Unassociated Document
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-SB, AMENDMENT NO. 2
GENERAL
FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS
ISSUERS
UNDER
SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission
file number 000-50385
CATALYST
LIGHTING GROUP, INC.
(Name
of
Small Business Issuer in its charter)
|
Delaware
|
36-4611496
|
|
(State
or other jurisdiction
of
incorporation
or formation)
|
(I.R.S.
employer
identification
number)
|
|
Vero
Beach, Florida
|
32963
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Issuer's
telephone number: (772) 231-7544
Securities
to be registered under Section 12(b) of the Act:
|
Title
of each class to be so
registered
|
Name
of each Exchange on which
each
class is to be registered
|
|
None
|
N/A
|
Securities
to be registered under Section 12(g) of the Exchange Act:
Title
of
each class
Common
Stock, $0.0001
EXPLANATORY
NOTE
We
are
filing this General Form for Registration of Securities on Form 10-SB to
register our common stock, pursuant to Section 12(g) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”).
Once
this
registration statement is deemed effective, we will be subject to the
requirements of Regulation 13A under the Exchange Act, which will require us
to
file annual reports on Form 10-KSB, quarterly reports on Form 10-QSB, and
current reports on Form 8-K, and we will be required to comply with all other
obligations of the Exchange Act applicable to issuers filing registration
statements pursuant to Section 12(g) of the Exchange Act.
Our
common stock was previously registered under Section 12(g) of the Exchange
Act
under Commission File Number 000-50385. However, on December 27, 2005, we filed
Form 15 with the U.S. Securities and Exchange Commission (the “SEC”) to
terminate the registration of our common stock under Section 12(g) of the
Exchange Act and to suspend our duty to file reports under the Exchange Act.
The
Form 15 was filed on the basis that we had less than 300 holders of record
of
our common stock as of December 27, 2005.
Unless
otherwise noted, references in this registration statement to “Catalyst” the
“Company,” “we,” “our” or “us” means Catalyst Lighting Group,
Inc. Our principal place of business is located at 190 Lakeview
Way,
Vero
Beach, FL 32963.
Our
telephone number is (772)
231-7544.
FORWARD
LOOKING STATEMENTS
There
are
statements in this registration statement that are not historical facts. These
“forward-looking statements” can be identified by use of terminology such as
“believe,” “hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,”
“expect,” “estimate,” “project,” “positioned,” “strategy” and similar
expressions. You should be aware that these forward-looking statements are
subject to risks and uncertainties that are beyond our control. For a
discussion of these risks, you should read this entire Registration Statement
carefully, especially the risks discussed under “Risk Factors.” Although
management believes that the assumptions underlying the forward looking
statements included in this Registration Statement are reasonable, they do
not
guarantee our future performance, and actual results could differ from those
contemplated by these forward looking statements. The assumptions used for
purposes of the forward-looking statements specified in the following
information represent estimates of future events and are subject to uncertainty
as to possible changes in economic, legislative, industry, and other
circumstances. As a result, the identification and interpretation of data and
other information and their use in developing and selecting assumptions from
and
among reasonable alternatives require the exercise of judgment. To the extent
that the assumed events do not occur, the outcome may vary substantially from
anticipated or projected results, and, accordingly, no opinion is expressed
on
the achievability of those forward-looking statements. In the light
of these risks and uncertainties, there can be no assurance that the results
and
events contemplated by the forward-looking statements contained in this
Registration Statement will in fact transpire. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of
their
dates. We do not undertake any obligation to update or revise any
forward-looking statements.
TABLE
OF CONTENTS
|
Item
Number and Caption
|
Page
|
| |
|
|
PART
I
|
|
| |
|
|
Item
1. Description
of
Business
|
1
|
| |
|
|
Item
2. Management's
Discussion and Analysis or Plan of Operations
|
5
|
| |
|
|
Risk
Factors
|
9
|
| |
|
|
Item
3. Description
of
Property
|
15
|
| |
|
|
Item
4. Security
Ownership of Certain Beneficial Owners and Management
|
15
|
| |
|
|
Item
5. Directors,
Executive Officers, Promoters and Control Persons
|
17
|
| |
|
|
Item
6. Executive
Compensation
|
21
|
| |
|
|
Item
7. Certain
Relationships and Related Transactions
|
23
|
| |
|
|
Item
8. Description
of
Securities
|
24
|
| |
|
|
PART
II
|
|
| |
|
|
Item
1. Market for
Common Equity and Related Stockholder Matters
|
29
|
| |
|
|
Item
2. Legal
Proceedings
|
31
|
| |
|
|
Item
3. Changes in
and
Disagreements with Accountants
|
31
|
| |
|
|
Item
4. Recent Sales
of
Unregistered Securities
|
31
|
| |
|
|
Item
5. Indemnification
of Directors and Officers
|
32
|
| |
|
|
PART
F/S
|
|
| |
|
|
Financial
Statements
|
F-1
to F-20
|
| |
|
|
PART
III
|
|
| |
|
|
Item
1. Index to
Exhibits
|
34
|
| |
|
|
Signature
|
35
|
PART
I65
Item
1. Description of Business
(a)
Business
History and Background
We
were
formed as a “blank check” Delaware corporation under the name Wentworth III,
Inc. on March 7, 2001 to effect a merger, exchange of capital stock, asset
acquisition or other similar business combination with an operating business
which we believe had significant growth potential. As of February 12, 2003,
we
entered into a Securities Exchange Agreement with Whitco Company, L.L.P., a
Texas limited liability partnership which manufactured, marketed and distributed
outdoor lighting poles. On August 27, 2003, we acquired Whitco Company, LP
(successor in interest as a result of the conversion of Whitco Company, L.L.P.
to a limited partnership) through an exchange of all of Whitco's partnership
units, and options to purchase partnership units, for 2,991,368 shares of
Catalyst common stock, and options to purchase 808,632 shares of Catalyst common
stock. Following our acquisition of Whitco, we changed our name to Catalyst
Lighting Group, Inc., and Whitco became our wholly-owned
subsidiary.
Whitco
was a nationwide manufacturer, marketer and distributor of steel and aluminum
outdoor lighting poles. Founded in 1969, Whitco sold poles directly to original
equipment manufacturers (OEM's) and indirectly to other third parties through
its own contracted sales representatives. We sought to have Whitco become the
preferred manufacturer, marketer and distributor of steel and aluminum lighting
pole structures and accessories.
We
operated our Whitco business solely through our wholly-owned Whitco subsidiary.
As such, substantially all of our assets and liabilities resided in our Whitco
subsidiary. We continued to incur operating losses from our Whitco business
and
had insufficient working capital to fund our Whitco business operations. During
late 2005, we pursued the alternative of selling or merging with another company
to provide manufacturing economies of scale and the potential of additional
liquidity to fund operations.
However,
due to continuing operating losses, on March 15, 2006, Whitco voluntarily filed
for protection under Chapter 11 of the U.S. bankruptcy laws. On April 25, 2006,
the bankruptcy court approved a sale of Whitco’s assets (other than cash and
accounts receivable) used in its area lighting pole business. The assets were
sold free and clear of any liens and encumbrances to a third party purchaser
pursuant to Section 363 of the U.S Bankruptcy Code. The purchaser issued a
common stock purchase warrant (“Purchase Warrant”) to acquire shares of the
purchaser’s common stock as consideration for the assets purchased.
On
May
16, 2006, Whitco filed a motion to convert its bankruptcy case to a Chapter
7
liquidation proceeding. This motion was granted by the bankruptcy court on
July
13, 2006. In connection with the liquidation, the Purchase Warrant and Whitco’s
cash and accounts receivable were assigned and distributed to Whitco’s secured
creditor, Laurus Master Fund, Ltd. (“Laurus”). As part of the Chapter 7
bankruptcy proceedings, no assets were available for distribution to unsecured
creditors and, accordingly, these unsatisfied obligations were relieved as
part
of the liquidation of Whitco in accordance with the provisions of Chapter 7
of
U.S. bankruptcy laws.
Since
Whitco’s liquidation in bankruptcy, the Company has had nominal assets, nominal
business operations and its business strategy has been to investigate and,
if
such investigation warrants, acquire a target company or business seeking the
perceived advantages of being a publicly held corporation. In furtherance of
this business strategy, on July 25, 2006, Catalyst voluntarily filed for
protection under Chapter 11 of the U.S. bankruptcy laws. Catalyst subsequently
determined to withdraw from bankruptcy court protection and, on motion made
by
the U.S. trustee, the bankruptcy court ordered the case dismissed on January
9,
2007.
(b) Reorganization
Since
the
dismissal of Catalyst’s bankruptcy case, the Company completed a reorganization
in September 2007 and settled all of its outstanding liabilities with creditors
outside the jurisdiction of the bankruptcy courts (the “Reorganization”). As
part of this Reorganization, on August 22, 2007, the Company entered into a
securities purchase agreement (“Securities Purchase Agreement”) with KIG
Investors I, LLC (“KIG Investors”), a Delaware limited liability company,
pursuant to which KIG Investors purchased 1,572,770 shares of convertible
preferred stock for a purchase price of $157,277, or $0.10 per share (“Preferred
Stock Purchase”). A copy of the Securities Purchase Agreement is attached hereto
as Exhibit 10.3.
On
August
23, 2007, in accordance with the terms of the Securities Purchase Agreement,
the
existing officers and two of the Company’s directors resigned, and Kevin R.
Keating, the sole remaining director, was appointed Chief Executive Officer,
Chief Financial Officer, President, Secretary and Treasurer of the Company.
Kevin
R.
Keating is the father of Timothy J. Keating, the principal member of Keating
Investments, LLC. Keating Investments, LLC is the managing member of KIG
Investors. Timothy J. Keating is the manager of KIG Investors.
The
Preferred Stock Purchase was completed on September 12, 2007. The preferred
shares were automatically convertible into the Company’s common stock at such
time as the Company completed a 1-for-10 reverse stock split (“Reverse Split”).
The Reverse Split was completed on September 25, 2007, and KIG Investors was
issued 2,562,015 shares of common stock, on a post-reverse split basis, upon
cancellation of the preferred stock. The proceeds of the Preferred Stock
Purchase were used to pay outstanding liabilities of the Company.
KIG
Investors was granted certain demand and piggyback registration rights for
the
shares of common stock issued to them upon conversion, pursuant to the terms
and
condition of a certain registration rights agreement (“KIG Registration Rights
Agreement”). A copy of the KIG Registration Rights Agreement is attached hereto
as Exhibit 10.4.
In
connection with the closing of the Preferred Stock Purchase, the Company entered
into agreements with a number of creditors for a cash settlement of amounts
owed
to them by the Company. Pursuant to these cash settlements, the Company paid
an
aggregate of $30,277 in complete satisfaction of $191,092 in accrued
liabilities, resulting in income from the discharge of indebtedness of
$160,815.
In
connection with the closing of the Preferred Stock Purchase, the Company also
entered into settlement and release agreements (collectively, the “Settlement
Agreements”) with Feldman Weinstein & Smith, LLP (“FWS”), former legal
counsel to the Company, and with Halliburton Investor Relations (“HIR”), the
Company’s former investor relation firm, for the issuance of common stock in
complete settlement of amounts owed to them for services rendered. Pursuant
to
these Settlement Agreements, the Company issued an aggregate of 71,086 shares
of
common stock, on a post-split basis, valued at $7,109 or approximately $0.10
per
share, in satisfaction of accrued liabilities totaling $73,260, resulting in
income from discharge of indebtedness of $66,151 being recorded. A copy of
the
Settlement Agreements with FWS and HIR are attached hereto as Exhibits 10.5
and
10.6, respectively. FWS and HIR were granted certain piggyback registration
rights for the shares of common stock received by them in the
settlement.
In
connection with the closing of the Preferred Stock Purchase, the Company also
entered into settlement and release agreement with Laurus (“Laurus Settlement
Agreement”) for the issuance of common stock in complete settlement of amounts
owed to it for certain loans and accrued interest. Pursuant to the Laurus
Settlement Agreement, the Company issued 1,083,172 shares of common stock,
on a
post-split basis, valued at $108,317 or approximately $0.10 per share, in
satisfaction of principal under notes of $820,024 and accrued interest of
$121,095, resulting in income from discharge of indebtedness of $832,802 being
recorded. A copy of the Laurus Settlement Agreement is attached hereto as
Exhibit 10.8.
Laurus
was granted certain demand and piggyback registration rights for the shares
of
common stock issued to them under the settlement, pursuant to the terms and
condition of a certain registration rights agreement (“Laurus Registration
Rights Agreement”). A copy of the Laurus Registration Rights Agreement is
attached hereto as Exhibit 10.9.
Further,
as part of the foregoing cash and equity settlements, any creditor holding
warrants to purchase shares of the Company’s common stock agreed to the
cancellation of such warrants. Accordingly, warrants to purchase 82,367 shares
of common stock, on a post-reverse split basis, were cancelled.
(c)
Current Business of Issuer
Since
completion of its Reorganization, the Company’s business strategy has been to
investigate and, if such investigation warrants, acquire a target operating
company or business seeking the perceived advantages of being a publicly held
corporation. The Company’s principal business objective for the next 12 months
and beyond such time will be to achieve long-term growth potential through
a
combination with an operating business rather than immediate, short-term
earnings. The Company will not restrict its potential candidate target companies
to any specific business, industry or geographical location and, thus, may
acquire any type of business.
To
date,
the Company has made no efforts to identify a possible business combination.
As
a result, the Company has not conducted negotiations or entered into a letter
of
intent concerning any target business. The Company intends to commence search
for an operating business suitable for a business combination after this
Registration Statement becomes effective and the Company is a reporting company
under the Exchange Act.
Under
SEC
Rule 12b-2 under the Securities Act of 1933, as amended (the “Securities Act”),
the Company qualifies as a “shell company,” because it has no or nominal assets
(other than cash) and no or nominal operations. Management does not intend
to
undertake any efforts to cause a market to develop in our securities, either
debt or equity, until we have successfully concluded a business combination.
The
Company intends to comply with the periodic reporting requirements of the
Exchange Act for so long as it is subject to those requirements.
The
analysis of new business opportunities will be undertaken by or under the
supervision of Kevin R. Keating, the sole officer and director of the Company.
As of this date, the Company has not entered into any definitive agreement
with
any party, nor have there been any specific discussions with any potential
business combination candidate regarding business opportunities for the Company.
The Company has unrestricted flexibility in seeking, analyzing and participating
in potential business opportunities. In its efforts to analyze potential
acquisition targets, the Company will consider the following kinds of
factors:
(i) Potential
for growth, indicated by new technology, anticipated market expansion or new
products;
(ii)
Competitive
position as compared to other firms of similar size and experience within the
industry segment as well as within the industry as a whole;
(iii)
Strength
and diversity of management, either in place or scheduled for
recruitment;
(iv) Capital
requirements and anticipated availability of required funds, to be provided
by
the Company or from operations, through the sale of additional securities,
through joint ventures or similar arrangements or from other
sources;
(v) The
cost
of participation by the Company as compared to the perceived tangible and
intangible values and potentials;
(vi)
The
extent to which the business opportunity can be advanced;
(vii) The
accessibility of required management expertise, personnel, raw materials,
services, professional assistance and other required items; and
(viii)
Other
relevant factors.
In
applying the foregoing criteria, no one of which will be controlling, management
will attempt to analyze all factors and circumstances and make a determination
based upon reasonable investigative measures and available data. Potentially
available business opportunities may occur in many different industries, and
at
various stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex. Due to the Company's limited capital available for investigation,
the Company may not discover or adequately evaluate adverse facts about the
opportunity to be acquired.
(d) Form
of Potential Business Combination
The
manner in which the Company participates in an opportunity will depend upon
the
nature of the opportunity, the respective needs and desires of the Company
and
the promoters of the opportunity, and the relative negotiating strength of
the
Company and such promoters.
It
is
likely that the Company will acquire its participation in a business opportunity
through the issuance of common stock or other securities of the Company.
Although the terms of any such transaction cannot be predicted, it should be
noted that in certain circumstances the criteria for determining whether or
not
an acquisition is a so-called "tax free" reorganization under Section 368(a)(1)
of the Internal Revenue Code of 1986, as amended (the "Code") depends upon
whether the owners of the acquired business own 80% or more of the voting stock
of the surviving entity. If a transaction were structured to take advantage
of
these provisions rather than other "tax free" provisions provided under the
Code, all prior stockholders of the Company would in such circumstances retain
20% or less of the total issued and outstanding shares of the surviving entity.
Under other circumstances, depending upon the relative negotiating strength
of
the parties, prior stockholders of the Company may retain substantially less
than 20% of the total issued and outstanding shares of the surviving entity.
This could result in substantial additional dilution to the equity of those
who
were stockholders of the Company prior to a business combination with an
operating entity.
The
present stockholders of the Company will likely not have control of a majority
of the voting securities of the Company following a reorganization transaction.
As part of such a transaction, the Company's sole director may resign and one
or
more new directors may be appointed without any vote by
stockholders.
In
the
case of a business combination, the transaction may be accomplished upon the
sole determination of management without any vote or approval by stockholders.
In the case of a statutory merger or consolidation directly involving the
Company, it will likely be necessary to call a stockholders' meeting and obtain
the approval of the holders of a majority of the outstanding securities. The
necessity to obtain such stockholder approval may result in delay and additional
expense in the consummation of any proposed transaction and will also give
rise
to certain appraisal rights to dissenting stockholders. Most likely, management
will seek to structure any such transaction so as not to require stockholder
approval.
It
is
anticipated that the investigation of specific business opportunities and the
negotiation, drafting and execution of relevant agreements, disclosure documents
and other instruments will require substantial management time and attention
and
substantial cost for accountants, attorneys and others. If a decision is made
not to participate in a specific business opportunity, the costs theretofore
incurred in the related investigation might not be recoverable. Furthermore,
even if an agreement is reached for the participation in a specific business
opportunity, the failure to consummate that transaction may result in the loss
to the Company of the related costs incurred.
