UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
==================================
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
==================================
HALBERD
CORPORATION
(Exact
Name of Small Business Issuer in its Charter)
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Nevada
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7380
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26-4346918
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(State
of Incorporation)
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(Primary
Standard Classification Code)
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(IRS
Employer ID No.)
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Halberd
Corporation
10755
Vernon Avenue
Huntington Woods,
MI 48070
248-530-0270
(Address and Telephone
Number of Registrant’s Principal
Executive
Offices and Principal Place of Business)
Mark
S. Lundquist, CEO
Halberd
Corporation
10755
Vernon Avenue
Huntington Woods,
MI 48070
248-530-0270
(Name,
Address and Telephone Number of Agent for Service)
Copies of
communications to:
GREGG
E. JACLIN, ESQ.
ANSLOW
& JACLIN, LLP
195
Route 9 South, Suite204
Manalapan,
NJ 07726
TELEPHONE
NO.: (732) 409-1212
FACSIMILE
NO.: (732) 577-1188
Approximate
date of commencement of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. |_|
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act of 1933, please check the following box and list
the Securities Act registration Statement number of the earlier effective
registration statement for the same offering. |_|
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.|_|
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.|_|
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check the following box. |_|
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Large
accelerated filer
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o
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Accelerated
filer
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o
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Non-accelerated
filer
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o
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Smaller
reporting company
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x
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(Do
not check if a smaller reporting company)
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CALCULATION
OF REGISTRATION FEE
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Title
of Each Class Of Securities to be Registered
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Amount
to be
Registered
(1)
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Proposed
Maximum
Aggregate
Offering
Price
per
share (2)
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Proposed
Maximum
Aggregate
Offering
Price (3)
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Amount
of
Registration
fee
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Common
Stock, par value $0.001
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5,725,000
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$0.65
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$3,721,250
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$207.65
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(1) In
the event of a stock split, stock dividend, or similar transaction involving the
common stock, the number of shares registered shall automatically be increased
to cover the additional shares of common stock issuable pursuant to Rule 416
under the Securities Act.
(2) The
proposed maximum offering price per share and the proposed maximum aggregate
offering price have been estimated solely for the purpose of calculating the
amount of the registration fee in accordance with Rules 457(c) and 457(h) under
the Securities Act of 1933 on the basis of the average of the high and low
prices of the Common Stock on the OTC Bulletin Board on July 7, 2009, a date
within five (5) trading days prior to the date of the filing of this
Registration Statement.
(3) This
amount represents the maximum aggregate value of common stock which may be put
to the selling shareholder by the registrant pursuant to the terms and
conditions of an Investment Agreement between the selling shareholder and the
registrant.
PRELIMINARY
PROSPECTUS SUBJECT TO COMPLETION DATED JULY __, 2009
The
registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
securities act of 1933 or until the registration statement shall become
effective on such date as the commission, acting pursuant to said section 8(a),
may determine.
The information in this prospectus is
not complete and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the
offer or sale is not
permitted.
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PROSPECTUS
5,725,000 SHARES
OF
HALBERD
CORPORATION
COMMON
STOCK
This
prospectus relates to the resale of up to 5,725,000 shares of the common
stock of Halberd Corporation, a Nevada corporation, including 3,655,000
shares to be issued to certain shareholders for services
pursuant to certain agreements, 70,000 shares by the members of our Board
of Directors and 2,000,000 shares by Dutchess Private Equities Fund Ltd.,
a Cayman Island exempted company (“Dutchess”), a selling shareholder
pursuant to a “put right” under an investment agreement (the “Investment
Agreement”), also referred to as an Equity Line of Credit, that we have
entered into with Dutchess. The Investment Agreement permits us to “put”
up to twenty-five million ($25,000,000) in shares of our common stock to
Dutchess. We will not receive any proceeds from the sale of these shares
of common stock. However, we will receive proceeds from the sale of
securities pursuant to our exercise of this put right offered by Dutchess.
We will bear all costs associated with this registration.
Dutchess
is an “underwriter” within the meaning of the Securities Act of 1933, as
amended (the “Securities Act”) in connection with the resale of our common
stock under the Equity Line of Credit. Dutchess will pay us 93% of the
lowest closing “best bid” price (the highest posted bid price) of the
common stock during the five consecutive trading days immediately
following the date of our notice to Dutchess of our election to put shares
pursuant to the Investment Agreement.
Our
shares of common stock are traded on the Over-the-Counter Bulletin Board
(the “OTCBB”) under the symbol “HALB.OB.” On July 7, 2009, the closing
sale price of our common stock was $0.65 per share.
This
investment involves a high degree of risk. You should purchase shares only
if you can afford a complete loss. See "Risk Factors" beginning on page
4.
The
information in this prospectus is not complete and may be changed. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. No one may sell these securities
nor may offers to buy be accepted until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and is not soliciting an offer to
buy these securities in any state where the offer, solicitation or sale is
not permitted.
Neither
the Securities and Exchange Commission nor any state securities commission
has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The
Date of This Prospectus Is: July __, 2009
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This
summary highlights selected information contained elsewhere in this
prospectus. This summary does not contain all the information that
you should consider before investing in the common stock. You should
carefully read the entire prospectus, including “Risk Factors”, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and
the Consolidated Financial Statements, before making an investment decision .
About
Our Company
We are a
development stage company that was incorporated under the laws of the State of
Nevada on January 26, 2009. On January 28, 2009, we entered into a share
purchase agreement with SellMyBusinessNow.Com, Inc., a corporation established
under the laws of the State of Michigan on August 2, 2007 (“SellMyBusiness”),
pursuant to which we acquired all the shares of common stock of SellMyBusiness
for 25,058,000 shares of our common stock. As a result, SellMyBusiness became
our wholly-owned subsidiary.
Our
operations are conducted under the name “Sellmybusiness.com®” established
on December 3, 2007. Sellmybusiness.com® provides a single web portal for
interested parties to find, buy and sell businesses, real estate and equipment
and all the related services needed to support the transaction, including
financing, incorporation, professional help and additional business resources.
Sellmybusiness.com® intends to support businesses of all sizes and types,
including start-ups, well-established companies, home-based businesses,
closely-held companies, multinational public corporations and franchises.
Sellmybusiness.com®’s real estate listing service assists people to buy, sell,
lease or sublease commercial and residential land and property.
Sellmybusiness.com®’s equipment listing service provides a portal to buy, sell
or lease excess inventory, capital equipment, raw materials, vehicles, aircraft,
ships and rail equipment.
“The
Company,” “we,” “us,” or “our,” are references to the combined business of
Halberd Corporation and its wholly-owned subsidiary, SellMyBusinessNow.Com,
Inc.
Where
You Can Find Us
Our
principal executive office location and mailing address is 10755 Vernon Avenue,
Huntington Woods, MI 48070. The corporate telephone number is
248-530-0270.
The
Offering
This
prospectus relates to the resale of up to 5,725,000 shares of our common stock,
including 3,655,000 shares to be issued to shareholders pursuant to services
agreements, 70,000 shares held by members of our Board of Directors and
2,000,000 to be issued toDutchess pursuant to an Investment Agreement, effective
April 30, 2009, entered into by Dutchess and us.
For the
purpose of determining the number of shares of common stock to be offered by
this prospectus, we have assumed that we will issue not more than 2,000,000
shares pursuant to the exercise of our put right under the Investment Agreement,
although the number of shares that we will actually issue pursuant to that put
right may be more or less than 2,000,000, depending on the trading price of our
common stock. We currently do not intend to exercise the put right in a
manner which would result in our issuance of more than 2,000,000 shares, but if
we were to exercise the put right in that manner, we would be required to file a
subsequent registration statement with the Securities and Exchange Commission
(the “SEC”) and that registration statement would have to be declared effective
prior to the issuance of any additional shares.
The
Investment Agreement with Dutchess provides that following notice to Dutchess,
we may put to Dutchess up to $25,000,000 in shares of our common stock for a
purchase price equal to 93% of the lowest closing “best bid” price (the highest
posted bid price) of the common stock during the five consecutive trading days
immediately following the date of our notice to Dutchess of our election to put
shares pursuant to the Investment Agreement. The dollar value that we will be
permitted to put pursuant to the Investment Agreement will be either: (A) 200%
of the average daily volume in the US market of the common stock for the ten
trading days prior to the notice of our put, multiplied by the average of the
three daily closing bid prices immediately preceding the date of the put, or (B)
$300,000. Dutchess has indicated that it will resell those shares in the
open market, resell our shares to other investors through negotiated
transactions, or hold our shares in its portfolio. This prospectus covers
the resale of our stock by Dutchess either in the open market or to other
investors through negotiated transactions. Dutchess’ obligations under the
Investment Agreement are not transferrable and this registration statement does
not cover sales of our common stock by transferees of Dutchess.
Dutchess
will only purchase shares when we meet the following conditions:
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·
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a
registration statement has been declared effective and remains effective
for the resale of the common stock subject to the Equity Line of
Credit;
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·
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our
common stock has not been suspended from trading for a period of five
consecutive trading days and we have not been notified of any pending or
threatened proceeding or other action to delist or suspend our common
stock;
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·
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we
have complied with our obligations under the Investment Agreement and the
Registration Rights Agreement;
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·
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no
injunction has been issued and remains in force, and no action has been
commenced by a governmental authority which has not been stayed or
abandoned, prohibiting the purchase or the issuance of our common stock;
and
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·
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we
have not filed a petition in bankruptcy, either voluntarily or
involuntarily, and there shall not have been commenced any proceedings
under any bankruptcy or insolvency
laws.
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The
Investment Agreement will terminate when any of the following events
occur:
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·
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Dutchess
has purchased an aggregate of $25,000,000 of our common
stock;
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·
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we
file or otherwise enter an order for relief in bankruptcy;
or
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·
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our
common stock ceases to be registered under the Securities Exchange Act of
1934 (the “Exchange Act”).
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As we
draw down on the Equity Line of Credit, shares of our common stock will be sold
into the market by Dutchess. The sale of these additional shares could
cause our stock price to decline. In turn, if the stock price declines and
we issue more puts, more shares will come into the market, which could cause a
further drop in the stock price. You should be aware that there is an
inverse relationship between the market price of our common stock and the number
of shares to be issued under the Equity Line of Credit. If our stock price
declines, we will be required to issue a greater number of shares under the
Equity Line of Credit. We have no obligation to utilize the full amount
available under the Equity Line of Credit.
Terms
of the Offering
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Common
stock offered:
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Up
to 5,725,000 shares of common stock, par value $0.001 per share, to be
offered for resale by certain shareholders and
Dutchess.
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Common
stock to be outstanding
before
this offering:
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26,128,000
shares
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Common
stock to be outstanding
after
this offering:
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31,783,000
shares
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Use
of proceeds:
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We
will not receive any proceeds from the sale of the shares of common stock.
However, we will receive proceeds from the Equity Line of Credit.
See “Use of Proceeds”.
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Risk
factors:
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An
investment in our common stock involves a high degree of risk. See “Risk
Factors” beginning on page 4 of this prospectus.
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OTC
Bulletin Board symbol:
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“HALB.OB”
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Our
operations are limited to SellMyBusiness, our wholly-owned subsidiary. The
following table provides summary consolidated financial statement data of
SellMyBusiness. The interim financial data for the three and nine-month periods
ended April 30, 2009 are unaudited. The financial statement data for the period
August 2, 2007 (date of inception) to July 31, 2008 has been derived from our
audited consolidated financial statements. The data set forth below should be
read in conjunction with “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” our consolidated financial statements and
the related notes included in this prospectus, and the unaudited financial
statements and related notes included in this prospectus.
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For
the Three Months
Ended
April
30,
2009
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For
the Nine Months
Ended
April
30,
2009
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For
the Period Ended
July
31, 2008 (from inception)
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||||||||||
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(Unaudited)
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(Unaudited)
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(Audited)
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||||||||||
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Net
Sales
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$
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587
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$
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5,679
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$
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7,015
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||||||
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Operating
expenses
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365,559
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501,349
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44,086
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Net
loss
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$
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(372,057)
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$
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(536,697
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)
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$
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(36,095
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)
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||||
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BALANCE
SHEET DATA:
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As
of
April
30, 2009
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As
of
July
31,
2008
(Audited)
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||||||
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(Unaudited)
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||||||||
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Current
assets
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$
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6,854
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$
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1,387
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||||
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Total
assets
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$
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587,539
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$
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341,708
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||||
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Total
liabilities (all current)
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$
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525,876
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$
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377,803
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||||
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Stockholders’
equity (deficit)
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$
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61,663
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$
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(36,095
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)
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|||
An
investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
prospectus before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed. Please note that throughout this prospectus, the words “we”,
“our” or “us” refer to the Company and its subsidiary not to the selling
stockholders.
Risk
Factors Related to Our Business
WE
HAVE A LIMITED OPERATING HISTORY THAT YOU CAN USE TO EVALUATE US, AND THE
LIKELIHOOD OF OUR SUCCESS MUST BE CONSIDERED IN LIGHT OF THE PROBLEMS, EXPENSES,
DIFFICULTIES, COMPLICATIONS AND DELAYS FREQUENTLY ENCOUNTERED BY A SMALL
DEVELOPING COMPANY.
The
Company was incorporated on January 26, 2009, and as such has had
minimal operating revenues to date. Further, the Company has no significant
assets and minimal earnings from sales. The success of the Company is dependent
upon the extent to which it will gain market share. All financial information
and financial projections and other assumptions made by the Company are
speculative and, while based on management's best estimates of projected sales
levels, operational costs, consumer preferences, and the general economic and
competitive health of the Company in the business listing marketplace, there can
be no assurance that the Company will operate profitably or remain
solvent.
WE
WILL REQUIRE FINANCING TO ACHIEVE OUR CURRENT BUSINESS STRATEGY AND OUR
INABILITY TO SECURE REQUIRED FINANCING COULD PROHIBIT US FROM EXECUTING OUR
BUSINESS PLAN AND CAUSE US TO SLOW DOWN OUR EXPANSION OF
OPERATIONS.
Based on
the development stage of the Company and its operational plan, management
believes that the Company will incur operating losses in the foreseeable
future.. Management has entered into a definitive agreement with Dutchess
Capital on terms that are acceptable. However, access to the investment fund is
predicated on the market for the Company’s stock and therefore the Company
cannot issue assurances that our shareholders will not be diluted by investment
of such capital, or to the extent of the dilution. Also, we cannot assure that
securities issued in exchange for such capital will not be sold on terms more
favorable than those of the shares sold in this or other offerings. The
availability of such funding is subject to credit, economic, market and legal
constraints. The inability to secure required capital from the fund could have a
material adverse effect on our business, operation results, or financial
condition. Additionally, there are no guarantees that any additional
financing can be obtained.
IF
WE ARE UNABLE TO ESTABLISH A LARGE USER BASE WE MAY HAVE DIFFICULTY ATTRACTING
ADVERTISERS TO OUR WEB SITE AND GENERATING MEMBERSHIP FEES, WHICH WILL HINDER
OUR ABILITY TO GENERATE REVENUES, WHICH MAY AFFECT OUR ABILITY TO EXPAND OUR
BUSINESS OPERATIONS AND OUR USER BASE.
An
integral part of our business plan and marketing strategy requires us to
establish a large user base. We will only be able to attract additional
advertisers to our web site and obtain sufficient membership fees if we can
obtain a large enough user base. The number of users necessary to attract
advertisers will be determined though discussions with the potential advertisers
and their input as to whether we can obtain revenues from advertisements based
upon the total members at that time. If for any reason our web site is
ineffective at attracting consumers or if we are unable to continue to develop
and update our web site to keep consumers satisfied with our service, our user
base may decrease and our ability to generate revenues may decline.
IN ORDER TO IMPLEMENT OUR BUSINESS
PLAN, WE WILL REQUIRE OUR USERS TO PAY FEES FOR OUR SERVICES. IF OUR USERS ARE
NOT WILLING TO PAY FOR THESE SERVICES, WE WILL BE FORCED TO SUSPEND AND
EVENTUALLY TO CEASE OUR BUSINESS ACTIVITIES.
In order
to implement our business plan, we will require our users to pay monthly fees
for the use of our services. We cannot guarantee that either our prospective
users will be willing to pay for our services. If we are unable to generate
sufficient revenues from our user fees, we will be forced to suspend and
possible cease all operations.
OUR MARKET IS CHARACTERIZED BY RAPID
TECHNOLOGICAL CHANGE, AND IF WE FAIL TO DEVELOP AND MARKET NEW TECHNOLOGIES
RAPIDLY, WE MAY NOT BECOME PROFITABLE IN THE FUTURE.
The
internet and the online commerce industry are characterized by rapid
technological change that could render our existing web site obsolete. The
development of our web site entails significant technical and business risks. We
can give no assurance that we will successfully use new technologies effectively
or adapt our web site to customer requirements or needs. If our management is
unable, for technical, legal, financial, or other reasons, to adapt in a timely
manner in response to changing market conditions or customer requirements, we
may never become profitable.
WE
WILL ENCOUNTER INTENSIVE COMPETITION. WE ARE IN NEED OF
FINANCING.
Short-term
and/or long-term competition may become intense once the Company launches its
business beyond development stage. Although the Company's financial projections
assume that the industry will generate competition, there can be no assurances
on how any level of competition may impact the financial forecasts and
projections made by management. Some competitors may include large publicly
funded companies. Some of these potential competitors have greater financial and
business resources than the Company. The Company believes that it will be able
to effectively compete with these larger entities but there can be no assurances
that it will be able to do so.
The lack
of adequate funding may adversely affect the Company’s ability to meet its
short-term objectives. The Company requires financing to expand its operations,
maintain public awareness of its products/services and provide working capital
for the anticipated growth of the Company. There can be no assurance that
all portions of its financing will be available or, if available that the terms
thereof will be attractive to the Company. The lack of additional financing may
adversely affect the Company's ability to meet its objectives.
OUR
MANAGEMENT TEAM HOLDS MAJORITY SHARES OF THE COMPANY AND THERE IS CONFLICT OF
INTEREST WHEN MAKING DECISIONS.
Management
will have the right, assuming the ownership of the Company does not change, to
perpetuate their status as officers and directors and therefore conduct the
business and affairs of the Company. The terms of any employment
agreements or other agreements between the Company and its officers were not the
result of any arm's length bargaining or negotiation, and such transactions
involve inherent conflicts of interest. There is no assurance that such
transactions are or will be favorable to the Company due to the lack of arm's
length bargaining. The Board of Directors, does however, believe that
such agreements and arrangements are fair to the Company and its
shareholders. The Company has a policy that it will not enter into a
business combination with any entity in which any member of management serves as
an officer, director or partner, or in which such person or such person's
affiliates or associates hold any ownership interest. If there is any
related party transaction, however remote, it would be submitted for approval by
an independent quorum of the Board of Directors and the proposed transaction
would be submitted to the shareholders for prior ratification in an
appropriate manner.
THERE
IS MINIMAL HISTORICAL BASIS FOR MANAGEMENT'S OPINION.
The
Company has a limited operating history. Accordingly, there is only a minimal
basis, other than the judgment of management, upon which to estimate the volume
of sales or the amount of revenues, which the Company's planned operations may
generate. Management's judgment regarding these estimates is based, in part,
upon research into the current state of the listing service marketplace.
Investors for the shares should be aware that conditions and circumstances
beyond the control of management may result in substantial differences between
the projected and actual financial results for the Company.
THE
COMPANY IS DEPENDENT ON KEY PERSONNEL.
The
Company is dependent upon its experienced management team, including its CEO,
Mark Lundquist, and President, Interim CFO & COO, John Maddox. The loss of
any of their services could negatively impact the Company, as there is a risk
that their services could not be replaced. Without these services, the growth,
progress, and overall success of the Company may be adversely
affected.
THERE
IS LIMITED LIABILITY OF MANAGEMENT AND IT MAY REQUIRE THE COMPANY TO INDEMNIFY
ITS OFFICERS AND DIRECTORS.
The
Company has adopted provisions to its Articles of Incorporation and bylaws,
which limit the liability of its officers and directors and provide for
indemnification by the Company of its officers and directors to the fullest
extent permitted by Nevada corporate law. Such law generally provides
that its officers and directors shall have no personal liability to the Company
or its shareholders for monetary damages for breaches of their fiduciary duties
as directors, except for breaches of their duties of loyalty, acts or omissions
not in good faith or which involve intentional misconduct or knowing violation
of the law, acts involving unlawful payment of dividends or unlawful stock
purchases or redemptions, or any transaction from which a director derives an
improper personal benefit. Such provisions substantially limit the shareholders'
ability to hold officers and directors liable for breaches of fiduciary duty,
and may require the Company to indemnify its officers and
directors.
OUR
ABILITY TO CONTINUE DEPENDS UPON ADDITIONAL FUNDING.
We are a
development stage company that has generated minimal revenues. For the period
from inception to July 31, 2008, we have incurred a net loss of $36,095, and for
the period from inception to April 30, 2009, we have incurred a net loss of
$572,792. If we cannot generate sufficient revenues from our services or obtain
sufficient funding, we may not be able to implement our business plan and may be
forced to cease our business activities.
