SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 8 TO FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SWEET SPOT GAMES, INC.
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(Name of small business issuer in its charter)
NEVADA 3944 26-2909561
- ---------------------------- ---------------------------- -------------------
(State or other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number) Identification No.)
Organization)
SWEET SPOT GAMES, INC.
2840 HIGHWAY 95 ALT. S, SUITE 7
SILVER SPRINGS, NV 89429
519-872-2539
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(Address and telephone number of principal executive offices and principal
place of business)
GREGORY GALANIS, PRESIDENT
SWEET SPOT GAMES, INC.
2840 HIGHWAY 95 ALT. S, SUITE 7
SILVER SPRINGS, NV 89429
(519) 872-2539
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(Name, address and telephone number of agent for service)
Copies to:
CHARLES BARKLEY, ESQ.
6201 FAIRVIEW ROAD, SUITE 200
CHARLOTTE, NC 28210
(704) 944-4290
(704) 944-4280 (FAX)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement is declared 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,
check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer," and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
Smaller reporting company [X]
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED PROPOSED AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED (1) MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION FEE
PRICE PER SECURITY (2) OFFERING PRICE (2)
- --------------------------- -------------- ---------------------- ------------------ ----------------
Shares of common stock,
$0.001 par value $ 450,000 $.30 $ 135,000 6.790
Total $ 450,000 $.30 $ 135,000 6.709
(1) The registration fee for the shares of the selling security holders is
based upon a value of $.30. All shares of common stock registered pursuant to
this registration statement are to be offered by the selling stockholders. In
the event of a stock split, stock dividend or similar transaction involving our
common stock, in order to prevent dilution, the number of shares registered
shall be automatically increased to cover the additional shares in accordance
with Rule 416(a)
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) promulgated under the Securities Act
of 1933, as amended. The selling security holders are offering 450,000 of the
shares, which we are registering. These shares will be sold at $.30 unless and
until the shares are traded and thereafter at prevailing market prices. If the
selling security holders sell to more than 25 persons, the Company will
undertake efforts to have markets established for the trading of the
securities. If such a market begins before all securities offered hereby are
sold, then the remaining securities will be sold at market prices.
We hereby amend this registration statement on such date or dates as may be
necessary to delay its effective date until we 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 this Registration Statement shall become effective on such date as the
Commission, acting pursuant to Section 8(a) may determine.
The information contained in this prospectus is not complete and may be
changed. Our selling stockholders may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and neither
this prospectus nor the selling stockholders is soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS, SUBJECT TO COMPLETION, DATED October 20, 2009
SWEET SPOT GAMES, INC.
450,000 Shares of Common Stock
This is a prospectus for the resale of up to 450,000 shares of our common
stock, par value $0.001 per share, by the selling stockholders of Sweet Spot
Games, Inc. identified in this prospectus under "Selling Securityholders".
Selling security holders are offering shares at a selling price of $.30 per
share. These shares may be sold by the selling stockholders from time to time
in the over-the-counter market, other national securities exchanges, or an
automated interdealer quotation system on which our common stock is then traded
or quoted, through negotiated transactions at negotiated prices or otherwise at
market prices prevailing at the time of sale. An arbitrary determination of the
offering price increases the risk that purchasers of the shares in the offering
will pay more than the value the public market ultimately assigns to the shares
and more than an independent appraisal value.
Our common stock is presently not traded on any market or securities
exchange and we have not begun to take steps to make the shares available for
trading. The sales price to the public is fixed at $.30 per share. After the
shares are sold they may be traded on the NASD Over-The-Counter Bulletin
Board.The Company is not able to apply for OTC Bulletin Board trading on its
own. We anticipate seeking sponsorship for the quotation of our common stock on
the OTC Bulletin Board upon effectiveness of the registration statement we have
filed with the SEC in connection with this offering. However, we can provide no
assurance that our shares will be listed for quotation on the OTC Bulletin
Board. If the selling security holders sell to more than 25 persons, the
Company will undertake efforts to have markets established for the trading of
the securities.
All selling security holders are statutory underwriters.
The information in this prospectus is not complete and may be changed.
These securities may not be sold until the registration filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted. The
distribution of the shares by the selling stockholders is not subject to any
underwriting agreement. We will receive none of the proceeds from the sale of
the shares by the selling stockholders. We will bear all expenses of
registration incurred in connection with this offering (currently estimated to
be $57,679, but all selling and other expenses incurred by the selling
stockholders will be borne by them. An arbitrary determination of the offering
price increase the risk that purchasers of the shares in the offering will pay
more than the value the public market ultimately assigns to our common stock
and more than an independent appraisal value.
Investing in our common stock involves a high degree of risk. We urge you to
carefully consider the ``Risk Factors'' beginning on page 11.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is
a criminal offense.
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TABLE OF CONTENTS PAGE
Summary 6
- Our Business 6
- About this Offering 6
- Corporate Information History 6
The Offering 7
Risk Factors 8
- Risks related to our business and industry 8
- Risks relating to our securities 9
Special note regarding forward looking statements 10
Where you can find more information 11
Use of Proceeds 11
Determination of Offering Price 11
Market for our Securities and Related stockholder matters 11
Management Discussion and Analysis and Plan of Operation 12
Business 16
Industry Overview 17
Patents and Intellectual Property 17
Competition 18
Regulation 21
Legal Proceedings 21
Directors, Executive Officers, Promoters, and Control Persons 22
Executive Compensation 25
Certain relationships and related transactions 25
Selling Stockholders 25
- Selling Stockholder Table 26
Plan of distribution 27
Description of securities 29
Transfer Agent 30
Limitation of Liability and Indemnification 31
Legal Matters 31
Experts 31
Financial Information 32
Until ________________, 2009 (60 days after the commencement of this
offering), all dealers that buy, sell or trade the securities, whether or not
participating in this offering, may be required to deliver a prospectus. This
delivery requirement is in addition to the obligation of dealers to deliver a
prospectus when acting as underwriters and with respect to any unsold
allotments or subscriptions.
`
Summary Financial Data
Because this is only a summary of our financial information, it does not
contain all of the financial information that may be important to you.
Therefore, you should carefully read all of the information in this prospectus
and any prospectus supplement, including the financial statements and their
explanatory notes and the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations," before making a
decision to invest in our common stock. The information contained in the
following summary are derived from our financial statements for the periods
June 30, 2008 (restated) ending June 30, 2009 (restated).
STATEMENTS OF INCOME :
For the Year June 2, 2008 June 2, 2009
Ended (Inception) to (Inception) to
June 30, 2009 June 30, 2008 June 30, 2009
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Revenues $ 13,325 - $ 13,325
Total Operating Expense 94,628 612,101 706,729
Net Loss $ (81,303) $ (612,101) $ 693,404
Loss Per Share $ (0.00) $ (0.02) $ (0.02)
BALANCE SHEET DATA:
June 30, 2009 June 30, 2008
(Restated) (Restated)
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Total Other Assets $ 42,254 $ 399
Total Current Liabilities 1,158 -
Total Stockholders' Equity $ 42,254 $ 399
SUMMARY
You should read the following summary together with the more detailed
information contained elsewhere in this prospectus, including the section
titled "Risk Factors," regarding us and the common stock being sold in this
offering. Unless the context otherwise requires, "we," "our," "us" and similar
phrases refer to Sweet Spot Games Inc., a Nevada corporation.
Corporate Information and History
We are a development stage enterprise and we do not have a developed
product. We launched our prototype game "Combat" on a limited basis in the
first quarter of 2009. We currently have approximately 2,000 registered users
but will require many times that number to become commercially viable. Our
business model is based on advertising sales and product placement within the
game and we will need sufficient numbers of demographically attractive users
to entice advertisers. We believe that the commercialization of the game will
continue throughout 2009 by sales of discounted or complimentary advertising
and product placement.
The market for advertising is somewhat depressed and sales have been slow
since commencement of the initial game. We are currently working on the
development of other games that will not depend on advertising for the primary
revenue stream, but there is no assurance that these alternative games will be
successfully developed.
We were founded in 2008 as Sweet Spot Games, Inc., a Nevada
corporation on June 2, 2008. Our registered office is located at 2840 Highway
95 Alt. S, Suite 7, Silver Springs, NV 89429. The Company's telephone number
is 519-872-2539. The President of the Company is Gregory Galanis.
Recent Financing Transactions
Beginning in June of 2008 and continuing until October of 2008 the company
privately offered up to 500,000 shares of Common Stock to accredited investors
at a price of .20 per share. As part of that private placement we agreed to
assert our best efforts to register the shares sold in the private placement
provided that at least 75% of the shares offered were sold. The company sold
450,000 shares to accredited investors and closed the offering in October of
2008.
The securities offered in both private placements, including the common
stock, sold in reliance upon the exemption from registration contained in
Section 4(2) of the Securities Act and Regulation S and Regulation D
promulgated thereunder, which exempt transactions by an issuer not involving
any public offering. The issuance of the shares was undertaken without general
solicitation or advertising. Each purchaser of the shares represented in the
purchase agreement, among other things, that (a) it was an "accredited
investor", as defined in Regulation D promulgated under the Securities Act of
1933, (b) it had obtained sufficient information from us to evaluate the merits
and risks of an investment in the shares of our common stock and (c) it was
acquiring the shares of our common stock for investment purposes and not with a
view to any public resale or other distribution in violation of the Securities
Act of 1933 or the securities laws of any state. In addition, the stock
certificate representing these shares contained a legend that they are
restricted securities under the Securities Act of 1933. These securities may
not be offered or sold in the United States in the absence of an effective
registration statement or exemption from the registration requirements under
the Securities Act.
6
THE OFFERING
The Offering
All selling security holders are statutory underwriters and will be required
to comply with all obligations imposed on statutory underwriters under the
Securities Act of 1933. and any broker-dealer executing sell orders on behalf
of the selling stockholders may be deemed to be ``underwriters'' within the
meaning of the Securities Act of 1933, and any commissions or discounts given
to any such broker-dealer may be deemed to be underwriting commissions or
discounts under the Securities Act of 1933. The selling stockholders have
informed us that they do not have any agreement or understanding, directly or
indirectly, with any person to distribute their common stock.
Common stock offered by the selling stockholders:
Shares of Common Stock,
$0.001 par value 450,000 shares
Common stock outstanding 30,110,000 shares (1)
Use of proceeds We will receive none of the proceeds
from the sale of the shares by the
selling stockholders.
Risk Factors You should read the section titled
"Risk Factors" beginning on page 11 as
well as other cautionary statements
throughout this prospectus before
investing in any shares offered
hereunder.
Selling Stockholders
All of the offered shares are to be offered and sold by our existing
security holders. Forty Five selling stockholders acquired their shares in our
2008 Private Offering which were common stock.Each selling shareholder is a
"statutory underwriter" as that term is defined under the Securities Act of
1933, as amended and will be subject to the obligations of a statutory
underwriter until the offering is concluded or all shares offered have been
sold.
In addition, under Rule 416 of the Securities Act, this prospectus, and
the registration statement of which it is a part, covers a presently
indeterminate number of shares of common stock issuable on the occurrence of a
stock split, stock dividend or other similar transaction.
7
RISK FACTORS
RISKS RELATED TO OUR BUSINESS
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES
A HIGH DEGREE OF RISK. WE CANNOT ASSURE THAT WE WILL EVER GENERATE SIGNIFICANT
REVENUES, DEVELOP OPERATIONS, OR MAKE A PROFIT.
WE ARE A DEVELOPMENT STAGE COMPANY WITH NO OPERATING HISTORY FOR YOU TO
EVALUATE AND WE HAVE NOT PROVEN OUR ABILITY TO GENERATE PROFITS.
We are a developmental stage company. Although we have developed a working
prototype, we have not established a market for our product. We have no
meaningful operating history so it will be difficult for you to evaluate an
investment in our securities. From our inception to date, we have had minimal
revenues of $13,325 and incurred a net loss of $693,404. We launched our
interactive multiplayer online game in the first quarter of 2009 but there is
no assurance that we will ever be able to become profitable. You will be
furnishing venture capital to us and will bear the risk of complete loss of
your investment if we are unsuccessful.
An investor should also consider the uncertainties and difficulties frequently
encountered by companies, such as ours, in their early stages of development.
Our revenue and income potential is unproven and our business model is still
emerging. If our business model does not prove to be profitable, investors may
lose all of their investment.
WE HAVE HAD MINIMAL REVENUES AND ANTICIPATE LOSSES FOR THE FORESEEABLE FUTURE.
Since inception we have had had minimal revenues of $13,325 and incurred a net
loss of $693,404. Our auditors have noted that our ability to become a going
concern is dependent on our continued ability to obtain additional financing.
We have not achieved profitability and expect to continue to incur net losses
throughout fiscal 2009 and subsequent fiscal periods. Thus far we have
financed through cash provided by financing activities of $134,500, primarily
from a private placement that concluded in October, 2008. We expect to generate
revenues through the sales of licensing, advertising and product placement
within the online game, but there is no assurance that we will be able to
attract advertisers or sufficient advertising revenues to become profitable. We
expect to incur significant operating expenses and, as a result, will need to
generate significant revenues to achieve profitability, which may not occur.
Even if we do achieve profitability, we may be unable to sustain or increase
profitability on an ongoing basis.
IF WE FAIL TO IMPLEMENT OUR COMMERCIALIZATION STRATEGY, OUR BUSINESS, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS COULD BE MATERIALLY AND ADVERSELY AFFECTED.
Our future financial performance and success are dependent in large part upon
our ability to implement our commercialization strategy successfully. We have
consulted with prospective advertisers and management believes that a market
will develop for advertising on our online game., but there is no assurance
that any such revenues will materialize. We have not engaged third party
consultants to identify potential clients for our technology and we have no
means to determine whether this strategy will be successful. We may not be able
to successfully implement our commercialization strategy with or without the
involvement of these third parties. If we are unable to do so, our long-term
growth and profitability may be adversely affected. Even if we are able to
successfully implement some or all of the initiatives of our business plan, our
operating results may not improve to the extent we expect, or at all.
Implementation of our commercialization strategy could also be affected by a
number of factors beyond our control, such as increased competition, legal
developments, general economic conditions or increased operating costs or
expenses. In addition, to the extent we have misjudged the nature and extent of
industry trends or our competition, we may have difficulty achieving our
strategic objectives. We may also decide to alter or discontinue certain
aspects of our business strategy at any time. Any failure to successfully
implement our business strategy may adversely affect our business, financial
condition and results of operations and thus our ability to service our
indebtedness, including our ability to make principal and interest payments on
our indebtedness.