We
presently have no employees. Our sole officer and director is engaged in outside
business activities and anticipates that he will devote to our business very
limited time until the acquisition of a successful business opportunity has
been
identified. We expect no significant changes in the number of our employees
other than such changes, if any, incident to a business
combination.
(e)
Reports
to Security Holders
(i) The
Company is not required to deliver an annual report to security holders and
at
this time does not anticipate the distribution of such a report.
(ii)
The
Company will file reports with the SEC. The Company will be a reporting company
and will comply with the requirements of the Exchange Act.
(iii)
The
public may read and copy any materials the Company files with the SEC in the
SEC's Public Reference Section, Room 1580, 100 F Street N.E., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Section by calling the SEC at 1-800-SEC-0330. Additionally, the SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC, which can be found at http://www.sec.gov.
Item
2. Management’s Discussion and Analysis or Plan of Operations
(a) Reorganization
The
Company completed its reorganization in September 2007 and settled all of its
outstanding liabilities with creditors outside the jurisdiction of the
bankruptcy courts. As part of the Reorganization, on August 22, 2007, the
Company entered into a stock purchase agreement with KIG Investors pursuant
to
which KIG Investors purchased 1,572,770 shares of convertible preferred stock
for a purchase price of $157,277, or $0.10 per share.
The
Preferred Stock Purchase was completed on September 12, 2007. The preferred
shares were automatically convertible into the Company’s common stock at such
time as the Company completed a 1-for-10 reverse stock split (“Reverse Split”).
The Reverse Split was completed on September 25, 2007, and KIG Investors was
issued 2,562,015 shares of common stock, on a post-reverse split basis, upon
cancellation of the preferred stock. The proceeds of the Preferred Stock
Purchase were used to pay outstanding liabilities of the Company.
As
part
of the Reorganization, the Company entered into agreements with a number of
creditors for a cash settlement of amounts owed to them by the Company. Pursuant
to these cash settlements, the Company paid an aggregate of $30,277 in complete
satisfaction of $191,092 in accrued liabilities, resulting in income from the
discharge of indebtedness of $160,815.
As
part
of the Reorganization, the Company also entered into Settlement Agreements
with
FWS and HIR for the issuance of common stock in complete settlement of amounts
owed to them for services rendered. Pursuant to these Settlement Agreements,
the
Company issued an aggregate of 71,086 shares of common stock, on a post-reverse
split basis, valued at $7,109 or approximately $0.10 per share, in satisfaction
of accrued liabilities totaling $73,260, resulting in income from discharge
of
indebtedness of $66,151 being recorded.
As
part
of the Reorganization, the Company also entered into a settlement agreement
with
Laurus, the Company’s secured creditor, for the issuance of common stock in
complete settlement of amounts owed to it for certain loans and accrued
interest. Pursuant to the Laurus Settlement Agreement, the Company issued
1,083,172 shares of common stock, on a post-split basis, to Laurus valued at
$108,317 or approximately $0.10 per share, in satisfaction of principal under
notes of $820,024 and accrued interest of $121,095, resulting in income from
discharge of indebtedness of $832,802 being recorded.
For
the
twelve months ended September 30, 2006 and 2007, the Company had no revenues
from continuing operations.
For
the
twelve months ended September 30, 2007, the Company had a loss from operations
of $(118,450), as compared with a loss from operations of $(381,602) for the
twelve months ended September 30, 2006.
For
the
twelve months ended September 30, 2007, the Company incurred interest expense
of
$79,678, as compared with interest expense of $246,607 for the twelve months
ended September 30, 2006. The reduction in interest expense was primarily
attributed to payments made on certain notes issued to Laurus during the twelve
months ended September 30, 2006 in connection with the Whitco bankruptcy and
liquidation.
The
Company had net earnings from discontinued operations of $66,304 during the
twelve months ended September 30, 2006. The net earnings from discontinued
operations were comprised of a loss from discontinued operations (net of tax)
of
$(2,149,123), which was offset by a gain of $2,215,427 on the disposition of
the
Whitco subsidiary.
The
Company also had income on discharge of indebtedness of $1,059,768 during the
twelve months ended September 30, 2006. This discharge income was related to
the
settlements made with various creditors of the Company including, Laurus, FWS
and HIR.
For
the
twelve months ended September 30, 2007, the Company had net income of $861,640,
primarily related to discharge income of $1,059,768 for the period, as compared
with a net loss of $(561,905) for the twelve months ended September 30, 2006.
(c)
Liquidity and Capital Resources
As
of
September 30, 2007, the Company had assets equal to $76,696, comprised
exclusively of cash and cash equivalents. The Company’s current liabilities as
of September 30, 2007 were $8,363, comprised exclusively of accrued expenses.
The
following is a summary of the Company’s cash flows provided by (used in)
operating, investing, and financing activities for the twelve months ended
September, 2007 and 2006:
| |
|
Twelve
months ended September, 30
|
|
| |
|
2007
|
|
2006
|
|
|
Operating
activities
|
|
$
|
(80,581
|
)
|
$
|
344,364
|
|
|
Investing
activities
|
|
|
-
|
|
|
-
|
|
|
Financing
activities
|
|
$
|
157,277
|
|
$
|
(344,364
|
)
|
| |
|
|
|
|
|
|
|
|
Net
effect on cash
|
|
$
|
76,696
|
|
$
|
-
|
|
The
Company currently has nominal assets, no active business operations and no
sources of revenues. The Company is dependent upon the receipt of capital
investment or other financing to fund its ongoing operations and to execute
its
business plan of seeking a combination with a private operating company. In
addition, the Company is dependent upon certain related parties to provide
continued funding and capital resources. If continued funding and capital
resources are unavailable at reasonable terms, the Company may not be able
to
implement its plan of operations. Our financial statements indicate that without
additional capital, there is substantial doubt as to our ability to continue
as
a going concern.
(d)
Plan
of Operations
Since
the
Company completed its Reorganization in September 2007, its business strategy
and plan of operation has been to investigate and, if such investigation
warrants, acquire a target operating company or business seeking the perceived
advantages of being a publicly held corporation. Our principal business
objective for the next 12 months and beyond such time will be to achieve
long-term growth potential through a combination with a business rather than
immediate, short-term earnings. The Company will not restrict our potential
candidate target companies to any specific business, industry or geographical
location and, thus, may acquire any type of business.
The
Company does not currently engage in any business activities that provide cash
flow. The costs of investigating and analyzing business combinations for the
next 12 months and beyond such time will be paid with money in our treasury
or
with additional amounts, as necessary, to be loaned to or invested in us by
our
stockholders, management or other investors.
During
the next 12 months we anticipate incurring costs related to the filing of
Exchange Act reports, and consummating a business combination.
We
believe we will be able to meet these costs through use of funds in our treasury
and additional amounts to be loaned by or invested in us by our stockholders,
management or other investors. Currently, however, our ability to continue
as a
going concern is dependent upon our ability to generate future profitable
operations and/or to obtain the necessary financing to meet our obligations
and
repay our liabilities arising from normal business operations when they come
due. Our ability to continue as a going concern is also dependent on our ability
to find a suitable target operating company and enter into a possible business
combination with such operating company. Management’s plan includes obtaining
additional funds by equity financing prior to or in connection with a business
combination and/or related party advances; however, there is no assurance of
additional funding being available.
The
Company may consider a an operating business which has recently commenced
operations, is a developing company in need of additional funds for expansion
into new products or markets, is seeking to develop a new product or service,
or
is an established business which may be experiencing financial or operating
difficulties and is in need of additional capital. In the alternative, a
business combination may involve the acquisition of, or merger with, a company
which does not need substantial additional capital, but which desires to
establish a public trading market for its shares, while avoiding, among other
things, the time delays, significant expense, and loss of voting control which
may occur in a public offering.
Our
sole
officer and director has not had any preliminary contact or discussions with
any
representative of any other entity regarding a business combination with us.
Any
target business that is selected may be a financially unstable company or an
entity in its early stages of development or growth, including entities without
established records of sales or earnings. In that event, we will be subject
to
numerous risks inherent in the business and operations of financially unstable
and early stage or potential emerging growth companies. In addition, we may
effect a business combination with an entity in an industry characterized by
a
high level of risk, and, although our management will endeavor to evaluate
the
risks inherent in a particular target business, there can be no assurance that
we will properly ascertain or assess all significant risks.
Our
management anticipates that it will likely be able to effect only one business
combination, due primarily to our limited financing and the dilution of interest
for present and prospective stockholders, which is likely to occur as a result
of our management’s plan to offer a controlling interest to a target business in
order to achieve a tax-free reorganization. This lack of diversification should
be considered a substantial risk in investing in us, because it will not permit
us to offset potential losses from one venture against gains from
another.
The
Company anticipates that the selection of a business combination will be complex
and extremely risky. Because of general economic conditions, rapid technological
advances being made in some industries and shortages of available capital,
our
management believes that there are numerous firms seeking even the limited
additional capital which we will have and/or the perceived benefits of becoming
a publicly traded corporation. Such perceived benefits of becoming a publicly
traded corporation include, among other things, facilitating or improving the
terms on which additional equity financing may be obtained, providing liquidity
for the principals of and investors in a business, creating a means for
providing incentive stock options or similar benefits to key employees, and
offering greater flexibility in structuring acquisitions, joint ventures and
the
like through the issuance of stock. Potentially available business combinations
may occur in many different industries and at various stages of development,
all
of which will make the task of comparative investigation and analysis of such
business opportunities extremely difficult and complex.
We
do not
currently intend to retain any entity to act as a "finder" to identify and
analyze the merits of potential target businesses. However, at present, we
contemplate that Keating Securities, LLC (“Keating Securities”), a Delaware
limited liability company and a registered broker-dealer, may act as one of
the
finders of business combinations for the Company. Timothy J. Keating, the son
of
Kevin R. Keating, our sole officer and director, and a the manager of KIG
Investors, our principal stockholder, is the Managing Member of, and holds
approximately a 54% interest in, Keating Securities. There is currently no
signed agreement or preliminary agreement or understanding between us and
Keating Securities.
We
currently have no source of operating revenue, and have only limited working
capital with which to pursue our business plan, which contemplates the
completion of a business combination with an operating company. The amount
of
capital required to sustain operations until the successful completion of a
business combination is subject to future events and uncertainties. It may
be
necessary for us to secure additional working capital through loans or sales
of
common stock, and there can be no assurance that such funding will be available
in the future. These conditions raise substantial doubt about our ability to
continue as a going concern. Our
auditor
has issued a "going concern" qualification as part of his opinion in the Audit
Report
for the
year ended September 30, 2007.
(f) Critical
Accounting Policies
The
preparation of financial statements and related disclosures in conformity with
accounting principles generally accepted in the United States requires estimates
and assumptions that affect the reported amounts of assets and liabilities,
revenues and expenses and related disclosures of contingent assets and
liabilities in the financial statements and accompanying notes. The SEC has
defined a company’s critical accounting policies as the ones that are most
important to the portrayal of the company’s financial condition and results of
operations, and which require the company to make its most difficult and
subjective judgments, often as a result of the need to make estimates of matters
that are inherently uncertain. We believe that our estimates and assumptions
are
reasonable under the circumstances; however, actual results may vary from these
estimates and assumptions. We have identified in Note 2 - “Summary of
Significant Accounting Policies” to the Financial Statements contained in Part
F/S of this document certain critical accounting policies that affect the more
significant judgments and estimates used in the preparation of the financial
statements.
(g) Off-Balance
Sheet Arrangements
We
have
not entered into any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes
in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources and would be considered material
to
investors.
RISK
FACTORS
An
investment in the Company is highly speculative in nature and involves an
extremely high degree of risk. A prospective investor should consider the
possibility of the loss of an investor’s entire investment and evaluate all
information about us and the risk factors discussed below in relation to his
financial circumstances before investing in us
There
may be conflicts of interest between our management and the stockholders of
the
Company.
Conflicts
of interest create the risk that management may have an incentive to act
adversely to the interests of the stockholders of the Company. A conflict
of interest may arise between our management's personal pecuniary interest
and
its fiduciary duty to our stockholders. In addition, Kevin R. Keating, our
sole
officer and director, is currently involved with other public shell companies
and conflicts in the pursuit of business combinations with such other public
shell companies with which he is, and may in the future be, affiliated with
may
arise. If we and the other public shell companies that management is affiliated
with desire to take advantage of the same opportunity, then members of
management that are affiliated with both companies would abstain from voting
upon the opportunity. In the event of identical officers and directors, members
of management, such individuals will arbitrarily determine the company that
will
be entitled to proceed with the proposed transaction.
Additionally,
we contemplate that at least one of the finders of business combinations for
the
Company will be Keating Securities. Timothy J. Keating, the manager of KIG
Investors, our principal stockholder, and the son of Kevin R. Keating, our
sole
officer and director, is the Managing Member of, and holds approximately a
54%
interest in, Keating Securities. We cannot assure you that conflicts of interest
among us, Keating Securities and our stockholders will not develop.
We
have no current operating business.
We
currently have no relevant operating business, revenues from operations or
assets. Our business plan is to seek a merger or business combination with
an
operating business. We may not realize any revenue unless and until we
successfully combine with an operating business. We face all of the risks
inherent in the investigation, acquisition, or involvement in a new business
opportunity. An investor’s purchase of any of our securities must be regarded as
placing funds at a high risk in a new or "start-up" venture with all of the
unforeseen costs, expenses, problems, and difficulties to which such ventures
are subject. We will, in all likelihood, sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination. This may result in our incurring a net operating loss that will
increase continuously until we can consummate a business combination with a
profitable business opportunity. We cannot assure you that we can identify
a
suitable business opportunity and consummate a business
combination.
There
is competition for those private companies suitable for a business combination
of the type contemplated by management.
We
are in
a highly competitive market for a small number of business opportunities which
could reduce the likelihood of consummating a successful business combination.
We are and will continue to be an insignificant participant in the business
of
seeking business combinations with operating entities that desire to become
public companies. A large number of established and well-financed entities,
including small public companies and venture capital firms, are active in
mergers and acquisitions of companies that may be desirable target candidates
for us. Nearly all these entities have significantly greater financial
resources, technical expertise and managerial capabilities than we do;
consequently, we will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination.
These
competitive factors may reduce the likelihood of our identifying and
consummating a successful business combination.
Our
future success is highly dependent on the ability of management to locate and
attract a suitable acquisition.
The
nature of our operations is highly speculative, and there is a consequent risk
of loss of your investment. The success of our plan of operations will depend
to
a great extent on the operations, financial condition and management of the
identified business opportunity. While management intends to seek business
combination(s) with entities having established operating histories, we cannot
assure you that we will be successful in locating candidates meeting that
criterion. In the event we complete a business combination, the success of
our
operations may be dependent upon management of the successor firm or venture
partner firm and numerous other factors beyond our control. In addition, even
if
we complete a business combination, there is no assurance that the business
we
acquire will generate revenues or profits, or that the value of our common
stock
will increase as a result of the acquired business opportunity.
We
only intend to acquire a single business opportunity and thus your investment
will lack diversification.
Because
of our limited financial resources, it is unlikely that we will be able to
diversify our acquisitions or operations. The inability to diversify our
activities into more than one area will subject our investors and stockholders
to economic fluctuations within a particular business or industry and therefore
increase the risks associated with the investment. We only intend to engage
in a
business combination with one operating entity.
We
have no existing agreement for a business combination or other
transaction.
We
have
no arrangement, agreement or understanding with respect to engaging in a
business combination with an operating business. No assurances can be given
that
we will successfully identify and evaluate suitable business opportunities
or
that we will conclude a business combination. Management has not identified
any
particular industry or specific business within an industry for evaluation.
We
cannot guarantee that we will be able to negotiate a business combination on
favorable terms, and there is consequently a risk that funds allocated to the
purchase of our shares will not be invested in a company with active business
operations. Further, management will seek to structure any such business
combination so as not to require stockholder approval.
Management
intends to devote only a limited amount of time to seeking a target company
which may adversely impact our ability to identify a suitable acquisition
candidate.
While
seeking a business combination, management anticipates devoting very limited
time to the Company's affairs. Our sole officer has not entered into a written
employment agreement with us and is not expected to do so in the foreseeable
future. This limited commitment may adversely impact our ability to identify
and
consummate a successful business combination. To supplement our search
activities, we may be required to employ accountants, technical experts,
appraisers, attorneys, or other consultants or advisors. Some of these outside
advisors may be our affiliates or their affiliated entities. The selection
of
any such advisors will be made by our management without any input from
stockholders, and the engagement of such persons may reduce the value of your
investment.
The
time and cost of preparing a private company to become a public reporting
company may preclude us from entering into a merger or acquisition with the
most
attractive private companies.
Target
companies that fail to comply with SEC reporting requirements may delay or
preclude acquisition. Sections 13 and 15(d) of the Exchange Act require
reporting companies to provide certain information about significant
acquisitions, including certified financial statements for the company acquired,
covering one, two, or three years, depending on the relative size of the
acquisition. The time and additional costs that may be incurred by some target
entities to prepare these statements may significantly delay or essentially
preclude consummation of an acquisition. Otherwise suitable acquisition
prospects that do not have or are unable to obtain the required audited
statements may be inappropriate for acquisition so long as the reporting
requirements of the Exchange Act are applicable. Further, the internal control
management assessment and auditor attestation requirements under Section 404
of
the Sarbanes-Oxley Act of 2002 may limit the number of suitable acquisition
prospects if they cannot, or are unwilling to, comply with these
requirements.
The
Company may be subject to further government regulation which would adversely
affect our operations.
