requiring
pipelines to transport gas for regulated fees, and an increasing tendency to
rely on short-term contracts priced at spot market prices.
Competition
The oil and gas industry is highly competitive. Our competitors and potential
competitors include major oil companies and independent producers of varying
sizes, all of which are engaged in the acquisition of producing properties and
the exploration and development of prospects. Most of our competitors have
greater financial, personnel and other resources than we have. Consequently,
they have greater leverage to use in acquiring prospects, hiring personnel and
marketing oil and gas. Accordingly, a high degree of competition in these areas
is expected to continue.
Governmental Regulations
The production and sale of oil and gas is subject to regulation by state,
federal, and local authorities. In most areas there are statutory provisions
regulating the production of oil and natural gas under which administrative
agencies may set allowable rates of production and promulgate rules in
connection with the operation and production of such wells, ascertain and
determine the reasonable market demand of oil and gas, and adjust allowable
rates with respect thereto.
Our operations are subject to extensive and continually changing regulation
because legislation affecting the oil and natural gas industry is under
constant review for amendment and expansion. Many departments and
agencies, both federal and state, are authorized by statute to issue
and have issued rules and regulations binding on the oil and natural gas
industry and its individual participants. The failure to comply with such
rules and regulations can result in large penalties. The regulatory burden
on this industry increases our cost of doing business and, therefore,
affects our profitability. However, we do not believe that these
regulations will have a significant negative impact on our operations
with the acquired assets.
The Comprehensive Environmental Response, Compensation, and Liability Act
(CERCLA) contains provisions requiring the remediation of releases of
hazardous substances into the environment and imposes liability, without regard
to fault or the legality of the original conduct, on certain classes of persons
including owners and operators of contaminated sites where the release occurred
and those companies who transport, dispose of, or arrange for disposal of
hazardous substances released at the sites. Under CERCLA, such persons may be
subject to joint and several liability for the costs of cleaning up the
hazardous substances that have been released into the environment, for damages
to natural resources and for the costs of certain health studies. Third
parties may also file claims for personal injury and property damage allegedly
caused by the release of hazardous substances. Although we handle hazardous
substances in the ordinary course of business, we are not aware of any
hazardous substance contamination for which we may be liable.
Management believes that we are in compliance in all material respects with the
applicable environmental laws and regulations to which we are subject. We do
not anticipate that compliance with existing environmental laws and regulations
will have a material effect upon our capital expenditures, earnings or
competitive position. To date, we have not been required to spend any material
amount on compliance with environmental regulations. However, changes in the
environmental laws and regulations, or claims for damages to persons, property,
natural resources or the environment, could result in substantial costs and
liabilities, and thus there can be no assurance that we will not incur
significant environmental compliance costs in the future.
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Item 1A. Risk Factors
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An investment in our securities involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
registration statement, including our consolidated financial statements and the
notes to those statements, before you purchase any of our shares. The risks and
uncertainties described below are not the only ones we face. Additional risks
and uncertainties not presently known to us, or that we currently deem
immaterial, could negatively impact our business, results of operations or
financial condition in the future. If any of the following risks and
uncertainties develops into actual events, our business, results of operations
or financial condition could be adversely affected. In those cases, the trading
price of our securities could decline, and you may lose all or part of your
investment.
RISKS RELATED TO OUR BUSINESS
We have a history of losses which may continue and which may negatively impact
our ability to achieve our business objectives.
We have incurred cumulative net losses of $7,478,191 for the period from 1970
(inception) to SEPTember 30, 2011 . We cannot be assured that we can
achieve or sustain profitability on a quarterly or annual basis in the future.
Our operations are subject to the risks and competition inherent in the
establishment of a business enterprise. There can be no assurance that future
operations will be profitable. We may not achieve our business objectives and
the failure to achieve such goals would have an adverse impact on us.
We will require additional capital to fund our future activities. If we fail to
obtain additional capital, we may not be able to implement fully our business
plan, which could lead to a decline in reserves.
We are dependent on our ability to obtain financing to supplement our cash flow
from operations. Historically, we have financed our business plan and
operations primarily with issuances of common stock. We also require capital
to fund our capital budget. Production of oil and gas will require significant
capital expenditures and successful drilling operations. We will be required
to meet our needs from our internally generated cash flows, debt financings
and equity financings.
If our revenues decrease as a result of lower commodity prices, operating
difficulties, declines in reserves or for any other reason, we may have
limited ability to obtain the capital necessary to sustain our operations
at current levels. We may, from time to time, need to seek additional
financing. Even if additional capital is needed, we may not be able to
obtain debt or equity financing on terms favorable to us, or at all.
If cash generated by operations is not sufficient to meet our capital
requirements, the failure to obtain additional financing could result
in a curtailment of our operations relating to exploration and development
of our projects, which could lead to a possible loss of properties and
a decline in any oil and gas we may recover.
Our independent registered public accounting firm has expressed substantial
doubt about our ability to continue as a going concern, which may hinder our
ability to obtain future financing.
In their report dated July 5, 2011, our independent registered public
accounting firm stated that our consolidated financial statements for the
fiscal year ended December 31, 2010 were prepared assuming that we would
continue as a going concern. Our ability to continue as a going concern is
an issue raised as a result of recurring losses and cash used in operations.
We continue to experience net operating losses. Our ability to continue as
a going concern is subject to our ability to obtain necessary funding from
outside sources, including obtaining additional funding from the sale of
our securities. Our continued net operating losses increase the difficulty
in meeting such goals, and there can be no assurances that such methods
will prove successful. In addition, we most likely will need to raise
monies for future development costs. Even though these development costs
may be incurred over a three to five year period, we may be unable to
raise the funds necessary to cover such costs. We have only raised
limited amount of capital.
Therefore, there is no assurance that further capital can be raised, which if
not raised will substantially change our plans to develop any of our oil
properties.
The duration or severity of the current global economic downturn and
ddisruptions in the financial markets, and their impact on our Company,
are uncertain.
The oil and gas industry generally is highly cyclical, with prices subject to
worldwide market forces of supply and demand and other influences. The recent
global economic downturn, coupled with the global financial and credit market
disruptions, have had a historic negative impact on the oil and gas industry.
These events have contributed to an unprecedented decline in crude oil and
natural gas prices, weak end markets, a sharp drop in demand, increased global
inventories, and higher costs of borrowing and/or diminished credit
availability. While we believe that the long-term prospects for oil and gas
remain bright, we are unable to predict the duration or severity of the current
global economic and financial crisis. There can be no assurance that any
actions we may take in response to further deterioration in economic and
financial conditions will be sufficient. A protracted continuation or worsening
of the global economic downturn or disruptions in the financial markets could
have a material adverse effect on our business, financial condition or results
of operations.
Gas and oil prices are volatile, and a decline in gas or oil prices could
significantly affect our business, financial condition or results of operations
and our ability to meet our capital expenditure requirements and financial
commitments.
Our revenues, profitability and cash flow depend substantially upon the prices
and demand for gas and oil. The markets for these commodities are volatile, and
even relatively modest drops in prices can affect significantly our financial
results and impede our growth. Prices for gas and oil fluctuate widely in
response to relatively minor changes in the supply and demand for gas and oil,
market uncertainty and a variety of additional factors beyond our control, such
as:
domestic and foreign supply of gas and oil;
price and quantity of foreign imports;
commodity processing, gathering and transportation availability and the
availability of refining capacity;
domestic and foreign governmental regulations;
political conditions in or affecting other gas producing and oil
producing countries, including the current conflicts in the Middle East
and conditions in South America and Russia;
the ability of the members of the Organization of Petroleum Exporting
Countries to agree to and maintain oil price and production controls;
weather conditions, including unseasonably warm winter weather;
technological advances affecting gas and oil consumption;
overall United States and global economic conditions; and
price and availability of alternative fuels.
Further, gas prices and oil prices do not necessarily fluctuate in direct
relationship to each other.
The results of higher investment in the exploration for and production of gas
and other factors may cause the price of gas to drop. Lower gas and oil prices
may not only cause our revenues to decrease but also may reduce the amount of
gas and oil that we can produce economically. Substantial decreases in gas and
oil prices would render uneconomic some or all of our drilling locations. This
could have a material adverse effect on our financial condition, results of
operations and cash flow.
Drilling and exploring for, and producing, gas and oil are high risk activities
with many uncertainties that could adversely affect our business, financial
condition or results of operations.
Drilling and exploration are the main methods we use to replace our
hydrocarbons. However, drilling and exploration operations may not result
in any increases in hydrocarbons for various reasons. Exploration activities
involve numerous risks, including the risk that no commercially productive
gas or oil reservoirs will be discovered. In addition, the future cost and
timing of drilling, completing and producing wells is often uncertain.
Furthermore, drilling operations may be curtailed, delayed or canceled as
a result of a variety of factors, including:
lack of acceptable prospective acreage;
inadequate capital resources;
unexpected drilling conditions, pressure or irregularities in
formations, equipment failures or accidents;
adverse weather conditions, including tornados;
unavailability or high cost of drilling rigs, equipment or labor;
reductions in gas and oil prices;
limitations in the market for gas and oil;
surface access restrictions;
title problems;
compliance with governmental regulations; and
mechanical difficulties.
Our decisions to purchase, explore, develop and exploit prospects or properties
depend in part on data obtained through geophysical and geological analyses,
production data and engineering studies, the results of which are often
uncertain. Even when used and properly interpreted, 3-D seismic data and
visualization techniques only assist geoscientists and geologists in
identifying subsurface structures and hydrocarbon indicators. They do not
allow the interpreter to know conclusively if hydrocarbons are present or
producible economically. In addition, the use of 3-D seismic and other
advanced technologies require greater predrilling expenditures than traditional
drilling strategies.
In addition, higher gas and oil prices generally increase the demand for
drilling rigs, equipment and crews and can lead to shortages of, and
increasing costs for, such drilling equipment, services and personnel.
Such shortages could restrict our ability to drill the wells and conduct
the operations that we currently have planned. Any delay in the drilling
of new wells or significant increase in drilling costs could adversely
affect our ability to increase our production and reduce our revenues.
We may not discover commercial quantities of oil and gas reserves, which will
impact our ability to meet our business goals.
Our ability to locate reserves is dependent upon a number of factors, including
our participation in multiple exploration projects and our technological
capability to locate oil and gas in commercial quantities. We cannot predict
that we will have the opportunity to participate in projects that economically
produce commercial quantities of oil and gas in amounts necessary to create a
positive cash flow for the Company or that the projects in which we elect to
participate will be successful. There can be no assurance that our planned
projects will result in significant reserves or that we will have future
success in drilling productive wells at economical reserve replacement costs.
The results of higher investment in the exploration for and production of gas
and other factors may cause the price of gas to drop. Lower gas and oil prices
may not only cause our revenues to decrease but also may reduce the amount of
gas and oil that we can produce economically. Substantial decreases in gas and
oil prices would render uneconomic some or all of our drilling locations. This
could have a material adverse effect on our financial condition, results of
operations and cash flow.
All of our future oil and gas properties will located in Texas, Kansas and
Oklahoma, and our future leases are primarily attributable to fields in those
areas, making us vulnerable to risks associated with having our production
concentrated in a small area.
If the vast majority of our producing properties are geographically
concentrated in Texas, Kansas and Oklahoma, and our leases are primarily
attributable to the fields in that area. As a result of this concentration,
we may be disproportionately exposed to the impact of delays or interruptions
of production from these wells caused by significant governmental regulation,
transportation capacity constraints, curtailments of production, natural
disasters, interruption of transportation of gas produced from the wells
in these basins or other events that impact these areas.
Identified drilling locations that we decide to drill may not yield gas or oil
in commercially viable quantities and are susceptible to uncertainties that
could materially alter the occurrence or timing of their drilling.
Our drilling locations are in various stages of evaluation, ranging from
locations that are ready to be drilled to locations that will require
substantial additional evaluation and interpretation. There is no way to
predict in advance of drilling and testing whether any particular drilling
location will yield gas or oil in sufficient quantities to recover drilling
or completion costs or to be economically viable. The use of seismic data
and other technologies and the study of producing fields in the same area
will not enable us to know conclusively before drilling whether gas or oil
will be present or, if present, whether gas or oil will be present in
commercial quantities. The analysis that we perform may not be useful in
predicting the characteristics and potential reserves associated with our
drilling locations. As a result, we may not find commercially viable
quantities of gas and oil.
Our drilling locations represent a significant part of our growth strategy. Our
ability to drill and develop these locations depends on a number of factors,
including gas and oil prices, costs, the availability of capital, seasonal
conditions, regulatory approvals and drilling results. Because of these
uncertainties, we do not know when the unproved drilling locations we have
identified will be drilled or if they will ever be drilled or if we will be
able to produce gas or oil from these or any proved drilling locations. As
such, our actual drilling activities may be materially different from those
presently identified, which could adversely affect our business, results of
operations or financial condition.
Our actual production, revenues and expenditures related to our oil and gas
prospects are likely to differ from our estimates of hydrocarbons. We may
experience production that is less than estimated and drilling costs that are
greater than estimated in our reserve reports. These differences may be
material.