THE
COMPANY HAS NOT PAID OR DECLARED ANY DIVIDENDS, NOR, DOES IT ANTICIPATE PAYING
ANY DIVIDENDS IN THE FORESEEABLE FUTURE.
The
Company has not paid or declared any dividends, nor, by reason of its present
financial status and its contemplated financial requirements, does it anticipate
paying any dividends in the foreseeable future. The future payment of dividends
by the Company on its Common Stock, if any, rests within the sole discretion of
the Company's board of directors and will depend, on among other things, the
Company's earnings, its capital requirements and its financial condition as well
as other relevant factors.
OUR
ARTICLES OF INCORPORATION PROVIDE FOR INDEMNIFICATION OF OFFICERS AND DIRECTORS
AT OUR EXPENSE AND LIMIT THEIR LIABILITY WHICH MAY RESULT IN A MAJOR COST TO US
AND HURT THE INTERESTS OF OUR SHAREHOLDERS BECAUSE CORPORATE RESOURCES MAY BE
EXPENDED FOR THE BENEFIT OF OFFICERS AND/OR DIRECTORS.
Our
articles of incorporation and applicable Nevada law provide for the
indemnification of our directors, officers, employees, and agents, under certain
circumstances, against attorney's fees and other expenses incurred by them in
any litigation to which they become a party arising from their association with
or activities on our behalf. We will also bear the expenses of such
litigation for any of our directors, officers, employees, or agents, upon such
person's written promise to repay us if it is ultimately determined that any
such person shall not have been entitled to indemnification. This
indemnification policy could result in substantial expenditures by us which we
will be unable to recoup.
We have
been advised that, in the opinion of the SEC, indemnification for liabilities
arising under federal securities laws is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification for liabilities arising under federal securities laws, other
than the payment by us of expenses incurred or paid by a director, officer
or controlling person in the successful defense of any action, suit or
proceeding, is asserted by a director, officer or controlling person in
connection with the securities being registered, we will (unless in the opinion
of our counsel, the matter has been settled by controlling precedent) submit to
a court of appropriate jurisdiction, the question whether indemnification by us
is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue. The legal process relating to this
matter if it were to occur is likely to be very costly and may result in us
receiving negative publicity, either of which factors is
likely to materially reduce the market and price for our shares, if such a
market ever develops.
Risk
Factors Related to Our Securities, the Equity Line of Credit and This
Offering
WE
ARE REGISTERING AN AGGREGATE OF 5,725,000 SHARES OF COMMON STOCK, INCLUDING
2,000,000 SHARES OF COMMON STOCK TO BE ISSUED UNDER THE EQUITY LINE OF CREDIT.
THE SALE OF SUCH SHARES COULD DEPRESS THE MARKET PRICE OF OUR COMMON
STOCK.
We are
registering an aggregate of 5,725,000 shares of common stock, including
2,000,000 shares of common stock under the registration statement of which this
prospectus forms a part for issuance pursuant to the Equity Line of Credit. The
sale of these shares into the public market by Dutchess could depress the market
price of our common stock.
As of July 7, 2009, there were 26,128,000 shares of our common
stock issued and outstanding.
ASSUMING
WE UTILIZE THE MAXIMUM AMOUNT AVAILABLE UNDER THE EQUITY LINE OF CREDIT,
EXISTING SHAREHOLDERS COULD EXPERIENCE SUBSTANTIAL DILUTION UPON THE ISSUANCE OF
COMMON STOCK.
Our
Equity Line of Credit with Dutchess contemplates the potential future issuance
and sale of up to $25,000,000 of our common stock to Dutchess subject to certain
restrictions and obligations. The following table is an example of the number of
shares that could be issued at various prices assuming we utilize the maximum
amount available under the Equity Line of Credit. These examples assume
issuances at 95% of a market price of $0.65 per share and at 10%, 25% and 50%
below $0.65 per share.
The
following table should be read in conjunction with the footnotes immediately
following the table.
|
Percent
below current market price
|
Price
per share (1)
|
Number
of shares issuable (2)
|
Shares
outstanding
(3)
|
Percent
of outstanding
shares
(4)
|
|
5%
|
$0.6175
|
40,485,830
|
70,268,830
|
55.57%
|
|
10%
|
$0.5850
|
42,735,043
|
72,518,043
|
56.90%
|
|
25%
|
$0.4875
|
51,282,051
|
81,065,051
|
61.30%
|
|
50%
|
$0.3250
|
76,923,077
|
106,706,077
|
70.38%
|
(1)
Represents purchase prices equal to 95% of $0.65 per share and potential
reductions thereof of 10%, 25% and 50%.
(2)
Represents the number of shares issuable if the entire commitment of $25,000,000
under the Equity Line of Credit were drawn down at the indicated purchase
prices.
(3)
Based on 29,783,000 shares, including 26,128,000 shares of common stock
outstanding at July 7, 2009 and 3,655,000 shares issuable to certain
shareholders pursuant to consulting agreements.
(4)
Percentage of the total outstanding shares of common stock after the issuance of
the shares indicated, without considering any contractual restriction on the
number of shares the selling shareholder may own at any point in time or other
restrictions on the number of shares we may issue.
WE
MAY NOT HAVE ACCESS TO THE FULL AMOUNT UNDER THE EQUITY LINE.
As of
July 7, 2009, the closing market price of our common stock is $0.65. There is no
assurance that the market price of our common stock will increase substantially
in the near future. The entire commitment under the Equity Line of Credit is
$25,000,000. Presumably we will maintain the market price of our common stock at
$0.65, we need to issue 40,485,830 shares of common stock to Dutchess (at a 5%
discount) in order to have access to the full amount under the Equity Line of
Credit.
DUTCHESS
WILL PAY LESS THAN THE THEN-PREVAILING MARKET PRICE FOR OUR COMMON
STOCK.
The
common stock to be issued to Dutchess pursuant to the Investment Agreement will
be purchased at a seven percent discount to the lowest closing “best bid” price
(the highest posted bid price) of the common stock during the five consecutive
trading days immediately following the date of our notice to Dutchess of our
election to put shares pursuant to the Investment Agreement. Dutchess has a
financial incentive to sell our common stock immediately upon receiving the
shares to realize the profit equal to the difference between the discounted
price and the market price. If Dutchess sells the shares, the price of our
common stock could decrease. If our stock price decreases, Dutchess may have a
further incentive to sell the shares of our common stock that it holds. These
sales may have a further impact on our stock price.
THERE
MAY NOT BE SUFFICIENT TRADING VOLUME IN OUR COMMON STOCK TO PERMIT US TO
GENERATE ADEQUATE FUNDS FROM THE EXERCISE OF OUR PUT.
The
Investment Agreement provides that the dollar value that we will be permitted to
put to Dutchess will be either: (A) 200% of the average daily volume in the US
market of the common stock for the three trading days prior to the notice of our
put, multiplied by the average of the three daily closing bid prices immediately
preceding the date of the put, or (B) $300,000. If the average daily
trading volume in our common stock is too low, it is possible that we would only
be permitted to exercise a put for $300,000, which may not provide adequate
funding for our planned operations.
OUR
COMMON STOCK IS THINLY TRADED, SO YOU MAY BE UNABLE TO SELL AT OR NEAR ASK
PRICES OR AT ALL IF YOU NEED TO SELL YOUR SHARES TO RAISE MONEY OR OTHERWISE
DESIRE TO LIQUIDATE YOUR SHARES.
Our
common stock has historically been sporadically or “thinly-traded” on the OTCBB,
meaning that the number of persons interested in purchasing our common stock at
or near ask prices at any given time may be relatively small or nonexistent.
This situation is attributable to a number of factors, including the fact that
we are a small company which is relatively unknown to stock analysts, stock
brokers, institutional investors and others in the investment community that
generate or influence sales volume, and that even if we came to the attention of
such persons, they tend to be risk-averse and would be reluctant to follow an
unproven company such as ours or purchase or recommend the purchase of our
shares until such time as we became more seasoned and viable.
As a
consequence, there may be periods of several days or more when trading activity
in our shares is minimal or non-existent, as compared to a mature issuer which
has a large and steady volume of trading activity that will generally support
continuous sales without an adverse effect on share price. It is possible
that a broader or more active public trading market for our common stock will
not develop or be sustained, or that current trading levels will
continue.
THE
SELLING SHAREHOLDER MAY ENGAGE IN SHORT SALES. SIGNIFICANT SHORT SALES OF OUR
COMMON STOCK WILL CAUSE THE DECLINE OF OUR SHARE PRICE
In
connection with the distribution of the common stock or otherwise, the selling
shareholder may enter into hedging transactions with broker-dealers or other
financial institutions. In connection with such transactions, broker-dealers or
other financial institutions may engage in short sales of shares in the course
of hedging the positions they assume with the selling shareholder. If there are
significant short sales of our stock, the price decline that would result from
this activity will cause our share price to decline which in turn may cause long
holders of our stock to sell their shares thereby contributing to sales of stock
in the market. If there is an imbalance on the sell side of the market our stock
the price will decline. It is not possible to predict if the circumstances where
by a short sales could materialize or to what our share price could drop. In
some companies that have been subjected to short sales their stock price has
dropped to near zero. We cannot provide any assurances that this situation will
not happen to us.
THE
MARKET PRICE FOR OUR COMMON STOCK IS PARTICULARLY VOLATILE GIVEN OUR STATUS AS A
RELATIVELY UNKNOWN COMPANY WITH A SMALL AND THINLY TRADED PUBLIC FLOAT, LIMITED
OPERATING HISTORY AND LACK OF NET REVENUES WHICH COULD LEAD TO WIDE FLUCTUATIONS
IN OUR SHARE PRICE. THE PRICE AT WHICH YOU PURCHASE OUR COMMON STOCK MAY
NOT BE INDICATIVE OF THE PRICE THAT WILL PREVAIL IN THE TRADING
MARKET.
The
market for our common stock is characterized by significant price volatility
when compared to seasoned issuers, and we expect that our share price will
continue to be more volatile than a seasoned issuer for the indefinite future.
In fact, during the period from June 10, 2009 (first date of trading)
until July 7, 2009, the high and low sale prices of a share of our common stock
were $0.75 and $0.10, respectively. The volatility in our share price is
attributable to a number of factors. First, as noted above, the shares of
our common stock are sporadically and/or thinly traded. As a consequence
of this lack of liquidity, the trading of relatively small quantities of shares
by our shareholders may disproportionately influence the price of those shares
in either direction. The price for our shares could, for example, decline
precipitously in the event that a large number of shares of our common stock are
sold on the market without commensurate demand, as compared to a seasoned issuer
which could better absorb those sales without adverse impact on its share
price.
Secondly,
we are a speculative or “risky” investment due to our limited operating history
and lack of profits to date, and uncertainty of future market acceptance for our
products and services. As a consequence of this enhanced risk, more
risk-adverse investors may, under the fear of losing all or most of their
investment in the event of negative news or lack of progress, be more inclined
to sell their shares on the market more quickly and at greater discounts than
would be the case with the stock of a seasoned issuer.
YOU
MAY BE UNABLE TO SELL YOUR COMMON STOCK AT OR ABOVE YOUR PURCHASE PRICE, WHICH
MAY RESULT IN SUBSTANTIAL LOSSES TO YOU.
The
following factors may add to the volatility in the price of our common stock:
actual or anticipated variations in our quarterly or annual operating results;
government regulations, announcements of significant acquisitions, strategic
partnerships or joint ventures; our capital commitments; and additions or
departures of our key personnel. Many of these factors are beyond our
control and may decrease the market price of our common stock, regardless of our
operating performance. We cannot make any predictions or projections as to
what the prevailing market price for our common stock will be at any time,
including as to whether our common stock will sustain its current market price,
or as to what effect that the sale of shares or the availability of common stock
for sale at any time will have on the prevailing market price.
VOLATILITY
IN OUR COMMON STOCK PRICE MAY SUBJECT US TO SECURITIES LITIGATION.
The
market for our common stock is characterized by significant price volatility
when compared to seasoned issuers, and we expect that our share price will
continue to be more volatile than that of a seasoned issuer for the indefinite
future. In the past, plaintiffs have often initiated securities class
action litigation against a company following periods of volatility in the
market price of its securities. We may in the future be the target of
similar litigation. Securities litigation could result in substantial
costs and liabilities and could divert management’s attention and
resources.
SHARES
ELIGIBLE FOR FUTURE SALE BY OUR CURRENT SHAREHOLDERS MAY ADVERSELY AFFECT OUR
STOCK PRICE.
To date,
we have had a very limited trading volume in our common stock. As long as
this condition continues, the sale of a significant number of shares of common
stock at any particular time could be difficult to achieve at the market prices
prevailing immediately before such shares are offered. In addition, sales
of substantial amounts of common stock, including shares issued upon the
exercise of outstanding options and warrants, under Securities and Exchange
Commission Rule 144 or otherwise could adversely affect the prevailing market
price of our common stock and could impair our ability to raise capital at that
time through the sale of our securities.
OUR
ISSUANCE OF ADDITIONAL COMMON STOCK IN EXCHANGE FOR SERVICES OR TO REPAY DEBT
WOULD DILUTE YOUR PROPORTIONATE OWNERSHIP AND VOTING RIGHTS AND COULD HAVE A
NEGATIVE IMPACT ON THE MARKET PRICE OF OUR COMMON STOCK.
Our Board
of Directors may issue shares of common stock to pay for debt or services,
without further approval by our stockholders based upon such factors as our
Board may deem relevant at that time. We have issued shares of our common
stock in payment for services in the past. It is likely that we will issue
additional securities to pay for services and reduce debt in the future.
It is possible that we will issue additional shares of common stock under
circumstances we may deem appropriate at the time.
THE
ELIMINATION OF MONETARY LIABILITY AGAINST OUR DIRECTORS, OFFICERS AND EMPLOYEES
UNDER OUR ARTICLES OF INCORPORATION AND THE EXISTENCE OF INDEMNIFICATION RIGHTS
FOR OUR DIRECTORS, OFFICERS AND EMPLOYEES MAY RESULT IN SUBSTANTIAL EXPENDITURES
BY HALBERD AND MAY DISCOURAGE LAWSUITS AGAINST OUR DIRECTORS, OFFICERS AND
EMPLOYEES.
Our
Articles of Incorporation contain provisions which eliminate the liability of
our directors for monetary damages to Halberd and our shareholders. Our
Bylaws also require us to indemnify our officers and directors. We may also have
contractual indemnification obligations under our agreements with our directors,
officers and employees. The foregoing indemnification obligations could cause us
to incur substantial expenditures to cover the cost of settlement or damage
awards against directors, officers and employees, which we may be unable to
recoup. These provisions and resultant costs may also discourage us from
bringing a lawsuit against directors, officers and employees for breaches of
their fiduciary duties, and may similarly discourage the filing of derivative
litigation by our shareholders against our directors, officers and employees
even though such actions, if successful, might otherwise benefit us and our
shareholders.
IF
WE FAIL TO REMAIN CURRENT ON OUR REPORTING REQUIREMENTS, WE COULD BE REMOVED
FROM THE OTC BULLETIN BOARD, WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS TO
SELL OUR SECURITIES AND THE ABILITY OF SHAREHOLDERS TO SELL THEIR SECURITIES IN
THE SECONDARY MARKET.
Companies
trading on the OTC Bulletin Board, such as Halberd, must be reporting issuers
under Section 12 of the Exchange Act, and must be current in their reports under
Section 13 of the Exchange Act, in order to maintain price quotation privileges
on the OTC Bulletin Board. If we fail to remain current on our reporting
requirements, we could be removed from the OTC Bulletin Board. As a
result, the market liquidity for our securities could be adversely affected by
limiting the ability of broker-dealers to sell our securities and the ability of
shareholders to sell their securities in the secondary market.
OUR
COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH IS SUBJECT TO RESTRICTIONS ON
MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES.
If our
common stock becomes tradable in the secondary market, we will be subject to the
penny stock rules adopted by the Securities and Exchange Commission that require
brokers to provide extensive disclosure to their customers prior to executing
trades in penny stocks. These disclosure requirements may cause a reduction in
the trading activity of our common stock, which in all likelihood would make it
difficult for our shareholders to sell their securities.
Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system). Penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to
deliver a standardized risk disclosure document that provides information about
penny stocks and the risks in the penny stock market. The broker-dealer also
must provide the customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the
transaction, and monthly account statements showing the market value of each
penny stock held in the customer’s account. The broker-dealer must also make a
special written determination that the penny stock is a suitable investment
for the purchaser and receive the purchaser’s written agreement to the
transaction. These requirements may have the effect of reducing the level of
trading activity, if any, in the secondary market for a security that becomes
subject to the penny stock rules. The additional burdens imposed upon
broker-dealers by such requirements may discourage broker-dealers from effecting
transactions in our securities, which could severely limit their market price
and liquidity of our securities. These requirements may restrict the ability of
broker-dealers to sell our common stock and may affect your ability to resell
our common stock.
We will
not receive any proceeds from the sale of common stock offered by certain
shareholders and Dutchess. However, we will receive proceeds from the sale
of our common stock to Dutchess pursuant to the Investment Agreement. The
proceeds from our exercise of the put option pursuant to the Investment
Agreement will be used for working capital and general corporate
expenses.
We
propose to expend these proceeds as follows:
|
Proceeds
if 100%, or 2,000,000 shares sold
|
Proceeds
if 50% or 1,000,000 shares sold
|
|||||||
|
Gross
proceeds (1)
|
$ | 1,209,000 | $ | 604,500 | ||||
|
Offering
expenses:
|
||||||||
|
Marketing
|
$ | 650,000 | $ | 190,000 | ||||
|
Payroll
|
$ | 250,000 | $ | 180,000 | ||||
|
Facilities
|
$ | 50,000 | $ | 50,000 | ||||
|
Furniture
& Equipment
|
$ | 15,000 | $ | 15,000 | ||||
|
Insurances
|
$ | 30,000 | $ | 30,000 | ||||
|
Contract
Labor
|
$ | 60,500 | $ | 60,500 | ||||
|
Legal
fees
|
$ | 73,000 | $ | 3,500 | ||||
|
Printing
of prospectus
|
$ | 500 | $ | 500 | ||||
|
Accounting
and auditing fees
|
$ | 70,000 | $ | 70,000 | ||||
|
State
securities fees
|
||||||||
|
Transfer
agent fees
|
||||||||
|
Miscellaneous
expenses
|
$ | 10,000 | $ | 5,000 | ||||
|
Total
offering expenses
|
||||||||
|
Net
proceeds
|
$ | 1,209,000 | $ | 604,500 | ||||
(1)
Reflecting a 7% discount to Dutchess, and assuming the offering price is $0.65
per share.
Working
capital needs include accounts payable and inventory.
The
following table sets forth the name of the selling shareholder, the number of
shares of common stock owned, the number of shares of common stock registered by
this prospectus and the number and percent of outstanding shares that the
selling shareholder will own after the sale of the registered shares, assuming
all of the shares are sold. The information provided in the table and
discussions below has been obtained from the selling shareholder. The
selling shareholder may have sold, transferred or otherwise disposed of, or may
sell, transfer or otherwise dispose of, at any time or from time to time since
the date on which it provided the information regarding the shares, all or a
portion of the shares of common stock beneficially owned in transactions exempt
from the registration requirements of the Securities Act. As used in this
prospectus, “selling shareholder” includes donees, pledges, transferees or other
successors in interest selling shares of our common stock received from the
named selling shareholder as a gift, pledge, distribution or other non
sale-related transfer.
Beneficial
ownership is determined in accordance with Rule 13d-3(d) promulgated by the
Securities and Exchange Commission under the Exchange Act. Unless
otherwise noted, each person or group identified possesses sole voting and
investment power with respect to the shares, subject to community property laws
where applicable. As of July 7, 2009, there were 26,128,000 shares of our common
stock issued and outstanding.
On April
30, 2009, we previously entered into an Investment Agreement with Dutchess to
raise up to $25,000,000 through an equity line of credit. Except as
described above, to our knowledge Dutchess has not had a material relationship
with us during the last three years, other than as an owner of our common stock
or other securities.
On July
2, 2009, we entered into a Chief of Staff Services Extension Agreement with
River Star, LLC, by which River Star would provide various consulting services
in exchange for $7,500 per month through the end of our 2010 fiscal year and
1,000,000 shares of our common stock. The 1,000,000 shares will be issued
in sixteen (16) equal monthly installments beginning August 2009 and are being
registered in this registration statement.
On July
2, 2009, we entered into a Services Agreement with Awecomm Technologies, LLC
(“Awecomm”), by which Awecomm would provide webhosting and development services
in exchange for 804,000 shares of our common stock. The 804,000 shares will be
issued to Awecomm up to 43,855 per month beginning August 2009 and are being
registered in this registration statement
On July
2, 2009, we entered into a Services Agreement with Issuers Capital Advisors,
LLC, by which Issuers Capital Advisor LLC would provide Investor and Public
Relations services in exchange for 456,000 shares of our common stock. The
456,000 shares will be issued to Issuers Capital Advisor LLC up to
38,000 per month beginning August 2009 and are being registered in this
registration statement
On July
2, 2009, we entered into a Services Agreement with Marx Layne, Inc., by which
Marx Layne, Inc. would provide marketing and content development
services in exchange for 395,000 shares of our common stock. The 395,000
shares will be issued to Marx Layne, Inc. up to 32,917 per month beginning
August 2009 and are being registered in this registration
statement.
