As filed with the Securities and Exchange Commission on February 14, 2006
Registration No. 333-_____
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
----------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
IFSA STRONGMAN, INC.
(Name of small business issuer in its charter)
Delaware 7929 20-0929024
(State or other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number) Identification No.)
Organization)
28-32 Wellington Road
London, NW8 9SP, United Kingdom
+44 20 7060 4372
(Address and telephone number of principal executive offices and
principal place of business)
Jussi Laurimaa, Chief
Executive Officer
IFSA Strongman, Inc.
28-32 Wellington Road
London, NW8 9SP, United Kingdom
+44 20 7060 4372
(Name, address and telephone number of agent for service)
Copies to:
Gregory Sichenzia, Esq.
Yoel Goldfeder, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas, 21st Flr.
New York, New York 10018
(212) 930-9700
(212) 930-9725 (fax)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If any securities being registered on this Form are to be offered on a delayed
or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: |_|
1
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. _________
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. _________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. _________
2
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------
Title of each class of Number of Shares Proposed Proposed Amount of
securities to be registered to be registered maximum maximum registration fee
offering aggregate
price per offering price
share (1)
- -------------------------------------------------------------------------------------------------------------
Common Stock, $0.001 par 5,762,500 $0.67 $3,860,875.00 $413.11
value
- -------------------------------------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) and Rule 457(g) under the Securities Act
of 1933, using the average of the high and low price as reported on
the Over-The-Counter Bulletin Board on February 10, 2006, which was
$0.67 per share.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
3
The information in this Prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement is filed with the Securities and Exchange Commission and becomes
effective. This Prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the sale is not
permitted.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED FEBRUARY 10, 2006
IFSA STRONGMAN, INC.
5,762,500 SHARES OF
COMMON STOCK
This prospectus relates to the resale by the selling stockholders of up to
5,762,500 shares of our common stock. The selling stockholders may sell common
stock from time to time in the principal market on which the stock is traded at
the prevailing market price or in negotiated transactions. The selling
stockholders may be deemed underwriters of the shares of common stock, which
they are offering.
We are not selling any shares of common stock in this offering and
therefore will not receive any proceeds from this offering.
Our common stock is listed on the Over-The-Counter Bulletin Board under
the symbol "ISMN." The last reported sales price per share of our common stock
as reported by the Over-The-Counter Bulletin Board on February 10, 2006, was
$0.67.
Investing in these securities involves significant risks. See "Risk
Factors" beginning on page 7.
No other underwriter or person has been engaged to facilitate the sale of
shares of common stock in this offering. None of the proceeds from the sale of
stock by the selling stockholders will be placed in escrow, trust or any similar
account.
We may amend or supplement this prospectus from time to time by filing
amendments or supplements as required. You should read the entire prospectus and
any amendments or supplements carefully before you make your investment
decision.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ________, 2006.
4
Table Of Contents
Prospectus Summary.............................................................6
Risk Factors...................................................................7
Use Of Proceeds................................................................7
Market For Common Equity And Related Stockholder Matters......................11
Business......................................................................15
Facilities....................................................................19
Employees.....................................................................19
Legal Proceedings.............................................................19
Management....................................................................19
Certain Relationships And Related Transactions................................21
Security Ownership Of Certain Beneficial Owners And Management................22
Description Of Securities To Be Registered....................................22
Indemnification For Securities Act Liabilities................................23
Plan Of Distribution..........................................................23
Penny Stock...................................................................23
Selling Stockholders..........................................................25
Legal Matters.................................................................26
Experts.......................................................................26
Available Information.........................................................26
5
PROSPECTUS SUMMARY
The following summary highlights selected information contained in this
prospectus. This summary does not contain all the information you should
consider before investing in the securities. Before making an investment
decision, you should read the entire prospectus carefully, including the "risk
factors" section, the financial statements and the notes to the financial
statements. As used throughout this prospectus, the terms "IFSA Strongman,"
"IFSA," the "Company," "we," "us," and "our" refer to IFSA Strongman, Inc.
IFSA STRONGMAN, INC.
We were formed in the state of Utah on March 2, 2001, and was subsequently
reincorporated under the laws of the State of Delaware on March 30, 2004. On
December 9, 2005, we entered into a Share Exchange Agreement with IFSA Strongman
Ltd., a United Kingdom corporation and the shareholders of IFSA Strongman Ltd.,
which closed on December 29, 2005. Pursuant to the Agreement, we acquired all of
the outstanding equity stock of IFSA Strongman Ltd. from the shareholders of
IFSA Strongman Ltd. On December 28, 2005 we changed our name to IFSA Strongman,
Inc.
Subsequent to the acquisition of IFSA Strongman Ltd., we are an integrated
media, entertainment and athlete representation company, principally engaged in
the development, production and marketing of television programs, live events
and the licensing and sale of branded consumer products. The content of IFSA's
entertainment and consumer products is centered on the various strongman
competitions and events world-wide.
Our executive offices are located at 28-32 Wellington Road, London, United
Kingdom NW8, and our telephone number is 44 20 7060 4372. We are a Delaware
corporation.
The Offering
Common stock outstanding before the offering........... 28,737,500 shares
Common stock offered by selling stockholders........... Up to 5,762,500 shares.
Common stock to be outstanding after the offering...... 28,737,500 shares
Use of proceeds........................................ We will not receive
any proceeds from the
sale of the common
stock hereunder. See
"Use of Proceeds" for
a complete
description.
OTCBB Symbol .......................................... ISMN.ob
6
RISK FACTORS
This investment has a high degree of risk. Before you invest you should
carefully consider the risks and uncertainties described below and the other
information in this prospectus. If any of the following risks actually occur,
our business, operating results and financial condition could be harmed and the
value of our stock could go down. This means you could lose all or a part of
your investment.
Risks Related To Our Business
Our failure to continue to develop creative and entertaining programs and events
would likely lead to a decline in the popularity of our brand of entertainment.
The creation, marketing and distribution of live and televised
entertainment is at the core of our business and is critical to our ability to
generate revenues across our media platforms and product outlets. Our failure to
continue to create popular live events and televised programming would likely
lead to a decline in our television ratings and attendance at our live events,
which would likely adversely affect our operating results.
Our failure to retain or continue to recruit key athletes could lead to a
decline in the appeal of the popularity of our brand of entertainment.
Our success depends, in large part, upon our ability to recruit and retain
athletes who have the physical presence to compete in our strongman
competitions. We cannot be sure you that we will be able to continue to identify
and retain these athletes in the future. Additionally, we cannot be sure that we
will be able to retain our current athletes during the remaining terms of their
contracts or renew their contracts when their contracts expire. Our failure to
attract and retain key athletes, or a serious or untimely injury to, or the
death of, or unexpected or premature loss or retirement for any reason of any of
our key athletes, could lead to a decline in the appeal and the popularity of
our brand of entertainment, which could adversely affect our operating results.
A decline in general economic conditions could adversely affect our business.
Our operations are affected by general economic conditions, which
generally may affect consumers' disposable income, the level of advertising
spending and the size and number of retail outlets. The demand for entertainment
and leisure activities tends to be highly sensitive to the level of consumers'
disposable income. A decline in general economic condition could reduce the
level of discretionary income that our fans and potential of our revenues. A
decline in general economic conditions could also reduce levels of advertising
spending, which could impair our ability to sell advertising for its various
media platforms at acceptable rates or at all.
Furthermore, a decline in the size or number of retail outlets for our
branded merchandise and consolidation in the retail industry as a result of
declining general economic conditions could harm our distribution and sales of
merchandise. Any of the foregoing could adversely affect our operating results.
A decline in the popularity of our brand of sports entertainment, including as a
result of changes in the social and political climate, could adversely affect
our business.
Our operations are affected by consumer tastes and entertainment trends,
which are unpredictable and subject to change and may be affected by changes in
the social and political climate. Our programming is created to evoke a response
from our fans. A change in our fans' tastes or a material change in the
perceptions of our business partners, including our sponsors, distributors and
licensees, whether as a result of the social and political climate or otherwise,
could adversely affect our operating results.
7
Changes in the regulatory atmosphere and related private-sector initiatives
could adversely affect our business.
While the production and distribution of television programming by
independent producers is not directly regulated by the federal or state
governments in the United States, the marketplace for television programming in
the United States is affected significantly by government regulations applicable
to, as well as social and political influences on, television stations,
television networks and cable and satellite television systems and channels. A
number of governmental and private-sector initiatives relating to the content of
media programming have been announced in response to certain events unrelated to
us. Changes in governmental policy and private-sector perceptions could further
restrict program content and adversely affect our levels of viewership and
operating results.
The markets in which we operate are highly competitive, rapidly changing and
increasingly fragmented, and we may not be able to compete effectively,
especially against competitors with greater financial resources or marketplace
presence.
We compete for advertising dollars with other media companies. We face
competition from professional and college sports, as well as from other forms of
live and televised entertainment and other leisure activities in a rapidly
changing and increasingly fragmented marketplace. For the sale of branded
merchandise, we compete with entertainment companies, professional and college
sports leagues and other makers of branded apparel and merchandise. Many of the
companies with whom we compete with have greater financial resources than us.
Our failure to compete effectively could result in a significant loss of
viewers, venues, distribution channels or athletes/other performers and fewer
entertainment and advertising dollars spent on its form of sports entertainment,
any of which could adversely affect our operating results.
We face uncertainties associated with international markets.
Our production of live events overseas subjects us to the risks involved
in foreign travel, local regulations, including regulations requiring us to
obtain visas for our athletes, and political instability inherent in varying
degrees in those markets. In addition, the distribution of our television,
branded merchandise and licensed products in international markets exposes us to
some degree of currency and piracy risk. These risks could adversely affect our
operating results and impair our ability to pursue our business strategy as it
relates to international markets.
We may be prohibited from promoting and conducting our live events if we do not
comply with applicable regulations.
In various states in the United States and some foreign jurisdictions,
athletic commissions and other applicable regulatory agencies require us to
obtain licenses for promoters, medical clearances and/or other permits or
licenses for athletes and other performers and/or permits for events in order
for us to promote and conduct our live events. In the event that we fail to
comply with the regulations of a particular jurisdiction, we may be prohibited
from promoting and conducting our live events in that jurisdiction. The
inability to present our live events over an extended period of time or in a
number of jurisdictions could lead to a decline in the various revenue streams
generated from live events, which could adversely affect our operating results.
Our insurance may not be adequate to cover liabilities resulting from accidents
or injuries that occur during our physically demanding events.
The events we organize expose our athletes and our employees who are
involved in the production of those events to the risk of travel and performance
related accidents, the consequences of which may not be fully covered by
insurance. The physical nature of our events expose our athletes to the risk of
serious injury or death. Any liability to us resulting from any death or serious
injury sustained by one of our athletes while performing, to the extent not
covered by insurance and the various waivers our athletes sign, could adversely
affect our operating results.
Because we depend on our senior management's experience and knowledge of the
industry, we would be adversely affected if senior management left.
We are dependent on the continued efforts of our senior management team.
We do not currently have an employment contracts with some of our senior
executives. If, for any reason, senior executives do not continue to be active
in management, our business, financial condition or results of operations could
be adversely affected. In addition, we do not maintain key personnel life
insurance on our senior executives and other key employees.
8
We may need to raise capital to fund our operations, and our failure to
obtain funding when needed may force us to delay, reduce or eliminate
acquisitions and business development plans.
If in the future, we are not capable of generating sufficient revenues
from operations and our capital resources are insufficient to meet future
requirements, we may have to raise funds to continue the development,
commercialization and marketing of our business.
We cannot be certain that funding will be available on acceptable terms,
or at all. To the extent that we raise additional funds by issuing equity
securities, our stockholders may experience significant dilution. Any debt
financing, if available, may involve restrictive covenants that impact our
ability to conduct our business. If we are unable to raise additional capital if
required or on acceptable terms, we may have to significantly delay, scale back
or discontinue our planned acquisitions or business development plans or obtain
funds by entering into agreements on unattractive terms.
Risks Related To This Offering
There Is No Assurance Of An Established Public Trading Market, Which Would
Adversely Affect The Ability Of Investors In Our Company To Sell Their
Securities In The Public Markets.