Although
we will be subject to the reporting requirements under the Exchange Act,
management believes we will not be subject to regulation under the Investment
Company Act of 1940, as amended (the “Investment Company Act”), since we will
not be engaged in the business of investing or trading in securities. If we
engage in business combinations which result in our holding passive investment
interests in a number of entities, we could be subject to regulation under
the
Investment Company Act. If so, we would be required to register as an investment
company and could be expected to incur significant registration and compliance
costs. We have obtained no formal determination from the SEC as to our status
under the Investment Company Act and, consequently, violation of the Investment
Company Act could subject us to material adverse consequences.
Any
potential acquisition or merger with a foreign company may subject us to
additional risks.
If
we
enter into a business combination with a foreign company, we will be subject
to
risks inherent in business operations outside of the United States. These risks
include, for example, currency fluctuations, regulatory problems, punitive
tariffs, unstable local tax policies, trade embargoes, risks related to shipment
of raw materials and finished goods across national borders and cultural and
language differences. Foreign economies may differ favorably or unfavorably
from
the United States economy in growth of gross national product, rate of
inflation, market development, rate of savings, and capital investment, resource
self-sufficiency and balance of payments positions, and in other
respects.
Shares
of our common stock are currently very thinly traded, and liquidity of shares
of
our common stock is limited.
Shares
of
our common stock will be very thinly traded, and the price if traded may not
reflect the value of the Company. Moreover, we just completed a reverse split
of
the shares which may not reflect the value of the Company either. In connection
with a future business combination, we may have to undertake a further reverse
split of our shares. There can be no assurance that there will be an active
market for our shares either now or after we complete the business combination.
The market liquidity will be dependant on the perception of the operating
business and any steps that its management might take to bring the company
to
the awareness of investors. There can be no assurance given that there will
be
any awareness generated. Consequently investors may not be able to liquidate
their investment or liquidate it at a price that reflects the value of the
business. If a more active market should develop, the price may be highly
volatile. Because there may be a low price for our securities, many brokerage
firms may not be willing to effect transactions in the securities. Even if
an
investor finds a broker willing to effect a transaction in the securities,
the
combination of brokerage commissions, transfer fees, taxes, if any, and any
other selling costs may exceed the selling price. Further, many lending
institutions will not permit the use of such securities as collateral for any
loans. Our shares of common stock are currently quoted over-the-counter on
the
Pink Sheets quotation system. Management intends to strongly consider
undertaking a business transaction with a private operating company which will
allow our shares to be quoted and traded on the Over-the-Counter Bulletin Board
(“OTC BB”), NASDAQ Global Market, NASDAQ Capital Market or a national exchange.
However, there can be no assurance that, upon a business combination, we will
qualify our shares for quotation or listing on NASDAQ or a national exchange,
or
be able to maintain the criteria necessary to insure continued quotation or
listing.
We
also
intend to seek to have our shares of common stock quoted on the OTC BB prior
to
completion of the business combination; however, there can be no assurances
that
we will be able to obtain an OTC BB quotation prior to the business combination.
In the event we are unable to obtain an OTC BB quotation prior to the business
combination, the value of your investment may be reduced since certain
attractive target operating businesses may only consider a combination with
an
OTC BB quoted company.
The
majority of our shares currently outstanding are "restricted securities" within
the meaning of Rule 144 under the Securities Act. As restricted shares, these
shares may be resold only pursuant to an effective registration statement or
under the requirements of Rule 144 or other applicable exemption from
registration under the Securities Act and as required under applicable state
securities laws. Rule 144 currently provides in essence that a person who has
held restricted securities for a period of one year may, under certain
conditions, sell every three months, in brokerage transactions, a number of
shares that does not exceed the greater of 1.0% of a company's outstanding
common stock. There is no limit on the amount of restricted securities that
may
be sold by a non-affiliate after the restricted securities have been held by
the
owner for a period of two years. Current stockholders who own 10% or more of
our
shares will likely be deemed an affiliate until 90 days after a business
combination is completed with a target company. After such 90-day period and
assuming said shares have been held for more than two years, these stockholders
may be able to sell their shares without volume restrictions. A sale under
Rule
144 or under any other exemption from the Securities Act, if available, or
pursuant to subsequent registrations of our shares, may have a depressive effect
upon the price of our shares in any market that may develop. The SEC has
proposed new rules that may shortened the one year holding period under Rule
144
to six months in certain circumstances. There is no assurance that these
proposed rules will ultimately be adopted by the SEC in its current form or
any
other form.
The
availability of the exemptions from registration provided by Rule 144 under
or
Section 4(1) of the Securities Act may be limited in accordance with the letter
from Richard K. Wulff, Chief of the Office of Small Business Policy of the
Securities and Exchange Commission’s Division of Corporation Finance, to Ken
Worm of NASD Regulation, dated January 21, 2000 (the “Wulff Letter”). The Wulff
Letter provides that certain private transfers of the shares of common stock
also may be prohibited without registration under federal securities laws.
The
SEC has proposed codifying certain aspects of the Wulff Letter and adjusting
some of its provisions. The proposed adjustments include allowing
stockholders of a company that was formerly a shell company to be able to
utilize the exemption from registration under Rule 144 under certain
circumstances following such time as the company is no longer a shell company
and certain disclosures have been completed. There is no assurance that this
proposal will ultimately be adopted by the SEC in its current form or any other
form.
Compliance
with the criteria for securing exemptions under federal securities laws and
the
securities laws of the various states is extremely complex, especially in
respect of those exemptions affording flexibility and the elimination of trading
restrictions in respect of securities received in exempt transactions and
subsequently disposed of without registration under the Securities Act or state
securities laws.
There
are issues impacting liquidity of our securities with respect to the SEC’s
review of a future resale registration statement.
A
majority of our shares of common stock currently outstanding are “restricted
securities”, the holders thereof have certain registration rights. As such,
following the business combination, we will likely file a resale registration
statement on Form SB-2 or Form S-1, or some other available form, to register
for resale such shares of common stock. In some cases, we are obligated to
file
a registration statement for certain restricted shares pursuant to certain
registration rights agreements. We cannot control this future registration
process in all respects as some matters are outside our control. Even if we
are
successful in causing the effectiveness of the resale registration statement,
there can be no assurances that the occurrence of subsequent events may not
preclude our ability to maintain the effectiveness of the registration
statement. Any of the foregoing items could have adverse effects on the
liquidity of our shares of common stock. Further, a
sale of
our shares pursuant to an effective registration may have a depressive effect
upon the price of our shares in any market that may develop.
In
addition, the SEC has recently disclosed that it has developed internal
guidelines concerning the use of a resale registration statement to register
the
securities issued to certain investors in private investment in public equity
(PIPE) transactions, where the issuer has a market capitalization of less than
$75 million and, in general, does not qualify to file a registration statement
on Form S-3 to register its securities. The SEC has taken the position that
these smaller issuers may not be able to rely on Rule 415 under the Securities
Act (“Rule 415”), which generally permits the offer and sale of securities on a
continued or delayed basis over a period of time, but instead would require
that
the issuer offer and sell such securities in a direct or "primary" public
offering, at a fixed price, if the facts and circumstances are such that the
SEC
believes the investors seeking to have their shares registered are underwriters
and/or affiliates of the issuer. It appears that the SEC in most cases will
permit a registration for resale of up to one third of the total number of
shares of common stock then currently owned by persons who are not affiliates
of
such issuer and, in some cases, a larger percentage depending on the facts
and
circumstances. Staff members also have indicated that an issuer in most cases
will have to wait until the later of six months after effectiveness of the
first
registration or such time as substantially all securities registered in the
first registration are sold before filing a subsequent registration on behalf
of
the same investors. Since, following a reverse merger or business combination,
we may have only a limited number of tradable shares of common stock, it is
unclear as to how many, if any, shares of common stock the SEC will permit
us to
register for resale, but SEC staff members have indicated a willingness to
consider a higher percentage in connection with registrations following reverse
mergers with shell companies such as the Company. The SEC may require as a
condition to the declaration of effectiveness of a resale registration statement
that we reduce or “cut back” the number of shares of common stock to be
registered in such registration statement. The result of the foregoing is that
a
stockholder’s liquidity in our common stock may be adversely affected in the
event the SEC requires a cut back of the securities as a condition to allow
the
Company to rely on Rule 415 with respect to a resale registration statement,
or,
if the SEC requires us to file a primary registration statement.
We
have never paid dividends on our common stock.
We
have
never paid dividends on our common stock and do not presently intend to pay
any
dividends in the foreseeable future. We anticipate that any funds available
for
payment of dividends will be re-invested into the Company to further its
business strategy.
The
Company may be subject to certain tax consequences in our business, which may
increase our cost of doing business.
We
may
not be able to structure our acquisition to result in tax-free treatment for
the
companies or their stockholders, which could deter third parties from entering
into certain business combinations with us or result in being taxed on
consideration received in a transaction. Currently, a transaction may be
structured so as to result in tax-free treatment to both companies, as
prescribed by various federal and state tax provisions. We intend to structure
any business combination so as to minimize the federal and state tax
consequences to both us and the target entity; however, we cannot guarantee
that
the business combination will meet the statutory requirements of a tax-free
reorganization or that the parties will obtain the intended tax-free treatment
upon a transfer of stock or assets. A non-qualifying reorganization could result
in the imposition of both federal and state taxes that may have an adverse
effect on both parties to the transaction.
The
Company intends to issue more shares in a business combination, which will
result in substantial dilution.
Our
Certificate of Incorporation authorizes the issuance of a maximum of
200,000,000 shares of common stock and a maximum of 10,000,000 shares of
preferred stock. Any business combination effected by us may result in the
issuance of additional securities without stockholder approval and may result
in
substantial dilution in the percentage of our common stock held by our then
existing stockholders. Moreover, the common stock issued in any such business
combination transaction may be valued on an arbitrary or non-arm’s-length basis
by our management, resulting in an additional reduction in the percentage of
common stock held by our then existing stockholders. Our Board
of
Directors has the power to issue any or all of such authorized but unissued
shares without stockholder approval. To the extent that additional shares of
common stock or preferred stock are issued in connection with a business
combination or otherwise, dilution to the interests of our stockholders will
occur and the rights of the holders of common stock may be materially adversely
affected.
Our
principal stockholder may engage in a transaction to cause the Company to
repurchase its shares of common stock.
In
order
to provide an interest in the Company to a third parties, our principal
stockholder may choose to cause the Company to sell Company securities to one
or
more third parties, with the proceeds of such sale(s) being utilized by the
Company to repurchase shares of common stock held by it. As a result of such
transaction, our management, principal stockholder(s) and Board of Directors
may
change.
The
Company has conducted no market research or identification of business
opportunities, which may affect our ability to identify a business to merge
with
or acquire.
The
Company has not conducted market research concerning prospective business
opportunities, nor have others made the results of such market research
available to the Company. Therefore, we have no assurances that market demand
exists for a merger or acquisition as contemplated by us. Our management has
not
identified any specific business combination or other transactions for formal
evaluation by us, such that it may be expected that any such target business
or
transaction will present such a level of risk that conventional private or
public offerings of securities or conventional bank financing will not be
available. There is no assurance that we will be able to acquire a business
opportunity on terms favorable to us. Decisions as to
which
business opportunity to participate in will be unilaterally made by our
management, which may act without the consent, vote or approval of our
stockholders.
Because
we may seek to complete a business combination through a “reverse merger”,
following such a transaction we may not be able to attract the attention of
major brokerage firms.
Additional
risks may exist since we will assist a privately held business to become public
through a “reverse merger.” Securities analysts of major brokerage firms may not
provide coverage of our Company since there is no incentive to brokerage firms
to recommend the purchase of our common stock. No assurance can be given that
brokerage firms will want to conduct any secondary offerings on behalf of our
post-merger company in the future.
We
cannot assure you that following a business combination with an operating
business, our common stock will be listed on NASDAQ or any other securities
exchange.
Following
a business combination, we may seek the listing of our common stock on NASDAQ
or
the American Stock Exchange. However, we cannot assure you that following such
a
transaction, we will be able to meet the initial listing standards of either
of
those or any other stock exchange, or that we will be able to maintain a listing
of our common stock on either of those or any other stock exchange. After
completing a business combination, until our common stock is listed on the
NASDAQ or another stock exchange, we expect that our common stock would be
eligible to trade on the OTC Bulletin Board, another over-the-counter quotation
system, or on the “pink sheets,” where our stockholders may find it more
difficult to dispose of shares or obtain accurate quotations as to the market
value of our common stock. In addition, we would be subject to an SEC rule
that,
if it failed to meet the criteria set forth in such rule, imposes various
practice requirements on broker-dealers who sell securities governed by the
rule
to persons other than established customers and accredited investors.
Consequently, such rule may deter broker-dealers from recommending or selling
our common stock, which may further affect its liquidity. This would also make
it more difficult for us to raise additional capital following a business
combination.
Our
Certificate of Incorporation authorizes the issuance of preferred stock by
our
Board of Directors.
Our
Certificate of Incorporation authorizes the issuance of up to 10,000,000 shares
of preferred stock with designations, rights and preferences determined from
time to time by our Board of Directors. Accordingly, our Board of Directors
is
empowered, without stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting, or other rights which could adversely affect
the voting power or other rights of the holders of the common stock. In the
event of issuance, the preferred stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change
in
control of the Company. Although we have no present intention to issue any
shares of its authorized preferred stock, there can be no assurance that the
Company will not do so in the future.
Item
3. Description of Property
The
Company neither rents nor owns any properties. The Company utilizes the office
space and equipment of its sole officer and director at no cost. Management
estimates such amounts to be immaterial. The Company currently has no policy
with respect to investments or interests in real estate, real estate mortgages
or securities of, or interests in, persons primarily engaged in real estate
activities.
Item
4. Security Ownership of Certain Beneficial Owners and
Management
The
following table sets forth certain information regarding the Company’s common
stock beneficially owned on November 30, 2007, for (i) each shareholder the
Company knows to be the beneficial owner of 5% or more of its outstanding common
stock, (ii) each of the Company’s executive officers and directors, and (iii)
all executive officers and directors as a group. In general, a person is deemed
to be a "beneficial owner" of a security if that person has or shares the power
to vote or direct the voting of such security, or the power to dispose or to
direct the disposition of such security. A person is also deemed to be a
beneficial owner of any securities of which the person has the right to acquire
beneficial ownership within 60 days. To the best of the Company’s knowledge, all
persons named have sole voting and investment power with respect to such shares,
except as otherwise noted. At November 30, 2007, 4,331,131 shares of the
Company’s common stock were outstanding.
|
Name
and Address
|
|
Number
of Shares Beneficially
Owned
|
|
Percent
of Shares
|
|
Dennis
Depenbusch (1)
c/o
LRTC
1617
St. Andrew Drive
Lawrence,
KS 66047
|
|
181,298
|
|
4.2%
|
| |
|
|
|
|
|
Kevin
R. Keating
190
Lakeview Way
Vero
Beach, Florida 32963
|
|
96,880
|
|
2.2%
|
| |
|
|
|
|
|
Laurus
Master Fund, Ltd
335
Madison Avenue, 10th Floor
New
York, NY 10017
|
|
1,108,172
|
|
25.6%
|
| |
|
|
|
|
|
KIG
Investors I, LLC (3)
c/o
Timothy J. Keating, Manager
5251
DTC Parkway, Suite 1090
Greenwood
Village, Colorado 80111
|
|
2,562,015
|
|
59.2%
|
| |
|
|
|
|
|
Keating
Investments, LLC (4)
c/o
Timothy J. Keating, Manager
5251
DTC Parkway, Suite 1090
Greenwood
Village, Colorado 80111
|
|
2,596,979
|
|
60.0%
|
| |
|
|
|
|
|
Timothy
J. Keating
5251
DTC Parkway, Suite 1090
Greenwood
Village, Colorado 80111
|
|
2,596,979
|
|
60.0%
|
| |
|
|
|
|
|
All
Executive Officers and Directors as a group
|
|
96,880
|
|
2.2%
|
| |
(1)
|
Dennis
Depenbusch was the former Chief Executive Officer, Chief Financial
Officer
and director of the Company. He resigned from these positions on
August
23, 2007.
|
| |
(2)
|
Kevin
R. Keating has been a director of the Company since March 2001. He
was
appointed Chief Executive Officer, Chief Financial Officer, President,
Secretary and Treasurer on August 23, 2007.
|
| |
(3)
|
Represents
shares of common stock held directly by KIG Investors I, LLC (“KIG
Investors”). KIG Investors is managed by Keating Investments, LLC
(“Keating Investments”) and Timothy J. Keating. Keating Investments has a
68.75% equity interest in KIG
Investors.
|
| |
(4)
|
Keating
Investments has voting and investment control over the securities
owned by
KIG Investors, and therefore may be deemed a beneficial owner of
the
2,562,015 shares of common stock owned by KIG Investors. Keating
Investments’ beneficial ownership includes 34,964 shares of common stock
owned directly by Keating Investments. Keating Investments is managed
by
Timothy J. Keating.
|
| |
(5)
|
Timothy
J. Keating has voting and investment control over the securities
beneficially owned by Keating Investments. Since Keating Investments
may
be deemed a beneficial owner of the shares of common stock held by
KIG
Investors, Timothy J. Keating may be deemed an indirect beneficial
owner
of the 2,562,015 shares of common stock held by KIG Investors. Timothy
J.
Keating has voting and investment control over the securities owned
by
Keating Investments, and therefore Timothy J. Keating may be deemed
a
beneficial owner of the 2,596,979 shares of common stock deemed
beneficially owned by KIG Investors.
|
Item
5. Directors, Executive Officers, Promoters and Control Persons
|
(a)
|
Identification
of Directors and Executive
Officers
|
Our
sole
officer and director and additional information concerning him is as
follows:
|
Name
|
|
Age
|
|
Position
|
|
Kevin
R. Keating
|
|
67
|
|
Chief
Executive Officer, Chief Financial Officer, President, Secretary
and
Treasurer and Director
|
The
term
of office of each director expires at our annual meeting of stockholders or
until their successors are duly elected and qualified. Except as set forth
in
Item 6 of this Registration Statement, the Directors are not compensated for
serving as such. Officers serve at the discretion of the Board of Directors.