WE MAY HAVE INSUFFICIENT LIQUIDITY TO CONTINUE.
The Company will not receive any proceeds from the sale of common stock. We are
devoting substantially all of our present efforts to establishing a new
business, developing and launching an online, multiplayer game and will need
additional capital to continue implementing our business plan. We have
generated minimal revenue. We will have to seek other sources of financing or
we will be forced to curtail or terminate our business plans. There is no
assurance that additional sources of financing will be available at all or at a
reasonable cost.
We anticipate expenses of approximately $10,000 per month for the next 12
months. This includes the part time programmers, bandwidth and servers, and
licenses. As of June 4, 2009, the Company has cash on hand of approximately
$32,000. Currently the Company does not have sufficient cash to cover the
anticipated expenses and will need to raise additional capital or derive
revenues from its games. We intend to begin marketing the current Combat game
to existing internet properties on a "white label" basis and expect revenue
from our consulting agreements, revenues from the "Crib Wars" game, and third
party development contracts.
The largest anticipated expense is the cost of development. We typically pay
part time programmers at the rate of $900 per week and graphic artists $650 per
week for graphic artists on an as needed basis.If we are unable to successfully
generate revenues or raise capital we would terminate the part time workers,
slow the development of the products and reduce our expenses.
OUR PRINCIPAL STOCKHOLDERS CONTROLS OUR BUSINESS AFFAIRS IN WHICH CASE YOU WILL
HAVE LITTLE OR NO PARTICIPATION IN OUR BUSINESS AFFAIRS.
Currently, our principal stockholder owns 76.79% of our common stock. As a
result, he will have control over all matters requiring approval by our
stockholders without the approval of minority stockholders. In addition, he
will also be able to elect all of the members of our Board of Directors, which
will allow him to control our affairs and management. He will also be able to
affect most corporate matters requiring stockholder approval by written
consent, without the need for a duly noticed and duly-held meeting of
stockholders. As a result, they will have significant influence and control
over all matters requiring approval by our stockholders. Accordingly, you will
be limited in your ability to affect change in how we conduct our business.
WE MAY INCUR SIGNIFICANT COSTS TO ENSURE COMPLIANCE WITH CORPORATE GOVERNANCE
AND ACCOUNTING REQUIREMENTS.
We expect to incur significant costs associated with our public company
reporting requirements, costs associated with applicable corporate governance
requirements, including requirements under the Sarbanes-Oxley Act of 2002 and
other rules implemented by the SEC. We expect all of these applicable rules and
regulations to increase our legal and financial compliance costs and to make
some activities more time-consuming and costly. While we have no experience as
a public company, we estimate that the these additional costs will total
approximately $50,000 per year. We also expect that these applicable rules and
regulations may make it more difficult and more expensive for us to obtain
director and officer liability insurance and we may be required to accept
reduced policy limits and coverage or incur substantially higher costs to
obtain the same or similar coverage. As a result, it may be more difficult for
us to attract and retain qualified individuals to serve on our board of
directors or as executive officers. We are currently evaluating and monitoring
developments with respect to these newly applicable rules, and we cannot
predict or estimate the amount of additional costs we may incur or the timing
of such costs.
8
RISKS RELATING TO OUR SECURITIES
WE HAVE NEVER PAID DIVIDENDS ON OUR COMMON STOCK AND YOU MAY NEVER RECEIVE
DIVIDENDS. THERE IS A RISK THAT AN INVESTOR IN OUR COMPANY WILL NEVER SEE A
RETURN ON INVESTMENT AND THE STOCK MAY BECOME WORTHLESS.
We have never paid dividends on our common stock. We intend to retain earnings,
if any, to finance the development and expansion of our business. Future
dividend policy will be at the discretion of the Board of Directors and will be
contingent upon future earnings, if any, our financial condition, capital
requirements, general business conditions and other factors. Future dividends
may also be affected by covenants contained in loan or other financing
documents, which may be executed by us in the future. Therefore, there can be
no assurance that cash dividends of any kind will ever be paid. If you are
counting on a return on your investment in the common stock, the shares are a
risky investment.
THERE IS CURRENTLY NO MARKET FOR OUR COMMON STOCK AND NO ASSURANCE THAT ONE
WILL DEVELOP.
There is currently no trading market for our shares of Common Stock, and there
can be no assurance that a more substantial market will ever develop or be
maintained. Any market price for shares of our Common Stock is likely to be
very volatile, and numerous factors beyond our control may have a significant
adverse effect. In addition, the stock markets generally have experienced, and
continue to experience, extreme price and volume fluctuations which have
affected the market price of many small capital companies and which have
often been unrelated to the operatingperformance of these companies. These
broad market fluctuations, as well as general economic and political
conditions, may also adversely affect the market price of our Common Stock.
Further, there is no correlation between the present limited market price of
our Common Stock and our revenues, book value, assets or other established
criteria of value. The present limited quotations of our Common Stock should
not be considered indicative of the actual value of the Company or our Common
Stock.
Future sales of our common stock could put downward selling pressure on our
shares, and adversely affect the stock price. There is a risk that this
downward pressure may make it impossible for an investor to sell his shares at
any reasonable price.
Future sales of substantial amounts of our common stock in the public market,
or the perception that such sales could occur, could put downward selling
pressure on our shares, and adversely affect the market price of our common
stock. Such sales could be made pursuant to Rule 144 under the Securities Act
of 1933, as amended, as shares become eligible for sale under the Rule.
AN ARBITRARY DETERMINATION OF THE OFFERING PRICE INCREASES THE RISK THAT
PURCHASERS OF THE SHARES IN THE OFFERING WILL PAY MORE THAN THE VALUE THE
PUBLIC MARKET ULTIMATELY ASSIGNS TO OUR COMMON STOCK AND MORE THAN AN
INDEPENDENT APPRAISAL VALUE OF US.
The offering price for the shares of $.30 was arbitrarily determined by our
management. The offering price bears no relation to our assets, revenues, book
value or other traditional criteria of value. Investors may be unable to
resell their shares at or near the offering price, if they are able to resell
the shares at all. Selling security holders are offering shares at a selling
price of $.30 per share until a market for the shares is established and
thereafter at prevailing market prices. If the selling security holders sell to
more than 25 persons, the Company will undertake efforts to have markets
established for the trading of the securities. If such a market begins before
all securities offered hereby are sold, then the remaining securities will be
sold at market prices.
IF A MARKET DEVELOPS FOR OUR SECURITIES IT COULD BE VOLATILE AND MAY NOT
APPRECIATE IN VALUE.
If a market should develop for our securities, of which we have no assurance,
the market price is likely to fluctuate significantly. Fluctuations could be
rapid and severe and may provide investors little opportunity to react. Factors
such as changes in results from our operations, and a variety of other factors,
many of which are beyond the control of the Company, could cause the market
price of our common stock to fluctuate substantially. Also, stock markets in
penny stock shares tend to have extreme price and volume volatility. The market
prices of shares of many smaller public companies securities are subject to
volatility for reasons that frequently unrelated to the actual operating
performance, earnings or other recognized measurements of value. This
volatility may cause declines including very sudden and sharp declines in the
market price of our common stock. We cannot assure investors that the stock
price will appreciate in value, that a market will be available to resell your
securities or that the shares will retain any value at all.
9
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Included in this prospectus are "forward-looking" statements, as well as
historical information. Although we believe that the expectations reflected in
these forward-looking statements are reasonable, we can give no assurance that
the expectations reflected in these forward-looking statements will prove to be
correct. Our actual results could differ materially from those anticipated in
forward-looking statements as a result of certain factors, including matters
described in the section titled "Risk Factors." Forward-looking statements
include those that use forward-looking terminology, such as the words
"anticipate," "believe," "estimate," "expect," "intend," "may," "project,"
"plan," "will," "shall," "should" and similar expressions, including when used
in the negative. Although we believe that the expectations reflected in these
forward-looking statements are reasonable and achievable, these statements
involve risks and uncertainties and no assurance can be given that actual
results will be consistent with these forward-looking statements, Actual
results may be materially different than those described in this prospectus.
Important factors that could cause our actual results, performance or
achievements to differ from these forward-looking statements include the
factors described in the "Risk Factors" section and elsewhere in this
prospectus.
All forward-looking statements attributable to us are expressly qualified
in their entirety by these and other factors. We undertake no obligation to
update or revise these forward-looking statements, whether to reflect events or
circumstances after the date initially filed or published, to reflect the
occurrence of unanticipated events or otherwise
10
AVAILABLE INFORMATION
We have filed a registration statement on Form S-1 with the U.S.
Securities and Exchange Commission, or the SEC, to register the shares of our
common stock being offered by this prospectus. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts
of which are omitted in accordance with the rules of the Commission. For
further information pertaining to the Company, reference is made to the
Registration Statement. Statements contained in this prospectus or any
documents incorporated herein by reference concerning the provisions of
documents are necessarily summaries of such documents, and each statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the Commission. Copies of the Registration Statement are on file at
the offices of the Commission, and may be inspected without charge at the
offices of the Commission, the addresses of which are set forth above, and
copies may be obtained from the Commission at prescribed rates. The
Registration Statement has been filed electronically through the Commission's
Electronic Data Gathering, Analysis and Retrieval System and may be obtained
through the Commission's Web site (http:// www.sec.gov).
You may read and copy any reports, statements or other information that we
file at the SEC's public reference facilities at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information regarding the public reference facilities. The SEC maintains a
website, http://www.sec.gov, that contains reports, proxy statements and
information statements and other information regarding registrants that file
electronically with the SEC, including us. Our SEC filings are also available
to the public from commercial document retrieval services. Information
contained on our website should not be considered part of this prospectus.
We will become subject to the information requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith file reports and
other information with the Securities and Exchange Commission. Such reports and
other information filed by us can be inspected and copied at the public
reference facilities of the Commission at 100 F Street, N.E., Washington, D.C.
20549 . Requests for copies should be directed to the Commission's Public
Reference Section, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for more information on the public
reference rooms. The Commission maintains a Web site (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding registrants that file electronically.
USE OF PROCEEDS
This prospectus relates to shares of our common stock that may be offered
and sold from time to time by the selling stockholders who will receive all of
the proceeds from the sale of the shares. We will not receive any proceeds from
the sale of shares of common stock in this offering. We will bear all expenses
of registration incurred in connection with this offering, but all commissions,
selling and other expenses incurred by the selling stockholders to
underwriters, agents, brokers and dealers will be borne by them. We estimate
that our expenses in connection with the filing of the registration statement
of which this prospectus is a part will be approximately $57,679.
DETERMINATION OF OFFERING PRICE
The selling security holders will sell their shares at $.30 per share. Prior to
this offering, there has been no market for our shares. If the selling security
holders sell to more than 25 persons, the Company will undertake efforts to
have markets established for the trading of the securities. The offering price
of $.30 per share was arbitrarily determined and bears no relationship to
assets, book value, net worth, earnings, actual results of operations, or any
other established investment criteria. Among the factors considered in
determining this price were our historical sales levels, estimates of our
prospects, the background and capital contributions of management, the degree
of control which the current shareholders desired to retain, current conditions
of the securities markets and other information.
11
MARKET FOR OUR SECURITIES AND RELATED STOCKHOLDER MATTERS
Dividend Policy
We do not expect to pay a dividend on our common stock in the foreseeable
future. The payment of dividends on our common stock is within the discretion
of our board of directors, subject to our certificate of incorporation. We
intend to retain any earnings for use in our operations and the expansion of
our business. Payment of dividends in the future will depend on our future
earnings, future capital needs and our operating and financial condition, among
other factors.
MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
SUMMARY OF CRITICAL ACCOUNTING POLICIES
The discussion and analysis of our financial condition and results of
operations is based upon our financial statements, which have been prepared in
accordance with generally accepted accounting principles generally accepted in
the United States (or "GAAP"). The preparation of those financial statements
requires us to make estimates and judgments that affect the reported amount of
assets and liabilities at the date of our financial statements. Actual results
may differ from these estimates under different assumptions or conditions.
Critical accounting policies are those that reflect significant judgments or
uncertainties, and potentially result in materially different results under
different assumptions and conditions. We have described below what we believe
are our most critical accounting policies. SEE ALSO NOTES 1 and 2 TO
CONSOLIDATED FINANCIAL STATEMENTS, "SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES".
Revenue recognition
The Company will recognize sales revenue at the time of delivery when
ownership has transferred to the customer, when evidence of a payment
arrangement exists and the sales proceeds are determinable and collectable.
After the customer has accessed the website and answered the questions
necessary to execute the forms and documents for participation, he is
required to pay for the services with a credit card. The credit card charge is
immediately electronically processed and approved or declined. Once approved,
we immediately complete the actual filing forms and documents and file them
electronically, if possible, or overnight them to the appropriate state. At
that point, we recognize the revenue from the transaction.
Stock-based compensation
The Company will account for its employee stock based compensation
arrangements in accordance with the provisions of Accounting Principles Board
("APB") Opinion No. 25. "Accounting for Stock Issued to Employees", and
related interpretations. As such, compensation expense for stock options,
common stock and other equity instruments issued to non-employees for services
received will be based upon the fair value of the equity instruments issued, as
the services are provided and the securities earned. SFAS No. 123, "Accounting
for Stock-Based Compensation", requires entities that continue to apply the
provisions of APB Opinion No. 25 for transactions with employees to provide pro
forma net earnings (loss) and pro forma earnings (loss) per share disclosures
for employee stock option grants as if the fair-value-based method defined in
SFAS No. 123 had been applied to these transactions. For the period from
inception (June 2, 2008) to June 30, 2009, no stock options were committed to
be issued to employees.
12
Income taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss carry forwards that are available to be carried
forward to future years for tax purposes. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date. When it is not considered to be more likely than not that a deferred tax
asset will be realized, a valuation allowance is provided for the excess.
Although the Company has significant loss carry forwards available to reduce
future income for tax purposes, no amount has been reflected on the balance
sheet for deferred income taxes as any deferred tax asset has been fully offset
by a valuation allowance.
Deferred income taxes are reported for timing differences between items
of income or expense reported in the financial statements and those
reported for income tax purposes in accordance with Statement of Financial
Accounting Standards number 109 Accounting for Income Taxes, which requires
the use of the asset/liability method of accounting for income taxes.
