UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-1/A THIRD AMENDMENT
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CREDEX CORPORATION
(Exact name of registrant as specified in its charter)
Florida 6199 16-1731286
(State or Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification
Number)
454 Treemont Drive, Orange City, Fl 32763
(386) 218-6823
(Address including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
Richard R. Cook, Esq.
Credex Corporation
454 Treemont Dr., Orange City, FL 32763
(386) 218-6823
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code,of Agent for Service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to 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 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 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 filed, a non-accelerated filer, or a smaller reporting company, See
the definitions of "large accelerated filed," "accelerated filer" and "smaller
reporting company" in Ruler 12b-2 of the Exchange Act.
Large accelerated filer ___ Accelerated filer ___
Non-accelerated filer ___ Smaller reporting company X
(Do not check if a smaller reporting company)
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CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
"Title of Each Class of Being Price Per Offering Registration
Security Being Registered" Registered Security Price Fee
Shares of common stock, par
value $.001 per share(2) 2,940,625 $0.25(1) $735,156 $52.42
Total 2,940,625 $735,156 $52.42
(1) Calculated pursuant to Rule 457 under the Securities Act of 1933
arbitrarily set because of no trading history because this registration
statement is being filed concurrently with Form 10 statement under the
Securities Act of 1934 to allow initial reporting and trading to start.
(2) Represents shares of the Registrant's common stock being registered for
resale that have been issued to the selling stockholders named in this
registration statement.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE 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 IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
2,940,625 Shares of Common Stock
The offering is for 2,940,625 shares of our common stock held by current
shareholders (selling stockholders) that are being registered for sale on a
continuous basis. Credex will not receive any of the proceeds from the sale of
stock by the Selling Stockholders.
Until such time as our common stock is listed on the Over the Counter Bulletin
Board, we expect that the selling stockholders will sell their shares at prices
between $ .15 and $.25, if any shares are sold. After our common stock is
quoted on the OTCBB, the selling stockholders may sell all or a portion of these
shares from time to time in market transactions through any stock exchange
or market on which our stock is then listed, in negotiated transactions or
otherwise, and at prices and on terms that will be determined by the
then-prevailing market price or at negotiated prices.
None of our stock is now being publicly traded. When and if a public market
develops, you are urged to obtain current market quotations of our common stock
before purchasing any of the shares being offered for sale pursuant to this
prospectus.
These securities involve a high degree of risk. Please carefully review the
section titled "Risk Factors" on page 7.
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.
This prospectus is not an offer to sell any securities other than the shares of
common stock offered hereby. This prospectus is not an offer to sell securities
in any circumstances in which such an offer is unlawful.
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information contained in this
prospectus is accurate as of any date other than
THE DATE OF THIS PROSPECTUS IS [ ], 2010.
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CREDEX CORPORATION
TABLE OF CONTENTS Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 5
SUMMARY OF THE OFFERING 5
RISK FACTORS 7
WHERE YOU CAN FIND ADDITIONAL INFORMATION 14
DIVIDEND POLICY 15
DETERMINATION OF OFFERING PRICE 15
DILUTION 16
SELLING STOCKHOLDERS 17
PLAN OF DISTRIBUTION 18
DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED 20
INTERESTS OF NAMED EXPERTS AND COUNSEL 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND PLAN OF OPERATIONS 23
PROPOSED BUSINESS 26
MANAGEMENT 37
EXECUTIVE COMPENSATION 42
PRINCIPAL SHAREHOLDERS 43
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 43
LEGAL PROCEEDINGS 44
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION 44
INDEMINIFICATION OF DIRECTORS AND OFFICERS 44
SECURITIES AND EXCHANGE COMMISSION INDEMNIFICATION DISCLOSURE 44
RECENT SALES OF UNREGISTERED SECURITIES 45
FINANCIAL STATEMENTS 47
UNDERTAKINGS 61
SIGNATURES 64
EXHIBITS
3.(i) RESTATED ARTICLES OF INCORPORATION OF CREDEX CORPORATION
3.(ii) BYLAWS OF CREDEX CORPORATION
5 OPINION LETTER OF ATTORNEY
10 AGREEMENT FOR SERVICES
10.1 AGREEMENT WITH PIF SERVICES
23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
CREDEX CORPORATION (the "Company") is including the following cautionary
statement to make applicable and take advantage of the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995 for any forward-looking
statements made by, or on behalf of, the Company. The information contained in
this registration statement, includes some statements that are not purely
historical and that are forward-looking statements. Such forward-looking
statements include, but are not limited to, statements regarding management's
expectations, hopes, beliefs, intentions or strategies regarding the future,
including our financial condition and results of operations. In addition, any
statements that refer to projections, forecasts or other characterizations of
future events or circumstances, including any underlying assumptions, are
forward-looking statements. The words "anticipates," "believes," "continue,"
"could," "estimates," "expects," "intends," "may," "might," "plans," "possible,"
"potential," "predicts," "projects," "seeks," "should," "would" and similar
expressions, or the negatives of such terms, may identify forward-looking
statements, but the absence of these words does not mean that a statement is
not forward-looking. The forward-looking statements contained in this
Prospectus are based on current expectations and beliefs concerning future
developments. These that may cause actual results or performance to be
materially different from those expressed or implied by these forward-looking
statements involve a number of risks and uncertainties some of which are beyond
the companies' control. In addition to other factor and matters discussed
elsewhere herein, the following is an important factors that, in the view of
the Company, could cause actual results to differ materially from those
discussed in the forward-looking statements: the ability of the Company to
obtain acceptable forms and amounts of financing to fund planned operations,
technology development, marketing and other expansion efforts. The Company has
no obligation to update or revise forward-looking statements to reflect the
occurrence of future events or circumstances. You should also read the Risk
Factors set out on page 7 through 17 of this Prospectus in conjunction with
this Cautionary Statement.
Summary of the offering
You should read the entire prospectus, including "Risk Factors," our financial
statements, the related notes thereto and the other documents to which this
prospectus refers, before making an investment decision. In this prospectus, the
terms Credex,
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"the Company," "we," "our" and "us" refer to Credex Corporation, a Florida
corporation.
The offering is for 2,940,625 shares of our common stock held by current
shareholders (selling stockholders) that is being registered. Credex will not
receive any of the proceeds from the sale of stock by the Selling Stockholders.
Information regarding the Selling Stockholders and the times and manner in
which they may offer and sell the shares under this prospectus is provided under
"Selling Stockholders" and "Plan of Distribution" in this prospectus.
The Selling Stockholders, and any broker-dealer executing sell orders on behalf
of the Selling Stockholders or Credex, may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933. Commissions received by any
broker-dealer may be deemed to be underwriting commissions under the Securities
Act of 1933. See "Plan of Distribution."
Credex is not an operating company and has never earned revenue from operations.
Credex is not operating it's business until such time as capital is raised for
operations.
Credex Corporation, a Florida Corporation formed on September 2, 2005, for
purchasing, servicing, managing and reselling of non-performing (defaulted)
unsecured credit card debt portfolios to be acquired from financial institutions
distressed debt wholesalers and other debt resellers.
The Company intends to purchase portfolios with all rights, title and interest
of non-performing accounts receivable (credit card debt) at deeply discounted
rates, (approximately 3% or less of face values), outsource the collection
process, develop a portfolio of restructured debt and sell the residual
portfolio.
Non-performing portfolios accumulate in the normal course of operations, when a
credit grantor from time to time charges-off from its books, accounts which are
delinquent. Because the outstanding balance remains the obligation of the
defaulting customer, a group of charged-off accounts (a portfolio) contains
a value which can be obtained through various collection techniques. This value
or yield is dependent upon several variables such as creditor standards,
geographical stratification of the portfolio, age of the charge-offs, stages of
internal and external collection efforts, elapsed time since collection was last
worked, elapsed time since last activity, past recovery obtained from collection
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efforts and whether the debt is within the statute of limitations. These
portfolios may be acquired at significant discounts of their face value, ranging
from $0.01 to $0.57 on the dollar, with an expected return of 10% to 12% of the
face value of the portfolios. The Company intends to purchase portfolios of
Primary, Secondary and Tertiary distressed credit card debt from distressed debt
wholesalers and re-sellers because they offer smaller portfolios for sale and
re-purchase. These portfolios usually sell for $0.01 to $0.03 per dollar of face
value. The prices stated are for 2009. On average, approximately $800,000 of
face value defaulted credit card debt can be purchased with $12,000.
Credex's executive office is located at and its mailing address is 454 Treemont
Drive, Orange City, FL 32763. The telephone number is (386) 218-6823. The fax
number is (386)218-6823.
RISK FACTORS
THE SHARES ARE HIGHLY SPECULATIVE, INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE
PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT.
PROSPECTIVE INVESTORS IN THE SHARES SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS.
BECAUSE CREDEX LACKS OPERATING HISTORY, IT POSSIBILY MAY GO OUT OF BUSINESS.
New ventures are inherently more risky than seasoned operating ventures.
Although Credex has not operated pursuant to its business plan, in 2005 Credex
purchased a portfolio of defaulted credit card debt to test the feasibility of
its business plan. On a trial basis accounts from the portfolio were collected.
The remainder of the portfolio was then sold. These transactions are shown in
the statement of operation in Item 13 of this Registration Statement.
BECAUSE CREDEX IS A DEVELOPMENT STAGE COMPANY, IT POSSIBLY MAY GO OUT OF
BUSINESS.
Credex is a development stage company. The Company will be reliant upon
additional funding of $250,000 during the next twelve (12)
months to initiate its business. This money may not be raised.
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IF IT IS NOT SUCCESSFUL IN SELLING ITS SHARES, WHEN OFFERED, CREDEX MAY GO OUT
OF BUSINESS.
When it offers its shares for sale to the public, Credex may be unsuccessful
because it has no operations, it has no public market for its shares, and it
has not implemented its business plan.
IF CREDEX DOES NOT ATTAIN ITS GOALS FOR GROWTH, THE COMPANY MAY GO OUT OF
BUSINESS.
Credex has not implemented its business plan, has not hired needed key
personnel, and has not ontained the required funding for implementation of
planned operations. Because of these factors, Credex may not achieve its
business goal for growth.
BECAUSE OF UNCERTAINTY OF SIGNIFICANT ASSUMPTIONS FOR FUNDING FROM STOCK SALES
NOT HEPPENING, CREDEX MAY GO OUT OF BUSINESS.
Credex is a development stage company. The Company will be reliant upon
additional funding of $250,000 during the next twelve (12)
months to initiate its business. This money may not be raised.
The Company's plans for financing and implementing its planned business
operations and the projection of the Company's potential for profitability from
its intended operations are based on the experience, judgment and certain
assumptions of management and upon certain available information concerning
availability of non-performing credit card debt. Funds anticipated through
stock sales may not be realized. The Company's plans are based on the following
assumptions: That all or any Shares in future offerings will be sold; that the
Company will be successful in adhering to its planned formula for growth; and
that sales will reach a minimum level to allow profitability. The Risk is that
this money may not be raised.
THE COMPETITION FACED BY CREDEX MAY CAUSE CREDEX NOT TO ATTAIN ITS GROWTH PLANS
RESULTING IT GOING OUT OF BUSINESS.
Competitors of the Company include traditional consumer debt buyers and sellers
such as Portfolio Recovery Associates, Collins Financial Services, Inc.,
Oliphant Financial Corp., US Credit Corp., and many other financial
institutions. Competitors have an advantage over the Company primarily due to
the fact that they have more funds to invest in portfolio purchases. These
competitors also have lengthy profitable operating histories.
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BECAUSE OF UNCERTAINTY OF ADEQUACY OF FINANCIAL RESOURCES FROM PROFITABLE
OPERATIONS, CREDEX MAY GO OUT OF BUSINESS.
Credex is a development stage company. The Company will be reliant upon
additional funding of $250,000 during the next twelve (12)
months to initiate its business as set forth in its continuing strategic plan
for growth.
Credex may not reach profitability from operations because of the competition
it faces, funding needed for key personnel and implementation of the planned
operations, and meeting of its milestones in the next twelve months. [Refer
to page 7 ]
BECAUSE OF DEPENDENCE ON KEY PERSONNEL, CREDEX MAY GO OUT OF BUSINESS.