Although our common stock trades on the Over-the-Counter Bulleting Board
(the "OTCBB"), a regular trading market for the securities may not be sustained
in the future. The NASD has enacted recent changes that limit quotations on the
OTCBB to securities of issuers that are current in their reports filed with the
Securities and Exchange Commission. The effect on the OTCBB of these rule
changes and other proposed changes cannot be determined at this time. The OTCBB
is an inter-dealer, Over-The-Counter market that provides significantly less
liquidity than the NASD's automated quotation system (the "NASDAQ Stock
Market"). Quotes for stocks included on the OTCBB are not listed in the
financial sections of newspapers as are those for The NASDAQ Stock Market.
Therefore, prices for securities traded solely on the OTCBB may be difficult to
obtain and holders of common stock may be unable to resell their securities at
or near their original offering price or at any price. Market prices for our
common stock will be influenced by a number of factors, including:
o the issuance of new equity securities;
o changes in interest rates;
o competitive developments, including announcements by competitors of
new products or services or significant contracts, acquisitions,
strategic partnerships, joint ventures or capital commitments;
o variations in quarterly operating results;
o change in financial estimates by securities analysts;
o the depth and liquidity of the market for our common stock;
o investor perceptions of our company and the sports and entertainment
industry generally; and
o general economic and other national/internaional conditions.
The Limited Prior Public Market And Trading Market May Cause Volatility In The
Market Price Of Our Common Stock.
Our common stock is currently traded on a limited basis on the OTCBB under
the symbol "ISMN." The quotation of our common stock on the OTCBB does not
assure that a meaningful, consistent and liquid trading market currently exists,
and in recent years such market has experienced extreme price and volume
fluctuations that have particularly affected the market prices of many smaller
companies like us. Our common stock is thus subject to volatility. In the
absence of an active trading market:
9
o investors may have difficulty buying and selling or obtaining market
quotations;
o market visibility for our common stock may be limited; and
o a lack of visibility for our common stock may have a depressive
effect on the market for our common stock.
Our Common Stock Could Be Considered To Be A "Penny Stock."
Our common stock could be considered to be a "penny stock" if it meets one
or more of the definitions in Rules 15g-2 through 15g-6 promulgated under
Section 15(g) of the Securities Exchange Act of 1934, as amended. These include
but are not limited to the following: (i) the stock trades at a price less than
$5.00 per share; (ii) it is NOT traded on a "recognized" national exchange;
(iii) it is NOT quoted on The NASDAQ Stock Market, or even if so, has a price
less than $5.00 per share; or (iv) is issued by a company with net tangible
assets less than $2.0 million, if in business more than a continuous three
years, or with average revenues of less than $6.0 million for the past three
years. The principal result or effect of being designated a "penny stock" is
that securities broker-dealers cannot recommend the stock but must trade in it
on an unsolicited basis.
Broker-Dealer Requirements May Affect Trading And Liquidity.
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule
15g-2 promulgated thereunder by 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 our common stock are urged to obtain and read such
disclosure carefully before purchasing any shares that are deemed to be "penny
stock." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve
the account of any investor for transactions in such stocks before selling any
penny stock to that investor. This procedure requires the broker-dealer to (i)
obtain from the investor information concerning his or her financial situation,
investment experience and investment objectives; (ii) reasonably determine,
based on that information, that transactions in penny stocks are suitable for
the investor and that the investor has sufficient knowledge and experience as to
be reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it more
difficult for holders of our common stock to resell their shares to third
parties or to otherwise dispose of them in the market or otherwise.
Shares Eligible For Future Sale May Adversely Affect The Market Price Of Our
Common Stock, As The Future Sale Of A Substantial Amount Of Our Restricted Stock
In The Public Marketplace Could Reduce The Price Of Our Common Stock.
From time to time, certain of our stockholders may be eligible to sell all
or some of their shares of common stock by means of ordinary brokerage
transactions in the open market pursuant to Rule 144, promulgated under the
Securities Act ("Rule 144"), subject to certain limitations. In general,
pursuant to Rule 144, a stockholder (or stockholders whose shares are
aggregated) who has satisfied a one-year holding period may, under certain
circumstances, sell within any three-month period a number of securities which
does not exceed the greater of 1% of the then outstanding shares of common stock
or the average weekly trading volume of the class during the four calendar weeks
prior to such sale. Rule 144 also permits, under certain circumstances, the sale
of securities, without any limitations, by a non-affiliate of our company that
has satisfied a two-year holding period. Any substantial sale of common stock
pursuant to Rule 144 or pursuant to any resale prospectus may have an adverse
effect on the market price of our securities.
10
USE OF PROCEEDS
This prospectus relates to shares of our common stock that may be offered
and sold from time to time by selling stockholders. We will receive no proceeds
from the sale of shares of common stock in this offering.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock is traded on the Over-The-Counter Bulletin Board,
referred to herein as the OTCBB, under the symbol "ISMN" The following table
sets forth, for the calendar periods indicated, the range of the high and low
last reported bid prices of our common stock, as reported by the OTCBB since
trading commenced on March 4, 2005. The quotations represent inter-dealer prices
without retail mark-ups, mark-downs or commissions, and may not necessarily
represent actual transactions.
2005
---------------------------------------------
High* Low*
---------------- ----------------
1st Quarter (from March 4, 2005)............. $ 1.250 $ 1.010
2nd Quarter.................................. $ 1.010 $ 0.400
3rd Quarter ................................. $ 0.510 $ 0.150
4th Quarter ................................. $ 0.150 $ 0.300
As of February 10, 2006, there were approximately 292 holders of record of
our common stock.
Dividends
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance the expansion of
our business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table shows information with respect to each equity
compensation plan under which our common stock is authorized for issuance as of
the fiscal year ended December 31, 2005.
EQUITY COMPENSATION PLAN INFORMATION
- -----------------------------------------------------------------------------------------------------------------
Plan category Number of securities Weighted average Number of securities
to be issued upon exercise price of remaining available for
exercise of outstanding options, future issuance under
outstanding options, warrants and rights equity compensation plans
warrants and rights (excluding securities
reflected in column (a)
- -----------------------------------------------------------------------------------------------------------------
(a) (b) (c)
- -----------------------------------------------------------------------------------------------------------------
Equity compensation plans approved -0- -0- -0-
by security holders
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Equity compensation plans not -0- -0- -0-
approved by security holders
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Total -0- -0- -0-
- -----------------------------------------------------------------------------------------------------------------
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MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward-Looking Statements
The information in this report contains forward-looking statements. All
statements other than statements of historical fact made in this report are
forward looking. In particular, the statements herein regarding industry
prospects and future results of operations or financial position are
forward-looking statements. These forward-looking statements can be identified
by the use of words such as "believes," "estimates," "could," "possibly,"
"probably," anticipates," "projects," "expects," "may," "will," or "should" or
other variations or similar words. No assurances can be given that the future
results anticipated by the forward-looking statements will be achieved.
Forward-looking statements reflect management's current expectations and are
inherently uncertain. Our actual results may differ significantly from
management's expectations.
The following discussion and analysis should be read in conjunction with
our financial statements, included herewith. This discussion should not be
construed to imply that the results discussed herein will necessarily continue
into the future, or that any conclusion reached herein will necessarily be
indicative of actual operating results in the future. Such discussion represents
only the best present assessment of our management.
Corporate History
On December 9, 2005, Synerteck Incorporated consummated a Share Exchange
Agreement with IFSA Strongman Ltd. whereby all of the shareholders in IFSA
Strongman Ltd. had their shares converted into 20,000,000 shares of Synerteck.
On December 28, 2005, to effect a name change, Synerteck executed a merger
document with its wholly owned subsidiary IFSA Strongman, Inc., a newly formed
Delaware corporation. This effectively changed the registrant's name from
Synerteck Incorporated to IFSA Strongman, Inc.
Overview
We are an integrated media, entertainment and athlete representation
company, principally engaged in the development, production and marketing of
television programs, live events and the licensing and sale of branded consumer
products. The content of our entertainment and consumer products is centered on
the various strongman competitions and events world-wide.
Plan of Operations
The current cash resources of the Company are not adequate for it to reach
breakeven. The management estimates that approximately $500,000 in additional
cash resources will be required during 2006. The management expects the business
of IFSA Strongman to become self-sustaining during the third quarter of 2006,
after which the company will not be needing cash injections to run its core
operations.
The Company is in the process of raising the $500,000 financing required
for breakeven. This financing is being raised partly as an equity issue priced
at $0.40 per share, and partly as a bridge loan.
In addition to the breakeven financing, the management is preparing for a
larger, approximately $5,000,000 capital raise during 2006. The proceeds of this
bigger fundraise will be used for more rapid expansion into sports reality
television, gaming and merchandising. The management expects that the Company's
ability to reach breakeven is not dependent on the success of this expansion
financing.
The main product development activity for the company in 2006 will be to
lift its event presentation to the level of the TV presentation achieved in
2005. Thereafter, the next main product development step will be to try to
commission one or more sports reality concepts for a major TV network in the USA
or UK.
The main investment activity of the Company throughout 2006 will remain
the production of its core television product. Additional smaller investments
will be made into the development of an e-commerce Website with better content
management functionality and into production of strongman equipment at a smaller
scale than in 2004. The main investments in the future years will be made into
the development of pilots for sports reality TV shows involving strongmen, into
the development of a strongman console game, and into the development of
additional lines of strongman merchandise.
12
The management does not foresee substantial changes in the number of
employees during 2006.
Liquidity and Capital Resources
Since inception, we have financed IFSA Strongman's operations from its
business cash flows and the issuance of $50,000 of promissory notes. As of
September 30, 2005, IFSA Strongman's primary source of liquidity consisted of
$48,650 in cash and cash equivalents. Because IFSA Strongman is cash flow
positive, we do not expect to require additional investment capital during the
next twelve months to continue our operations at their current level.
Nevertheless, we may seek to secure additional debt or equity capital to finance
substantial business development initiatives or acquire another information
technology firm. At present, however, we have no plans to seek any such
additional capital or to engage in any business development or acquisition
activity.
Recent Accounting Pronouncements
In June 2003, the Securities and Exchange Commission ("SEC") adopted final
rules under Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404").
Commencing with our annual report for the fiscal year ending December 31, 2008,
we will be required to include a report of management on our internal control
over financial reporting. The internal control report must include a statement.
o of management's responsibility for establishing and maintaining
adequate internal control over our financial reporting;
o of management's assessment of the effectiveness of our internal
control over financial reporting as of year end;
o of the framework used by management to evaluate the effectiveness of
our internal control over financial reporting; and
o that our independent accounting firm has issued an attestation
report on management's assessment of our internal control over
financial reporting, which report is also required to be filed.
In December 2004, the FASB issued FASB SFAS No. 123 (revised 2004),
Share-Based Payment, which is a revision of SFAS No. 123, Accounting for
Stock-Based Compensation. SFAS No. 123(R) supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of
Cash Flows. Generally, the approach in SFAS No. 123(R) is similar to the
approach described in SFAS No. 123. However, SFAS No. 123(R) requires all
share-based payments to employees, including grants of employee stock options,
to be recognized in the income statement based on their fair values. Pro forma
disclosure is no longer an alternative. The new standard will be effective for
the Company in the fiscal year ending December 31, 2006. The Company has not yet
assessed the impact on future operations of adopting this new standard.
The FASB also issued FASB Statement No. 154 (SFAS 154) which replaces APB
Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting
Accounting Changes in Interim Financial Statements, and changes the requirements
for the accounting for and reporting of a change in accounting principle. It is
not believed that this will have an impact on the Company in the foreseeable
future as no accounting changes are anticipated.
Results of Operations
Following is our discussion of the relevant items affecting results of
operations for the periods ended September 30, 2005 and 2004.
Revenues. Revenue is recognized upon completion of services or delivery of
goods. Advance customer payments are recorded as deferred revenue until such
time as they are recognized. Product sales are not warranted by the Company and
may be subject only to warranties that may be provided by the product
manufacturer. Therefore, product warranties have no effect on the financial
statements.
13
IFSA Strongman generated net revenues of $42,222 during the three months
ended September 30, 2005, which represents a 31% decrease compared to $60,752 in
net revenues during the third quarter of 2004. For the nine month period ended
September 30, 2005, net revenues were $123,163, representing a 17% decrease
compared to $147,894 in net revenues during the first nine months of 2004. This
decrease was mainly due to the reduction in systems support services provided to
one large related party client during the nine months ended September 30, 2005.