Deferred income taxes and tax benefits are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases, and for tax loss and credit carry forwards. The Company provides
deferred taxes for the estimated future tax effects attributable to
temporary differences and carry forwards when realization is more likely than
not.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions, where applicable, that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements, as well as the reported amounts of revenues
and expenses during the reporting period. While actual results could differ
from those estimates, management does not expect such variances, if any, to
have a material effect on the financial statements.
Software and Development Costs
In March 2000, the Emerging Issues Task Force, known as "EITF," reached a
consensus on Issue No. 00-2, Accounting for Website Development Costs. Under
EITF Issue No 00-2, accounting for website development costs depends on the
stage in which costs are incurred as follows: Planning the website:
All costs incurred in this stage are expensed as incurred. Developing
the applications and infrastructure: During this stage, costs may be incurred
to acquire or develop both hardware and software needed to operate the site.
All software costs should be accounted for under AICPA Statement of
Position 98-1 ("SOP 98-1"), Accounting for the Cost of Computer Software
Development or obtained for internal use. Under SOP 98-1, certain
software development costs are capitalized and amortized over the estimated
useful life of the website. Graphics are a component of software and their
initial development costs should be accounted for under SOP 98-1. After the
launch of the website, graphics charges should be expensed as incurred, except
for website enhancements, which should be capitalized. All costs of operating
the site should be expensed as incurred. The costs we incurred and developing
our website are accounted for using EITF Issue No.00-2.
Research and Development Costs
Research is planned search or critical investigation aimed at discovery
of new knowledge with the hope that such knowledge will be useful in developing
a new product or service or a new process or technique or in bringing about a
significant improvement to an existing product or process. Development is the
translation of research findings or other knowledge into a plan or design for a
new product or process or for a significant improvement to an existing product
or process whether intended for sale or use. It includes the conceptual
formulation, design, and testing of product alternatives, and operation of
pilot plants. It does not include routine or periodic alterations to existing
products, production lines, manufacturing processes, and other on-going
operations even though those alterations may represent improvements and it does
not include market research or market testing activities. All research and
development costs have been expensed as incurred in accordance with FASB 2.
Depreciation
Depreciation is computed using the straight-line method over the assets'
expected useful lives of three years.
13
Amortization
Software development costs are amortized using the straight-line method
over three years. Amortization expense for the year end June 30, 2009 was
$2,767. There was no amortization expense in prior periods.
Valuation of Long-Lived Assets
The Company periodically analyzes its long-lived assets for potential
impairment, assessing the appropriateness of lives and recoverability of
unamortized balances through measurement of undiscounted operating cash flows
on a basis consistent with accounting principles generally accepted in the
United States of America.
Intangible and Other Long-Lived Assets, Net
Intangible and other long-lived assets are stated at cost, less
accumulated amortization and impairments. The Company periodically analyzes
its long-lived assets for potential impairment, assessing the appropriateness
of lives and recoverability of unamortized balances through measurement of
undiscounted operating cash flows on a basis consistent with accounting
principles generally accepted in the United States of America.
Related Parties
The Company incurred compensation and payroll tax expense in the amount of
$5,558 which was paid to a relative of the Company's President.
Plan of Operation
To date we have financed our activities from private placements. Until we begin
to generate revenues we expect to continue to rely on loans from our directors
and related parties. We have no other sources of capital and there can be no
guarantee that the Company will be able to meet its obligations or obtain
sufficient capital to complete its plan of operations for the next twelve (12)
months. There is no assurance that our officers can or will provide such funds
when the need arises. We have no other sources of capital and there can be no
guarantee that the Company will be able to meet its obligations or obtain
sufficient capital to complete its plan of operations for the next twelve (12)
months.
Sweet Spot Games, Inc. (the "Company") was organized in Nevada on June 2, 2008.
The Company is a development stage company and currently has no operations.
Sweet Spot Games, Inc. is a developer of online multiplayer skill based games.
The Company develops games in a 3D environment allowing users from around the
globe to compete in an environment that very closely resembles the graphic
quality of console based systems such as Microsoft's Xbox or Sony's Play
Station.
"Combat", the Company's flagship product, is an online multiplayer game that
allows users to compete amongst each other as medieval characters in a large
combat forum.
The game server engine that has been created, dynamically "spawns" additional
game rooms as soon as 50 competitors exceed occupancy in the room. At the
beginning of each competition each user is given a full "health" status. As
competitors shoot each other during the game using various weapons and tactical
maneuvres, the "health" status of each competitor is depleted. The last
competitor standing wins the battle.
The game engine was developed to award players on a "per point" system. With
each "win", the system tallies the high point earners and at the end of every
day, week or month, awards these competitors with prizes that are featured on
the "Combat" website. This approach is successful in attracting a significant
repetitive user base and also retains users by offering a "sticky" competitive
environment.
14
The Company has commenced sales of annual licenses to third parties for
"private label" uses for the Combat game. The Company will host, maintain and
"white label" the applications for the Licensees. The Company sold its first
license in march, 2009 for the sum of $13,325 USD to "CribWars", a Canadian
company that manufactures a board game. In addition to the licensing fee, the
Company will receive 50% of revenues generated by the online version of
Cribwars in exchange for the Company s assistance in completing the development
of the online CribWars game.
Currently the Company generates revenue by placing in-game ads within the
gaming environment. By monitoring and tracing each competitors' IP address the
Company is able to dynamically deliver ads that are local for that particular
user. The Company offers its advertisers the opportunity to target their
advertising based on geographic location.
The Company's mandate is to continue producing highly attractive and
interactive online multiplayer skill-based games that revolutionize the
environment in which online gaming applications exist today.
Results of Operations
Assets. As of June 30, 2009 total assets were $42,254 consisting of $17,802
in current assets, $2,319 in fixed assets and $22,133 in other assets. For
the period ended June 30, 2008, the current assets were $399, fixed assets were
nil and total assets were $399. The change in assets is attributable to an
increase in cash from $399 at June 30, 2008 to $17,802 at June 30, 2009,
increase in fixed assets from zero to $2,319 and other assets of zero to
$22,133 for the same periods. The increase in other assets is attributable
to an increase in software development costs less accumulated amortization.
Depreciation is computed using the straight line method over the assets
expected useful lives of three years. Other assets consisted of organizational
cost totaling $1,101, software developments cost of $24,683 and accumulated
amortization of $5,157. Deferred charges are amortized using the straight line
method over three years. The largest asset, software development cost, is
the result of the improvements made to our software package for the development
of our flagship product, "Combat", an online multiplayer game and the website
in which the game will reside. Game development was substantially complete
as of March 31, 2009 and completion of the resident website is expected to
be completed in the last quarter of 2009.
Liabilities. Total liabilities as of June 30, 2009 were $1,158 which consisted
entirely of accounts payable and accrued expenses. Since the company's
inception was June, 2008 there are no liabilities during comparable periods.
Revenues. From inception to June 30, 2009 the company was in its development
stage and therefore had only minimal revenues. In March, 2009 the company sold
a license to its "Combat" game for an annual licensing fee of $13,325. The
company has launched its in game advertising and expects to generate
advertising revenue in upcoming quarters. The Company expects to launch its
second multi player online game in the fourth quarter of 2009. There were no
revenues for comparable periods.
Operating Expense. From inception to June 30, 2009 the company had total
operating expenses of $706,729, consisting of $1,154 in bank charges, $3,700 in
depreciation and amortization expense, $27,555 in travel expense, $16,838 in
website development costs, $5,558 in compensation and payroll taxes, and
$1,473 in other expenses. The largest of the operating expense was legal and
professional fees of $650,451. This expense included one time charge to
Newman and Associates, a Beverly Hills, CA, consulting company for shares
issuable under the consulting agreement. The company also issued 150,000
shares to its securities counsel to partially defray its legal fees. Shares so
issued were recorded at a cost of $0.20 The company experienced a net loss as
of June 30, 2009 of $94,628. As the Company commenced in June, 2008 the only
expense in the comparable period was $612,101 for legal and consulting fees.
Stockholders' Equity. As of June 30, 2009 was $41,096. This consisted of
30,110 in common stock issued and outstanding, representing 30,110,000 shares
issued and outstanding at a par value of .001. For the period ended June 30,
2008, the stockholder's equity was $399. The company's corporate charter filed
in Nevada of June, 2008 authorized 70,000,000 shares of common stock, par value
..001 and 5,000,000 shares of preferred stock par value .001, no preferred
shares have been issued. The company also had paid in capital of 704,390 for
the period ended June 30, 2009 as compared to $583,000 for the same period in
2008 and accumulated a deficit $,$693,404 as compared to $612,101 for the same
respective periods. The paid in capital was due to a private placement which
concluded in October, 2008 and 3,000,000 shares of common stock issued for
consulting and professional fees. The issuance of shares for consulting and
professional fees was recorded in accordance with FASB 123R at .20 cents per
share.
Liquidity and Capital Resources . We believe that our cash usage rate
will average $10,000 per month for the next twelve months. The cash usage is
expected to be for website and game development, legal,
accounting and marketing expenses. Our expenditures can be managed to some
extent by adding to or subtracting independent contractors. Expected increases
in expenses as a public company is estimated to be equal to a decrease in
website development costs.
The Company's largest ongoing expense is cost of development. We currently
expect to pay each "freelance" developer $900 US per week for one programmer
and $650 per week for each Graphic Arts / Animation artist. We anticipate
expenses of approximately $10,000 per month for the next 12 months. This
includes the part time programmers, bandwidth and servers, and licenses. As of
June 4, 2009, the Company has cash on hand of approximately $32,000. Currently
the Company does not have sufficient cash to cover the anticipated expenses and
will need to raise additional capital or derive revenues from its games. We
intend to begin marketing the current Combat game to existing internet
properties on a "white label" basis. If we are unable to successfully raise
capital or generate revenues we would terminate the part time workers, slow the
development of the products and reduce our expenses.
We currently do not have sufficient cash on hand to fund operations for the
next 12 months. The minimum amount of capital required by the company is
estimated at $120,000 for the next twelve months.
Although there can be no assurance, we believe that our revenues beginning in
the third quarter of 2009 will be sufficient to offset the cash needs. Our
consultant as commenced discussions with four non-U. S. gaming sites that have
indicated an interest in a revenue sharing arrangement which would include a
game currently in development of a "jockey" style game that allows players to
compete on an online multiplayer basis.
The company also plans the sale of advertising, game and software
licenses and professional software and game development services. We have
only sold one license to date, for $13,325. While we believe that future
revenues will be sufficient, the expected revenues are tenuous and contingent
on a variety of factors. If these revenues are not sufficient to offset cash
usage, the company will seek additional capital through private placements and
or underwriting of securities. If all of these options should fail, the
company may have to terminate the business plan."
We currently have been engaged to provide consulting services to NexJ Systems,
a Toronto, Ontario CRM solutions provider. We will be engaged to provide
programming for 3-D visualization for their electronic health records
initiative at the University of Waterloo in Kitchener, Ontario. We expected to
commence this engagement in the fourth quarter of 2009 but we have experienced
delays which will likely postpone development into 2010.
General. Our primary sources of cash have been sales of common stock through
private placements and loans from affiliates. We are a developmental stage
company and we will rely upon more established third party vendors for many
aspects of the manufacture, sale and distribution of our product. Our cash
balance as of June 02, 2008 was $0 and the cash balance at the end of the
period ended June 30, 2009 was $17,802.
Cash Flows from Operating Activities. Cash flows from operating activities as
of June 30, 2009 experienced a net loss of $$693,404 as compared to a net
loss of $612,101 for the period ended June 30, 2008. Because our inception was
in June, 2008, these periods are not of comparable length. Depreciation and
amortization totaled $3,700 and organizational cost increased by $1,101. Paid
in capital and common stock shares issued for services totaled $600,000 and
accounts payable increased by $1,158 as a result net cash used by operating
activities was $88,546, of which $76,445 was used during the year ended June
30, 2009 As compared to $12,101 during the period inception (June 2, 2008) to
June 30, 2008. Since the company commenced in June, 2008 there is no comparable
period for comparison purposes.
Cash Flows from Investing Activities. Net cash used by investing activities
totaled $28,152 all of which occurred during the year ended June 30, 2009,
consisting of purchase of equipment of $3,252 and software development cost of
$24,900. The net cash used was mainly for the development of the "Combat" game
and the resident website where the game will reside. Since the company
commenced in June, 2008 there is no comparable period for comparison purposes.
Cash Flows from Financing Activities. Net cash provided by financing activities
totaled $134,500 as of June 30, 2009. This consisted of $610 from the issuance
of common stock shares from our private placement which concluded in October,
2008; paid in capital from our private placement of $121,390; and capital
contributions of $12,500 which were recorded during the period inception to
June 30, 2008. Since the company commenced in June, 2008 there is no comparable
period for comparison purposes.
15
Internal Controls
Our auditors, Brock, Schechter & Polakotf, LLP, in the completion of their
audit, reported to management on system deficiencies that constituted material
weaknesses in the internal controls of the Company. We have received their
comments and propose to act on their observations as follows:
1. Internal Control Environment - In order to address the issue, we are
currently implementing an internal control system which, as defined by the
Committee of Sponsoring Organization of the Treadway Commission, achieves the
establishment of a control environment, risk assessment, control activities,
information and communication and monitoring.
2. ATM activity - With the implementation of the internal controls mentioned
above the use of the ATM has been precluded and according to these internal
controls, receipts for business purposes and invoices for services are retained
for the timely and accurate recording into the general ledger system for
monitoring and communicating all financial information.
BUSINESS
We are a developmental stage company and currently have minimal revenues. The
company has developed and launched an online multiplayer game known as "Combat"
which it expects to allow worldwide users to connect through the internet. In
March, 2009 we issued our first annual license for the Combat game to
"Cribwars" Corporation, a Canadian purveyor of a board game of the same name
for the sum of $13,325 plus 50% of the online revenues generated from the
online version of the cribwars game. To date we have received no royalties from
the game.
To play combat, players download the proprietary software from our website to
compete with other players for small prizes and recreation the company hopes to
generate revenue through in-game advertisement, product placement, and, in the
future, possibly gaming. The company hopes to position itself as an online
multiplayer game developer and to create in market other online games in the
future.
The Company develops games with a 3D environment allowing users from around the
globe to enjoy competing in an environment that very closely resembles the
graphic quality of console based systems such as Microsoft's Xbox or Sony's
Play Station.