The Company has been significantly dependent on the services of Cypress, Denise
Leonardo, Chairman, President/CEO and Steven G. Salmond, Treasurer/CFO and,
Secretary. In the future, the Company will be dependent upon their services and
outside consultants in distressed debt purchasing, managing and re-selling and
any future employees of the Company for the continued development of the
Company's services. The loss of services of senior management could have a
substantial adverse effect on the Company. The success of the Company's
business will be largely contingent on its ability to attract and retain highly
qualified corporate and operations level management team.
POTENTIAL LIABILITY AND INSURANCE COSTS MAY CAUSE CREDEX TO GO OUT OF BUSINESS.
As with all businesses operating in today's somewhat litigious atmosphere, the
Company's intended operations could expose it to a risk of liability for legal
damages arising out of its operations. The Company intends to carry acceptable
levels of liability insurance for its industry.
BECAUSE OF NO HISTORICAL BASIS FOR MANAGEMENT'S OPINION, EVALUATION OF CREDEX
IS DIFFICULT.
Although all of the Company's Officers, Directors, and its management team have
experience in and have been involved in the daily operations of the Company,
which to this point have involved almost exclusively the securing of capital so
the Company can execute it's business plan. There is no basis, other than the
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judgment of the Company's management, on which to estimate, (i) the level of
market acceptance or the amount of revenues which the Company's planned
operations may generate, or (ii) other aspects of the Company's proposed
operations.
NO TRADING HISTORY OF COMMON STOCK MAKES STOCK TRADING PRICE IF ANY NOT POSSIBLE
TO ESTIMATE.
The Company's Common Shares have not been traded publicly. Recent history has
shown that the market price of Common Stock fluctuates substantially due to a
variety of factors, including market perception of a company's ability to
achieve its planned growth, quarterly operating results of the Company or other
similar companies, the trading volume in the Company's Common Stock, changes in
general conditions in the economy or other developments affecting the Company or
its competitors. In addition, the stock market is subject to extreme price and
volume fluctuations. Volatility has had a significant effect on the market
prices of securities issued by many companies for reasons unrelated to the
operating performance of these companies.
BECAUSE CREDEX HAS NOT COMMENCED PLANNED OPERATIONS, WHICH MUST BE PROFITABLE
FOR DIVIDEND PAYMENTS, DIVIDENDS CANNOT BE ESTIMATED OR PAID.
No dividends have been paid on the Shares and the Company does not anticipate
the payment of cash dividends in the foreseeable future. If the operations of
the Company become profitable, it is anticipated that, for the foreseeable
future, any income received would be devoted to the Company's future operations
and that cash dividends would not be paid to the Company's Shareholders.
(See "Business - Dividend Policy.")
BECAUSE OF LACK OF MANAGEMENT EXPERIENCE NEEDED FOR PLANNED OPERATIONS, CREDEX
MAY GO OUT OF BUSINESS.
None of the officers or directors has any experience in management of a company
providing the services Credex proposes to offer.
Mr. Salmond, the Company's CFO, has experience managing and operating a public
company. Failure to comply or adequately comply with any laws, rules, or
regulations applicable to our business may result in fines or regulatory actions
which may materially adversely affect our business, results of operation, or
financial condition and could result in delays in the development of an active
and liquid trading market for our stock.
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IF WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROL OVER FINANCIAL
REPORTING, OUR ABILITY TO ACCURATELY AND TIMELY REPORT OUR FINANCIAL RESULTS OR
PREVENT FRAUD MAY BE ADVERSELY AFFECTED AND INVESTOR CONFIDENCE AND THE MARKET
PRICE OF OUR COMMON STOCK MAY BE ADVERSELY IMPACTED.
Recently, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010,
which became effective on July 21, 2010, has amended Section 404 of the
Sarbanes-Oxley Act of 2002 (the "Act"). The rules adopted by the SEC pursuant to
the Act require an annual assessment of our internal control over financial
reporting. The SEC extended the compliance dates for non-accelerated filers, as
defined by the SEC. Accordingly, we believe that the annual assessment of our
internal controls requirement will first apply to our annual report for the 2010
fiscal year. The standards that must be met for management to assess the
internal control over financial reporting as effective are new and complex, and
require significant documentation, testing and possible remediation to meet the
detailed standards. We may encounter problems or delays in completing activities
necessary to make an assessment of our internal control over financial
reporting. Pursuant to the amended Act, as neither a "large accelerated filer"
nor an "accelerated filer", we are exempt from the requirements of Section
404(b) of the Act to obtain an auditor's report on management's assessment of
the effectiveness of the Company's internal control over financial reporting.
The expense of compliance may prohibit the Company from becoming operational.
CREDEX NEEDS FOR ADDITIONAL EMPLOYEES IF SUITABLE EMPLOYEES ARE NOT FOUND CREDEX
MAY GO OUT OF BUSINESS.
The Company's future success also depends upon its continuing ability to attract
and retain highly qualified personnel. Expansion of the Company's business and
operation will require additional managers and employees with industry
experience, and the success of the Company will be highly dependent on the
Company's ability to attract and retain skilled management personnel and other
employees. There can be no assurance that the Company will be able to attract or
retain highly qualified personnel. Competition for skilled personnel in the
construction industry is significant. This competition may make it more
difficult and expensive to attract, hire and retain qualified managers and
employees.
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THERE IS LIMITED LIQUIDITY ON THE BULLETIN BOARDS WHICH LIMITS THE POTENTIAL
MARKET FOR ITS STOCK..
We intend to have our stock quoted on the OTC Bulletin Board or through the Pink
Quotation System Bulletin Board. The OTC Bulletin Board is a significantly more
limited market than the New York Stock Exchange or NASDAQ system. When fewer
shares of a security are being traded on the OTCBB, volatility of prices may
increase and price movement may outpace the ability to deliver accurate quote
information. Due to lower trading volumes in shares of our Common Stock, there
may be a lower likelihood of one's orders for shares of our Common Stock being
executed, and current prices may differ significantly from the price one was
quoted at the time of one's order entry.
IN ORDER TO RAISE SUFFICIENT FUNDS TO EXPAND OUR OPERATIONS, WE MAY HAVE TO
ISSUE ADDITIONAL SECURITIES AT PRICES WHICH MAY RESULT IN SUBSTANTIAL DILUTION
TO OUR SHAREHOLDERS THUS LIMITING THE MARKET FOR OUR STOCK.
If we raise additional funds through the sale of equity or convertible debt, our
current stockholders' percentage ownership will be reduced. In addition, these
transactions may dilute the value of our common shares outstanding. We may have
to issue securities that may have rights, preferences and privileges senior to
our common stock. We cannot provide assurance that we will be able to raise
additional funds on terms acceptable to us, if at all. If future financing is
not available or is not available on acceptable terms, we may not be able to
fund our future needs, which would have a material adverse effect on our
business plans, prospects, results of operations and financial condition.
WE NEED ADDITIONAL CAPITAL TO FUND OUR OPERATIONS. WE MAY NOT BE ABLE TO OBTAIN
SUFFICIENT CAPITAL AND MAY BE FORCED TO LIMIT THE SCOPE OF OUR PROPOSED
OPERATIONS.
If adequate additional financing is not available on reasonable terms, we may
not be able to carry out our corporate strategy and we would be forced to modify
our business plans accordingly.
In connection with our growth strategies, we may experience increased capital
needs and accordingly, we may not have sufficient capital to fund our future
operations without additional capital investments. Our capital needs will depend
on numerous factors, including (i) our profitability; (ii) the release of
competitive products by our competition; (iii) the level of our investment in
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research and development; and (iv) the amount of our capital expenditures,
including acquisitions. We cannot assure you that we will be able to obtain
capital in the future to meet our needs.
In recent years, the securities markets in the United States have experienced
a high level of price and volume volatility, and the market price of securities
of many companies have experienced wide fluctuations that have not necessarily
been related to the operations, performances, underlying asset values or
prospects of such companies. For these reasons, our securities can also be
expected to be subject to volatility resulting from purely market forces over
which we will have no control. If we need additional funding we will, most
likely, seek such funding in the United States and the market fluctuations
affect on our stock price could limit our ability to obtain equity financing.
IF WE CANNOT OBTAIN ADDITIONAL FUNDING, WE MAY BE REQUIRED TO: (I) LIMIT OUR
EXPANSION; (II) LIMIT OUR MARKETING EFFORTS; AND (III) DECREASE OR ELIMINATE
CAPITAL EXPENDITURES. SUCH REDUCTIONS COULD MATERIALLY ADVERSELY AFFECT OUR
BUSINESS AND OUR ABILITY TO COMPETE.
Even if we do find a source of additional capital, we may not be able to
negotiate terms and conditions for receiving the additional capital that are
favorable to us. Any future capital investments could dilute or otherwise
materially and adversely affect the holdings or rights of our existing
shareholders. We cannot give you any assurance that any additional financing
will be available to us, or if available, will be on terms favorable to us.
BECAUSE OF PENNY STOCK REGULATIONS, CREDEX MAY NOT BE ABLE TO INTEREST THE
NEEDED BROKER-DEALERS TO MAKE A MARKET FOR ITS SHARES.
The stock registered hereby are subject to "Penny Stock" regulations.
Broker-dealer practices in connection with transactions in "penny stock" are
regulated by certain penny stock rules adopted by the Commission. Penny stocks
generally are equity securities with a price of less than $5.00 (other than
securities registered on certain national securities exchanges or quoted on
Nasdaq provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or systems) or to
other than establish customers or accredited investors. [In general, "accredited
13
investors" are defined as institutions with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 with their spouses.]
The penny stock rules require a broker-dealer, prior to transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized disclosure
document that provided information about penny stocks and the risks in penny
stock market. The broker-dealer also must provide the customer with current
bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its sales person in connection with the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing
the level of trading activity in the secondary market for a stock that becomes
subject to the penny stock rules. If the Company's securities become subject
to the penny stock rules, investors in the Offering may find it more difficult
to sell their securities.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the
Securities Act with respect to the shares of common stock offered hereby. This
prospectus, which constitutes a part of the registration statement, does not
contain all of the information set forth in the registration statement or the
exhibits and schedules filed therewith. For further information about us and
the common stock offered hereby, we refer you to the registration statement and
the exhibits and schedules attached thereto. Statements contained in this
prospectus regarding the contents of any contract or any other document that is
filed as an exhibit to the registration statement are not necessarily complete,
and each such statement is qualified in all respects by reference to the full
text of such contract or other document filed as an exhibit to the registration
statement. Upon completion of this offering, we will be required to file
periodic reports, proxy statements, and other information with the SEC pursuant
to the Securities Exchange Act of 1934. You may read and copy this information
at the Public Reference Room of the SEC, 100 F. Street, N.E., Room 1580,
14
Washington, D.C. 20549. You may obtain information on the operation of the
public reference rooms by calling the SEC at 1-800-SEC-0330. The SEC also
maintains an Internet website that contains reports, proxy statements and other
information about issuers, like us, that file electronically with the SEC. The
address of that site is www.sec.gov.
Before Credex filed this Form S-1 it filed a Form 10, Registration Statement
and a 10-Q pursuant to the Securities Exchange Act of 1934.
The information contained in the Form 10, 10Q and S-1 are available at the
sec.gov site under company filings in the EDGAR system.
DIVIDEND POLICY
Credex has never paid a dividend.
The Company does not currently intend to declare or pay any
dividends on its Common Stock, except to the extent that such payment is
consistent with the Company's overall financial condition and plans for growth.
For the foreseeable future, the Company intends to retain excess future earnings
if any, to support development and growth of its business. Any future
determination to declare and pay dividends will be at the discretion of the
Company's Board of Directors and will be dependent on the Company's financial
condition, results of operations, cash requirements, plans for expansion, legal
limitations, contractual restrictions and other factors deemed relevant by the
Board of Directors.
DETERMINATION OF OFFERING PRICE
The offering price has been arbitrarily set by the Board of Directors. No market
price could otherwise be determined because Credex's shares have not been traded
resulting in no history for valuation.
As there is no established public market for our shares, the offering price and
other terms and conditions relative to our shares have been arbitrarily
determined by Credex and do not bear any relationship to assets, earnings, book
value, or any other objective criteria of value. In addition, no investment
banker, appraiser, or other independent third party has been consulted
concerning the offering price for the shares or the fairness of the offering
price used for the shares. The price of the current offering is fixed at $0.25
15
per share. This price is significantly greater than the price paid by the
company's officers and directors for common equity since the company's inception
on September 2, 2005. The company's officers and directors paid $0.001 per share
a difference of $0.249 per share lower than the share price in this offering.