In
addition, we are registering 10,000 shares each which are held by the
members of our Board of Directors.
|
Beneficial
Ownership of Common Shares
Prior
to this Offering
|
Number
of Shares
to
be Sold
Under
this Prospectus (1)
|
Beneficial
Ownership of Common Shares
after
this Offering
|
|||
|
Selling
Shareholder
|
Number
of Shares
|
Percent
of Class
|
Number
of Shares (2)
|
Percent
of Class (3)
|
|
|
Dutchess
Private Equities Fund, Ltd. (4)
|
0
|
--
|
2,000,000
|
0
|
--
|
|
Anslow
& Jaclin, LLP (5)
|
0
|
--
|
1,000,000
|
0
|
--
|
|
River
Star, LLC (6) (11)
|
1,010,000
|
3.87%
(7)
|
1,010,000
|
1,000,000
|
3.33%
|
|
Awecomm
Technologies, LLC (8)
|
0
|
--
|
804,000
|
0
|
--
|
|
Issuers
Capital Advisors, LLC (9)
|
0
|
--
|
456,000
|
0
|
--
|
|
Marx
Layne, Inc. (10)
|
0
|
--
|
395,000
|
0
|
--
|
|
John
C. Maddox
|
13,010,000
|
49.79%
|
10,000
|
13,000,000
|
40.90%
|
|
Mark
Lundquist
|
4,010,000
|
15.35%
|
10,000
|
4,000,000
|
12.59%
|
|
Leland
Thomas
|
2,806,000
|
10.74%
|
10,000
|
2,796,000
|
8.80%
|
|
Bruce
Nyberg
|
30,000
|
*
|
10,000
|
20,000
|
*
|
|
Lizabeth
Ardisana
|
10,000
|
*
|
10,000
|
0
|
--
|
|
Michael
Burns
|
10,000
|
*
|
10,000
|
0
|
--
|
|
Total
|
20,886,000
|
79.94%
|
5,725,000
|
20,816,000
|
65.49%
|
* less
than 1%
|
(1)
|
The
number of shares set forth in the table represents an estimate of the
number of common shares to be offered by the selling shareholder. We
have assumed the sale of all of the common shares offered under this
prospectus will be sold. However, as the selling shareholder can offer
all, some or none of its common stock, no definitive estimate can be given
as to the number of shares that the selling shareholder will offer or sell
under this prospectus.
|
|
(2)
|
These
numbers assume the selling shareholder sells all of its shares after the
completion of the offering.
|
|
(3)
|
Based
on 31,783,000 shares of common stock outstanding after the completion of
the offering.
|
|
(4)
|
Dutchess
is a Cayman Island exempted corporation. Michael Novielli and
Douglas H. Leighton are directors of Dutchess with voting and investment
power over the shares.
|
|
(5)
|
Anslow
& Jaclin, LLP is our legal counsel. We will issue 62,500 shares of our
common stock for its legal services per month for sixteen (16) months
beginning August 2009. Richard I. Anslow is the managing
partner of Anslow & Jaclin, LLP and has voting and dispositive control
over securities held by Anslow & Jaclin,
LLP.
|
|
(6)
|
The
1,010,000 shares registered herewith includes 1,000,000 shares issuable
under the Chief of Staff Extension Services Agreement and 10,000 shares
issued for the services rendered by Nicholas A. Coco as a member of our
Board of Directors. Nicholas A. Cocco has voting and dispositive control
over securities held by River Star, LLC. He is a member of our
Board of Directors.
|
|
(7)
|
Based
on 26,128,000 shares of common stock outstanding before the completion of
this offering.
|
|
(8)
|
Janet
Nawrocki has voting and dispositive control over securities held by
Awecomm Technologies, LLC.
|
|
(9)
|
Gregg
Linn has voting and dispositive control over securities held by
Issuers Capital Advisors, LLC.
|
|
(10)
|
Michael
Szudarek has voting and dispositive control over securities held by
Marx Layne, Inc.
|
The
purpose of this prospectus is to permit the selling shareholder to offer and
sell up to an aggregate of 5,725,000 shares at such times and at such places as
they choose. The decision to sell any shares is within the sole discretion
of the holder thereof.
The
distribution of the common stock by a selling shareholder may be effected from
time to time in one or more transactions. Any of the common stock may be
offered for sale, from time to time, by a selling shareholder, or by permitted
transferees or successors of the selling shareholder, or otherwise, at prices
and on terms then obtainable, at fixed prices, at prices then prevailing at the
time of sale, at prices related to such prevailing prices, or in negotiated
transactions at negotiated prices or otherwise. The common stock may be
sold by one or more of the following:
|
·
|
On
the OTCBB or any other national common stock exchange or automated
quotation system on which our common stock is traded, which may involve
transactions solely between a broker-dealer and its customers which are
not traded across an open market and block
trades.
|
|
·
|
Through
one or more dealers or agents (which may include one or more
underwriters), including, but not limited
to:
|
|
·
|
Block
trades in which the broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this
prospectus.
|
|
·
|
Purchases
by a broker or dealer as principal and resale by such broker or dealer for
its account pursuant to this
prospectus.
|
|
·
|
Ordinary
brokerage transactions.
|
|
·
|
Transactions
in which the broker solicits
purchasers
|
|
·
|
Directly
to one or more purchasers.
|
|
·
|
A
combination of these methods.
|
Dutchess
and any broker-dealers who act in connection with the sale of its shares are
“underwriters” within the meaning of the Securities Act, and any discounts,
concessions or commissions received by them and profit on any resale of the
shares as principal may be deemed to be underwriting discounts, concessions and
commissions under the Securities Act.
In
connection with the distribution of the common stock or otherwise, the selling
shareholder may enter into hedging transactions with broker-dealers or other
financial institutions. In connection with such transactions, broker-dealers or
other financial institutions may engage in short sales of shares in the course
of hedging the positions they assume with the selling shareholder. A
selling shareholder may also sell shares short and redeliver the shares to close
out such short positions. A selling shareholder may also enter into options or
other transactions with broker-dealers or other financial institutions which
require the delivery to such broker-dealers or other financial institutions of
the common stock, which shares such broker-dealers or financial institutions may
resell pursuant to this prospectus, as supplemented or amended to reflect that
transaction. A selling shareholder may also pledge the common stock registered
hereunder to a broker-dealer or other financial institution and, upon a default,
such broker-dealer or other financial institution may affect sales of the
pledged shares pursuant to this prospectus, as supplemented or amended to
reflect such transaction. In addition, any common stock covered by this
prospectus that qualifies for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than pursuant to this prospectus.
The
selling shareholder or its underwriters, dealers or agents may sell the common
stock to or through underwriters, dealers or agents, and such underwriters,
dealers or agents may receive compensation in the form of discounts or
concessions allowed or reallowed. Underwriters, dealers, brokers or other agents
engaged by the selling shareholder may arrange for other such persons to
participate. Any fixed public offering price and any discounts and concessions
may be changed from time to time. Underwriters, dealers and agents who
participate in the distribution of the common stock may be deemed to be
underwriters within the meaning of the Securities Act, and any discounts or
commissions received by them or any profit on the resale of shares by them may
be deemed to be underwriting discounts and commissions thereunder. The proposed
amounts of the common stock, if any, to be purchased by underwriters and the
compensation, if any, of underwriters, dealers or agents will be set forth in a
prospectus supplement.
Unless
granted an exemption by the Commission from Regulation M under the Exchange Act,
or unless otherwise permitted under Regulation M, a selling shareholder
will not engage in any stabilization activity in connection with our
common stock, will furnish each broker or dealer engaged by a selling
shareholder and each other participating broker or dealer the number of copies
of this prospectus required by such broker or dealer, and will not bid for or
purchase any common stock of our or attempt to induce any person to purchase any
of the common stock other than as permitted under the Exchange Act.
We will
not receive any proceeds from the sale of these shares of common stock offered
by the selling shareholder. We shall use our best efforts to prepare and file
with the Commission such amendments and supplements to the registration
statement and this prospectus as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act with
respect to the disposition of the common stock covered by the registration
statement for the period required to effect the distribution of such common
stock.
We are
paying certain expenses (other than commissions and discounts of underwriters,
dealers or agents) incidental to the offering and sale of the common stock to
the public, which are estimated to be approximately $20,000. If we are required
to update this prospectus during such period, we may incur additional expenses
in excess of the amount estimated above.
In order
to comply with certain state securities laws, if applicable, the common stock
will be sold in such jurisdictions only through registered or licensed brokers
or dealers. In certain states the shares of common stock may not be sold unless
they have been registered or qualify for sale in such state or an exemption from
registration or qualification is available and is complied with.
General
Our
authorized capital stock consists of 120,000,000 shares of common stock, par
value $0.001 per share, and 10,000,000 shares of preferred stock, par value
$0.001 per share. We have not yet issued any preferred stock. There are no
provisions in our charter or by-laws that would delay, defer or prevent a change
in our control.
Common
Stock
We are
authorized to issue 120,000,000 shares of common stock. Currently we
have 26,128,000 common shares issued and outstanding.
The
holders of our common stock have equal ratable rights to dividends from funds
legally available if and when declared by our Board of Directors and are
entitled to share ratably in all of our assets available for distribution to
holders of common stock upon liquidation, dissolution or winding up of our
affairs. Our common stock does not provide the right to a preemptive,
subscription or conversion rights and there are no redemption or sinking fund
provisions or rights. Our common stock holders are entitled to one
non-cumulative vote per share on all matters on which shareholders may
vote.
All
shares of common stock now outstanding are fully paid for and non-assessable and
all shares of common stock which are being registered pursuant to
this registration statement are fully paid and
non-assessable. We refer you to our Articles of Incorporation, Bylaws
and the applicable statutes of the state of Nevada for a more complete
description of the rights and liabilities of holders of our
securities. All material terms of our common stock have been
addressed in this section.
Holders
of shares of our common stock do not have cumulative voting rights, which means
that the holders of more than 50% of the outstanding shares, voting for the
election of directors, can elect all of the directors to be elected, if they so
choose, and, in that event, the holders of the remaining shares will not be able
to elect any of our directors.
Dividends
We have
not paid any cash dividends to shareholders. The declaration of any
future cash dividends is at the discretion of our board of directors and
depends upon our earnings, if any, our capital requirements and
financial position, our general economic conditions, and other pertinent
conditions. It is our present intention not to pay any cash dividends
in the foreseeable future, but rather to reinvest earnings, if any, in our
business operations.
Convertible
Notes
On
November 28, 2007 and January 3, 2008, we entered into convertible promissory
notes with certain investors totaling $300,000. In addition, we issued
1,501 shares to these investors. In January 2009, we entered into stock
conversion agreements with these investors, pursuant to which we issued 2,300
shares of our common stock as conversion of promissory notes dated November 28,
2007 and January 3, 2008 including principal of $300,000 and interest of 23,000
at a conversion price of $133.00 and $500.00 per share,
respectively.
No expert
or counsel named in this prospectus as having prepared or certified any part of
this prospectus or having given an opinion upon the validity of the securities
being registered or upon other legal matters in connection with the registration
or offering of the common stock was employed on a contingency basis, or had, or
is to receive, in connection with the offering, a substantial interest, direct
or indirect, in the registrant or any of its parents or subsidiaries. Nor was
any such person connected with the registrant or any of its parents or
subsidiaries as a promoter, managing or principal underwriter, voting trustee,
director, officer, or employee.
The
consolidated financial statements for the period ended July 31, 2008
included in this prospectus and the registration statement have been audited by
Rehmann Robson, P.C. to the extent and for the periods set forth in their report
appearing elsewhere herein and in the registration statement, and are included
in reliance upon such report given upon the authority of said firm as experts in
auditing and accounting.
Rehmann
Robson, P.C., the Company’s independent registered public accounting firm, has
performed reviews of the unaudited interim consolidated financial statements
included herein. Pursuant to Rule 436(c) of the Securities Act of
1933 (“Act”) their report on these reviews should not be considered a part of
this registration statement nor a “report” within the meaning of sections 7 and
11 of the Act and the independent registered public accounting firm liability
under Section 11 does not extend to it.
CORPORATE
HISTORY AND STRUCTURE
Our
History
We are a
development stage company that was incorporated under the laws of the State of
Nevada on January 26, 2009. On January 28, 2009, we entered into a share
purchase agreement with SellMyBusiness, a corporation established under the laws
of the State of Michigan in August 2007, pursuant to which we acquired all of
the issued and outstanding shares of common stock of SellMyBusiness for
25,058,000 shares of our common stock. As a result, SellMyBusiness became our
wholly-owned subsidiary.
Our
operations are conducted through our wholly owned subsidiary SellMyBusiness
under the name “Sellmybusiness.com®” established on December 3, 2007. To
date, the Company’s activities have been limited to raising capital, obtaining
financing, constructing its website and administrative functions.
Sellmybusiness.com® provides a single web portal for interested parties to find,
buy and sell businesses, real estate and equipment and all the related services
needed to support the transaction, including financing, incorporation,
professional help and additional business resources. Sellmybusiness.com® intends
to support businesses of all sizes and types, including start-ups,
well-established companies, home-based businesses, closely-held companies,
multinational public corporations and franchises. Sellmybusiness.com®’s real
estate listing service assists people to buy, sell, lease or sublease commercial
or residential land and property. Sellmybusiness.com®’s equipment listing
service provides a portal to buy, sell or lease excess inventory, capital
equipment, raw materials, vehicles, aircraft, ships and rail
equipment.
Upon
inception of SellMyBusiness on August 2, 2007, we issued 6,500 shares to John
Maddox as founder shares for no consideration. On November
28, 2007, we issued 2,000 shares to Mark Lundquist as founder shares for no
consideration. On November 28, 2007 and January 3, 2008, we entered
into convertible promissory notes with certain investors totaling of $300,000.
In addition, we issued 1,501 shares to these investors. In January 2009, we
entered into stock conversion agreements with these investors, pursuant to which
we issued 2,300 shares of our common stock as conversion of promissory notes
dated November 28, 2007 and January 3, 2008 including principal of $300,000 and
interest of 23,000 at a conversion price of $133.00 and $500.00 per share,
respectively. In January 2009, we completed an offering in which we sold 228
shares of common stock at $500 per share in connection with our private
placement. Please note that the share numbers in this paragraph are given
before the effectiveness of share exchange agreement dated January 28,
2009.
Overview
SellMyBusiness.com®
(a wholly owned subsidiary of Halberd Corporation) provides a single web portal
for business people to find, buy and sell businesses, real estate and equipment
and all the related services needed to support the transaction, including
financing, incorporation, professional help and additional business
resources. SellMyBusiness.com intends to support businesses of all
sizes and types, including start-ups, well-established companies, home-based
businesses, closely-held companies, multi-national public corporations and
franchises. SellMyBusiness.com’s real estate listing service assists
people to buy, sell, lease or sub-lease commercial and residential land and
property. SellMyBusiness.com’s equipment listing service provides
business people with a portal to buy, sell or lease excess inventory, capital
equipment, raw materials, vehicles, aircraft, ships and rail
equipment. In its first month of operation, the site attracted over
half a million visitors.
Business
Model
The
strategy for SellMyBusiness.com is to become the recognized online total
solution provider for buying or selling a business and everything related to the
transaction. This strategy encompasses the following key
elements:
|
·
|
Listing
businesses for sale with a local, regional, national and international
reach.
|
|
·
|
Listing
real estate for sale or lease, particularly when linked to a business for
sale.
|
|
·
|
Listing
equipment for sale or lease, particularly when the equipment, assets and
inventory are linked to the business for sale.
|
|
·
|
Special
confidential listing service for businesses, real estate and
equipment.
|
|
·
|
Special
pre-qualified buyer service for businesses, real estate and
equipment.
|
|
·
|
Professional
service provider referrals to assist in the purchase, sale, start-up or
operation of a business, such as attorneys, brokers, accountants, business
valuators and consultants.
|
|
·
|
Online
document management system for handling all paperwork involved in the sale
or lease of businesses, real estate and equipment.
|
|
·
|
Business
resources for owners and executives, such as business books, white papers,
and important links.
|
|
·
|
Live
support.
|
|
·
|
Easy-to-navigate,
easy-to-understand website.
|
|
·
|
Multilingual
website versions.
|
|
·
|
Support
for all types of businesses: public corporations, private companies,
franchises, not-for-profits and home-based
businesses.
|
Revenue
is generated from five methods:
|
1)
|
fees
for listing businesses, real estate and equipment for sale or
lease;
|
|
2)
|
membership
registration fees for lead generation for professional service providers
in multiple categories;
|
|
3)
|
registration
fees for broker/dealers to have monthly or annual access rights for
selling or leasing businesses, real estate and
equipment;
|
|
4)
|
website
banner advertising;
|
|
5)
|
affiliate
fees (incorporation services, financing services, Amazon.com book sales,
etc.);
|
Growth is
attained through an aggressive and multi-channel marketing campaign focused on
user demographics. Many Internet-based start-ups and their potential
investors quickly look for IT-related specialists to lead the
company. Although SellMyBusiness.com is an Internet-based firm,
management believes the business is based more heavily on a
“marketing-to-the-proper-user” and “solution provider” model, rather than an
“IT-based” model. The co-founders already have prior experience in
launching web-based companies and implementing sophisticated enterprise and CRM
software. Currently, web development and support is provided by one
of the leading firms in the state, but will be brought inside the company if
deemed appropriate. However, management stresses that
SellMyBusiness.com is a solution provider company for business buyers and
sellers that runs on the web, not a web-based company that happens to provide
solutions for business people.
The
Concept
SellMyBusiness.com
was developed to fill a need in the marketplace. The Internet is gradually
moving from a product and service sales model to a solutions sale model.
SellMyBusiness.com is a complete business solution selling model and provides a
full complement of services needed to support the transition of a business from
one owner to another, addressing the difficulty in finding these services, and
how technology can play a part in providing a total solution.
Unique
Value Propositions
Currently
there are multiple competitive websites acting as repositories for buyers and
sellers of businesses, real estate and equipment, but nearly all only focus on
one of these three elements. Nine unique value propositions make
SellMyBusiness.com significantly different than its competition and place it in
a leadership role in the marketplace.
|
1.
|
Total
Selling Solution. None of the competitive websites merge
all facets of buying or selling a business such as: the sale or purchase
of the business entity and its related commercial property; the sale of
its inventory and all types of equipment, and; assistance in finding
professional help to support the transaction such as attorneys,
accountants, business valuators and financiers. Viewers want
(and need) a condensation of information and sources. Said
another way, the Internet is graduating from product sales to solution
sales. SellMyBusiness.com is the solution sale for
businesses.
|
|
2.
|
Professional
Service Provider Referrals. SellMyBusiness.com has
created a special web section to enlist paid membership from service
providers such as accountants, banks, lawyers, and business valuators to
help with introductions to clients in need of their
services. Over fifty categories have been
identified.
|
|
3.
|
Multi-media
Marketing and Live Support. Current competitive websites
lack presence in the marketplace, capturing only 5%-18% of all businesses
for sale. Based on management’s research, competitive sites
rely primarily on Internet search engine optimization and online
advertising
|
SellMyBusiness.com creates a
shift in this strategy by utilizing the global reach of the Internet coupled
with targeted multimedia advertising and public relations campaigns, and live
support. A recent article from the editors at Business.com stressing
this value about SellMyBusiness.com states, “And here’s something unique: live
reps are available to answer questions by phone!”1 The
result of these two market concepts is a company that exploits the Internet’s
strengths – primarily data driven – coupled with effective marketing and real
people to provide a truly unique, personal and valuable service.
|
4.
|
Designed
for Non-Web Focused Customers. The average age of
business owners in the U.S. is 56 years (the same in Australia and New
Zealand).2
3
This age group is certainly not ignorant of the web, but they do not spend
as much time surfing the web as other younger demographic
groups. SellMyBusiness.com management has thus targeted a
portion of its marketing on this user demographic. Furthermore,
the website was developed to be simple, clean and clutter free to simplify
navigation for those viewers less web
savvy.
|
|
5.
|
Designed
for Short Attention Span Viewers. Executives, business
owners and entrepreneurs traditionally have short attention
spans. In order to provide important information about the site
without the need to read text, SellMyBusiness.com utilizes an online web
actor to speak directly to the viewer. No competitor uses web
actors.
|
|
6.
|
Local
Language Website. Although the
language of the Internet is English, not all website viewers speak
English. Thus, SellMyBusiness.com
intends to launch culturally relevant versions of the site in
multiple foreign languages.
|
|
7.
|
The
Business Vault®. SellMyBusiness.com offers a unique
feature, the Business
Vault Confidential Listing Service: a completely private and
confidential place to list a business, real estate and equipment for sale
and receive leads only from financially pre-qualified
buyers. Many business owners and executives do not wish to
publicly list, but would utilize the Internet if they knew their
information could be kept confidential and they would only receive contact
from parties that have the financial wherewithal for the
transaction.
|
|
8.
|
Business
Watch®. Business Watch provides
a service to buyers, allowing them to conduct a search for businesses,
real estate or equipment and then lock in the search
criteria. Then, whenever a listing meeting their search
criteria is added to the SellMyBusiness.com database the Business Watch service
automatically generates an email alerting the potential buyer to the new
listing. Business Watch assures
the buyer will not miss any viable purchasing
opportunities.
|
|
9.
|
Web-based Document
Management Portal. Once a business, real estate or
equipment purchase is agreed upon by a buyer and seller,
SellMyBusiness.com can provide a unique, centralized document management
system that allows all parties involved in the transaction (buyer, seller,
attorneys, brokers, mortgagers, etc.) to upload and share
documents. SellMyBusiness.com management has made an exclusive
arrangement with the developer of this document management system, a
company that has also developed special web-based real estate listing
modules currently used by international business brokers and an
international broker association..
|
______________________________________
1 Technology Insider – News and Views
from Business.com editors; Kehrer, Daniel, May 12, 2008,
Business.com
2 Business
Enterprise Institute; Brown John, 2007.