Kevin
R.
Keating has
served as a director of the Company since its inception. Mr. Keating was
appointed Chief Executive Officer, Chief Financial Officer, President, Secretary
and Treasurer on August 23, 2007. Mr. Keating is the Managing Member of
Vero Management, LLC, which provides managerial, administrative, and
financial consulting services for micro-cap public companies.
For
more
than 40 years he has been engaged in various aspects of the
investment business. Mr. Keating began his Wall Street career with
the First Boston Corporation in New York in 1965. From 1967
through 1974, he was employed by
several institutional research boutiques where he functioned as Vice
President Institutional Equity Sales. From 1974 until 1982, Mr. Keating was
the
President and Chief Executive Officer of Douglas Stewart, Inc., a New York
Stock Exchange member firm. From 1982 through 2006, he was associated with
a
variety of securities firms as a registered representative servicing the
investment needs of high net worth individual investors.
Additionally,
Mr. Keating currently serves as director of the following public companies:
Blue
Holdings, Inc. and DigitalFX International, Inc. Mr. Keating serves as sole
officer and a director of Solar Group, Inc., a public shell company, which
trades on the Pink Sheets under the symbol “SLRG.” Also, he is the sole officer
and director of Wentworth IV, Inc., Wentworth V, Inc., Wentworth VI, Inc.,
Wentworth VII, Inc., and Wentworth VIII, Inc., all of which are
publicly-reporting, non-trading, blank check, shell companies.
Mr.
Keating serves as the sole officer and a director of Frezer, Inc., the sole
officer and director of IPORUSSIA, Inc., and the sole officer and director
of
QuikByte Software, Inc., all of which are public shell companies which trade
on
the Over-the-Counter Bulletin Board under the symbols “FRZR”, “IPOR”, and
“QBYT”, respectively.
The
prior
blank check company experience of Mr. Keating is set forth below:
|
Name
|
|
Filing
Date Registration Statement
|
|
Operating
Status
|
|
SEC
File Number
|
|
Pending
Business Combinations
|
|
Additional
Information
|
|
AeroGrow
International, Inc. (formerly Wentworth I, Inc.)
|
|
March
7, 2006
|
|
Wentworth
I, Inc. was a Rule 419 Blank Check company and completed a merger
with and
into AeroGrow International Inc. on February 24, 2006.
|
|
000-50888
|
|
None.
|
|
Kevin
R. Keating served as officer, director and shareholder since inception.
Upon the merger with AeroGrow International, Inc., Mr. Keating ceased
to
be an officer or director. Mr. Keating remains a
shareholder.
|
| |
|
|
|
|
|
|
|
|
|
|
|
Wentworth
II, Inc.
|
|
June
9, 2006
|
|
Wentworth
II, Inc. became a reporting company effective August 10, 2006 and
completed a merger with Omnia Luo Group Limited on October 9,
2007.
|
|
000-52040
|
|
None.
|
|
Kevin
R. Keating served as sole officer and director since inception. Mr.
Keating ceased to be an officer or director on October 9, 2007. Mr.
Keating remains a shareholder.
|
| |
|
|
|
|
|
|
|
|
|
|
|
Wentworth
IV, Inc.
|
|
August
17, 2006
|
|
Effective
October 16, 2006.
|
|
000-52189
|
|
None.
|
|
Kevin
R. Keating has served as sole officer and director since
inception.
|
| |
|
|
|
|
|
|
|
|
|
|
|
Wentworth
V, Inc.
|
|
August
17, 2006
|
|
Effective
October 16, 2006.
|
|
000-52190
|
|
None.
|
|
Kevin
R. Keating has served as sole officer and director since
inception.
|
| |
|
|
|
|
|
|
|
|
|
|
|
Wentworth
VI, Inc.
|
|
September
20, 2007
|
|
Effective
November 19, 2007.
|
|
000-52821
|
|
None.
|
|
Kevin
R. Keating has served as sole officer and director since
inception.
|
| |
|
|
|
|
|
|
|
|
|
|
|
Wentworth
VII, Inc.
|
|
September
20, 2007
|
|
Effective
November 19, 2007.
|
|
000-52820
|
|
None.
|
|
Kevin
R. Keating has served as sole officer and director since
inception.
|
| |
|
|
|
|
|
|
|
|
|
|
|
Wentworth
VIII, Inc.
|
|
September
20, 2007
|
|
Effective
November 19, 2007.
|
|
000-52819
|
|
None.
|
|
Kevin
R. Keating has served as sole officer and director since
inception.
|
(b) Significant
Employees
None.
(c) Family
Relationships
Timothy
J. Keating, who may be deemed a beneficial owner of shares of the Company’s
common stock by virtue of his relationship with KIG Investors and Keating
Investments, is the son of Kevin R. Keating, our Chief Executive Officer, Chief
Financial Officer, President, Secretary, Treasurer and sole
director.
(d) Involvement
in Certain Legal Proceedings
There
have been no events under any bankruptcy act, no criminal proceedings and no
judgments, injunctions, orders or decrees material to the evaluation of the
ability and integrity of any director, executive officer, promoter or control
person of the Company during the past five years.
(e) Audit
Committee and Audit Committee Financial Expert
The
Company is not a "listed company" under SEC rules and is therefore not required
to have an audit committee comprised of independent directors. The Company
does
not currently have an audit committee, however, for certain purposes of the
rules and regulations of the SEC and in accordance with the
Sarbanes-Oxley Act of 2002,
the
Company's board of directors is deemed to be its audit committee and as such
functions
as an audit committee and performs some of the same functions as an audit
committee including: (1) selection and oversight of the Company’s independent
accountant; (2) establishing procedures for the receipt, retention and treatment
of complaints regarding accounting, internal controls and auditing matters;
and
(3) engaging outside advisors. The Company's
board
of directors has determined that its members do not include a person who is
an
"audit committee financial expert" within the meaning of the rules and
regulations of the SEC. The board of directors has determined that each of
its
members is able to read and understand fundamental financial statements and
has
substantial business experience that results in that member's financial
sophistication. Accordingly, the board of directors believes that each of its
members have the sufficient knowledge and experience necessary to fulfill the
duties and obligations that an audit committee would have.
(f) Code
of Ethics
A
code of
ethics relates to written standards that are reasonably designed to deter
wrongdoing and to promote:
· Honest
and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships;
· Full,
fair, accurate, timely and understandable disclosure in reports and documents
that are filed with, or submitted to, the SEC and in other public communications
made by an issuer;
· Compliance
with applicable governmental laws, rules and regulations;
· The
prompt internal reporting of violations of the code to an appropriate person
or
persons identified in the code; and
· Accountability
for adherence to the code.
Due
to
the limited scope of the Company’s current operations, the Company has not
adopted a corporate code of ethics that applies to its executive
officers.
(g) Conflicts
of Interest
Certain
conflicts of interest exist and may continue to exist between the Company and
its officers and directors due to the fact that each has other business
interests to which they devote their primary attention. Each officer and
director may continue to do so notwithstanding the fact that management time
should be devoted to the business of the Company.
Certain
conflicts of interest may exist between the Company and its management, and
conflicts may develop in the future. The Company has not established policies
or
procedures for the resolution of current or potential conflicts of interest
between the Company, its officers and directors or affiliated entities. There
can be no assurance that management will resolve all conflicts of interest
in
favor of the Company, and conflicts of interest may arise that can be resolved
only through the exercise by management their best judgment as may be consistent
with their fiduciary duties. Management will try to resolve conflicts to the
best advantage of all concerned.
(h) Board
Meetings; Nominating and Compensation Committees
The
Board
of Directors took a number of actions by written consent of all of the directors
during the fiscal year ended September 30, 2007. Such
actions by the written consent of all directors are, according to Delaware
corporate law and the Company’s by-laws, as valid and effective as if they had
been passed at a meeting of the directors duly called and held. The Company's
directors and officers do not receive remuneration from the Company unless
approved by the Board of Directors or pursuant to an employment contract. No
compensation has been paid to the Company's directors for attendance at any
meetings during the last fiscal year.
The
Company does not have standing nominating or compensation committees, or
committees performing similar functions. The Company’s board of directors
believes that it is not necessary to have a compensation committee at this
time
because the functions of such committee are adequately performed by the board
of
directors. The board of directors also is of the view that it is appropriate
for
the Company not to have a standing nominating committee because the board of
directors has performed and will perform adequately the functions of a
nominating committee. The Company is not a "listed company" under SEC rules
and
is therefore not required to have a compensation committee or a nominating
committee.
(i) Shareholder
Communications
There
has
not been any defined policy or procedure requirements for stockholders to submit
recommendations or nomination for directors. The board of directors does not
believe that a defined policy with regard to the consideration of candidates
recommended by stockholders is necessary at this time because it believes that,
given the limited scope of the Company’s operations, a specific nominating
policy would be premature and of little assistance until the Company’s business
operations are at a more advanced level. There are no specific, minimum
qualifications that the board of directors believes must be met by a candidate
recommended by the board of directors. Currently, the entire board of directors
decides on nominees, on the recommendation of any member of the board of
directors followed by the board’s review of the candidates’ resumes and
interview of candidates. Based on the information gathered, the board of
directors then makes a decision on whether to recommend the candidates as
nominees for director. The Company does not pay any fee to any third party
or
parties to identify or evaluate or assist in identifying or evaluating potential
nominee.
Because
the management and directors of the Company are the same persons, the Board
of
Directors has determined not to adopt a formal methodology for communications
from shareholders on the belief that any communication would be brought to
the
board of directors’ attention by virtue of the co-extensive capacities served by
Kevin R. Keating.
(j) Indemnification
Under
Delaware corporate law and pursuant to our certificate of incorporation and
bylaws, the Company may indemnify its officers and directors for various
expenses and damages resulting from their acting in these capacities.
Insofar
as
indemnification for liabilities arising under the Securities Act may be
permitted to the Company’s officers or directors pursuant to the foregoing
provisions, the Company has been informed that, in the opinion of the SEC,
this
indemnification is against public policy as expressed in the Securities Act,
and
is therefore unenforceable.
Item
6. Executive Compensation
(a)
Compensation
Discussion and Analysis
The
Company currently is a shell company with nominal assets, no employees and
no
active business operations. The Company’s business plans are to identify an
operating company with which to merge or to complete a business combination
in a
reverse merger transaction. As such, the Company currently has no formal
compensation program for its executive officers, directors or employees.
The
Company is not a "listed company" under SEC rules and is therefore not required
to have a compensation committee. Accordingly, the Company has no compensation
committee.
Except
as
set forth in the summary compensation table below, during the fiscal years
ended
September 30, 2006 and 2007, the Company has not provided any salary, bonus,
annual or long-term equity or non-equity based incentive programs, health
benefits, life insurance, tax-qualified savings plans, special employee benefits
or perquisites, supplemental life insurance benefits, pension or other
retirement benefits or any type of nonqualified deferred compensation programs
for its executive officers or employees.
On
September 14, 2007, the Company issued Kevin R. Keating 86,653 shares of the
Company’s common stock, on a post-reverse split basis, valued at $8,665 for
consulting services provided by Mr. Keating. Mr. Keating will not receive any
further remuneration until the consummation of a business combination. However,
please see Item 7, Certain Relationships and Related Transactions, below for
a
full discussion of a certain agreement between the Company and Vero Management,
L.L.C., a limited liability company for which Mr. Keating is the sole member
and
manager. Mr. Keating intends to devote very limited time to our
affairs.
It
is
possible that, after the Company successfully consummates a business combination
with an unaffiliated entity, that entity may desire to employ or retain Mr.
Keating for the purposes of providing services to the surviving entity. However,
the Company has adopted a policy whereby the offer of any post-transaction
employment or services to members of management will not be a consideration
in
our decision whether to undertake any proposed transaction.
No
retirement, pension, profit sharing, stock option or insurance programs or
other
similar programs are currently in place for the benefit of the Company’s
employees.
As
of
October 1, 2005, there were issued and outstanding options to purchase 9,828
shares of the Company’s common stock, on a post-reverse split basis, and there
were 140,172 options available for issuance under the 2003 Stock Option Plan.
During the fiscal year ended September 30, 2006, the options to purchase 9,828
shares of common stock under the 2003 Stock Option Plan were cancelled. On
September 14, 2007, following the closing of the Preferred Stock Purchase,
the
2003 Stock Option Plan was terminated by the Company’s Board of Directors, and
there are no stock options outstanding as of the date of this
filing.
There
are
no understandings or agreements regarding compensation our management will
receive after a business combination that is required to be included in this
table, or otherwise.
(b) Summary
Compensation Table
The
following table summarizes the total compensation paid to or earned by each
of
the Company’s named executive officers who served as executive officers during
all or a portion of the fiscal years ended September 30, 2006 and 2007.
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
|
Name
and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards ($)
|
|
Option
Awards ($)
|
|
Non-equity
Incentive Plan Compen-sation
($)
|
|
Non-qualified
Deferred Compen-sation Earnings
($)
|
|
All
Other Compensation
($)
|
|
Total
Compensation
($)
|
|
|
Dennis
Depenbusch (former CEO and CFO)(1)
|
|
|
2007
2006
|
|
$
$
|
0
76,000
|
|
$
$
|
0
0
|
|
$
$
|
2,000
0
|
|
$
$
|
0
0
|
|
$
$
|
0
0
|
|
$
$
|
0
0
|
|
$
$
|
0
3,000
|
|
$
$
|
2,000
79,000
|
|
|
Kevin
R. Keating (CEO, Pres., CFO, Tres. and Secry.)(1)
|
|
|
2007
2006
|
|
$
$
|
0
0
|
|
$
$
|
0
0
|
|
$
$
|
8,665
0
|
|
$
$
|
0
0
|
|
$
$
|
0
0
|
|
$
$
|
0
0
|
|
$
$
|
0
0
|
|
$
$
|
8,665
0
|
|
(1) The
Company, through its former wholly owned subsidiary, Whitco, paid to its former
CEO, Dennis Depenbusch, a salary of approximately $76,000 for the period from
October 1, 2005 to March 31, 2006. On September 14, 2007, the Company issued
Dennis Depenbusch 20,000 shares of the Company’s common stock, on a post-reverse
split basis, valued at $2,000 for consulting services provided by Mr. Depenbusch
in connection with the Reorganization. The Company, though Whitco, paid for
Mr.
Depenbusch’s health insurance coverage for the period from October 1, 2005 to
March 31, 2006 which was valued at approximately $3,000.
(2)
On
September 14, 2007, the Company issued Kevin R. Keating 86,654 shares of the
Company’s common stock, on a post-reverse split basis, valued at $8,665 for
consulting services provided by Mr. Keating.
(c)
Employment
and Other Agreements
The
Company has no employment agreements or other agreements with any of its
executive officers or employees.
(d) Compensation
of Directors
During
the fiscal years ended September 30, 2006 and 2007, Messrs. Depenbusch and
Keating did not receive separate compensation for their services as a director.
Item
7. Certain Relationships and Related Transactions
On
August
22, 2007, the Company entered into a revolving loan agreement with Keating
Investments, LLC (“Lender”). Pursuant to this agreement, the
Lender
agreed to make advances to the Company from time to time at the request of
the
Company. The advances outstanding were not to exceed $30,000. The Company was
required to repay the outstanding advances in full on or before October 22,
2007. The advances bear interest commencing September 22, 2007 at a rate of
6%
per annum. The Lender made advances of $25,000 and $5,000 on August 27, 2007
and
September 5, 2007, respectively. The advances were used for working capital
purposes and to pay certain accrued liabilities and service providers. On
September 19, 2007, these advances were repaid in full from the proceeds of
the
Preferred Stock Purchase. Keating
Investments, LLC is the managing member of KIG Investors. A copy of the Loan
Agreement is attached hereto as Exhibit 10.10.
On
September 14, 2007, the Company issued 86,654 shares of its common stock, on
a
post-reverse split basis, to Kevin R. Keating, the sole officer and director
of
the Company, for services rendered to the Company valued at $8,665.
On
September 14, 2007, the Company issued 20,000 shares of its common stock, on
a
post-reverse split basis, to Dennis Depenbusch, a former officer and director
of
the Company, for consulting services rendered to the Company valued at $2,000.
During
the fiscal years ended September 30, 2006 and 2007, a former officer and
director of the Company made cost advances on behalf of the Company totaling
$5,015. These advances were repaid by the Company from the proceeds of the
Preferred Stock Purchase.
Effective
October 1, 2007, the Company entered into a management agreement (“Management
Agreement”) with Vero Management, L.L.C., a Delaware limited liability company
(“Vero”) under which Vero had agreed to provide a broad range of managerial and
administrative services to the Company including, but not limited to, assistance
in the preparation and maintenance of the Company’s financial books and records,
the filing of various reports with the appropriate regulatory agencies as are
required by State and Federal rules and regulations, the administration of
matters relating to the Company’s shareholders including responding to various
information requests from shareholders as well as the preparation and
distribution to shareholders of relevant Company materials, and to provide
office space, corporate identity, telephone and fax services, mailing, postage
and courier services for a fixed fee of $1,000 per month, for an initial period
of twelve months. At the end of the initial twelve month term, the agreement
will continue to remain in effect until terminated in writing by either party.
Kevin R. Keating, the sole officer and director of the Company, is the sole
owner and manager of Vero. A copy of the Management Agreement is attached hereto
as Exhibit 10.12.
Except
as
otherwise indicated herein, there have been no related party transactions,
or
any other transactions or relationships required to be disclosed pursuant to
Item 404 of Regulation S-B.