Other officers and directors paid $.10 per share and $.01 per share.
Until such time as our common stock is listed on the Over the Counter Bulletin
Board, we expect that the selling stockholders will sell their shares at prices
between $ .15 and $.25, if any shares are sold. After our common stock is
quoted on the OTCBB, the selling stockholders may sell all or a portion of these
shares from time to time in market transactions through any stock exchange
or market on which our stock is then listed, in negotiated transactions or
otherwise, and at prices and on terms that will be determined by the
then-prevailing market price or at negotiated prices.
DILUTION
The common stock to be sold by the selling shareholders is set out in the
Selling Security Holders section is common stock that is currently issued.
Accordingly, there will be no dilution to our existing shareholders.
16
SELLING STOCKHOLDERS
The following list of shareholders and their shares of common stock to be sold
are as follows:
Shares owned Shares
Prior to the to be Shares Retained
Shareholder Name offering Sold Retained %ownership
Leonardo, Denise* 300,000 300,000 0 0%
Gansel, Carol C. 50,000 50,000 0 0%
Mitchell, Jerome D. 25,000 25,000 0 0%
Schonsheck, Darold N. 237,500 237,500 0 0%
Price, Louise A. 15,000 15,000 0 0%
Cook, Edward T. 10,000 10,000 0 0%
Bullock, David W. 10,000 10,000 0 0%
Kuker, Timothy L. 35,000 35,000 0 0%
Worl, Ronald S. 10,000 10,000 0 0%
Solimini, Karen L. 50,000 50,000 0 0%
Doane, Kelly A. 50,000 50,000 0 0%
Goodwin, Julie Ann** 253,100 253,100 0 0%
Goodwin, George Kirby 50,000 50,000 0 0%
Goodwin, Mary Beatrice 50,000 50,000 0 0%
Widmer, Ruth 100,000 100,000 0 0%
Kuker, Jonathan 35,000 35,000 0 0%
Armstrong, Charleen 100,000 100,000 0 0%
Gridley, Guinevere 10,000 10,000 0 0%
Deveau, Sheila P. 10,000 10,000 0 0%
Raynard, Thomas 50,000 50,000 0 0%
Pitman, Randall E. 50,000 50,000 0 0%
Hannam, Teresa 45,500 45,500 0 0%
Bradaric, Judith 20,000 20,000 0 0%
Murphy, William A. 30,000 30,000 0 0%
Lehman, Larry 27,500 12,500 0 0%
Hampton, Michael W. 100,000 100,000 0 0%
Globex Transfer, LLC 125,000 125,000 0 0%
Panceria, Bruce 38,275 38,275 0 0%
Bashaw-Werner, Renay 350,000 350,000 0 0%
Weller, Janine *** 350,000 350,000 0 0%
Greiner, Terry E. 12,500 12,500 0 0%
Childress, Sondra B. 25,000 25,000 0 0%
Schonsheck, Bethany L. 25,000 25,000 0 0%
Schonsheck, Theodore A. 25,000 25,000 0 0%
Bostic, Stephen N. 25,000 25,000 0 0%
Cameron, Doreen L. 56,250 46,250 0 0%
Lee, James A. 10,000 10,000 0 0%
Mitchell, Jerome C. 125,000 125,000 0 0%
Mary G. Bashaw Irrevocable
Trust, William P. Bashaw,
Ttee. 50,000 50,000 0 0%
Total 2,940,625
* Ms. Leonardo served as Treasurer, Chief Financial Officer and Director of the
Company from her appointment on October 24, 2007 until May 28, 2010 when she was
elected President. Her responsibilities included oversight over
internal controls, financial reporting and compliance with state and federal
laws.
** Julie Ann Goodwin is a current director.
17
*** Janine Weller is a current director and sister of Renay Bashaw-Werner.
None of the selling stockholders is a broker/dealer or an affiliate of any
broker/dealer.
PLAN OF DISTRIBUTION
The Selling Stockholders and any of their pledgees, donees, transferees,
assignees and successors-in-interest may, from time to time, sell any or all of
their shares of common stock on any stock exchange, market or trading facility
on which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The Selling Stockholders may use any one or more of
the following methods when selling shares:
* 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; to cover short sales made after the date
that the registration statement of which this prospectus is a part is
declared effective by the SEC;
* broker-dealers may agree with the Selling Stockholders to sell a specified
number of such shares at a stipulated price per share;
* a combination of any such methods of sale; and any other method permitted
pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
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. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
18
The Selling Stockholders may from time to time pledge or grant a
security interest in some or all of the shares owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell shares of common stock from time to time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list of
Selling Stockholders to include the pledgee, transferee or other successors in
interest as Selling Stockholders under this prospectus.
The Selling Stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.
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. Discounts, concessions, commissions and
similar selling expenses, if any, that can be attributed to the sale of
securities will be paid by the Selling Stockholder and/or the purchasers. At
the time a particular offer of shares is made by the Selling Stockholders, to
the extent required, a prospectus will be distributed. Each Selling Stockholder
has represented and warranted to Credex that it acquired the securities for
investment and, at the time of its purchase of such securities such Selling
Stockholder had no agreements or understandings, directly or indirectly, with
any person to register or distribute any such securities.
Selling Stockholders and any other persons participating in the sale or
distribution of the shares offered under this prospectus will be subject to
applicable provisions of the Exchange Act, and the rules and regulations under
that act, including Regulation M. These provisions may restrict activities of,
and limit the timing of purchases and sales of any of the shares by, the Selling
Stockholders or any other person. Furthermore, under
Regulation M, persons engaged in a distribution of securities are prohibited
from simultaneously engaging in market making and other activities with respect
to those securities for a specified period of time prior to the commencement of
19
such distributions, subject to specified exceptions or exemptions. All of these
limitations may affect the marketability of the shares.
We may suspend the use of this prospectus on a limited basis if we learn of any
event that causes this prospectus to include an untrue statement of material
fact or omit to state a material fact required to be stated in the prospectus
or necessary to make the statements in the prospectus not misleading in light
of the circumstances then existing. If this type of event occurs, a prospectus
supplement or post-effective amendment, if required, will be distributed to each
Selling Stockholder.
Number of Holders of Common Stock
As of the date of this filing, there are 40 holders of common stock.
DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The Company is authorized to issue One Hundred Million (100,000,000) shares of
Common Stock (the Common Stock) of Par Value of ($0.001). As of the date of this
Offering the Company had 5,899,250 shares of Common Stock issued and outstanding
Holders of Common Stock are each entitled to cast one vote for each Share held
of record on all matters presented to shareholders. Cumulative voting is not
allowed; hence, the holders of a majority of the outstanding Common Stock can
elect all directors. Holders of Common Stock are entitled to receive such
dividends as may be declared by the Board of Directors out of funds legally
available therefore and, in the event of liquidation, to share pro-rata in any
distribution of the Company's assets after payment of liabilities. The Board of
Directors is not obligated to declare a dividend and it is not anticipated that
dividends will be paid unless and until the Company is profitable. Holders of
Common Stock do not have preemptive rights to subscribe to additional shares if
issued by the Company. There are no conversion, redemption, sinking fund or
similar provisions regarding the Common Stock. All of the outstanding Shares of
Common Stock are fully paid.
No personal liability attaches to shareholders by reason of the ownership of
such shares.
20
Holders of Shares of Common Stock will have full rights to vote on all matters
brought before shareholders for their approval. We are not currently authorized
to issue preferred stock and have no intention of amending our corporate
documents to authorize preferred stock. Holders of the Common Stock will be
entitled to receive dividends, if and as declared by the Board of Directors, out
of funds legally available, and share pro-rata in any distributions to holders
of Common Stock upon liquidation.
Upon any liquidation, dissolution or winding-up of Credex, our assets, after
the payment of debts and liabilities and any liquidation preferences of, and
unpaid dividends on, any class of preferred stock then outstanding, will be
distributed pro-rata to the holders of the common stock. The holders of the
common stock have no right to require us to redeem or purchase their shares.
Preferred Stock
The Company does not have any authorized shares of Preferred Stock.
Voting Rights
Holders of the Company's Common Stock are entitled to one vote per Share for
each Common Share held of record by Company shareholders.
No Cumulative Voting
Holders of shares of our common stock do not have cumulative voting rights,
which means that the holders of more than 50% of the outstanding shares, voting
for the election of directors, can elect all of the directors to be elected, if
they so choose, and, in that event, the holders of the remaining shares will not
be able to elect any of our directors.
Transfer Agent
We have selected Globex Transfer, LLC, 780 Deltona Blvd., Suite 202, Deltona,
FL 32725 as our transfer agent.
Shares Eligible For Future Sale
The Securities currently are "restricted securities" as that term is defined in
SEC Rule 144 of the 1933 Securities Act ("Rule 144"), and may not be resold
without registration under the Securities Act. Provided certain requirements
21
are met, the Shares of Common Stock purchased hereunder may be resold pursuant
to Rule 144 or may be resold pursuant to another exemption from the registration
requirement.
Generally, Rule 144 provides that a holder of restricted shares of an issuer
which maintains certain available public information, where such shares are held
6 months or more, may sell in every three months the greater of: (a) an amount
equal to one percent of the Company's outstanding shares; or (b) an amount equal
to the average weekly volume of trading in such securities during the preceding
four calendar weeks prior to the sale. Persons who are not affiliates of the
Company may sell shares beneficially owned for at least one year at the time of
the proposed sale without regard to volume restrictions. There is no existing
public or other market for the Shares. Any such market may never develop.
Take Over Provisions
There are no provisions in the Articles of Incorporation or By-Laws restricting
take over of control of the Company.
INTERESTS OF NAMED EXPERTS AND COUNSEL
The financial statements of Credex Corporation for the period from inception,
September 2, 2005, through December 31, 2009, included elsewhere in this
Prospectus have been audited by Moss, Krusick & Associates, LLC, independent
registered public accounting firm, as stated in its report appearing herein, and
are included in reliance upon the report of such firm given upon its authority
as experts in accounting and auditing. With respect to the unaudited financial
statements of Credex Corporation as of September 30, 2010 and for the nine
months ended September 30, 2010 and 2009 and period from inception through
september 30, 2010, included elsewhere in this Prospectus, such statements have
not been audited by Moss, Krusick & Associates, LLC and that firm does not
express an opinion on them.
Corporate Counsel, Richard R. Cook, has issued an opinion as to various aspects
of the common stock registered hereby. See page 74. Mr. Cook is a member of
Cypress Bend Executive Services, LLC, a party related to Credex. See page 37.
22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATIONS
BACKGROUND
The following discussion of our financial condition and results of operations
should be read in conjunction with our financial statements and the related
notes, and other financial information contained in this prospectus.
Overview
We are a development stage company. Although Credex has not operated pursuant
to its business plan, in 2005 Credex purchased a portfolio of defaulted credit
card debt to test the feasibility of its business plan. On a trial basis
accounts from the portfolio were collected. The remainder of the portfolio was
then sold. These transactions are shown in the statement of operation in this
Prospectus. Our auditors have raised substantial doubt as to our ability to
continue as a going concern. We need a minimum of approximately $100,000 during
the next 12 months to begin implementation of our business plan.
Since our inception, we have devoted our activities to the following:
Purchasing a debt portfolio;
Obtaining bids from professional collectors to collect the portfolio;
Developing contacts from whom to purchase portfolios;
Contracting for operational support; and
Securing enough capital to carry out these activities.
Plan of Operations
As discussed above we have not yet operated pursuant to our business plan. We
have generated no revenue in 2009 or 2008 or the nine months ended
September 30, 2010 and 2009.
Development stage operating expenditures during the period from inception on
September 2, 2005 to September 30, 2010 were $76,254 which consisted primarily
of general and administrative expenses related to legal, accounting and other
23
fees related to our formation and this registration statement. Our net loss was
$12,248 and $12,398 for the nine months ended September 30, 2010 and 2009,
respectively, and $15,015 and $7,001 for the years ended December 31, 2009 and
2008, respectively cumulative income to date was $23,450 including finance
income of $15,417, consulting income of $8,000 and interest income of $33.
Liquidity and Capital Resources
Our capital resources have been acquired through the sale of shares of our
common stock.
At December 31, 2009 and 2008, we had total assets of $2,185 and $3,390,
respectively, consisting of cash.
At September 30, 2010, we had total assets of $8,287 consisting of cash.
At December 31, 2009 and 2008, our total liabilities were $2,500 and $3,000
respectively consisting primarily of accounts payable.