During the first nine months of 2005 and 2004, we received $52,580 and $71,340,
respectively, in gross revenues from systems support. Although hardware sales
revenues decreased, several new IT service contracts were established in the
first three months of 2005 which contributed to the total net revenues recorded
for the first nine months of 2005. Other sources of revenue were information
technology services, hardware sales and equipment leases. We anticipate that
these three areas will constitute the principal source of IFSA Strongman's
revenue for the foreseeable future.
Cost of Sales. Expenses which comprise cost of sales are the wholesale
cost of hardware, software, any accompanying licenses, product sales
commissions, and commissions paid in connection with information technology
consulting contracts. Also included in cost of sales are personnel and materials
costs to administer these information technology services. As more organizations
utilize our technology services, future expenses included in cost of goods sold
will increase as well as potential fee sharing expenses to organizations that
assist us in providing these services.
Cost of sales for the three months ended September 30, 2005 were $5,439, a
5% decrease from $5,753 during the third quarter of 2004. For the nine month
period ended September 30, 2005, cost of sales was $25,270, a 24% decrease from
$33,408 during the first nine months of 2004. This decrease corresponds with the
decrease in revenues for the same period. Revenues for the nine months ended
September 30, 2005 were more heavily weighted towards service as opposed to
hardware and software sales when compared to the same period in the prior year.
IT services and systems support yield a higher margin than hardware and software
sales. Cost of sales is attributable to (i) expenses incurred pursuant to the
delivery of our information technology support, and (ii) sales commissions paid
in connection with technology consulting projects.
General and Administrative Expenses. Our general and administrative
expenses have been comprised of administrative wages and benefits; occupancy and
office expenses; outside legal, accounting and other professional fees; travel
and other miscellaneous office and administrative expenses. General and
administrative expenses for the three months ended September 30, 2005 were
$88,211, a 272% increase compared to $23,740 during the third quarter of 2004.
For the nine month period ended September 30, 2005, general and administrative
expenses were $131,933, a 159% increase from $50,941 during the first nine
months of 2004. This increase was primarily due to the issuance of common stock
to certain employees and contract personnel under the Company's Stock Incentive
Plan. The value of the stock as well as the services received was $40,000.
Without this non-cash expense, general and administrative expenses would have
been $91,933 for the nine month period ended September 30, 2005. Other costs in
this category were accounting and legal fees associated with the audit of the
financial statements and filings with the Securities and Exchange Commission.
Professional fees accounted for approximately $25,253 of general and
administrative expenses during the nine month period ended September 30, 2005,
as compared to $20,635 during the first nine months of 2004. Although we
endeavor to decrease certain costs associated with personnel salaries and
benefits, professional fees, contract labor, and rent and occupancy-related
expense, as the business grows, these expenses will increase. Because we
sublease our office facilities from our former parent corporation, we do not
anticipate any material commitments for capital expenditures in the foreseeable
future.
Selling and Marketing Expenses. Our selling and marketing expenses include
selling/marketing wages and benefits; advertising and promotional expenses;
travel and other miscellaneous related expenses. Selling and marketing expenses
for the three months ended September 30, 2005 were $44,590, a 167% increase from
$16,731 during the third quarter of 2004. For the nine month period ended
September 30, 2005, selling and marketing expenses were $70,622, an 125%
increase from $31,367 during the first nine months of 2004. This increase was
primarily attributable to increased salaries of sales personnel as well as
additional expenditures for advertising and marketing. We expect that our sales
and marketing expenditures will increase as we continue to develop our client
base and expand our efforts in computer hardware and software leasing.
Product Development. Product research and development expenses for the
three months ended September 30, 2005 were $3,024, a 57% decrease from $7,037
during the second quarter of 2004. For the nine month period ended September 30,
2005, product development expenses were $5,822, a 56% decrease from $13,138
during the first nine months of 2004. This decrease was the result of the
decrease in our product development expenses related to systems development for
our programming and web site hosting services. We believe that significant
investments in product development are required to remain competitive.
Accordingly, we expect to incur increased expenditures with respect to product
development in future periods.
14
Other Income (Expense). We incurred net other income of $31,333 for the
nine months ended September 30, 2005 compared to net other expense of $2,087
during the first nine months of 2004. The income recorded in 2005 is mainly the
result of the sale of marketable securities resulting in a realized gain of
$29,238. The expenses incurred in this category were comprised primarily of
interest expenses related to the notes payable issued by the Company during the
first half of 2004. Income tax expense of $3,263 was also recorded during the
first nine months of 2004.
Off-Balance Sheet Arrangements
IFSA Strongman is not subject to any off-balance sheet arrangements.
Critical Accounting Policies
The preparation of financial statements and related notes requires us to
make judgments, estimates, and assumptions that affect the reported amounts of
assets, liabilities, revenue and expenses, and related disclosure of contingent
assets and liabilities. An accounting policy is considered to be critical if it
requires an accounting estimate to be made based on assumptions about matters
that are highly uncertain at the time the estimate is made, and if different
estimates that reasonably could have been used, or changes in the accounting
estimates that are reasonably likely to occur periodically, could materially
impact the financial statements.
Because of our limited level of operations, we have not had to make
material assumptions or estimates other than our assumption that we are a going
concern. If our business increases, our principal estimates will involve whether
engagements in process will be profitable.
BUSINESS
Overview of Business
We are an integrated media, entertainment and athlete representation
company, principally engaged in the development, production and marketing of
television programs, live events and the licensing and sale of branded consumer
products. The content of our entertainment and consumer products is centered on
the various strongman competitions and events world-wide.
Operations
Our operations are segmented into three principal business units:
o The World Governing Body: A body created to govern the strongman sport
worldwide with national member federations in over 30 countries;
o Athlete Management Division: Represents and manages strongman athletes
through exclusive commercial representation contracts; and
o Commercial Division: Organizes international strongman competitions and
handles the television production, sales and marketing operations,
merchandising and the licensing of the IFSA brand.
We are striving to consolidate the strongman sport and entertainment
globally and elevate it to the next level in terms of professionalism and
production values. We are aiming to do this by creating a season-long narrative
to the sport via establishment of a single worldwide competition pyramid, by
trying to promote a handful of strongman athletes into superstardom, and by
supporting all aspects of the sport with professional, coherent and solid
infrastructure.
15
The World Governing Body
The International Federation of Strength Athletes was formed in by Dr
Douglas Edmunds and David Webster, OBE, as a governing body for international
strongman events. The International Federation of Strength Athletes became an
accepted and influential governing body by participants in the strongman sport
worldwide. We acquired this governing body from IFSA Projects Ltd on June 10,
2004 and it currently operates as one of our divisions called World Governing
Body (the "WGB").
We have entered into agreements with different national strongman
federations in over 30 different countries, which mandate the national member
federations will follow the WGB's charter, implement its rules & regulations in
their respective countries and be recognized to act as legitimate governing
bodies in their regions. The WGB is governed by a Board formed by Dr. Douglas
Edmunds (Chairman), Jamie Reeves, Marcel Mostert, Ilkka Kinnunen, Christian
Fennell, Dr. Terry Todd/Dr. Mauro de Pasquale (rotating), one representative
elected by the national member federations and one representative elected by the
strongman athletes.
The WGB has implemented a health policy that includes mandatory medical
examinations for all athletes competing in international level plus drug
testing. The drug policy is available for download at
http://ifsastrongman.com/worldbody/health/.
The WGB maintains a list of qualified strongman referees for various
levels of competition. The WGB also regulates the rules of the strongman sport
and disciplines, including specifications for equipment with which world records
are ratified by the WGB. Finally, the WGB maintains a worldwide strongman
athlete ranking through a points system, and designs each year's competition
calendar and the qualification pyramid for top title events. The WGB charges
sanction fees and referee fees from competition promoters to cover its costs.
Athlete Management Division
During 2004-2005, the Athlete Management Division ("AMD") signed contracts
with 88 strongman athletes from over 30 countries. AMD represents these athletes
in most commercial dealings related to their sports personalities. AMD also
controls image and other rights of these athletes, and earns a commission from
large proportion of commercial contracts, appearance fees and prize monies
earned by the contracted athletes. In addition, athletes contracted by AMD, as
well as those contracted by the national member federations of the WGB, can only
compete in events sanctioned by the WGB or one of the national member
federations, unless otherwise agreed with the athlete on a case-by-case basis.
In its first year of operation in 2005, AMD placed contracted athletes in
two feature-length movies, two television shows and one talk show. AMD intents
to enhance the profile and improve the earnings of the best contracted strongman
athletes and personalities through better media exposure, and to enhance the
profile of the strongman sport by introducing well-known athletes from other
sporting activities, such as professional football and wrestling, into
strongman.
Commercial Division
The Commercial Division is responsible for the following core activities:
o Event Deals: identifying and contracting event promoters for the main
international events organized by us. In a typical contract, the event
promoter organizes the venue, ticket sales and local marketing and public
relations, whereas we would organize the logistics, television production,
floor management and the competition.
o TV Production: we produce a television series called "IFSA Strongman" for
international distribution. The format for the series is currently 13 half
hour episodes. In 2005, the series was produced in a strategic partnership
with Octagon CSI, employing up to the minute entertainment style
presentation, enhanced photography and in-vision graphics. The content for
the series is drawn from continental and world championships produced by
us, from national and subcontinental championships produced by their
respective national federations with rights for international distribution
shared or held by us, and from athlete profiles produced by us. In
addition to the existing series, we are attempting to produce a sports
reality television show format commissioned by a major television network
within the next two years.
16
o TV Distribution: we have licensed Octagon CSI, in the United Kingdom, to
distribute the "IFSA Strongman" television series worldwide. With offices
in 33 countries, Octagon CSI is in a position to deliver 350,000,000
households in the first year.
o Sponsorship Acquisition: we target sponsorship revenues in three main
categories: broadcast sponsorship, event sponsorship and athlete
sponsorship. Sponsorship packages in each category are multi-dimensional
in the sense that they each include broadcast, promotional, and live
elements. Given our control of all key aspects of the strongman platform
it has created (athletes, events, venue, equipment, and formats), tailored
packages can be created for branding partners with particular needs. The
total sponsorship inventory can be valued at several million dollars, and
Octagon CSI is helping us sell it with it's worldwide sponsorship sales
team with an exclusive retainer-based contract.
o Gaming: 8-bit Ltd. has created a Java-based strongman game for mobile
phones using our brand, formats and athlete personalities and has been
granted worldwide distribution rights for it with royalties to be paid to
us. We are also in discussions with developers and distributors about
creating a console-based strongman game. The existing mobile phone game
uses our sponsors as advertisers and we intend to continue bringing its
key sponsors in as advertisers into the strongman gaming arena to offer
them additional exposure.
o Licensing: InAphone A/S has been granted a license to the IFSA brand, top
IFSA contracted athletes' sports personalities and selected television
footage for mobile content distribution worldwide. We are presented with
additional licensing opportunities from time to time, and intend to enter
into more licensing contracts in the future.
o Merchandising: we have created a collection of approximately 50 Stock
Keeping Units of strongman clothing that has been used by athletes and
officials in major international title events throughout the 2005
strongman season. We own the designs and manufacture the clothing in
Brazil. We intend to make this line of clothing available for retail. We
also intend to produce a highlights DVD of the 2005 strongman season for
retail distribution. Other merchandising opportunities are being discussed
and we intend to expand our merchandising offering.
To boost particularly its TV production and TV distribution capabilities, the
Commercial Division acquired in December 2004 a strongman television property
called "All-Strength" from Wyndham Studios Entertainment, Inc., a Canadian
company.
Industry Overview
The combined world wide reach of all strongman television programs in the
past has been at an approximate level of half-a-billion viewers a year and
includes channels such as Eurosport, BBC, ESPN and FOX. The strongman sport
existed initially as a loose federation of enthusiasts worldwide, but that
changed in 1995 with the creation of the International Federation of Strength
Athletes that quickly became the generally accepted world governing body of
strongman.