The game server engine that has been created dynamically "spawns" game rooms as
soon as 50 competitors exceed occupancy in the room. At the beginning of each
competition, each user is given a full "health" status. As other competitors
shoot each other during the game with various weapons and tactical maneuvers,
the "health" status of each competitor is depleted. The last competitor
standing wins the battle.
The game engine was developed to award players on a point system. With each
"win" the competitor accumulates, the system tallies the high point earners at
the end of every day, week and month and awards these competitors with prizes
that are featured on the Combat website. This approach is successful in
attracting a significant user base and also retaining users by offering a
"sticky" competitive environment.
Due to the competitive nature of the gaming environment that the Company's
products generate, the gaming software that has been developed can also
accommodate a wagering environment meant for offshore implementation. Under
this model, each competitor pays a flat game "entry" fee. At the end of the
competition, the "house" retains a certain "rake" and the rest of the pooled
funds are divided accordingly amongst the top three finishers.
Each model, whether point system based or wagering, can have thousands of game
rooms running simultaneously creating a very lucrative recurring stream of
revenue for the Company.
The Company currently generates revenue by placing in-game ads within the
actual gaming environment. By monitoring and tracing each competitors' IP
address the Company is able to dynamically deliver ads that are local to that
particular user. The Company offer its advertisers the opportunity to target
their ad based on geographic location.
Introduction to the "Combat" Game
"Combat," the Company's flagship product, is an online multiplayer game that
allows users to compete amongst each other as medieval characters in a large
combat forum.
The Company has structured the design and implementation of the web portal and
gaming software in a simple fashion meant to make it simple for users of any
age group to access and play the game. The website that our users access is
meant to introduce the game and its objective, collect registration data
through a web based form and forward a download link to the user to validate
their email address and provide them access to the installation file that self
extracts on the users machine. Once the game has been successfully installed,
the user logs into the system. Once validated, the user is entered into a game
room that has less than 50 users logged in. Once the game room limit of 50
users are reached, the competition begins. Within the game, users are
dynamically spawned into existence throughout various areas of the playing
field. The gaming environment in totally 3D and allows the users to manipulate
various camera views and player functions. The battle is officially complete
when there is one person left standing in the arena. Given the current
business model, the system collects user data at the end of every day, week and
month and awards the user with the most accumulated "wins" with the prize
featured on the website.
16
Marketing Strategy
We intend to market our online game "Combat" to advertisers seeking coveted
demographic groups. Management believes that the multiplayer online game format
will attract participation from demographic groups that are attractive to
advertisers. We believe that advertisers will be interested in the number of
players, their demographic characteristics, and the number of hours spent
playing the game. To create a venue for participation by members of attractive
demographic groups, we intend to offer prizes to participants for successful
play. This strategy will seek to select a cafeteria of prizes believed to be
sought after by such persons.
The Company's games are expected to attract an audience that is equally divided
amongst males and females between the ages of 21-35. Each user on average
visits the gaming portal 3 times per week and when a gaming session is
initiated spends an average of 26 minutes playing the game. Given the
demographics that the current gaming title attracts, the Company is easily able
to attract advertisers to expose their product or service to our captivated
audience.
The Company currently expects to use several online marketing strategies to
attract a large number of users to the website. Double opt-in email list have
been purchased that are specifically targeted to online users in various
geographic location that have previously visited websites that are game
related, or are members of a newsletter or online blog that provides gaming
related content. The most successful strategy that we have implemented which
has yielded the most results is affiliate marketing campaigns. The Company is
currently part of an affiliate network that is made up of over 12,000 high
profile websites that circulate awareness of partner products and services
through banner advertisements, blog inserts and email blasts.
The Company has evaluated other marketing strategies such as banner
advertisements on large content portals. The Company has found that targeted
network advertising within affiliate networks, blogs and community centric
websites are far more cost effective and successful in terms of the audience we
are looking to attract.
The Company is also considering being part of gaming conferences that are
hosted in Europe and Asia. Having a presence at these venues will not only
increase awareness of our current and future products, but will also provide
the Company an opportunity to meet potential partners and suitors for future
acquisition.
Derby Dash
The Company has commenced development of another online game tentatively called
"Derby Dash" which is expected to be completed by October, 2009 at
http://derbydash.sweetspot games.ca. The game is an online horse racing
simulator which allows users to connect through the Internet, download
the software and become virtual Jockeys. The Company hopes to generate revenue
through the "pay to play" aspect of the game as well as advertising. The game
is a virtual horse racing game, where the horse is controlled by the user.
There is no "random generator" so we believe this game will be deemed a "game
of skill" for gaming purposes. The company plans on initially launching the
game outside the US in areas where the gaming market is active and gambling
laws are more lenient. We initially expect to license the game to other,
more established gaming portals.
Sales and Distribution
Licensing.
The Company currently intends to license the non-exclusive rights to the Combat
game and future games and applications to third parties on an annual license.
We intend to begin marketing the current Combat game to existing internet
properties on a "white label" basis. Under the terms of the license the Company
will host and maintain the Combat game and will customize or "white label"
the game for the Licensee's applications. The Licensee will retain all
advertising, membership fees, sponsorships and other revenues derived from
the game. Licensees are not permitted to sublicense. Presently, each licensee
is permitted unlimited geographical scope.
In March, 2009, the Company issued its first license to CribWars, a board game
manufacturer located in London, Ontario Canada. The annual license sold for
$13,325 USD for a "CribWars" private label application. In addition, the
Company will receive 50% of the revenue generated from the online version of
Cribwars. To date, we have received no revenues from the royalties.
The Company is in negotiations with five other Canadian persons regarding
additional licensing application. Licensees will participate in cross marketing
arrangements established by the Company.
The Company may, but does not .expect to sell the entire rights to one or more
of its games, including Combat, subject to such licensing agreements as may
then be currently in place.
Direct Sales
The Company has also implemented a Direct Sales model for generating
revenues. On the Company owned version of the games the Company will sell
advertisements, product placement, sponsorships, add cross promotional
marketing. The Company does not intend to charge registration fees, membership
fees or other fees for access to end users.
The Company will retain a Director of Sales which will establish sales
districts for other sales representatives to be recruited and sell within. Our
sales approach is simple. A marketing "ad kit" has been put together to
illustrate to the potential client why it would be beneficial for their
business to place an ad within the Company's gaming "ad network." An extensive
amount of information has been gathered from the Company's online statistical
reporting tools and can be presented to clients to showcase demographical
information that are related to their niche market. The Company has taken a
"localized" approach to generating revenue. The client has the choice of
placing an ad within a Local, District or National scale. The Company's
mandate is to raise the necessary capital to quickly maximize the development
of gaming titles in its portfolio in order to have a greater reach in the
market and consequently be able to sell more advertising space within these
gaming applications. Our sales model will grow exponentially as soon sales
territories area expanded across the United States. The Company's mandate is
to have a dedicated sales force in 4 continents within its second year of
operations.
The pricing model that the Company has implemented is broken down in 3 "tiers"
- - Local, District and National. In order for a client to place an IP specific
ad within the Company's "ad network" for a one month period is divided into
Local, District and National placement. (Each game room within each gaming
title developed by the Company accommodates a total of 25 dynamic ad
placements.) Each of the Company's sales representatives are compensated by
commission and are paid a 20% recurring commission on each ad they sell within
their territory. Each sales representative is trained and mentored by the
Company's Director of Sales prior to assuming their role independently. The
Company's pricing model is marketed as an "introductory" offer. Once traffic
and exposure increases, it is anticipated that the price points of each "tier"
will increase accordingly.
17
Sources of Revenue
In-Game Advertising
The Company has structured its advertising strategy into 3 different tires:
Local, District & National
The difference between each package is where the clients' advertisement will
appear within the Company's ad network. If the client chooses to implement a
Local ad, their advertisement will only appear to users that log into the game
within the same geographic location.
Each game has 25 ad spots per dynamically served IP geographic segment.
Licensing Fees
The Company intends to sell annual non-exclusive licensing to third parties.
The Company will host, maintain and "white label" various games including the
flagship game, Combat. Licensees will be permitted to retain all advertising,
membership fees, access charges, and other sources of revenue. The private
label applications will participate in any cross promotional marketing. All
prizes, winnings and other benefits will be hosted by the licensee and all
obligations will be exclusively that of the licensee.
Cross promotions will be handled by the Company. Discussions have commenced
with a number of companies including sports drinks, clothing, sporting
equipment, computer accessories, vacation package companies and condom
companies. Under these arrangements we will receive no revenues but will
receive advertising and sponsorship space on the websites of these companies
and in connection with certain promotions.
Competition
The Company is looking to enter a market with a very concentrated competitive
environment. Competitors that exist within the industry are few in numbers but
large in size. The Company's direct competitor include Blizzard Entertainment,
which was acquired by Activision. Prior to the acquisition, Blizzard employed
hundreds of employees that focused primarily on the development of their
flagship product, World of Warcraft (WoW). The product is available for
purchase through electronic download or by purchasing a CD version at a retail
venue. Which ever way the user chooses to obtain the product, a purchase price
of approximately $60 US must be incurred. At that point on, the end-user must
pay a monthly subscription fee of approximately $13 US to maintain their
membership within the gaming community. Given that Blizzard launched WoW as a
"pay-to-play" gaming application without offering any free trial opportunity
shows the extreme appetite in the marketplace for such gaming environments.
WoW attracted 40,000 active members within their first month of operations
about 4 years ago. Since then, WoW has a world wide membership base that
exceeds the 7 million mark.
There are several differences between Blizzard's WoW and the Company's "Combat"
product. Both gaming applications are built for "pay-to-play" multi-player
competition although the "Combat" product has been developed on a two tier
model. "Combat" can be installed to operate as a "play-to-win" and "pay-to-
play" wagering model. In the first instance, there is no cost for the user to
register and download the gaming software. The Company generates revenue based
on a pure IP based geographic in-game advertising model. In the second
instance, the user pays a nominal monthly fee to keep their account active,
although the Company gives the user the opportunity to actually win real money
by continuing to compete. WoW functions on a business model that caters to an
audience that is very different from the Company's. The Company's target
audience has a combined interest in both online multiplayer competitive gaming
and performance based compensation. The WoW audience is a pure fictional role-
playing atmosphere that allows the user to focus more on building a character
than wining prizes or money.
18
Industry
According to In-Stat/MDR, the online gaming market will be valued at over $10
billion by the end of 2009. In June of 2008, Nielsen/NetRating released data
of the estimated total number of online gamers. The figure exceeded 46 million
in the U.S. alone. According to market research firm IDC, the popularity of
Internet gaming in Asia has topped online shopping. In countries such as China
and Malaysia, the number of online gamers outnumbers online shoppers by a ratio
of 2-to-1. Pearl Research analysts wrote in a new market study that there are
more than 400 million Internet users across Asia, representing an untapped
market for online gaming content.
According to the latest Strategy Analytics outlook, the global online gaming
market is set to triple in the next 5 years.
The report, "Online Games: Global Market Forecast," notes that the rapidly
expanding Massively Multiplayer Online Games market, led by Blizzard
Entertainment's World of Warcraft franchise, is blazing the way for electronic
sell-through and digital distribution of both PC and console games.
In terms of revenue, the online games category is the largest category out of
the three main online entertainment markets - music, games and video -
according to Strategy Analytics.
It estimates that the global online games market generated $3.8 billion in 2006
and projects that the market will grow with a compound annual growth rate
(CAGR) of 25.2% in the 2007-2011 forecast period to reach $ 11.8 billion -
approximately one-third of the total games software market - by 2011.
That's more than triple 2006's revenues and double the $5.2 billion anticipated
for 2007.
The global in-game advertising market, which generated $77.7 million globally
in 2006, continues to develop at an exponential rate and will, by 2011, grow to
$971.3 million in worldwide in-game advertising expenditures (fixed product
placement/static ads and dynamic ads), according to a recent Yankee Group
report.
This year alone in-game ad expenditures will more than double, reaching $182.7
million, according to the report, "Advertising and Games: 2007 In-Game
Advertising Forecast."
Additional findings in the report:
- Dynamically placed 2D ads will cannibalize static in-game ads, but
fixed product placements will continue to grow through 2011.
- The number of games with in-game ads will double annually through
2008.
- In the near term, PC games will drive the market for dynamically
served ads.
19
New media growth is eclipsing that of traditional advertising media, according
to Yankee: Spending on traditional advertising media (television, newspapers,
radio and magazines) grew $3.6 billion last year, while spending on internet
advertising grew $4.3 billion.
As one part of that trend, connected game devices are becoming the foundation
on which providers build dynamic in-game ad insertion, Yankee said.
"Advertisers are increasingly finding in-game advertising to be a greater
investment value because of the variety of opportunities that exist in and
around games. Video games represent an `above the line' opportunity, which
means that video games should be used to build brands and not as a call to
action that distracts from the game play," said Michael Goodman, director of
digital entertainment in Yankee Group's Consumer Research group.
Implementation of Our Plan and Business Model
The Company has made a significant effort to assure that its customers not only
enjoy an online gaming experience among none other, but in addition provide an
easy to use system in which customer feedback and support tickets can be issued
and resolved quickly and easily. The Company has setup dedicated accounts that
operate on a 24/7 basis with MSN Messenger and Skype. Both services allow the
Company's support team to handle both text based inquiries through the MSN
Messenger software or VOIP Internet calls through the Skype system. Each
communication medium that the Company has chosen to implement provides the
customer with real-time responses. The Company believes that such real-time
response systems compared to the conventional delayed email support systems are
key to retaining a loyal customer base.
The Company retains an advanced in-house group of engineers that are extremely
qualified within the game application development industry. The Company's
product has been developed to be able to be implemented within various
technical environments. The Company is well prepared to accomplish remote
installations and can act as a consultancy firm to implement the product under
a license/royalty or white label agreement.
The Company has made significant investment in hardware peripherals that are
industry leading. Given that the Company is competing in an environment that
requires it to be on the leading edge, continuous investment must be made into
providing the engineering team with the technical resources they require in
order to develop content that not only meets but exceeds industry standards.
The primary product that the Company will bring to market is "Combat" - an
online skill based MMOG (Massive Multi-Player Online Game).
There are significant additions that the Company is planning on introducing as
the user base increases. An entire selection of competition arena maps and
character modification selections are two simple areas in which the Company
will add significant value to their online multi-player gaming environments.
In order to maximize the interactive and real-time communication aspect of the
game, the Company is going to introduce VOIP (Voice Over Internet Protocol)
messaging. This feature will allow each user from around the globe that is
competing amongst other players within the game room to interact in real-time
with the other competitors without having to type messages by hand that
currently take attention away from the competitor.