At September 30, 2010, we had total liabilities of $ 2,500.
We anticipate taking the following actions during the next 12 months, assuming
we receive the required funding:
File an S-1 to register and sell, if a public market develops, common stock to
raise up to $500,000.00. To become effective by April 1, 2011. We estimate
that, if a market develops, it will take 3 to 6 months to raise these funds.
Once we have raised at least $250,000.00 we will hire a management team
member with debt collection experience to supervise our contract collectors. We
estimate that, if a market develops, it will take 4 months to raise these funds
and hire this person. Date is now August 1, 2011.
Contract with debt collection firm or firms. We estimate this to take 1
month. The date is now September 1, 2011.
Purchase portfolio(s) We estimate this to take 1 month. The date is now
October 1, 2011.
Collection efforts begin. The date is now October 1, 2011.
Purchase Primary and Secondary at a price not to exceed 3% of the face
value of the portfolios that is credit card debt only.
24
Use collection agencies for all collections with a fixed cost not to
exceed 35% of what is collected.
Create Planned Payment Arrangements (PPA) for up to six months.
Sell the remainder of the portfolio after six months deemed uncollectible
at the time of sale.
Cash Requirements
We intend to provide funding for our activities, if any, through a combination
of the private placement of the company's equity securities and the public sales
of equity securities.
We have no agreement, commitment or understanding to secure any funding from any
source.
Off-Balance Sheet Arrangements
We do not have any off balance sheet arrangements.
Credex has never been in bankruptcy or receivership. The
Company is a new venture.
Credex's executive office is located at 454 Treemont Drive, Orange City,
FL 32763. The telephone number is (386) 218-6823, and the fax number is
(386) 218-6823.
Credex is not operating it's business plan until such time as
capital is raised for operations. To date its operation has involved only
selling stock to meet expenses.
DISCLOSURE OF CONTRACTED OBLIGATIONS
On July 9, 2010, the Company entered into an agreement for services
with Cypress Bend Executive Services, LLC ("Cypress"), a related party, whereby
Cypress acts as consultant to:
1. Raise the necessary money for the Company to operate in the short term,
2. Prepare and file documents with the SEC to take the Company public,
3. Secure a transfer agent and market maker broker-dealer for the Company's
stock,
25
4. Secure the necessary audits for the required filing documents, and
5. Provide day-to-day operational management services to the Company.
In exchange for these services, which the Company anticipates will last for a
ten month period, the Company agreed to pay Cypress cash fees of $200,000
as well as provide Cypress with 2,958,625 shares of its stock, which
effectively transfers control of the Company to Cypress during this period.
Also, as part of the contract Steven G. Salmond, a member of Cypress Bend
was installed as Secretary, Treasurer, CFO and Director of Credex. Because
the consulting services began August 1, 2010, amortization into Professional
Fees was $40,000 in 2010 and $0 in 2009 and 2008 resulting in net unearned
capital of $160,000 as of September 30, 2010 [unaudited]. Upon receipt of
the cash payment of $200,000, Cypress is to return the shares to the Company's
treasury.
PROPOSED BUSINESS
The Company intends to purchase portfolios with all rights, title and interest
of non-performing accounts receivable (credit card debt) at deeply discounted
rates, (approximately 3% or less of face values), outsource the collection
process, develop a portfolio of restructured debt and sell the residual
portfolio.
Non-performing portfolios accumulate in the normal course of operations, when a
credit grantor from time to time charges-off from its books, accounts which are
delinquent. Because the outstanding balance remains the obligation of the
defaulting customer, a group of charged-off accounts (a portfolio) contains a
value which can be obtained through various collection techniques. This value or
yield is dependent upon several variables such as creditor standards,
geographical stratification of the portfolio, age of the charge-offs, stages of
internal and external collection efforts, elapsed time since collection was last
worked, elapsed time since last activity, past recovery obtained from collection
efforts and whether the debt is within the statute of limitations. These
portfolios may be acquired at significant discounts of their face value,
ranging from $0.01 to $0.57 on the dollar, with an expected return of 10% to
12% of the face value of the portfolios. The Company intends to purchase
portfolios of Primary, Secondary and Tertiary distressed credit card debt from
26
distressed debt wholesalers and re-sellers because they offer smaller portfolios
for sale and re-purchase. These portfolios usually sell for $0.01 to $0.03 per
dollar of face value. The prices stated are for 2009. On average, approximately
Number of Employees
The Company intends to operate for the foreseeable future without employees.
Credex has entered into a management contract with Cypress Bend Executive
Services, LLC ("Cypress"). This contract provides that Cypress will provide
operational support to Credex and to take Credex Public through Form 10 and S-1
filings with the Securities and Exchange Commission. Cypress will return the
shares it holds to Treasury Stock upon completion of its contract obligations
and receiving payment in full for its services.
On July 9, 2010, the Company entered into an agreement for services
with Cypress Bend Executive Services, LLC ("Cypress"), a related party, whereby
Cypress acts as consultant to:
1. Raise the necessary money for the Company to operate in the
short term,
2. Prepare and file documents with the SEC to take the Company
public,
3. Secure a transfer agent and market maker broker-dealer for
the Company's stock,
4. Secure the necessary audits for the required filing
documents, and
5. Provide day-to-day operational management of the Company.
In exchange for these services, which the Company anticipates will last for a
ten month period, the Company agreed to pay Cypress cash fees of $200,000
as well as provide Cypress with 2,958,625 shares of its stock, which
effectively transfers control of the Company to Cypress during this period.
Also, as part of the contract Steven G. Salmond, a member of Cypress Bend
was installed as Secretary, Treasurer, CFO and Director of Credex. Because
the consulting services began August 1, 2010, amortization into Professional
Fees was $40,000 in 2010 and $0 in 2009 and 2008 resulting in net unearned
capital of $160,000 as of September 30, 2010 [unaudited]. Upon receipt of
the cash payment of $200,000, Cypress is to return the shares to the Company's
treasury.
27
PRODUCTS AND SERVICES
The Company's products are the credit card portfolios it purchases. The higher
the quality of the product, generally determined by age and consumer
demographics, the greater the cost and resulting recovery rate. The age of the
product, which typically is six months to two years old, will also determine the
value of the portfolio at the end sale, or how much the remaining portfolio will
recover in terms of price.
A given group of credit card delinquencies occurring in one month contain many
facets of delinquency causes. Generally, these causes for default will fall
within three categories; 1) non-financial impact (as in a dispute perceived to
be legitimate, or arguments over liability amid dissolving marriages); 2)
one-time financial impact (temporary lay-off, major home or auto repair, a
death in the family); and 3) permanent financial reversal (disability,
retirement, benefits loss or reduction). Because a debtor's financial position
changes over a period of time, usually for the better, a certain portion of a
portfolio will be deemed collectable, at least partially.
This aging process is a well known an exploited fact in the collection industry.
Lending institutions have identified three distinct periods of time over which
collection efforts are initiated. These three periods are commonly referred to
as Primary (first collection effort lasting 3 to 12 months), Secondary (second
collection effort lasting from 12 to 24 months), Tertiary (third collection
effort, also lasting from 24 to 36 months or longer) and Quads (forth
collection effort lasting from approximately 36 months to when the accounts
become "out of statute". The stage or age, of a portfolio is an important
component in determining its value. The Company intends to buy portfolios
that are "One Agency or Two Agency Accounts," which means that the accounts
have previously been sent to one or two another collection agencies for
collection and then retrieved.
Credex will buy the debts it will collect through debt collection agencies.
Once the original creditor sells the debt the only way for them to "retrieve"
it is to buy it back. The terms "One or Two Agency Accounts" is language
commonly used in the industry to indicate that the accounts have been purchased
by one buyer, "One Agency," or second buyer "Two Agency." One Agency is the
same as the primary and Two Agency is the same as secondary and Three Agency
is the same as tertiary accounts. Original creditors can retain ownership and
28
have more than one agency try and collect the accounts. The Original creditor
can sell the debt at any time in the collection process. It can sell the debt
as One Agency, Two Agency and etc. depending on prior collection efforts.
All purchase agreements entered into, will allow for replacement or
reimbursement of accounts deemed uncollectible, as in the case of bankruptcies
death of the debtor or fraud, but only if the act occurred less than 30 days
after the purchase closing date. Payments made directly to the seller are
forwarded to the Company on a timely basis if payments overlap.
PRODUCT SERVICING/OUTSOURCING DESCRIPTION
The Company intends to out-source all collection activities to established
collection agencies that have expertise in collecting non-performing credit
card debt. We can rely on the collecting performance history of the
collectors with whom we contract. We can also rely on information available
from Kaulkin and Ginsberg and Inside ARM.
Management personnel of potential collection agencies will be personally
interviewed by Credex. The agency's collection performance and business
references will be obtained prior to signing any agreement with the agency.
Credex intends to sign agreements that contain a provision that allows
cancellation at any time with 30 days notice to the non-canceling party.
For your information we have attached a copy of an agreement we propose to
use.
Kaulkin and Ginsberg is one of the leading and most reliable sources of data
and information in the debt collection business.
About Kaulkin and Ginsberg:
Experience
* Completed more industry M&A transactions than anyone else
- over 125 for a total value of over $3 billion
* Delivered hundreds of industry valuations
- dozens of valuation assignments each year
* Keynoted all of the major industry conferences
* Chaired three conferences, including the industry's largest, plus two
M&A conferences
29
Access
* Established relationships with the industry's senior decision makers
since 1991
* Our advisory board consists of the most senior persons in their industry
segments
Information
* We conduct comprehensive original research on the industry
* Publisher of seven editions of The Kaulkin Report since
1994
- a seminal research study that has been cited in the
public filings of leading corporations, in The Wall Street
Journal, and in many documents supporting private
transactions in the industry
* Our research also includes The Global Debt Buying Report,
Healthcare ARM Report, and countless custom research
projects
* Acquisition criteria for financial, strategic, and industry
buyers seeking entry or expansion within the industry
About Inside ARM publication:
Kaulkin Media is the most credible publisher of specialized news and
information for the accounts receivable management (or "debt collection")
industry. With over 60,000 subscribers including collection agencies and
law firms, debt buyers, creditors, suppliers of technology and services to
these groups, regulators, industry investors, and many other interested
parties.
Once the portfolio has been acquired, the collection work effort begins
The Company will supervise the collection contractor to see the following steps
are taken.
An initial written notice is sent to each debtor informing them of the change
in ownership of the debt owed and that the Company is entitled to the full
amount of principal and accrued interest due and that payment(s) are to be sent
to the collection agency as directed by the Company.
30
Initial Review. The object of this review is to isolate that part of the
portfolio that could most likely produce the highest earned revenue initially or
possessing the greatest means with which to provide initial revenue. Much can
be determined about a debtor and his ability to pay larger sums, when
considering the area in which he resides, whether he holds real estate, current
job status, the amount of unsecured debt he owes, and the status of same. These
are among the several criteria used to decide which accounts should be
prioritized initially. By this review, the collection agencies would be
concentrating heavily on the accounts most likely to pay in a short time-frame.
It is important to note that the review process usually takes place prior to the
actual purchase of the portfolio when a spreadsheet of the portfolio can be
examined for many of the criteria described above. Following the review of all
of the accounts in the portfolio, the Company can either reject the
portfolio of purchase it.
Collection Efforts. The collection process is responsible for the majority of
the recovery in the shortest period of time. This can best be described as an
intense and concentrated focus by the collectors on all accounts as prioritized
in the previous step. The higher the priority the greater the efforts. In this
phase, approximately 8% to 10% of the original portfolio face amount is deemed
recoverable in the first six months. Skip tracing (locating some of the debtors)
accounts may be utilized by the collector. Offers of settlements may be made to
the debtors of up to fifty percent of the debt to entice payment.
Restructuring. When the collection efforts are exhausted on accounts, usually 4
to 6 months after purchase, a new effort is initiated to restructure the
existing debt. Debtors are encouraged to restructure the outstanding debt at
lower monthly payments than previously expected to pay; by forgiving accrued
interest to date.
Correspondence. Regular collection notices and demand notices are mailed,
generating a fluctuating degree of response and remittance. An initial notice
is sent to the entire portfolio base, which notifies the debtors of the change
of debt holder, and further warns of the possibility of other collection
remedies for continued non-payment. From there, notices are collector generated
befitting the individual circumstances.