The promoters of strongman events fall in two categories: ex-athletes and
strongman fans who have been promoting smaller events for years and professional
promoters in entertainment and sports in general who are just entering strongman
now. The first category dominated the marketplace prior to our entry, and
typically organizes events with budgets in the $10,000 to $50,000 range. The
latter category, largely introduced by IFSA to the strongman sport and
entertainment, promote events with budgets in the $100,000 to $1,000,000 range.
Television production for strongman events typically has been, and outside
of IFSA predominantly still is done by small television production outfits with
very limited budgets. The notable historical exception to that is BBC, who used
to produce the Trans-World International's World's Strongest Man show every year
until 2004, when they retired from strongman events. Historically, IFSA
estimates that the most widely distributed strongman television show has been
the World's Strongest Man show. In 2003, the last year prior to our entry, the
World's Strongest Man show was broadcast in approximately 40 countries, and had
a theoretical reach of 500 million households. The second largest distribution
was either United Strongman Series or All-Strength, depending on whether number
of countries, theoretical reach or advertising equivalent values are used.
17
Acquisition Strategy
We believe that there are significant opportunities to both further
consolidate our leadership position within the strongman sports and
entertainment industry and to diversify our revenue base without losing focus by
adding other sports and entertainment properties through selective acquisitions.
Our officers and directors have the requisite skills and experience for
identifying, pursuing, negotiating and closing deals with potential acquisition
candidates, and integrating acquired operations. We believe we can integrate
acquired companies into its management structure and business system
successfully without a significant increase in general and administrative
expenses. In addition, future acquisitions may enable us to lower overhead costs
by centralizing key functions.
Seasonality
The strongman sport and entertainment is seasonal in nature due to the
fact that most activities and events take place from May to November.
Accordingly, we hire dozens of contract workers during the main events of the
competition season with short-term contracts. During the off-season, our core
staff and officers work on sponsorship acquisition, television productions,
merchandising, licensing, television sales and athlete contracting and
development.
Competition
We compete for advertising dollars with other media companies and face
competition from professional and college sports, as well as from other forms of
live and televised entertainment and other leisure activities in a rapidly
changing and increasingly fragmented marketplace. For the sale of branded
merchandise, we compete with entertainment companies, professional and college
sports leagues and other makers of branded apparel and merchandise.
In addition to general entertainment competition, we directly compete in
the production and organization of strongman events. The major competitors are:
o Trans-World International, which organizes the World's Strongest Man
event held annually in September or October;
o World-Class Entertainment AB, a subsidiary of World-Class
International AB, which in 2005 organized three competitions branded
as The World's Strongest Man Super-Series;
o United Strongman Series which consists of 6-8 competitions annually
in different countries; and
o World Strongman Cup which also consists of 6-8 competitions annually
in different countries.
We estimate that our results in 2005 compared very favorably with those of
our competitors listed above. All of these competitors collectively conducted an
estimated 25-28 events, approximately 20% of the total number of events
organized by IFSA and its national member federations. Furthermore, the
competitors collectively awarded an estimated $230,000-$270,000 in prizes,
approximately 30% of that collected by IFSA's athletes. Finally, eliminating
overlap, the competing organizers had an estimated 55-70 athletes participating
in their events, approximately 17% of IFSA's and its member federations' total,
with the top athlete affiliated with competitors taking home and estimated
$50,000-$60,000, or approximately 30% of the monies earned by IFSA's top
athlete.
We intend to establish ourselves as the premium product in strongman
sports and entertainment, and to develop our offering so that it is viewed as
superior to the other organizers of strongman events and at par with leading
international sports and entertainment titles in more established sports.
18
Intellectual Property
We have registered our corporate logo as a trade mark on October 21, 2004,
in the United Kingdom and have since filed for registration in Canada, the
United States and the European Union using the registration in the United
Kingdom as the priority date.
Government Regulation
We are subject to various government regulations including environmental,
employment, privacy and safety regulations. The cost of compliance with these
various regulations is not material; however, there are no assurances that
additional legislation or changes in the regulatory environment will not limit
our activities in the future or increase the cost of compliance.
FACILITIES
Our principal executive offices are located at 28-32 Wellington Road,
London NW8 9SP, United Kingdom. This office consists of approximately 270 square
feet which are rented on a monthly basis for $4,300.
In addition to the foregoing, we have a regional office located at 105
Robinson Street, Unit #3, Oakville, ON L6J 1G1. This office consists of
approximately 300 square feet which are rented on a monthly basis for $2,250.
We believe that current facilities are adequate for our current and
immediately foreseeable operating needs. We do not have any policies regarding
investments in real estate, securities or other forms of property.
EMPLOYEES
As of February 10, 2006 we had five full-time employees and 3 consultants
providing services; however, during the main competition season we will hire
approximately 30 additional temporary employees. We have not experienced any
work stoppages and we consider relations with our employees to be good.
LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal
proceedings, which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other
matters may arise from time to time that may harm our business. We are currently
not aware of any such legal proceedings or claims that we believe will have,
individually or in the aggregate, a material adverse affect on our business,
financial condition or operating results.
MANAGEMENT
Executive Officers and Directors
Below are the names and certain information regarding our executive
officers and directors:
- -----------------------------------------------------------------------------------------------------
Name Age Position
- -----------------------------------------------------------------------------------------------------
Stephen Townley 52 Chairman of the Board
- -----------------------------------------------------------------------------------------------------
Jussi Laurimaa 38 Chief Executive Officer and Director
- -----------------------------------------------------------------------------------------------------
Christian Fennell 45 Chief Operating Officer, President and Director
- -----------------------------------------------------------------------------------------------------
Jaime Alvarez 30 Chief Financial Officer and Director
- -----------------------------------------------------------------------------------------------------
Douglas Edmunds 61 Chairman of the World Governing Body's Board and
Director
- -----------------------------------------------------------------------------------------------------
Officers are elected annually by the Board of Directors (subject to the
terms of any employment agreement), at its annual meeting, to hold such office
until an officer's successor has been duly appointed and qualified, unless an
officer sooner dies, resigns or is removed by the Board.
19
Background of Executive Officers and Directors
Stephen Townley, Chairman of the Board. Mr. Townley was appointed as our
Chairman of the Board on December 9, 2005. From 1983 to August 2001 Mr. Townley
was the founding and senior partner at the law firm of Townleys. In August t 6 0
2001 Townleys merged into the law firm of Hammond Suddards Edge and Mr. Townley
was a consultant to that firm until his agreement expired in July 2004. Mr.
Townley graduated from University College London in 1975 with a LLM Degreee. Mr.
Townley currently serves on the board of directors of Active Rights Management
Limited, International Motor Sports Association, Sport Services Group Limited,
Sports Lawyers Association, World Sport Football Pty, Projector NetResult and
various other organizations and entities.
Jussi Laurimaa, Chief Executive Officer and Director. Mr. Laurimaa was
appointed as our Chief Executive Officer on December 9, 2005 and as a member of
the Board of Directors on December 23, 2005. Prior to joining us, Mr. Laurimaa
was the chief executive officer of IFSA Strongman Ltd. from June 2004 through
December 2005. In addition, Mr. Laurimaa is currently, and has been since March
2002 a general partner of InvestGroup Ventures, London (UK), a venture capital
firm. From January 1999 until March 2002 Mr. Laurimaa was the managing partner
of Enba, Dublin in Ireland. Mr. Laurimaa graduated from London Business School
in 1996 with a Masters in Finance (with distinction) and in 1991 from the
Helsinki University of Technology with a M.Sc. in Engineering Physics (with
distinction) and from University of Helsinki Faculty of Medicine with a
B.Medicine. Mr. Laurimaa currently serves on the board of directors of
Independent Risk Monitoring Ltd., a corporation in the United Kingdom.
Christian Fennell, Chief Operating Officer, President and Director. Mr.
Fennell was appointed as our Chief Operating Officer and President on December
9, 2005 and as a member of the Board of Directors on December 23, 2005. Prior to
joining us, Mr. Fennell was the Chief Operating Officer and President of IFSA
Strongman Ltd. from September 2005 through December 2005, from May 2005 to
September 2005 Mr. Fennell was the Commercial Director at IFSA and from January
2005 to May 2005 Mr. Fennell was the head of television at IFSA. From October
1999 to January 2005 Mr. Fennell worked for Wyndham Studios Entertainment Inc.
in connection with sporting event management and television production. Mr.
Fennell graduated from Queens University in Kingston, Ontario in 1983 with a
Hon. B.A. in Political Science. Mr. Fennell currently serves on the board of
directors of Wyndham Studios Entertainment Inc.
Jaime Alvarez, Chief Financial Officer and Director. Mr. Alvarez was
appointed as our Chief Financial Officer on December 9, 2005 and as a member of
the Board of Directors on December 23, 2005. Prior to joining us, Mr. Alvarez
was the chief financial officer of IFSA Strongman Ltd. from August 2004 through
December 2005. Mr. Alvarez also served as the chief operating officer of IFSA
Strongman Ltd. from December 2004 through August 2005. In addition, Mr. Alvarez
is currently, and has been since August 2002 an associate partner of InvestGroup
Ventures, London (UK), a venture capital firm. From July 2003 until August 2004
Mr. Alvarez was an associate banker at European Bank of Reconstruction and
Development (London). From June 2002 until September 2002 Mr. Alvarez was an
advisor to the vice president of Pepsi Beverages International in Shanghai. From
July 1999 until August 2001 Mr. Alvarez was a business analyst at McKinsey & Co.
in Madrid. Mr. Alvarez graduated from Harvard Business School in 2003 with an
M.B.A., from U. Pontificia Comillas, Icade in Madrid, Spain in 1999 with an
advanced degree in Business and Economy and in 1998 with a Law degree and from
Uned (Open University) with a degree in Industrial Engineering.
Douglas Edmunds, Chairman of the World Governing Body's Board and
Director. Mr. Edmunds was appointed as Chairman of the World Governing Body on
June 12, 2004 and as a member of our Board of Directors on December 23, 2005.
Prior to joining us, Mr. Edmunds was a director of IFSA Projects in Glasgow,
Scotland from 1999 to June 2004. In addition, Mr. Edmunds worked at Drakemire
Dairy Ltd. from 1982 to April 2000 and retired as the managing director of milk
processing. Mr. Edmunds graduated from the University of Strathclyde in 1969
with a Phd, from Glasgow University in 1966 with a BSc from St. Josephs College
in 1962.
Board of Directors
Our Directors are elected by the vote of a majority in interest of the
holders of our voting stock and hold office until the expiration of the term for
which he or she was elected and until a successor has been elected and
qualified.
A majority of the authorized number of directors constitutes a quorum of
the Board for the transaction of business. At least three-quarters of the
directors must be present at the meeting to constitute a quorum. However, any
action required or permitted to be taken by the Board may be taken without a
meeting if all members of the Board individually or collectively consent in
writing to the action.
20
Directors may receive compensation for their services and reimbursement
for their expenses as shall be determined from time to time by resolution of the
Board. Our non-executive directors currently do not receive compensation for
their participation at Board meetings and committees of the Board.
Executive Compensation
The following table sets forth all compensation paid in respect of our
Chief Executive Officer and those individuals who received compensation in
excess of $100,000 per year (collectively, the "Named Executive Officers") for
our last three completed fiscal years.
SUMMARY COMPENSATION TABLE
Annual Compensation
---------------------------------------------------
Other
Name and Annual
Principal Position Year Salary ($) Bonus ($) Compensation ($)
----------------------------------------------------------------------------------------
Jussi Laurimaa 2005 $76,720 -0- -0-
Chief Executive
Officer
Clayton Barlow 2005 $51,826 -0- -0-
Former Chief Executive 2004 $58,910 $6,087 -0-
Officer 2003 $42,000 $6,516 -0-
There are no current employment agreements between any individuals and the
Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 2004, IFSA entered into an agreement with Wyndham Studios
Entertainment, Inc., a Canadian company, and Christian Fennell (the "Wyndham
Agreement"). The Wyndham Agreement provides for IFSA acquiring from Wyndham
Studios Entertainment the All-Strength brand and television property, related
sponsorship agreements, and all other assets of Wyndham Studios Entertainment
that in any way relate to strongman. Christian Fennell was a director of Wyndham
Studios Entertainment, and as part of the Wyndham Agreement, he joined IFSA as a
full-time employee.