We estimate the amount of hydrocarbons available in our
prospects. Petroleum engineering is a subjective process of estimating
underground accumulations of gas and oil that cannot be measured in an exact
manner. Estimates of economically recoverable gas and oil reserves and of
future net cash flows necessarily depend upon a number of variable factors
and assumptions, including:
historical production from the area compared with production from other
similar producing areas;
the assumed effects of regulations by governmental agencies;
assumptions concerning future gas and oil prices; and
assumptions concerning future operating costs, severance and excise
taxes, development costs and workover and remedial costs.
Because all estimates of recoverable oil and gas are to some degree subjective,
each of the following items may differ materially from those assumed in
estimating proved reserves:
the quantities of gas and oil that are ultimately recovered;
the production and operating costs incurred;
the amount and timing of future development expenditures; and
future gas and oil prices.
Estimates of proved undeveloped reserves are even less reliable than estimates
of proved developed reserves.
Furthermore, different engineers may make different estimates of recoverable
oil and gas and cash flows based on the same available data. Our actual
production, revenues and expenditures will likely be different from estimates
and the differences may be material. Actual future net cash flows also will be
affected by factors such as:
the amount and timing of actual production;
supply and demand for gas and oil;
increases or decreases in consumption; and
changes in governmental regulations or taxation.
You should not assume that the present value of future net revenues from our
potential recoverable oil and gas is the current market value of our estimated
gas and oil reserves.
Competition in the oil and gas industry is intense, and many of our competitors
have resources that are greater than ours.
We operate in a highly competitive environment for acquiring prospects and
productive properties, marketing gas and oil and securing equipment and trained
personnel. Many of our competitors are major and large independent oil and gas
companies that possess and employ financial, technical and personnel resources
substantially greater than ours. Those companies may be able to develop and
acquire more prospects and productive properties than our financial or
personnel resources permit. Our ability to acquire additional prospects and
discover reserves in the future will depend on our ability to evaluate and
select suitable properties and consummate transactions in a highly competitive
environment. Also, there is substantial competition for capital available for
investment in the oil and gas industry. Larger competitors may be better able
to withstand sustained periods of unsuccessful drilling and absorb the burden
of changes in laws and regulations more easily than we can, which would
adversely affect our competitive position. We may not be able to compete
successfully in the future in acquiring prospective reserves, developing
reserves, marketing hydrocarbons, attracting and retaining quality personnel
and raising additional capital.
We depend on our management team and other key personnel. Accordingly, the loss
of any of these individuals could adversely affect our business, financial
condition and the results of operations and future growth.
Our success largely depends on the skills, experience and efforts of our
management team. The loss of the services of one or more members of our senior
management team could have a negative effect on our business, financial
condition, results of operations and future growth. We have not entered into an
employment agreement with David Pressler, our President and Chief Executive
Officer. See Executive Compensation Item 6 Employment agreements and other
arrangements. If he or other key personnel resign or become unable to continue
in their present roles and are not adequately replaced, our business operations
could be materially adversely affected. Our ability to manage our growth, if
any, will require us to attract, motivate and retain additional qualified
personnel. Competition for these types of personnel is intense, and we may not
be successful in attracting, assimilating and retaining the personnel required
to grow and operate our business profitably
We are subject to complex governmental laws and regulations that may adversely
affect the cost, manner or feasibility of doing business.
Our operations and facilities are subject to extensive federal, state and local
laws and regulations relating to the exploration for, and the development,
production and transportation of, gas and oil, and operating safety, and
protection of the environment, including those relating to air emissions,
wastewater discharges, land use, storage and disposal of wastes and remediation
of contaminated soil and groundwater. Future laws or regulations, any adverse
changes in the interpretation of existing laws and regulations or our
failure to comply with existing legal requirements may harm our business,
results of operations and financial condition. We may encounter reductions
in reserves or be required to make large and unanticipated capital
expenditures to comply with governmental laws and regulations, such as:
price control;
taxation;
lease permit restrictions;
drilling bonds and other financial responsibility requirements, such as
plug and abandonment bonds;
spacing of wells;
unitization and pooling of properties;
safety precautions; and
permitting requirements.
Under these laws and regulations, we could be liable for:
personal injuries;
property and natural resource damages;
well reclamation costs, soil and groundwater remediation costs; and
governmental sanctions, such as fines and penalties.
Our operations could be significantly delayed or curtailed, and our cost of
operations could significantly increase as a result of environmental safety and
other regulatory requirements or restrictions. We are unable to predict the
ultimate cost of compliance with these requirements or their effect on our
operations. We may be unable to obtain all necessary licenses, permits,
approvals and certificates for proposed projects. Intricate and changing
environmental and other regulatory requirements may require substantial
expenditures to obtain and maintain permits. If a project is unable to function
as planned, for example, due to costly or changing requirements or local
opposition, it may create expensive delays, extended periods of non-operation
or significant loss of value in a project.
Our oil and gas business depends on transportation facilities owned by others.
The marketability of our potential oil and gas production
depends in part on the availability, proximity and capacity of pipeline systems
owned or operated by third parties. Federal and state regulation of oil and gas
production and transportation, tax and energy policies, changes in supply and
demand and general economic conditions could adversely affect our ability to
produce, gather and transport oil and natural gas.
Attempts to grow our business could have an adverse effect on our ability to
manage our growth effectively.
Because of our small size, we desire to grow rapidly in order to achieve
certain economies of scale. Although there is no assurance that this
rapid growth will occur, to the extent that it does occur, it will place
a significant strain on our financial, technical, operational and
administrative resources. As we increase our services and enlarge the
number of projects we are evaluating or in which we are participating,
there will be additional demands on our financial, technical and
administrative resources. The failure to continue to upgrade our
technical, administrative, operating and financial control systems or the
occurrence of unexpected expansion difficulties, including the recruitment
and retention of geoscientists and engineers, could have a material adverse
effect on our business, financial condition and results of operations.
Operating hazards, natural disasters or other interruptions of our operations
could result in potential liabilities, which may not be fully covered by our
insurance.
The oil and gas business involves certain operating hazards such as:
well blowouts;
cratering;
explosions;
uncontrollable flows of gas, oil or well fluids;
fires;
pollution; and
releases of toxic gas.
The occurrence of one of the above may result in injury, loss of life,
suspension of operations, environmental damage and remediation and/or
governmental investigations and penalties.
In addition, our future operations in Texas, Kansas and Oklahoma are especially
susceptible to damage from natural disasters such as tornados and involve
increased risks of personal injury, property damage and marketing
iinterruptions. Any of these operating hazards could cause serious injuries,
fatalities or property damage, which could expose us to liabilities. The
payment of any of these liabilities could reduce, or even eliminate, the
funds available for exploration, development, exploitation and acquisition,
or could result in a loss of our properties. Consistent with insurance coverage
generally available to the industry, our insurance policies provide limited
coverage for losses or liabilities relating to pollution, with broader coverage
for sudden and accidental occurrences. Our insurance might be inadequate to
cover our liabilities. The insurance market in general and the energy insurance
market in particular have been difficult markets over the past several years.
Insurance costs are expected to continue to increase over the next few years
and we may decrease coverage and retain more risk to mitigate future cost
increases. If we incur substantial liability and the damages are not covered
by insurance or are in excess of policy limits, or if we incur liability at a
time when we are not able to obtain liability insurance, then our business,
results of operations and financial condition could be materially adversely
affected.
Our results are subject to quarterly and seasonal fluctuations.
Our quarterly operating results have fluctuated in the past and could be
negatively impacted in the future as a result of a number of factors, including:
seasonal variations in gas and oil prices;
variations in levels of production; and
the completion of exploration and production projects.
Market conditions or transportation impediments may hinder our access to gas
and oil markets or delay our production.
Market conditions, the unavailability of satisfactory gas and oil processing
and transportation may hinder our access to gas and oil markets or delay our
production. The availability of a ready market for our gas and oil production
depends on a number of factors, including the demand for and supply of gas and
oil and the proximity of reserves to pipelines or trucking and terminal
facilities. In addition, the amount of gas and oil that can be produced and
sold is subject to curtailment in certain circumstances, such as pipeline
interruptions due to scheduled and unscheduled maintenance, excessive pressure,
physical damage to the gathering or transportation system or lack of contracted
capacity on such systems. The curtailments arising from these and similar
circumstances may last from a few days to several months, and in many cases we
are provided with limited, if any, notice as to when these circumstances will
arise and their duration. As a result, we may not be able to sell, or may have
to transport by more expensive means, the gas and oil production from wells or
we may be required to shut in gas wells or delay initial production until the
necessary gathering and transportation systems are available. Any significant
curtailment in gathering system or pipeline capacity, or significant delay in
construction of necessary gathering and transportation facilities, could
adversely affect our business, financial condition or results of operations.
Environmental liabilities may expose us to significant costs and liabilities.
There is inherent risk of incurring significant environmental costs and
liabilities in our gas and oil operations due to the handling of petroleum
hydrocarbons and generated wastes, the occurrence of air emissions and water
discharges from work-related activities and the legacy of pollution from
historical industry operations and waste disposal practices. We may incur joint
and several or strict liability under these environmental laws and regulations
in connection with spills, leaks or releases of petroleum hydrocarbons and
wastes on, under or from our properties and facilities, many of which have been
used for exploration, production or development activities for many years,
oftentimes by third parties not under our control. Private parties, including
the owners of properties upon which we conduct drilling and production
activities as well as facilities where our petroleum hydrocarbons or wastes are
taken for reclamation or disposal, may also have the right to pursue legal
actions to enforce compliance as well as to seek damages for non-compliance
with environmental laws and regulations or for personal injury or property
damage. In addition, changes in environmental laws and regulations occur
frequently, and any such changes that result in more stringent and costly
waste handling,storage, transport, disposal or remediation requirements could
have a material adverse effect on our production or our operations or
financial position. We may not be able to recover some or any of these
costs from insurance.
Our growth strategy could fail or present unanticipated problems for our
business in the future, which could adversely affect our ability to make
acquisitions or realize anticipated benefits of those acquisitions.
Our growth strategy may include acquiring oil and gas businesses and
properties. We may not be able to identify suitable acquisition opportunitie
or finance and complete any particular acquisition successfully.
Furthermore, acquisitions involve a number of risks and challenges, including:
diversion of managements attention;
the need to integrate acquired operations;
potential loss of key employees of the acquired companies;
potential lack of operating experience in a geographic market of the
acquired business; and
an increase in our expenses and working capital requirements.
Any of these factors could adversely affect our ability to achieve anticipated
levels of cash flows from the acquired businesses or realize other anticipated
benefits of those acquisitions.
The requirements of complying with the Securities Exchange Act of 1934 and the
Sarbanes Oxley Act of 2002 may strain our resources and distract management.
As a public company we will be subject to the reporting requirements of the
Securities Exchange Act of 1934, referred to as the Exchange Act, and the
Sarbanes Oxley Act of 2002 and related rules of the SEC. These requirements may
place a strain on our systems and resources as we will be required to carry out
activities we have not conducted previously, and we will incur significant
legal, accounting and other expenses that we did not incur in the past. The
Exchange Act requires that we file annual, quarterly and current reports with
respect to our business and financial condition. The Sarbanes Oxley Act of 2002
requires that we maintain effective disclosure controls and procedures,
corporate governance standards and internal controls over financial reporting.
If we identify any issues in complying with those requirements (for example, if
we or our independent auditors identify a material weakness or significant
deficiency in our internal control over financial reporting), we could incur
additional costs rectifying those issues, and the existence of those issues
could adversely affect us, our reputation or investor perceptions of us.
We also expect that it could be difficult and will be significantly more
expensive to obtain directors and officers liability insurance, and we may be
required to accept reduced policy limits and coverage or incur substantially
higher costs to obtain the same or similar coverage. As a result, it may be
more difficult for us to attract and retain qualified persons to serve on
our board of directors or as executive officers. Advocacy efforts by
stockholders and third parties also may prompt even more changes in
governance and reporting requirements.
We cannot predict or estimate the amount of additional costs we may incur
or the timing of such costs. Additionally, in connection with these
heightened duties, significant resources and management oversight will
be required as we may need to devote additional time and personnel to
legal, financial and accounting activities to ensure our ongoing
compliance with public company reporting requirements. The effort to
prepare for these obligations may divert managements attention from
other business concerns, which could have a material adverse affect on
our business, financial condition, results of operations or cash flow.
Risks related to this filing
There has been limited public market for our common stock, and our stock price
may fluctuate significantly.
There is currently no public market for our common stock, and an active
trading market may not develop or be sustained after the sale of all of
the shares covered by this filing. The market price of our common stock
could fluctuate significantly as a result of:
our operating and financial performance and prospects;
quarterly variations in the rate of growth of our financial indicators,
such as net income per share, net income and revenues;
changes in revenue or earnings estimates or publication of research
reports by analysts about us or the exploration and production industry;
liquidity and registering our common stock for public resale;
actual or unanticipated variations in our reserve estimates and
quarterly operating results;
changes in gas and oil prices;
speculation in the press or investment community;
sales of our common stock by our stockholders;
increases in our cost of capital;
changes in applicable laws or regulations, court rulings and enforcement
and legal actions;
changes in market valuations of similar companies;
adverse market reaction to any increased indebtedness we incur in the
future;
additions or departures of key management personnel;
general market and economic conditions, including the occurrence of
events or trends affecting the price of gas; and
domestic and international economic, legal and regulatory factors
unrelated to our performance.