3 What it means to be a baby boomer!;
Dibb, Sharon, Bstar Pty Ltd., 2007.
The
Market
According
to the U.S. Census Bureau there are approximately 13.1 million firms in the
U.S., generating over $22 billion in annual sales.4 The
total number of businesses that are for sale annually just in the United States
is estimated to be 1.1 million5 and this
number is expected to continue increasing as Baby Boomers sell off their
companies to the upcoming generations. John Brown of the Business
Enterprise Institute states one out of two business owners in the country [U.S.]
plan on leaving their business within the next ten years.6 SellMyBusiness.com
management estimates that Europe and the Asia-Pacific region triple this
number.
The
initial target market for SellMyBusiness.com is:
|
·
|
the
1.1 million sellers of
businesses (and related real estate and equipment) in the
U.S.;
|
|
·
|
the
resulting 1.1 million buyers of
businesses;
|
|
·
|
the
broker/dealer network that will
assist in the buying and selling of these businesses;
|
|
·
|
the
individuals (For Sale By Owners) that
choose not to enlist the services of brokers,
and;
|
|
·
|
the
professional service providers that
provide a vast array of services for buyers &
sellers.
|
Follow-on
growth includes expansion of local language versions of SellMyBusiness.com into
targeted countries. SellMyBusiness.com management’s estimate for the
worldwide market is over 60 million companies with approximately 10 percent
changing hands each year. Approximately 20 million firms each exist
in the Americas, Europe and Asia/Middle East. This estimate is based
on data on China, India, Europe, Russia and Brazil789. A
more dramatic market size picture is drawn from a Global Entrepreneurship
Monitor study stating that out of the 40 GEM countries, accounting for
almost 4 billion out of a world population of 6.3 billion, about 50 million
new companies will
be launch each year (about 137,000 per day) with a subsequent number of firms
being closed (potentially sold).10
Competition
& Supporting Financial Model
Three
types of competitors exist for SellMyBusiness.com: 1) current web-based sites;
2) local and regional broker sites, and; 3) vertical market
specialists.
Competition - Current
Web-based Sites
There are
eight direct competitors to SellMyBusiness.com within the business sales arena
(i.e. not including real estate and equipment). This may appear to be
an indicator of a saturated market to most, but in fact it provides strong
insight into some critical areas.
Current
Web-based Sites
|
Domain
Name
|
Owner
|
Location
|
Launched
|
#
of Bus. For Sale
|
#
of Reg. Buyers
|
#
of Agents, Brokers, ect.
|
Countries
Listed
|
Selling
Fee
($/mo)
|
Broker
Fee
($/mo)
|
Visits/
Searches per. mo.
|
|
BizBuySells.com
|
LoopNet,
Inc.
|
San
Francisco, CA
|
1996
|
48,000
|
24,000
|
2,500
|
24
|
59.95
|
49.95
|
650,000
|
|
BizQuest.com
|
Bizquest,
LLC
|
Los
Angeles, CA
|
2005
|
42,000
|
100,000
|
n/a
|
33
|
54.95
|
39.95
|
n/a
|
|
BusinessBroker.net
|
BusinessBroker.net
|
Atlanta,
GA
|
Est
1999
|
30,000
|
n/a
|
n/a
|
15
|
99.95
|
39.95
|
500,000
|
|
BusinessDistrict.com
|
Business
District, LLC
|
Shawnee,
KS
|
2006
|
998
|
n/a
|
n/a
|
1
|
Free
|
Free
|
n/a
|
|
BusinessesFor
Sale.com
|
Dynamics
PLC
|
London,
UK
|
1996
|
51,000
|
200,000
|
1,000
|
110
|
79.95
|
29.95
|
330,000
|
|
BusinessMart.com
|
Business
Mart, Inc.
|
Parlin,
NJ
|
2003
|
n/a
|
n/a
|
n/a
|
2
|
69.95
|
34.95
|
n/a
|
|
BusinessNation.com
|
Itm
Holdings, LLC
|
Lakewood,
CO
|
1998
|
2,300
|
n/a
|
n/a
|
1
|
29.95
|
39.95
|
n/a
|
|
DaltonBusiness.com
|
Untied
Business Media Ltd.
|
London,
UK
|
2001
|
25,000
|
n/a
|
n/a
|
9
|
£60
($121)
|
n/a
|
n/a
|
|
SellMyBusiness.com
|
SellMyBusiness.com
Inc.
|
Bingham
Farms, MI
|
2008
|
3,500
|
Too
new
|
Too
new
|
1
|
59.95
|
29.95
|
550,000
|
First,
none of these companies appears to have exploited the market based on the small
market share. Research indicates the primary marketing methods used by the
competition is Internet Search Engine Optimization (SEO). SellMyBusiness.com
management has been unable to identify any significant marketing used by any of
the companies, except LoopNet which owns BizBuySell. BizBuySell has
an affiliate arrangement with Wall Street Journal Online
and runs small ads in business publications such as Fast
Company. BusinessNation.com appears to be unfocused and
offering business listing services as only one small piece of a larger strategy;
resulting in only 2,300 listings. BusinessDistrict.com is basing its
growth model on business social networking. The remaining six
sites appear to rely on Internet search engine results. Of the 1.1
million companies sold in the U.S. each year, SellMyBusiness.com management
estimates the amount listed online represents less than one percent of the total
world market potential.
____________________________________________
4 2004
United States Census Bureau data.
5 2005 Business Reference
Guide; West, Tom, 2005.
6 Business
Enterprise Institute; Brown, John, 2007.
7
“Registered SMEs in China surpass 4.3 million”, Li Zibin, China Knowledge, Oct 22,
2007
8 “Growth
Opportunities for Indian SME’s”, Deloitte Touche Tohmatsu India Private Limited
(Source: Ministry of Micro, Small and Medium Enterprises, Government of India),
Apr 22, 2008, pg 5,
9 “General
Market Outlook – Macroeconomic Projections [on Brazil]”, Canadian Heritage,
www.pch.gc.ca, 2008.
10 “Small
Business”, Mason, Moya K., (Source: 2002 Global Entrepreneurship
Monitor survey), www.moyak.com, 2008.
Although
these sites are considered direct competitors which may indicate the need to
capture market share from them, SellMyBusiness.com personnel have conducted
field studies that verify business owners and brokers sign up on multiple sites
to ensure market visibility. Therefore, SellMyBusiness.com’s growth is based on
customers listing solely with SellMyBusiness.com and jointly with its
competitors.
The
following chart shows a matrix comparing the features and unique value
propositions offered by SellMyBusiness.com relative to its
competitors.
Figure
6: SellMyBusiness.com Features versus Competition
1 Adding
multilingual sites in 2009-10
2 For
brokers only
3
Sponsored links only
4 Five
categories only
Competition - Local and
Regional Broker Sites
The
second area of competition is the myriad of local and regional broker
websites. These sites are not considered viable competitors due to
their limited reach and local or regional focus.
Competition - Vertical
Market Specialists
The third
type of competitor is the web-based specialty market seller. These
firms focus on a narrow niche business industry and essentially hook up sellers
with brokers within that niche. However, as mentioned in the previous
“Competition - Current Web-based Sites” paragraph, due to the modest fees for
the listing and registration service, business owners and brokers list in
multiple sites to ensure market visibility.
Website
Visitor Analytics
The
SellMyBusiness.com website incorporates rich analytical tools for assessing
information about website traffic and visitors such as: sessions, pageviews,
hits, requested pages, downloads (from the SellMyBusiness.com website), page
drilldowns, entrance pages, exit pages, bounce rates, click paths, length of
pageview, depth of session, length of session, referrals, domains, user IP
addresses, browser details, and reasons for de-listing.
The
capture and translation of this data into visitor demographics creates a
powerful tool for SellMyBusiness.com management for pricing banner
advertisement, affiliate arrangements, corporate sponsorships and, potentially,
company purchase.
Intellectual
Property
SellMyBusiness.com
has secured three registered service marks:
|
1.
|
The
subsidiary company name and, thus, its domain name: SellMyBusiness.com®
|
|
2.
|
The
confidential listing and pre-qualified buyer service: Business
Vault®
|
|
3.
|
The
business listing alert service: Business
Watch®
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Employees
As
of April 10, 2009, the Company had three employees. The Company
plans to hire more persons on as-needed basis. The Company has not
entered into any collective bargaining agreements.
Our
mailing address is located at 10755 Vernon Avenue, Huntington Woods, MI 48070.
Phone-based web support is located at 10755 Vernon, Huntington Woods, MI 48070
at a facility cost of $1,500 per month.
John C.
Maddox, our President, Chief Operating Officer and Director, is subject to
certain payments under a Chapter 13 Plan approved by United States Bankruptcy
Court on June 13, 2007. He paid $600 per month to certain creditors from May 31,
2007 to September 30, 2008. He is now paying $669.04 per month to these
creditors for twelve months, effective October 1, 2008.
Except
stated above, there are no legal proceedings pending or threatened against us or
our officers and directors.
Our
common stock has been traded on the OTCBB under the symbol “HALB.OB” since June
10, 2009. However, our common stock was thinly traded in the public market. From
June 10, 2009 to July 7, 2009, the highest trading price was $0.75 per share and
the lowest trading price was $0.10 per share.
Holders of Our Common
Stock
As of the
date of this registration statement, we had 50 shareholders of our common
stock.
Rule 144
Shares
After
July 2009, all of the shares of our common stock held by 39 shareholders who
purchased their shares in the Regulation D 506 offering by us will become
available for resale to the public without any restriction.
Stock Option
Grants
To date,
we have not granted any stock options.
Transfer Agent and
Registrar
Our
transfer agent is Globex Transfer, LLC, 780 Deltoan Blvd., Suite 202, Deltona,
Florida 32725 and its phone number is (386)206-1133.
Dividend
Policy
Since
inception we have not paid any dividends on our common stock. We currently do
not anticipate paying any cash dividends in the foreseeable future on our common
stock, when issued pursuant to this offering. Although we intend to retain our
earnings, if any, to finance the exploration and growth of our business, our
Board of Directors will have the discretion to declare and pay dividends in the
future. Payment of dividends in the future will depend upon our earnings,
capital requirements, and other factors, which our Board of Directors may
deem relevant.
We have
filed with the SEC a registration statement on Form S-1 under the Securities Act
with respect to the common stock offered hereby. This prospectus, which
constitutes part of the registration statement, does not contain all of the
information set forth in the registration statement and the exhibits and
schedule thereto, certain parts of which are omitted in accordance with the
rules and regulations of the SEC. For further information regarding our
common stock and our company, please review the registration statement,
including exhibits, schedules and reports filed as a part thereof. Statements in
this prospectus as to the contents of any contract or other document filed as an
exhibit to the registration statement, set forth the material terms of such
contract or other document but are not necessarily complete, and in each
instance reference is made to the copy of such document filed as an exhibit
to the registration statement, each such statement being qualified in all
respects by such reference.
We are
also subject to the informational requirements of the Exchange Act which
requires us to file reports, proxy statements and other information with the
SEC. Such reports, proxy statements and other information along with the
registration statement, including the exhibits and schedules thereto, may be
inspected at public reference facilities of the SEC at 100 F Street N.E ,
Washington D.C. 20549. Copies of such material can be obtained from
the Public Reference Section of the SEC at prescribed rates. You may call the
SEC at 1-800-SEC-0330 for further information on the operation of the public
reference room. Because we file documents electronically with the SEC, you may
also obtain this information by visiting the SEC’s Internet website at http://www.sec.gov.
|
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
Huntington
Woods, Michigan
For
the Three and Nine Months Ended
April
30, 2009 and April 30, 2008 and
August
2, 2007 (date of inception) to April 30,
2009
|
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
Huntington
Woods, Michigan
INTERIM
CONSOLIDATED FINANCIAL STATEMENTS
For
the Three and Nine Months Ended
April
30, 2009 and April 30, 2008 and
August
2, 2007 (date of inception) to April 30, 2009
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
TABLE
OF CONTENTS
TABLE
OF CONTENTS
|
Interim
Consolidated Financial Statements
|
Page
|
|
Review
Report of Independent Registered Public Accounting Firm
|
1
|
|
Consolidated
Balance Sheets as of April 30, 2009 (unaudited) and July 31,
2008
|
2
|
|
Consolidated
Statements of Operations for the three and nine months
ended
|
|
|
April
30, 2009 and 2008 and August 2, 2007 (date of inception) to April 30, 2009
(unaudited)
|
3
|
|
Consolidated
Statements of Stockholders’ Equity (Deficit) for the nine
months
|
|
|
Ended
April 30, 2009 and period ended April 30, 2008 (unaudited)
|
4
|
|
Consolidated
Statements of Cash Flows for the nine months ended
|
|
|
April
30, 2009 and 2008 and August 2, 2007 (date of inception) to April 30, 2009
(unaudited)
|
5
|
|
Notes
to Interim Consolidated Financial Statements
|
6-15
|
REVIEW
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
June 18,
2009
Board of
Directors and Stockholders
Halberd
Corporation and Subsidiary
Huntington
Woods, Michigan
We have
reviewed the consolidated balance sheet of Halberd
Corporation and Subsidiary, a development stage company (the Company) as
of April 30, 2009, the related consolidated statements of operations for the
three and nine month periods ended April 30, 2009 and 2008, and the related
consolidated statements of stockholders’ equity (deficit) and cash flows for the
nine-month periods ended April 30, 2009 and 2008. These consolidated financial
statements are the responsibility of the Company’s management.
We
conducted our reviews in accordance with the standards established by the Public
Company Accounting Oversight Board (United States). A review of interim
financial information consists principally of applying analytical procedures and
making inquiries of persons responsible for financial and accounting matters. It
is substantially less in scope than an audit conducted in accordance with
standards established by the Public Company Accounting Oversight Board (United
States), the objective of which is the expression of an opinion regarding the
consolidated financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on
our reviews, we are not aware of any material modifications that should be made
to the consolidated financial statements referred to above in order for them to
conform with accounting principles generally accepted in the United States of
America.
We have
previously audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheet of
Halberd
Corporation and Subsidiary as of July 31, 2008, and the related
consolidated statements of operations, stockholders’ deficit, and cash flows for
the period August 2, 2007 through July 31, 2008 (not presented herein); and in
our report dated January 29, 2009, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information
set forth in the accompanying consolidated balance sheet as of July 31, 2008, is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
/s/ Rehmann Robson
Rehmann Robson, P.C.