Part of the acquisition consideration under the Wyndham Agreement is an
earn-out payable to Mr Fennell. Under the earn-out, Mr Fennell is entitled to a
percentage of Reference Turnover, which is defined as the sum of IFSA's
North-American TV broadcasting and merchandising fees plus 50% of global
sponsorship revenues. The percentage of the Reference Turnover due to Mr Fennell
is 20% in 2005, 13% in 2006 and 5% in 2005. IFSA estimates the total payments
under this earnout over the three years to be approximately $100,000 - $250,000.
Clayton Barlow, our former Chief Executive Officer and Director, was
issued 175,000 shares of our common stock in accordance with our stock incentive
plan in 2005. Mr. Barlow holds a total of 186,228 shares of our common stock.
Chene Gardner, our former Chief Financial Officer and Director, was issued
600,000 shares of our common stock in accordance with our stock incentive plan
in 2005. Mr. Gardner holds a total of 761,089 shares of our common stock.
Kenneth Denos, our former Director, was issued 650,000 shares of our
common stock in accordance with our stock incentive plan in 2005. Mr. Denos
holds a total of 658,893 shares of our common stock.
21
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of February 10,
2006 with respect to the beneficial ownership of the outstanding common stock by
(i) any holder of more than five (5%) percent; (ii) each of our executive
officers and directors; and (iii) our directors and executive officers as a
group. Except as otherwise indicated, each of the stockholders listed below has
sole voting and investment power over the shares beneficially owned.
- -------------------------------------------------------------------------------------------------------------
Name of Beneficial Owner (1) Number of Shares Percentage of Shares
Beneficially Owned Prior Beneficially Owned Prior
to Offering to Offering
- -------------------------------------------------------------------------------------------------------------
Stephen Townley 0 *
- -------------------------------------------------------------------------------------------------------------
Jussi Laurimaa (3) 8,865,884 30.85%
- -------------------------------------------------------------------------------------------------------------
Christian Fennell 489,892 1.70%
- -------------------------------------------------------------------------------------------------------------
Jaime Alvarez 220,684 *
- -------------------------------------------------------------------------------------------------------------
Douglas Edmunds 1,299,210 4.52%
- -------------------------------------------------------------------------------------------------------------
Jamie Reeves 1,557,214 5.42%
- -------------------------------------------------------------------------------------------------------------
Invest Group Sports Management (4) 8,023,298 27.92%
- -------------------------------------------------------------------------------------------------------------
All officers and directors as a group (5 persons) 12,232,884 42.57%
- -------------------------------------------------------------------------------------------------------------
* Less than 1%.
(1) Except as otherwise indicated, the address of each beneficial owner
is c/o IFSA Strongman, Inc. 28-32 Wellington Road, London NW8 9SP,
United Kingdom.
(2) Applicable percentage ownership is based on 28,737,500 shares of
common stock outstanding as of February 10, 2006, together with
securities exercisable or convertible into shares of common stock
within 60 days of February 10, 2006 for each stockholder. Beneficial
ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock
that are currently exercisable or exercisable within 60 days of
February 10, 2006 are deemed to be beneficially owned by the person
holding such securities for the purpose of computing the percentage
of ownership of such person, but are not treated as outstanding for
the purpose of computing the percentage ownership of any other
person. (3) Of the shares beneficially owned by Jussi Laurimaa,
8,023,297 shares are owned by InvestGroup Sports Management, a
company controlled, but not owned, by Mr. Laurimaa.
(4) Jussi Laurimaa is a director of InvestGroup Sports Management and
has the voting and dispositive rights over the shares held by it.
o No Director, executive officer, affiliate or any owner of
record or beneficial owner of more than 5% of any class of
voting securities of the Company is a party adverse to the
Company or has a material interest adverse to the Company.
DESCRIPTION OF SECURITIES TO BE REGISTERED
COMMON STOCK
Our authorized capital stock consists of 100,000,000 shares of common
stock at a par value of $0.001 per share and 10,000,000 shares of preferred
stock at a par value of $0.001 per share. As of February 10, 2006, there were
28,737,500 shares of our common stock issued and outstanding that are held by
approximately 292 stockholders of record and 50,000 shares of our preferred
stock issued and outstanding that are held by approximately one stockholder of
record.
Holders of our common stock are entitled to one vote for each share on
all matters submitted to a stockholder vote. Holders of common stock do not have
cumulative voting rights. Therefore, holders of a majority of the shares of
common stock voting for the election of directors can elect all of the
directors. Holders of our common stock representing a majority of the voting
power of our capital stock issued, outstanding and entitled to vote, represented
in person or by proxy, are necessary to constitute a quorum at any meeting of
stockholders. A vote by the holders of a majority of our outstanding shares is
required to effectuate certain fundamental corporate changes such as
liquidation, merger or an amendment to our articles of incorporation.
22
Holders of our common stock are entitled to share in all dividends that
the board of directors, in its discretion, declares from legally available
funds. In the event of a liquidation, dissolution or winding up, each
outstanding share entitles its holder to participate pro rata in all assets that
remain after payment of liabilities and after providing for each class of stock,
if any, having preference over the common stock. Our common stock has no
pre-emptive rights, no conversion rights and there are no redemption provisions
applicable to our common stock.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our bylaws provide for the indemnification of our directors to the fullest
extent permitted by the Delaware General Corporation Law. We are required to
advance, prior to the final disposition of any proceeding, promptly on request,
all expenses incurred by any director or executive officer in connection with
that proceeding on receipt of an undertaking by or on behalf of that director or
executive officer to repay those amounts if it should be determined ultimately
that he or she is not entitled to be indemnified under our bylaws or otherwise.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
PLAN OF DISTRIBUTION
The selling stockholders and any of their respective pledgees, donees,
assignees and other successors-in-interest may, from time to time, sell any or
all of their shares of common stock on any stock exchange, market or trading
facility on which the shares are traded or in private transactions. These sales
may be at fixed or negotiated prices. The selling stockholders may use any one
or more of the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits the purchaser;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately-negotiated transactions;
o short sales that are not violations of the laws and regulations of
any state or the United States;
o broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
o through the writing of options on the shares;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. The selling
stockholders shall have the sole and absolute discretion not to accept any
purchase offer or make any sale of shares if they deem the purchase price to be
unsatisfactory at any particular time.
The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades.
The selling stockholders or their respective pledgees, donees, transferees
or other successors in interest, may also sell the shares directly to market
makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. Such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the selling stockholders
and/or the purchasers of shares for whom such broker-dealers may act as agents
or to whom they sell as principal or both, which compensation as to a particular
broker-dealer might be in excess of customary commissions. Market makers and
block purchasers purchasing the shares will do so for their own account and at
their own risk. It is possible that a selling stockholder will attempt to sell
shares of common stock in block transactions to market makers or other
purchasers at a price per share which may be below the then market price. The
selling stockholders cannot assure that all or any of the shares offered in this
prospectus will be issued to, or sold by, the selling stockholders. The selling
stockholders and any brokers, dealers or agents, upon effecting the sale of any
of the shares offered in this prospectus, may be deemed to be "underwriters" as
that term is defined under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, or the rules and regulations under
such acts. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
23
We are required to pay all fees and expenses incident to the registration
of the shares, including fees and disbursements of counsel to the selling
stockholders, but excluding brokerage commissions or underwriter discounts.
The selling stockholders, alternatively, may sell all or any part of the
shares offered in this prospectus through an underwriter. No selling stockholder
has entered into any agreement with a prospective underwriter and there is no
assurance that any such agreement will be entered into.
The selling stockholders may pledge their shares to their brokers under
the margin provisions of customer agreements. If a selling stockholder defaults
on a margin loan, the broker may, from time to time, offer and sell the pledged
shares. The selling stockholders and any other persons participating in the sale
or distribution of the shares will be subject to applicable provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations under
such act, including, without limitation, Regulation M. These provisions may
restrict certain activities of, and limit the timing of purchases and sales of
any of the shares by, the selling stockholders or any other such person. In the
event that the selling stockholders are deemed affiliated purchasers or
distribution participants within the meaning of Regulation M, then the selling
stockholders will not be permitted to engage in short sales of common stock.
Furthermore, under Regulation M, persons engaged in a distribution of securities
are prohibited from simultaneously engaging in market making and certain other
activities with respect to such securities for a specified period of time prior
to the commencement of such distributions, subject to specified exceptions or
exemptions. In regards to short sells, the selling stockholder can only cover
its short position with the securities they receive from us upon conversion. In
addition, if such short sale is deemed to be a stabilizing activity, then the
selling stockholder will not be permitted to engage in a short sale of our
common stock. All of these limitations may affect the marketability of the
shares.
We have agreed to indemnify the selling stockholders, or their transferees
or assignees, against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the selling
stockholders or their respective pledgees, donees, transferees or other
successors in interest, may be required to make in respect of such liabilities.
If the selling stockholders notify us that they have a material
arrangement with a broker-dealer for the resale of the common stock, then we
would be required to amend the registration statement of which this prospectus
is a part, and file a prospectus supplement to describe the agreements between
the selling stockholders and the broker-dealer.
PENNY STOCK
The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for the purposes relevant to us,
as any equity security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require:
o that a broker or dealer approve a person's account for transactions
in penny stocks; and
o the broker or dealer receive from the investor a written agreement
to the transaction, setting forth the identity and quantity of the
penny stock to be purchased.
24
In order to approve a person's account for transactions in penny stocks,
the broker or dealer must
o obtain financial information and investment experience objectives of
the person; and
o make a reasonable determination that the transactions in penny
stocks are suitable for that person and the person has sufficient
knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a
penny stock, a disclosure schedule prescribed by the Commission relating to the
penny stock market, which, in highlight form:
o sets forth the basis on which the broker or dealer made the
suitability determination; and
o that the broker or dealer received a signed, written agreement from
the investor prior to the transaction.
Disclosure also has to be made about the risks of investing in penny
stocks in both public offerings and in secondary trading and about the
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.
SELLING STOCKHOLDERS
The following table sets forth the common stock ownership of the selling
stockholders as of February 10, 2006. The selling stockholders acquired their
securities through the Share Exchange Agreement which closed on December 9,
2005.
Number of Percentage of
Number of Shares Owned Common Stock
Shares Owned Number of After Owned After
Before Shares Offered Completion of Completion of
Name Offering for Sale Offering (1) Offering (2)
- ----------------------------------------------- ------------- -------------- ------------- -------------
Asset Investment Partners Ltd. (3) 1,425,000 1,425,000 0 *
Aswel Advisors Ltd. (4) 1,425,000 1,425,000 0 *
Waleed Moumina 1,250,000 1,250,000 0 *
Amna Mesbah Dajani 1,287,500 1,287,500 0 *
Giovanni Bonaccorso 125,000 125,000 0 *
John Thomas 50,000 50,000 0 *
George Denos 125,000 125,000 0 *
Josh Butcher 37,500 37,500 0 *
Chene Gardner 37,500 37,500 0 *
* Less than 1%.
(1) Assumes that all securities registered will be sold.
(2) Applicable percentage ownership is based on 28,737,500 shares of
common stock outstanding as of February 10, 2006, together with
securities exercisable or convertible into shares of common stock
within 60 days of February 10, 2006for each stockholder. Beneficial
ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock
that are currently exercisable or exercisable within 60 days of
February 10, 2006are deemed to be beneficially owned by the person
holding such securities for the purpose of computing the percentage
of ownership of such person, but are not treated as outstanding for
the purpose of computing the percentage ownership of any other
person.
(3) Raed Bairakgdar has the voting and dispositive rights over the
shares held by Asset Investment Partners Ltd.
25
(4) Loey Tarabzonoy has the voting and dispositive rights over the
shares held by Aswel Advisors Ltd.
LEGAL MATTERS
Sichenzia Ross Friedman Ference LLP, New York, New York will issue an
opinion with respect to the validity of the shares of common stock being offered
hereby.
EXPERTS
Our financial statements as of December 31, 2004 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years ended December 31, 2004 and 2003, appearing in this prospectus and
registration statement have been audited by Bouwhuis, Morrill & Company, LLC,
independent registered public accountants, as set forth on their report thereon
appearing elsewhere in this prospectus, and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
AVAILABLE INFORMATION
We have filed with the SEC a registration statement on Form SB-2 to
register the securities offered by this prospectus. For future information about
us and the securities offered under this prospectus, you may refer to the
registration statement and to the exhibits filed as a part of the registration
statement.