If a trading market develops for our common stock, stock markets in general
experience volatility that often is unrelated to the operating performance of
particular companies. These broad market fluctuations may adversely affect the
trading price of our common.
Certain stockholders shares are restricted from immediate resale but may be
sold into the market in the near future. This could cause the market price of
our common stock to drop significantly.
As of December 31, 2010, we have outstanding 489,535,296 shares of common
stock. Sales of a substantial number of shares of our common stock in the
public markets following this filing by any of our existing stockholders
(or persons to whom our existing stockholders may distribute shares of our
common stock), or the perception that such sales might occur, could have a
material adverse effect on the price of our common stock or could impair our
ability to obtain capital through an offering of equity securities.
You may experience dilution of your ownership interests due to the future
issuance of additional shares of our common stock.
We may in the future issue our previously authorized and unissued securities,
resulting in the dilution of the ownership interests of our present
stockholders and purchasers of common stock offered hereby. We are currently
authorized to issue 500 million shares of common stock and 5 million shares
of preferred stock with preferences and rights as determined by our board of
directors. The potential issuance of such additional shares of common stock
may create downward pressure on the trading price of our common stock. We
may also issue additional shares of our common stock or other securities
that are convertible into or exercisable for common stock in connection with
the hiring of personnel, future acquisitions, future public offerings or
private placements of our securities for capital raising purposes, or for
other business purposes.
If equity research analysts do not publish research or reports about our
business or if they issue unfavorable commentary or downgrade our common stock,
the price of our common stock could decline.
The trading market for our common stock may rely in part on the research and
reports that equity research analysts publish about us and our business. We do
not control the opinions of these analysts. The price of our stock could
decline if one or more equity analysts downgrade our stock or if those
analysts issue other unfavorable commentary or cease publishing reports
about us or our business.
The availability of shares for sale in the future could reduce the market price
of our common stock.
In the future, we may issue securities to raise cash for acquisitions. We may
also acquire interests in outside companies by using a combination of cash and
our common stock or just our common stock. We may also issue securities
convertible into our common stock. Any of these events may dilute your
ownership interest in our company and have an adverse impact on the price
of our common stock.
In addition, sales of a substantial amount of our common stock in the public
market, or the perception that these sales may occur, could reduce the market
price of our common stock. This could also impair our ability to raise
additional capital through the sale of our securities.
There is no active trading market for our common stock and if a market for our
common stock does not develop, our investors may be unable to sell their shares
in a timely manner.
There is currently no active trading market for our common stock
and such a market may not develop or be sustained. We currently plan to have
our common stock quoted on the OTC Pink Sheets. In order to do this, a market
maker must file a Form 15c-211 to allow the market maker to make a market in
shares of our common stock. At the date hereof, we are not aware that any
market maker has any such intention. We cannot provide our investors with any
assurance that our common stock will be quoted on the OTC Pink Sheets or,
if quoted, that a public market will materialize. Further, the OTC Pink Sheets
is not a listing service or exchange, but is instead a dealer quotation service
for subscribing members. If our common stock is not quoted on the OTC Pink
Sheets or if a public market for our common stock does not develop, then
investors may not be able to resell the shares of our common stock that they
have purchased making this an illiquid investment. If we establish a trading
market for our common stock, the market price of our common stock may be
significantly affected by factors such as actual or anticipated fluctuations
in our operating results, general market conditions and other factors. In
addition, the stock market has from time to time experienced significant price
and volume fluctuations that have particularly affected the market prices of
the shares of developmental stage companies like RPM Advantage, which may
adversely affect the market price of our common stock in a material manner.
Because our common stock is deemed a low-priced Penny stock, an investment in
our common stock should be considered high risk and subject to marketability
restrictions.
RPM Advantage common shares may be deemed to be penny stock as that term is
defined in Regulation Section 240.3a51-1 of the Securities and Exchange
Commission (the SEC). Penny stocks are stocks: (a) with a price of less than
U.S. $5.00 per share; (b) that are not traded on a recognized national
exchange; (c) whose prices are not quoted on the NASDAQ automated quotation
system (NASDAQ - where listed stocks must still meet requirement (a) above); or
(d) in issuers with net tangible assets of less than U.S. $2,000,000 (if the
issuer has been in continuous operation for at least three years) or U.S.
$5,000,000 (if in continuous operation for less than three years), or with
average revenues of less than U.S. $6,000,000 for the last three years.
Section 15(g) of the United States Securities Exchange Act of 1934, as
amended, and Regulation Section 240.15g(c)2 of the SEC require broker dealers
dealing in penny stocks to provide potential investors with a document
disclosing the risks of penny stocks and to obtain a manually signed and dated
written receipt of the document before effecting any transaction in a penny
stock for the investor's account. Potential investors in RPM Advantage common
shares are urged to obtain and read such disclosure carefully before purchasing
any common shares that are deemed to be penny stock.
The Financial Industry Regulatory Authority sales practice requirements may
also limit a stockholders ability to buy and sell our stock.
In addition to the penny stock rules referred to above, the Financial Industry
Regulatory Authority, which we refer to as FINRA, has adopted rules that
require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable
for that customer. Prior to recommending speculative low priced securities
to their non-institutional customers, broker-dealers must make reasonable
efforts to obtain information about the customers financial status, tax
status, investment objectives and other information. Under interpretations
of these rules, the FINRA believes that there is a high probability that
speculative low priced securities will not be suitable for at least some
customers. The FINRA requirements make it more difficult for broker-dealers
to recommend that their customers buy our common stock, which may limit your
ability to buy and sell our stock and have an adverse effect on the market
for shares of our common stock.
RISKS RELATED TO THE OWNERSHIP OF OUR SECURITIES
We do not anticipate paying any dividends in the foreseeable future, which may
reduce the return on your investment in our common stock.
To date, RPM Advantage has not paid any cash dividends on its Common Stock and
does not anticipate paying any such dividends in the foreseeable future.
Payment of future dividends will depend on earnings and the capital
requirements of RPM Advantage, and RPM Advantage debt facilities and other
factors considered appropriate by RPM Advantage Executive Officers and
Directors. We cannot guarantee that we will, at any time, generate sufficient
profits or surplus cash that would be available for distribution as a dividend
to the holders of our common stock. Our current plans are to use any profits
that we may generate, if we generate any profits at all, to fund our operations.
Therefore, any return on your investment would derive from an increase in the
price of our stock, which may or may not occur.
We will need to raise additional capital and, in so doing, will further dilute
the total number of shares issued and outstanding.
We will need to raise additional capital by issuing additional shares of common
stock and will, thereby, increase the number of common shares outstanding.
There can be no assurance that this additional capital will be available and,
if the capital is available at all, that it will be available on terms
acceptable to us. The issuances of additional equity securities by RPM Advantage
may result in a significant dilution in the equity interests of its current
security holders. Alternatively, we may have to borrow large sums, and assume
debt obligations that require us to make substantial interest and capital
payments. If we are able to raise additional capital, we cannot assure that
it will be on terms that enhance the value of our common shares. If we are
unable to obtain financing in the amounts and on terms deemed acceptable,
the business and future success will almost certainly be adversely affected.
As we may be unable to create or sustain a market for our shares, they may be
extremely illiquid.
If no market develops, the holders of our common stock may find it difficult or
impossible to sell their shares. Further, even if a market develops, our common
stock will be subject to fluctuations and volatility and RPM Advantage cannot
apply directly to be quoted on the FINRA Over-The-Counter Pink Sheets
Additionally, the stock may be listed or traded only to the extent that there
is interest by broker-dealers in acting as a market maker in RPM Advantage
stock. Despite RPM Advantage efforts, it may not be able to convince any
broker/dealers to act as market-makers and make quotations on the Over-The
Counter Pink Sheets.
The regulation of Penny stocks by the SEC and FINRA may discourage the
tradability of our common stock.
We are a penny stock company. Our securities currently do not trade, however,
when they do they will be subject to a Securities and Exchange Commission rule
that imposes special sales practice requirements upon broker-dealers who sell
such securities to persons other than established customers or accredited
investors. For purposes of the rule, the phrase accredited investors means,in
general terms, institutions with assets in excess of $5,000,000, or individuals
having a net worth in excess of $1,000,000 or having an annual income that
exceeds $200,000 (or that, when combined with a spouse's income, exceeds
$300,000). For transactions covered by the rule, the broker-dealer must make a
special suitability determination for the purchaser and receive the purchasers
written agreement to the transaction prior to the sale. Effectively, this
discourages broker-dealers from executing trades in penny stocks. Consequently,
the rule will affect the ability of purchasers in this offering to sell their
securities in any market that might develop therefore because it imposes
additional regulatory burdens on penny stock transactions.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate penny stocks. Such rules include Rules 3a51-1, 15g-1,
15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities
and Exchange Act of 1934, as amended. Because our securities constitute
penny stocks within the meaning of the rules, the rules would apply to us
and to our securities. The rules will further affect the ability of owners
of shares to sell our securities in any market that might develop for them
because it imposes additional regulatory burdens on penny stock transactions.
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 shareholder losses.
Our management is aware of the abuses that have occurred historically
in the penny stock market.
Rule 144 Sales In the Future May Have a Depressive Effect on our
Stock Price.
All of the outstanding shares of common stock that are held by our present
officers, directors, and affiliate stockholders are restricted securities
within the meaning of Rule 144 under the Securities Act of 1933, as amended.
As restricted Shares, these shares may be resold only pursuant to an
effective registration statement or under the requirements of Rule 144 or
other applicable exemptions from registration under the Act and as required
under applicable state securities laws. Rule 144 provides in essence that
an affiliate 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 companys
outstanding common stock or the average weekly trading volume during the
four calendar weeks prior to the sale.
There is no limit on the amount of restricted securities that may be sold by a
non-affiliate after the owner has held the restricted securities for a period
of six months. A sale under Rule 144 or under any other exemption from the Act,
if available, or pursuant to subsequent registration of shares of common stock
of present stockholders, may have a depressive effect upon the price of the
common stock in any market that may develop.
Our stock will in all likelihood be thinly traded and as a result an investor
may be unable to sell at or near ask prices or at all if the investor needs to
liquidate shares.
Our common stock is currently listed for trading on the Gray Sheets, meaning
that the number of persons interested in purchasing our common shares 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 us or purchase or recommend
the purchase of any of our securities until such time as we becomes more
seasoned and viable.
As a consequence, there may be periods of several days or more when trading
activity in our securities will be minimal or non-existent, as compared to a
seasoned issuer which has a large and steady volume of trading activity that
will generally support continuous sales without an adverse effect on
securities price. We cannot give you any assurance that a broader or more
active public trading market for our common securities will develop or be
sustained, or that any trading levels will be sustained. Due to these
conditions, we can give investors no assurance that they will be able to
sell their shares at or near ask prices or at all if the investor needs
money or otherwise desires to liquidate the our securities.
Trading in our shares in the public market will most likely be volatile because
of factors beyond our control.
There can be no assurance that our shares will continue to be quoted on the
Gray Sheets or that they will be accepted for trading on the Over The
Counter Pink Sheets or other recognized trading market, or that if they
are, there will be an active trading market for the shares. Accordingly,
it could be difficult for holders of our common stock to liquidate their
shares.
The market price of our common stock could be subject to significant
fluctuations and the market price could be subject to any of the following
factors:
our failure to achieve and maintain profitability;
changes in earnings estimates and recommendations by financial analysts;
actual or anticipated variations in our quarterly and annual results of
operations;
changes in market valuations of similar companies;
announcements by us or our competitors of significant contracts,
new services, acquisitions, commercial relationships, joint ventures
or capital commitments;
loss of significant clients or customers;
loss of significant strategic relationships.
Financial Information about Industry Segments
RPM Advantage operates in the Exploration and Production industry, as an
independent oil and gas producer. As of and for the years ending December
31, 2010, and 2009 the Company had no foreign operations.
Employees
At December 31, 2010 and 2009 RPM Advantage employed 1 person, of which 1
were full-time. The Company considers its relationships with its employees
to be satisfactory and is not a party to any collective bargaining agreement.
Reports to Security Holders.
1.The Company will file with the SEC reports as required under the
Exchange Act and comply with the requirements of the Exchange Act.
2.The public may read and copy any materials the Company files with the
SEC in the SECs Public Reference Section, Room 1580, 100 F Street N.E.,
Washington, D.C. 20549. The public may obtain information on the
operation of the Public Reference Section by calling the SEC at
1-800-SEC-0330.
Additionally, the SEC maintains an Internet site that contains reports,
proxy and information statements, and other information regarding issuers
that file electronically with the SEC, which can be found at
http://www.sec.gov.