Troy,
Michigan
|
HALBERD
CORPORATION AND SUBSIDIARY
|
||||||||
|
(a
development stage company)
|
||||||||
|
CONSOLIDATED
BALANCE SHEETS
|
||||||||
|
|
April
30
|
July
31,
|
||||||
|
2009
|
2008
|
|||||||
|
(Unaudited)
|
||||||||
|
ASSETS
|
||||||||
|
Cash
and cash equivalents, equal to total current assets
|
$ | 6,854 | $ | 1,387 | ||||
|
Prepaid
expenses
|
9,500 | - | ||||||
|
Property
and equipment, net
|
551,940 | 314,221 | ||||||
|
Trademarks
|
19,245 | 8,770 | ||||||
|
Deferred
income taxes
|
- | 17,330 | ||||||
|
Total
assets
|
$ | 587,539 | $ | 341,708 | ||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
|
Liabilities
|
||||||||
|
Accounts
payable
|
$ | 291,989 | $ | 17,959 | ||||
|
Accrued
expenses
|
22,542 | 17,386 | ||||||
|
Deferred
revenue
|
2,428 | 1,510 | ||||||
|
Due
to officers
|
124,890 | 30,048 | ||||||
|
Line-of-credit
due to stockholder
|
29,027 | 10,900 | ||||||
|
Promissory
notes payable
|
55,000 | - | ||||||
|
Convertible
notes payable
|
- | 300,000 | ||||||
|
Total
liabilities (all current)
|
525,876 | 377,803 | ||||||
|
Stockholders'
equity (deficit) (Note 6)
|
||||||||
|
Common
stock - $0.001 par value; 120,000,000 shares
|
||||||||
|
authorized,
26,058,000 and 20,002,000 shares issued and
|
||||||||
|
outstanding
at April 30, 2009 and July 31, 2008,
|
||||||||
|
respectively
|
1,505 | - | ||||||
|
Additional
paid-in capital
|
632,950 | - | ||||||
|
Deficit
accumulated during the development stage
|
(572,792 | ) | (36,095 | ) | ||||
|
Total
stockholders' equity (deficit)
|
61,663 | (36,095 | ) | |||||
|
Total
liabilities and stockholders' equity (deficit)
|
$ | 587,539 | $ | 341,708 | ||||
The
accompanying notes are an integral part of these interim consolidated financial
statements
F1
|
HALBERD
CORPORATION AND SUBSIDIARY
|
||||||||||||||||||||
|
(a
development stage company)
|
||||||||||||||||||||
|
CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
|
||||||||||||||||||||
|
Cumulative
|
||||||||||||||||||||
|
Period
From
|
||||||||||||||||||||
|
August
2, 2007
|
||||||||||||||||||||
|
(date
of inception)
|
||||||||||||||||||||
|
Three
Months Ended April 30
|
Nine
Months Ended April 30
|
to
April 30
|
||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
2009
|
||||||||||||||||
|
Net
sales
|
$ | 587 | $ | 1,546 | $ | 5,679 | $ | 1,546 | $ | 12,695 | ||||||||||
|
Cost
of sales
|
538 | 218 | 1,451 | 218 | 2,097 | |||||||||||||||
|
Gross
margin
|
49 | 1,328 | 4,228 | 1,328 | 10,598 | |||||||||||||||
|
Operating
expenses
|
365,559 | 157,669 | 501,349 | 215,151 | 545,436 | |||||||||||||||
|
Operating
loss
|
(365,510 | ) | (156,341 | ) | (497,121 | ) | (213,823 | ) | (534,838 | ) | ||||||||||
|
Interest
income
|
- | 620 | - | 620 | 1,253 | |||||||||||||||
|
Interest
expense
|
(6,547 | ) | (2,380 | ) | (22,246 | ) | (10,617 | ) | (39,207 | ) | ||||||||||
|
Other
expense, net
|
(6,547 | ) | (1,760 | ) | (22,246 | ) | (9,997 | ) | (37,954 | ) | ||||||||||
|
Loss
before income taxes
|
(372,057 | ) | (158,101 | ) | (519,367 | ) | (223,820 | ) | (572,792 | ) | ||||||||||
|
Income
taxes
|
- | - | (17,330 | ) | - | - | ||||||||||||||
|
Net
loss
|
$ | (372,057 | ) | $ | (158,101 | ) | $ | (536,697 | ) | $ | (223,820 | ) | $ | (572,792 | ) | |||||
|
Basic
and diluted loss per common share
|
* | * | * | * | * | |||||||||||||||
|
Weighted
average number of common
|
||||||||||||||||||||
|
shares
outstanding, basic and fully diluted
|
25,558,000 | 10,001 | 22,415,775 | 10,001 | 20,080,276 | |||||||||||||||
|
*
less than $0.01
|
||||||||||||||||||||
The
accompanying notes are an integral part of these interim consolidated financial
statements
F2
|
HALBERD
CORPORATION AND SUBSIDIARY
|
||||||||||||||||||||
|
(a
development stage company)
|
||||||||||||||||||||
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED)
|
||||||||||||||||||||
|
Additional
|
Deficit
Accumulated
During
the
|
Total
|
||||||||||||||||||
|
Common
Stock
|
Paid-in
|
Development
|
Stockholders'
|
|||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Stage
|
Deficit
|
||||||||||||||||
|
Balances
- August 2, 2007
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
|
Common
stock issued
|
10,001 | - | - | - | - | |||||||||||||||
|
Net
loss
|
- | - | - | (223,820 | ) | (223,820 | ) | |||||||||||||
|
Balances
- April 30, 2008
|
10,001 | $ | - | $ | - | $ | (223,820 | ) | $ | (223,820 | ) | |||||||||
|
|
||||||||||||||||||||
|
Additional
|
Deficit
Accumulated
During
the
|
Total Stockholders' |
||||||||||||||||||
|
Common
Stock
|
Paid-in
|
Development
|
Equity
|
|||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Stage
|
(Deficit)
|
||||||||||||||||
|
Balances
- August 1, 2008 *
|
20,002,000 | $ | - | $ | - | $ | (36,095 | ) | $ | (36,095 | ) | |||||||||
|
Conversion
to equity of notes
|
||||||||||||||||||||
|
payable
and accrued interest
|
4,600,000 | 460 | 322,540 | - | 323,000 | |||||||||||||||
|
Private
placement during January
|
||||||||||||||||||||
|
2009
at $0.22/share
|
374,000 | 37 | 80,963 | - | 81,000 | |||||||||||||||
|
Shares
issued for consulting
|
||||||||||||||||||||
|
services
during January 2009
|
||||||||||||||||||||
|
at
$0.25/share
|
82,000 | 8 | 20,492 | - | 20,500 | |||||||||||||||
|
Shares
issued for consulting
|
||||||||||||||||||||
|
services
during March 2009
|
||||||||||||||||||||
|
at
$0.25/share
|
1,000,000 | 1,000 | 249,000 | - | 250,000 | |||||||||||||||
|
Direct
filing costs associated with
|
- | - | (40,045 | ) | - | (40,045 | ) | |||||||||||||
|
registration
of common shares
|
||||||||||||||||||||
|
Net
loss
|
- | - | - | (536,697 | ) | (536,697 | ) | |||||||||||||
|
Balances
- April 30, 2009
|
26,058,000 | $ | 1,505 | $ | 632,950 | $ | (572,792 | ) | $ | 61,663 | ||||||||||
|
*
As adjusted to reflect recapitalization - Note 1
|
||||||||||||||||||||
The
accompanying notes are an integral part of these interim consolidated financial
statements
F3
|
HALBERD
CORPORATION AND SUBSIDIARY
|
||||||||||||
|
(a
development stage company)
|
||||||||||||
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
||||||||||||
|
Cumulative
|
||||||||||||
|
Period
From
|
||||||||||||
|
August
2, 2007
|
||||||||||||
|
(date
of inception)
|
||||||||||||
|
Nine
Months Ended April 30
|
to
April 30
|
|||||||||||
|
2009
|
2008
|
2009
|
||||||||||
|
Cash
flows from operating activities
|
||||||||||||
|
Net
loss
|
$ | (536,697 | ) | $ | (223,820 | ) | $ | (572,792 | ) | |||
|
Adjustments
to reconcile net loss to net cash
|
||||||||||||
|
provided
by (used in) operating activities
|
||||||||||||
|
Depreciation
|
2,135 | 730 | 3,558 | |||||||||
|
Deferred
income tax valuation allowance
|
17,330 | - | - | |||||||||
|
Changes
in operating assets and liabilities that
|
||||||||||||
|
provided
(used) cash
|
||||||||||||
|
Prepaid
expenses
|
(9,500 | ) | (460 | ) | (9,500 | ) | ||||||
|
Accounts
payable and accrued expenses
|
532,641 | 9,377 | 567,986 | |||||||||
|
Deferred
revenue
|
918 | - | 2,428 | |||||||||
|
Due
to officers
|
94,842 | 48 | 124,890 | |||||||||
|
Net
cash provided by (used in)
|
||||||||||||
|
operating
activities
|
101,669 | (214,125 | ) | 116,570 | ||||||||
|
Cash
flows from investing activities
|
||||||||||||
|
Trademark
costs
|
(10,475 | ) | (3,162 | ) | (19,245 | ) | ||||||
|
Purchases
of property and equipment,
|
||||||||||||
|
including
website costs
|
(239,854 | ) | (67,537 | ) | (555,498 | ) | ||||||
|
Net
cash used in investing activities
|
(250,329 | ) | (70,699 | ) | (574,743 | ) | ||||||
|
Cash
flows from financing activities
|
||||||||||||
|
Net
stockholder line-of-credit borrowings
|
18,127 | - | 29,027 | |||||||||
|
Issuance
of promissory notes payable
|
55,000 | - | 55,000 | |||||||||
|
Issuance
of convertible notes payable
|
- | 300,000 | 300,000 | |||||||||
|
Proceeds
from private placement, net of
|
||||||||||||
|
offering
costs of $ 12,500
|
81,000 | - | 81,000 | |||||||||
|
Net
cash provided by financing activities
|
154,127 | 300,000 | 465,027 | |||||||||
|
Net
increase in cash and cash equivalents
|
5,467 | 15,176 | 6,854 | |||||||||
|
Cash
and cash equivalents - beginning of period
|
1,387 | - | - | |||||||||
|
Cash
and cash equivalents - end of period
|
$ | 6,854 | $ | 15,176 | $ | 6,854 | ||||||
|
Supplemental
disclosures of noncash financing activities:
|
||||||||||||
|
Issuance
of 1,082,000 shares of common stock in
|
||||||||||||
|
exchange
for consulting services
|
$ | 270,500 | $ | - | $ | 270,500 | ||||||
|
Conversion
of notes payable to common stock
|
$ | 323,000 | $ | - | $ | 323,000 | ||||||
|
Direct
filing costs associated with
|
||||||||||||
|
registration
of common shares
|
$ | (40,045 | ) | $ | - | $ | (40,045 | ) | ||||
The
accompanying notes are an integral part of these interim consolidated financial
statements
F4
HALBERD
CORPORATION AND SUBSIDIARY
(a
development stage company)
NOTES
TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
1.
|
BUSINESS
AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
Principles
of Consolidation
The
consolidated financial statements include the accounts of Halberd
Corporation and its wholly owned subsidiary Sellmybusinessnow.com,
Inc. All intercompany balances and transactions have been
eliminated in consolidation.
Organization,
Nature of Business (including development stage), and Basis of
Presentation
Sellmybusinessnow.com,
Inc., is a development stage company that was incorporated under the laws
of the state of Michigan on August 2, 2007. The Company began
operating under the name “Sellmybusiness.com®” on December 3,
2007. To date, the Company’s activities have been limited to raising
capital, obtaining financing, constructing its website and administrative
functions. Sellmybusiness.com® intends to provide a single
web portal for interested parties to find, buy and sell businesses, real estate
and equipment and all the related services needed to support the transaction,
including financing, incorporation, professional help and additional business
resources. Sellmybusiness.com® intends to support
businesses of all sizes and types, including start-ups, well-established
companies, home-based businesses, closely-held companies, multinational public
corporations and franchises. Sellmybusiness.com®’s real estate listing
service will assist business people to buy, sell, lease or sublease commercial
land and property. Sellmybusiness.com®’s equipment listing
service will provide a portal to buy, sell or lease excess inventory, capital
equipment, raw materials, vehicles, aircraft, ships and rail
equipment.
On
January 26, 2009, Halberd
Corporation, a Nevada corporation, was formed by Sellmybusinessnow.com,
Inc.’s founders in conjunction with a legal reorganization of the
Company. Halberd
Corporation is structured to act as the parent company of Sellmybusinessnow.com,
Inc. As part of this action, and effective on January 28,
2009, all of the issued and outstanding shares of Sellmybusinessnow.com,
Inc. common stock were exchanged on a 2,000-to-1 basis for Halberd
Corporation common stock. As a result, the accompanying
consolidated financial statements reflect this reorganization and are presented
on a consolidated basis and are labeled as those of the parent
company. Halberd
Corporation and Subsidiary are collectively referred to as the
“Company”.
The
Company has adopted a fiscal year end of July 31.
HALBERD
CORPORATION AND SUBSIDIARY
(a
development stage company)
NOTES
TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Basis
of Accounting
The
accompanying unaudited consolidated financial statements have been prepared in
accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) for
interim financial information. In the opinion of management, all
adjustments considered necessary for a fair presentation have been
included. The results of operations for the nine months ended April
30, 2009 are not necessarily indicative of the results that may be expected for
the year ended July 31, 2009.
Use
of Estimates
The
preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
income and expenses during the reporting period. Actual results could
differ from those estimates.
Segment
Reporting
The
Company has determined that it does not have any separately reportable business
segments at April 30, 2009.
Cash
and Cash Equivalents
Cash and
cash equivalents consist of cash on hand and demand deposits in
banks. The Company considers all highly liquid investments purchased
with original maturities of six months or less to be cash
equivalents.
Revenue
Recognition
The
Company utilizes the guidance in Securities and Exchange Commission (SEC) Staff
Accounting Bulletin (SAB) No. 104, Revenue Recognition, to
recognize revenue. Under SAB No. 104, revenue is recognized only when
persuasive evidence of an agreement exists, delivery of the service has
occurred, the sales price is fixed or determinable and collectability is
reasonably assured. Payments received in advance of services being rendered are
recorded as deferred revenue and recognized on a straight-line basis over the
service period.
HALBERD
CORPORATION AND SUBSIDIARY
(a
development stage company)
NOTES
TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As the
Company is in the development stage, it has generated limited revenues during
the period ended April 30, 2009. Management believes the Company will
principally derive its future revenue from customers that pay fees via credit
card through the web site for a suite of services to market and search for
commercial real estate and operating businesses. These services include a
premium membership that provides the customer unlimited access to listings,
maximized exposure for their listings, along with enhanced services to market
their listings.
Management
also anticipates the Company will earn revenue from other sources including
advertising revenues, which will be recognized ratably over the period in which
the advertisement is displayed on the web site, provided that no significant
obligations remain and collection of the resulting receivable is probable.
Advertising rates are dependent on the services provided and the placement of
the advertisements.
Property
and Equipment (including web site costs)
Costs
incurred to develop the Company’s web site, Sellmybusiness.com®,
are capitalized or expensed, as applicable, in accordance with the Financial
Accounting Standards Board’s Emerging Issues Task Force Issue 00-2, Accounting for Web Site Development
Costs (EITF 00-2), which addresses whether certain development costs
should be capitalized or expensed. Exhibit 00-2A of EITF 00-2 breaks
potential web site development costs into 34 distinct potential activities,
among four stages: Planning; Web Site Application and Infrastructure
Development; Graphics and Content Development; and
Operating. Management analyzes the nature of costs incurred relative
to these stages and either capitalizes or expenses the related costs in
accordance with EITF 00-2. Because the Company’s current web
site development costs incurred relate principally to development and testing,
the Company is generally capitalizing these costs.
Management
periodically reviews these assets to determine whether carrying values have been
impaired.
Depreciation
and Amortization
Depreciation
on equipment is computed using the straight-line method over the estimated
useful lives of the related assets which range from three to seven
years. Amortization of web site costs did not commence during the
period ended April 30, 2009 since the final operating version of the site was
not completed as of that date.
Trademark
Costs
The
Company has capitalized costs to obtain trademarks registered for its three
service marks Sellmybusiness.com®, Business Vault®, and Business
Watch®. Such costs principally relate to legal fees
incurred. These intangible assets have been determined to have a life
of 15 years and the Company will begin amortizing them when full website
operations begin (scheduled for July 2009).
HALBERD
CORPORATION AND SUBSIDIARY
(a
development stage company)
NOTES
TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Income
Taxes
Deferred
income tax assets and liabilities are computed annually for differences between
the financial statement and tax bases of assets and liabilities that will result
in taxable or deductible amounts in the future, based on enacted tax laws and
rates applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be
realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and
liabilities. Deferred income taxes relate principally to the
Company’s net operating loss carry forward.
Concentration
Risks
Financial
instruments that potentially subject the Company to a concentration of credit
risk consist of cash and cash equivalents and when they exist, trade accounts
receivable. Cash and cash equivalents are deposited with high credit
quality financial institutions. The Company’s revenue and accounts
receivable are primarily derived from credit card transactions with subscribers
and are typically settled within two to three business days.
Fair
Value of Financial Instruments
The
Company’s financial instruments, including cash and cash equivalents, accounts
receivable, accounts payable and accrued liabilities, are carried at cost, which
approximates their fair value because of the short-term maturity of these
instruments.
Net
Income (loss) Per Share
Net
income (loss) per share is calculated under the provisions of Statement of
Financial Accounting Standards (SFAS) No. 128, Earnings Per
Share. “Diluted” reflects the potential dilution of all common
stock equivalents except in cases where the effect would be
anti-dilutive. Common stock equivalents of 4,508,000 were excluded
from net loss per diluted share for all prior periods presented as this effect
would have been anti-dilutive. These common stock equivalents were
converted to common stock during January 2009 and as such are reflected in
weighted average common shares outstanding for the periods ended April 30,
2009.
HALBERD
CORPORATION AND SUBSIDIARY
(a
development stage company)
NOTES
TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Recent
Accounting Pronouncements
In
April 2009, the Financial Accounting Standards Board (FASB) issued three
related Staff Positions (FSP): (i) FSP 157-4, “Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability have Significantly
Decreased and Identifying Transactions That Are Not Orderly”, (ii)
FSP Statement of Financial Accounting Standard (SFAS) 115-2 and SFAS
124-2, “Recognition
and Presentation of Other-Than-Temporary Impairments”, and
(iii) FSP SFAS 107-1 and Accounting Principles Board (APB) 28-1, “Interim Disclosures about Fair
Value of Financial Instruments”, each of which will be effective for
interim and annual periods ending after June 15, 2009. FSP 157-4 provides
guidance on how to determine the fair value of assets and liabilities under SFAS
157 Fair Value Measurements, in the current economic environment and
reemphasizes that the objective of a fair value measurement remains the
determination of an exit price. FSP SFAS 115-2 and SFAS 124-2 modify the
requirements for recognizing other-than-temporarily impaired debt securities and
revise the existing impairment model for such securities by modifying the
current intent and ability indicator in determining whether a debt security is
other-than-temporarily impaired. FSP SFAS 107 and APB 28-1 enhance the
disclosure of instruments under the scope of SFAS 157 for both interim and
annual periods. We are currently evaluating the potential impact of these Staff
Positions.
In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations,” (SFAS
141(R)), which replaces SFAS 141. SFAS 141(R) establishes principles and
requirements for recognition and measurement of assets, liabilities and any
non-controlling interest acquired due to a business combination. Under SFAS
141(R) the entity that acquires the business (whether in a full or partial
acquisition) may recognize only the assets acquired, the liabilities assumed,
and any non-controlling interest in the acquiree at the acquisition date,
measured at fair value. SFAS 141(R) requires the acquirer to recognize goodwill
as of the acquisition date, measured as a residual. Under SFAS 141(R),
acquisition-related transaction and restructuring costs will be expensed as
incurred rather than treated as part of the acquisition cost and included in the
amount recorded for assets acquired. SFAS 141(R) is effective for fiscal years
beginning after December 15, 2008. Accordingly, the Company will apply the
provisions of SFAS 141(R) for acquisitions completed after July 31,
2009.
In
April 2009, the FASB issued FSP No. 141R-1, “Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from
Contingencies”. FSP 141R-1 amends the provisions in FASB Statement 141R
for the initial recognition and measurement, subsequent measurement and
accounting, and disclosures for assets and liabilities arising from
contingencies in business combinations. FSP 141R-1 eliminates the distinction
between contractual and non-contractual contingencies, including the initial
recognition and measurement criteria in Statement 141R and instead carries
forward most of the provisions in SFAS 141 for acquired contingencies. FSP
141R-1 is effective for contingent assets and contingent liabilities acquired in
business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after
December 15, 2008. We expect that FSP 141R-1 will not have an impact on our
consolidated financial statements at this time.
HALBERD
CORPORATION AND SUBSIDIARY
(a
development stage company)
NOTES
TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
In April
2008, the FASB issued FASB Staff Position, No. 142-3, “Determination of the Useful Life of
Intangible Assets” (“FSP 142-3”). This FSP amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS No. 142,
“Goodwill and Other Intangible
Assets”. The intent of this FSP is to improve the consistency
between the useful life of a recognized intangible asset under SFAS No. 142 and
the period of expected cash flows used to measure the fair value of the asset
under SFAS No. 141(R), “Business Combinations,” and other U.S. generally
accepted accounting principles. This FSP is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years and early adoption is
prohibited. Accordingly, this FSP is effective for the Company on
August 1, 2009. The Company does not believe the adoption of FSP
142-3 will have a material impact on its financial position, results of
operations or cash flows.
Other
recent accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies are not expected to apply to the Company or to
have a material impact on the Company’s reported results of operations on a per
share basis.
|
2.
|
PROPERTY
AND EQUIPMENT
|
|
|
Property
and equipment consists of the following assets
at:
|
|
April
30,
|
July
31,
|
|||||||
|
2009
|
2008
|
|||||||
|
Web
site costs
|
$ | 542,123 | $ | 302,269 | ||||
|
Phone
system
|
8,464 | 8,464 | ||||||
|
Computer
equipment
|
4,911 | 4,911 | ||||||
|
Total
|
555,498 | 315,644 | ||||||
|
Less
accumulated depreciation
|
3,558 | 1,423 | ||||||
|
Property
and equipment, net
|
$ | 551,940 | $ | 314,221 | ||||
HALBERD
CORPORATION AND SUBSIDIARY
(a
development stage company)
NOTES
TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
3.
RELATED PARTY TRANSACTIONS (including debt and leases)
The
Company’s majority stockholder has provided a $75,000 revolving line of credit
to the Company. Outstanding advances bear interest at 10% per annum,
and any such advances are due May 1, 2010. A total of $29,027 and
$10,900 was outstanding as of April 30, 2009 and July 31, 2008,
respectively. Interest of $2,118 and $160 on such advances is
included with accrued expenses in the accompanying balance sheet at April 30,
2009 and July 31, 2008, respectively.
The
Company incurred rent expense of $3,100 for the initial period ended July 31,
2008 under a month to month lease with an entity in which the Company’s majority
stockholder is an owner. Beginning October 1, 2008, the Company began
leasing space from the majority stockholder for $1,500 per month on a month to
month basis. Rent expense under these agreements for the nine months
ended April 30, 2009 and April 30, 2008 was $13,500 and $6,000,
respectively.
The Company leases its domain name from
an entity owned by its majority stockholder. Rent expense for the
nine months ended April 30, 2009 and 2008 were $287 and $77, respectively. The
related liabilities are included in accrued expenses at April 30, 2009 and
2008. The monthly rent for use of the domain name is 5% of
revenues.
The
Company accrues $5,000 a month for services provided by its majority and a
minority stockholder. Such amounts are included in the accompanying
balance sheet under “Due to Officers”, as well as a miscellaneous amount of $48
due to the majority stockholder. The balance due to officers as of
April 30, 2009 and July 31, 2008 are $124,890 and $30,048,
respectively.
During
the current year the Company entered into a services agreement with a
shareholder for consulting services under which the Company is required to pay
$7,500 a month. Related expense for the nine months ended April 30,
2009 is $37,500.
4.
PROMISSORY NOTES PAYABLE
In April
2009, the Company issued promissory notes totaling $55,000 to five
stockholders. The notes were due two months after issuance at the
principal amount plus 25% of the loan. The maturity of these notes
has been extended to August 2009 at the rate of $500 per $10,000 in loan
principal outstanding.
HALBERD
CORPORATION AND SUBSIDIARY
(a
development stage company)
NOTES
TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
5. CONVERTIBLE
DEBT
On
January 1, 2008, the Company issued convertible promissory notes totaling
$300,000 to eight stockholders, who own a combined 15% of the Company’s common
stock. The notes bore interest at 10% per annum and were due on the
earlier of the Company registering any of its securities under the Securities
Act of 1933, or eighteen months after the date of the note (April through July
2009). In addition, each of the note holders could convert the entire
outstanding amount of their note including accrued interest into shares of the
Company’s common stock at any time up to the maturity date of the respective
note.
During
January 2009, all of the convertible debt was converted to equity, resulting in
the issuance of 4,508,000 shares of the Company’s common stock. Related
accrued interest of $23,000 on these loans was also converted to equity,
resulting in the issuance of 92,000 shares of the Company’s common
stock. All shares in this note have been adjusted to reflect the
exchange discussed in Note 1.
6. CAPITAL
STOCK
The
Company’s initial common shares issued to its two founders and eight initial
investors were issued for no consideration and are thus carried at a value of
zero in the accompanying balance sheet as no services were performed or were
required to be performed in order for any of the original investors to obtain
their shares. Management determined the fair value of the initial
shares to be zero given the start-up nature of the business which included a
lack of operational history, lack of share liquidity and lack of corporate
financing for operations at the time of issuance.
The
Company has authorized 10,000,000 shares of preferred stock at a par value of
$0.001. No preferred shares are issued or outstanding as of January
31, 2009. Any preferences, rights, voting powers, restrictions,
dividend limitations, qualifications, and terms and conditions of redemption
shall be set forth and adopted by a board of directors’ resolution prior to the
issuance of any series of preferred stock.