Item
8. Description of Securities
(a)
Common
and Preferred Stock
The
Company is authorized by its Certificate of Incorporation, as amended, to issue
an aggregate of 210,000,000 shares of capital stock, of which 200,000,000 are
shares of common stock, par value $0.0001 per share (the "Common Stock") and
10,000,000 are shares of preferred stock, par value $0.0001 per share (the
“Preferred Stock”).
On
August
27, 2007, the Company’s Board of Directors designated 1,600,000 shares of
preferred stock as Series A Convertible Preferred Stock (“Series A Preferred
Stock”). A copy of the Certificate of Designation of Series A Convertible
Preferred Stock is attached hereto as Exhibit 3.2. Each share of Series A
Preferred Stock was automatically convertible into 16.28982 shares of fully
paid
and non-assessable common stock upon the Company’s completion of a reverse stock
split. The holders of Series A Preferred Stock were entitled to vote the number
of shares of common stock they were entitled to upon conversion on all matters
presented to a vote of the common stockholders.
On
September 12, 2007, the Company completed the sale of 1,572,770 shares of Series
A Preferred Stock to KIG Investors for a purchase price of $157,277. The shares
of Series A Preferred Stock were automatically convertible into the Company’s
common stock at such time as the Company completed a 1-for-10 reverse stock
split (“Reverse Split”).
On
September 25, 2007, the Company completed a 1-for-10 reverse stock split of
its
outstanding common stock. The Reverse Split provided for the round up of
fractional shares and the special treatment of certain shareholders as
follows:
a. shareholders
holding less than 100 shares of common stock as of the record date will not
be
affected by the Reverse Split and will hold the same number of shares both
before and after the Reverse Split;
b. shareholders
holding 1,000 or fewer shares of common stock, but at least 100 shares of common
stock as of the record date will hold 100 shares of common stock following
the
Reverse Split; and
c.
all
fractional shares as a result of the Reverse Split will be rounded up.
As
a
result of the Reverse Split, the Series A Preferred Stock held by KIG Investors
were automatically converted into 2,562,015 shares of common stock, on a
post-reverse split basis. Upon the conversion of the Series A Preferred Stock,
the 1,600,000 shares of Preferred Stock previously designated as Series A
Preferred Stock were automatically returned to the status of authorized and
unissued shares of preferred stock, available for future designation and
issuance pursuant to the terms of the Certificate of Incorporation.
In
connection with the Reverse Split, effective September 25, 2007, the Company
also amended its certificate of incorporation to reduce the par value of its
common stock and preferred stock from $0.01 to $0.0001 per share and to increase
the number of authorized shares of common stock from 40,000,000 to 200,000,000
shares.
As
of
December 3, 2007, after giving effect to the Reverse Split, there were 4,331,131
shares of common stock, par value $0.0001 per share, issued and outstanding.
Except as otherwise noted, all references to shares of the Company’s common
stock herein shall refer to the shares of common stock after giving effect
to
the Reverse Split and the reduction of the par value per share.
Common
Stock
All
outstanding shares of Common Stock are of the same class and have equal rights
and attributes. The holders of Common Stock are entitled to one vote per share
on all matters submitted to a vote of stockholders of the Company. All
stockholders are entitled to share equally in dividends, if any, as may be
declared from time to time by the Board of Directors out of funds legally
available. In the event of liquidation, the holders of Common Stock are entitled
to share ratably in all assets remaining after payment of all liabilities.
The
stockholders do not have cumulative or preemptive rights.
Preferred
Stock
Our
Certificate of Incorporation authorizes the issuance of up to 10,000,000 shares
of Preferred Stock with designations, rights and preferences determined from
time to time by its Board of Directors. Accordingly, our Board of Directors
is
empowered, without stockholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting, or other rights which could adversely affect
the voting power or other rights of the holders of the Common Stock. In the
event of issuance, the Preferred Stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change
in
control of the Company. Although we have no present intention to issue any
shares of our authorized Preferred Stock, there can be no assurance that the
Company will not do so in the future.
The
description of certain matters relating to the securities of the Company is
a
summary and is qualified in its entirety by the provisions of the Company's
Certificate of Incorporation and By-Laws, copies of which have been filed as
exhibits to this Form 10-SB.
Registration
Rights Granted to the Investor and Laurus
On
September 12, 2007, the Company offered certain registration rights to KIG
Investors in connection with the Preferred Stock Purchase, pursuant to the
terms
and conditions contained in that certain registration rights agreement, a copy
of which is attached hereto as Exhibit
10.4 (the “KIG Registration Rights Agreement”). On
September 14, 2007, the Company offered certain registration rights to Laurus
in
connection with the issuance of shares of the Company’s common stock in
settlement of certain debt obligations, pursuant to the terms and conditions
contained in that certain registration rights agreement, a copy of which is
attached hereto as Exhibit
10.9 (“Laurus
Registration Rights Agreement”). The terms and conditions of the KIG
Registration Rights Agreement and the Laurus Registration Rights Agreement
are
substantially similar. The KIG Registration Rights Agreement and the Laurus
Registration Rights Agreement are referred to herein as the “Registration
Rights Agreements”. The number of shares subject to registration rights for each
of the above holders is as follows:
|
Stockholder
|
|
Number
of Shares Subject to Registration Rights (on a post-reverse split
basis)
|
|
KIG
Investors I, LLC
|
|
2,562,015
|
|
Laurus
Master Fund, Ltd.
|
|
1,083,172
|
Pursuant
to the Registration Rights Agreements, commencing on
the
date that is thirty (30) days after the date the
Company completes a business combination with a private company in a reverse
merger or reverse take-over transaction (a “Reverse Merger”), the stockholders
shall
each have a separate one-time right to request the Company to register
for resale the shares of Common Stock held by such persons. The
Company is required to cause the registration statement filed
as
a result of such requests to
be
declared effective under the Securities Act as promptly as possible after the
filing thereof and shall keep the demand registration statement continuously
effective under the Securities Act until the earlier of (i) two years after
its
effective date, (ii) such time as all of the shares of Common Stock covered
by
such registration statement have been publicly sold by the stockholders, or
(iii) such time as all of the shares of Common Stock covered by such
registration statement may be sold by the stockholders pursuant to Rule 144(k).
Further, if all of the shares of Common Stock to be included in the registration
statement filed cannot be so included due to certain comments from the SEC,
and
there is not an effective registration statement otherwise covering the shares
of Common Stock, then the Company is obligated to prepare and file such
registration statement(s) for such number of additional registration statements
as may be necessary in order to ensure that all shares of Common Stock are
covered by an existing and effective registration statement.
Additionally,
the Registration Rights Agreement provides the stockholders with “piggyback”
registration rights such that at any time there is not an effective registration
statement covering the shares of Common Stock, and the Company files a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, then the Company is required to send written notice to the stockholders
of such intended filings at least twenty (20) days prior thereto and is required
to automatically include in such registration statement all shares of Common
Stock held by the stockholders for resale and offer on a continuous basis
pursuant to Rule 415; provided, however, that (i) if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company determines for any reason not to proceed with such
registration, the Company will be relieved of its obligation to register any
shares of Common Stock in connection with such registration, (ii) in case of
a
determination by the Company to delay registration of its securities, the
Company will be permitted to delay the registration of shares of Common Stock
for the same period as the delay in registering such other securities, (iii)
each stockholder is subject to confidentiality obligations with respect to
any
information gained in this process or any other material non-public information
he, she or it obtains, (iv) each stockholder is subject to all applicable laws
relating to insider trading or similar restrictions; and (v) if all of the
shares of Common Stock of the stockholders cannot be so included due to certain
comments from the SEC, then the Company may reduce the number of each
stockholders’ shares of Common Stock covered by such registration statement to
the maximum number which would enable the Company to conduct such offering
in
accordance with the provisions of Rule 415.
The
stockholders shall be entitled to include all shares of Common Stock for resale
in the registration statement filed by the Company in connection with a public
offering of equity securities by the Company, pursuant to Rule 415, so long
as
(1) such shares shall not be included as part of the underwritten offering
of
primary shares by the Company, unless the Company and underwriter agree to
allow
the inclusion of such shares of Common Stock as part of the underwritten
offering and, in such event, the stockholders elect to include the shares of
Common Stock in the underwriting subject to an allocation among all stockholders
of registration rights in the manner set forth in the Registration Rights
Agreement, (2) the underwriter approves the inclusion of such shares of Common
Stock in such registration statement, subject to customary underwriter cutbacks
applicable to all stockholders of registration rights, (3) the stockholders
shall enter into the underwriters’ form of lockup agreement as and to the extent
requested by the underwriters, which may require that all of the shares of
Common Stock held by the stockholders not be sold or otherwise transferred
without the consent of the underwriters for a period not to exceed 180 days
from
the closing of the offering contemplated by the registration statement, and
(4)
if all of the shares of Common Stock of the stockholders cannot be so included
due to certain comments from the SEC, then the Company may reduce the number
of
each stockholders’ shares of Common Stock covered by such registration statement
to the maximum number which would enable the Company to conduct such offering
in
accordance with the provisions of Rule 415.
The
Registration Rights Agreement contains a cut-back provision, whereby, in the
event all of the all of the shares of Common Stock held by the stockholders
cannot be included in a registration statement due to certain comments by the
SEC or underwriter cutbacks, then the Company, unless otherwise prohibited
by
the SEC, shall cause the shares of Common Stock of the stockholders to be
included in such registration statement to be reduced pro rata based on the
number of shares of Common Stock held by all holders of registration
rights.
The
registration rights afforded to the stockholders shall terminate on the earliest
date when all shares of Common Stock of the stockholders either: (i) have been
publicly sold
by the
stockholders
pursuant
to a registration statement, (ii) have
been
covered by an effective registration statement which has been effective for
an
aggregate period of twelve (12) months (whether or not consecutive), or (iii)
may
be
sold by the stockholders
pursuant
to Rule 144(k), or Rule 144 without regard to the volume limitations for sales
as provided in that regulation, as determined by the counsel to the Company
pursuant to a written opinion letter to such effect, addressed and acceptable
to
the Company's transfer agent and the affected stockholders.
Each
stockholder shall also indemnify the Company, each of its directors, each of
its
officers who signs the Registration Statement and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act against damages arising out of or based upon: (i) such stockholder’s
provision of any untrue or alleged untrue statement of a material fact to be
contained in any registration statement or prospectus or in connection with
the
qualification of the offering under the securities or other “blue sky” laws of
any jurisdiction, or arising out of or relating to any such stockholder’s
omission or alleged omission of a material fact required to be stated therein
or
necessary to make the statements contained in such registration statement or
prospectus not misleading or (ii) such stockholder’s violation or alleged
violation by the Company of the Securities Act or the Exchange Act, any other
law, including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the shares of Common
Stock pursuant to a registration statement or (iii) such stockholder’s violation
of the Registration Rights Agreement.
Registration
Rights Granted to Other Stockholders
On
September 14, 2007, the Company offered certain registration rights to the
following stockholders of the Company, pursuant to terms and conditions
substantially similar to those set forth in the form of registration rights
agreement, a copy of which is attached hereto as Exhibit
10.7 (“Other Registration Rights Agreements”).
|
Stockholder
|
|
Number
of Shares Subject to Registration Rights (on a post-reverse split
basis)
|
|
|
Halliburton
Investor Relations
|
|
|
49,819
|
|
|
Feldman
Weinstein & Smith, LLP
|
|
|
21,267
|
|
|
Kevin
R. Keating
|
|
|
86,654
|
|
|
Garisch
Financial, Inc.
|
|
|
86,654
|
|
|
Dennis
Depenbusch
|
|
|
20,000
|
|
The
Other
Registration Rights Agreements provide the stockholders with “piggyback”
registration rights such that at any time there is not an effective registration
statement covering the shares of Common Stock, and the Company files a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, then the Company is required to send written notice to the stockholders
of such intended filings at least twenty (20) days prior thereto and is required
to automatically include in such registration statement all shares of Common
Stock held by the stockholders for resale and offer on a continuous basis
pursuant to Rule 415; provided, however, that (i) if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company determines for any reason not to proceed with such
registration, the Company will be relieved of its obligation to register any
shares of Common Stock in connection with such registration, (ii) in case of
a
determination by the Company to delay registration of its securities, the
Company will be permitted to delay the registration of shares of Common Stock
for the same period as the delay in registering such other securities, (iii)
each stockholder is subject to confidentiality obligations with respect to
any
information gained in this process or any other material non-public information
he, she or it obtains, (iv) each stockholder is subject to all applicable laws
relating to insider trading or similar restrictions; and (v) if all of the
shares of Common Stock of the stockholders cannot be so included due to certain
comments from the SEC, then the Company may reduce the number of each
stockholders’ shares of Common Stock covered by such registration statement to
the maximum number which would enable the Company to conduct such offering
in
accordance with the provisions of Rule 415.
The
stockholders shall be entitled to include all shares of Common Stock for resale
in the registration statement filed by the Company in connection with a public
offering of equity securities by the Company, pursuant to Rule 415, so long
as
(1) such shares shall not be included as part of the underwritten offering
of
primary shares by the Company, unless the Company and underwriter agree to
allow
the inclusion of such shares of Common Stock as part of the underwritten
offering and, in such event, the stockholders elect to include the shares of
Common Stock in the underwriting subject to an allocation among all stockholders
of registration rights in the manner set forth in the Other Registration Rights
Agreements, (2) the underwriter approves the inclusion of such shares of Common
Stock in such registration statement, subject to customary underwriter cutbacks
applicable to all stockholders of registration rights, (3) the stockholders
shall enter into the underwriters’ form of lockup agreement as and to the extent
requested by the underwriters, which may require that all of the shares of
Common Stock held by the stockholders not be sold or otherwise transferred
without the consent of the underwriters for a period not to exceed 180 days
from
the closing of the offering contemplated by the registration statement, and
(4)
if all of the shares of Common Stock of the stockholders cannot be so included
due to certain comments from the SEC, then the Company may reduce the number
of
each stockholders’ shares of Common Stock covered by such registration statement
to the maximum number which would enable the Company to conduct such offering
in
accordance with the provisions of Rule 415.
The
Other
Registration Rights Agreements contain a cut-back provision, whereby, in the
event all of the all of the shares of Common Stock held by the stockholders
cannot be included in a registration statement due to certain comments by the
SEC or underwriter cutbacks, then the Company, unless otherwise prohibited
by
the SEC, shall cause the shares of Common Stock of the stockholders to be
included in such registration statement to be reduced pro rata based on the
number of shares of Common Stock held by all holders of registration
rights.
The
registration rights afforded to the stockholders shall terminate on the earliest
date when all shares of Common Stock of the stockholders either: (i) have been
publicly sold
by the
stockholders
pursuant
to a registration statement, (ii) have
been
covered by an effective registration statement which has been effective for
an
aggregate period of twelve (12) months (whether or not consecutive), or (iii)
may
be
sold by the stockholders
pursuant
to Rule 144(k), or Rule 144 without regard to the volume limitations for sales
as provided in that regulation, as determined by the counsel to the Company
pursuant to a written opinion letter to such effect, addressed and acceptable
to
the Company's transfer agent and the affected stockholders.
Each
stockholder shall also indemnify the Company, each of its directors, each of
its
officers who signs the Registration Statement and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act against damages arising out of or based upon: (i) such stockholder’s
provision of any untrue or alleged untrue statement of a material fact to be
contained in any registration statement or prospectus or in connection with
the
qualification of the offering under the securities or other “blue sky” laws of
any jurisdiction, or arising out of or relating to any such stockholder’s
omission or alleged omission of a material fact required to be stated therein
or
necessary to make the statements contained in such registration statement or
prospectus not misleading or (ii) such stockholder’s violation or alleged
violation by the Company of the Securities Act or the Exchange Act, any other
law, including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the shares of Common
Stock pursuant to a registration statement or (iii) such stockholder’s violation
of the Other Registration Rights Agreement.
(b)
Debt
Securities
None.
(c)
Warrants
As
of
October 1, 2005, there were issued and outstanding warrants to purchase 86,410
shares of the Company’s common stock, on a post-reverse split basis. During the
fiscal year ended September 30, 2007, the Company entered into settlement
agreements with certain creditors who held warrants to purchase 82,366 shares
of
common stock. As part of these settlement agreements, these warrants were
cancelled. As of September 30, 2007, the Company had issued and outstanding
warrants, on a post-reverse split basis, as follows:
|
Warrant
Holder
|
|
Warrants
Outstanding
|
|
Exercise
Price
|
|
Expiry
Date
|
|
|
John
Sanderson (a former director)
|
|
|
710
|
|
$
|
31.25
|
|
|
3/26/2008
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Wilkinson
Family Trust (an investor)
|
|
|
3,334
|
|
$
|
30.00
|
|
|
12/10/2009
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Balances,
September 30, 2007
|
|
|
4,044
|
|
|
|
|
|
|
|
A
copy of
the above common stock purchase warrants are attached hereto as Exhibits 10.1
and 10.2.
(d) Other
Securities to Be Registered
None.
PART
II
Item
1. Market for Common Equity and Related Stockholder Matters
(a)
Market
Information
Our
Common Stock began trading on the OTC Bulletin Board on June 28, 2004. Our
common stock was quoted on the National Quotation Bureau’s Over-the-Counter
Electronic Bulletin Board under the symbol “CYSL” through December 27, 2005,
when we filed a Form 15 application with the SEC. Since that time we have traded
on the Pink Sheets under the symbol “CYSL”. Effective September 25, 2007, our
symbol of the Pink Sheets was changed to “CYSU” in connection with the Reverse
Split.
The
table
below sets forth the reported high and low bid prices for the periods indicated.
The bid prices shown reflect quotations between dealers, without adjustment
for
markups, markdowns or commissions, and may not represent actual transactions
in
our securities. All prices have been adjusted retroactively to give effect
to
the Reverse Split.