Given that the Company's current revenue model is based on in-game advertising,
the corporate mandate at this point in time is to develop and market additional
gaming titles. The Company plans on closely maintaining the back-end business
model that has been implemented in the original Combat title. Each additional
gaming title that the Company will release will be based on generating revenue
from in-game advertisements or wagering revenue through an offshore
implementation.
The Company currently retains key engineering talent that has significant
experience in online game development. The Company recruits talent from
Michigan State University's Game Design Program.
The Company has spent over 2 years developing the Combat game. The objective
of the Company is continuously introduce interactive additions to Combat and
simultaneously retain the necessary additional talent to develop additional
gaming titles which will in turn generate further revenue for the Company.
Each MMOG title that the company plans on launching will take approximately 3
months to complete given that the proper amount of engineering talent is
exclusively dedicated to new product development.
It is anticipated that every gaming title could easily generate a minimum of
$100,000 US per month from in-game advertising, not including any residual
income from offshore wagering.
The Company has structured the design and implementation of the web portal and
gaming software in a simple fashion meant to make it simple for users of any
age group to access and play the game. The website that our users access is
meant to introduce the game and its objective, collect registration data
through a web based form and forward a download link to the user to validate
their email address and provide them access to the installation file that self
extracts on the users machine. Once the game has been successfully installed,
the user logs into the system. Once validated, the user is entered into a game
room that has less than 50 users logged in. Once the game room limit of 50
users are reached, the competition begins. Within the game, users are
dynamically spawned into existence throughout various areas of the playing
field. The gaming environment in totally 3D and allows the users to manipulate
various camera views and player functions. The battle is officially complete
when there is one person left standing in the arena. Given the current
business model, the system collects user data at the end of every day, week and
month and awards the user with the most accumulated "wins" with the prize
featured on the website.
Expanding the Company's sales and marketing initiatives to include as many
geographic IP targets will also be a priority. The Company's Director of Sales
and Marketing will initiate an aggressive campaign to recruit representatives
within certain North American geographic targets that will generate significant
revenue for the Company.
20
The Company will maximize its online exposure to generate as much traffic as
possible to its online portal. In order to sustain and be able to handle this
population of users, the Company will consider upgrading its current bandwidth
pipeline in order to supply our customer base with a "zero latency" experience.
Every new employee that joins the Company as a member of the development team
will be asked to sign a Non-Compete and IP Transfer Waiver therefore securing
the Company from having to face any potential lawsuits in the future pertaining
to IP ownership.
Further areas in which the Company must be aware of potential risks are:
- Retention of key engineering talent
- Being first to market with leading edge technology and gaming
content
- Remaining "relevant" to our customer base
- Competitive landscape becoming more fragmented
REGULATION
We are subject to the same federal, state and local laws as other
companies conducting business in the software field. Our products are subject
to copyright laws. We may become the subject of infringement claims or legal
proceedings by third parties with respect to our current or future products. In
addition, we may initiate claims or litigation against third parties for
infringement of our proprietary rights, or to establish the validity of our
proprietary rights. Any such claims could be time-consuming, divert management
from our daily operations, result in litigation, cause product delays or lead
us to enter into royalty or licensing agreements rather than disputing the
merits of such claims. Moreover, an adverse outcome in litigation or a similar
adversarial proceedings could subject us to significant liabilities to third
parties, require the expenditure of significant resources to develop non-
infringing products, require disputed rights to be licensed from others or
require us to cease the marketing or use of certain products, any of which
could have a material adverse effect on our business and operating results.
21
LEGAL PROCEEDINGS
We are not presently involved in any litigation that is material to our
business. We are not aware of any pending or threatened legal proceedings. In
addition, none of our officers, directors, promoters or control persons has
filed or been involved for the past five years:
- in any conviction of a criminal proceeding or involved in a
pending criminal proceeding (excluding traffic violations and minor
offenses)
- is subject to any order, judgment or decree enjoining, barring
suspending or otherwise limiting their involvement in any type of
business, securities, or banking activities,
- or has been found to have violated a federal or state
securities or commodities law.
In 2007, Mr. Galanis filed for protection from creditors under an applicable
section of the Canadian bankruptcy laws. The case is currently pending under
the file name, Estate of Gregory Galanis, Case Number: 35-1058528. Mr. Tim
Carson was been appointed as the Trustee. Discharge was completed on January
15, 2009.
21
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
Directors and Executive Officers.
Name Age Title
- --------------- --- ---------------------------------
Gregory Galanis 27 Founder, President, CEO, Director
Bruce R. Maxim 56 Director
Gerald W. Mills 57 CFO, Director
Art Benjamin 72 COO
Our Bylaws provide that we shall have that number of directors determined by
the majority vote of the board of directors. Currently we have two directors.
Each director will serve until our next annual shareholder meeting. Directors
are elected for one-year terms. Our Board of Directors elects our officers
at the regular annual meeting of the Board of Directors following the annual
meeting of shareholders. Vacancies may be filled by a majority vote of
the remaining directors then in office. Our directors and executive officers
are as follows:
Gregory Galanis - Founder, President, CEO and Director
Gregory Galanis, 27, Chief Executive, Financial and Technical Officer. Mr.
Galanis has been involved in the design, debugging and implementation of
software and hardware systems for over 10 years. From 1999 to 2004 Mr. Galanis
served as Chief Technical officer at ExchangePulse Inc. and managed a team of
developers building a website that broadcast dynamically updating stock quotes
through the Internet and to wireless devices. He consulted with Taurus
Analytices, Inc. in 2004 developing a website that posted financial advice to a
paying customer base of over 20,000 and managing a team of 4 developers. In
2005 Mr. Galanis was employed on a temporary basis with General Motors in the
locomotive division. From 2005 to 2007 Mr. Galanis served as Chief Technical
Officer at Cygnus Gaming Inc. where he developed a portfolio of 8 adver-games
for a large offshore gaming portal. (Built with OpenGL and 3D Studio Max.) He
managed a team of 8 developers and graphic artists. From 2007 to beginning his
current position, Mr. Galanis served as a project manager with ShopAuto where
he managed five developers. While at Shop Auto, Mr. Galanis re-developed the
company's online website, including backend functionality to allow paying
members to add and modify their vehicle inventory and make secure payment.
(Built with PHP and JavaScript) He successfully brought 10 unique keywords to
the Google Adwords Top 5 by implementing strategic SEO methods, building
monthly traffic from 200,000 unique visitors a month to over 1 million. He
also designed an SQL database that contained detailed customer profiles for
future marketing efforts. Mr. Galanis has a degree from the University of
Western Ontario in Business Administration and Computer Science.
In 2007, Mr. Galanis filed for protection from creditors under an applicable
section of the Canadian bankruptcy laws. The case is currently pending under
the file name, Estate of Gregory Galanis, Case Number: 35-1058528. Mr.
Tim Carson has been appointed as the Trustee. The Trustee's address is:
BDO Dunwoody Limited
250 N. Christina St. P.O Box 730
Sarnia, ON, N7T 7J7
Phone: (519) 337-5500
Fax: (519) 337-9886
22
Bruce R. Maxim- Chief Technology Officer and Director
Since September 19, 1991 Dr. Maxim has been an associate professor of the
Computer and Information Science Department at the University of Michigan-
Dearborn. Dr. Maxim earned his Bachelor's of Science and Master's Degree in
Mathematics Education from the University of Michigan in 1973 and 1974
respectively.
He was employed by the University of Michigan as a Programmer, Programmer
Analyst and Senior Programmer Analyst from 1978 to 1984. In 1984 he became a
Visiting Assistant Professor at the University of Michigan in the Department of
Mathematic and Statistics and Information Science Program. He was promoted to
associate professor in September, 1991.
Dr Maxim has written extensively in the field of game design, game development,
and object oriented programming. His work has been recently published in the
37th Annual Frontiers in Education Conference, Proceedings of the 2006 IEEE
Frontiers in Education Conference, the Annual Meeting of the Association for
Engineering Education, in The Internet Encyclopedia.
He is a frequent speaker, reviewer, and collaborator in the field of computer
science, computer science education, and software engineering.
Dr. Maxim serves on and "as needed basis" and does not expect to spend more
than a small portion of his time in the business of the company.
Gerald W. Mills, FCA, Collins Barrow KMD, London. Gerald Mills, a member of the
Institute's Council since 2004, is a Partner at Collins Barrow KMD LLP in
London.
A Chartered Accountant since 1973, Gerry was elected a Fellow of the Ontario
Institute in 2003. Active in the profession, Gerry served as Vice-Chair of
Council, Chair of the Finance Committee and has been a member of the Bylaws
Review Committee. He has also served as both Chair and member of the
Institute's Professional Conduct Committee.
In addition, he has been a member of the Practice Inspection Committee.
Gerry is a Director of the London Chamber of Commerce, was its Honorary
Treasurer for 2006 through to 2008 and a member of its Executive Committee. He
is currently Vice-Chair of the Board of Directors of Compassion Canada, as well
as Chair of its Finance
Committee.
Active in the community, Gerry has been both Director and Chair of the Head
Injury Association of London and District, and is a founding member of his
community church.
Art Benjamin, 72, Chief Operating Officer, spent 13 years at IBM until 1976 as
Senior Product Placement Analyst. While there he was the designer of human
factor interaction and user psychology, pioneering the first "Information
Center." In 1978 he founded Art Benjamin Associates which produced ACT/1,
the first prototyping tool, and introduced the concept of User Architecture
in North America and abroad. In 1983 he co-founded Online People Inc. and
developed an executive-level method for evolving an information technology
strategy, and companies on four continents have implemented that approach.
During the `90s, he also founded Proteo Technology and Practical Systems
developed methods and tools for implementing workflow automation. Since 2001
he has been a private consultant and mentor to various early stage companies
in the technology industry.
Mr. Benjamin has been the recipient of special recognition awards from such
prestigious organizations as the Association of Systems Management and the
Canadian Council of Computer Education. Mr. Benjamin also served as a member of
many committees and advisory groups, including the Education Technology
committee of the National Research Council of Canada and the Grants Awards
committee for the University Research Incentive Fund for the Ontario
Government.
23
Principal Shareholders
The following table contains certain information as of June 6, 2009 as to
the number of shares of Common Stock beneficially owned by (i) each person
known by the Company to own beneficially more than 5% of the Company's Common
Stock, (ii) each person who is a Director of the Company, (iii) all persons as
a group who are Directors and Officers of the Company, and as to the percentage
of the outstanding shares held by them on such dates and as adjusted to give
effect to this Offering.
CURRENT AFTER OFFERING
------- --------------
Name and Position Shares Percentage Percentage
- ----------------- ---------- ---------- ----------
GREGORY GALANIS 22,995,000 76.4% 76.4%
GERALD NEWMAN 2,700,000 8.97% 8.97%
CHARLES BARKLEY 2,400,000 7.97% 7.97%
BRUCE R. MAXIM 0 0 0
GERALD W. MILLS 0 0 0
Officers and Directors
as a Group 22,995,000 76.4% 76.4%
TOTALS 28,095,000 93.4% 93.4%
`
24
Executive Compensation
No compensation was awarded to or paid to any executive officer or of the
Company during the years 2008, 2007, and 2006.
The following table and the accompanying notes provide summary information for
each of the last three fiscal years concerning cash and non-cash compensation
paid or accrued.
Summary Compensation Table
Non-
Non-Equity qualified
Name and Incentive Deferred
Principal Stock(1) Option Plan Compensation All Other
Position Year Salary Bonus Awards Awards Compensation Earnings Compensation Total
- --------- ---- ------ ----- ------ ------ ------------ ------------ ------------ -----
Gregory 2008 0 0 0 0 0 0 0 0
Galanis 2007 0 0 0 0 0 0 0 0
CEO 2006 0 0 0 0 0 0 0 0
Gerald W. 2008 0 0 0 0 0 0 0 0
Mills 2007 0 0 0 0 0 0 0 0
CFO, Director 2006 0 0 0 0 0 0 0 0
Bruce R. 2008 0 0 0 0 0 0 0 0
Maxim 2007 0 0 0 0 0 0 0 0
Director 2006 0 0 0 0 0 0 0 0
Silvester 2008 0 0 0 0 0 0 0 0
Pepi 2007 0 0 0 0 0 0 0 0
Former Director
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 19, 2005, we entered into a Consulting Services Agreement with
Gerald Newman and Associates ("Newman"), a consulting firm in Beverly Hills,
California. Newman will assist us in investor relations, management consulting,
the selection of personnel and other management issues. We have issued
2,700,000 shares to Newman, valued at $0.20 for accounting purposes.
We also retained a securities attorney, Charles Barkley, Attorney at Law, with
offices in Charlotte, NC. As part of the compensation to Mr. Barkley, we issued
195,000 shares of common stock to Mr. Barkley at inception. We also issued at
inception 100,000 shares of common stock to Elizabeth Garcia, who agreed to
serve as our initial corporate secretary and bookkeeper . We have computed
these shares at the rate of 7.5 cents per share. The valuation was entirely
arbitrary, since the company had a significant negative shareholder equity at
the time of the issuance.
Mr. Barkley assisted us in our private placement which closed in October,
2008 and serves as our securities counsel in this filing. Also, in
June, 2009, our CEO, Greg Galanis personally sold 2,205,000 shares to
our securities counsel Charles Barkley. The consideration for that sale
consisted of cash, and exchange of shares and services as follows:
a. Initial cash payments of $1,225;
b. Future legal services to the Company for the first year of public
filings under the Securities Exchange Act of 1934, as amended; and
c. 50% of U.S. Capital Ventures, Inc., a developmental stage Nevada
corporation established in September 2007, that is expected to be
devoted to consulting services for companies interested in cross
border transactions between the United States and Canada.
Mr. Galanis intended this transaction to partially secure required legal
services for the Company without further dilution to the existing shareholders.
As a result, Mr. Galanis has declined any arrangement whereby he is to be
compensated by the Company for exchanging personal assets for legal services
for the Company.
Also in June, 2009, Mr. Galanis gave 300,000 shares to Ms. Gina Romero for
future services in connection with the intended business operations of U.S.
Capital Ventures, Inc. Ms. Romero was an administrative assistant in the
office of our securities attorney until January 2009. The shares delivered
also compensated Ms. Romero for administrative services rendered to the Company
after the termination of her employment with Mr. Barkley's office. Mr. Galanis
did not intend to further dilute the current shareholders, and therefore, there
is no arrangement whereby he is to be compensated by the Company.