During
January 2009, the Company issued a private placement memorandum (“PPM”) to
increase the number of shareholders to a minimum of 35. The PPM
resulted in the Company issuing 374,000 shares of common stock to 32 additional
stockholders in exchange for cash consideration of $93,500. The
offering costs of $12,500 were offset against the proceeds. In addition, during
January 2009 seven vendors were owed a total of $20,500 as of December 31, 2008
were issued 82,000 shares of common stock in settlement of amounts owed to
them.
HALBERD
CORPORATION AND SUBSIDIARY
(a
development stage company)
NOTES
TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
During
March 2009, the Company issued 1,000,000 shares of common stock to a consultant
(and related party) for organizational services rendered. The shares
were valued at $250,000 and the related expense was recognized as an operating
expense during the quarter ended April 30, 2009
As
detailed in our S-1/A registration statement filed April 14, 2009, 656,000
common shares held by 48 existing shareholders were registered for
resale. No additional capital was raised as a result of this
registration.
During
April 2009 the Company entered into an equity line of credit agreement which
allows the Company to sell up to $25,000,000 of the Company’s common stock over
the course of 48 months at 93% of the market price. As of April 30,
2009 no such sales have been entered into under the agreement.
|
7.
|
INCOME
TAXES
|
The
Company establishes valuation allowances in accordance with the provisions of
SFAS No. 109, Accounting for
Income Taxes. The Company continually reviews the
realizability of deferred tax assets and recognizes these benefits only as
reassessment indicates that it is more likely than not that such tax benefits
will be realized.
As of
April 30, 2009, the Company has a net operating loss carry forward for federal
income tax purposes of approximately $577,678, which expires through 2023,
available to reduce federal taxable income, if any, of future
periods.
Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets, liabilities for financial reporting purposes and the
amounts used for income tax purposes. Significant components of the
Company’s deferred income tax liabilities and assets are summarized as follows
as of April 30, 2009 and July 31, 2008:
HALBERD
CORPORATION AND SUBSIDIARY
(a
development stage company)
NOTES
TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
April
30,
|
July
31,
|
|||||||
|
2009
|
2008
|
|||||||
|
Deferred
tax assets:
|
||||||||
|
Net operating loss
carry forward
|
$ | 577,678 | $ | 48,500 | ||||
|
Depreciation and
other
|
5,758 | 2,400 | ||||||
|
Total
deferred tax assets
|
583,436 | 50,900 | ||||||
|
Expected
tax rate
|
34 | % | 34 | % | ||||
|
Gross
deferred income tax assets
|
$ | 198,368 | $ | 17,330 | ||||
|
Less
valuation allowance
|
-198,368 | - | ||||||
|
Net
deferred income tax asset
|
$ | - | $ | 17,330 | ||||
At April
30, 2009, the Company did not recognize any current or deferred federal or state
income tax benefit because it has sustained operating losses since
inception. The Company has provided a full valuation allowance on the
deferred tax asset, consisting primarily of net operating loss carry forwards,
because of uncertainty regarding its realizability.
Effective
January 1, 2008, the state of Michigan enacted the Michigan Business Tax Act
(“MBTA”), replacing the Michigan single business tax with a business income tax
and modified gross receipts tax. The enactment of the MBTA does not
have a material impact on the consolidated financial statements of the Company
to date.
|
7.
|
OPERATING
LEASE
|
The
Company utilizes the services of a third party that houses and maintains its web
site server. Such services are provided under a month to month lease
for $650 per month.
* * * *
*
|
HALBERD
CORPORATION AND SUBSIDIARY
(a
development stage company)
Bingham
Farms, Michigan
CONSOLIDATED
FINANCIAL STATEMENTS
For
the Period
August
2, 2007 (date of inception)
to
July 31, 2008
|
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
Bingham
Farms, Michigan
CONSOLIDATED
FINANCIAL STATEMENTS
For
the Period
August
2, 2007 (date of inception)
to
July 31, 2008
HALBERD
CORPORATION AND SUBSIDIARY
(a
development stage company)
TABLE
OF CONTENTS
|
Page
|
|
|
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
|
Consolidated
Financial Statements
|
|
| August 2, 2007 (date of inception) to July 31, 2008 | |
|
Consolidated Balance Sheets
|
F-2
|
|
Consolidated Statements of
Operations
|
F-3
|
|
Consolidated Statements of
Stockholders’ Deficit
|
F-4
|
|
Consolidated Statements of Cash
Flows
|
F-5
|
|
Notes to Interim Consolidated
Financial Statements
|
F-6
-
F-16
|
* * * *
*
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
January
26, 2009
Board of
Directors and Stockholders
Halberd
Corporation and Subsidiary
Bingham
Farms, Michigan
We have
audited the accompanying consolidated balance sheet of Halberd
Corporation and Subsidiary, (a development stage company), (“the
Company”) as
of July 31, 2008, and the related consolidated statements of operations,
stockholders’ deficit, and cash flows for the period August 2, 2007 (date
of inception) to July 31, 2008. These consolidated financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We
conducted our audit in accordance with the 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
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Halberd
Corporation and Subsidiary as of July 31, 2008, and the results of their
consolidated operations and their cash flows for the period August 2, 2007 (date
of inception) to July 31, 2008 in conformity with accounting principles
generally accepted in the United States of America.
/s/
Rehmann Robson
Rehmann Robson, P.C.
Troy,
Michigan
|
HALBERD
CORPORATION AND SUBSIDIARY
|
||||
|
(a
development stage company)
|
||||
|
CONSOLIDATED
BALANCE SHEET
|
||||
|
JULY
31, 2008
|
||||
|
ASSETS
|
||||
|
Cash
and cash equivalents (equal to total current assets)
|
$ | 1,387 | ||
|
Property
and equipment, net
|
314,221 | |||
|
Trademarks
|
8,770 | |||
|
Deferred
income taxes
|
17,330 | |||
|
Total
assets
|
$ | 341,708 | ||
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||
|
Liabilities
|
||||
|
Accounts
payable
|
$ | 17,959 | ||
|
Accrued
expenses
|
17,386 | |||
|
Deferred
revenue
|
1,510 | |||
|
Due
to officers
|
30,048 | |||
|
Line
of credit due to stockholder
|
10,900 | |||
|
Convertible
notes payable
|
300,000 | |||
|
Total
liabilities ( all current)
|
377,803 | |||
|
Stockholders'
deficit (Note 5)
|
||||
|
Common
stock - $0.001 par value; 120,000,000 shares
|
||||
|
authorized,
20,002,000 shares issued and outstanding
|
- | |||
|
Deficit
accumulated during the development stage
|
(36,095 | ) | ||
|
Total
stockholders' deficit
|
(36,095 | ) | ||
|
Total
liabilities and stockholders' deficit
|
$ | 341,708 | ||
The
accompanying notes are an integral part of the consolidated financial
statements.
F-2
|
HALBERD
CORPORATION AND SUBSIDIARY
|
||||
|
(a
development stage company)
|
||||
|
CONSOLIDATED
STATEMENT OF OPERATIONS
|
||||
|
August
2, 2007 (date of inception) to July 31, 2008
|
||||
|
Sales
|
$ | 7,015 | ||
|
Cost
of sales
|
646 | |||
|
Gross
margin
|
6,369 | |||
|
Operating
expenses
|
44,086 | |||
|
Operating
loss
|
(37,717 | ) | ||
|
Other
income (expense)
|
||||
|
Interest
income
|
1,253 | |||
|
Interest
expense
|
(16,961 | ) | ||
|
Other
expense, net
|
(15,708 | ) | ||
|
Loss
before income tax benefit
|
(53,425 | ) | ||
|
Income
tax benefit
|
17,330 | |||
|
Net
loss
|
$ | (36,095 | ) | |
The
accompanying notes are an integral part of the consolidated financial
statements.
F-3
|
HALBERD
CORPORATION AND SUBSIDIARY
|
||||||||||||||||
|
(a
development stage company)
|
||||||||||||||||
|
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' DEFICIT
|
||||||||||||||||
|
August
2, 2007 (date of inception) to July 31, 2008
|
||||||||||||||||
|
Deficit
Accumulated
|
Total
|
|||||||||||||||
|
Common
Stock
|
During
the
|
Stockholders'
|
||||||||||||||
|
Shares
|
Amount
|
Development
Stage
|
Deficit
|
|||||||||||||
|
Balances
- August 2, 2007
|
- | $ | - | $ | - | $ | - | |||||||||
|
Common
stock issued
|
10,001 | - | - | - | ||||||||||||
|
Net
loss
|
- | - | (36,095 | ) | (36,095 | ) | ||||||||||
|
Balances
- July 31, 2008
|
10,001 | $ | - | $ | (36,095 | ) | $ | (36,095 | ) | |||||||
|
Balances
as adjusted to reflect
|
||||||||||||||||
|
recapitalization
(Note 1)
|
20,002,000 | $ | - | $ | (36,095 | ) | $ | (36,095 | ) | |||||||
The
accompanying notes are an integral part of the consolidated financial
statements.
F-4
|
HALBERD
CORPORATION AND SUBSIDIARY
|
||||
|
(a
development stage company)
|
||||
|
CONSOLIDATED
STATEMENT OF CASH FLOWS
|
||||
|
August
2, 2007 (date of inception) to July 31, 2008
|
||||
|
Cash
flows from operating activities
|
||||
|
Net
loss
|
$ | (36,095 | ) | |
|
Adjustments
to reconcile net loss to net cash
|
||||
|
provided
by operating activities
|
||||
|
Depreciation
|
1,423 | |||
|
Deferred
income tax benefit
|
(17,330 | ) | ||
|
Changes
in operating assets and liabilities that provided cash:
|
||||
|
Accounts
payable and accrued expenses
|
35,345 | |||
|
Deferred
revenue
|
1,510 | |||
|
Due
to officers
|
30,048 | |||
|
Net
cash provided by operating activities
|
14,901 | |||
|
Cash
flows from investing activities
|
||||
|
Trademark
costs
|
(8,770 | ) | ||
|
Purchases
of property and equipment, including web site costs
|
(315,644 | ) | ||
|
Net
cash used in investing activities
|
(324,414 | ) | ||
|
Cash
flows from financing activities
|
||||
|
Proceeds
from issuance of convertible notes
|
300,000 | |||
|
Proceeds
from stockholder line of credit
|
10,900 | |||
|
Net
cash provided by financing activities
|
310,900 | |||
|
Net
increase in cash and cash equivalents, equal to cash
|
||||
|
and
cash equivalents at end of period
|
$ | 1,387 | ||
The
accompanying notes are an integral part of the consolidated financial
statements.
F-5
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
1.
|
BUSINESS
AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
Principles
of Consolidation
The
consolidated financial statements include the accounts of Halberd
Corporation and its wholly owned subsidiary Sellmybusinessnow.com,
Inc. All intercompany balances and transactions have been
eliminated in consolidation.
Organization,
Nature of Business (including development stage), and Basis of
Presentation
Sellmybusinessnow.com,
Inc. is a development stage company that was incorporated under the laws
of the state of Michigan on August 2, 2007. The Company began operating under
the name “Sellmybusiness.com®” on December 3, 2007. To
date, the Company’s activities have been limited to raising capital, obtaining
financing, constructing its website and administrative functions. The Company
has ten stockholders, eight of which have also entered into convertible debt
agreements with the Company (Note 4). Sellmybusiness.com® intends to provide a single
web portal for interested parties to find, buy and sell businesses, real estate
and equipment and all the related services needed to support the transaction,
including financing, incorporation, professional help and additional business
resources. Sellmybusiness.com® intends to support
businesses of all sizes and types, including start-ups, well-established
companies, home-based businesses, closely-held companies, multinational public
corporations and franchises. Sellmybusiness.com®’s real estate listing service
will assist business people to buy, sell, lease or sublease commercial land and
property. Sellmybusiness.com®’s equipment listing service
will provide a portal to buy, sell or lease excess inventory, capital equipment,
raw materials, vehicles, aircraft, ships and rail equipment.
On
January 26, 2009, Halberd
Corporation, a Nevada corporation, was formed by Sellmybusinessnow.com,
Inc.’s founders in conjunction with a legal reorganization of the
Company. Halberd
Corporation is structured to act as the parent company of Sellmybusinessnow.com,
Inc. As part of this action, and effective on January 28, 2009
all of the issued and outstanding shares of Sellmybusinessnow.com,
Inc.’s common stock were exchanged on a 2,000-to-1 basis for Halberd
Corporation’s common stock. As a result, the accompanying
consolidated financial statements reflect this reorganization and are presented
on a consolidated basis and are labeled as those of the parent
company. Halberd
Corporation and Subsidiary are collectively referred to as the
“Company”.
The
Company has adopted a fiscal year end of July 31.
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Basis
of Accounting
The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States.
Use
of Estimates
The
preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
income and expenses during the reporting period. Actual results could
differ from those estimates.
Segment
Reporting
The
Company has determined that it does not have any separately reportable business
segments at July 31, 2008.
Cash
and Cash Equivalents
Cash and
cash equivalents consist of cash on hand and demand deposits in
banks. The Company considers all highly liquid investments purchased
with original maturities of six months or less to be cash
equivalents.
Revenue
Recognition
The
Company utilizes the guidance in Securities and Exchange Commission (SEC) Staff
Accounting Bulletin (SAB) No. 104, Revenue Recognition, to
recognize revenue. Under SAB No. 104, revenue is recognized only when persuasive
evidence of an agreement exists, delivery of the service has occurred, the sales
price is fixed or determinable and collectability is reasonably assured.
Payments received in advance of services being rendered are recorded as deferred
revenue and recognized on a straight-line basis over the service
period.
As the
Company is in the development stage, it has generated limited revenues during
the period ended July 31, 2008. However, management believes the
Company will principally derive its future revenue from customers that pay fees
via credit card through the web site for a suite of services to market and
search for commercial real estate and operating businesses. These services
include a premium membership that provides the customer unlimited access to
listings, maximized exposure for their listings, along with enhanced services to
market their listings.
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Management
also anticipates the Company will earn revenue from other sources including
advertising revenues, which will be recognized ratably over the period in which
the advertisement is displayed on the web site, provided that no significant
obligations remain and collection of the resulting receivable is probable.
Advertising rates are dependent on the services provided and the placement of
the advertisements.
Property
and Equipment (including web site costs)
Costs
incurred to develop the Company’s web site, Sellmybusiness.com®,
are capitalized or expensed, as applicable, in accordance with the Financial
Accounting Standards Board Emerging Issues Task Force Issues No. EITF 00-2,
Accounting for Web Site
Development Costs, which addresses whether certain development costs
should be capitalized or expensed. Exhibit 00-2A of EITF 00-2 breaks
potential web site development costs into 34 distinct potential activities,
among four stages: Planning; Web Site Application and Infrastructure
Development; Graphics and Content Development; and
Operating. Management analyzes the nature of costs incurred relative
to these stages and either capitalizes or expenses the related costs in
accordance with EITF 00-2. Because the Company’s current web
site development costs incurred relate principally to development and testing,
the Company is generally capitalizing these costs.
Management
periodically reviews these assets to determine whether carrying values have been
impaired.
Depreciation
and Amortization
Depreciation
on equipment is computed using the straight-line method over the estimated
useful lives of the related assets which range from three to seven
years. Amortization of web site costs did not commence during the
period ended July 31, 2008 since the final operating version of the site was not
completed as of that date.
Trademark
Costs
The
Company has capitalized costs to obtain trademarks registered for its three
service marks Sellmybusiness.com®, Business Vault®, and Business
Watch®. Such costs principally relate to legal fees
incurred. These intangible assets have been determined to have a life
of 15 years and the Company will begin amortizing them when full website
operations begin (scheduled for April 2009).
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Income
Taxes
Deferred
income tax assets and liabilities are computed annually for differences between
the financial statement and tax bases of assets and liabilities that will result
in taxable or deductible amounts in the future, based on enacted tax laws and
rates applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be
realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and
liabilities. Deferred income taxes relate principally to the
Company’s net operating loss carry forward.
Concentration Risks
Financial
instruments that potentially subject the Company to a concentration of credit
risk consist of cash and cash equivalents and when they exist, trade accounts
receivable. Cash and cash equivalents are deposited with high credit
quality financial institutions. Revenue and accounts receivable are
primarily derived from credit card transactions with subscribers and are
typically settled within two to three business days.
Fair Value of Financial
Instruments
The
Company’s financial instruments, including cash and cash equivalents, accounts
receivable, accounts payable and accrued liabilities, are carried at cost, which
approximates their fair value because of the short-term maturity of these
instruments.
Net
Income (loss) Per Share
Net
income (loss) per share is calculated under the provisions of Statement of
Financial Accounting Standards (SFAS) No. 128, Earnings Per
Share. “Diluted” reflects the potential dilution of all common
stock equivalents except in cases where the effect would be
anti-dilutive.
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Recent Accounting Pronouncements
On August
1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements,”
(SFAS 157), which defines fair value, establishes a framework for measuring fair
value under accounting principles
generally accepted in the United States, and enhances disclosures about fair
value measurements. The Company elected to delay the application of SFAS 157 to
nonfinancial assets and nonfinancial liabilities, as allowed by FASB Staff
Position (FSP) SFAS 157-2. FSP SFAS 157-3 clarifies the application of SFAS 157
in a market that is not active. SFAS 157 (as amended) applies whenever other
standards require (or permit) assets or liabilities to be measured at fair value
and, therefore, does not expand the use of fair value in any new circumstances.
Fair value is defined as the exchange price that would be received to sell an
asset or paid to transfer a liability in the principal or most advantageous
market for the asset or liability in an orderly transaction (i.e., not a forced
transaction, such as a liquidation or distressed sale) between market
participants at the measurement date. SFAS 157 (as amended) clarifies that fair
value should be based on the assumptions market participants would use when
pricing an asset or liability and establishes a fair value hierarchy that
prioritizes the information used to develop those assumptions. The fair value
hierarchy gives the highest priority to quoted prices in active markets and the
lowest priority to unobservable data. SFAS 157 (as amended) requires fair value
measurements to be separately disclosed by level within the fair value
hierarchy. For assets and liabilities recorded at fair value, it is the
Company’s policy to maximize the use of observable inputs and minimize the use
of unobservable inputs when developing fair value measurements for those items
for which there is an active market. In cases where the market for a financial
asset or liability is not active, the Company includes appropriate risk
adjustments that market participants would make for nonperformance and liquidity
risks when developing fair value measurements.
Fair
value measurements for assets and liabilities where there exists limited or no
observable market data and, therefore, are based primarily upon estimates, are
often calculated based on the economic and competitive environment, the
characteristics of the asset or liability and other factors. Therefore, the
results cannot be determined with precision and may not be realized in an actual
sale or immediate settlement of the asset or liability. Additionally, there may
be inherent weaknesses in any calculation technique, and changes in the
underlying assumptions used, including discount rates and estimates of future
cash flows, could significantly affect the results of current or future values.
The initial adoption of SFAS No. 157 did not have any impact on the Company’s
financial position or operations.
Effective
August 1, 2008, the Company adopted SFAS No. 159, "The Fair Value Option for Financial
Assets and Financial Liabilities, including an amendment of FASB Statement No.
115" (SFAS 159), which is effective for fiscal years beginning after
November 15, 2007. SFAS 159 provides companies with an option to report selected
financial assets and liabilities at fair value. The objective of SFAS 159 is to
reduce both complexity in accounting for financial instruments and the
volatility in earnings caused by measuring related assets and liabilities
differently. SFAS 159 also establishes presentation and disclosure requirements
designed to facilitate comparisons between companies that choose different
measurement attributes for similar types of assets and liabilities. It also
requires entities to display the fair value of those assets and liabilities for
which the company has chosen to use fair value on the face of the balance sheet.
SFAS 159 does not eliminate disclosure requirements included in other accounting
standards, including requirements for disclosures about fair value measurements
included in SFAS 157 and SFAS No. 107, "Disclosures about Fair Value of
Financial Instruments." At August 1, 2008 the Company decided
not to elect the fair value option for any financial assets or
liabilities under the scope of SFAS 159.
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
In
December 2007, the FASB issued SFAS No. 141(revised 2007), “Business Combinations,” (SFAS
141(R)), which replaces SFAS 141. SFAS 141(R) establishes principles and
requirements for recognition and measurement of assets, liabilities and any
non-controlling interest acquired due to a business combination. Under SFAS
141(R) the entity that acquires the business (whether in a full or partial
acquisition) may recognize only the assets acquired, the liabilities assumed,
and any non-controlling interest in the acquiree at the acquisition date,
measured at fair value. SFAS 141(R) requires the acquirer to recognize goodwill
as of the acquisition date, measured as a residual. Under SFAS 141(R),
acquisition-related transaction and restructuring costs will be expensed as
incurred rather than treated as part of the acquisition cost and included in the
amount recorded for assets acquired. SFAS 141(R) is effective for fiscal years
beginning after December 15, 2008. Accordingly, the Company will apply the
provisions of SFAS 141(R) for acquisitions completed after July 31,
2009.