Per
Share
Common Stock Bid Prices by Quarter*
For
the Fiscal Year Ended on September 30, 2006
|
|
|
High*
|
|
Low*
|
|
|
Quarter
Ended December 31, 2005
|
|
$
|
100.00
|
|
$
|
2.00
|
|
|
Quarter
Ended March 31, 2006
|
|
$
|
2.00
|
|
$
|
2.00
|
|
|
Quarter
Ended June 30, 2006
|
|
$
|
6.00
|
|
$
|
2.00
|
|
|
Quarter
Ended September 30, 2006
|
|
$
|
11.00
|
|
$
|
5.00
|
|
For
the Fiscal Year Ended on September 30, 2007*
|
|
|
High*
|
|
Low*
|
|
|
Quarter
Ended December 31, 2006
|
|
$
|
7.00
|
|
$
|
7.00
|
|
|
Quarter
Ended March 31, 2007
|
|
$
|
7.00
|
|
$
|
7.00
|
|
|
Quarter
Ended June 30, 2007
|
|
$
|
7.00
|
|
$
|
7.00
|
|
|
Quarter
Ended September 30, 2007
|
|
$
|
10.00
|
|
$
|
1.01
|
|
*
All
prices have been adjusted retroactively to give effect to the 1-for-10 Reverse
Split effective September 25, 2007. Prices obtained from www.bigcharts.com,
a
service of Market Watch, Inc.
(b)
Holders
As
of
September 30, 2007, there were 85 record holders of our common stock and
approximately 30 beneficial holders who held our common stock in street name.
(c)
Dividends
The
Company has not paid any cash dividends to date and does not anticipate or
contemplate paying dividends in the foreseeable future. It is the present
intention of management to utilize all available funds for the development
of
the Company's business.
(d) Penny
Stock Regulations
Our
securities are subject to the SEC's “penny stock” rules. The penny stock rules
may affect the ability of owners of our shares to sell them. There may be a
limited market for penny stocks due to the regulatory burdens on broker-dealers.
The market among dealers may not be active. Investments in penny stocks often
are unable to sell stock back to the dealer that sold them the stock. The
mark-ups or commissions charged by the broker-dealers might be greater than
any
profit an investor may make. Because of large spreads that market makers quote,
investors may be unable to sell the stock immediately back to the dealer at
the
same price the dealer sold the stock to the investor.
Our
securities are also subject to the SEC’s rule that imposes special sales
practice requirements upon broker-dealers that sell such securities to other
than established customers or accredited investors. For purposes of the rule,
the phrase “accredited investor” means, in general terms, institutions with
assets exceeding $5,000,000 or individuals having net worth in excess of
$1,000,000 or having an annual income that exceeds $200,000 (or that, combined
with a spouse’s income, exceeds $300,000). For transactions covered by the rule,
the broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser’s written agreement to the transaction prior
to the sale. Consequently, the rule may affect the ability of purchasers of
our
securities to buy or sell in any market.
Item
2. Legal Proceedings
Presently,
there are not any material pending legal proceedings to which the Company is
a
party or as to which any of its property is subject, and no such proceedings
are
known to the Company to be threatened or contemplated against it.
Item
3. Changes in and Disagreements with Accountants
On
October 18, 2007, the Company dismissed Hein & Associates, LLP at its
accountants. Hein & Associates, LLP did not issue audit reports on the
Company’s financial statements for the years ended September 30, 2006 and 2007.
A copy of Hein’s letter to the Company dated as of October 18, 2007 is attached
hereto as Exhibit 16.
During
the years ended September 30, 2006 and 2007, and during the interim period
from
October 1, 2007 through October 18, 2007, there were no disagreements with
Hein
& Associates, LLP, whether or not resolved, on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope
or
procedure, which, if not resolved to the satisfaction of Hein & Associates,
LLP, would have caused it to make reference to the subject matter of the
disagreement(s) in connection with its audit reports. A copy of Hein’s letter to
the SEC dated as of January 10, 2008 is attached hereto as Exhibit
16.1.
On
October 18, 2007, the Company engaged Comiskey & Company, P.C. as its
accountants for the fiscal years ended September 30, 2006 and 2007.
Item
4. Recent Sales of Unregistered Securities
On
September 12, 2007, the Company completed the sale of 1,572,770 shares of Series
A Preferred Stock to KIG Investors for a purchase price of $157,277. The shares
of Series A Preferred Stock were automatically convertible into the Company’s
common stock at such time as the Company completed a 1-for-10 reverse stock
split (“Reverse Split”). On September 25, 2007, the Company completed a 1-for-10
reverse stock split of its outstanding common stock. As a result of the Reverse
Split, the Series A Preferred Stock held by KIG Investors were automatically
converted into 2,562,015 shares of common stock, on a post-reverse split basis.
On
September 14, 2007, the Company issued Feldman Weinstein & Smith, LLP
(“FWS”), former legal counsel to the Company, and Halliburton Investor Relations
(“HIR”), the Company’s former investor relation firm, an aggregate of 71,086
shares of common stock, on a post-reverse split basis, valued at $7,109 or
approximately $0.10 per share, in satisfaction of accrued liabilities totaling
$73,260, resulting in income from discharge of indebtedness of $66,151 being
recorded.
On
September 14, 2007, the Company also entered into an agreement with Laurus
Master Fund, Ltd. (“Laurus”), the Company’s secured creditor, for the issuance
of common stock in complete settlement of amounts owed to it for certain loans
and accrued interest. Pursuant to this equity settlement, the Company issued
1,083,172 shares of common stock, on a post-reverse split basis, valued at
$108,317 or approximately $0.10 per share, in satisfaction of principal under
notes of $820,024 and accrued interest of $121,095, resulting in income from
discharge of indebtedness of $832,802 being recorded.
On
September 14, 2007, the Company issued Dennis Depenbusch 20,000 shares of the
Company’s common stock, on a post-reverse split basis, valued at $2,000 for
consulting services provided by Mr. Depenbusch in connection with the
reorganization described in Part I, Item 1(b) above.
On
September 14, 2007, the Company issued Kevin R. Keating 86,654 shares of the
Company’s common stock, on a post-reverse split basis, valued at $8,665 for
consulting services provided by Mr. Keating.
On
September 14, 2007, the Company issued Garisch Financial, Inc. 86,654 shares
of
the Company’s common stock, on a post-reverse split basis, valued at $8,665 for
consulting services provided by Garisch Financial, Inc. A copy of the Consulting
Agreement between Garisch Financial, Inc. and the Company is attached hereto
as
Exhibit 10.11.
In
consideration of the above stock issuances, the Company granted certain
registration rights to the holders thereof. See Part I, Item 8(a) for a
discussion of the registration rights granted in connection with the above
stock
issuances.
In
connection with the above stock issuance, we did not pay any underwriting
discounts or commissions. None of the sales of securities described or referred
to above was registered under the Securities Act. Each of the purchasers fell
into one or more of the categories that follow: an existing shareholder, a
creditor, a current or former officer or director, a service provider, or an
accredited investor with whom we or an affiliate of ours had a prior business
relationship. As a result, no general solicitation or advertising was used
in
connection with the sales. In making the sales without registration under the
Securities Act, we relied upon one or more of the exemptions from registration
including those contained in Sections 4(2) of the Securities Act. The purchasers
represented in writing that they acquired the securities for their own accounts.
A legend was placed on the stock certificates stating that the securities have
not been registered under the Securities Act and cannot be sold or otherwise
transferred without an effective registration or an exemption
therefrom.
Item
5. Indemnification of Directors and Officers
Section 145
of the Delaware General Corporation Law provides that a corporation may
indemnify directors and officers as well as other employees and individuals
against expenses including attorneys' fees, judgments, fines and amounts paid
in
settlement in connection with various actions, suits or proceedings, whether
civil, criminal, administrative or investigative other than an action by or
in
the right of the corporation, a derivative action, if they acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, if they had no reasonable cause to believe their conduct was
unlawful. A similar standard is applicable in the case of derivative actions,
except that indemnification only extends to expenses including attorneys' fees
incurred in connection with the defense or settlement of such actions, and
the
statute requires court approval before there can be any indemnification where
the person seeking indemnification has been found liable to the corporation.
The
statute provides that it is not exclusive of other indemnification that may
be
granted by a corporation's certificate of incorporation, bylaws, agreement,
a
vote of stockholders or disinterested directors or otherwise.
The
Company’s Certificate of Incorporation provides that it will indemnify and hold
harmless, to the fullest extent permitted by Section 145 of the Delaware General
Corporation Law, as amended from time to time, each person that such section
grants us the power to indemnify.
The
Delaware General Corporation Law permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for:
· any
breach of the director's
duty of loyalty to the corporation or its stockholders;
· acts
or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
· payments
of unlawful dividends
or unlawful stock repurchases or redemptions; or
· any
transaction from which the
director derived an improper personal benefit.
The
Company’s Certificate of Incorporation provides that, to the fullest extent
permitted by applicable law, none of our directors will be personally liable
to
us or our stockholders for monetary damages for breach of fiduciary duty as
a
director. Any repeal or modification of this provision will be prospective
only
and will not adversely affect any limitation, right or protection of a director
of our company existing at the time of such repeal or modification.
PART
F/S
INDEX
TO FINANCIAL STATEMENTS
|
Report
of Independent Registered Public Accounting Firm
|
|
F-2
|
| |
|
|
|
Balance
Sheet
-
As of September 30, 2007
|
|
F-3
|
| |
|
|
|
Statements
of Operations
-
For the Years Ended September 30, 2007 and 2006
|
|
F-4
|
| |
|
|
|
Statements
of Changes in Stockholders’ Equity (Deficit)
-
For the Years Ended September 30, 2007 and 2006
|
|
F-5
|
| |
|
|
|
Statements
of Cash Flows
-
For the Years Ended September 30, 2007 and 2006
|
|
F-6
|
| |
|
|
|
Notes
to Financial Statements
|
|
F-7
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Shareholders
Catalyst
Lighting Group, Inc.
Vero
Beach, Florida
We
have
audited the accompanying balance sheet of Catalyst Lighting Group, Inc.
as of
September 30, 2007, and the related statements of operations, stockholders’
equity (deficit), and cash flows for the years ended September 30, 2007
and
2006. 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 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. An audit includes examining,
on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In
our
opinion, the financial statements referred to above present fairly, in
all
material respects, the financial position of Catalyst Lighting Group, Inc.
as of
September 30, 2007 and the results of their operations and their cash flows
for
the years ended September 30, 2007 and 2006 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 2 to the financial
statements, the Company has suffered recurring losses from operations.
This
raises substantial doubt about the Company’s ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Denver,
Colorado
November
26, 2007
/s/
Comiskey & Company
PROFESSIONAL
CORPORATION
CATALYST
LIGHTING GROUP, INC.
BALANCE
SHEET
SEPTEMBER
30, 2007
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash
|
|
$
|
76,696
|
|
|
Prepaid
expenses and other
|
|
|
–
|
|
|
Total
current assets
|
|
|
76,696
|
|
| |
|
|
|
|
|
Other
Assets
|
|
|
–
|
|
| |
|
|
|
|
|
Total
Assets
|
|
$
|
76,696
|
|
| |
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
| |
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
8,363
|
|
| |
|
|
|
|
|
Total
current liabilities
|
|
|
8,363
|
|
| |
|
|
|
|
|
Stockholders’
Equity:
|
|
|
|
|
|
Preferred
stock – $.0001 par value; authorized 10,000,000 shares, none
issued
|
|
|
–
|
|
|
Common
stock – $.0001 par value; authorized 200,000,000 shares, 4,331,131
shares issued and outstanding
|
|
|
433
|
|
|
Additional
paid-in capital
|
|
|
4,150,986
|
|
|
Accumulated
deficit
|
|
|
(4,083,086
|
)
|
|
Total
stockholders’ equity
|
|
|
68,333
|
|
| |
|
|
|
|
|
Total
Liabilities and Stockholders’ Equity
|
|
$
|
76,696
|
|
The
accompanying notes are an integral part of these financial
statements.
CATALYST
LIGHTING GROUP, INC.
STATEMENTS
OF OPERATIONS
| |
|
For
the Years Ended
|
|
| |
|
September
30,
|
|
| |
|
2007
|
|
2006
|
|
| |
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
$
|
-
|
|
| |
|
|
|
|
|
|
|
|
General,
Selling and Administrative Expenses
|
|
|
118,450
|
|
|
381,602
|
|
| |
|
|
|
|
|
|
|
|
Loss
From Operations
|
|
|
(118,450
|
)
|
|
(381,602
|
)
|
| |
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
(79,678
|
)
|
|
(246,607
|
)
|
|
Income
on Discharge of Indebtedness
|
|
|
1,059,768
|
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
Income
(Loss) from operations before income tax
|
|
|
861,640
|
|
|
(628,209
|
)
|
| |
|
|
|
|
|
|
|
|
Income
tax Expense (Benefit)
|
|
|
-
|
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
Income
(Loss) from continuing operations
|
|
|
861,640
|
|
|
(628,209
|
)
|
| |
|
|
|
|
|
|
|
|
Loss
From Discontinued Operations (net of tax)
|
|
|
-
|
|
|
(2,149,123
|
)
|
| |
|
|
|
|
|
|
|
|
Gain
on Disposition of Subsidiary (net of tax)
|
|
|
-
|
|
|
2,215,427
|
|
| |
|
|
|
|
|
|
|
|
Net
Earnings from Discontinued Operations
|
|
|
-
|
|
|
66,304
|
|
| |
|
|
|
|
|
|
|
|
Net
Income (Loss)
|
|
$
|
861,640
|
|
$
|
(561,905
|
)
|
| |
|
|
|
|
|
|
|
|
Basic
and Diluted Net Income (Loss) Per Common Share:
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
$
|
1.70
|
|
$
|
(1.50
|
)
|
|
Discontinued
Operations
|
|
$
|
-
|
|
$
|
0.16
|
|
|
Net
Income (Loss)
|
|
$
|
1.70
|
|
$
|
(1.34
|
)
|
| |
|
|
|
|
|
|
|
|
Weighted
Average Number of Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
506,322
|
|
|
419,065
|
|
|
Diluted
|
|
|
506,322
|
|
|
419,065
|
|
*after
giving retroactive effect to 1-for-10 reverse stock split which was completed
September 25, 2007.
The
accompanying notes are an integral part of these financial
statements.
CATALYST
LIGHTING GROUP, INC.
STATEMENTS
OF CHANGES IN
STOCKHOLDERS’
EQUITY (DEFICIT)
FOR
THE YEARS ENDED SEPTEMBER 30, 2007 AND 2006
| |
|
Preferred
Stock
|
|
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Deficit
|
|
Stockholders’
Equity
(Deficit)
|
|
| |
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
October 1, 2005
|
|
|
–
|
|
$
|
–
|
|
|
421,550
|
|
$
|
42
|
|
$
|
3,859,344
|
|
$
|
(4,382,821
|
)
|
$
|
(523,435
|
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
|
|
|
(561,905
|
)
|
|
(561,905
|
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
September 30, 2006
|
|
|
–
|
|
|
–
|
|
|
421,550
|
|
|
42
|
|
|
3,859,344
|
|
|
(4,944,726
|
)
|
|
(1,085,340
|
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock issued for cash
|
|
|
157,277
|
|
|
157,277
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
157,277
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for payment of debt
|
|
|
–
|
|
|
–
|
|
|
1,154,258
|
|
|
115
|
|
|
115,310
|
|
|
–
|
|
|
115,425
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services
|
|
|
–
|
|
|
–
|
|
|
193,308
|
|
|
20
|
|
|
19,311
|
|
|
–
|
|
|
19,331
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued on conversion of preferred stock
|
|
|
(157,277
|
)
|
|
(157,277
|
)
|
|
2,562,015
|
|
|
256
|
|
|
157,021
|
|
|
–
|
|
|
–
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
861,640
|
|
|
861,640
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
September 30, 2007
|
|
|
–
|
|
$
|
–
|
|
|
4,331,131
|
|
$
|
433
|
|
$
|
4,150,986
|
|
$
|
(4,083,086
|
)
|
$
|
68,333
|
|
*after
giving retroactive effect to 1-for-10 reverse stock split and the reduction
in
the par value of common stock from $.01 to $.0001 which was completed September
25, 2007.
The
accompanying notes are an integral part of these financial
statements.
CATALYST
LIGHTING GROUP, INC.
STATEMENTS
OF CASH FLOWS
| |
|
For
the Years Ended
September
30,
|
|
| |
|
2007
|
|
2006
|
|
|
Cash
Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
861,640
|
|
$
|
(561,905
|
)
|
|
Adjustments
to reconcile net income (loss) to net cash used in
operating activities:
|
|
|
|
|
|
|
|
|
Equity
in (income) loss of former subsidiary
|
|
|
-
|
|
|
2,149,123
|
|
|
(Income)
on discharge of intercompany indebtedness
|
|
|
-
|
|
|
(636,944
|
)
|
|
Loss
on disposition of subsidiary
|
|
|
-
|
|
|
3,427,354
|
|
|
(Income)
on discharge of indebtedness attributable to former
subsidiary
|
|
|
-
|
|
|
(5,005,837
|
)
|
|
(Income)
on discharge of indebtedness
|
|
|
(1,059,768
|
)
|
|
-
|
|
|
Third
party warrant issued for payment of debt
|
|
|
-
|
|
|
(729,630
|
)
|
|
Amortization
of debt discount
|
|
|
51,960
|
|
|
144,251
|
|
|
Common
stock issued for services
|
|
|
19,331
|
|
|
-
|
|
|
Change
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Intercompany
receivable from (payable to) former subsidiary
|
|
|
-
|
|
|
1,529,448
|
|
|
Accounts
payable and accrued liabilities
|
|
|
46,256
|
|
|
28,504
|
|
|
Net
cash provided by (used in) operating activities
|
|
|
(80,581
|
)
|
|
344,364
|
|
|
Cash
Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
(Purchase)
retirement of property and equipment
|
|
|
-
|
|
|
-
|
|
|
Net
cash provided by (used in) investing activities
|
|
|
-
|
|
|
-
|
|
|
Cash
Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Net
proceeds from (payments on) debt
|
|
|
-
|
|
|
(344,364
|
)
|
|
Preferred
stock issuance
|
|
|
157,277
|
|
|
-
|
|
|
Net
cash provided by (used in) financing activities
|
|
|
157,277
|
|
|
(344,364
|
)
|
|
Net
Change in Cash
|
|
|
76,696
|
|
|
-
|
|
|
Cash,
at beginning of period
|
|
|
-
|
|
|
-
|
|
|
Cash,
at end of period
|
|
$
|
76,696
|
|
$
|
-
|
|
|
Supplemental
Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
|
Cash
paid during the year for interest
|
|
$
|
-
|
|
$
|
205,190
|
|
|
Schedule
of Non-Cash Financing Activities:
|
|
|
|
|
|
|
|
|
Common
stock issued in payment of debt
|
|
$
|
115,425
|
|
$
|
-
|
|
|
Common
stock issued on conversion of preferred stock
|
|
$
|
157,277
|
|
$
|
-
|
|
|
Third
party warrant issued for payment of debt
|
|
$
|
-
|
|
$
|
729,630
|
|
The
accompanying notes are an integral part of these financial
statements.