Stock Option Agreements
The Company has not entered into stock option agreements with the any
individuals or companies. The management does anticipate that to secure the
services of certain prospective employee that a stock option plan will need to
be effective in the very near future. The company anticipates that such a plan
would allow for options at competitive market rates.
SELLING SHAREHOLDERS
The following table presents information regarding the selling shareholders.
Unless otherwise noted, the shares listed below represent the shares that each
selling shareholder beneficially owned on June 30 , 2009.
Each of the selling shareholders listed below purchased shares in the Company
from a private placement of commencing June 2, 2008 and continuing until
October, 2008. Each of the purchasers were believed by management to be
sophisticated investors who qualify as "accredited investors" under definitions
promulgated under Regulation D. Forty Three of the purchasers were residents of
Canada and two were residents of the United States. The Company believes that
these sales were exempted from registration by Regulation S. Regulation D. All
of the Canadian residents had prior, existing relationships with the management
of the Company and the two U. S. residents had prior, existing relationships
with the consultant to the Company. Each prospective subscriber was given a
subscription agreement and accompanying disclosures. All of the subscribers
were given unlimited access to the management to make such inquiries and
investigations as they deemed appropriate.
Each of the subscribers represented to the Company in writing that:
(a) that they have adequate means of providing for their current needs
and personal contingencies and have no need to sell the Shares of
common stock in the foreseeable future (that is, at the time of the
investment, they can afford to hold the Shares for an indefinite
period of time);
(b) they either alone or with their duly designated purchaser
representative, have such knowledge and experience in business and
financial matters such that they are capable of evaluating the
risks and merits of an investment in our common stock; and
(c) that they are an accredited investor as defined in Regulation D.
We agreed to exert our best efforts to register the shares sold in the
private placement if at least 75% of the offering is sold at Company expense.
There are no other agreements to register any shares although the Company may
seek a legal opinion as to the tradability of the shares issued hereunder.
We are registering the above-referenced shares to permit each of the
selling shareholders and their pledges, donees, transferees or other
successors-in-interest that receive their shares from the selling shareholders
as a gift, partnership distribution or other non-sale related transfer after
the date of this prospectus to resell the shares.
Unless otherwise noted, the following table sets forth the name of each selling
shareholder, the number of shares owned by each of the selling shareholders as
of June 30, 2009, the number of shares that may be offered
under this prospectus and the number of shares of our common stock owned by
the selling shareholders after this offering is completed, assuming all
of the shares being offered are sold. Except as otherwise disclosed below,
none of the selling shareholders has, or within the past three years has had,
any position, office or other material relationship with us. The number of
shares in the column "Shares Offered" represents all of the shares that a
selling shareholder may offer under this prospectus.
Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated
by the SEC under the Exchange Act. The percentages of shares beneficially owned
are based 30,110,000 shares of our common stock outstanding as of March 31,
2009, as set forth in the following table and more fully described in the
applicable footnotes.
25
NAME OF SHARES BENEFICIALLY PERCENTAGE OF SHARES SHARES SHARES BENEFICIALLY PERCENTAGE OF SHARES
SELLING OWNED BEFORE THE OUTSTANDING BEFORE THE BEING OWNED AFTER THE BENEFICIALLY OWNED
SHAREHOLDER OFFERING OFFERING OFFERED OFFERING AFTER THE OFFERING
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Jack Carter 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Michael J. D'Angelo 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Mary Pagoulatos 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Francine Ackland 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Norman W. Ackland 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Brian George 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Manuel Duch-Vidri 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Peter S. Taylor 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Kishin Bhagchandani 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Veena Bhagchandani 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Mary Parks 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Karan Dhami 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Teji Dhami 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
T. Guiltinan 10,000 .00033% 10,000 - 0.000%
Dentistry Prof. Corp.
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Thil - Yong Kang 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Josephine Pepe 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Christina Pepe 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Eugenia Korinis 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Peter Giavanoglou 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Varoslaw Ostrowski 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Kent Wolfe 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Linda Sharma 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Anna Rossi Chrapko 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Nikola Mrksic 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Saleh Elrafih 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Mary McNamee 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Ralph J. Vuolo, JR. 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
David Oswald 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
William W. Fry 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Norine Faulkner 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Ralph Citro 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Jamil Barakat 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Terry Russell 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Jassi Mann 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Surinder Mann 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Pasquale Liberatore 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Paul Monaco 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Michael Monaco 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
John I. Biondic 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Lisa Delaney 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Gino Policicchio 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Ben Policicchio 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
George Stamatakos 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Peter Rona 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
Niall Murphy 10,000 .00033% 10,000 - 0.000%
- --------------------- ------------------- ---------------------- ------- ------------------- --------------------
26
PLAN OF DISTRIBUTION
Distribution by Selling Stockholders
We are registering the shares of our common stock covered by this
prospectus for the selling stockholders. Each selling stockholder, the
"selling stockholders," of the common stock and any of their pledgees,
assignees and successors-in-interest may, from time to time, sell any or all of
their shares of common stock through the OTC Bulletin Board or any other 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. A
selling stockholder may use any one or more of the following methods when
selling shares:
. ordinary brokerage transactions and transactions in which the broker-
dealer solicits purchasers,
. 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,
. purchases by a broker-dealer as principal and resale by the broker-dealer
for its account,
. an exchange distribution in accordance with the rules of the applicable
exchange,
. privately negotiated transactions,
. settlement of short sales entered into after the effective date of the
registration statement of which this prospectus is a part,
. broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share,
. through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise,
. a combination of any such methods of sale, or
. any other method permitted pursuant to applicable law.
27
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. 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. Each Selling Stockholder
has informed us that it does not have any written or oral agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock. In no event shall any broker-dealer receive fees, commissions and
markups which, in the aggregate, that would exceed eight percent (8%).
The selling stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, if available, rather than under this prospectus.
Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction
a markup or markdown in compliance with NASDR IM-2440.
In connection with the sale of the common stock or interests therein, the
selling stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. The selling
stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with broker-
dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The selling stockholders and any broker-dealers or agents that are
involved in selling the shares will be considered "underwriters" within the
meaning of the Securities Act in connection with such sales. 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. Each selling stockholder has
informed us that it does not have any written or oral agreement or
understanding, directly or indirectly, with any person to distribute the common
stock. In no event shall any broker-dealer receive fees, commissions and
markups which, in the aggregate, would exceed eight percent (8%).
Because selling stockholders will be considered "underwriters" within the
meaning of the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act including Rule 172 thereunder. In addition,
any securities covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than under
this prospectus. There is no underwriter or coordinating broker acting in
connection with the proposed sale of the shares by the selling stockholders.
We agreed to keep this prospectus effective until the earlier of (i) the
date on which the shares may be resold by the selling stockholders without
registration and without regard to any volume limitations by reason of Rule
144(k) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The shares will be sold
only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the shares
may not be sold unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable rules and regulations under the Securities Exchange Act
of 1934, any person engaged in the distribution of the shares may not
simultaneously engage in market making activities with respect to the common
stock for the applicable restricted period, as defined in Regulation M, prior
to the commencement of the distribution. In addition, the selling stockholders
will be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including Regulation M, which may limit the timing of
purchases and sales of shares of the common stock by the selling stockholders
or any other person. We will make copies of this prospectus available to the
selling stockholders and have informed them of the need to deliver a copy of
this prospectus to each purchaser at or prior to the time of the sale
(including by compliance with Rule 172 under the Securities Act).
We are required to pay certain fees and expenses incurred by us incident
to the registration of the shares. We have agreed to indemnify the selling
stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
The selling stockholders may offer all of the shares of common stock for
sale. Further, because it is possible that a significant number of shares could
be sold at the same time under this prospectus, such sales, or that
possibility, may have a depressive effect on the market price of our common
stock. We cannot assure you, however, that any of the selling stockholders will
sell any or all of the shares of common stock they may offer.
28
Description of Securities
The Company's authorized capital consists of 70,000,000 shares of Common Stock
and 5,000,000 shares of convertible preferred shares, each with par value
$.001. We have issued 30,110,000 shares of Common Stock, which are currently
outstanding and no preferred shares.
Common Stock
Holders of our common stock are entitled to one vote for each share on all
matters submitted to a stockholder vote. Our stockholders may not cumulate
their votes. Except as otherwise required by applicable law, the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation (or, if any holders of
shares of Preferred Stock are entitled to vote together with the holders of
Common Stock, as a single class with such holders of shares of Preferred
Stock). Holders of common stock are entitled to share in all dividends that the
board of directors, in its discretion, declares from legally available funds.
Each share of Common Stock shall be entitled to the same rights and privileges
as every other share of Common Stock.
Holders of our common stock have no conversion, preemptive or other
subscription rights, and there are no redemption provisions applicable to our
common stock. The Common Stock shall be subject to the express terms of the
Preferred Stock and any series of Preferred stock.
29
In the event of any voluntary or involuntary liquidation, distribution or
winding up of the Corporation, after distribution in full of preferential
amounts to the holders of shares of Preferred Stock, the common stockholders
will be entitled to receive all of the remaining assets of the Corporation.
Each stockholder is entitled to a ratable distribution in proportion to the
number of shares of Common Stock held by them. The Common Stock shall be
subject to the express terms of the Preferred Stock and any series thereof.
Each share of Common Stock shall be equal to every other share of Common Stock,
except as otherwise provided herein or required by law.
Subject to the preferential and other dividend rights applicable to Preferred
Stock, holders of Common Stock shall be entitled to such dividends and other
distributions in cash, stock or property of the Corporation as may be declared
thereon by the Board of Directors from time to time out of assets or funds of
the Corporation legally available therefore. All dividends and distributions on
the Common Stock payable in stock of the Corporation shall be made in shares of
Common Stock.
Preferred Stock
Under Nevada law, we have authorized up to a total of 5,000,000 preferred
shares "blank check" preferred stock. Nevada law permits broad discretion is
determining the rights and preferences of blank check preferred stock. Our
board of directors is authorized, without further stockholder approval, to
issue blank check preferred shares from time-to-time in one or more series,
convertible to common stock at a ratio of ten shares of common stock. As of the
date of this private placement memorandum, there are no outstanding shares of
preferred stock. The Board of Directors may confer voting rights on the
preferred stock which shall have priority over the voting rights of common
stock. The votes of the class of Preferred Stockholders may be weighted more
heavily than the votes of the common stock class.
The Board of Directors is authorized to cause preferred shares to be issued in
one or more classes or series and with may designate preferences with respect
to each such class or series. Each class or series may have designations,
powers, preferences and rights with respect to the shares of each such series
as well as qualifications, limitations or restrictions.
Subject to certain limitations prescribed by law and the rights and preferences
of the preferred stock. Each new series of preferred stock may have different
rights and preferences that may be established by our board of directors. We
may offer preferred stock to our officers, directors, holders of 5% or more of
any class of our securities, or similar parties except on the same terms as the
preferred stock is offered to all other existing or new stockholders.
The Board may determine the rights and preferences of future series of
preferred stock such as:
- Shares;
- Dividends;
- Conversion rights to common stock or other securities;
- Voting rights;
- Preferential payments upon liquidation;
- Establishment of reserves for preferred payments; and
- Redemption prices to be paid upon redemption of the preferred stock.
The company agreed to exert reasonable good faith efforts to register the
securities sold in the 2008 Private Offering within 180 days of the closing.
In connection with the registration rights afforded under the 2005 Private
Offering we engaged Gerald Newman and Associates, a management consultant firm
located in Beverly Hills, CA. We agreed to pay Newman 3 Million of common
stock, which have been valued for accounting purposes at $0.20 per share . The
Company engaged Newman to provide certain services incidental to the formation
and development of the game, the private offering and the registration of the
securities sold in the 2008 offering.
We have granted no registration rights except as registered under this
prospectus.
TRANSFER AGENT AND REGISTRAR
The Company will initially act as its own transfer agent and registrar for
its shares of Common Stock. The Company expects to engage Island Stock
Transfer, Inc., a transfer agent in Tampa, FL after the conclusion of this
offering.
30
LIMITATIONS OF LIABILITY AND INDEMNIFICATION
Our articles of incorporation provide that we will indemnify any person who is
or was a director, officer, employee, agent or fiduciary of our company to the
fullest extent permitted by applicable law. Nevada law permits a Nevada
corporation to indemnify its directors, officers, employees and agents against
liabilities and expenses they may incur in such capacities in connection with
any proceeding in which they may be involved, if (i) such director or officer
is not liable to the corporation or its stockholders due to the fact that his
or her acts or omissions constituted a breach of his or her fiduciary duties as
a director or officer and the breach of those duties involved intentional
misconduct, fraud or a knowing violation of law, or (ii) he or she acted in
good faith and in a manner reasonably believed to be in or not opposed to our
best interests, or that with respect to any criminal action or proceeding, he
or she had no reasonable cause to believe that his or her conduct was unlawful.
In addition, our bylaws include provisions to indemnify our officers and
directors and other persons against expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with the action,
suit or proceeding against such persons by reason of serving or having served
as officers, directors, or in other capacities, if such person either is not
liable pursuant to Nevada Revised Statutes 78.138 or acted in good faith and in
a manner such person reasonably believed to be in or not opposed to the best
interests of our company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendre or its equivalent will not, of
itself, create a presumption that the person is liable pursuant to Nevada
Revised Statutes 78.138 or did not act in good faith and in a manner which such
person reasonably believed to be in or not opposed to the best interests of our
company and, with respect to any criminal action or proceeding, had reasonable
cause to believe that such person's conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
small business issuer pursuant to the foregoing provisions, or otherwise, we
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in such Act and is,
therefore, unenforceable.
There are no provisions in our articles of incorporation or bylaws that would
delay, defer or prevent a change or control.
LEGAL MATTERS
Charles W. Barkley, our counsel, will pass upon the validity of the shares of
common stock offered in this prospectus. Mr. Barkley owns 150,000 restricted
shares of our common stock which are not being registered in this offering.
EXPERTS
The financial statements included in this prospectus have been audited by
Brock, Schechter & Polakoff, LLP, independent registered public accountant to
the extent and for the periods set forth in their report appearing elsewhere
herein and are included in reliance upon such report given upon the authority
of that firm as experts in auditing and accounting.