In addition, after the effective date of this prospectus, we will be
required to file annual, quarterly, and current reports, or other information
with the SEC as provided by the Securities Exchange Act. You may read and copy
any reports, statements or other information we file at the SEC's public
reference facility maintained by the SEC at 100 F Street, N.E., Washington, D.C.
20549. You can request copies of these documents, upon payment of a duplicating
fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference room. Our SEC filings are
also available to the public through the SEC Internet site at http\\www.sec.gov.
26
IFSA STRONGMAN, INC.
INDEX TO FINANCIAL STATEMENTS
Financial Statements for the Years Ended December 31, 2004
Report of Independent Registered Public Accounting Firm.................. F-2
Balance Sheet............................................................ F-3
Statements of Operations................................................. F-4
Statements of Stockholders' Equity....................................... F-5
Statements of Cash Flows................................................. F-6
Notes to the Financial Statements........................................ F-7
Financial Statements for the Period Ended September 30, 2005
Condensed Balance Sheets................................................. F-8
Condensed Statements of Operations....................................... F-9
Condensed Statements of Stockholders' Equity.............................F-10
Condensed Statements of Cash Flows.......................................F-11
Notes to the Condensed Financial Statements..............................F-12
1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Synerteck Incorporated
Draper, Utah
We have audited the accompanying balance sheet of Synerteck Incorporated as of
December 31, 2004 and the related statements of operations, stockholders' equity
and cash flows for the years ended December 31, 2004 and 2003. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with the standards of 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. The Company has
determined that it is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Synerteck Incorporated as of
December 31, 2004 and 2003 and the results of its operations and its cash flows
for the years ended December 31, 2004 and 2003 in conformity with accounting
principles generally accepted in the United States of America.
As discussed in Note 11, the accompanying 2004 financial statements have been
restated.
Bouwhuis, Morrill & Company, LLC
Layton, Utah
March 17, 2005
2
IFSA STRONGMAN, INC.
(Formerly Synerteck Incorporated)
Balance Sheet
(as restated)
ASSETS
December 31,
2004
------------
CURRENT ASSETS
Cash and cash equivalents $ 36,376
Accounts receivable, net (Note 2) 16,769
------------
Total Current Assets 53,145
------------
PROPERTY AND EQUIPMENT, NET (Note 2) 20,008
------------
TOTAL ASSETS $ 73,153
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 7,885
Accrued expenses 10,157
------------
Total Current Liabilities 18,042
------------
LONG TERM LIABILITIES
Notes payable 15,000
Notes payable - related parties 35,000
------------
Total Long Term Liabilities 50,000
------------
TOTAL LIABILITIES 68,042
------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 10,000,000 shares
authorized, -0- shares issued and outstanding --
Common stock, $0.001 par value; 100,000,000 shares
authorized, 500,000 shares issued and outstanding 500
Additional paid-in capital 59,810
Accumulated deficit (55,199)
------------
Total Stockholders' Equity 5,111
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 73,153
============
The accompanying notes are an integral part of these financial statements.
3
IFSA STRONGMAN, INC.
(Formerly Synerteck Incorporated)
Statements of Operations
For the Years Ended December 31,
2004 2003
------------ ------------
(as restated)
NET REVENUES
Product revenue $ 31,984 $ 29,228
Service revenue 72,346 19,872
Product and service revenue - related parties 102,750 74,706
------------ ------------
Total Net Revenues 207,080 123,806
------------ ------------
OPERATING EXPENSES
Cost of sales-product 7,973 6,098
Cost of sales-service 14,753 8,816
Cost of sales-related parties 19,105 15,000
General and administrative 157,073 35,473
Selling and marketing 48,321 25,086
Research and development 20,132 10,314
------------ ------------
Total Operating Expenses 267,357 100,787
------------ ------------
INCOME (LOSS) FROM OPERATIONS (60,277) 23,019
------------ ------------
OTHER INCOME (EXPENSES)
Interest expense (3,722) --
Other income -- 50
Interest income 228 83
------------ ------------
Total Other Income (Expenses) (3,494) 133
------------ ------------
NET INCOME (LOSS) BEFORE INCOME TAXES (63,771) 23,152
PROVISION FOR INCOME TAXES (Note 8) -- (5,524)
------------ ------------
NET INCOME (LOSS) $ (63,771) $ 17,628
============ ============
BASIC NET INCOME (LOSS) PER SHARE $ (0.13) $ 0.04
============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 500,000 500,000
============ ============
The accompanying notes are an integral part of these financial statements.
4
IFSA STRONGMAN, INC.
(Formerly Synerteck Incorporated)
Statements of Stockholders' Equity
(as restated)
Common Stock
--------------------------- Additional
Paid-in Accumulated
Shares Amount Capital(Deficit) Deficit
------------ ------------ ------------ ------------
Balance, December 31, 2002 500,000 $ 500 $ (500) $ (9,056)
Net income for the year ended
December 31, 2003 -- -- -- 17,628
------------ ------------ ------------ ------------
Balance, December 31, 2003 500,000 500 (500) 8,572
Gain on forgiveness of related party debt (Note 10) -- -- 60,310 --
------------ ------------ ------------ ------------
Net loss for the year ended
December 31, 2004 -- -- -- (63,771)
------------ ------------ ------------ ------------
Balance, December 31, 2004 500,000 $ 500 $ 59,810 $ (55,199)
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
5
IFSA STRONGMAN, INC.
(Formerly Synerteck Incorporated)
Statements of Cash Flows
For the Years Ended December 31,
2004 2003
------------ ------------
(as restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (63,771) $ 17,628
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation expense 4,509 503
Bad debts expense 80,707 7,047
Changes in operating assets and liabilities:
Accounts receivable (16,436) (3,454)
Due to/from related parties (8,718) (20,576)
Accounts payable (4,813) 8,399
Accrued expenses 8,356 (824)
------------ ------------
Net Cash Provided (Used) by Operating Activities (166) 8,723
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (21,398) (3,622)
------------ ------------
Net Cash Used in Investing Activities (21,398) (3,622)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 15,000 --
Proceeds from notes payable - related parties 48,000 --
Payments on notes payable - related parties (13,000) --
------------ ------------
Net Cash Provided by Financing Activities 50,000 $ --
------------ ------------
NET INCREASE IN CASH & CASH EQUIVALENTS 28,436 $ 5,101
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 7,940 2,839
------------ ------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 36,376 $ 7,940
============ ============
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest $ -- $ --
Cash paid for income taxes $ -- $ --
The accompanying notes are an integral part of these financial statements.
6
IFSA STRONGMAN, INC.
(Formerly Synerteck Incorporated)
Notes to the Financial Statements
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
IFSA Strongman, Inc. (formerly Synerteck Incorporated) (the Company)
was incorporated under the laws of the State of Delaware on March
30, 2004 with authorized common stock of 100,000,000 shares and
authorized preferred stock of 10,000,000 shares. Both classes of
stock have a par value of $0.001 per share. The Company was
originally formed as Synerteck Incorporated under the laws of the
State of Utah on March 2, 2001 prior to its reincorporation into
Delaware.
A wholly owned subsidiary of SportsNuts, Inc. until November 15,
2004, the Company was created to be a technology partner with
SportsNuts, Inc. for a variety of organizations, both sports and
non-sports related, that require information technology services.
These services include website hosting, website design and
maintenance, computer hardware leasing, hardware and software
programming and configuration, wide area network and local area
network configuration, and other related services.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of the Company is
presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations
of the Company's management who are responsible for their integrity
and objectivity. These accounting policies conform to accounting
principles generally accepted in the United States of America and
have been consistently applied in the preparation of the financial
statements. The following policies are considered to be significant:
a. Accounting Method
The Company recognizes income and expenses based on the accrual
method of accounting. The Company has elected a calendar year-end.
b. Cash and Cash Equivalents
Cash equivalents are generally comprised of certain highly liquid
investments with original maturities of less than three months.
c. Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
d. Basic Net Loss per Share of Common Stock
In accordance with Financial Accounting Standards No. 128, "Earnings
per Share," basic net loss per common share is based on the weighted
average number of shares outstanding during the periods presented.
Diluted earnings per share is computed using the weighted average
number of common shares plus dilutive common share equivalents
outstanding during the period. There are no common stock equivalents
as of December 31, 2004 and 2003.
1
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Allowance for Doubtful Accounts
Accounts receivable are recorded net of the allowance for doubtful
accounts. The Company generally offers 30-day credit terms on sales
to its customers and requires no collateral. The Company maintains
an allowance for doubtful accounts which is determined based on a
number of factors, including each customer's financial condition,
general economic trends and management judgement. As of December 31,
2004, the allowance for doubtful accounts was $7,428.
f. Property and Equipment
Property and equipment are stated at cost less accumulated
depreciation. Depreciation is calculated using the straight-line
method over the estimated useful lives of the assets. When assets
are disposed of, the cost and accumulated depreciation (net book
value of the assets) are eliminated and any resultant gain or loss
reflected accordingly. Betterments and improvements are capitalized
over their estimated useful lives whereas repairs and maintenance
expenditures on the assets are charged to expense as incurred.
Life 2004 2003
--------- ------------------ ------------------
Computer Equipment 3 Years $ 14,718 $ 3,622
Furniture and Fixtures 5 Years 10,302 --
Less - Accumulated Depreciation (5,012) (503)
------------------ ------------------
Net Property and Equipment $ 20,008 $ 3,119
================== ==================
Depreciation expense for the years ended December 31, 2004 and 2003
was $4,509 and $503, respectively.
g. Revenue Recognition
Products and services provided by the Company are broken down into
two categories for revenue recognition purposes, they are: services,
and off-the-shelf hardware/software sales. The revenue recognition
policy for these categories is as follows:
Revenue is recognized upon completion of services or delivery of
goods where the sales price is fixed or determinable and
collectibility is reasonably assured. Revenue is not recognized
until persuasive evidence of an arrangement exists. Advance customer
payments are recorded as deferred revenue until such time as they
are recognized. Product sales were solely derived from the resale of
off-the-shelf hardware and software packages. Product sales are not
warranted by the Company and may be subject only to warranties that
may be provided by the product manufacturer.
h. Recent Accounting Pronouncements
In April 2002, the Financial Accounting Standards Board issued
Statement No. 145 ("SFAS 145"), "Rescission of FASB Statements Nos.
4, 44, and 64 and Amendment of FASB Statement No. 13." SFAS 145
addresses the presentation for losses on early retirements of debt
in the statement of operations. The Company has adopted SFAS 145 and
will not present losses on early retirements of debt as an
extraordinary item.
2
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
h. Recent Accounting Pronouncements (Continued)
In June 2002, the Financial Accounting Standards Board issued
Statement No. 146 ("SFAS 146"), "Accounting for Costs Associated
with Exit or Disposal Activities." The provisions of SFAS 146 become
effective for exit or disposal activities commenced subsequent to
December 31, 2002. The adoption of SFAS 146 had no impact on the
Company's financial position, results of operations or cash flows.
In November 2002, the Financial Accounting Standards Board issued
FASB Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and t
12 12 Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." This interpretation
elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under
certain guarantees that it has issued. It also clarifies (for
guarantees issued after January 1, 2003) that a guarantor is
required to recognize, at the inception of a guarantee, a liability
for the fair value of the obligations undertaken in issuing the
guarantee. At December 31, 2004, the Company does not have any
outstanding guarantees and accordingly does not expect the adoption
of FIN 45 to have any impact on its financial position, results of
operations or cash flows.
i. Income Taxes
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards Board (SRAS) No. 109, "Accounting
for Income Taxes." Under this method, deferred income taxes are
determined based on the difference between the financial statement
and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which differences are expected to reverse. In
accordance with the provisions of SFAS No. 109, a valuation
allowance would be established to reduce deferred tax assets if it
were more likely than not that all or some portion, of such deferred
tax assets would not be realized. A full allowance against deferred
tax assets was provided as of December 31, 2004.