CATALYST
LIGHTING GROUP, INC.
NOTES
TO FINANCIAL STATEMENTS
|
1.
|
Organization
and Basis of Presentation:
|
Organization
and Business
Catalyst
Lighting Group, Inc. (“Company”) was incorporated in the State of Delaware on
March 7, 2001. On August 27, 2003, the Company completed the reverse
acquisition
of Whitco Company, L.P. (“Whitco”). Whitco was a wholly owned subsidiary of the
Company and was engaged in the manufacture and sale of area lighting
poles to
distributors throughout the United States of America.
The
Company’s common stock was quoted on the Over-the-Counter Bulletin Board under
the symbol CYSL through December 27, 2005, when it filed a Form 15 application
with the SEC to withdrawal as a reporting company under U.S. securities
laws.
Since that time, the Company’s common stock has traded on the Pink Sheets under
the symbol CYSL.
On
March
15, 2006, Whitco voluntarily filed for protection under Chapter 11 of the
U.S.
bankruptcy laws. On April 25, 2006, the bankruptcy court approved a sale
of
Whitco’s assets (other than cash and accounts receivable) used in its area
lighting pole business. The assets were sold free and clear of any liens
and
encumbrances to a third party purchaser pursuant to Section 363 of the
U.S
Bankruptcy Code. The purchaser issued a common stock purchase warrant to
acquire
shares of the purchaser’s common stock as consideration for the assets purchased
(“Purchase Warrant”). See Note 3.
On
May
16, 2006, Whitco filed a motion to convert its bankruptcy case to a Chapter
7
liquidation proceeding. This motion was granted by the bankruptcy court
on July
13, 2006. In connection with the liquidation, the Purchase Warrant and
Whitco’s
cash and accounts receivable were assigned and distributed to Whitco’s secured
creditor. As part of the Chapter 7 bankruptcy proceedings, no assets were
available for distribution to unsecured creditors and, accordingly, these
unsatisfied obligations were relieved as part of the liquidation in accordance
with the provisions of Chapter 7 of U.S. bankruptcy laws. See Note 5.
Since
Whitco’s liquidation in bankruptcy, the Company has had nominal assets and
nominal business operations and its business strategy has been to investigate
and, if such investigation warrants, acquire a target company or business
seeking the perceived advantages of being a publicly held corporation.
In
furtherance of this business strategy, on July 25, 2006, the Company voluntarily
filed for protection under Chapter 11 of the U.S. bankruptcy laws. The
Company
subsequently determined to withdraw from bankruptcy court protection and,
on
motion made by the U.S. trustee, the bankruptcy court ordered the case
dismissed
on January 9, 2007. Since the dismissal of the Company’s bankruptcy case, the
Company has settled its outstanding liabilities with creditors and is now
in a
position to actively seek a target company (see Notes 4 and 5). In addition,
effective February 22, 2007, the Company experienced a change in control
and its
management changed, pursuant to a Securities Purchase Agreement by and
between
the Company and KIG Investors I, LLC (“Investor”)(see Note 4).
CATALYST
LIGHTING GROUP, INC.
NOTES
TO FINANCIAL STATEMENTS
The
Company’s principal business objective for the next 12 months and beyond such
time will be to achieve long-term growth potential through a combination
with a
business rather than immediate, short-term earnings. The Company will not
restrict its potential candidate target companies to any specific business,
industry or geographical location and, thus, may acquire any type of
business.
Basis
of Presentation
The
accompanying financial statements include the accounts of the Company.
The
operations of Whitco, prior to the disposition of Whitco’s assets, are excluded
from continuing operations.
Going
Concern
Since
inception, the Company and its former subsidiary have a cumulative net
loss of
$4,083,086. Since inception, the Company has also been dependent upon the
receipt of capital investment or other financing to fund its operations.
The
Company currently has no source of operating revenue, and has only limited
working capital with which to pursue its business plan, which contemplates
the
completion of a business combination with an operating company. The amount
of
capital required to sustain operations until the successful completion
of a
business combination is subject to future events and uncertainties. It may be
necessary for the Company to secure additional working capital through
loans or
sales of common stock, and there can be no assurance that such funding
will be
available in the future. These conditions raise substantial doubt about
the
Company’s ability to continue as a going concern.
The
accompanying financial statements have been presented on the basis of the
continuation of the Company as a going concern and do not include any
adjustments relating to the recoverability and classification of recorded
asset
amounts or the amounts and classifications of liabilities that might be
necessary should the Company be unable to continue as a going
concern.
| 2. |
Summary
of Accounting Policies:
|
Income
Taxes
The
Company accounts for income taxes in accordance with the Statement of Financial
Accounting Standards No. 109, Accounting
for Income Taxes,
which
requires the recognition of deferred tax liabilities and assets at currently
enacted tax rates for the expected future tax consequences of events that
have
been included in the financial statements or tax returns. A valuation allowance
is recognized to reduce the net deferred tax asset to an amount that is
more
likely than not to be realized.
Use
of Estimates
In
preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required
to
make estimates and assumptions that affect the reported amounts of assets
and
liabilities, the disclosure of contingent assets and liabilities at the
date of
the financial statements, and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from these estimates.
CATALYST
LIGHTING GROUP, INC.
NOTES
TO FINANCIAL STATEMENTS
Cash
and Cash Equivalents
For
purposes of the statements of cash flows, the Company considers all highly
liquid investments with a maturity of three months or less to be cash
equivalents. There were no cash equivalents at September 30, 2007.
Fair
Value of Financial Instruments
The
estimated fair values for financial instruments are determined at discrete
points in time based on relevant market information. These estimates involve
uncertainties and cannot be determined with precision. The carrying amounts
of
accounts payable and accrued liabilities approximate fair value because
of the
short-term maturities of these instruments.
Stock
Compensation for Services Rendered
The
Company accounts for equity instruments issued to non-employees in accordance
with the provisions of SFAS No. 123 and Emerging Issues Task Force ("EITF")
Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to
Other
Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services." All transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based
on the
fair value of the consideration received or the fair value of the equity
instrument issued, whichever is more reliably measurable. The measurement
date
of the fair value of the equity instrument issued is the earlier of the
date on
which the counterparty's performance is complete or the date on which it
is
probable that performance will occur.
Earnings
(Loss) per Share
Basic
earnings per (loss) share (EPS) is calculated by dividing the income or
loss
available to common shareholders by the weighted average number of common
shares
outstanding for the period. Diluted EPS reflects the potential dilution
that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. Potentially dilutive securities
for
the years ended September 30, 2006 and 2007 would have been anti-dilutive
for
EPS calculations and therefore are not included.
Disposed
Operations
The
Company has adopted Statement of Financial Accounting Standards No. 144
"Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS
No. 144
modifies previous disclosures and requires additional disclosures for
discontinued operations and the assets associated with discontinued operations.
In connection with the bankruptcy sale of Whitco’s assets and Whitco’s
subsequent liquidation in bankruptcy, the Company disposed of its existing
area
lighting pole business (see Note 3). The operations of Whitco, prior to
the
disposition of Whitco’s assets, are excluded from continuing
operations.
CATALYST
LIGHTING GROUP, INC.
NOTES
TO FINANCIAL STATEMENTS
Recent
Pronouncements
In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards No. 157, Fair Value Measurements
(“SFAS 157”). The purpose of SFAS 157 is to provide users of financial
statements with better information about the extent to which fair value
is used
to measure recognized assets and liabilities, the inputs used to develop
the
measurements, and the effect of certain of the measurements on earnings
for the
period. SFAS No. 157 also provides guidance on the definition of fair value,
the
methods used to measure fair value, and the expanded disclosures about
fair
value measurements. This changes the definition of fair value to be the
price
that would be received to sell an asset or paid to transfer a liability,
an exit
price, as opposed to the price that would be paid to acquire the asset
or
received to assume the liability, an entry price. SFAS No. 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods with those fiscal years (e.g., January
1,
2008, for calendar year-end entities).
In
February 2007, the FASB issued Statement of Financial Accounting Standards
No.
159, The Fair Value Option for Financial Assets and Financial Liabilities,
including an amendment of FASB Statement No. 115 (“FAS 159”). FAS 159 permits
companies to choose to measure many financial instruments and certain other
items at fair value that are not currently required to be measured at fair
value
and establishes presentation and disclosure requirements designed to facilitate
comparisons between companies that choose different measurement attributes
for
similar types of assets and liabilities. The provisions of FAS 159 will
become
effective as of the beginning of our 2009 fiscal year.
The
adoption of these new Statements is not expected to have a material effect
on
the Company’s financial position, results of operations, or cash
flows.
|
3.
|
Sale
of Subsidiary’s Assets in Bankruptcy:
|
On
March
15, 2006, Whitco, the Company’s wholly owned operating subsidiary, voluntarily
filed for protection under Chapter 11 of the U.S. bankruptcy laws. On April
25,
2006, the bankruptcy court approved a sale of Whitco’s assets (other than cash
and accounts receivable) used in its area lighting pole business. The assets
were sold free and clear of any liens and encumbrances to a third party
purchaser pursuant to Section 363 of the U.S Bankruptcy Code. The purchaser
issued the Purchase Warrant as consideration for the assets purchased.
The
Purchase Warrant was valued by the parties to the transaction at $1,500,000.
On
May
16, 2006, Whitco filed a motion to convert its bankruptcy case to a Chapter
7
liquidation proceeding. This motion was granted by the bankruptcy court
on July
13, 2006. In connection with the liquidation, the Purchase Warrant and
Whitco’s
cash and accounts receivable were assigned and distributed to Whitco’s secured
creditor (see Note 5). As part of the Chapter 7 bankruptcy proceedings,
no
assets were available for distribution to unsecured creditors and, accordingly,
these unsatisfied obligations were relieved as part of the liquidation
in
accordance with the provisions of Chapter 7 of U.S. bankruptcy laws.
CATALYST
LIGHTING GROUP, INC.
NOTES
TO FINANCIAL STATEMENTS
This
transaction has been accounted for as discontinued operations since
the Company
disposed of its entire area lighting pole business operations as
a result of the
bankruptcy sale.
The
excess of the purchase price paid by the purchaser (including liabilities
assumed) over the adjusted basis of the assets transferred by Whitco
to the
purchaser was recorded as a gain (loss) on disposal of assets and
liabilities
from the discontinued operations. The following is a composition
of the purchase
price paid and the assets transferred in connection with the bankruptcy
sale of
Whitco’s assets:
|
Consideration
Paid by Purchaser:
|
|
|
|
|
|
| |
|
|
|
|
|
|
Purchase
warrant (at agreed value)
|
|
|
|
|
$
|
1,500,000
|
|
| |
|
|
|
|
|
|
|
|
Adjusted
Basis of Whitco Assets Transferred to Purchaser:
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
Inventory,
net
|
|
|
1,399,299
|
|
|
|
|
|
Plant,
property and equipment, net
|
|
|
95,033
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
Total
Adjusted Basis of Transferred Assets
|
|
|
|
|
|
1,494,332
|
|
| |
|
|
|
|
|
|
|
|
Gain
on Sale of Whitco Assets
|
|
|
|
|
$
|
5,668
|
|
The
gain
(loss) on the disposition of Whitco includes certain Whitco indebtedness
discharged as part of the liquidation in accordance with the provisions
of
Chapter 7 of U.S. bankruptcy laws and certain expense items related to
the
liquidation. The following is a composition of the foregoing:
|
Discharge
of Whitco Indebtedness related to Liquidation:
|
|
|
|
| |
|
|
|
|
Related
party debt, current
|
|
$
|
250,000
|
|
|
Other
debt, current
|
|
|
1,290,748
|
|
|
Accounts
payable
|
|
|
2,833,383
|
|
|
Accrued
liabilities
|
|
|
431,706
|
|
|
Long
term debt
|
|
|
200,000
|
|
| |
|
|
|
|
|
Income
from Discharge of Indebtedness
|
|
|
5,005,837
|
|
| |
|
|
|
|
|
Adjustments
to Reconcile to Gain From Disposal of Subsidiary:
|
|
|
|
|
| |
|
|
|
|
|
Adjustment
for Cancellation of Intercompany Payable to Whitco
|
|
|
636,944
|
|
|
Book
value of Whitco subsidiary after cancellation of debt
|
|
|
(3,427,354
|
)
|
| |
|
|
|
|
|
Net
Gain (Loss) on Whitco Liquidation
|
|
$
|
2,215,427
|
|
CATALYST
LIGHTING GROUP, INC.
NOTES
TO FINANCIAL STATEMENTS
| 4. |
Change
of Control Transaction; Creditor Settlements:
|
On
August
22, 2007, the Company entered into a stock purchase agreement with the
Investor
pursuant to which the Investor purchased 1,572,770 shares of convertible
preferred stock for a purchase price of $157,277, or $0.10 per share
(“Preferred
Stock Purchase”).
On
August
23, 2007, in accordance with the terms of the stock purchase agreement,
the
existing officers and two of the Company’s directors resigned, and Kevin R.
Keating, the sole remaining director, was appointed Chief Executive Officer,
Chief Financial Officer, President, Secretary and Treasurer.
Kevin
R.
Keating is the father of Timothy J. Keating, the principal member of
Keating
Investments, LLC. Keating Investments, LLC is the managing member of
the
Investor. Timothy J. Keating is the manager of the Investor.
The
Preferred Stock Purchase was completed on September 12, 2007. The preferred
shares were automatically convertible into the Company’s common stock at such
time as the Company completed a 1-for-10 reverse stock split (“Reverse Split”).
The Reverse Split was completed on September 25, 2007, and the Investor
was
issued 2,562,015 shares of common stock, on a post-split basis, upon
cancellation of the preferred stock. As of September 30, 2007, the Investor
owns
approximately 59% of the outstanding shares of common stock. The proceeds
of the
Preferred Stock Purchase were used to pay outstanding liabilities of
the
Company.
In
connection with and as a condition of the closing of the Preferred Stock
Purchase, the Company entered into agreements with a number of creditors
for a
cash settlement of amounts owed to them by the Company. Pursuant to these
cash
settlements, the Company paid an aggregate of $30,277 in complete satisfaction
of $191,092 in accrued liabilities, resulting in income from the discharge
of
indebtedness of $160,815.
In
connection with and as a condition of the closing of the Preferred Stock
Purchase, the Company also entered into agreements with a number of creditors
for the issuance of common stock in complete settlement of amounts owed
to them
for services rendered. Pursuant to these equity settlements, the Company
issued
an aggregate of 71,086 shares of common stock, on a post-split basis,
valued at
$7,109 or approximately $0.10 per share, in satisfaction of accrued liabilities
totaling $73,260, resulting in income from discharge of indebtedness
of $66,151
being recorded.
In
connection with and as a condition of the closing of the Preferred Stock
Purchase, the Company also entered into an agreement with the Company’s secured
creditor for the issuance of common stock in complete settlement of amounts
owed
to it for certain loans and accrued interest. Pursuant to this equity
settlement, the Company issued 1,083,172 shares of common stock, on a
post-split
basis, valued at $108,317 or approximately $0.10 per share, in satisfaction
of
principal under notes of $820,024 and accrued interest of $121,095, resulting
in
income from discharge of indebtedness of $832,802 being recorded. See
Note
5.
CATALYST
LIGHTING GROUP, INC.
NOTES
TO FINANCIAL STATEMENTS
In
consideration of the above equity settlements, each creditor was granted
piggy
back registration rights for the shares of common stock received in
the
settlement.
Further,
as part of the cash and equity settlements, any creditor holding warrants
to
purchase shares of the Company’s common stock agreed to the cancellation of such
warrants. Accordingly, warrants to purchase 82,367 shares of common stock,
on a
post-split basis, were cancelled.
Secured
Notes
On
September 30, 2004, the Company and Whitco entered into a financing arrangement
with a secured creditor (the “Entity”) which included (1) a Secured Convertible
Term Note in the principal amount of two million dollars (the “Term Note”) and
(2) a Secured Revolving Note (the “Revolving Note”) and a Secured Convertible
Minimum Borrowing Note (together with the Revolving Note, the “AR Notes”) in the
aggregate principal amount of up to three million dollars
The
Company and Whitco were jointly and severally liable under the AR Notes,
and the
Company was liable under the Term Note. The Term Note and AR Notes
(collectively, the “Notes”) matured on September 30, 2007 and were
collateralized by a first priority lien on inventory, accounts receivable,
raw
materials and other assets of the Company and Whitco and all of the Company’s
ownership interests in Whitco. The Notes accrued interest at a rate per
annum
equal to the “prime rate” published in The Wall Street Journal from time to
time, plus two percent (2%), but shall in no event be less than six percent
(6%)
per annum. Catalyst also granted registration rights with respect to
all shares
of Common Stock underlying the Notes and certain warrants issued to the
Entity
in connection with its financings.