31
Portfolio Sale. Approximately 70% of the original portfolio will be sold, which
includes all of the accounts that are determined to be uncollectible at that
time. In order to improve cash flows, the Company intends to sell these
accounts every 120 to 160 days from the date of the portfolio purchase. The
company has developed several outlets to sell this residual product, which
represents 1% to 2% of remaining face amount.
MISSION
The Company intends to purchase non-performing credit card debt portfolios from
debt resellers and brokers. The Company intends to produce earned revenue equal
to a return of 9% to 12% of the face of the portfolio within 6 months. The
Company intends to sell the uncollected portion of the portfolio for 1% to 2%
of the remaining face amount after 120 days from the purchase date.
KEYS TO SUCCESS
1. Purchase portfolios at or near 1.5% to 3% of face value.
2. Collect 9% to 12% of the face value.
3. Sell uncollected portion of the portfolio for 1% to 2% of the
remaining face value (Included in # 2 above).
4. Keep cost of outsourced collections to 35% or less of
collections.
MILESTONES
File an S-1 to register and sell, if a public market develops, common
stock to raise up to $500,000.00. To become effective by April 1, 2011. We
estimate that, if a market develops, it will take 3 to 6 months to raise these
funds.
Once we have raised at least $250,000.00 we will hire a management team
member with debt collection experience to supervise our contract collectors.
We estimate that, if a market develops, it will take 4 months to raise these
funds and hire this person. Date is now August 1, 2011.
Contract with debt collection firm or firms. The contracts with the
collections agencies used to collect the debt will contain a provision that the
agency will receive a percentage of the amounts collected on each account.
This fee will be a matter of negotiations. Credex will not agree to pay the
agency more than 35% of the amount collected on each account. We estimate this
to take 1 month. The date is now September 1, 2011.
32
Purchase portfolio(s) We estimate this to take 1 month. The date is
now October 1, 2011.
Collection efforts begin. The date is now October 1, 2011.
Purchase Primary and Secondary at a price not to exceed 3% of the face
value of the portfolios that is credit card debt only.
Use collection agencies for all collections with a fixed cost not to
exceed 35% of what is collected.
Create Planned Payment Arrangements (PPA) for up to six months.
Sell the remainder of the portfolio, deemed uncollectible, after six
months.
INDUSTRY ANALYSIS
Charge-off credit card debt volume has grown from $3 billion in 1991 to
$22 billion in 1999. From 1999 to 2002 it grew to $60 billion and as of
June, 2003 it reached $73 billion. The total credit card debt outstanding as of
March, 2009 was $939.6 billion dollars according to Federal Reserve data, of
which approximately 10% or approximately $94 billion was delinquent.
181 Million Americans hold an average of 5.4 credit cards with an average debt
of $1,157per card or $6,247 per person. The average household debt was $10,697
as of December, 2008. The above statistics were taken from Nilson Reports, dated
March and April, 2009, the census bureau and Experian, dated March, 2009.
INDUSTRY PARTICIPANTS
There are approximately 3,000 active buyers (including collection law firms) of
non-performing credit card debt. They range from companies that buy very large
blocks of charge-offs at different age levels to small companies that buy in
face amounts of $300,000 to $10 million portfolios. Small collection law firms
buy as few as forty accounts at a time. They typically buy them for debtors in
the Counties in which they normally practice and simply file a law suite against
the debtors immediately (usually small claims court up to $5,000). They use the
intimidation of the law suit to force collection in part or in full. The cost
of filing fees and service of process can easily add up to $100 to the cost of
the individual account.
33
The major publicly traded debt buyers and collectors are all listed on Nasdaq
and include Asta Funding (ASFI), Asset Acceptance Capital Corp. (AACC), Encore
Capital Group (ECPG), First City Financial (FCFC) and Portfolio Recovery
Associates (PRAA). These companies use a combination of inside collectors,
outside collection agencies and attorneys in their collection process.
The buyers of larger portfolios now include more brokers, wholesalers and debt
resellers that do not participate in the collection process. These companies
will segment the portfolios by states or regions, age, number of accounts and
account size so the accounts in the purchased portfolio can be sold to smaller
buyers, which now make up a large percentage of buying market. Many of these
portfolios can be seen and acquired over the internet.
COMPETITIVE COMPARISON
Competition occurs only in respect to purchasing the portfolios. The Company
will be able to be competitive in part because of the expertise of its proposed
collection agency vendors who will also review our proposed portfolio purchases
prior to our purchasing small portfolios. We can not compete in the purchase of
large portfolios because of our lack of large amounts of capital. Small
portfolios of debt are readily available from brokers and wholesalers at
competitive prices.
COMPETITION AND BUYING PATTERNS
The purchase of the large portfolios is usually by sealed bid. Some major buyers
do have certain credit card issuers tied up with forward purchase agreements.
However, now smaller portfolios are bought through negotiation with the seller,
rather than a sealed bid. All portfolios accounts can be reviewed by the buyer
prior to purchase. All portfolios are reviewed and scored for yield probability
before bidding. All of the accounts that a buyer has agreed to purchase are
scrubbed in order to eliminate accounts that are in bankruptcy or the creditor
is deceased.
34
MAIN COMPETITORS
There are over 3,000 debt buyers of varying size and capital capabilities that
buy credit card debt of small to medium portfolios. Because the Company intends
to negotiate with several debt sellers, the Company may not know who it is
competing against. On the other hand, the large debt buyers are not competitors
of the Company, because the Company does not intend to buy large portfolios.
However, some of the large buyers that segment the portfolios that they purchase
for resale could be future providers of portfolios to the Company.
MARKET ANALYSIS
The concept of buying and selling bad debts is not new, but technology and
better management methods have changed the practice, making it more attractive
for the investor. This analysis will examine the fundamentals of this business
and some of the key issues that determine success or failure.
The availability of non-performing credit card debt can be characterized as
unending. So long as the American economy is credit based, there will always
be delinquency to varying degrees. If delinquency rates of credit card issuers
were to decline (implying less product for sale), market forces would move to
increase their share by lowering standards thereby once again increasing
delinquency rates. This cycle of tightening and loosening standards would
inversely affect the price paid for product.
Businesses that generate consumer debt have always been faced with the problem
of delinquent accounts or charge-offs and write-offs and for years assigned
these accounts to collection agencies. These agencies collect a fee of
approximately 33% to 35% of the amount they collect. For the owner of the
"paper" though, this system has drawbacks. Although the costs are fixed, it may
take months or years to recover a portion of the debt.
The result has been that companies increasingly prefer to sell their debts
rather than assign it, and that has created opportunity for those skilled at
collection methods. In a typical purchase of bad debts, a block of accounts are
acquired at a very steep discount. The price might range from 1 cent to 10
cents on the dollar, for instance. The new owner then collects as much as he
can, keeping all of the proceeds.
35
Since these accounts have usually been worked by someone else, it is vital that
the purchaser have a professional approach to the classification and management
of the accounts in order to maximize return. For instance, computers are now
used extensively to analyze the collect ability of accounts. The seller provides
to the buyer a database of accounts on tape, disk or email, which is then fed
into the buyer's computer. This, in turn, reads the files, producing a
statistical profile which management can evaluate, based on their experience and
knowledge of the industry.
The end result is that a value is assigned to the portfolio, representing the
likely ultimate collection possible. This enables the buyer to fix a price on
the accounts that will yield the desired profit. If the seller agrees, ownership
changes hands and the buyer begins to work the accounts.
The following table, published by "Inside ARM" on March 24, 2009, by Kaulkin
and Ginsberg, shows the rate decline ranges in portfolio pricing from 2008 to
2009 and the 2009 price predictions. The price ranges are based on confirmed
transactions as well as anecdotal discussions with debt buyers and credit
issuers.
Price Range Price Range Price 2009 Price
Jan. 2008 Jan. 2009 Decline Predictions
Fresh $.09 - $.12 $.055 - $.075 33% - 40% $.04 -$.06
Primary (Firsts) $.08 - $.08 $.035 - $.05 20% - 40% $.025 -$.04
Secondary (Seconds) $.03 - $.05 $.02 - $.03 20% - 33% $.015 -$.025
Tertiary (Thirds) $.0125- $.03 $.01 - $.02 20% - 33% $.0075-$.015
Quads $.005 - $.0125 $.004 - $.01 20% - 33% $.003-$.0075
In addition to the purely statistical exercise of establishing value, a buyer
must also consider a number of subjective factors before acquiring a portfolio.
* Age of debt. Generally, the older the debt, the more difficult it may be to
find the debtor.
* Source of debt. The underwriting standard of the original issuer has a
bearing on the ability to collect effectively.
* Proof of debt. The original documentation may be lost, but some form of proof
is preferable, but not always available.
36
* Location of debtor. Debtors who reside in areas where a high concentration of
homeowners are found are more desirable than those living in areas with high
turnover.
* History of work on the account. Accounts that have been extensively worked
are less likely to be profitable to a buyer.
A number of legal considerations attend the purchase of bad debts. These
include assurance of available documentation, representations that balances are
correct, identification of the debtors and the ability to return accounts to the
seller where debtors are found to be bankrupt, deceased or the account has been
satisfied by the debtor. The time period in which such accounts can be returned
is negotiable, usually 30 days after purchase.
The determination of which accounts to keep and which to sell, and at what
stage of development to sell, now becomes critical to the profitability of the
venture. Once a portfolio of accounts has been acquired, the accounts are
classified: those which will require a disproportionate amount of collection
effort are typically resold to collection agencies, attorneys and others at
below cost. Those which will return the greatest net proceeds are retained.
The next task is to work the accounts. Generally, this means contacting the
debtor by mail and by phone. Most of the accounts purchased will have been sold
because normal mail and phone contact has failed. This would be due to the
debtors having "skipped," because of incomplete data, or the fact that the
account has somehow deteriorated to the point that legal action or resale of
the account may be necessary.
Once the debtor has been contacted, the collection representative makes
arrangement for repayment of the debt. In many cases the reasons why the account
went into default have now been resolved. These include loss of job, divorce,
illness with extensive medical bills and over extension of credit. The task of
the collector is to use an approach that will be effective with the debtor, such
as:
* recognition of settlements and debt refinancing that may aid the debtor by
restoring credit.
* focusing on a relationship approach rather than strong arm tactics.
37
* capitalizing on the debtors improved circumstances that may allow the debtor
to apply for a credit to resolve prior debts.
MANAGEMENT
Identification of Directors:
Position Held
Name Age with Company Elected
________________________________________________________________
Janine Weller 49 Director May 28, 2010
Denise Leonardo 48 Director October 24, 2007
Julie Ann Goodwin 49 Director May 28, 2010
Steven G. Salmond 61 Director August 21, 2010
Directors are elected by the shareholders at each annual meeting.
Identification of Officers:
Position Held
Name Age with Company Elected
________________________________________________________________
Denise Leonardo 48 President, CEO May 28, 2010*
Steven G. Salmond 61 Secretary and
Treasurer, CFO August 21, 2010
* Ms. Leonardo served as Treasurer, Chief Financial Officer and Director of the
Company from her appointment on October 24, 2007 until May 28, 2010 when she
was elected President. Her responsibilities included oversight over internal
controls, financial reporting and compliance with state and federal laws.
Officers of the Company serve at the will of the Board of Directors. Presently
the Company has no employment contract with any of its officers.
Brief biographies of the officers and directors of the Company are set forth
below. Each director holds office until the next annual meeting or until his
death, resignation, retirement, removal, disqualification or until a successor
has been elected and qualified. Vacancies in the existing board are filled by
a majority of the remaining directors.
None of the officers or directors hold directorships in any other Company.
Of the officers and directors only Mr. Salmond has any experience in management
of a public company.
38
Denise Leonardo, President - Ms. Leonardo served as Treasurer, Chief Financial
Officer and Director of the Company from her appointment on October 24, 2007
until May 28, 2010 when she was elected President. Her responsibilities included
oversight over internal controls, financial reporting and compliance with state
and federal laws.
Ms. Leonardo received the designation of CSOX (Certificate in Sarbanes-Oxley) in
December, 2006 from the SOX Institute of the Sarbanes-Oxley Group, Clifton, New
Jersey.
Ms. Leonardo has been the president of DL Consultants, Inc., Palm Beach, FL
from 2005 thru the present. She oversees all aspects of the business. The
Company provides direction to clients regarding the requirements of the
Sarbanes-Oxley Act of 2002 and aids clients in the way they communicate their
financial information by cultivating, edgarizing and filing SEC Form filings
and Private Placement Memorandum documents.