31
FINANCIAL STATEMENTS
Brock, Schechter & Polakoff, LLP726 Exchnage Street, Suite 822
Buffalo, NY 14210
716-854-5034
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders of
Sweet Spot Games, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Sweet Spot Games, Inc. (A
development stage company) as of June 30, 2009 and June 30, 2008, and the
related statements of income, changes in stockholders' equity, and statements
of cash flows for the period of June 2, 2008 (inception) to June 30, 2008 and
for the year ended June 30, 2009. 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 audits.
We conducted our audits in accordance with the standards of the Public Company
Accountability Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provide 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 Sweet Spot Games, Inc. as
of June 30, 2009 and June 30, 2008 and the results of its operations and its
cash flows for the period from June 2, 2008 (inception) to June 30, 2008 and
for the year ended June 30, 2009 in conformity with U.S. generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that
Sweet Spot Games, Inc. will continue as a going concern. As dicscussed in
Note 1 to the financial statements, under existing circumstances, there is
substantial doubt about the ability of Sweet Spot Games, Inc. to continue
as a going concern. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Buffalo, NY
___________, 2009
32
SWEET SPOT GAMES, INC.
(A Development Stage Company)
BALANCE SHEET
as of June 30, 2009
June 30,
2009 2008
(Restated) (Restated)
-------------- ------------
ASSETS
Current assets
Cash $ 17,802 $ 399
-------------- ------------
Property and equipment
Equipment 3,252 -
Less: accumulated depreciation (933) -
-------------- ------------
Net property and equipment 2,319 -
-------------- ------------
Other assets
Software development costs 24,900 -
Less: accumulated amortization (2,767) -
-------------- ------------
Total other assets 22,133 -
-------------- ------------
$ 42,254 $ 399
============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable - trade $ 600 $ -
Accrued expenses 558 -
-------------- ------------
Total current liabilities 1,158 -
-------------- ------------
Stockholders' equity
Preferred stock - authorized 5,000,000 shares, $0.001
par value; none issued - -
Common stock - authorized 75,000,000 shares, $0.001
par value; issued and outstanding 30,110,000 shares 30,110 29,500
Additional paid in capital 704,390 583,000
Deficit accumulated during the development stage (693,404) (612,101)
-------------- ------------
Total stockholders' equity 41,096 399
-------------- ------------
$ 42,254 $ 399
============== ============
The accompanying notes to financial statements are an integral part of these statements.
F-2
SWEET SPOT GAMES, INC.
(A Development Stage Company)
STATEMENT OF INCOME (LOSS)
For the period from June 2, 2008 (Inception) to
June 30, 2009
For the Year Ended June 2, 2008 June 2, 2008
June 30, (Inception) to (Inception) to
2009 June 30, 2008 June 30, 2009
(Restated) (Restated) (Restated)
------------------ -------------- --------------
Revenue
Sales $ 13,325 $ - $ 13,325
------------------ -------------- --------------
Operating expenses
Bank charges 1,154 - 1,154
Compensation and payroll taxes 5,558 - 5,558
Depreciation and amortization 3,700 - 3,700
Legal and professional fees 38,350 612,101 650,451
Travel 27,555 - 27,555
Other office expense 1,473 - 1,473
Website development expense 16,838 - 16,838
------------------ -------------- --------------
Total operating expenses 94,628 612,101 706,729
------------------ -------------- --------------
Net loss $ (81,303) $ (612,101) $ (693,404)
================== ============== ==============
Weighted average number of * shares outstanding 29,899,167 29,500,000 29,868,462
Loss per share $ (0.00) $ (0.02) $ (0.02)
The accompanying notes to financial statements are an integral part of these statements.
F-3
SWEET SPOT GAMES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDER'S ACUMULATED
DEFICIT
and the period from June 2, 2008 to
June 30, 2009
Common Stock Additional
-------------------------- Paid in Accumulated
Number Capital Deficit Total
of Shares Amount (Restated) (Restated) (Restated)
---------- ------- --------- ----------- ---------
Balance at June 2, 2008*(Date of Inception) 26,500,000 $26,500 $ (14,000) $ - $ 12,500
Common stock issued for services* performed 3,000,000 3,000 597,000 - 600,000
Net loss for June 2, 2008 to June * 30, 2008 - - - (612,101) (612,101)
---------- ------- --------- ----------- ---------
Balance at June 30, 2008 29,500,000 29,500 583,000 (612,101) 399
Private placement memorandum, * shares issued
from July 1, 2009* to September 30, 2008 at $0.20*
per share 450,000 450 89,550 - 90,000
Private placement memorandum, * shares issued
in April and May* 2009 at $0.20 per share 160,000 160 31,840 - 32,000
Net loss for the year ended June * 30, 2008 - - - (81,303) (81,303)
---------- ------- --------- ----------- ---------
Balance at December 31, 2008 30,110,000 $30,110 $ 704,390 $ (693,404) $ 41,096
========== ======= ========= =========== =========
The accompanying notes to financial statements are an integral part of these statements.
F-4
SWEET SPOT GAMES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the period from June 2, 2008 (Inception) to
June 30, 2009
For the Year Ended June 2, 2008 June 2, 2008
June 30, (Inception) to (Inception) to
2009 June 30, 2008 June 30, 2009
(Restated) (Restated) (Restated)
------------------ -------------- --------------
Cash flows from operating activities
Net loss $ (81,303) $ (612,101) $ (693,404)
Adjustments to reconcile net loss to
cash used in operating activities
Depreciation and amortization 3,700 - 3,700
Common stock issued for * services performed - 600,000 600,000
Changes in assets and liabilities
Accounts payable 600 - 600
Accrued expenses 558 - 558
Accrued income taxes
------------------ -------------- --------------
Net cash used in operating activities (76,445) (12,101) (88,546)
------------------ -------------- --------------
Cash flows from investing activities
Cash purchases of property and equipment (3,252) - (3,252)
Cash spent on software development costs (24,900) - (24,900)
------------------ -------------- --------------
Net cash used in investing activities (28,152) - (28,152)
------------------ -------------- --------------
Cash flows from financing activities
Issuance of common stock 122,000 12,500 134,500
------------------ -------------- --------------
Net increase in cash and cash equivalents 17,403 399 17,802
Cash and cash equivalents at * beginning of year 399 - -
------------------ -------------- --------------
Cash at end of year $ 17,802 $ 399 $ 17,802
================== ============== ==============
The accompanying notes to financial statements are an integral part of these statements.
F-5
SWEET SPOT GAMES, INC.
(A Development Stage Company)
Notes to Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Sweet Spot Games, Inc. (the "Company") was organized in Nevada on
June 2, 2008. The Company is a development stage company and
currently has no operations. The Company is a developer of online
multiplayer skill based games.
The Company develops games in a 3D environment allowing users from
around the globe to compete in an environment that very closely
resembles the graphic quality of console based systems such as
Microsoft's Xbox or Sony's Play Station.
"Combat", the Company's flagship product, is an online multiplayer
game that allows users to compete amongst each other as medieval
characters in a large combat forum.
The game server engine that has been created, dynamically "spans"
additional game rooms as soon as 50 competitors exceed occupancy
in the room. At the beginning of each competition each user is
given a full "health" status. As competitors shoot each other
during the game using various weapons and tactical maneuvers, the
"health" status of each competitor is depleted. The last
competitor standing wins the battle.
The game engine was developed to award players on a "per point"
system. With each "win", the system tallies the high point
earners and at the end of every day, week or month, awards these
competitors with prizes that are featured on the "Combat" website.
This approach is successful in attracting a significant repetitive
user base and also retains users by offering a "sticky"
competitive environment.
Currently the Company generates revenue by placing in-game ads
within the gaming environment. By monitoring and tracing each
competitors' IP address the Company is able to dynamically deliver
ads that are local for that particular user. The Company offers
its advertisers the opportunity to target their advertising based
on geographic locations.
The Company's mandate is to continue producing highly attractive
and interactive online multiplayer skill-based games that
revolutionize the environment in which online gaming applications
exist today.
BASIS OF ACCOUNTING
The Company's policy is to prepare its financial statements in
conformity with generally accepted accounting principles in the
United States of America and have been consistently applied in the
preparation of the financial statements on a going concern basis,
which assumes the realization of assets and the discharge of
liabilities in the normal course of operations for the foreseeable
future. The Company maintains it financial records on an accrual
method of accounting.
The Company's ability to continue as a going concern is dependent
upon the continued ability to obtain financing to repay its
current obligations and fund working capital until it is able to
achieve profitable operations. The Company will seek to obtain
capital from equity financing through private placements.
Management hopes to realize sufficient sales in future years to
achieve profitable operations. There can be no assurance that the
Company will be able to raise sufficient debt or equity capital on
satisfactory terms. If management is unsuccessful in obtaining
financing or achieving profitable operations, the Company may be
required to cease operations. The outcome of these matters cannot
be predicted at this time. These financial statements do not give
effect to any adjustments which could be necessary should the
Company be unable to continue as a going concern and, therefore,
be required to realize its assets and discharge its liabilities in
other than the normal course of business and at amounts differing
from those reflected in the financial statements.
F-6
SWEET SPOT GAMES, INC.
(A Development Stage Company)
Notes to Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SOFTWARE DEVELOPMENT COSTS
In March 2000, the Emerging Issues Task Force, known as "EITF,"
reached a consensus on Issue No. 00-2, Accounting for Website
Development Costs. Under EITF Issue No 00-2, accounting for
website development costs depends on the stage in which
costs are incurred as follows: Planning the website: All
costs incurred in this stage are expensed as incurred.
Developing the applications and infrastructure: During this
stage, costs may be incurred to acquire or develop both hardware
and software needed to operate the site. All software costs
should be accounted for under AICPA Statement of Position 98-1
("SOP 98-1"), Accounting for the Cost of Computer Software
Development or obtained for internal use. Under SOP 98-1,
certain software development costs are capitalized and amortized
over the estimated useful life of the website. Graphics are a
component of software and their initial development costs should
be accounted for under SOP 98-1. After the launch of the website,
graphics charges should be expensed as incurred, except for
website enhancements, which should be capitalized. All costs of
operating the site should be expensed as incurred. The costs we
incurred and developing our website are accounted for using EITF
Issue No.00-2.
REVENUE RECOGNITION
The Company will recognize sales revenue at the time of delivery
when ownership has transferred to the customer, when evidence of a
payment arrangement exists and the sales proceeds are determinable
and collectable. After the customer has accessed the website and
answered the questions necessary to execute the forms and
documents for participation, the customer is required to pay
for the services with a credit card. The credit card charge is
immediately electronically processed and approved or declined.
Once approved, the Company immediately completes the actual filing
forms and documents and files them electronically, if possible, or
overnights them to the appropriate state. At that point, we
recognize the revenue from the transaction.
STOCK-BASED COMPENSATION
The Company will account for its employee stock based compensation
arrangements in accordance with the provisions of Accounting
Principles Board ("APB") Opinion No. 25. "Accounting for Stock
Issued to Employees", and related interpretations. As such,
compensation expense for stock options, common stock and other
equity instruments issued to non-employees for services received
will be based upon the fair value of the equity instruments
issued, as the services are provided and the securities earned.
SFAS No. 123, "Accounting for Stock-Based Compensation", requires
entities that continue to apply the provisions of APB Opinion No.
25 for transactions with employees to provide pro forma net
earnings (loss) and pro forma earnings (loss) per share
disclosures for employee stock option grants as if the fair-value-
based method defined in SFAS No. 123 had been applied to these
transactions. For the period from inception (June 2, 2008) to
June 30, 2009, no stock options were committed to be issued to
employees.
INCOME TAXES
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss
carry forwards that are available to be carried forward to future
years for tax purposes. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. When it is
not considered to be more likely than not that a deferred tax
asset will be realized, a valuation allowance is provided for the
excess. Although the Company has significant loss carry-
F-7
SWEET SPOT GAMES, INC.
(A Development Stage Company)
Notes to Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES (CONTINUED)
forwards available to reduce future income for tax purposes, no
amount has been reflected on the balance sheet for deferred income
taxes as any deferred tax asset has been fully offset by a
valuation allowance.
Deferred income taxes are reported for timing differences between
items of income or expense reported in the financial
statements and those reported for income tax purposes in
accordance with Statement of Financial Accounting Standards
number 109 Accounting for Income Taxes, which requires the use of
the asset/liability method of accounting for income taxes.
Deferred income taxes and tax benefits are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases, and for tax loss and
credit carry forwards. The Company provides deferred taxes
for the estimated future tax effects attributable to
temporary differences and carry forwards when realization is more
likely than not.
LOSS PER SHARE
Basic loss per share has been calculated using the weighted
average number of common shares issued and outstanding during the
year.
USE OF ESTIMATES
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to
make certain estimates and assumptions, where applicable, that
affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. While actual
results could differ from those estimates, management does not
expect such variances, if any, to have a material effect on the
financial statements.
RESEARCH AND DEVELOPMENT COSTS
Research is planned search or critical investigation aimed at
discovery of new knowledge with the hope that such knowledge will
be useful in developing a new product or service or a new process
or technique or in bringing about a significant improvement to an
existing product or process. Development is the translation of
research findings or other knowledge into a plan or design for a
new product or process or for a significant improvement to an
existing product or process whether intended for sale or use. It
includes the conceptual formulation, design, and testing of
product alternatives, and operation of pilot plants. It does not
include routine or periodic alterations to existing products,
production lines, manufacturing processes, and other on-going
operations even though those alterations may represent
improvements and it does not include market research or market
testing activities. All research and development costs have been
expensed as incurred in accordance with FASB 2.
DEPRECIATION
Depreciation is computed using the straight-line method over the
assets' expected useful lives of three years.
F-8
SWEET SPOT GAMES, INC.
(A Development Stage Company)
Notes to Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
AMORTIZATION
Software development costs are amortized using the straight-line
method over three years. Amortization expense for the year end
June 30, 2009 was $2,767. There was no amortization expense in
prior periods.
Amortization expense for the next three fiscal years ending June
30 is as follows:
2010 $8,300
2011 8,300
2012 5,533
SUBSEQUENT EVENTS
The Company has evaluated for subsequent events through the date
of the independent auditors' report, which is the date the
financial statements were made available to be issued.
RESTATEMENT
The financial statements have been restated as a result of a
change in auditors.