At December 31, 2004, the Company had net operating loss
carryforwards of approximately $84,000 which may be offset against
future taxable income through 2024. No tax benefit has been reported
in the financial statements because the potential tax benefits of
the net operating loss carryforwards are offset by a valuation
allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of
1986, net operating loss carryforwards for Federal income tax
reporting purposes are subject to annual limitations. Should a
change in ownership occur, net operating loss carryforwards may be
limited as to future use.
j. Reclassifications
Certain amounts in the accompanying financial statements have been
reclassified to conform to the current year presentation. These
reclassifications had no material effect on our financial
statements.
3
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company was a wholly owned subsidiary of SportsNuts, Inc. until
November 15, 2004. During the ordinary course of business there may
have been amounts due to or from any of the companies in the then
consolidated entity. These amounts are classified as either net
receivables or net payables - related parties. The Company records
all expenses related to their operations in their financial
statements, therefore, there are no adjustments which would be
required to present the Company's financial statements as if it had
operated as an unaffiliated entity for the entire year.
Service Agreements
On March 1, 2002, the Company entered into an oral agreement to
provide IT related services to a company affiliated by common
management and shareholders. These services include network
engineering, architecture and design, website and e-mail hosting,
network hosting and website design. The fee for these services
varies depending on the level of service but ranges between $4,000
and $7,000 per month. Additional project based fees may be
negotiated.
Effective April 1, 2004, the Company entered into a service
agreement with SportsNuts, Inc., to provide various services
including network and server maintenance and support, user support
and website maintenance. In exchange for these services SportsNuts,
Inc. will pay to the Company a non-refundable fee of $2,000 per
month. No minimum or specific performance is required by the terms
of this agreement.
Management Services Agreement
Effective April 1, 2004, the Company entered into a management
services agreement with SportsNuts, Inc., to receive various
services including use of information technologies, accounting and
bookkeeping services, and limited legal, business development and
administrative services for a non-refundable fee of $750 per month.
No minimum or specific performance is required by the terms of this
agreement.
Office Space
The Company is subject to a month-to-month rental agreement for its
office space with SportsNuts, Inc. Currently, the rental fee is
$1,000 per month and is subject to increase as more space is needed
or due to economic factors. During the years ended December 31, 2004
and 2003 the Company paid SportsNuts, Inc. $12,000 for office space.
The terms of this agreement are similar to those of other,
unrelated, companies renting office space from SportsNuts, Inc.
4
NOTE 4 - NOTES PAYABLE
Notes payable consisted of the following:
December 31,
2004
------------
Note payable to a company, interest at 8% per
annum, due in full on March 1, 2007, unsecured $ 10,000
Note payable to a company, interest at 8% per
annum, due in full on March 1, 2007, unsecured 5,000
------------
Total Notes Payable 15,000
Less: Current Portion --
------------
Long-Term Notes Payable $ 15,000
============
Future minimum payments consist of the following at December 31:
2005 $ --
2006 --
2007 15,000
2008 and thereafter --
------------
Total $ 15,000
============
NOTE 5 - NOTES PAYABLE - RELATED PARTIES
Notes payable - related parties consisted of the following:
December 31,
2004
------------
Note payable to a related individual, interest at 8%
per annum, due in full on March 1, 2007, unsecured $ 10,000
Note payable to a related individual, interest at 8%
per annum, due in full on March 1, 2007, unsecured 10,000
Note payable to a related individual, interest at 8%
per annum, due in full on March 1, 2007, unsecured 5,000
Note payable to a related individual, interest at 8%
per annum, due in full on March 1, 2007, unsecured 5,000
Note payable to a related individual, interest at 8%
per annum, due in full on March 1, 2007, unsecured 5,000
------------
Total Notes Payable - Related Parties 35,000
Less: Current Portion --
------------
Long-Term Notes Payable - Related Parties $ 35,000
============
5
Note 5 - NOTES PAYABLE - RELATED PARTIES (Continued)
Future minimum payments consist of the following at December 31,:
2005 $ --
2006 --
2007 35,000
2008 and thereafter --
----------
Total $ 35,000
==========
NOTE 6 - EQUITY TRANSACTIONS
100,000 common shares of Synerteck (Utah) were issued to the
incorporator upon incorporation. The shares were issued at no value.
500,000 common shares of Synerteck (Delaware) were issued on the
basis of 5-for-1 for all of the outstanding shares of Synerteck
(Utah) as part of the Company's reincorporation into the State of
Delaware. All references to shares issued and outstanding in the
financial statements have been retroactively restated to reflect the
effects of this change in capital structure.
On February 9, 2004, the Board of Directors approved the Company's
amended and restated Articles of Incorporation (Amendment). The
Amendment increases the authorized shares of common stock from
1,000,000 to 100,000,000 shares. The Amendment also provides for a
new class of stock. The new class of stock is preferred stock with
10,000,000 shares authorized. Both common and preferred stock have
no par value.
On November 15, 2004, the Company's then parent, SportsNuts, Inc.,
distributed all of their shares of Synerteck Incorporated to the
shareholders of SportsNuts, Inc. on a pro-rata basis by way of an
exchange and distribution of 100% of Synerteck's outstanding shares.
The total number of shares outstanding has not changed due to this
transaction which terminated the parent/subsidiary relationship.
NOTE 7 - FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107 (SFAS 107),
"Disclosures about Fair Value of Financial Instruments" requires
disclosure of the fair value of financial instruments held by the
Company. SFAS 107 defines the fair value of a financial instrument
as the amount at which the instrument could be exchanged in a
current transaction between willing parties. The following methods
and assumptions were used to estimate fair value:
The carrying amount of cash equivalents, accounts receivable,
accounts payable and notes payable approximate fair value due to
their short-term nature.
NOTE 8 - INCOME TAXES
The Company was a wholly-owned subsidiary of SportsNuts, Inc.
until November 15, 2004 and has been filing a consolidated tax
return. For the purposes of these financial statements income tax
expense has been calculated on the separate return basis as if the
Company were not a part of a consolidated entity.
The provision for income taxes as of December 31, 2004 and
2003 is detailed in the following summary:
6
NOTE 8 - INCOME TAXES (Continued)
December 31,
2004 2003
------------ ------------
Current:
Federal income taxes $ (12,534) $ 4,089
State income taxes (4,397) 1,435
Allowance for deferred tax benefit 16,931 --
------------ ------------
Income tax expense (benefit)
$ -- $ 5,524
============ ============
A reconciliation of income taxes at the state and federal
statutory rate to the effective tax rate is as follows:
December 31,
----------------------------
2004 2003
------------ ------------
Income taxes (benefit) computed at the state
and Federal statutory rates (5% and 15%, respectively) $ (12,754) $ 4,630
Decrease in allowance for bad debts (4,837) 1,109
State income taxes 660 (215)
Allowance for deferred tax benefit 16,931 --
------------ ------------
Income Tax Expense (benefit) $ -- $ 5,524
============ ============
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Major Customers
For the year ended December 31, 2004, two customers generated
revenues in excess of 10% of the Company's total revenues. Revenues
from these customers totaled $113,682 (a related party) and $22,868
(a related party) or 55% and 11%, respectively.
For the year ended December 31, 2003, one customer generated
revenues in excess of 10% of the Company's total revenues. Revenue
from this customer totaled $96,428 (a related party) or 78%.
Royalty Agreement
In connection with the notes payable entered into during 2004, the
Company entered into royalty agreements with the holders of the
notes. Pursuant to the terms of the embedded royalty agreements the
holders of the notes are entitled to a royalty of 2% of the
Company's gross revenues collected (cash basis). At December 31,
2004, the Company had accrued $2,245 relating to these royalties.
The royalty is to be divided on a pro rata basis among the note
holders.
7
NOTE 10 - GAIN ON FORGIVENESS OF RELATED PARTY DEBT
During 2004, a related party forgave debt of the Company in the
amount of $60,310. Due to this relationship the gain has been
reported as an increase in additional paid-in-capital rather than
through the statement of operations.
NOTE 11 - RESTATED FINANCIAL STATEMENTS
Subsequent to issuing the Company's financial statements for the
year ended December 31, 2004, the Company discovered certain errors
in the previously issued financial statements. These financial
statements have been restated to correct for these errors which are
as follows:
The allowance for doubtful accounts was previously overstated by
$6,835 which caused a reduction in the net accounts receivable
balance.
A previously reported related party receivable was deemed
uncollectible and written-off to bad debt expense which is included
in general and administrative expenses in the amount of $75,945.
The Company previously reported net income and included a provision
for income taxes which was included in accrued expenses in the
amount of $14,300. The Company is now reporting a loss so no such
provision is necessary.
The Company originally reported a gain on forgiveness of debt for a
related party which has been reclassified as an increase in
additional paid-in capital due to the relationship. The amount of
additional paid-in capital relating to this reclassification is
$60,310.
The impact of these adjustments on the Company's financial
statements as originally reported is as follows for the year ended
December 31:
As Previously As
2004 Reported Restated
---- ------------ ------------
Balance sheet:
Accounts receivable, net $ 9,934 $ 16,769
Receivables - related party 75,945 --
Accrued expenses 24,457 10,157
Additional paid-in capital (500) 59,810
Accumulated deficit 59,921 (55,199)
Statement of operations:
General and administrative $ 87,963 $ 157,073
Gain on forgiveness of debt 60,310 --
Net income (loss) 51,349 (63,771)
Basic net income (loss) per share $ 0.10 $ (0.13)
8
IFSA STRONGMAN, INC.
(Formerly Synerteck Incorporated)
Condensed Balance Sheets
ASSETS
September 30, December 31,
2005 2004
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 48,650 $ 36,376
Accounts receivable, net 13,240 16,769
------------ ------------
Other current assets 1,571 --
------------ ------------
Total Current Assets 63,461 53,145
------------ ------------
PROPERTY AND EQUIPMENT, NET 14,783 20,008
------------ ------------
TOTAL ASSETS $ 78,244 $ 73,153
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 28,476 $ 7,885
Accrued expenses 3,912 10,157
------------ ------------
Total Current Liabilities 32,388 18,042
------------ ------------
LONG TERM LIABILITIES
Notes payable -- 15,000
Notes payable - related parties -- 35,000
------------ ------------
Total Long Term Liabilities -- 50,000
------------ ------------
TOTAL LIABILITIES 32,388 68,042
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 10,000,000 shares
authorized, 50,000 and -0- shares issued and
outstanding, respectively 50 --
Common stock, $0.001 par value; 100,000,000 shares
authorized, 3,000,000 and 500,000 shares issued and
outstanding, respectively 3,000 500
Additional paid-in capital 181,231 59,810
Accumulated deficit (138,425) (55,199)
------------ ------------
Total Stockholders' Equity 45,856 5,111
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 78,244 $ 73,153
============ ============
The accompanying notes are an integral part of these condensed financial
statements.
9
IFSA STRONGMAN, INC.
(Formerly Synerteck Incorporated)
Condensed Statements of Operations
(Unaudited)
For the Three Months Ended
September 30,
----------------------------
2005 2004
------------ ------------
NET REVENUES
Product revenue $ -- $ 1,907
Service revenue 23,630 27,435
Product and service revenue - related parties 18,592 31,410
------------ ------------
Total Net Revenues 42,222 60,752
------------ ------------
OPERATING EXPENSES
Cost of sales-product -- 1,488
Cost of sales-service 1,864 1,364
Cost of sales-related parties 3,575 2,901
General and administrative 88,211 23,740
Selling and marketing 44,590 16,731
Research and development 3,024 7,037
------------ ------------
Total Operating Expenses 141,264 53,261
------------ ------------
INCOME (LOSS) FROM OPERATIONS (99,042) 7,491
------------ ------------
OTHER INCOME (EXPENSES)
Interest expense (39) (1,008)
Realized loss on marketable securities (5,158) --
Gain on forgiveness of debt 3,932 --
Interest income -- 80
------------ ------------
Total Other Expenses (1,266) (928)
------------ ------------
NET INCOME (LOSS) BEFORE INCOME TAXES (100,308) 6,563
PROVISION FOR INCOME TAXES -- (1,263)
------------ ------------
NET INCOME (LOSS) $ (100,308) $ 5,300
============ ============
BASIC NET INCOME (LOSS) PER SHARE $ (0.04) $ 0.01
============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 2,630,435 500,000
============ ============
The accompanying notes are an integral part of these condensed financial
statements.