In April
2008, the FASB issued FASB Staff Position, No. 142-3, “Determination of the Useful Life of
Intangible Assets” (“FSP 142-3”). This FSP amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS No. 142,
“Goodwill and Other Intangible
Assets”. The intent of this FSP is to improve the consistency
between the useful life of a recognized intangible asset under SFAS No. 142 and
the period of expected cash flows used to measure the fair value of the asset
under SFAS No. 141(R), “Business Combinations,” and other U.S. generally
accepted accounting principles. This FSP is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years and early adoption is
prohibited. Accordingly, this FSP is effective for the Company on
August 1, 2009. The Company does not believe the adoption of FSP
142-3 will have a material impact on its financial position, results of
operations or cash flows.
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
In June
2008, the FASB issued FSP No. EITF 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating
Securities,” (FSP EITF 03-6-1). FSP EITF 03-6-1 clarifies that unvested
share-based payment awards that contain non-forfeitable rights to dividends or
dividend equivalents are considered participating securities and should be
included in the calculation of basic earnings per share using the two-class
method prescribed by SFAS 128, “Earnings Per Share.” FSP EITF
03-6-1 is effective for financial statements issued for fiscal years and interim
periods beginning after December 15, 2008. All prior period earnings per share
amounts presented are required to be adjusted retrospectively. Accordingly, the
Company will adopt the provisions of FSP EITF 03-6-1 on February 1,
2009. The Company does not expect the adoption of the provisions of
FSP EITF 03-6-1 to have a material effect on the Company’s financial condition
and results of operations.
Other
recent accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies are not expected to apply to the Company or have
a material impact on the Company’s reported results of operations on a per share
basis.
|
2.
|
PROPERTY
AND EQUIPMENT
|
|
|
Property
and equipment consists of the following assets at July 31,
2008:
|
|
Web
site costs
|
$ | 302,269 | ||
|
Telephone
system
|
8,464 | |||
|
Computer
equipment
|
4,911 | |||
|
Total
|
315,644 | |||
|
Less
accumulated depreciation
|
1,423 | |||
|
Property
and equipment, net
|
$ | 314,221 | ||
|
3.
|
RELATED
PARTY TRANSACTIONS (including debt and
leases)
|
The
Company’s majority stockholder has provided a $75,000 revolving line of credit
to the Company. Outstanding advances bear interest at 10% per annum, and any
such advances are due May 1, 2009. Interest of $160 on such advances is included
with accrued expenses on the accompanying consolidated balance
sheet.
The
Company incurred rent expense of $10,500 for the initial period ended July 31,
2008 under a month-to-month lease with an entity in which the Company’s majority
stockholder is an owner. Subsequent to year end, the Company began leasing space
from the majority stockholder for $1,500 per month. The arrangement operates on
an informal, month-to-month basis.
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The Company leases its domain name from
an entity owned by its majority stockholder. Rent expense for the
initial period ended July 31, 2008 was $426; the related liability is included
in accrued expenses at July 31, 2008. The monthly rent for use of the
domain name is based on 5% of revenues.
The
Company has accrued $15,000 each for services provided by its majority and 20%
stockholders during the period ended July 31, 2008. Such amounts are
included in the accompanying consolidated balance sheet under “Due to Officers”,
as well as a miscellaneous amount of $48 due to the majority
stockholder.
The
Company paid a business related by common ownership (to its 20% stockholder)
$25,000 during the period ended July 31, 2008 for various services in connection
with web site development and business planning.
|
4.
|
CONVERTIBLE
DEBT
|
On
January 1, 2008 the Company issued convertible promissory notes totaling
$300,000 to eight stockholders, who own a combined 15% of the Company’s common
stock. The notes bear interest at 10% per annum and are due on the earlier of
the Company registering any of its securities under the Securities Act of 1933
or eighteen months after the date of the note (April through July 2009). In
addition, each of the note holders may; at their option, convert the entire
outstanding principal amount of their note into shares of the Company’s common
stock at any time up to the maturity date of the respective note. If all holders
of these notes exercised the conversion option, the Company would be required to
issue an additional 4,508,000 shares (shares reflect exchange discussed in Note
1) (See Note 9).
Interest
expense on these notes was $16,800 for the period ended July 31, 2008 and is
included with accrued expenses on the accompanying consolidated balance
sheet.
|
5.
|
CAPITAL
STOCK
|
The
Company’s initial common shares issued to its two founders (65% and 20% of the
outstanding shares, respectively) and eight initial investors (15% of
outstanding shares, all of whom also hold convertible debt (see Note 4), were
issued for no consideration and are thus carried at a value of zero on the
accompanying consolidated balance sheet as no services were performed or were
required to be performed in order for any of the original investors to obtain
their shares. Management determined the fair value of the initial shares to be
zero given the start-up nature of the business which included a lack of
operational history, lack of share liquidity and a lack of corporate financing
for operations at the time of issuance.
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
Company has authorized 10,000,000 shares of preferred stock at a par value of
$0.001. No preferred shares are issued or outstanding as of July 31,
2008. Any preferences, rights, voting powers, restrictions, dividend
limitations, qualifications, and terms and conditions of redemption shall be set
forth and adopted by a board of directors’ resolution prior to issuance of any
series of preferred stock.
|
6.
|
INCOME
TAXES
|
The
Company establishes valuation allowances in accordance with the provisions of
SFAS No. 109, Accounting for
Income Taxes. The Company continually reviews realizability of
deferred tax assets and recognizes these benefits only as reassessment indicates
that it is more likely than not that such tax benefits will be
realized.
As of
July 31, 2008, the Company has a net operating loss carry forward for federal
income tax purposes of approximately $48,500, which expires in 2023, available
to reduce federal taxable income of future periods.
Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. Significant components of
the Company’s deferred income tax liabilities and assets are summarized as
follows as of July 31, 2008:
|
Amount
|
||||
|
Deferred
tax assets:
|
||||
|
Net
operating loss carry forward
|
$ | 48,500 | ||
|
Depreciation
and other
|
2,400 | |||
|
Total
deferred tax assets
|
50,900 | |||
|
Expected
tax rate
|
34 | % | ||
|
Net
deferred income tax assets
|
$ | 17,330 | ||
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
income tax benefit for the period ended July 31, 2008 consists entirely of a
deferred benefit. No valuation allowance has been recorded on the
deferred tax assets due to management’s estimates of future taxable income,
beginning in 2010. Management believes that it is more likely than
not that the deferred tax assets will be realized in full based on comparisons
of profitability with similar enterprises, the expected high margin nature of
the business and the Company’s anticipated ability to raise sufficient capital
to drive awareness of the web site through advertising.
Effective
January 1, 2008, the state of Michigan enacted the Michigan Business Tax Act
(“MBTA”), replacing the Michigan single business tax with a business income tax
and modified gross receipts tax. The enactment of the MBTA does not have a
material impact on the consolidated financial statements of the Company as of
July 31, 2008.
|
7.
|
OPERATING
LEASE
|
The
Company utilizes the services of a third party that houses and maintains its web
site server. Such services are provided under a month to month lease
for $650 per month.
|
8.
|
NET
LOSS PER SHARE
|
Basic net
loss per share is computed by dividing the net loss for the period by the
weighted average number of common shares outstanding during the period. Diluted
net loss per share is computed by dividing the net loss for the period by the
weighted average number of shares of common stock and potentially dilutive
common stock outstanding during the period. The following table sets forth the
computation of basic and diluted net loss per share for the period ended July
31, 2008:
|
Numerator:
|
||||
|
Net loss
|
$ | (36,095 | ) | |
|
Denominator
|
||||
|
Weighted average common shares-basic and diluted
|
20,002,000 | |||
|
Net
loss per share
|
||||
|
Basic
|
$ | 0.00 | ||
|
Diluted
|
$ | 0.00 | ||
|
Common
stock equivalents excluded from net loss per
|
||||
|
diluted share because their effect would have been
|
||||
|
anti-dilutive
|
4,508,000 | |||
HALBERD
CORPORATION AND
SUBSIDIARY
(a
development stage company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
9.
|
SUBSEQUENT
EVENTS (UNAUDITED)
|
The
Company is preparing to become a publicly traded company and intends to file
a Form S-1 Registration Statement with the Securities and Exchange
Commission in Spring 2009. In connection with this process, the Company
issued a private placement memorandum ("PPM") to increase the number of
shareholders to a minimum of 35. The PPM resulted in the Company issuing
374,000 shares of common stock to 32 additional stockholders in exchange for
cash consideration of $93,500 in January 2009. Seven vendors who were owed
a total of $20,500 as of December 31, 2008 were issued 82,000 shares of stock in
settlement of amounts owed to them.
During
January 2009, all of the convertible debt was converted to equity, resulting in
the issuance of 4,508,000 shares of the Company’s common stock. Related
accrued interest of $23,000 on these loans was also converted to equity,
resulting in the issuance of 92,000 shares of the Company’s common
stock. All shares in this note have been adjusted to reflect the
exchange discussed in Note 1.
* * * *
*
AND
RESULTS OF OPERATIONS
This
section of the Registration Statement includes a number of forward-looking
statements that reflect our current views with respect to future events and
financial performance. Forward-looking statements are often identified by words
like believe, expect, estimate, anticipate, intend, project and similar
expressions, or words which, by their nature, refer to future events. You should
not place undue certainty on these forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from our
predictions.
Overview
of Our Performance and Operations
Our
business
We are a
development stage company that was incorporated under the laws of the State of
Nevada on January 26, 2009. On January 28, 2009, we entered into a share
purchase agreement with SellMyBusinessNow.com, Inc. (DBA SellMyBusiness.com), a
corporation established under the laws of the State of Michigan in August 2007,
pursuant to which we acquired all the shares of common stock of SellMyBusiness
for 25,058,000 shares of our common stock. As a result, SellMyBusiness became
our wholly-owned subsidiary.
To date,
the Company’s activities have been limited to raising capital, obtaining
financing, constructing its website and administrative functions. As reflected
in the accompanying financial statements, we had liabilities of $525,876; and a
net loss of $572,792 for the period from inception to April 30, 2009. We had
liabilities of $525,876, and a net loss of $536,697 for the nine months ended
April 30, 2009, respectively.
Plan
of Operation
We have
begun limited operations, and we require outside capital to implement our
business model.
1. We
believe we can complete development of version 2 of the website, continue
marketing efforts in the U.S., continue the Company’s national public relations
campaign, develop local language versions of the website in select international
markets, launch targeted marketing campaigns internationally.
2. All
business functions will be coordinated and managed by our CEO Mark
Lundquist, President & COO John Maddox, and our consultants.
3. Within
120 days of the initiation of our marketing campaign, we believe we will begin
to generate expanded revenues from our targeted approach.
Based on
the development stage of the Company and its operational plan, management
believes that the Company will incur operating losses in the foreseeable future.
Management has developed an operational plan that has been presented to various
institutional funds and has entered into an Equity line with Dutchess Capital
for securities financing. However, access to the investment fund is
predicated on the market for the Company’s stock and therefore the Company
cannot issue assurances that our shareholders will not be diluted by investment
of such capital, or to the extent of the dilution. Also, we cannot assure that
securities issued in exchange for such capital will not be sold on terms more
favorable than those of the shares sold in current or other offerings. The
availability of such funding is subject to credit, economic, market and legal
constraints. The inability to secure required capital from the fund could have a
material adverse effect on our business, operation results, or financial
condition. Additionally, there are no guarantees that any additional
financing can be obtained.
Limited
Operating History
We are a
developmental business listing and services Company incorporated on January
26, 2009, and as such had minimal operating revenues to date. Further, we
have limited assets and earnings to date. The success of our company is
dependent upon the extent to which it will gain market share. All financial
information and financial projections and other assumptions made by us are
speculative and, while based on management's best estimates of projected sales
levels, operational costs, consumer preferences, and the general economic and
competitive health of our company in the business listing and services
marketplace, there can be no assurance that we will operate profitably or remain
solvent.
Results
of Operations
As of the
most recent quarter ended April 30, 2009, we had cash on hand of $6,854, and our
total assets were $587,539 while our total liabilities were $525,876. We had
shareholder’s equity of $61,663.
For the
nine months ended April 30, 2009, we had a net loss of $536,697. The company has
had minimal revenues since 2007 and will need to raise capital to further its
operations. Based on the development stage of the Company and its operational
plan, management believes that the Company will incur operating losses in the
foreseeable future. Management has developed an operational plan that has been
presented to various institutional funds and has entered into a an Equity line
with Dutchess Capital for securities financing. Management believes that it can
enter into definitive agreements with the funder on terms that are acceptable.
However, access to the investment fund is predicated on the market for the
Company’s stock and therefore the Company cannot issue assurances that our
shareholders will not be diluted by investment of such capital, or to the extent
of the dilution. Also, we cannot assure that securities issued in exchange for
such capital will not be sold on terms more favorable than those of the shares
sold in current or other offerings. The availability of such funding is subject
to credit, economic, market and legal constraints. The inability to secure
required capital from the fund could have a material adverse effect on our
business, operation results, or financial condition. Additionally, there are no
guarantees that any additional financing can be obtained.
Liquidity
and Capital Resources
We
anticipate based on the development stage of our Company and our operational
plan we will incur operating losses in the foreseeable future. We have developed
an operational plan that has been presented to potential private investment in
public equity (“PIPE”) funders with the result that we have secured a an Equity
line with Dutchess Capital for $25 million in securities to assist in the
Company’s development and growth. Therefore, we believe we can satisfy our cash
requirements for the future based upon our access to capital from this
Securities Financing Agreement (“SFA”) and our ability to generate cash from
operations.
The
amount of funding required from the SFA and our desire to request funding from
the SFA is based on our ability to generate revenue from operations. If actual
revenue exceeds projections the company’s need for SFA funding is diminished. If
actual revenue trails projections the Company’s need for SFA funding is
heightened and is dependent on the market for our stock. Therefore,
there is no assurance that we will either need or be successful in completing
all portions of the PIPE, secondary offering or any other financing when we have
an active market for our stock. Our investors should assume that any
portions of SFA or other outside funding will cause substantial dilution to
current stockholders. Further, there can be no assurances that the
SFA will close and that we will have access to this capital.
The
foregoing represents our best estimate of our cash needs based on current
planning and business conditions. The exact allocation, purposes and timing of
any monies raised in subsequent private financings may vary significantly
depending upon the exact amount of funds raised and our progress with the
execution of our business plan.
Off
Balance Sheet Arrangements
We do not
have any off-balance sheet arrangements that we are required to disclose
pursuant to these regulations. In the ordinary course of business, we enter into
operating lease commitments, purchase commitments and other contractual
obligations. These transactions are recognized in our financial statements in
accordance with generally accepted accounting principles in the United
States.
We do not
have any off-balance sheet arrangements, financings, or other relationships with
unconsolidated entities or other persons, also known as “special purpose
entities” (SPEs).
Critical
Accounting Policies
The
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates based on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
A summary
of significant accounting policies is included in Note 1 to the audited
consolidated financial statements for the year ended July 31, 2008. Management
believes that the application of these policies on a consistent basis enables us
to provide useful and reliable financial information about our Company's
operating results and financial condition.
Recently
Issued Accounting Pronouncements
In
April 2009, the Financial Accounting Standards Board (FASB) issued three
related Staff Positions (FSP): (i) FSP 157-4, “Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability have Significantly
Decreased and Identifying Transactions That Are Not Orderly”, (ii)
FSP Statement of Financial Accounting Standard (SFAS) 115-2 and SFAS
124-2, “Recognition and Presentation of Other-Than-Temporary
Impairments”, and (iii) FSP SFAS 107-1 and Accounting Principles
Board (APB) 28-1, “Interim Disclosures about Fair Value of Financial
Instruments”, each of which will be effective for interim and annual periods
ending after June 15, 2009. FSP 157-4 provides guidance on how to determine
the fair value of assets and liabilities under SFAS 157 Fair Value Measurements,
in the current economic environment and reemphasizes that the objective of a
fair value measurement remains the determination of an exit price. FSP SFAS
115-2 and SFAS 124-2 modify the requirements for recognizing
other-than-temporarily impaired debt securities and revise the existing
impairment model for such securities by modifying the current intent and ability
indicator in determining whether a debt security is other-than-temporarily
impaired. FSP SFAS 107 and APB 28-1 enhance the disclosure of instruments under
the scope of SFAS 157 for both interim and annual periods. We are currently
evaluating the potential impact of these Staff Positions.
In
December 2007, the FASB issued SFAS No. 141(revised 2007), “Business Combinations,”
(SFAS 141(R)), which replaces SFAS 141. SFAS 141(R) establishes principles
and requirements for recognition and measurement of assets, liabilities and
any non-controlling interest acquired due to a business combination. Under
SFAS 141(R) the entity that acquires the business (whether in a full or
partial acquisition) may recognize only the assets acquired, the
liabilities assumed, and any non-controlling interest in the acquiree at
the acquisition date, measured at fair value. SFAS 141(R) requires
the acquirer to recognize goodwill as of the acquisition date, measured as
a residual. Under SFAS 141(R), acquisition-related transaction and
restructuring costs will be expensed as incurred rather than treated as
part of the acquisition cost and included in the amount recorded for assets
acquired. SFAS 141(R) is effective for fiscal years beginning
after December 15, 2008. Accordingly, the Company will apply the provisions
of SFAS 141(R) for acquisitions completed after July 31, 2009.
In
April 2009, the FASB issued FSP No. 141R-1, “Accounting for Assets
Acquired and Liabilities Assumed in a Business Combination That Arise from
Contingencies”. FSP 141R-1 amends the provisions in FASB Statement 141R for the
initial recognition and measurement, subsequent measurement and accounting, and
disclosures for assets and liabilities arising from contingencies in business
combinations. FSP 141R-1 eliminates the distinction between contractual and
non-contractual contingencies, including the initial recognition and measurement
criteria in Statement 141R and instead carries forward most of the provisions in
SFAS 141 for acquired contingencies. FSP 141R-1 is effective for contingent
assets and contingent liabilities acquired in business combinations for which
the acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. We expect that FSP 141R-1
will not have an impact on our consolidated financial statements at this
time.
In April
2008, the FASB issued FASB Staff Position, No. 142-3, “Determination of the Useful
Life of Intangible Assets” (“FSP 142-3”). This FSP amends the factors
that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under
SFAS No. 142, “Goodwill and
Other Intangible Assets”. The intent of this FSP is to improve the
consistency between the useful life of a recognized intangible asset under
SFAS No. 142 and the period of expected cash flows used to measure the fair
value of the asset under SFAS No. 141(R), “Business Combinations,” and
other U.S. generally accepted accounting principles. This FSP is effective
for financial statements issued for fiscal years beginning after December
15, 2008, and interim periods within those fiscal years and early adoption
is prohibited. Accordingly, this FSP is effective for the Company on August
1, 2009. The Company does not believe the adoption of FSP 142-3 will have a
material impact on its financial position, results of operations or cash
flows.
Other
recent accounting standards that have been issued or proposed by the FASB
or other standards-setting bodies are not expected to apply to the Company
or have a material impact on the Company’s reported results of operations
on a per share basis.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There
have been no changes in or disagreements with accountants on accounting or
financial disclosure matters.
Our
executive officer’s and director’s and their respective ages as of July 7, 2009
are as follows:
|
Name
|
Age
|
Position
|
|
Mark
Lundquist
|
51
|
Chief
Executive Officer, Secretary and Director
|
|
John
Maddox
|
43
|
President,
Interim Chief Financial Officer, Chief Operating Officer, Treasurer and
Director
|
|
Lizabeth
Ardisana
|
58
|
Director
|
|
Leland
Thomas
|
58
|
Chairman
of the Board of Directors
|
|
Bruce
Nyberg
|
63
|
Director
|
|
Nicholas
Cocco
|
44
|
Director
|
|
Michael
Burns
|
66
|
Director
|
Set forth
below is a brief description of the background and business experience of our
executive officers and directors for the past five years.
Mark Lundquist,
Co-Founder, Chief Executive Officer, Secretary and
Director
Mr.
Lundquist has been our Chief Executive Officer and Secretary since inception on
January 26, 2009. He is also the Founder, President and CEO of Fulcrum Edge,
Inc., a business advisory company specializing in business planning, corporate
growth, strategic planning, and sales and marketing since 2001. He spent fifteen
years in the aerospace and defense arena before coming to Detroit to work in the
automotive and high-tech automation industries. In the corporate world he was
brought in to implement change, restructuring, turnarounds and help companies
grow their business, frequently in preparation for sale. He has held executive
positions with firms such as Grimes Aerospace (now Honeywell), Valcor,
Aeroquip-Vickers, Mannesmann, Bosch and Norgren. Mr. Lundquist also founded
WebAxia, Inc., an online based business focused on website effectiveness, as
well as co-founding Petronom+Hydronom, LLC, a distributor of water purification
and combustion engine fuel enhancement devices.
Mr.
Lundquist studied astrophysics and engineering at the University of Illinois at
Urbana-Champaign and has a degree in Mechanical Engineering. He is a
mentor to Detroit’s TechTown and Ann Arbor SPARK, two high tech business
incubators; and sits on the advisory boards for multiple firms. He is
also an Executive Faculty Member of Wayne State University’s E2detroit
Entrepreneurship Program, an instructor for the University of Michigan’s
entrepreneurship immersion programs, and a contributing business writer to Michigan SmallTech, the
state’s micro- and nanotechnology association.