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Item 2 . Financial Information
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Acquisitions and Disposals
None.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
You should read the following discussion and analysis of financial
condition and results of operations of RPM Advantage together with the
financial statements and the notes to the financial statements which
appear elsewhere in this annual report and RPM Advantage's Form 10-K
for the year ended December 31, 2010 and 2009.
In the opinion of management, the accompanying Audited
consolidated financial statements include all adjustments,
necessary for a fair presentation of the financial position of
the Company as of December 31, 2010 and December 31, 2009, and the
results of its income and comprehensive income for the twelve
month ended December 31, 2010 and 2009 and cash flows for
the twelve months ended December 31, 2010 and 2009.
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K and the information incorporated by
reference may include Forward-Looking Statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Exchange Act of 1934.
The Company intends the Forward-Looking Statements to be covered by the
Safe Harbor Provisions for Forward-Looking Statements. All statements
regarding the Companys expected financial position and operating results,
its business strategy, its financing plans and the outcome of any
contingencies are forward-Looking Statements. The Forward-Looking
Statements are based on current estimates and projections about our
industry and our business.
Words such as anticipates, expects, intends, plans, believes, seeks,
estimates, or variations of such words and similar expressions are
intended to identify such Forward-Looking Statements. The Forward-Looking
Statements are subject to risks and uncertainties that could cause actual
results to differ materially from those set forth or implied by any
Forward-Looking Statements. For example, the Company is highly dependent
on its Chief Executive Officer for strategic planning. If he is unable to
perform his services for any significant period of time, the Company's
ability to continue growing could be adversely affected. In addition,
factors that could cause actual results to differ materially
from the Forward-Looking Statements include, but are not limited to,
adverse tax consequences of offshore operations, distribution problems,
unforeseen environmental liabilities and the uncertain military, political
and economic conditions in the world.
We have based these forward-looking statements on our current
expectations and projections about future events. These forward-looking
statements are subject to risks, uncertainties and assumptions, which include,
among other things:
- our need for substantial capital;
- our ability to service debt;
- our history of net operating losses;
- the amortization of our intangible assets;
- our ability to integrate our various acquisitions;
- the risks associated with our ability to implement our
business strategies;
- the impact of competition and technological developments;
- subscriber turnover;
- litigation and regulatory changes;
- dependence on key suppliers; and
- reliance on key personnel.
Other matters set forth in this Quarterly Report on Form 10-QSB may
also cause actual results to differ materially from those described in
the forward-looking statements. We undertake no obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed
in this Annual Report on Form 10-K may not occur.
OVERVIEW
The Company is a independent operator in the Exploration and Production
(E & P) segment of oil and gas industry. The Company focus is on
secondary recovery leases that have known proven reserves and can have
their values increased by and through the application of new and
emerging enhanced recovery technologies. The Company considers itself
to be one operating segment.
The Company once had a network of 14 radio towers (one tower was owned
by the Company and 13 towers were leased) to deliver wireless services
in the coastal regions of Alabama, Louisiana, Mississippi and the Florida
panhandle. The Company owned seven Certificates of Public Convenience
and Necessity issued by the Alabama Public Service Commission and 34
frequencies licensed by the Federal Communications Commission. These
certificates and licenses allowed the Company to provide wireless
messaging services in these geographic areas.
After a period of refocusing the corporation and its direction. The
company has since the start of the 2006 fiscal year, has maintain a
growth strategy of making a series of acquisitions in Exploration and
Production segment of the oil and gas industry.
The Company supports its operations from its executive offices in
Houston, Texas.
The geographic areas the Company is looking to explore includes
Texas, Oklahoma, Kansas, Arkansas, Louisiana, Mississippi and all
other United States onshore leases .
Economic and Other Factors
The post SEPTember 11th era has generally been characterized by a
favorable business climate for suppliers of Oil an natural gas.
The Company believes the Exploration and Production market is
likely to continue to exhibit healthy growth, particularly
in industrial sectors, due to ongoing concerns over the adequacy
of security safeguards in Oil producing nations and a continued
world-wide demand for Energy.
Business Concentration and Credit Risk
An entity is more vulnerable to concentrations of credit risk if it is
exposed to risk of loss greater than it would have had if it mitigated
its risk through diversification of customers. Such risks of loss manifest
differently, depending on the nature of the concentration, and vary in
significance.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30,2011
Sales for the three months ended SEPTember 30, 2011 remained the same
at $0 as compared to $0 for the same period a year ago. Sales for
the nine months ended SEPTember 30, 2011 remained the same at $0 as compared
to $0 for the same period a year ago.
The Company's gross profit for the three months ended Setember 30, 2011
remained the same $0 or as compared to $0 for the same period a year ago.
The Company's gross profit for the nine months ended SEPTember 30, 2011 at $0
or as compared to $0 for the same period a year ago.
Selling, general and administrative expenses for the the three months ended
SEPTember 30, 2011 remained the same at $0,as compared to $0 a year ago.
Selling, general and administrative expenses for the nine
months ended SEPTember 30, 2011 remained the same at $0, as compared to $0
a year ago. General and administrative expenses
include executive management, accounting, office telephone, repairs and
maintenance, management information systems, salaries and employee benefits.
Interest expense, net for the three months ended SEPTember 30, 2011
remained the same at $0 as compared to $0 for the same period a year ago.
Interest expense, net for the nine months ended SEPTember 30, 2011
remained the same at $0 as compared to $0 for the same period a year ago.
Net loss remained the same at $0 or $0.00 per share for the three months
ended SEPTember 30, 2011 as compared to $0 or $0.00 per share for the
same period a year ago. Net loss remained the same at $0 or $0.00
per share for the nine months ended SEPTember 30, 2011 as compared
to $0 or $0.00 per share for the same period a year ago.
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31,2010
Sales for the twelve months ended December 31, 2010 remained the same
at $0 as compared to $0 for the same period a year ago.
The Company's gross profit for the twelve months ended December 31, 2010
remained the same $0 or as compared to $0 for the same
period a year ago.
Selling, general and administrative expenses for the twelve months ended
December 31, 2009 increased to $139,558 as compared to $59,929 a year
ago. General and administrative expenses include executive management,
accounting, office telephone, repairs and maintenance, management
information systems, salaries and employee benefits.
Interest expense, net for the twelve months ended December 31, 2010
remained the same at $0 as compared to $0 for the same period a year ago.
Net loss increased to $(139,558) or $0.00 per share for the twelve months
ended December 31, 2010 as compared to $(59,929) or $0.00 per share for
the same period a year ago.
Liquidity and Capital Resources
Accounts Receivable at December 31, 2010 remained the same at $0 as
compared to $0 at December 31, 2009.
As of December 31, 2010 the Company had no material commitments for capital
expenditures or inventory purchases other than purchase orders issued
in the normal course of business.
The Companys growth, whether internal or through acquisitions,
requires significant capital investment infrastructure.
For the remainder of 2010 and throughout the year 2011, the Companys
business strategy continue to focus on increasing stockholder value by
raising capital and finding additional strategic assets to acquire, The
availability of financing and the ability to reduce the combined companies
long-term debt. Such transactions will result in substantial capital
requirements for which additional financing may be required. No assurance
can be given that such additional financing would be available on terms
satisfactory to the Company.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Access to Future Capital
The Company's ability to access borrowings and generate investments in
the company and to meet its debt service and other obligations will be
dependent upon its future performance and its cash flows from
operations, which will be subject to financial, business and other
factors, certain of which are beyond the Company's control, such as
prevailing economic conditions. The Company cannot assure you that, in
the event it was to require additional financing, such additional
financing would be available on terms permitted by agreements relating
to existing indebtedness or otherwise satisfactory to it.
Effects of Inflation
We do not believe that inflation has had a material impact on our business.
Critical Accounting Estimates and Policies
The preparation of financial statements in conformity with
generally accepted accounting principles (GAAP) requires management to make
estimates and assumptions that affect the amounts reported in the consolidated
financial statements and judgments related to the application of certain
accounting policies.
While we base our estimates on historical experience, current information and
other factors deemed relevant, actual results could differ from those
estimates.
We consider accounting estimates to be critical to our reported financial
results if (i) the accounting estimate requires us to make assumptions about
matters that are uncertain and (ii) different estimates that we reasonably
could have used for the accounting estimate in the current period, or
changes in the accounting estimate that are reasonably likely to occur
from period to period, would have material impact on our consolidated
financial statements.
We consider our policies for oil and gas properties, mineral properties, long
lived assets, asset retirement obligations, environmental matters and revenue
recognition to be critical, due to the continuously evolving standards and
industry practices related to revenue recognition, wherein any changes could
materially impact the way we report revenues. Accounting policies related to:
fair value of financial instruments, stock-based compensation, and income taxes
are also considered to be critical as these policies involve considerable
subjective judgment and estimation by management. Critical accounting policies
and our procedures related to these policies, are described below.
Oil and Gas Properties
The Company uses the successful efforts method of accounting for oil and gas
producing activities. Costs to acquire interest in oil and gas properties, to
drill and equip exploratory wells that find proved reserves, to drill and equip
development wells and related asset retirement costs are capitalized. Costs to
drill exploratory wells that do not find proved reserves, geological and
geophysical costs, and costs of carrying and retaining unproved properties are
expensed. Unproved oil and gas properties that are individually significant are
periodically assessed for impairment of value, and a loss is recognized at the
time of impairment by providing an impairment allowance. Other unproved
properties are amortized based on the Companys experience of successful
drilling and average holding period. Capitalized costs of producing oil and gas
properties, after considering estimated residual salvage values, are
depreciated and depleted by the unit-of-production method. Support equipment
and other property and equipment are depreciated over their estimated useful
lives.
On the sale or retirement of a complete unit of a proved property, the cost and
related accumulated depreciation, depletion, and amortization are eliminated
from the property accounts, and the resultant gain or loss is recognized.
On the retirement or sale of a partial unit of proved property, the cost is
charged to accumulated depreciation, depletion, and amortization with a
resulting gain or loss recognized in income. On the sale of an entire interest
in an unproved property for cash or cash equivalent, gain or loss on the sale
is recognized, taking into consideration the amount of any recorded impairment
if the property had been assessed individually. If a partial interest in an
unproved property is sold, the amount received is treated as a reduction of
the cost of the interest retained.
Mineral Properties
Costs of acquiring mining properties are capitalized upon acquisition in
accordance with ASC 930 Extractive Industries Mining if the property is
determined to have commercially minable deposits. Mine exploration costs are
expensed as incurred. Mine development costs are expensed as incurred and are
capitalized once proven and probable reserves exist. Costs incurred to maintain
current production or to maintain assets on a standby basis are charged to
operations. Costs of abandoned projects are charged to operations upon
abandonment.
Depletion of producing mineral properties is recorded using the
unit-of-production method.
Long-lived Assets
In accordance with ASC 360, Property, Plant, and Equipment, the Company tests
long-lived assets or asset groups for recoverability when events or changes in
circumstances indicate that their carrying amount may not be recoverable.
Circumstances which could trigger a review include, but are not limited to:
significant decreases in the market price of the asset; significant adverse
changes in the business climate or legal factors; accumulation of costs
significantly in excess of the amount originally expected for the acquisition
or construction of the asset; current period cash flow or operating losses
combined with a history of losses or a forecast of continuing losses
associated with the use of the asset; and current expectation that the asset
will more likely than not be sold or disposed significantly before the end
of its estimated useful life. Recoverability is assessed based on the
carrying amount of the asset compared to the estimated future undiscounted
cash flows expected to result from the use and the eventual disposal of the
asset, as well as specific appraisal in certain instances. An impairment
loss equal to the excess of the carrying value over the assets fair market
value is recognized when the carrying amount exceed the undiscounted cash
flows.
Asset Retirement Obligations
The Company follows the provisions of ASC 410, Asset Retirement and
Environmental Obligations, which establishes standards for the initial
measurement and subsequent accounting for obligations associated with the sale,
abandonment or other disposal of long-lived tangible assets arising from the
acquisition, construction or development and for normal operations of such
assets. The Company did not have any asset retirement obligation for the three
months ended SEPTember 30, 2011 and 2010 and at December 31, 2010 and 2009.
Environmental Matters
Our operations are subject to evolving federal, state and local environmental
laws and regulations related to the discharge of materials into the
environment.
Our process is not expected to produce harmful levels of emissions or waste
by-products. However, these laws and regulations would require us to remove or
mitigate the environmental effects of the disposal or release of substances at
our site should they occur. Compliance with such laws and regulations can be
costly. Additionally, governmental authorities may enforce the laws and
regulations with a variety of civil and criminal enforcement measures,
including monetary penalties and remediation requirements. We are not aware
of any area of non-compliance with federal, state or local environmental
laws and regulations as of the date of this report.
Revenue Recognition
We sell crude oil, gas and minerals under short-term agreements at prevailing
market prices. Revenue, which is our net revenue interest in the leased
property, is recognized at the point of sale, when the crude oil, gas and
minerals are extracted from our storage units by the customer. This is at the
point where the customer has taken title and has assumed the risks and rewards
of ownership, the sales price is fixed or determinable and collectability is
reasonably assured.