From 2003 thru 2005, Ms. Leonardo was employed with American Capital Holdings,
Inc. and IS Direct Agency, Palm Beach, FL. She assisted in the creation of ten
(10) public development stage companies and developed a human resource
department and financial department procedures. She implemented
Sarbanes-Oxley compliance and was responsible for compiling and formatting
financial data into SEC Form structure, edgarize and filing SEC documents.
She also created the insurance department at IS Direct Agency as a licensed
entity/producer and agent/producer in 39 and 48 states respectively. She was
also responsible for maintaining investor communications and relations.
From 1991 thru 2004, Ms. Leonardo owned and operated Leonardo Yacht Maintenance,
Palm Beach, FL. She developed a team to provide service for detailing and
maintenance of vessels throughout Palm Beach County, FL.
Ms. Leonardo was director of sales and service at Venus Interiors, Flagler
Beach, FL and sales rep at Sunflooring, Inc., Tampa, FL from 1981 thru 1991.
She was responsible for sales and service to the retail and wholesale markets.
Ms. Leonardo in 2006 was Sarbanes-Oxley Certified and attained from the State
of Florida, a Life, Health & Annuity Insurance License in 2005.
39
Ms. Leonardo attended Palm Beach Community College in 2005 for Financial
Accounting. From 2000 thru 2001, she attained an AS Degree in Computer
Programming and DB Design while being listed on the Dean's and president's List.
Julie Goodwin, Director - Since 1999 to present, Mrs. Goodwin studies stock
market and economic trends using technical chart analysis methods while
successfully trading in self-directed accounts.
She was employed in opening investment accounts with Charlestown Savings Bank,
Boston 1980. She married and relocated to Nova Scotia, Canada 1981.
Mrs. Goodwin co-owned and managed a lobster and boat building businesses from
1981 to 2000. Through home-schooling, she educated her four children utilizing
Montessori Methodology from 1985-2005.
Mrs. Goodwin graduated with honors from Malden High School, class of 1978, then,
majored in French and Education at University of Massachusetts, Amherst
1978-1980. Mrs. Goodwin Attended Centre International d'Etudes Francais in
Angers, France, Spring 1980.
Janine Weller, Director - Ms. Weller has been National Graphic Design Director
for Sonoco CorrFlex, from 2007 to present, operating from the Glen Rock, NJ
sales & design office. She is responsible for creative leadership and
development of graphic designers and 3D rendering specialists, focused on
creating innovative, best in class, award-winning solutions for customers in a
variety of industries.
Through successful development and implementation of best practices, she has
unified designers of different disciplines, training and geographic locations
across the US to work as a team, leveraging design resources to meet customer
expectations.
Ms. Weller joined Sonoco CorrFlex, the point-of-purchase merchandising display
division of Sonoco, a global manufacturer of industrial and consumer products
and provider of packaging services in 2003, as senior graphic designer.
Starting in 2000, Ms. Weller served as graphic designer at ADC. Purchased by
Alliance/Rock-Tenn in 2001, she was retained as senior graphic designer through
March 2003. Prior to 2000, Ms. Weller has continuously held a variety of
positions in the graphic design and advertising fields including in-house,
agency, studio and consulting.
40
Ms. Weller is a 1983 graduate of Pratt Institute with a B.F.A. degree with
honors in art direction.
Steven G. Salmond - Mr. Salmond has consulted small businesses on accounting
and related systems including setup of accounting system, transfer of accounting
records to new systems, and training of staff in the new systems. He has also
in the private sector of accounting performed accounts receivable, accounts
payable, payroll, general journal adjustments and prepared financial statements
for both publicly and privately held companies. Mr. Salmond has been Chief
Financial Officer ("CFO") in several public companies reporting under the 1934
Securities Act. Mr. Salmond was the CFO in Lincoln Floorplanning Company, Inc.
and consulted the CFO of United Park City Mines for its 1934 filings. Lincoln
was a small company with no continous operations. United Park was a New York
Stock Exchange company with real estate development operation until it was taken
private. He has managed personnel in accounting departments as well as
work under the management of accounting to perform the work to be completed.
Mr. Salmond has experience in oil and gas, timber harvesting, mining, real
estate development, water purification equipment manufacture and service,
computer software training, marketing, and health spas. Mr. Salmond was an
audit partner in a small accounting practice. He audited oil and gas,
mining, health spas, printing, fast food and startup companies.
Most of the audits were for publicly traded companies with some filing with the
U.S. Securities and Exchange Commission. He graduated with a B.S. Degree in
Accounting in 1975 from Weber State University located in Ogden, Utah.
41
EXECUTIVE COMPENSATION
Description Name (1) Name (2) Name (3) Name (4) Name (5) Name (6)
Name and Principal Janine Denise Julie Ann Steven G. James H. Richard
Position (a) Weller Leonardo Goodwin Salmond Bashaw R. Cook
Year (b) 2009 2009 2009 2009 2009 2009
Salary ($) (c) $ 0 $ 0 $ 0 $ 0 $6,200 $ 0
Bonus ($) (d) 0 0 0 0 0 0
Stock Awards ($) (e) 0 0 0 0 0 0
Option Awards ($) (f) 0 0 0 0 0 0
Non-equity Incentive
Plan Compensation ($)
(g) 0 0 0 0 0 0
Change in pension
value and Non-
Qualified deferred
compensation earnings
($) (h) 0 0 0 0 0 0
All other
compensation ($) (i) 0 0 0 0 0 0
Total ($) (j) $ 0 $ 0 $ 0 $ 0 $6,200 $ 0
Year (b) 6/30/2010 6/30/2010 6/30/2010 6/30/2010 6/30/2010 6/30/2010
Salary ($) (c) $ 0 $ 0 $ 0 $ 0 $2400 $ 0
Bonus ($) (d) 0 0 0 0 0 0
Stock Awards ($) (e) 0 0 0 0 0 0
Option Awards ($) (f) 0 0 0 0 0 0
Non-equity Incentive
Plan Compensation ($)
(g) 0 0 0 0 0 0
Change in pension
value and Non-
Qualified deferred
compensation earnings
($) (h) 0 0 0 0 0 0
All other
compensation ($) (i) 0 0 0 0 0 0
Total ($) (j) $ 0 $ 0 $ 0 $ 0 $2,400 $ 0
(1) Director from May 28, 2010
(2) President and Director (CEO) from May 28, 2010 and past
Secretary/Treasurer (CFO) from 2005 to May 28, 2010
(3) Director from May 28, 2010
(4) Secretary/Treasurer (CFO) and Director from August 21, 2010
(5) Past President and Director (CEO), died on May 15, 2010. President and
Director from 2005 to May 15, 2010 (Death Date)
(6) Past Secretary/Treasurer (CFO) from May 28, 2010 to August 21, 2010;
Director from 2005 to August 21, 2010
There was no compensation paid to Officers or Directors in 2008
(c) The named officer received payments in cash only
42
Future salaries of the officers and directors will be set by the Board of
Directors depending upon the financial condition of the company, and may
include bonuses, health insurance and other compensation as the Board of
Directors may award. Out-of-pocket expenses are defined as the monies expended
on behalf of the company while engaged in Company Business such as travel
expenses and items purchased for use by the Company.
SECURITY OWNERSHIP OF MANAGEMENT
______________________________________________________________________________
Title of Class Name and Address Amount and Nature of Percent
of Beneficial Owner of Beneficial Owner
______________________________________________________________________________
Common stock Steven G. Salmond 2,958,625 52.29%
454 Treemont Drive
Orange City, FL 32763
Common stock Denise Leonardo 300,000 5.30%
9266 Keating Drive
Palm Beach Gardens, FL 33410
Common stock Julie Ann Goodwin 253,100 4.47%
232 Trickey Pond Rd.
Naples, ME 04055
Common stock Janine Weller 350,000 6.19%
415 Macopin Road
West Milford, NJ 07480
Common stock Officers and Directors
as a group 3,861,725 68.25%
See "Certain Relationships and Related Party Transactions"
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
No officer or director is related to or has any relationship with any other
officer or director.
Credex has entered into a management contract with Cypress. This contract
provides that Cypress will provide operational support to Credex and to take
Credex Public through Form 10 and S-1 filings with the Securities and Exchange
Commission. Cypress will return the shares it owns to Treasury Stock upon
completion of its contract obligations and receiving payment in full for its
services. Cypress is a Nevada, LLC formed on July 7, 2010 with three members.
43
As part of the agreement Steven G. Salmond, a member of Cypress Bend, was
installed as Secretary, treasurer, CFO and Director of Credex. Cypress has a
business plan to provide services similar to those provided to Credex. Credex
is Cypress's first client.
The contract with Cypress Bend Executive Services, LLC was negotiated between
Credex's CEO, Denise Leonardo and Timothy L. Kuker of Cypress. The Contract
was approved by Credex's Board. None of the voting members have any
relationship with Cypress. Mr. Cook abstained from voting on the matter of
the agreement. Credex believes the negotiation was arms length and the terms
of the agreement are at least as favorable to Credex as could have been obtained
with an unrelated party.
The Company has entered into subscription agreements to sell its stock as shown
in Item 10 and exhibit 10.1.
LEGAL PROCEEDINGS
Credex is not involved in any litigation or any material legal proceeding. No
Officer or Director is involved in any litigation or any material legal
proceeding.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Credex is bearing the costs of issuance and distribution of the shares being
sold in this prospectus. Credex estimates the costs for the transfer agent to
range between $2,000 and $3,000.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
There is no statute, charter provision, by-law, contract or other arrangement
under which any controlling person, director or officer of the registrant is
insured or indemnified in any manner against liability which he may incur in his
capacity as such, other than Florida Statute 607.0850. This statue allows the
Company to Indemnify Officers and Directors in the case of good faith errors.
SECURITIES AND EXCHANGE COMMISSION INDEMNIFICATION DISCLOSURE
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
44
RECENT SALES OF UNREGISTERED SECURITIES
The authorized equity of Credex Corporation consists of 100 million Shares,
$.001 par value per share, of which 5,899,250 shares are issued and outstanding
to officers, directors and private individuals for cash and services rendered
from inception (September 2, 2005) through November 19, 2010.
The sale of all of this unregistered stock was not pursuant to any public
offering. The stock was not advertised in any media. No solicitation in any
form was made to the general public.
Credex Corporation
Sale of Investment
Title of Shares Share Amount
Stock Date Issued Price Paid Subscribed Services
Common 09/09/2005 10,000 $0.100 $1,000
Common 10/24/2007 2,240,000 $0.010 $16,131
Common 10/24/2007 250,000 $0.010 $1,800
Common 04/04/2008 50,000* $0.020 $1,000
Common 07/07/2008 25,000* $0.020 $500
Common 07/28/2008 25,000* $0.020 $500
Common 08/16/2008 15,000* $0.020 $300
Common 09/06/2008 50,000* $0.020 $1,000
Common 09/21/2008 10,000* $0.020 $200
Common 10/01/2008 10,000* $0.020 $200
Common 10/17/2008 15,000* $0.020 $300
Common 12/31/2008 150,000* $0.020 $3,000
Common 06/22/2009 10,000 $0.020 $200
Common 06/22/2009 10,000 $0.020 $200
Common 06/29/2009 50,000 $0.020 $1,000
Common 06/29/2009 50,000 $0.020 $1,000
Common 06/29/2009 100,000 $0.020 $2,000
Common 06/29/2009 50,000 $0.020 $1,000
Common 06/29/2009 50,000 $0.020 $1,000
Common 06/29/2009 100,000 $0.020 $2,000
Common 07/22/2009 10,000 $0.020 $200
Common 08/04/2009 100,000 $0.020 $2,000
Common 09/19/2009 10,000 $0.020 $200
Common 10/07/2009 10,000 $0.020 $200
Common 10/07/2009 50,000 $0.020 $1,000
Common 10/07/2009 50,000 $0.020 $1,000
Common 11/19/2009 45,500 $0.020 $910
Common 12/15/2009 20,000 $0.020 $400
Common 02/22/2010 30,000 $0.020 $600
Common 03/16/2010 12,500 $0.020 $250
Common 04/14/2010 100,000 $0.020 $2,000
Common 04/30/2010 125,000 $0.020 $2,500
Common 07/12/2010 1,500,000 $0.113 $0 $0 $200,000**
Common 08/30/2010 12,500 $0.040 $500
Common 08/30/2010 25,000 $0.040 $1,000
Common 08/23/2010 125,000 $0.040 $5,000
Common 09/03/2010 25,000 $0.040 $1,000
45
Common 09/03/2010 62,500 $0.040 $2,500
Common 09/03/2010 25,000 $0.040 $1,000
Common 09/03/2010 25,000 $0.040 $1,000
Common 09/03/2010 25,000 $0.040 $1,000
Common 10/05/2010 56,250 $0.040 $2,250
Common 10/05/2010 10,000 $0.040 $400
Common 11/04/2010 150,000 $0.040 $6,000
Common 11/06/2010 25,000 $0.040 $1,000
5,889,250 $68,241 $0 $200,000*
* Shares sold under Reg D. The remaining shares were sold under the Private
Placement Memorandum.