10
IFSA STRONGMAN, INC.
(Formerly Synerteck Incorporated)
Condensed Statements of Operations
(Unaudited)
For the Nine Months Ended
September 30,
----------------------------
2005 2004
------------ ------------
NET REVENUES
Product revenue $ 7,024 $ 20,022
Service revenue 63,559 56,532
Product and service revenue - related parties 52,580 71,340
------------ ------------
Total Net Revenues 123,163 147,894
------------ ------------
OPERATING EXPENSES
Cost of sales-product 4,929 14,137
Cost of sales-service 12,642 11,442
Cost of sales-related parties 7,699 7,829
General and administrative 131,933 50,941
Selling and marketing 70,622 31,367
Research and development 5,822 13,138
------------ ------------
Total Operating Expenses 237,722 128,854
------------ ------------
INCOME (LOSS) FROM OPERATIONS (114,559) 19,040
------------ ------------
OTHER INCOME (EXPENSES)
Interest expense (1,836) (2,301)
Realized gain on marketable securities 29,238 --
Gain on forgiveness of debt 3,932 --
Interest income -- 214
------------ ------------
Total Other Income (Expenses) 31,333 (2,087)
------------ ------------
NET INCOME (LOSS) BEFORE INCOME TAXES (83,226) 16,953
PROVISION FOR INCOME TAXES -- (3,263)
------------ ------------
NET INCOME (LOSS) $ (83,226) $ 13,690
============ ============
BASIC NET INCOME PER SHARE $ (0.06) $ 0.03
============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 1,311,355 500,000
============ ============
The accompanying notes are an integral part of these condensed financial
statements.
11
IFSA STRONGMAN, INC.
(Formerly Synerteck Incorporated)
Condensed Statements of Stockholders' Equity
Preferred Stock Common Stock Additional
--------------------------- --------------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 2003 -- $ -- 500,000 $ 500 $ (500) $ 8,572
Gain on forgiveness of
related party debt -- -- -- -- 60,310 --
Net income for the year ended
December 31, 2004 -- -- -- -- -- (63,771)
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 2004 -- -- 500,000 500 59,810 (55,199)
Issuance of preferred stock
for cash (unaudited) 50,000 50 -- -- 24,950 --
Common stock issued for debt
payment (unaudited) -- -- 1,500,000 1,500 57,471 --
Common stock issued for
services (unaudited) -- -- 1,000,000 1,000 39,000 --
Net loss for the nine months
ended September 30, 2005
(unaudited) -- -- -- -- -- (83,226)
------------ ------------ ------------ ------------ ------------ ------------
Balance, September 30, 2005
(unaudited) 50,000 $ 50 3,000,000 $ 3,000 $ 181,231 $ (138,425)
============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of these condensed financial
statements.
12
IFSA STRONGMAN, INC.
(Formerly Synerteck Incorporated)
Condensed Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
September 30,
----------------------------
2005 2004
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (83,226) $ 13,690
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation 5,225 2,767
Stock issued for services 40,000 --
Realized gain on trading securities (29,238) --
Changes in operating assets and liabilities:
Accounts receivable 3,529 (14,195)
Trading securities 29,238 --
Due to/from related parties -- 263
Other current assets (1,571) (715)
Accounts payable 20,591 (1,667)
Accrued expenses 2,726 7,365
------------ ------------
Net Cash Provided (Used) by Operating Activities (12,726) 7,508
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property & equipment -- (21,397)
------------ ------------
Net Cash Used in Investing Activities -- (21,397)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock 25,000 --
Proceeds from issuance of notes payable -- 15,000
Proceeds from issuance of notes payable - related parties -- 35,000
------------ ------------
Net Cash Provided by Financing Activities 25,000 50,000
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 12,274 36,111
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 36,376 7,940
------------ ------------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 48,650 $ 44,051
============ ============
The accompanying notes are an integral part of these condensed financial
statements.
13
IFSA STRONGMAN, INC.
(Formerly Synerteck Incorporated)
Condensed Statements of Cash Flows (Continued)
(Unaudited)
For the Nine Months Ended
September 30,
---------------------------
2005 2004
------------ ------------
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest $ -- $ --
Income taxes $ -- $ --
Non-Cash Investing and Financing Activities:
Common stock issued to convert notes payable
and accrued interest and royalty fees $ 58,971 $ --
Common stock issued for services $ 40,000 $ --
The accompanying notes are an integral part of these condensed financial
statements.
14
IFSA STRONGMAN, INC.
(Formerly Synerteck Incorporated)
Notes to the Condensed Financial Statements
September 30, 2005 and December 31, 2004
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with U.S. generally accepted accounting principles have
been condensed or omitted in accordance with such rules and
regulations. The information furnished in the interim condensed
financial statements include normal recurring adjustments and
reflects all adjustments, which, in the opinion of management, are
necessary for a fair presentation of such financial statements.
Although management believes the disclosures and information
presented are adequate to make the information not misleading, it is
suggested that these interim condensed financial statements be read
in conjunction with the Company's audited financial statements and
notes thereto for the year ended December 31, 2004 included in its
Form 10-KSB. Operating results for the nine months ended September
30, 2005 are not necessarily indicative of the results to be
expected for the year ending December 31, 2005.
NOTE 2 - MATERIAL EVENTS
On April 8, 2005, the Company entered into a preferred stock
purchase agreement with an individual investor whereby the Company
agreed to issue 50,000 of its previously unissued Series A preferred
stock for cash of $25,000. The preferred shares will convert into
common stock of the Company during a three year period on a one for
one basis.
On June 13, 2005, the Company issued 1,500,000 shares of its common
stock in satisfaction of notes payable and accrued interest and
royalty fees totaling $58,971.
On August 3, 2005, the Company issued 1,000,000 shares of its common
stock as part of the Company's 2005 Stock Incentive Plan to its
employees and contractors. The shares were registered with the
Securities and Exchange Commission on Form S-8 on August 11, 2005.
1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the General Corporation Law of the State of Delaware,
we can indemnify our directors and officers against liabilities they may incur
in such capacities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act").
Our bylaws provide for the indemnification of our directors to the fullest
extent permitted by the Delaware General Corporation Law. We are required to
advance, prior to the final disposition of any proceeding, promptly on request,
all expenses incurred by any director or executive officer in connection with
that proceeding on receipt of an undertaking by or on behalf of that director or
executive officer to repay those amounts if it should be determined ultimately
that he or she is not entitled to be indemnified under our bylaws or otherwise.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, if any, payable by the Registrant
relating to the sale of common stock being registered. All amounts are estimates
except the SEC registration fee.
SEC registration fee $ 413.11
Printing and engraving expenses $ 10,000.00
Legal fees and expenses $ 50,000.00
Accounting fees and expenses $ 25,000.00
Miscellaneous expenses $ 5,000.00
Total.........................$ 90,413.11
The Registrant has agreed to bear expenses incurred by the selling
stockholders that relate to the registration of the shares of common stock being
offered and sold by the selling stockholders.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Pursuant to a Share Exchange Agreement, which closed on December 9, 2005,
we issued 20,000,000 shares of common stock to accredited investors and non-U.S.
persons (as contemplated by Rule 902 under the Securities Act of 1933). These
issuances are exempt from registration requirements under Regulation D or
Regulation S under the Securities Act of 1933, as amended. The shares issued
pursuant to Regulation S were issued in an "offshore transaction" as defined in,
and pursuant to, Rule 902 under the Securities Act of 1933 on the basis that the
purchaser was not offered the shares in the United States and did not execute or
deliver any agreement in the United States.
Simultaneously with the closing of the Share Exchange Agreement, on
December 9, 2005, we completed a private placement offering of 150,000 units
consisting of ten shares our common stock, par value $0.001 per share and one
warrant exercisable for one share of our common stock, for an aggregate purchase
price of $600,000.
In addition, simultaneously with the closing of the Share Exchange
Agreement, the holder of a convertible note in the principal amount of $515,000
converted such on December 9, 2005, for an aggregate of 1,287,500 shares of our
common stock, par value $0.001 per share.
1
On February 2, 2006, we closed on an additional private placement offering
of 12,500 units consisting of ten shares our common stock, par value $0.001 per
share and one warrant exercisable for one share of our common stock, for an
aggregate purchase price of $50,000.
* All of the above offerings and sales were deemed to be exempt under
Section 4(2) of the Securities Act of 1933, as amended. No advertising or
general solicitation was employed in offering the securities. The offerings and
sales were made to a limited number of persons, all of whom were accredited
investors, business associates of our company or executive officers of our
company, and transfer was restricted by our company in accordance with the
requirements of the Securities Act of 1933. In addition to representations by
the above-referenced persons, we have made independent determinations that all
of the above-referenced persons were accredited or sophisticated investors, and
that they were capable of analyzing the merits and risks of their investment,
and that they understood the speculative nature of their investment.
Except as expressly set forth above, the individuals and entities to whom
we issued securities as indicated in this section of the registration statement
are unaffiliated with us.
ITEM 27. EXHIBITS.
Exhibit
Number Description of Exhibit
3.1 Registrant's Certificate of Incorporation (incorporated by
reference to the exhibits to Registrants Form 10-SB filed on
September 15, 2004).
3.2 Certificate of Ownership of Synerteck Incroporated and IFSA
Strongman, Inc. (incorporated by reference to the exhibits to
Registrants Form 8-K filed on December 28, 2005).
3.3 Registrant's By-Laws (incorporated by reference to the exhibits
to Registrants Form 10-SB filed on September 15, 2004).
5.1 Opinion of Sichenzia Ross Friedman Ference LLP
10.1 Share Exchange Agreement by and among Synerteck Incorporated, and
IFSA Strongman Ltd. and the shareholders of IFSA Strongman Ltd.
(incorporated by reference to the exhibits to Registrants Form
8-K filed on December 15, 2005).
23.1 Consent of Bouwhuis, Morrill & Company, LLC.
23.2 Consent of Sichenzia Ross Friedman Ference LLP (contained in
Exhibit 5.1)
ITEM 28. UNDERTAKINGS.
The undersigned Company hereby undertakes to:
(1) File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities Act of
1933, as amended (the "Securities Act");
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of the securities offered would
not exceed that which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective registration
statement, and
(iii) Include any additional or changed material information on the plan of
distribution.
2
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) For determining liability of the undersigned small business issuer under the
Securities Act to any purchaser in the initial distribution of the securities,
the undersigned undertakes that in a primary offering of securities of the
undersigned small business issuer pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of
any of the following communications, the undersigned small business issuer will
be a seller to the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned small business
issuer relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned small business issuer or used or referred to by the
undersigned small business issuer;
(iii) The portion of any other free writing prospectus relating to the offering
containing material information about the undersigned small business issuer or
its securities provided by or on behalf of the undersigned small business
issuer; and
(iv) Any other communication that is an offer in the offering made by the
undersigned small business issuer to the purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
3
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorizes this registration
statement to be signed on its behalf by the undersigned, in London, United
Kingdom, on February 14, 2006.
IFSA STRONGMAN, INC.
By: /s/ Jussi Laurimaa
-------------------
Jussi Laurimaa
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Jaime Alvarez
-------------------
Jaime Alvarez
Chief Financial Officer
(Principal Financial and
Accounting Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jussi Laurimaa and Jaime Alvarez his true and
lawful attorneys-in-fact, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign any
and all amendments (including post-effective amendments) to this registration
statement and to sign a registration statement pursuant to Section 462(b) of the
Securities Act of 1933, and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated: Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed by the following persons
in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
- -------------------------------- ---------------------------------------- -----------------
/s/ Stephen Townley
- --------------------------- Chairman of the Board February 14, 2006
Stephen Townley
/s/ Jussi Laurimaa Chief Executive Officer and Director February 14, 2006
- ---------------------------
Jussi Laurimaa
/s/ Christian Fennell Chief Operating Officer, President and February 14, 2006
- --------------------------- Director
Christian Fennell
/s/ Jaime Alvarez Chief Financial Officer and Director February 14, 2006
- ---------------------------
Jaime Alvarez
/s/ Douglas Edmunds Chairman of the World Governing Body's
- --------------------------- Congress and Director February 14, 2006
Douglas Edmunds
4