Fair Value of Financial Instruments and Fair Value measurements
ASC 820, Fair Value Measurements and Disclosures, requires an entity to
maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. ASC 820 establishes a
fair value hierarchy based on the level of independent, objective
evidence surrounding the inputs used to measure fair value. A financial
instruments categorization within the fair value hierarchy is based upon
the lowest level of input that is significant to the fair value measurement.
ASC 820 prioritizes the inputs into three levels that may be used to measure
fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in
active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than
quoted prices that are observable for the asset or liability such as quoted
prices for similar assets or liabilities in active markets; quoted prices for
identical assets or liabilities in markets with insufficient volume or
infrequent transactions (less active markets); or model-derived valuations in
which significant inputs are observable or can be derived principally from, or
corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable
inputs to the valuation methodology that are significant to the measurement
of the fair value of the assets or liabilities.
Our financial instruments consist principally of cash, amounts receivable,
accounts payable, amounts due under lease purchases, and amounts due to related
parties. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC
825, Financial Instruments, the fair value of our cash equivalents is
determined based on Level 1 inputs, which consist of quoted prices in
active markets for identical assets. We believe that the recorded values of
all of the other financial instruments approximate their current fair values
because of their nature and respective maturity dates or durations.
Stock-Based Compensation
The cost of all share-based awards to employees, including grants of employee
stock options and restricted stock, is recognized in the consolidated financial
statements based on the fair value of the awards at grant date. The fair value
of stock option awards is determined using the Black-Scholes valuation model on
the date of grant. The fair value of restricted stock awards is equal to the
market price of our common stock on the date of grant. The fair value of
share-based awards is recognized as stock-based compensation expense on a
straight-line basis over the requisite service period from the date of grant.
Income Taxes
We recognize an asset or liability for the deferred tax consequences of all
temporary differences between the tax bases of assets or liabilities and their
reported amounts in the consolidated financial statements. Temporary
differences will result in taxable or deductible amounts in future years
when the amounts reported in the financial statements are recovered or
settled. These deferred tax assets or liabilities are measured using the tax
rates that are anticipated to be in effect when the differences are expected
to reverse. Deferred tax assets are reviewed periodically for recoverability
and a valuation allowance is provided as necessary.
Liquidity and Capital Resources
The accompanying financial statements for the three months ended SEPTember 30,
2011 and 2010 and for the years ended December 31, 2010 and 2009 have been
prepared on a basis that contemplates the realization of assets and the
satisfaction of liabilities and commitments in the normal course of business.
We have continuing net losses and negative cash flows from operating
activities. In addition, we have deficiencies in working capital and
stockholders equity as of the balance sheet dates. These conditions raise
substantial doubt about our ability to continue as a going concern. Our
consolidated financial statements do not include any adjustments to the
amounts and classification of assets and liabilities that may be necessary
should we be unable to continue as a going concern. These circumstances
caused our independent registered public accounting firm to include an
explanatory paragraph in their report dated July 5, 2011,regarding their
concerns about our ability to continue as a going concern. Our
ability to continue as a going concern depends on our ability to develop
mineral leases and sell oil and gas that generates sufficient revenue and
cash flows to meet our obligations and on our ability to obtain additional
financing or sell assets as may be required to fund current operations.
Managements plans include generating income from our current oil leases
and oil drilling operations to permit us to generate sufficient cash flows
to continue as a going concern. There is no assurance these plans will be
realized.
To date, we have financed our operations primarily through
private placements of the sale of our securities in private offering
transactions that were exempt from the registration requirements of the
Securities Act. During the year ended December 31, 2010, we raised $0
from the sale of securities. During the year ended December 31, 2009, we
raised $0 from the sale of securities. We used cash in operating
activities of $0 and $0 during the years ended December 31, 2010 and 2009,
respectively. Our working capital and other capital requirements for the next
twelve months will vary based upon a number of factors, including the period
required to bring our proposed drilling programs to commercial viability, the
level of sales of oil and gas, and acquisition costs for new oil and gas
leases, and the amounts we invest in strategic relationships. However,
because several factors related to the growth of our operations remain
outside of our control, there can be no assurance we will achieve commercial
viability on our anticipated timeline.
Our planned expenditures for the next 12 months (beginning October 1, 2011) are
summarized as follows:
Description Potential
Completion Date Estimated
Expenses ($)
Professional Fees (legal, accounting and auditing fees) 12 months 60,000
Oil and Gas Leases 12 months 200,000
Oil Well Drilling Costs 12 months 300,000
Other general and administrative expenses 12 months 140,000
Total 700,000
Our general and administrative expenses for the year will consist primarily of
transfer agent fees, investor relations expenses and general office expenses
including salaries. The professional fees are related to our regulatory filings
throughout the year.
Based on our planned expenditures, we will require additional funds of
approximately $699,000 (a total of $700,000 less our cash of approximately
$1,000 as of SEPTember 30, 2011) to proceed with our business plan over the
next 12 months. If we secure less than the full amount of financing that we
require, we will not be able to carry out our complete business plan and we
will be forced to proceed with a scaled back business plan based on our
available financial resources.
We believe that existing funds, funds generated from future operations,
plus those we raise from borrowings and sales of our securities will
be sufficient to support our operations for the next twelve months.
However, it is possible we will not be able to maintain our core services
through such period or that we will not raise sufficient additional funds
from asset sales and borrowings to cover operational expenses. Under those
circumstances, we will need to obtain additional funding to support our
operations. Because we have no contractual commitments with respect to any
of these initiatives, there can be no assurance that additional funds for
operations will be available on commercially reasonable terms or in the
necessary amounts. Our inability to obtain any needed additional financing
would have a material adverse effect on us, including possibly requiring us
to significantly curtail our operations.
Recent Accounting Pronouncements
In April 2010, the FASB issued ASU 2010-13, Compensation-Stock Compensation
(Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment
Award in the Currency of the Market in Which the Underlying Equity Security
Trades - a consensus of the FASB Emerging Issues Task Force. The amendments in
this Update are effective for fiscal years, and interim periods within those
fiscal years, beginning on or after December 15, 2010. Earlier application is
permitted. The Company does not expect the provisions of ASU 2010-13 to have a
material effect on the financial position, results of operations or cash flows
of the Company.
We have implemented all new accounting pronouncements that are in effect and
that may impact its consolidated financial statements and does not believe that
there are any other new accounting pronouncements that have been issued that
might have a material impact on its financial position or results of operations.
Quantitative and Qualitative Disclosure About Market Risk
Market risk is the potential loss arising from adverse changes in market rates
and prices, such as foreign currency exchange, interest rates, and commodity
prices.
Currently the Company is not involved in any hedge contracts or foreign
contracts and therefore has no exposure to such risks. All long-term debt is
subject to a fixed rate and as such is not subject to fluctuations in the
market rate.
Our major market risk exposure is in the pricing applicable to our oil
production and natural gas sales. Realizing pricing is primarily driven by the
prevailing domestic price for crude oil. Historically, prices received for oil
and gas sales have been volatile and unpredictable. We expect pricing
volatility to continue.
Oil prices ranged from a low of $70.04 per barrel to a high of
$91.51 per barrel during 2010. A significant decline in the price of oil could
have a material adverse effect on our financial condition and results of
operations.
Off-Balance Sheet Arrangements
None.
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Item 3. Description of Property
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RPM Advantage owns no property or any other real estate
We lease approximately 150 sq. ft. of office space in Houston, Texas at a
monthly rent of $100. The term of the lease is month to month. We believe that
there is sufficient office space available at favorable leasing terms both to
replace existing office space and to satisfy any additional needs we may have
as a result of future expansion.
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Item 4. Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------------
The following table shows the beneficial ownership of shares of
our common stock as of SEPTember 30, 2011 known by us, held by: (i) each
person who beneficially owns 5% or more of the shares of our common stock
then outstanding; (ii) each of our directors; (iii) each of our named
executive officers; and (iv) all of our directors and executive officers
as a group.
The information in this table reflects beneficial ownership as defined in Rule
13d-3 of the Exchange Act. To our knowledge and unless otherwise indicated,
each stockholder has sole voting power and investment power over the shares
listed as beneficially owned by such stockholder, subject to community property
laws where applicable. Percentage ownership is based on 6489,535,296 shares of
common stock outstanding as of SEPTember 30, 2011
SHARES PERCENT OF
NAME AND ADDRESS BENEFICIALLY OUTSTANDING
OF BENEFICIAL OWNER TITLE OF CLASS OWNED COMMON STOCK
-------------------- -------------- ------------- ------------
David R. Pressler Common Stock 100,000 0.0002%
2500 West Loop South
Suite 304
Houston, Texas 77027
LMJ Holdings, Inc. Common Stock 35,535,296 07.25%(1)
510 Saint James Place
Suite 110
Houston, Texas 77057
Hamershlag Sulzberger Common Stock 420,000,156 85.79%(1)
Borg, Inc.
1230 Avenue of the
Americas, 7th Floor
New York, NY 10020
L. Mychal Jefferson Common Stock 455,535,452 93.04%(1)
510 Saint James Place
Suite 110
Houston, Texas 77057
Cede & Co. Common Stock 55,535,296 11.34%
P.O. Box 222
Bowling Green Station
New York, New York 10274
----------------------------------------
(1) Except as otherwise noted, it is believed by the Company that all persons
have full voting and investment power with respect to the shares
indicated. Under the rules of the Securities and Exchange Commission, a
person (or group of persons) is deemed to be a beneficial owner of a
security if he or she, directly or indirectly, has or shares the power to
vote or to direct the voting of such security, or the power to dispose of
or to direct the disposition of such security. Accordingly, more than one
person may be deemed to be a beneficial owner of the same security. A
person is also deemed to be a beneficial owner of any security which that
person has the right to acquire within 60 days, such as options or
warrants to purchase the Common Stock of the Company. Mr. Jefferson is the
sole shareholder of LMJ Holdings, Inc. and Hamershlag Sulberger Borg, Inc.
is a wholly owned subsidiary of LMJ Holdings, Inc and is considered the
beneficial owner of the shares control by LMJ Holdings, Inc.
(2) Cede & Co. is a nominee holder of shares of Common Stock of the Company
as a depository for brokerage firms and others.
Beneficial ownership as a percentage of the class for each person
holding options, warrants or other rights exercisable within 60 days of
SEPTember 30, 2011 has been calculated as though shares of our common
stock subject to such rights were outstanding. However, such shares
have not been deemed outstanding for the purpose of calculating the
percentage of the class owned by any other person.
PART II
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Item 5. Directors and Executive Officers
------------------------------------------------------------------------------
The directors and executive officers currently serving on the Company are
as follows:
NAME AGE POSITION HELD SINCE
------ ----- --------------- -------
David R. Pressler 63 Interim Chairman of the Board, 1998
Director, Chief Executive
Officer, President and
CFO
The directors named above will serve until the next annual meeting of the
Companys stockholders. Thereafter, directors will be elected for one-year
terms at the annual stockholders' meeting. Officers will hold their positions
at the pleasure of the board of directors, absent any employment agreement, of
which none currently exists. There is no arrangement or understanding between
the directors and officers of the Company and any other person pursuant to
which any director or officer was or is to be selected as a director or
officer.
Biographical Information
------------------------
Mr. Pressler became Chairman of the Board, Chief Executive Officer, and
President of the Company on October 26, 1998, following the Companys
acquisition of all of the issued and outstanding stock of Communitronics, Inc.
He founded and was the President of Communitronics, Inc. from 1975 until its
acquisition by the Company. Mr. Pressler holds an FCC Master Radio Engineer
Rating with radar endorsement. He is a certified engineer (EI-0216), and is a
senior member of the National Association of Radio and Telecommunications
Engineers.
AUDIT COMMITTEE
We do not presently have an Audit Committee and the entire Board acts in such
capacity for the immediate future due to the limited size of the Board. The
Company intends to increase the size of its Board in the future, at which time
it may appoint an Audit Committee.
In lieu of an Audit Committee, the Board is empowered to make such examinations
as are necessary to monitor the corporate financial reporting and the external
audits of the Company, to provide to the Board of Directors (the Board) the
results of its examinations and recommendations derived there from, to outline
to the Board improvements made, or to be made, in internal control, to nominate
independent auditors, and to provide to the Board such additional information
and materials as it may deem necessary to make the Board aware of significant
financial matters that require Board attention.
COMPENSATION COMMITTEE
We do not presently have a Compensation Committee and the Board acts in such
capacity for the immediate future due to the limited size of the Board. We
intend to increase the size of its Board in the future, at which time it may
appoint a Compensation Committee which will be authorized to review and make
recommendations to the Board regarding all forms of compensation to be provided
to the executive officers and directors of the Company, including stock
compensation, and bonus compensation to all employees.
NOMINATING COMMITTEE
We do not presently have a Nominating Committee and the Board acts in such
capacity.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Upon becoming registered under the Securities Exchange Act of 1934 (the
Exchange Act of 1934), Section 16(a) of the Exchange Act of 1934, will require
that our directors and executive officers and persons who beneficially own more
than ten percent (10%) of a registered class of its equity securities, file
with the SEC reports of ownership and changes in ownership of its common stock
and other equity securities. Executive officers, directors, and greater than
ten percent (10%) beneficial owners are required by SEC regulation to furnish
us with copies of all Section 16(a) reports that they file.