2. ACCOUNTING PRONOUNCEMENTS
SFAS No. 7, Accounting and Reporting by Development Stage
Enterprises, establishes guidelines for identifying companies in
the development stage and specifies the standards of financial
accounting and reporting that apply to those companies. In
December 2004, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 123R, "Share-Based Payment" ("SFAS 123R"). SFAS
123R revises FASB Statement No. 123 "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25 "Accounting for
Stock Issued to Employees." SFAS 123R requires all public and non-
public companies to measure and recognize compensation expense for
all stock-based payments for services received at the grant-date
fair value, with the cost recognized over the vesting period (or
the requisite service period). SFAS 123R is effective for small
business issuers for all interim periods beginning after December
15, 2005. The adoption of SFAS 123R did not have a material impact
on the Company's financial statements or results of operations.
SFAS No. 123R permits public companies to adopt its requirements
using one of two methods. A "modified prospective" method in which
compensation cost is recognized beginning with the effective date
(a) based on the requirements of SFAS 123R for all share-based
payments granted after the effective date and (b) based on the
requirements of SFAS No. 123 for all awards granted to employees
prior to the effective date of SFAS No. 123R that remain unvested
on the effective date. A "modified retrospective" method which
includes the requirements of the modified prospective method
described above, but also permits entities to restate based on the
amounts previously recognized under SFAS No. 123 for purposes of
pro forma disclosures either (a) all prior periods presented or
(b) prior interim periods of the year of adoption. The Company has
yet to determine which method to use in adopting SFAS 123R.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities" ("SFAS No.
159"). SFAS No. 159 permits entities to choose to measure, on an
item-by-item basis, specified financial instruments and certain
other items at fair value. Unrealized gains and losses on items
for which the fair value option has been elected are required to
be reported in earnings at each reporting date. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007, the
provisions of which are required to be applied prospectively. The
Company believes that SFAS 159 will not have a material impact on
the financial position or results of operations.
F-9
SWEET SPOT GAMES, INC.
(A Development Stage Company)
Notes to Financial Statements
1. ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In December 2007, the FASB issued SFAS No. 160, "Non-controlling
Interests in Consolidated Financial Statements-An Amendment of ARB
No. 51, or SFAS No. 160" ("SFAS No. 160"). SFAS No. 160
establishes new accounting and reporting standards for the non-
controlling interest in a subsidiary and for the deconsolidation
of a subsidiary. SFAS No. 160 is effective for fiscal years
beginning on or after December 15, 2008. The Company believes that
SFAS 160 will not have a material impact on the financial position
or results of operations.
In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of
Generally Accepted Accounting Principles" ("SFAS No. 162"). This
statement identifies the sources of accounting principles and the
framework for selecting the principles to be used in the
preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) in the United States. This
statement is effective 60 days following the SEC approval of the
Public Company Accounting Oversight Board amendments to AU Section
411, "The Meaning of Present Fairly in Conformity With Generally
Accepted Accounting Principles". The Company does not expect the
adoption of SFAS No. 162 to have a material effect on the
financial condition or results of operations of the Company.
In June 2008, the FASB issued FASB Staff Position ("FSP") EITF 03-
6-1, "Determining Whether Instruments Granted in Share-Based
Payment Transactions Are Participating Securities" ("FSP EITF 03-
6-1"). FSP EITF 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities
prior to vesting, and therefore need to be included in the
earnings allocation in computing earnings per share under the two-
class method as described in SFAS No. 128, Earnings per Share.
Under the guidance of FSP EITF 03-6-1, unvested share-based
payment awards that contain non-forfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) are participating
securities and shall be included in the computation of earnings-
per-share pursuant to the two-class method. FSP EITF 03-6-1 is
effective for financial statements issued for fiscal years
beginning after December 15, 2008 and all prior-period earnings
per share data presented shall be adjusted retrospectively. Early
application is not permitted. The Company is assessing the
potential impact of this FSP on the earnings per share
calculation.
In April 2009, the FASB issued FSP No. FAS 157-4, "Determining
Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly" ("FSP FAS 157-4"). FSP FAS
157-4 provides guidance on estimating fair value when market
activity has decreased and on identifying transactions that are
not orderly. Additionally, entities are required to disclose in
interim and annual periods the inputs and valuation techniques
used to measure fair value. This FSP is effective for interim and
annual periods ending after June 15, 2009. The Company does not
expect the adoption of FSP FAS 157-4 will have a material impact
on its financial condition or results of operation.
In May 2009, the FASB released SFAS No. 165, "Subsequent Events,"
which establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but
before the financials statements are issued or available to be
issued. Effective for our financial statements as of June 30,
2009, we reviewed events occurring through the filling date of
this document. See Note 1 for our subsequent events disclosure.
In June 2009, the FASB released SFAS No. 167, "Amendments to FASB
Interpretations No. 46(R)," which addresses the effects on certain
provisions of FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities," as a result of the elimination of the
qualifying special-purpose entity concept in SFAS No. 166,
"Accounting for Transfers of Financial Assets." It addresses
concerns about the application of certain key provisions of
Interpretation 46(R), including those in which the accounting and
disclosures under the Interpretation do not always provide timely
and useful information about a
F-10
1. ACCOUNTING PRONOUNCEMENTS (CONTINUED)
company's involvement in a variable interest entity. This
statement requires us to perform an analysis to determine whether
any of our variable interest gives us a controlling financial
interest in a variable interest entity. In addition, this
statement requires ongoing assessments of whether we are the
primary beneficiary of a variable interest entity. SFAS No. 167
is effective for fiscal years, and interim periods within those
fiscal years, beginning after November 15, 2009. The Company does
not expect the adoption of SFAS 167 will have a material impact on
its financial condition or results of operation.
3. COMMITMENT AND CONTINGENCIES
Liabilities for loss contingencies, arising from claims,
assessments, litigation, fines and penalties and other sources
would be recorded when it is probable that a liability has been
incurred and the amount of the assessment and/or remediation can
be reasonably estimated. Recoveries from third parties, which are
probable of realization are separately recorded, and are not
offset against the related liability, in accordance with FASB No.
39, "Offsetting of Amounts Related to Certain Contracts." The
Company has no pending litigation either offensive or defensive
and the Company has no lease commitments.
4. COMMON STOCK SHARES FOR SERVICES
The Company issued 3,000,000 shares of common stock for
professional fees, consulting and research and development. These
transaction was recorded in accordance with FASB 123R at $.20 per
share.
5. RELATED PARTY TRANSACTIONS
The Company incurred compensation and payroll tax expense in the
amount of $5,558 which was paid to a relative of the Company's
President.
F-11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Registration Fees* $ 179
Federal Taxes -
State Taxes -
Legal Fees and Expenses 30,000
Transfer Agent and Printing 10,000
Blue Sky Fees 5,000
Accounting Fees and Expenses 5,000
Miscellaneous (1) 7,500
-------
Total $57,679
* Estimated Figures
(1) Includes costs for Edgar filings and all other costs anticipated.
Item 14. Indemnification of Directors and Officers.
Our articles of incorporation provide that we will indemnify any person
who is or was a director, officer, employee, agent or fiduciary of our company
to the fullest extent permitted by applicable law. Nevada law permits a Nevada
corporation to indemnify its directors, officers, employees and agents against
liabilities and expenses they may incur in such capacities in connection with
any proceeding in which they may be involved, if (i) such director or officer
is not liable to the corporation or its stockholders due to the fact that his
or her acts or omissions constituted a breach of his or her fiduciary duties as
a director or officer and the breach of those duties involved intentional
misconduct, fraud or a knowing violation of law, or (ii) he or she acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of our company, or that with respect to any criminal action or
proceeding, he or she had no reasonable cause to believe that his or her
conduct was unlawful.
In addition, our bylaws include provisions to indemnify its officers and
directors and other persons against expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with the action,
suit or proceeding against such persons by reason of serving or having served
as officers, directors, or in other capacities, if such person either is not
liable pursuant to Nevada Revised Statutes 78.138 or acted in good faith and in
a manner such person reasonably believed to be in or not opposed to the best
interests of our company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendre or its equivalent will not, of
itself, create a presumption that the person is liable pursuant to Nevada
Revised Statutes 78.138 or did not act in good faith and in a manner which such
person reasonably believed to be in or not opposed to the best interests of our
company and, with respect to any criminal action or proceeding, had reasonable
cause to believe that such person's conduct was unlawful.
Item 15. Recent Sales of Unregistered Securities.
Beginning in June of 2008 and continuing until October of 2008 the company
privately offered up to 500,000 shares of Common Stock to accredited investors
at a price of .20 per share. As part of that private placement we agreed to
assert our best efforts to register the shares sold in the private placement
provided that at least 75% of the shares offered were sold. The company sold
450,000 shares to accredited investors and closed the offering in October of
2008.
The securities offered in both private placements, including the common
stock, sold in reliance upon the exemption from registration contained in
Section 4(2) of the Securities Act and Regulation S and Regulation D
promulgated thereunder, which exempt transactions by an issuer not involving
any public offering. The issuance of the shares was undertaken without general
solicitation or advertising. Each purchaser of the shares represented in the
purchase agreement, among other things, that (a) it was an "accredited
investor", as defined in Regulation D promulgated under the Securities Act of
1933, (b) it had obtained sufficient information from us to evaluate the merits
and risks of an investment in the shares of our common stock and (c) it was
acquiring the shares of our common stock for investment purposes and not with a
view to any public resale or other distribution in violation of the Securities
Act of 1933 or the securities laws of any state. In addition, the stock
certificate representing these shares contained a legend that they are
restricted securities under the Securities Act of 1933. These securities may
not be offered or sold in the United States in the absence of an effective
registration statement or exemption from the registration requirements under
the Securities Act.
Other Consultants
On January 19, 2005, we entered into a Consulting Services Agreement with
Gerald Newman and Associates ("Newman"), a consulting firm in Beverly Hills,
California. Newman will assist us in investor relations, management consulting,
the selection of personnel and other management issues. We have issued
2,700,000 shares to Newman, valued at $0.20 for accounting purposes.
We also retained a securities attorney, Charles Barkley, Attorney at Law, with
offices in Charlotte, NC. As part of the compensation to Mr. Barkley, we issued
195,000 to Mr. Barkley at inception. We also issued at inception 100,000
shares, or $7,500 to Elizabeth Garcia, a member of Mr. Barkley's staff who
agreed to serve as our initial corporate secretary and bookkeeper . We have
computed these shares at the rate of 7.5 cents per share. The valuation was
entirely arbitrary, since the company had a significant negative shareholder
equity at the time of the issuance.
Mr. Barkley assisted us in our private placement which closed in October, 2008
and serves as our securities counsel in this filing.
In June, 2009, the Company accepted 5 additional subscriptions from 4 existing
shareholders and one new shareholder, all of whom are non-US persons as defined
by Regulation S and accredited investors as defined by Regulation D. A total of
150,000 shares were sold. All of the subscribers certified to the Company that
they were not solicited by the registration statement.
Also, in June, 2009, our CEO, Also, in 2009, Greg Galanis personally sold
2,205,000 shares to our securities counsel Charles Barkley. The
consideration for that sale consisted of cash, and exchange of shares and
services as follows:
a. Initial cash payments of $1,225;
b. Future legal services to the Company for the first year of public
filings under the Securities Exchange Act of 1934, as amended; and
c. 50% of U.S. Capital Ventures, Inc., a Nevada corporation established
in September 2007, that is expected to be devoted to consulting
services for companies interested in cross border transactions
between the United States and Canada.
Mr. Galanis intended this transaction to partially secure required legal
services for the Company without further dilution to the existing shareholders.
As a result, Mr. Galanis has declined any arrangement whereby he is to be
compensated by the Company for exchanging personal assets for legal services
for the Company.
Also in June, 2009, Mr. Galanis gave 300,000 shares to Ms. Ginna Romero for
future services in connection with the intended business operations of U.S.
Capital Ventures, Inc. Ms. Romero was an administrative assistant in the
office of our securities attorney until January 2009. The shares delivered
also compensated Ms. Romero for administrative services rendered to the Company
after the termination of her employment with Mr. Barkley's office. Mr. Galanis
did not intend to further dilute the current shareholders, and therefore, there
is no arrangement whereby he is to be compensated by the Company.
We believe these were private placements within the meaning of the rules
and regulations under the Securities Act. Each purchaser of the shares
represented in the purchase agreement, among other things, that (a) it was an
"accredited investor", as defined in Regulation D promulgated under the
Securities Act of 1933, (b) it had obtained sufficient information from us to
evaluate the merits and risks of an investment in the shares of our common
stock and (c) it was acquiring the shares of our common stock for investment
purposes and not with a view to any public resale or other distribution in
violation of the Securities Act of 1933 or the securities laws of any state. In
addition, the stock certificate representing these shares contained a legend
that they are restricted securities under the Securities Act of 1933. These
securities may not be offered or sold in the United States in the absence of an
effective registration statement or exemption from the registration
requirements under the Securities Act.
Item 16. Exhibits.
The following is a list of Exhibits filed as part of this registration
statement:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ---------- ----------------------
3.1* Articles of Incorporation
3.2* Bylaws
4.1* Form of Stock Certificate
5.1* Legal Opinion
10.1* Consulting Agreement with Newman and Associations
10.2* Subscription Agreement and Subscriber Information
14.1* Code of Ethics
23.1 Consent of Charles Barkley, Attorney (Included in exhibit 5)
23.2 Consent of Greg Lamb, CPA
- ----------
* Previously filed
ITEM 17. UNDERTAKINGS.
a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of 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) 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;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the 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 registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
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 registrant 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 Act and will be governed by the final
adjudication of such issue.
(c)The undersigned registrant hereby undertakes that if the registrant is
subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of
a registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to such
date of first use.
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 the requirements of filing of Form S-1 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of London,
Ontario, Canada on October 16, 2009.
Sweet Spot Games, Inc.
/s/ Gregory Galanis
- -------------------
By: Gregory Galanis
Title: President & CEO, Director
Sweet Spot Games, Inc.
/s/ Gerald W. Mills
- -------------------
By: Gerald W. Mills
Title: Chief Financial Officer, Director
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 date stated.
/s/ Gregory Galanis
-------------------
By: Gregory Galanis
Title: President,CEO, and Director
/s/ Gerald W. Mills
-------------------
By: Gerald W. Mills
Title: Chief Financial Officer, Director
/s/ Gerald W. Mills
-------------------
By: Gerald W. Mills
Title: Chief Accounting Officer, Director
(Principal Accounting Officer)
Date: October 16, 2009
A Majority of the Board of Directors
/s/ Gregory Galanis
-------------------
By: Gregory Galanis
Title: President,CEO, and Director
/s/ Gerald W. Mills
-------------------
By: Gerald W. Mills
Title: CFO, Director