In
connection with the Whitco bankruptcy, as of March 31, 2006, the Entity
and the
Company agreed that certain Whitco accounts receivable collections and
the
assignment of the Purchase Warrant to the Entity would be applied against
payment of the Notes balances as follows:
CATALYST
LIGHTING GROUP, INC.
NOTES
TO FINANCIAL STATEMENTS
|
Principal
and Interest Balances:
|
|
|
|
|
|
|
Revolving
Note – Principal Balance at March 14, 2006
|
|
$
|
920,421
|
|
|
|
|
|
Revolving
Note – Accrued Interest at March 15, 2006
|
|
|
3,854
|
|
|
|
|
|
Minimum
Borrowing Note – Principal Balance at March 14, 2006
|
|
|
997,000
|
|
|
|
|
|
Minimum
Borrowing Note – Accrued Interest at March 15, 2006
|
|
|
3,947
|
|
|
|
|
|
Total
Balance – Revolving Note and Minimum Borrowing Note
|
|
|
|
|
$
|
1,925,232
|
|
| |
|
|
|
|
|
|
|
|
Collections,
Payments and Charges:
|
|
|
|
|
|
|
|
|
Agreed
Value of Purchase Warrant
|
|
$ |
(1,500,000
|
)
|
|
|
|
|
Accounts
Receivable Balance at March 15, 2006
|
|
|
(1,404,295
|
)
|
|
|
|
|
Agreed
Uncollectible Accounts Receivable
|
|
|
300,000
|
|
|
|
|
|
Debtor-in-Possession
Collections by Laurus
|
|
|
(85,556
|
)
|
|
|
|
|
Laurus
Fees and Expenses
|
|
|
35,000
|
|
|
|
|
|
Total
Collections, Payments and Charges
|
|
|
|
|
$ |
(2,654,851
|
)
|
| |
|
|
|
|
|
|
|
|
Term
Note Balance:
|
|
|
|
|
|
|
|
|
Excess
Payments and Collections Applied to Term Note
|
|
|
|
|
$ |
(729,619
|
)
|
|
Term
Note – Principal Balance at March 14, 2006
|
|
|
|
|
|
1,549,643
|
|
|
Term
Note – Adjusted Principal Balance
|
|
|
|
|
$
|
820,024
|
|
|
Term
Note – Accrued Interest at March 15, 2006
|
|
|
|
|
|
6,134
|
|
|
Balance
– Term Note Plus Accrued Interest
|
|
|
|
|
$
|
826,158
|
|
As
of
September 30, 2006, the balance of the Term Note was $768,064, net of
debt
discount of $51,960. As of September 30, 2006, the Term Note had accrued
interest of $41,417.
In
connection with and as a condition of the closing of the Preferred Stock
Purchase, the Company entered into an agreement with the Entity for the
issuance
of common stock in complete settlement of amounts owed to it under the
Term Note
including accrued interest. Pursuant to this equity settlement, the Company
issued to the Entity 1,083,172 shares of common stock, on a post-split
basis,
valued at $108,317 or approximately $0.10 per share, in satisfaction
of
principal under the Term Note of $820,024 and accrued interest of $121,095,
resulting in income from discharge of indebtedness of $832,802 being
recorded.
CATALYST
LIGHTING GROUP, INC.
NOTES
TO FINANCIAL STATEMENTS
Revolving
Loan – Related Party
On
August
22, 2007, the Company entered into a revolving loan agreement with Keating
Investments, LLC (“Lender”). Pursuant to this agreement, the
Lender
agreed to make advances to the Company from time to time at the request
of the
Company. The advances outstanding were not to exceed $30,000. The Company
was
required to repay the outstanding advances in full on or before October
22,
2007. The advances bear interest commencing September 22, 2007 at a rate
of 6%
per annum. The Lender made advances of $25,000 and $5,000 on August 27,
2007 and
September 5, 2007, respectively. The advances were used for working capital
purposes and to pay certain accrued liabilities and service providers.
On
September 19, 2007, these advances were repaid in full from the proceeds
of the
Preferred Stock Purchase. Keating
Investments, LLC is the managing member of the Investor.
Option
Plans
As
of
October 1, 2005, there were issued and outstanding options to purchase
9,828
shares of the Company’s common stock, on a post-split basis, and there were
140,172 options available for issuance under the 2003 Stock Option Plan.
During
the fiscal year ended September 30, 2006, the options to purchase 9,828
shares
of common stock under the 2003 Stock Option Plan were cancelled. On September
13, 2007, following the closing of the Preferred Stock Purchase, the
2003 Stock
Option Plan was terminated by the Company’s Board of Directors.
Stock
Purchase Warrants
As
of
October 1, 2005, there were issued and outstanding warrants to purchase
86,410
shares of the Company’s common stock, on a post-split basis. During the fiscal
year ended September 30, 2007, the Company entered into settlement agreements
with certain creditors who held warrants to purchase 82,366 shares of
common
stock. As part of these settlement agreements, these warrants were cancelled.
As
of September 30, 2007, the Company had issued and outstanding warrants,
on a
post-split basis, as follows:
|
Warrant
Holder
|
|
Warrants
Outstanding
|
|
Exercise
Price
|
|
Expiry
Date
|
|
| |
|
|
|
|
|
|
|
|
Former
Director
|
|
|
710
|
|
$
|
31.25
|
|
|
3/26/2008
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Investor
|
|
|
3,334
|
|
$
|
30.00
|
|
|
12/10/2009
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Balances,
September 30, 2007
|
|
|
4,044
|
|
|
|
|
|
|
|
CATALYST
LIGHTING GROUP, INC.
NOTES
TO FINANCIAL STATEMENTS
Preferred
Stock
On
August
27, 2007, the Company’s Board of Directors designated 1,600,000 shares of
preferred stock as Series A Convertible Preferred Stock (“Preferred Stock”).
Each share of Preferred Stock was automatically convertible into 16.28982
shares
of fully paid and non-assessable common stock upon the Company’s completion of a
reverse stock split. The holders of Preferred Stock were entitled to
vote the
number of shares of common stock they were entitled to upon conversion
on all
matters presented to a vote of the common stockholders.
On
August
22, 2007, the Company entered into a stock purchase agreement with the
Investor
pursuant to which the Investor purchased 1,572,770 shares of Preferred
Stock for
a purchase price of $157,277 (“Preferred Stock Purchase”). The Preferred Stock
Purchase was completed on September 12, 2007. The shares of Preferred
Stock were
automatically convertible into the Company’s common stock at such time as the
Company completed a 1-for-10 reverse stock split (“Reverse Split”). The Reverse
Split was completed on September 25, 2007, and the Investor was issued
2,562,015
shares of common stock, on a post-split basis, upon cancellation of the
Preferred Stock.
Reverse
Stock Split
On
September 25, 2007, the Company completed a 1-for-10 reverse stock split
of its
outstanding common stock. The Reverse Split provided for the round up
of
fractional shares and the special treatment of certain shareholders as
follows:
a. shareholders
holding less than 100 shares of common stock as of the record date will
not be
affected by the Reverse Split and will hold the same number of shares
both
before and after the Reverse Split;
b. shareholders
holding 1,000 or fewer shares of common stock, but at least 100 shares
of common
stock as of the record date will hold 100 shares of common stock following
the
Reverse Split; and
c.
all
fractional shares as a result of the Reverse Split will be rounded
up.
In
connection with the Reverse Split, effective September 25, 2007, the
Company
also amended its certificate of incorporation to reduce the par value
of its
common stock and preferred stock from $0.01 to $0.0001 per share and
to increase
the number of authorized shares of common stock from 40,000,000 to 200,000,000
shares.
As
of
September 30, 2007, after giving effect to the Reverse Split, there were
4,331,131 shares of common stock, par value $0.0001 per share, issued
and
outstanding. Except as otherwise noted, all references to shares of the
Company’s common stock shall refer to the shares of common stock after giving
effect to the Reverse Split and the reduction of the par value per share.
CATALYST
LIGHTING GROUP, INC.
NOTES
TO FINANCIAL STATEMENTS
Common
Stock
Pursuant
to certain settlement agreements, on September 14, 2007, the Company
issued an
aggregate of 71,086 shares of common stock, on a post-split basis, valued
at
$7,109 or approximately $0.10 per share, in satisfaction of accrued liabilities
owed to certain service providers totaling $73,260, resulting in income
from
discharge of indebtedness of $66,151 being recorded.
Pursuant
to a settlement agreement with Entity, on September 14, 2007, the Company
issued
1,083,172 shares of common stock, on a post-split basis, valued at $108,317
or
approximately $0.10 per share, in satisfaction of principal under notes
of
$820,024 and accrued interest of $121,095, resulting in income from discharge
of
indebtedness of $832,802 being recorded.
On
September 14, 2007, the Company issued 86,654 shares of its common stock,
on a
post-split basis, to Kevin R. Keating, the sole officer and director
of the
Company, for services rendered to the Company valued at $8,665, or $0.10
per
share.
On
September 14, 2007, the Company issued 86,654 shares of its common stock,
on a
post-split basis, to Garisch Financial, Inc. for consulting services
rendered to
the Company valued at $8,665, or $0.10 per share.
On
September 14, 2007, the Company issued 20,000 shares of its common stock,
on a
post-split basis, to a former officer and director of the Company, for
consulting services rendered to the Company valued at $2,000, or $0.10
per
share.
On
September 25, 2007, following the completion of the Reverse Split, the
Company
automatically converted its outstanding Preferred Stock and issued the
Investor
2,562,015 shares of common stock, on a post-split basis.
All
of
the foregoing shares of common stock issued by the Company were issued
under an
exemption from registration under Section 4(2) of the Securities Act
of 1933, as
amended (“Securities Act”). As such, the shares of common stock so issued are
restricted shares, and the holder thereof may not sell, transfer or otherwise
dispose of such shares without registration under the Securities Act
or an
exemption therefrom. The Company has granted piggyback registration rights
to
each of the recipients of the foregoing stock issuances with respect
to the
above shares. In addition, demand registration rights have been granted
to the
Investor and the Entity.
CATALYST
LIGHTING GROUP, INC.
NOTES
TO FINANCIAL STATEMENTS
| 7. |
Related
Party Transactions:
|
On
September 14, 2007, the Company issued 86,654 shares of its common stock,
on a
post-split basis, to Kevin R. Keating, the sole officer and director
of the
Company, for services rendered to the Company valued at $8,665, or $0.10
per
share.
On
September 14, 2007, the Company issued 20,000 shares of its common stock,
on a
post-split basis, to a former officer and director of the Company, for
consulting services rendered to the Company valued at $2,000, or $0.10
per
share.
On
August
22, 2007, the Company entered into a revolving loan agreement with Keating
Investments, LLC (“Lender”). Pursuant to this agreement, the
Lender
agreed to make advances to the Company from time to time at the request
of the
Company. The advances outstanding were not to exceed $30,000. The Company
was
required to repay the outstanding advances in full on or before October
22,
2007. The advances bear interest commencing September 22, 2007 at a rate
of 6%
per annum. The Lender made advances of $25,000 and $5,000 on August 27,
2007 and
September 5, 2007, respectively. The advances were used for working capital
purposes and to pay certain accrued liabilities and service providers.
On
September 19, 2007, these advances were repaid in full from the proceeds
of the
Preferred Stock Purchase. Keating
Investments, LLC is the managing member of the Investor.
During
the fiscal years ended September 30, 2006 and 2007, a former officer
and
director of the Company made cost advances on behalf of the Company totaling
$5,015. These advances were repaid by the Company from the proceeds of
the
Preferred Stock Purchase.
CATALYST
LIGHTING GROUP, INC.
NOTES
TO FINANCIAL STATEMENTS
The
following is a reconciliation between the federal income tax benefit
computed at
the statutory federal income tax rate and actual income tax benefit (in
thousands):
| |
|
Year
Ended
September 30,
2007
|
|
Year
Ended
September 30,
2006
|
|
| |
|
|
|
|
|
|
Federal
income tax expense (benefit) at statutory rate
|
|
$
|
295
|
|
$
|
(191
|
)
|
| |
|
|
|
|
|
|
|
|
State
income taxes, net of federal
income tax effect
|
|
|
-
|
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
Valuation
allowance
|
|
|
(295
|
)
|
|
191
|
|
| |
|
|
|
|
|
|
|
|
Total
income tax benefit
|
|
$
|
-
|
|
$
|
-
|
|
At
September 30, 2007, the Company had a net operating loss carryforward
for
federal and state income tax purposes of approximately $6.8 million available
to
offset future taxable income through 2027. This operating loss is limited
under
the change of control provisions of Section 382.
Prior
net
operating loss carry forwards were reduced effective April 24, 2006 principally
as a result of cancellation of debt in the Chapter 11 proceedings.
A
valuation allowance of $2,455,000 was established at September 30, 2007
to
offset the benefit from the net operating loss carryforward to the extent
it is
more likely than not, based upon available evidence, that the recorded
value
will not be realized. Realization is dependent on the existence of sufficient
taxable income within the carryforward period. In August 2007, upon the
issuance
of common shares in settlement of liabilities, the Company underwent
a change of
control pursuant to Section 382 of the internal revenue code. Net operating
losses prior to the change of control are limited in post change periods
under
Section 382. Cancellation of indebtedness income subsequent to the change
in
control has been excluded from taxable income due to the insolvency of
the
company, and has the effect of reducing the pre-change net operating
loss
carryforward.
CATALYST
LIGHTING GROUP, INC.
NOTES
TO FINANCIAL STATEMENTS
Effective
October 1, 2007, the Company entered into a management agreement (“Management
Agreement”) with Vero Management, L.L.C., a Delaware limited liability company
(“Vero”) under which Vero had agreed to provide a broad range of managerial
and
administrative services to the Company including, but not limited to,
assistance
in the preparation and maintenance of the Company’s financial books and records,
the filing of various reports with the appropriate regulatory agencies
as are
required by State and Federal rules and regulations, the administration
of
matters relating to the Company’s shareholders including responding to various
information requests from shareholders as well as the preparation and
distribution to shareholders of relevant Company materials, and to provide
office space, corporate identity, telephone and fax services, mailing,
postage
and courier services for a fixed fee of $1,000 per month, for an initial
period
of twelve months. At the end of the initial twelve month term, the agreement
will continue to remain in effect until terminated in writing by either
party.
Kevin R. Keating, the sole officer and director of the Company, is the
sole
owner and manager of Vero.
PART
III
Item
1. Index to Exhibits
|
Exhibit
|
|
|
|
Number
|
|
Description
|
|
2.1
|
|
Certificate
of Ownership and Merger, as filed with the Delaware Secretary of
State on
September 23,
2003
|
| |
|
|
|
3.1
|
|
Certificate
of Incorporation, as filed with the Delaware Secretary of State
on March
7, 2001
|
| |
|
|
|
3.2
|
|
Certificate
of Designation of Series A Convertible Preferred Stock, as filed
with the
Delaware Secretary
of State on August 27, 2007
|
| |
|
|
|
3.3
|
|
Certificate
of Amendment of Certificate of Incorporation, as filed with the
Delaware
Secretary of State
on September, 19, 2007
|
| |
|
|
|
3.4
|
|
By-Laws,
as amended
|
| |
|
|
|
10.1
|
|
Common
Stock Purchase Warrant Issued to John Sanderson dated May 26,
2004
|
| |
|
|
|
10.2
|
|
Common
Stock Purchase Warrant Issued to Wilkinson Family Trust dated December
10,
2004
|
| |
|
|
|
10.3
|
|
Securities
Purchase Agreement between KIG Investors I, LLC and the Company
dated
August 22, 2007
|
| |
|
|
|
10.4
|
|
Registration
Rights Agreement between KIG Investors I, LLC and the Company dated
September 12,
2007
|
| |
|
|
|
10.5
|
|
Settlement
and Release Agreement between Feldman Weinstein & Smith, LLP and the
Company dated
August 21, 2007
|
| |
|
|
|
10.6
|
|
Settlement
and Release Agreement between Halliburton Investor Relations and
the
Company dated August
13, 2007
|
| |
|
|
|
10.7
|
|
Form
of Registration Rights Agreement between certain Other Stockholders
and
the Company dated
September 14, 2007
|
| |
|
|
|
10.8
|
|
Settlement
and Release Agreement between Laurus Master Fund, Ltd. and the
Company
dated August
22, 2007
|
| |
|
|
|
10.9
|
|
Registration
Rights Agreement between Laurus Master Fund, Ltd. and the Company
dated
September
14, 2007
|
| |
|
|
|
10.10
|
|
Revolving
Loan Agreement between Keating Investments, LLC and the Company
dated
August 22,
2007
|
| |
|
|
|
10.11
|
|
Consulting
Agreement between Garisch Financial, Inc. and the Company dated
September
13, 2007
|
| |
|
|
|
10.12
|
|
Agreement
between the Company and Vero Management, LLC, dated as of October
1,
2007
|
| |
|
|
|
16
|
|
Change
of Registered Accountant Letter dated October 18, 2007
|
| |
|
|
|
16.1
|
|
Former
Registered Accountant Letter dated January 10,
2008
|
Exhibit
16.1 is filed herewith. All other exhibits are contained in the Company’s Form
10-SB filed with the SEC on December 7, 2007.
SIGNATURES
In
accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the
undersigned, thereunto duly authorized.
| |
|
|
| Date:
January 24, 2008 |
Catalyst
Lighting Group, Inc. |
|
|
|
|
|
By: |
/s/
Kevin R. Keating |
| |
Name:
Kevin R. Keating |
| |
Title:
Chief Executive Officer
|