**Stock issued as part of a service agreement for future services with Cypress
Bend Executive Services, LLC. Refer to "Disclosure of Contracted
Obligations."
Such shares were issued pursuant to the exemption from registration contained
in Section 4(2) of the Securities.
[Intentionally Left Blank]
46
INDEX TO FINANCIAL STATEMENTS PAGE
Report of Independent Registered Certified Public Accounting Firm 48
Balance Sheets 49
Statements of Operations 50
Statement of Stockholders' Equity (Deficit) 51
Statements of Cash Flows 52
Notes to Financial Statements 53
47
REPORT OF INDEPENDENT REGISTERED CERTIFIED
PUBLIC ACCOUNTING FIRM
To the Board of Directors
Credex Corporation
Orange City, Florida
We have audited the accompanying balance sheets of Credex Corporation (a
development stage company) as of December 31, 2009 and 2008, and the related
statements of operations, stockholders' equity (deficit), and cash flows for the
years then ended and for the period from inception, September 2, 2005, to
December 31, 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 generally accepted auditing standards
as established by the Auditing Standards Board (United States) and in accordance
with the auditing standards of the Public Company Accounting 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. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits 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 Credex Corporation as of
December 31, 2009 and 2008, and the results of its operations and its cash flows
for the years then ended and for the period from inception, September 2, 2005,
to December 31, 2009 in conformity with accounting principles generally accepted
in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note D to the
financial statements, the Company is in the development stage and has suffered
recurring losses from operations. These conditions raise substantial doubt about
its ability to continue as a going concern. Management's plans regarding those
matters are also described in Note D. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Moss, Krusick & Associates, LLC
October 6, 2010
Winter Park, Florida
48
Credex Corporation
(A Development Stage Company)
BALANCE SHEETS
September 30, 2010, [Unaudited] and December 31, 2009
ASSETS
December 31,
September 30, -------------------
2010 2009 2008
------------ -------- ---------
(Unaudited)
CURRENT ASSETS:
Cash $ 8,287 $ 2,185 $ 3,390
--------- --------- --------
Total Assets $ 8,287 $ 2,185 $ 3,390
======= ======= ======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 2,500 $ 2,500 $ 3,000
--------- --------- --------
Total Current Liabilities 2,500 2,500 3,000
--------- --------- --------
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $0.001 par value; 100,000,000
authorized shares, 5,658,000, 3,565,500
and 2,850,000 shares issued and outstanding
at June 30, 2010 and December 31, 2009
and 2008, respectively 5,658 3,565 2,850
Additional paid in capital 252,933 36,676 23,081
Less unearned capital (see Note E) (160,000) 0 0
Accumulated deficit during the
development stage (92,804) (40,556) (25,541)
--------- --------- --------
Total Stockholders' Equity (Deficit) 5,787 (315) 390
--------- --------- --------
Total Liabilities and Stockholders'
Equity (Deficit) $ 8,287 $ 2,185 $ 3,390
======= ======= ======
The accompanying notes are an integral part of these financial statements.
49
Credex Corporation
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For Periods from Inception [September 2, 2005] to September 30, 2010
Nine Months Ended Years Ended Cumulative from
September 30, December 31 Inception to
------------------ ----------------- September 30,
2010 2009 2009 2008 2010
------- ------ -------- -------- ----------
(Unaudited) (Unaudited) (Unaudited)
REVENUE:
Finance income $ 0 $ 0 $ 0 $ 0 $ 15,417
Consulting income 0 0 0 0 8,000
-------- -------- -------- -------- --------
Total Revenue 0 0 0 0 23,417
-------- -------- -------- -------- --------
EXPENSES:
Travel 0 1,651 2,050 675 6,882
Office expenses 1,993 1,547 1,765 658 8,035
Telephone 257 0 0 0 2,579
Professional fees
(see Note E) 48,668 9,200 11,200 5,274 73,965
Advertising 0 0 0 0 350
Portfolio purchase 0 0 0 0 21,000
Seminar 0 0 0 0 1,585
Rent 1,330 0 0 396 1,858
-------- -------- -------- -------- --------
Total Expenses 52,248 12,398 15,015 7,003 116,254
-------- -------- -------- -------- --------
Operating Loss (52,248) (12,398) (15,015) (7,003) (92,837)
OTHER INCOME:
Interest income -0- -0- -0- 2 33
-------- -------- -------- -------- --------
Net loss before income
taxes (52,248) (12,398) (15,015) (7,001) (92,804)
INCOME TAXES -0- -0- -0- -0- -0-
-------- -------- -------- -------- --------
Net Loss $ (52,248) $(12,398) $(15,015) $(7,001) $(92,804)
========= ======== ======== ======== ========
Basic net loss per share $ (0.012) $(0.004) $ (0.005) $(0.003)
========= ======== ======== ========
Weighted average number
of shares
outstanding (000's) 4,211 3,018 3,143 2,589
========= ======== ======== ========
The accompanying notes are an integral part of these financial statements.
50
Credex Corporation
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For Periods from Inception [September 2, 2005] to September 30, 2010
<Table>
<Caption>
Common Stock Additional Development Total
---------------- Paid-in Unearned Stage Stockholders'
Shares Amount Capital Capital Deficit Equity
--------- ------ -------- ------------ ------- ---------
<s> <c> <c> <c> <c> <c> <c>
September 2, 2005, Date of
Incorporation 0 $ 0 $ 0 $ 0 $ 0 $ 0
Shares purchased for cash
at $0.001 per share 10,000 10 990 0 0 1,000
Net loss for year ended
December 31, 2005 0 0 0 0 (8,397) (8,397)
--------- ------ -------- --------- -------- --------
Balances - December 31, 2005 10,000 10 990 0 (8,397) (7,397)
Net loss for year ended
December 31, 2006 0 0 0 0 (8,056) (8,056)
--------- ------ -------- --------- -------- --------
Balances - December 31, 2006 10,000 10 990 0 (16,453) (15,453)
Stockholder loan used to
purchase shares at
$0.0072 per share 2,490,000 2,490 15,441 0 0 17,931
Net loss for year ended
December 31, 2007 0 0 0 0 (2,087) (2,087)
Balances - December 31, --------- ------ -------- --------- -------- --------
2007 2,500,000 2,500 16,431 0 (18,540) 391
Shares issued for cash
at $0.02 per share 350,000 350 6,650 0 0 7,000
Net loss for year ended
December 31, 2008 0 0 0 0 (7,001) (7,001)
Balances - December 31, --------- ------ -------- --------- -------- --------
2008 2,850,000 2,850 23,081 0 (25,541) 390
Shares issued for cash
at $0.02 per share 715,500 715 13,595 0 0 14,310
Net loss for year ended
December 31, 2009 0 0 0 0 (15,015) (15,015)
Balances - December 31, --------- ------ -------- --------- -------- --------
2009 3,565,500 3,565 36,676 0 (40,556) (315)
Shares issued for cash
at $0.02 per share
(unaudited) 267,500 268 5,082 0 0 5,350
Shares issued for cash
at $0.04 per share
(unaudited) 325,000 325 12,675 0 0 13,000
Shares issued for future
services at $0.113 per
share (unaudited) 1,500,000 1,500 198,500 (200,000) 0 0
Unearned capital amortized
(unaudited) 0 0 0 40,000 0 40,000
Net loss for period ended
September 30, 2010
(unaudited) 0 0 0 0 (52,248) (52,248)
Balances - September 30, --------- ------ -------- --------- -------- --------
2010 (unaudited) 5,658,000 $5,658 $252,933 $(160,000) $(92,804) $ 5,787
========= ====== ======== ========= ======== ========
The accompanying notes are an integral part of these financial statements.
</Table>
51
Credex Corporation
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For Periods from Inception [September 2, 2005] to September 30, 2010
<Table>
<Caption>
Nine Months Ended Years Ended Cumulative from
September 30, December 31 Inception to
------------------ ----------------- September 30,
2010 2009 2010 2009 2010
--------- -------- ------- ------- ----------
(Unaudited) (Unaudited) (Unaudited)
<s> <c> <c> <c> <c> <c>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(52,248) $(12,398) $(15,015) $(7,001) $(92,804)
Add non-cash expenses to Net Loss:
Professional fees from consulting
agreement (see Note E) 40,000 -0- -0- -0- 40,000
Adjustments to reconcile net loss to net cash
used by operations:
Decrease in security
deposits -0- -0- -0- 198 -0-
Increase (decrease) in
accounts payable -0- 500 (500) 3,000 2,500
------- -------- ------- ------- -------
Net Cash Used by
Operating Activities (12,248) (12,898) (15,515) (3,803) (50,304)
------- -------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stockholder
loan -0- -0- -0- -0- 46,828
Repayment of stockholder
loan -0- -0- -0- (1,000) (28,897)
Sale of common stock 18,350 10,800 14,310 7,000 40,660
-------- -------- ------- ------- -------
Net Cash Provided by
Financing Activities 18,350 10,800 14,310 6,000 58,591
------- -------- ------- ------- -------
Net Increase (Decrease)
in Cash 6,102 (2,098) (1,205) 2,197 8,287
Cash and Equivalents,
Beginning of Period 2,185 3,390 3,390 1,193 -0-
------- -------- ------- ------- -------
Cash and Equivalents,
End of Period $ 8,287 $ 1,292 $ 2,185 $ 3,390 $ 8,287
======== ======== ======= ======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ -0- $ -0- $ -0- $ -0- $ -0-
======== ======== ======= ======= =======
Cash paid for income taxes $ -0- $ -0- $ -0- $ -0- $ -0-
======== ======== ======= ======= =======
SIGNIFICANT NON-CASH ACTIVITIES:
Stockholder loan contributed
to capital for common
Stock $ -0- $ -0- $ -0- $ -0- $ 17,931
======== ======== ======= ======= =======
Common stock issued as collateral
for future services / additional
capital not earned $200,000 $ -0- $ -0- $ -0- $200,000
======== ======== ======= ======= =======
The accompanying notes are an integral part of these financial statements.
</Table>
52
Credex Corporation
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 (Unaudited) and December 31, 2009 and 2008
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1 Organization and Purpose
Credex Corporation, (the "Company") was incorporated in the State of Florida on
September 2, 2005. The Company is presently engaged in market research
regarding the cost and availability of non-performing credit card portfolios
including current market prices for the sales of portfolios deemed
non-collectable at the time of sale. The Company is exploring avenues for
raising capital in order to put its business plan into effect. The Company has
a December 31 year-end. The Company's principal office is in
Orange City, Florida.
2 Development Stage
The Company is currently a development stage entity as defined under accounting
standards, as it continues development activities related to non-performing
credit card portfolios. As required for development stage enterprises, the
statements of operations, cash flows and changes in stockholder's equity
(deficit) are presented on a cumulative basis from inception.
3 Revenue Recognition
The Company recognizes revenue from purchased non-performing receivables in
accordance with accounting standards on the accounting for certain loans or debt
securities acquired in a transfer. The Company will use the cost recovery method
and recognize income only after it has recovered its carrying value of purchased
non-performing receivables. There can be no assurance as to when or if the
carrying value will be recovered. Recognition of income using the interest
method would be dependent on the Company having the ability to develop
reasonable expectations of both the timing and amount of cash flows to be
collected. Due to uncertainties related to the expected timing of the
collections of older non-performing receivables purchased as a result of the
economic environment and the lack of validation of certain account components,
the Company determined that it will not have the ability to develop reasonable
expectations of timing of cash flows to be collected.
53
4 Cash and Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid investments with original maturities of less than three months to be
cash equivalents.
5 Financial Instruments
Financial instruments consist of bank deposits. The carrying amount of
financial instruments approximates fair value due to short-term maturities and
market interest rates.