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Item 6. Executive Compensation
------------------------------------------------------------------------------
No executive officer or director of the Company received compensation in or
during its fiscal years ended December 31, 2010 and 2009.
David R. Pressler, the President of the Company, received no compensation
in 2010 and 2009.
Employment Agreement
We do not have a Employement Agreement with any officers or employees
although we may adopt one or more of if need in the future.
Employee Pension, Profit Sharing or other Retirement Plans
We do not have a defined benefit, pension plan, profit sharing or other
retirement plan, although we may adopt one or more of such plans in the future.
Directors compensation
At present we do not pay our directors any fees, stock or option awards or any
other compensation for their services as directors or for attending meetings of
our Board of Directors, although we expect to adopt a director compensation
policy by the end of the year 2011. We have no standard arrangement pursuant to
which our directors are compensated for any services provided as a director or
for committee participation or special assignments, but may reimburse Directors
for reasonable expenses incurred in attending meetings.
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Item 7. Certain Relationships and Related Transactions
------------------------------------------------------------------------------
In connection with the reorganization of the Company in April 2006, David R.
Pressler, a director and President of the Company, received 100,000 shares
of Common Stock of the Company, valued at $0.10 per share, for 100% of his
shares of Communitronics, Inc.; The terms of this transaction were at least
as favorable to the Company as you would expect to negotiate with an
unaffiliated third party in a similar transaction.
In 2009, the Company agreed to issue 445,000,000 shares of its $0.001 par
value common stock to Hamershlag, Sulzberger & Borg in exchange for
the existing note payables of $280,807 at 12/31/2009 as well as 2010
expenses to be paid by Hamershlag, Hulzberger & Borg in the amount
of $88,558.00. The difference in value of stock issued $445,000 and
the debt exchanged of $369,365 will be booked against Additional Paid
in Capital for $75,635. The prepaid expenses of $88,558 were reversed
out against $88,558 of expenses paid in 2010.
Director Independence
Our Board has determined that none of our directors are independent under the
NASDAQ Stock Market listing rules.
------------------------------------------------------------------------------
Item 8. Legal Proceedings
------------------------------------------------------------------------------
NONE
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Item 9. Market Price of and Dividends Registrant's Common Equity
and Related Shareholder Matters
------------------------------------------------------------------------------
On March 22, 2011 the Company was temporary susended for trading on the Pink
Sheets under the symbol RPMV, for two weeks to April 5, 2011.The Company has
not yet begun to trade again. There is no assurance that a trading market
will ever develop or, if such a market does develop, that it will continue.
The following table presents, for the periods indicated, the reported high
and low transaction prices for RPM Advantage Common Stock for the periods
such securities were traded on OTC NASDAQ as noted above. Such prices reflect
inter-dealer prices, but do not include retail mark-ups, markdowns, or
commissions and may not necessarily represent actual transactions.
Year Ended December 31, 2008 High Low
---------------------------- ---- ---
1st Quarter $10.00 $2.75
2nd Quarter 2.75 2.25
3rd Quarter 2.25 2.25
4th Quarter 2.25 .11
Year Ended December 31, 2009 High Low
---------------------------- ---- ---
1st Quarter $ .11 $ .11
2nd Quarter .20 .20
3rd Quarter .25 .25
4th Quarter .15 .02
Year Ended December 31, 2010 High Low
---------------------------- ---- ---
1st Quarter $ .11 $ .11
2nd Quarter .20 .20
3rd Quarter .25 .25
4th Quarter .25 .15
Outstanding Shares and Number of Stockholders
As of SEPTember 30, 2011, the number of shares of common stock outstanding was
489,535,296. As of that date, there were approximately 925 record holders
of our shares of issued and outstanding common stock. This figure does not
include holders of shares held in securities position listings.
Dividends
We have never declared or paid dividends on our common stock.
Moreover, we currently intend to retain any future earnings for use in our
business and, therefore, do not anticipate paying any dividends on our common
stock in the foreseeable future.
PART III
------------------------------------------------------------------------------
Item 10. Recent Sales of Unresgisterd Securities
------------------------------------------------------------------------------
In 2009, the Company agreed to issue 445,000,000 shares of its $0.001 par
value common stock to Hamershlag, Sulzberger & Borg in exchange for
the existing note payables of $280,807 at 12/31/2009 as well as 2010
expenses to be paid by Hamershlag, Sulzberger & Borg in the amount
of $88,558.00. The difference in value of stock issued $445,000 and
the debt exchanged of $369,365 will be booked against Additional Paid
in Capital for $75,635. The prepaid expenses of $88,558 were reversed
out against $88,558 of expenses paid in 2010.
We relied upon Regulation S, Section 4(2) and Regulation D of the Securities
Act of 1933, as amended, for the issuances of the securities listed above.
Each prospective investor was given a private placement memorandum designed
to disclose all material aspects of an investment in us, including the
business, management, offering details, risk factors, consolidated financial
statements and use of funds.
It is the belief of management that each of the individuals
who invested have such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and risks of the
investment and therefore did not need the protections offered by registering
their shares under Securities and Act of 1933, as amended. Each investor
completed a Stock Purchase Agreement, Offeree Questionnaire and/or Subscription
Agreement whereby the investors certified that they were purchasing the shares
for their own accounts, with investment intent. This offering was not
accompanied by general advertisement or general solicitation and the shares
were issued with a Rule 144 restrictive legend.
------------------------------------------------------------------------------
Item 11. Description of Registrant's Securities to be Registered
------------------------------------------------------------------------------
As amended, our Articles of Incorporation authorize the issuance of 500,000,000
shares of common stock, par value $.001 per share, and 10,000,000 shares of
preferred stock, par value $.001 per share. As of SEPTember 30, 2011, there
were 489,535,296 shares of common stock issued and outstanding and no shares
of preferred stock outstanding.
Description of Common Stock
Except as otherwise required by law, each share of common stock entitles the
stockholder to one vote on each matter which stockholders may vote on at all
meetings of stockholders. Holders of common stock are not entitled to cumulate
votes in the election of directors. Holders of common stock do not have
preemptive, subscription or conversion rights, and there are no redemption or
sinking fund provisions applicable thereto. Subject to any prior rights of the
preferred stock, holders of common stock are entitled to share ratably in
dividends paid from the funds legally available for the payment thereof, when,
and if declared by our board of directors. The declaration of dividends,
however, is subject to the discretion of our board of directors. Subject to any
prior rights of the preferred stock, holders of common stock are also entitled
to share ratably in the assets of the company available for distribution to
holders of common stock after payment of our liabilities upon the liquidation
or dissolution of the company whether voluntary or involuntary.
Description of Preferred Stock
Our preferred stock is what is known as blank check preferred.
This means that our board of directors is authorized to fix, prior to the
issuance of any shares of each particular series of preferred stock, the
designation, powers, preferences, and relative, participating, optional and
other rights, and the qualifications, limitations and restrictions thereof, if
any, of such series.
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Item 12. Indemnification of Director and Officers
------------------------------------------------------------------------------
Chapter 78 of the NRS, pertaining to private corporations, provides that we are
required to indemnify our officers and directors to the extent that they are
successful in defending any actions or claims brought against them as a result
of serving in that position, including criminal, civil, administrative or
investigative actions and actions brought by or on behalf of the Company.
Chapter 78 of the NRS further provides that we are permitted to indemnify our
officers and directors for criminal, civil, administrative or investigative
actions brought against them by third parties and for actions brought by or on
behalf of the Company, even if they are unsuccessful in defending that action,
if the officer or director:
(a) is not found liable for a breach of his or her fiduciary duties as an
officer or director or to have engaged in intentional misconduct, fraud or a
knowing violation of the law; or
(b) acted in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
that his conduct was unlawful.
However, with respect to actions brought by or on behalf of the Company against
its officers or directors, the Company is not permitted to indemnify its
officers or directors where they are adjudged by a court, after the exhaustion
of all appeals, to be liable to the Company for amounts paid in settlement to
the Company, unless, and only to the extent that, a court determines that the
officers or directors are entitled to be indemnified.
Our Articles of Incorporation and our Bylaws provide that we will indemnify our
officers and directors to the full extent permitted by law for any threatened,
pending or completed actions or proceedings, whether they be civil, criminal,
administrative or investigative, including actions or proceedings brought by or
in the right of our company.
Advance of Expenses
As permitted by Chapter 78 of the NRS, our Articles of Incorporation and our
Bylaws, we are to advance funds to our officers or directors for the payment
of expenses incurred in connection with defending a proceeding brought against
them in advance of a final disposition of the action, suit or proceeding.
However, as a condition of our doing so, the officers or directors to which
funds are to be advanced must provide us with undertakings to repay any
advanced amounts if it is ultimately determined that they are not entitled
to be indemnified for those expenses.
Insurance
Chapter 78 of the NRS and our Bylaws also allow us to purchase and
maintain insurance on behalf of our officers or directors, regardless of
whether we have the authority to indemnify them against such liabilities
or expenses. Currently, we do not have any Directors & Officers Insurance.
The Statutes also provide that the allowed indemnification will not
be deemed exclusive of any other rights to which the directors, officers and
others may be entitled under our Bylaws, any agreement, a vote of stockholders
or otherwise.
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Item 13. Financial Statements and Supplementary Data
------------------------------------------------------------------------------
The consolidated financial statements and report of our independent registered
public accounting firm are filed as a separate part of this report beginning at
page F-1.
PART IV
------------------------------------------------------------------------------
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
------------------------------------------------------------------------------
None.
Item 14A. Controls and Procedures.
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Our management, with the participation of our Acting Executive Officer/Chief
Financial Officer, have reviewed and evaluated our disclosure controls and
procedures (as defined in the Securities Exchange Act Rule 13a-15(e)) as of
the end of the period covered by this Form 10-K. Based on that evaluation,
our management, including our Acting Executive Officer/Principal Financial
Officer, has concluded that our disclosure controls and procedures were
effective as of the end of the period covered by this Form 10 in ensuring
that information required to be disclosed in the reports that we file or
submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commissions rules and forms and is accumulated and
communicated to management, including our Acting Executive Officer/Principal
Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure
Managements Report on Internal Control Over Financial Reporting
The management of RPM Advantage, Inc. is responsible for establishing and
maintaining adequate internal control over financial reporting, as such
term is defined in Exchange Act Rule 13a 15(f). Under the supervision and
with the participation of our management, including our Acting Executive
Officer/Principal Financial Officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting based on
the framework in Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based
on our evaluation under the framework in Internal Control Integrated
Framework, our management concluded that our internal control over
financial reporting was effective as of SEPTember 30, 2011 and
December 31, 2010.
This Form 10 report does not include an attestation report of the Companys
independent registered public accounting firm regarding internal control
over financial reporting. Managements report was not subject to attestation
by the Companys registered public accounting firm pursuant to temporary
rules of the Securities Exchange Commission that permit the Company to
provide only managements report in its annual report.
Managements Annual Report on Changes in Internal Controls
There were no changes in our internal controls over financial reporting
during the quarter ended SEPTember 30, 2011, that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.
------------------------------------------------------------------------------
Item 15. Financial Statements and Exhibits
------------------------------------------------------------------------------
(a) Our consolidated financial statements are attached hereto
beginning at page F-1 following the signature page.
(b) Exhibits
The following documents have previously been filed as exhibits hereto unless
otherwise indicated:
Exhibit No. Description
3.1t Articles of Incorporation.
3.2t Bylaws.
4.1t Form of Stock Certificate
___________________________
* Filed herewith
t Filed as exhibits to Definitive Information Statement
on SCHEDULE 14C filed January 17, 20006,
and incorporated herein by reference.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: RPM ADVANTAGE, Inc.
November 8, 2011 By: /S/ DAVID R. PRESSLER
------------------- ----------------------------------------
David R. Pressler
President, Chief Executive Officer and
Principal Financial Officer
RPM ADVANTAGE, INC.
TABLE OF CONTENTS
Consolidated Balance Sheets 3-4
Consolidated Statements of Operations 5
Consolidated Statements of Cash Flows 6
Consolidated Statements of Stockholders' Equity 7
Part I
Item 1. Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis or
Plan of Operations 8
Part II - Other Information 10
Signature 11
EUGENE M EGEBERG
CERTIFIED PUBLIC ACCOUNTANT
2400 BOSTON STREET, #102
BALTIMORE, MARYLAND 21224
Telephone (410) 218-1711 Fax (410) 374-8121
To the Board of Directors and Stockholders
RPM Advantage, Inc. (Formerly Communitronics Inc)
Report of Independent Registered Public Accounting Firm
I have reviewed the Balance Sheet of RPM Advantage (formerly
Communitronics, Inc.) as of SEPTember 30, 2011 and the related
Statements of Operations, Stockholders Equity, and Cash
Flows for the three and nine months then ended. These interim
financial statements are the responsibility of the companys
management.
I conducted the review in accordance with the standards of the
Public Company Accounting Oversight Board (United States). A
review of interim financial information consists principally
of applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the
objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, I do
not express such an opinion.
Based on my review, I am not aware of any material modifications
that should be made to the accompanying financial statements in
order for them to be in conformity with Public Company Accounting
Oversight Board (United States) and U.S. Generally Accepted
Accounting Principles.
The Company has not generated significant revenues or profits
to date. This factor among others raises considerable doubt the
Company will be able to continue as a going concern. The Companys
continuation as a going concern depends upon its ability to
generate sufficient cash flow to conduct its operations and its
ability to obtain additional sources of capital and financing.
The accompanying consolidated financial statements do not
include any adjustments that might result from the outcome of
this uncertainty.
/s/
Eugene M Egeberg
Certified Public Accountant
Baltimore, MD
July 5, 2011
RPM ADVANTAGE, INC.
CONSOLIDATED BALANCE SHEETS
SEPT 30 SEPT 30 DEC 31
2011 2010 2010
( UNAUDITED) ( UNAUDITED) ( AUDITED)
------------- ------------ ----------
Assets
Current asset:
Cash and Cash Equivalents 0 0 0
Accounts Receivables 0 0 0
Cost and Estimated Earnings
in Excess of Billings 0 0 0
Prepaid Expenses 0 88,558 0
Other Assets 0 0 0
Long Term Assets:
Total Fixed Assets 0 0 0
Total Assets 0 88,558 0
Liabilities and Stockholders'
Equity
Current Liabilites
Accounts Payable 0 0 0
Accounts Payable/Accrued Liability 105,950 54,950 105,950
Loans Payable 0 0 0
Other current Liabilities 105,950 54,950 105,950
Long Term Liabilities
Total Long Term 0 0 0
Total Liabilities 105,950 54,950 105,950
Common Stock 489,535 489,535 489,535
Additional Paid In Capital 6,882,706 6,882,706 6,882,706
Accumilated Deficit (7,478,191) (7,338,633) (7,478,191)
Net Equity (105,950) 33,608 (105,950)
Total Liab. And Owner
Equtiy 0 $88,558 0
RPM ADVANTAGE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
(UNAUDITED)
(SEPT 30, 2011) (SEPT 30, 2010)
REVENUE 0 0
COST OF SALES 0 0
GROSS PROFIT 0 0
General & Administrative
(Less: interest, taxes
and depreciation) 0 0
INTEREST EXPENSE 0 0
DEPRECIATION EXPENSE 0 0
AMORTIZATION EXPENSE 0 0
TAX EXPENSE 0 0
TOTAL EXPENSES 0 0
NET ORDINARY INCOME 0 0
OTHER INCOME 0 0
OTHER EXPENSE 0 0
NET OTHER INCOME 0 0
Net Income 0 0
Net income per
share: Basic $ 0.00 $ 0.00
Diluted $ 0.00 $ 0.00
Weighted average
number of shares
outstanding : Basic 489,535,296 489,535,296
Diluted 489,535,296 489,535,296
RPM ADVANTAGE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED
(UNAUDITED)
(SEPT 30, 2011) (SEPT 30 2010) (DEC 31, 2010)
REVENUE 0 0 0
COST OF SALES 0 0 0
GROSS PROFIT 0 0 0
General & Administrative
(Less: interest, taxes
and depreciation) 0 0 0
INTEREST EXPENSE 0 0 0
DEPRECIATION EXPENSE 0 0 0
TAX EXPENSE 0 0 0
TOTAL EXPENSES 0 0 139,558
NET ORDINARY INCOME 0 0 (139,558)
OTHER INCOME 0 0 0
OTHER EXPENSE 0 0 0
NET OTHER INCOME 0 0 0
Net Income 0 0 (139,558)
Net income per
share: Basic $ 0.00 $ 0.00 $ 0.00
Diluted $ 0.00 $ 0.00 $ 0.00
Weighted average
number of shares
outstanding : Basic 489,535,286 44,535,286 489,535,286
Diluted 489,535,286 44,535,286 489,535,286
RPM ADVANTAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the
THREE Months
Ended
SEPT 30 SEPT 30
2011 2010
(UNAUDITED) (UNAUDITED)
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income 0 0
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 0 0
Decrease in Accounts Receivable 0 0
Increase in Prepaid Assets 0 0
Increase in Accounts Payable 0 0
Increase in Other Current Liabilities 0 0
NET CASH PROVIDED FOR OPERATING ACTIVITIES 0 0
CASH FLOWS FROM INVESTING ACTIVITIES: 0 0
NET CASH USED BY INVESTING ACTIVITIES 0 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Net INCREASE in long-term debt 0 0
NET CASH USED IN FINANCING ACTIVITIES 0 0
INCREASE IN CASH 0 0
CASH - BEGINNING OF PERIOD 0 0
CASH - END OF PERIOD 0 0
Supplemental disclosures of cash flows information:
Cash paid during the Period for:
Interest 0 0
Taxes 0 0
RPM ADVANTAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the
NINE Months
Ended
SEPT 30 SEPT 30
2011 2010
(UNAUDITED) (UNAUDITED)
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income 0 0
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 0 0
Increase in Accounts Receivable 0 0
Increase in Prepaid Assets 0 0
Increase in Accounts Payable 0 0
Increase in Other Current Liabilities 0 0
NET CASH PROVIDED FOR OPERATING ACTIVITIES 0 0
CASH FLOWS FROM INVESTING ACTIVITIES: 0 0
NET CASH USED BY INVESTING ACTIVITIES 0 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Net INcrease in long-term debt 0 0
NET CASH PROVIDED BY FINANCING ACTIVITIES 0 0
INCREASE IN CASH 0 0
CASH - BEGINNING OF PERIOD 0 0
CASH - END OF PERIOD 0 0
Supplemental disclosures of cash flows information:
Cash paid during the Period for:
Interest 0 0
Taxes 0 0
RPM ADVANTAGE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE Period JAN 1 - SEPT 30, 2011
(UNAUDITED)
Common Additional Shareholder Retained Total
Stock Paid in Cap Distribution Earnings
Balance at 12/31/2010 489,535 6,882,706 0 (7,478,191) (105,950)
Stock Issuance 0 0 0 0 0
Shareholder Dist 0 0 0 0 0
Additional Paid in Cap 0 0 0 0 0
Retained Earnings 0 0 0 0 0
Net Income 0 0 0 0 0
Balance at 6/30/2011 489,535 6,882,706 0 (7,478,191) (105,950)
ITEM 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RPM ADVANTAGE, Inc.
(A Development Stage Company)
Notes to Financial Statements
NOTE #1 Organization, Nature of Operations and Basis of Presentation
RPM Advantage, Inc., (formerly Communitronics,Inc.)
was organized in the state of Utah on SEPTember 21, 1970 and
re-incorporated in Nevada in April 2006.
The Company is a independent operator in the Exploration and Production
(E & P) segment of oil an gas industry. The Company focus is on
secondary recovery leases that have known proven reserves and can have
their values increased by and through the application of new and
emerging enhanced recovery technologies. The Company considers itself
to be one operating segment.
NOTE #2 Significant Accounting Policies
The significant accounting policies followed by the Company in
preparing its consolidated financial statements are set forth
in Note (2) to such consolidated financial statements included
in Form 10-K for the year ended December 31, 2010. The Company
has made no significant changes to these policies during 2011.
A. The Company uses the accrual method of accounting.
B. Revenues and directly related expenses are recognized in the
period then the goods are shipped to the customer.
C. The Company considers all short term, highly liquid investments
that are readily convertible, within three months, to known amounts
as cash equivalents. The Company currently has no cash equivalents.
D. Basic Earnings Per Shares are computed by dividing income available
to common stockholders by the weighted average number of common shares
outstanding during the period. Diluted Earnings Per Share shall be
computed by including contingently issuable shares with the weighted
average shares outstanding during the period. When inclusion of the
contingently issuable shares outstanding during the period. When
inclusion of the contingently issuable shares would have an
anti-dilutive effect upon earnings per share no diluted earnings per
share shall be presented.
E. Inventories: Inventories are stated at the lower of cost,
determined by the FIFO method or market.
F. Depreciation: The cost of property and equipment is depreciated
over the estimated useful lives of the related Communitronics Group,
Inc. assets. The cost of leasehold improvements is amortized over the
lesser of the length of the lease of the related assets of the
estimated lives of the assets. Depreciation and amortization is
computed on the straight-line method.
G. Estimates: The preparation of the financial statements in
conformity with generally accepted accounting Principles requires
management to make estimates and Communitronics Assumptions that affect
the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
H. Cash: The company policy for any cash balances above $100,000 in any
one account is to sweep the funds into a company brokerage account,
which under the Securities Investor Protectors Corporation, insures
cash balances up to $5,000,000.
I. Impairment of Long-Lived Assets: In accordance with Statement 144,
long-lived assets, such as property, plant, and equipment, and
purchased intangible assets subject to amortization, are reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability
of assets to be held and used is measured by a comparison of the
carrying amount of an asset to estimated undiscounted future cash
flows expected to be generated by the asset. If the carrying amount of an
asset exceeds its estimated future cash flows, an impairment charge
is recognized by the amount by which the carrying amount of the asset
exceeds the fair value of the asset. Assets to be disposed of would be
separately presented in the balance sheet and reported at the lower of
the carrying amount or fair value less costs to sell, and are no longer
depreciated. The assets and liabilities of a disposal group classified
as held for sale would be presented separately in the appropriate
asset and liability sections of the balance sheet.
Goodwill and intangible assets that have indefinite useful lives are
tested annually for impairment, and are tested for impairment more
frequently if events and circumstances indicate that the asset might
be impaired. An impairment loss is recognized to the
extent that the carrying amount exceeds the assets fair value.
For goodwill, the impairment determination is made at the reporting
unit level and consists of two steps. First, the Company determines
the fair value of a reporting unit and compares it to its carrying
amount.
Second, if the carrying amount of a reporting unit exceeds its fair
value, an impairment loss is recognized for any excess of the carrying
amount of the reporting units goodwill over the implied fair value of
that goodwill. The implied fair value of goodwill is determined by
allocating the fair value of the reporting unit in a manner similar
to a purchase price allocation, in accordance with FASB Statement No.
141, Business Combinations. The residual fair value after this
allocation is the implied fair value of the reporting unit goodwill.
J. Accounts receivable are recorded at the invoiced amount
and do not bear interest. Amounts collected on accounts
receivable are included in net cash provided by operating
activities in the consolidated statements of cash flows.
The allowance for doubtful accounts is the Companys best
estimate of the amount of probable credit losses in the Companys
existing accounts receivable. The Company determines the
allowance based on historical write-off experience by
industry and national economic data. Past due balances
over 90 days and over a specified amount are reviewed
individually for collectibility.
K. Principles of Consolidation. The consolidated financial
statements include our accounts and those of our wholly owned
subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.
NOTE #3 Income Taxes
RPM Advantage, Inc., has adopted SFAS 109 to account for income
taxes. RPM ADVANTAGE, Inc., currently has no issues that
create timing differences that would mandate deferred tax expense. Net
operating losses would create possible tax assets in future years. Due
to the uncertainty as to the utilization of net operating loss carry forwards
an evaluation allowance has been made to the extent of any tax benefit
that net-operating losses may generate. Subsequent to the report
RPM ADVANTAGE, had a change in officers and a change in control.
When control of an entity changes net operating losses generally can be used
only by the taxpayer (Officers) who sustained the losses. There can be no
assurance that the net operating losses sustained before the change in
control will be available for future benefits.
RPM ADVANTAGE, Inc., has incurred losses that can be
carried forward to offset future earnings if conditions of the Internal
Revenue Codes
are met. These losses are as follows:
Year of Loss Amount Expiration Date
2000-2010 $7,478,191 2020
Current Tax Asset Value of Net Operating Loss Carry forwards At Current
Prevailing Federal Tax Rate (33.9%) $2,535,107
Evaluation Allowance (33.9%) $2,535,107
Net Tax Asset $ -0-
Current Income Tax Expense -0-
Deferred Income Tax Benefit -0-
Note #4 Contingencies
In 2005, the Company became aware of a prior claim for services.
The Company is investigating the validity of the claim. In the process
of dealing with this claim the Company has established procedures in
handling prior claims and a reserve of $50,000 for these matters.
Note #5 Stockholders' Equity
As of SEPTember 30, 2011, there was approximately 489,535,286
of $.001 Shares of common stock outstanding. The company has no
outstanding warrants or stock based compensation to account for as of
SEPTember 30, 2011.
Note #6 Plant Property and Equipment
Property and equipment:
Property and equipment are recorded at cost.
Depreciation of property and equipment is provided
utilizing both straight line and accelerated methods over
the estimated useful lives of the respective assets.
The costs of maintenance and repairs are charged to
operations as incurred.