6 Advertising
The Company expenses advertising and promotions costs as they are incurred.
7 Concentrations of Credit Risk
The Company maintains its cash in a bank deposit account in a bank which
participates in the Federal Deposit Insurance Corporation (FDIC) Transaction
Account Guarantee Program, which provides separate FDIC coverage on the full
balance of personal and non-personal checking accounts, so long as they are
not interest-bearing. Under that program, through September 30, 2010, all
non-interest bearing accounts were fully guaranteed by the FDIC for the full
balance in the account. Coverage is in addition to and separate from the
$250,000 coverage available under FDIC's general deposit insurance rules. After
December 31, 2013, balances up to $100,000 will be insured. As of
September 30, 2010 (unaudited) and December 31, 2009 and 2008, the Company had
no balances in excess of federally insured limits.
8 Earnings per Share
Basic earnings per share is computed by dividing net income available to common
stockholders by the weighted average number of common stock shares outstanding
during the year. Diluted EPS is computed by dividing net income available to
common stockholders by the weighted average number of common stock shares
outstanding during the year plus potential dilutive instruments such as stock
options and warrants. The Company has no dilutive instruments outstanding.
54
9 Income Taxes
The Company follows Section 740-10-30 of the FASB Accounting Standards
Codification, which requires recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in
the financial statements or tax returns.
Under this method, deferred tax assets and liabilities are based on the
differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Deferred tax assets are reduced by a
valuation allowance to the extent management concludes it is more likely than
not that the assets will not be realized. 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 the Statements of Operations in the period that includes
the enactment date.
The Company adopted section 740-10-25 of the Codification ("Section 740-10-25")
which addresses the determination of whether tax benefits claimed or expected
to be claimed on a tax return should be recorded in the financial statements.
Under Section 740-10-25, the Company may recognize the tax benefit from an
uncertain tax position only if it is more likely than not that the tax
position will be sustained on examination by the taxing authorities, based on
the technical merits of the position. The tax benefits recognized in the
financial statements from such a position should be measured based on the
largest benefit that has a greater than fifty percent (50%) likelihood of
being realized upon ultimate settlement. Section 740-10-25 also provides
guidance on de-recognition, classification, interest and penalties on income
taxes, accounting in interim periods and requires increased disclosures. The
Company had no material adjustments to its liabilities for unrecognized income
tax benefits according to the provisions of Section 740-10-25.
10 Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
55
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
11 Recent Accounting Pronouncements Impacting Company
Effective October 15, 2009, the Company adopted the Financial Accounting
Standards Board ("FASB") new Accounting Standard Codification ("ASC" or
"Codification") as the single source of authoritative accounting guidance
under the Generally Accepted Accounting Principles Topic. The ASC does not
create new accounting and reporting guidance, rather it reorganizes U.S. GAAP
pronouncements into approximately 90 topics within a consistent structure. All
guidance in the ASC carries an equal level of authority. Relevant portions of
authoritative content, issued by the U.S. Securities and Exchange Commission
("SEC") for SEC reporting entities, have been included in the ASC. After the
effective date of the Codification, all non-grandfathered, non-SEC accounting
literature not included in the ASC was superseded and deemed non-authoritative.
Adoption of the Codification also changed how the U.S. GAAP is referenced in
financial statements.
In June 2009, the FASB issued SFAS 166, "Accounting for Transfers of Financial
Assets" an amendment of SFAS 140 (FASB ASC Topic 860-10). SFAS 166 is intended
to improve the relevance, representational faithfulness, and comparability of
the information that a reporting entity provides in its financial statements
about a transfer of financial assets: the effects of a transfer on its
financial position, financial performance, and cash flows: and a transferor's
continuing involvement, if any, in transferred financial assets. This statement
must be applied as of the beginning of each reporting entity's first annual
reporting period that begins after November 15, 2009. The adoption of SFAS 166
did not have an impact on the Company's financial statements.
Effective June 15, 2009, the Company adopted new guidance to the Subsequent
Events - ASC Topic 855. The Subsequent Events Topic establishes general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued.
In particular, the Subsequent Events Topic sets forth the period after the
balance sheet date during which management of an SEC reporting entity should
56
evaluate events or transactions that may occur for potential recognition or
disclosure in the financial statements, the circumstances under which an
entity should recognize events or transactions occurring after the balance
sheet date of its financial statements, and the disclosures that an entity
should make about events or transactions that occurred after the balance sheet
date. Entities are required to disclose the date through which subsequent
events were evaluated as well as the date the financial statements were issued
or available to be issued. Adoption of this guidance did not have any impact
on the financial statements presented.
NOTE B - STOCKHOLDERS' EQUITY DEFICIT
At inception on September 2, 2005, the Company was authorized to have
outstanding 10,000 shares of common stock at $0.10 par value per share. On
October 24, 2007, the Company amended its Articles of Incorporation to
increase the maximum number of authorized common shares to 100,000,000 and
changed the par value to $0.001 per share, which has been retro-actively
restated to $0.001 in the accompanying financial statements.
The Company currently has forty stockholders of record as of
September 30, 2010. As of September 30, 2010, the outstanding shares were
5,658,000. Share transactions subsequent to December 31, 2009, resulted in
an increase in shares outstanding of 2,092,500 shares as follows:
Shares issued for cash at $0.02 per share 267,500
Shares issued for cash at $0.04 per share 325,000
Shares issued to Cypress Bend Executive
Services, LLC ("Cypress") 1,500,000
---------
2,092,500
==========
Additionally, ownership of 694,445 shares was transferred from a past
officer/director to Cypress. This former officer/director is a member of
Cypress. Another past officer/director who is deceased passed to his heirs
1,705,555 shares of which his heirs transferred 764,180 shares to Cypress. A
total of 2,958,625 shares have been transferred to Cypress under a consulting
management agreement with the Company. Upon completion of its services,
Cypress is to be paid $200,000 by the Company at which time Cypress will
return these shares. (Refer to Note E - Related Party)
57
NOTE C - INCOME TAXES
Deferred income taxes result from temporary differences between the basis of
assets and liabilities recognized for differences between the financial
statements and tax basis thereon, and for the expected future tax benefits to
be derived from net operating losses and tax credit carry-forwards. The
Company has net operating losses and has recorded a valuation allowance equal
to the tax benefit of the accumulated net operating losses, since it is
uncertain that future taxable income will be realized during the applicable
carry-forward periods. These benefits expire between 2025 and 2030.
The Company's deferred tax assets as of September 30, 2010 and
December 31, 2010 and 2009 were as follows:
December 31, September 30,
-------------------
2010 2009 2008
--------- -------- -------
(Unaudited)
Deferred tax asset $ 19,900 $ 15,300 $ 9,600
Valuation allowance (19,900) (15,300) (9,600)
--------- -------- -------
Net Deferred Tax Asset $ 0 $ 0 $ 0
========= ======== =======
NOTE D - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company's financial position
and operating results raise substantial doubt about its ability to continue as
a going concern. The Company is in the development stage and has sustained
losses of $52,804 (unaudited) since inception which raises substantial doubt
about its ability to continue as a going concern. The ability of the Company
to continue as a going concern is dependent upon expanding operations and
obtaining additional capital and financing. Management's plan in this regard
is to implement the Company's business plan and to secure additional funds
through equity or debt financing. The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.
NOTE E - RELATED PARTY
A past shareholder of the Company had received fees for service in the nine
months ended September 30, 2010, and the years ended December 31, 2009 and
2008 in the amount of $2,400, $4,200, and $0, respectively.
58
On July 9, 2010, the Company entered into a agreement for services
with Cypress, a related party, whereby Cypress acts as consultant to:
1. Raise the necessary money for the Company to operate in the short term,
2. Prepare and file documents with the SEC to take the Company public,
3. Secure a transfer agent and market maker broker-dealer for the Company's
stock,
4. Secure the necessary audits for the required filing documents, and
5. Provide day-to-day operational management of the Company.
In exchange for these services, which the Company anticipates will last for
a ten month period, the Company agreed to pay Cypress cash fees of $200,000
as well as provide Cypress with 2,958,625 shares of its stock, which effectively
transfers control of the Company to Cypress during this period. Because the
consulting services began August 1, 2010, amortization into Professional Fees
was $40,000 in 2010 and $0 in 2009 and 2008 resulting in net unearned capital
of $160,000 as of September 30, 2010 [unaudited]. Upon receipt of the cash
payment of $200,000, Cypress is to return the shares to the Company's treasury.
[Refer to Note B - Stockholders' Equity (Deficit)]
NOTE F - FILING WITH THE US SECURITIES AND EXCHANGE COMMISSION
The Company has completed filing with the U.S. Securities and Exchange
Commission one form to become public and is in the process of preparing a
filing to be able to sell shares to the public. The Company filed a Form 10
under the Securities and Exchange Act of 1934 to start reporting its
operations. In conjunction with the Form 10, the Company will file an S-1
under the Securities Act of 1933 to allow its shareholders to sell their shares
to the public. The plan is for the Company to register 2,940,625 shares of
existing shares outstanding with the shares to be sold to the public at $0.25
per share. The costs for this offering are estimated to be less than $10,000.
59
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES
There are none.
EXPERTS
The financial statements of Credex Corporation for the period from inception,
September 2, 2005, through December 31, 2009, included elsewhere in this
Prospectus have been audited by Moss, Krusick & Associates, LLC, independent
registered public accounting firm, as stated in its report appearing herein,
and are included in reliance upon the report of such firm given upon its
authority as experts in accounting and auditing. With respect to the unaudited
financial statements of Credex Corporation as of September 30, 2010 and for the
nine months ended September 30, 2010 and 2009 and period from inception through
September 30, 2010, included elsewhere in this Prospectus, such statements have
not been audited by Moss, Krusick & Associates, LLC and that firm does not
express an opinion on them.
Richard R. Cook, Esq., has issued an opinion letter on this prospectus upon
which Credex has relied. We have included Mr. Cook's opinion letter in the
prospectus and elsewhere in the registration statement in reliance on this
opinion letter, given on his authority as an expert in legal matters. Mr. Cook
has known James H. Bashaw (Credex's former President) for more than 20 years.
Mr. Cook agreed to participate in this venture by providing his services in
preparing and filing the necessary documents with the SEC to make Credex a
public company. Mr. Cook's also agreed to serve on the Board of Directors and
as Corporate Secretary.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Credex Corporation
By: /s/ Denise Leonardo Date: January 24, 2011
Denise Leonardo,
Chief Executive Officer
60
UNDERTAKINGS
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) (Sec. 230.424(b) of this
chapter) if, in the aggregate, the changes in volume and price represent no
more than 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.
(4) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser:
If the registrant is relying on Rule 430B (Sec. 230.430B of this chapter):
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3)
(Sec. 230.424(b)(3) of this chapter) shall be deemed to be part of the
registration statement as of the date the filed prospectus was deemed part of
and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule
61
424(b)(2),(b)(5), or (b)(7) (Sec. 230.424(b)(2), (b)(5), or (b)(7) of this
chapter) as part of a registration statement in reliance on Rule 430B relating
to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x)
(Sec. 230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose of
providing the information required by section 10(a) of the Securities Act
of 1933 shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus is first used
after effectiveness or the date of the first contract of sale of securities in
the offering described in the prospectus. As provided in Rule 430B, for
liability purposes of the issuer and any person that is at that date an
underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration
statement to which that prospectus relates, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
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 effective date,
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 effective date; or
For the purpose of determining liability of the registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities
of the undersigned registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of
any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424
(Sec. 230.424 of this chapter);
(ii) Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant or
its securities provided by or on
62
behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
CREDEX CORPORATION
Date: January 25, 2011 By:/s/ Denise Leonardo
_______________________________
Denise Leonardo, President and
Chief Executive Officer
63
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Daytona Beach, State of
Florida, on the day of January 25, 2011.
CREDEX CORPORATION
By: /s/ Denise Leonardo
____________________________
Denise Leonardo, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on
the dates indicated.
Name Position Date
____________________ _______________________________ ________________
/s/ Denise Leonardo
_____________________
Denise Leonardo Chairman of the Board and 1/25/2011
Chief Executive Officer
/s/ Steven G. Salmond
_____________________
Steven G. Salmond Chief Financial Officer 1/25/2011
/s/ Janine Weller
_____________________
Janine Weller Director 1/25/2011
/s/ Julie Ann Goodwin
_____________________
Julie Ann Goodwin Director 1/25/2011
64