The estimated use full lives of property and equipment are as follows:
Equipment 7
Furniture 7
Computers 5
Computer software 5
Motor vehicle 5
Leasehold improvements 39
Note #7 Accounts Receivables
The accounts receivables for the reported periods are
SEPTember 30 SEPTember 30 DECEMBER 31
2011 2010 2010
(UNAUDITED) (UNAUDITED) (AUDITED)
------------- ------------ -----------
0 0 0
Note #8 Loans Payable and Prepaid Expense
In 2009, the Company agreed to issue 445,000,000 shares of its $0.001 par
value common stock to Hamershlag, Sulzberger & Borg in exchange for
the existing note payables of $280,807 at 12/31/2009 as well as 2010
expenses to be paid by Hamershlag, Hulzberger & Borg in the amount
of $88,558.00. The difference in value of stock issued $445,000 and
the debt exchanged of $369,365 will be booked against Additional Paid
in Capital for $75,635.
Index to Consolidated Financial Statements
Report of Independent Auditors........................... F-2
Consolidated Balance Sheets.............................. F-3
Consolidated Statements of Operations.................... F-4
Consolidated Statements of Shareholders' Equity.......... F-5
Consolidated Statements of Cash Flows.................... F-6
Notes to Consolidated Financial Statements............... F-7
Report of Independent Registered Public Accounting Firm
RPM ADVANTAGE, Inc.
Houston, TX
Eugene M Egeberg
Certified Public Accountant
2400 Boston Street, Suite 102
Baltimore, Maryland 21224
(410) 218-1711
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS REPORT
To the Stockholders
RPM Advantage, Inc.
2500 West Loop South
Suite 340
Houston, Texas 77027
We have audited the accompanying balance sheets of RPM Advantage, Inc.
as of December 31, 2010, 2009, and 2008, and the related statements of
operations and changes in stockholders deficit and cash flows for the
years then ended. These financial statements are the responsibility
of the Company management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards
required by the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. We were not engaged to perform an
audit of the Companys internal control over financial reporting. Our
audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 3 to
the financial statements, the Company has a large accumulated deficit
through December 31, 2010. This condition raises substantial doubt
about its ability to continue as a going concern. Managements plans
in regard to these matters are also described in Note 9.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of RPM
Advantage, Inc. in preparation of Form 10-K as of December 31, 2010,
2009, and 2008 and the results of its operations and its cash flows
for each of the years then ended in conformity with U.S. generally
accepted accounting principles.
/s/ Eugene M. Egeberg
______________________________
Eugene M Egeberg, CPA
Baltimore, MD
20 April 2011 -- RESTATED 5 July 2011
RPM ADVANTAGE, INC.
CONSOLIDATED BALANCE SHEETS
(AUDITED)
December 31 December 31
2010 2009
(Audited) (Audited)
------------ ------------
Assets
Current asset:
Cash and Cash Equivalents 0 0
Prepaid Expense 0 88,558
Total Current Assets 0 88,558
Total assets 0 88,558
Liabilities and Stockholders' Equity
Liabilities:
Accounts Payable/Accrued Liabilities 105,950 54,950
Total liabilities $105,950 $54,950
Equity:
Common Stock 489,535 489,535
Additional Paid In Capital 6,882,706 6,882,706
Accumulated Deficit (7,478,191) (7,338,633)
Total shareholders' equity ($105,950) $33,608
Total liabilities and shareholders' equity $0 $88,558
The accompanying notes are an integral part of these financial statements.
RPM ADVANTAGE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AUDITED)
2010
Revenues:
Fees 0
Less: Cost of Sales 0
Total Revenues $0
Ordinary Income/Expense
Expenses:
General & Administrative 139,558
Depreciation 0
Total Expenses $139,558
Net Income ($139,558)
2009
Revenues:
Fees 0
Less: Cost of Sales 0
Total Revenues $0
Expenses:
General & Administrative 59,929
Depreciation 0
Total Expenses $59,929
Net Income $59,929
The accompanying notes are an integral part of these financial statements.
RPM ADVANTAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AUDITED)
For the Year
Ended December 31
2010 2009
(Audited) (Audited)
------------ ------------
OPERATING ACTIVITIES:
Net Loss (139,558) (59,929)
Increase in Accounts Payable 1,000 1,000
Increase in Accrued Expenses 50,000 0
NET CASH PROVIDED BY OPERATING ACTIVITIES (88,558) (58,929)
FINANCING ACTIVITIES:
Additional Paid in Capital 0 (75,635)
Decrease in Loans Payable 0 (221,878)
Issuance of Common Stock 0 445,000
NET CASH PROVIDED BY FINANCING ACTIVITIES 0 147,487
INVESTING ACTIVITIES:
Decrease in Prepaid Expense 88,558 (88,558)
NET CASH PROVIDED BY INVESTING ACTIVITIES 88,558 (88,558)
INCREASE IN CASH 0 0
CASH - BEGINNING OF YEAR 0 0
CASH - END OF YEAR 0 0
The accompanying notes are an integral part of these financial statements.
RPM ADVANTAGE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2010, AND 2009
(AUDITED)
RESTATED JULY 5, 2011
2010
Common Additional Shareholder Retained Total
Stock Paid in Cap Distribution Earnings
Balance at 1/1/2010 489,535 6,882,706 0 (7,338,633) 33,608
Stock Issuance 0 0 0 0 0
Shareholder Dist 0 0 0 0 0
Additional Paid in Cap 0 0 0 0 0
Retained Earnings 0 0 0 0 0
Net Income 0 0 0 (139,558)(139,558)
Balance at 12/31/2010 489,535 6,882,706 0 (7,478,191)(105,950)
2009
Common Additional Shareholder Retained Total
Stock Paid in Cap Distribution Earnings
Balance at 1/1/2009 44,535 6,958,341 0 (7,278,704)(275,828)
Stock Issuance 445,000 0 0 0 445,000
Shareholder Dist 0 0 0 0 0
Additional Paid in Cap 0 (75,635) 0 0 (75,635)
Retained Earnings 0 0 0 0 0
Net Income 0 0 0 (59,929) (59,929)
Balance at 12/31/2009 489,535 6,882,706 0 (7,338,633) 33,608
The accompanying notes are an integral part of these financial statements.
ITEM 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RPM ADVANTAGE, Inc.
Notes to Financial Statements
NOTE #1 Organization, Nature of Operations and Basis of Presentation
RPM Advantage, Inc., (formerly Communitronics,Inc.)
was organized in the state of Utah on September 21, 1970 and
re-incorporated in Nevada in April 2006.
The Company is a independent operator in the Exploration and Production
(E & P) segment of oil a gas industry. The Company focus is on
secondary recovery leases that have known proven reserves and can have
their values increased by and through the application of new and
emerging enhanced recovery technologies. The Company considers itself
to be one operating segment.
NOTE #2 Significant Accounting Policies
The significant accounting policies followed by the Company in
preparing its consolidated financial statements are set forth
in Note (2) to such consolidated financial statements included
in Form 10-K for the year ended December 31, 2006. The Company
has made no significant changes to these policies during 2007.
A. The Company uses the accrual method of accounting.
B. Revenues and directly related expenses are recognized in the
period then the goods are shipped to the customer.
C. The Company considers all short term, highly liquid investments
that are readily convertible, within three months, to known amounts
as cash equivalents. The Company currently has no cash equivalents.
D. Basic Earnings Per Shares are computed by dividing income available
to common stockholders by the weighted average number of common shares
outstanding during the period. Diluted Earnings Per Share shall be
computed by including contingently issuable shares with the weighted
average shares outstanding during the period. When inclusion of the
contingently issuable shares outstanding during the period. When
inclusion of the contingently issuable shares would have an
anti-dilutive effect upon earnings per share no diluted earnings per
share shall be presented.
E. Inventories: Inventories are stated at the lower of cost,
determined by the FIFO method or market.
F. Depreciation: The cost of property and equipment is depreciated
over the estimated useful lives of the related Communitronics Group,
Inc. assets. The cost of leasehold improvements is amortized over the
lesser of the length of the lease of the related assets of the
estimated lives of the assets. Depreciation and amortization is
computed on the straight-line method.
G. Estimates: The preparation of the financial statements in
conformity with generally accepted accounting Principles requires
management to make estimates and Communitronics Assumptions that affect
the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
H. Cash: The company policy for any cash balances above $100,000 in any
one account is to sweep the funds into a company brokerage account,
which under the Securities Investor Protectors Corporation, insures
cash balances up to $5,000,000.
I. Impairment of Long-Lived Assets: In accordance with Statement 144,
long-lived assets, such as property, plant, and equipment, and
purchased intangible assets subject to amortization, are reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability
of assets to be held and used is measured by a comparison of the
carrying amount of an asset to estimated undiscounted future cash
flows expected to be generated by the asset. If the carrying amount of an
asset exceeds its estimated future cash flows, an impairment charge
is recognized by the amount by which the carrying amount of the asset
exceeds the fair value of the asset. Assets to be disposed of would be
separately presented in the balance sheet and reported at the lower of
the carrying amount or fair value less costs to sell, and are no longer
depreciated. The assets and liabilities of a disposal group classified
as held for sale would be presented separately in the appropriate
asset and liability sections of the balance sheet.
Goodwill and intangible assets that have indefinite useful lives are
tested annually for impairment, and are tested for impairment more
frequently if events and circumstances indicate that the asset might
be impaired. An impairment loss is recognized to the
extent that the carrying amount exceeds the assets fair value.
For goodwill, the impairment determination is made at the reporting
unit level and consists of two steps. First, the Company determines
the fair value of a reporting unit and compares it to its carrying
amount.
Second, if the carrying amount of a reporting unit exceeds its fair
value, an impairment loss is recognized for any excess of the carrying
amount of the reporting units goodwill over the implied fair value of
that goodwill. The implied fair value of goodwill is determined by
allocating the fair value of the reporting unit in a manner similar
to a purchase price allocation, in accordance with FASB Statement No.
141, Business Combinations. The residual fair value after this
allocation is the implied fair value of the reporting unit goodwill.
J. Accounts receivable are recorded at the invoiced amount
and do not bear interest. Amounts collected on accounts
receivable are included in net cash provided by operating
activities in the consolidated statements of cash flows.
The allowance for doubtful accounts is the Companys best
estimate of the amount of probable credit losses in the Companys
existing accounts receivable. The Company determines the
allowance based on historical write-off experience by
industry and national economic data. Past due balances
over 90 days and over a specified amount are reviewed
individually for collectibility.
K. Principles of Consolidation. The consolidated financial
statements include our accounts and those of our wholly owned
subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.
NOTE #3 Income Taxes
RPM Advantage, Inc., has adopted SFAS 109 to account for income
taxes. RPM ADVANTAGE, Inc., currently has no issues that
create timing differences that would mandate deferred tax expense. Net
operating losses would create possible tax assets in future years. Due
to the uncertainty as to the utilization of net operating loss carry forwards
an evaluation allowance has been made to the extent of any tax benefit
that net-operating losses may generate. Subsequent to the report
RPM ADVANTAGE, had a change in officers and a change in control.
When control of an entity changes net operating losses generally can be used
only by the taxpayer (Officers) who sustained the losses. There can be no
assurance that the net operating losses sustained before the change in
control will be available for future benefits.
RPM ADVANTAGE, Inc., has incurred losses that can be
carried forward to offset future earnings if conditions of the Internal
Revenue Codes
are met. These losses are as follows:
Year of Loss Amount Expiration Date
2000-2010 $7,478,191 2020
Current Tax Asset Value of Net Operating Loss Carry forwards At Current
Prevailing Federal Tax Rate (33.9%) $2,535,107
Evaluation Allowance (33.9%) $2,535,107
Net Tax Asset $ -0-
Current Income Tax Expense -0-
Deferred Income Tax Benefit -0-
Note #4 Contingencies
In 2005, the Company became aware of a prior claim for services.
The Company is investigating the validity of the claim. In the process
of dealing with this claim the Company has established procedures in
handling prior claims and a reserve of $100,000 for these matters.
Note #5 Stockholders' Equity
As of December 31, 2010, there was approximately 489,535,000
of $.001 Shares of common stock outstanding. The company has no
outstanding warrants or stock based compensation to account for as of
December 31, 2010.
Note #6 Plant Property and Equipment
Property and equipment:
Property and equipment are recorded at cost.
Depreciation of property and equipment is provided
utilizing both straight line and accelerated methods over
the estimated useful lives of the respective assets.
The costs of maintenance and repairs are charged to
operations as incurred.
The estimated use full lives of property and equipment are as follows:
Equipment 7
Furniture 7
Computers 5
Computer software 5
Motor vehicle 5
Leasehold improvements 39
Note #7 Accounts Receivables
The accounts receivables for the reported periods are
DECEMBER 31 DECEMBER 31
2010 2009
(AUDITED) (AUDITED)
------------- ------------
0 0
Note #8 Loans Payable and Prepaid Expense
In 2009, the Company agreed to issue 445,000,000 shares of its $0.001 par
value common stock to Hamershlag, Sulzberger & Borg in exchange for
the existing note payables of $280,807 at 12/31/2009 as well as 2010
expenses to be paid by Hamershlag, Sulzberger & Borg in the amount
of $88,558.00. The difference in value of stock issued $445,000 and
the debt exchanged of $369,365 will be booked against Additional Paid
in Capital for $75,635. The prepaid expenses of $88,558 were reversed
out against $88,558 of expenses paid in 2010.