John Maddox,
Co-founder, President, Interim Chief Financial Officer, Chief Operating
Officer, Treasurer and Director
Mr.
Maddox has been our President and COO since inception on January 26, 2009.
Effective June 23, 2009, he was appointed as our interim Chief Financial Officer
in connection with the resignation of the company’s former CFO. Mr. Maddox is
also a Founder and Principal with a Detroit based public accounting firm with
more than sixteen years experience working with a variety of clients on business
matters since 1992. He started his public accounting career with the
international firm of Grant Thornton after working eight years with his father’s
commercial roofing business, Lake Michigan Roofing, Inc. Prior to forming the
Detroit based public accounting firm, Mr. Maddox was a principal with a large
CPA firm in metropolitan Detroit. He was also the Founder and President of
MutualFundTaxInfo.com, an Internet-based firm providing information to
specialists in the mutual fund arena.
Mr.
Maddox holds a Bachelor of Science in Business Administration, a Masters Degree
in Taxation and a Graduate Certificate Degree in Taxation from
Walsh College. He is a member of the American Institute of
Certified Public Accountants, the Michigan Association of Certified Public
Accountants, and a former member of the Institute of Management
Accountants.
Lizabeth Ardisana,
Director
Ms.
Ardisana is the Chief Executive Officer of ASG Renaissance, a technical and
communication services firm she founded in 1987. The firm operates
offices in Michigan, California, Washington, D.C., South Carolina and Ontario,
Canada.
She is
currently a Director of Citizens Republic Bank, a trustee of Oakwood Hospital,
Chairperson of the Board of Directors of the Michigan Hispanic Chamber of
Commerce, Executive Board Member of the Detroit Regional Chamber of Commerce and
a trustee of the Skillman Foundation. Beth is also Vice-Chairman of
Focus: HOPE non-profit, a trustee of Kettering University and Treasurer of the
Metropolitan Affair Council. She also created and launched the
Hispanic Automotive Supplier Alliance.
Beth has
a Bachelor’s degree in Mathematics and Computer Science from the University of
Texas, a Master’s degree in Mechanical Engineering from the University of
Michigan, and a Master’s degree in Business Administration from the University
of Detroit.
Leland Thomas, Chairman of
the Board of Directors
Mr.
Thomas has been a member of our Advisory Board since January 2008. He is also a
Director with BBK, an international business advisory firm. He has
over 28 years of financial and operational expertise, including experience as a
self-employed turnaround consultant, a Chief Operating Officer, and a Corporate
Manager of Finance. His background includes alternative financing,
national and global business expansion, marketing, project management and
securities in both closely-held and large public corporations.
Mr.
Thomas has a Master of Business Administration in Finance from
Indiana University, a Bachelor of Science in Electrical Engineering from
the University of Illinois at Urbana-Champaign, and is a Registered Professional
Engineer in the state of Michigan.
Bruce Nyberg,
Director
Mr.
Nyberg held the position of Regional President of Huntington Bancshares
Incorporated until his retirement in 2007. In this role he headed up the $3
billion, 43 branch subsidiary in Eastern Michigan. Prior to his
career with Huntington Bank, he held the position of Senior Vice
President/Division Head of NBD Bancorp (now J.P.Morgan Chase).
He is
currently the Chairman of Forgotten Harvest, the nation’s third largest food
rescue organization and the Chairman of Michigan Roundtable for Diversity and
Inclusion. He also sits on the board of the Community Foundation for Southeast
Michigan. Previous board experience includes positions with MasterCard
International, Detroit Regional Chamber, Magic Line, New Detroit, and Bowling
Green State University Foundation.
Bruce
holds a Bachelor of Arts degree in History and Business (cum laude) from Bowling
Green State University and a Masters of Business Administration (with
Distinction) from the University of Michigan in Ann Arbor.
Nicholas Cocco,
Director
Mr. Cocco
has been a member of our Advisory Board and Chief of Staff since December
2008. He is also the Managing Director of River Star, LLC, a Michigan-based
liquidity management organization based in the greater Detroit area with
clients throughout the United States. Since 2001, River Star has been
specializing in business process optimization strategies for both public and
privately owned organizations. Mr. Cocco has over twenty-five years
of professional experience in sales, marketing, consulting and operations within
the retail, wholesale and technology industries. He has experience in
mergers and acquisitions, acquisition integration, turnarounds and new business
development.
Mr. Cocco
received his Baccalaureate of Science degree with distinction from the College
of Management and Business at National-Louis University in 1996. He
received his Associate of Sciences degree from
Northern Virginia Community College graduating Summa Cum
Laude. Additionally, he attended the Richard Devos Executive MBA
program at Northwood University in 2002/2003.
Michael Burns,
Director
Mr. Burns
held the position of President & CEO of Pioneer Human Services (Seattle)
until his retirement in 2007. Prior to this he was President &
CEO of Sea Watch International; President & CEO of Designer Foods, Inc.;
President & CEO of The Rymer Company (NYSE listed); President & CEO of
Kroehler Manufacturing Company (NYSE listed), and; President of Dutch Boy
Paints.
He is a
Founding Board Member and Secretary of Pinnacle Forum Seattle; Founding Board
Member and Vice Chair, Eastside Academy; Founding Board Member of Enzon, Inc.
(NASDAQ listed); Advisory Board Member of Entrenuity, and; Board Secretary for
Second Chance.
He holds
a Bachelor of Arts in English from William Paterson University and a Juris
Doctorate from Seton Hall University. He was admitted to the New
Jersey Bar in 1975.
COMMITTEES
OF THE BOARD OF DIRECTORS
Audit
Committee
Bruce
Nyberg and Michael Burns currently serve as its separately designated standing
Audit Committee, established in accordance with section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), with Bruce
Nyberg chairing the committee and serving as its financial
expert.
The
function of the Audit Committee, is to provide assistance to the Board in
fulfilling its responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, management practices,
reporting practices, and the quality and integrity of the financial reports of
the Company. In so doing, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the directors, the
independent auditors and Company management.
Compensation
Committee
Michael
Burns and Lizabeth Ardisana currently serve as its Compensation Committee, with
Michael Burns chairing the committee.
The
Compensation Committee establishes the Company’s general compensation policy
and, except as prohibited by law, may take any and all actions that the Board
could take relating to compensation of directors, executive officers, employees
and other parties. The Compensation Committee’s role is to (i) evaluate the
performance of the Company’s executive officers, (ii) set compensation for
directors and executive officers, (iii) make recommendations to the Board on
adoption of compensation plans and, (iv) administer Company compensation plans.
When evaluating potential compensation adjustments, the Compensation Committee
solicits and considers input provided by the Chief Executive Officer relating to
the performance and/or contribution to the Company’s overall performance by
executive officers and other key employees.
Business
Development Committee
Nicholas
Cocco and Mark Lundquist currently serve as its Business Development Committee,
with Nicholas A. Cocco chairing the committee.
The
Business Development Committee serves the Company by investigating, analyzing
and recommending strategic business development, strategic partnerships,
affiliate relationships, joint ventures, mergers, divestitures, and
acquisitions.
DIRECTOR
COMPENSATION
At this
time, our directors will not receive a fee for attending each board of directors
meeting or meeting of a committee of the board of directors. Directors are
permitted to receive fixed fees and other compensation for their services as
directors. The Board of Directors has the authority to fix the compensation of
directors. No amounts have been paid to, or accrued to, directors in such
capacity.
FAMILY
RELATIONSHIPS
There are
no family relationships among any of our officers or directors.
INVOLVEMENT
IN CERTAIN LEGAL PROCEEDINGS
John C.
Maddox, President, Interim Chief Financial Officer, Chief Operating
Officer, Treasurer and Director of the Company, is subject to certain
payments under a Chapter 13 Plan approved by United States Bankruptcy Court on
June 13, 2007. He paid $600 per month to certain creditors from May 31, 2007 to
September 30, 2008. He is now paying $669.04 per month to these creditors for
12 months, effective October 1, 2008.
Except as
disclosed above, to the best of our knowledge, none of our directors or
executive officers have been convicted in a criminal proceeding, excluding
traffic violations or similar misdemeanors, or has been a party to any judicial
or administrative proceeding during the past five years that resulted in a
judgment, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws, except for matters
that were dismissed without sanction or settlement. Except as set forth in our
discussion below in “Certain Relationships and Related Transactions,” none of
our directors, director nominees or executive officers has been involved in any
transactions with us or any of our directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and
regulations of the SEC.
John
Maddox served as Compliance Officer of the Company. The Company adopted a Code
of Business Conduct and Ethics.
Summary
Compensation Table
The
following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to the named persons for services
rendered in all capacities during the noted periods.
SUMMARY
COMPENSATION TABLE
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation ($)
|
Non-Qualified
Deferred Compensation Earnings
($)
|
All
Other Compensation
($)
|
Totals
($)
|
||||||||||||
|
Mark
Lundquist, CEO and Secretary
|
2008
|
$
|
0
|
0
|
0
|
0
|
0
|
0
|
25,000(1)
|
$
|
25,000
|
||||||||||
|
2007
|
0
|
0
|
0
|
0
|
0
|
0
|
5,000(2)
|
$
|
5,000
|
||||||||||||
|
John
Maddox, President, Interim CFO, COO
|
2008
|
$
|
0
|
0
|
0
|
0
|
0
|
0
|
25,000(1)
|
$
|
25,000
|
||||||||||
|
2007
|
$
|
0
|
0
|
0
|
0
|
0
|
0
|
5,000(2)
|
$
|
5,000
|
|||||||||||
|
Leland
Thomas, Director
|
2008
|
$
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
$
|
0
|
||||||||||
|
2007
|
$
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
$
|
0
|
|||||||||||
|
Nicholas
Cocco, Director
|
2008
|
$
|
11,250
|
0
|
0
|
0
|
0
|
0
|
11,250(3)
|
$
|
11,250
|
||||||||||
|
Joel
M. Ungar
Former
Chief Financial Officer
|
2008
|
$
|
5,000
|
0
|
0
|
0
|
0
|
0
|
5,000(4)
|
$
|
5,000
|
||||||||||
|
Lizabeth
Ardisana
Director
(5)
|
2008
|
$
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|||||||||||
|
Bruce
Nyberg
Director
(5)
|
2008
|
$
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|||||||||||
|
Michael
Burns
Director
(5)
|
2008
|
$
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|||||||||||
|
(1)
|
Mr.
Lundquist and Mr. Maddox received $25,000 each for consulting services in
2008. Additional $35,000 each was accrued and will be paid to them
respectively depending on the financial conditions of the
Company.
|
|
(2)
|
Mr.
Lundquist and Mr. Maddox received $5,000 each for consulting services in
2007.
|
|
(3)
|
River
Star, LLC was paid $11,250 for consulting services rendered to the
Company. Nicholas Cocco is the managing member of River Star,
LLC
|
|
(4)
|
Joel
Ungar was granted $5,000 for services to the Company. Effective June 23,
2009, Mr. Ungar resigned as our Chief Financial Officer and Chief
Accounting Officer of the Company. In connection with Mr. Ungar’s
resignation, on June 23, 2009, the Board of Directors of the Company
appointed John Maddox as interim Chief Financial Officer, effective June
23, 2009.
|
|
(5)
|
Lizabeth
Ardisana, Bruce Nyberg and Michael Burns were elected as directors of the
Company on May 15, 2009 and therefore did not receive any compensation for
the year ended 2008.
|
Option Grants
Table. There were
no individual grants of stock options to purchase our common stock made to the
executive officer named in the Summary Compensation Table through July 7,
2009.
Aggregated Option Exercises
and Fiscal Year-End Option Value Table. There were no stock options
exercised until July 7, 2009 by the executive officer named in the Summary
Compensation Table.
Long-Term Incentive Plan
(“LTIP”) Awards Table.
There were no awards made to a named executive officer in the last
completed fiscal year under any LTIP.
Compensation of
Directors
Directors
are permitted to receive fixed fees and other compensation for their services as
directors. The Board of Directors has the authority to fix the compensation of
directors. No amounts have been paid to, or accrued to, directors in such
capacity.
Employment
Agreements
We entered
into employment agreements with Mark Lundquist, our CEO, and John Maddox, our
President, Interim CFO & COO for a term of three years. The employment
agreements will automatically renew for successive one year after such initial
term, unless and until terminated by either the Board of Directors as prescribed
in the Company’s by-laws or by John Maddox by written letter to the Chairman
with thirty days notice. Both Mr. Lundquist and Mr. Maddox will receive an
annual base salary of $240,000. They will also receive annual bonus and other
benefits.
The
following table sets forth certain information as of July 7, 2009 with
respect to the beneficial ownership of our common stock, the sole outstanding
class of our voting securities, by (i) any person or group owning more than 5%
of each class of voting securities, (ii) each director, (iii) each executive
officer named in the Summary Compensation Table in the section entitled
“Executive Compensation” below and (iv) all executive officers and directors as
a group.
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Shares of common stock subject to options, warrants or
convertible securities exercisable or convertible within 60 days of July 7, 2009
are deemed outstanding for computing the percentage of the person or entity
holding such options, warrants or convertible securities but are not deemed
outstanding for computing the percentage of any other person, and is based on
26,128,000 shares of our common stock issued and outstanding as
of July 7, 2009.
|
Title
of Class
|
Name
and Address
of
Beneficial Owner
|
Amount
and Nature
of
Beneficial Owner
|
Percent
of
Class
|
|
Common
Stock
|
John
C. Maddox
|
13,010,000
|
49.79%
|
|
Common
Stock
|
Mark
Lundquist
|
4,010,000
|
15.35%
|
|
Common
Stock
|
Leland
Thomas (1)
|
2,806,000
|
10.74%
|
|
Common
Stock
|
Nicholas
Cocco (2)
|
1,010,000
|
3.87%
|
|
Common
Stock
|
Bruce
Nyberg
|
30,000
|
*
|
|
Common
Stock
|
Lizabeth
Ardisana
|
10,000
|
*
|
|
Common
Stock
|
Michael
Burns
|
10,000
|
*
|
|
Common
Stock
|
All
executive officers and directors as a group (7 persons)
|
21,886,000
|
83.76%
|
* less
than 1%.
|
(1)
|
Including
1,110,000 shares of our common stock owned by Mr. Thomas directly and
1,696,000 shares owned through Thomas IRA.
|
|
(2)
|
All
1,010,000 shares of our common stock are owned by River Star, LLC. It does
not include 1,000,000 shares issuable pursuant to certain Chief of Staff
Extension Services Agreement.
|
Our
subsidiary SellMyBusiness was incorporated under the laws of the State of
Michigan on August 2, 2007. Upon inception, we issued 6,500 shares to John
Maddox as founder shares with no consideration. On November 28, 2007
we issued 2,000 shares to Mark Lundquist as founder shares with no
consideration.
On
November 28, 2007 and January 3, 2008, we entered into convertible promissory
notes with certain investors totaling of $300,000. In addition, we issued 1,501
shares to these investors. Leland M. Thomas is one of these investors, while he
is also a member of our Advisory Board. In January 2009, we entered into stock
conversion agreements with these investors, pursuant to which we issued 2,300
shares of our common stock as conversion of promissory notes dated November 28,
2007 and January 3, 2008 including principal of $300,000 and interest of $23,000
at a conversion price of $133.00 and $500.00 per share,
respectively.
On
November 14, 2008, we entered into a consulting agreement with River Star, LLC,
pursuant to which we will pay $7,500 per month to River Star for consulting
services. The Managing Director of River Star, Nicholas A. Cocco, is our member
of Advisory Board and Chief of Staff.
In
addition, John C. Maddox has provided a $75,000 revolving line of credit to the
Company. Outstanding advances bear interest at 10% per annum, and any such
advances are due May 1, 2009. A total of $10,900 was outstanding as of July 31,
2008 and October 31, 2008.
The
Company incurred rent expense of $13,500 with an entity in which John C. Maddox
is an owner. Beginning October 1, 2008, the Company began using space owned
by John C. Maddox personally for $1,500 per month on a month to month
basis.
The
Company leases its domain name from an entity owned by John C. Maddox. Rent
expense for the initial period ended July 31, 2008 was $426 and as of October
31, 2008, the accrued expense was $185. The monthly rent for use of the domain
name is 5% of revenues. Mr. Maddox has agreed to sell all of the relevant domain
names for Halberd Corporation and SellMyBusiness.com to the Company for the
original purchase price which is estimated at $30,000, plus interest at 10% per
annum payable when the Company has generated sufficient cash flow or has access
to sufficient cash to complete the purchase.
On July
2, 2009, we entered into a Chief of Staff Services Extension Agreement with
River Star, LLC, by which River Star would provide various consulting services
in exchange for $7,500 per month through the end of our 2010 fiscal year and
1,000,000 shares of our common stock. The 1,000,000 shares will be issued in
sixteen (16) equal monthly installments beginning August 2009. Nicholas A. Cocco
has voting and dispositive control over securities held by River Star,
LLC. He is a member of our Board of Directors.
HALBERD
CORPORATION
5,725,000 SHARES
OF COMMON STOCK
PROSPECTUS
YOU
SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE
REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION
THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS
NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
Until
_____________, all dealers that effect transactions in these securities whether
or not participating in this offering may be required to deliver a prospectus.
This is in addition to the dealer’s obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
The Date of This Prospectus
Is: July
__, 2009
PART
II – INFORMATION NOT REQUIRED IN THE PROSPECTUS
|
Securities
and Exchange Commission registration fee
|
$
|
207
|
.65
|
|
|
Federal
Taxes
|
$
|
0
|
||
|
State
Taxes and Fees
|
$
|
0
|
||
|
Transfer
Agent Fees
|
$
|
0
|
||
|
Accounting
fees and expenses
|
$
|
10,000
|
||
|
Legal
fees and expenses
|
$
|
10,000
|
||
|
Blue
Sky fees and expenses
|
$
|
0
|
||
|
Miscellaneous
|
$
|
0
|
||
|
Total
|
$
|
20,207
|
.65
|
All
amounts are estimates other than the Commission’s registration fee. We are
paying all expenses of the offering listed above. No portion of these expenses
will be borne by the selling shareholders. The selling shareholders, however,
will pay any other expenses incurred in selling their common stock, including
any brokerage commissions or costs of sale.
Our
directors and officers are indemnified as provided by the Nevada Statutes and
our Bylaws. We have agreed to indemnify each of our directors and certain
officers against certain liabilities, including liabilities under the Securities
Act of 1933. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to our directors, officers and
controlling persons pursuant to the provisions described above, or
otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than our
payment of expenses incurred or paid by our director, officer or controlling
person in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
We have
been advised that in the opinion of the Securities and Exchange Commission
indemnification for liabilities arising under the Securities Act is against
public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities is asserted by one of our directors, officers, or controlling
persons in connection with the securities being registered, we will, unless in
the opinion of our legal counsel the matter has been settled by controlling
precedent, submit the question of whether such indemnification is against public
policy to a court of appropriate jurisdiction. We will then be governed by the
court’s decision.
We were
incorporated under the laws of State of Nevada on January 26, 2009. We entered
into a share purchase agreement with SellMyBusiness, a corporation established
under the laws of the State of Michigan in August 2007, pursuant to which we
acquired all the shares of common stock of SellMyBusiness for 25,058,000 shares
of our common stock. Shareholders of SellMyBusiness received 2000 shares of our
common stock for every 1 share of common stock of SellMyBusiness. As a result,
SellMyBusiness became our wholly-owned subsidiary. These shares of our common
stock qualified for exemption under Section 4(2) of the Securities Act of 1933
since the issuance shares by us did not involve a public offering. The offering
was not a “public offering” as defined in Section 4(2) due to the insubstantial
number of persons involved in the deal, size of the offering, manner of the
offering and number of shares offered. We did not undertake an offering in which
we sold a high number of shares to a high number of investors. The stock
certificate bearing a legend stating that such shares are restricted pursuant to
Rule 144 of the 1933 Securities Act. This restriction ensures that these shares
would not be immediately redistributed into the market and therefore not be part
of a “public offering.” Based on an analysis of the above factors, we have met
the requirements to qualify for exemption under Section 4(2) of the Securities
Act of 1933 for this transaction.
Upon
inception on August 2, 2007, SellMyBusiness issued 6,500 founder shares to our
then-CEO John C. Maddox. On November 28, 2007, SellMyBusiness issued 2,000
founder shares to our then-President & COO Mark Lundquist. These shares of
our common stock qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance shares by us did not involve a public offering.
The offering was not a “public offering” as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size of the offering,
manner of the offering and number of shares offered. We did not undertake an
offering in which we sold a high number of shares to a high number of investors.
The stock certificate bearing a legend stating that such shares are restricted
pursuant to Rule 144 of the 1933 Securities Act. This restriction ensures that
these shares would not be immediately redistributed into the market and
therefore not be part of a “public offering.” Based on an analysis of the above
factors, we have met the requirements to qualify for exemption under Section
4(2) of the Securities Act of 1933 for this transaction.
On
November 28, 2007 and January 3, 2008, we entered into convertible promissory
notes with certain investors totaling $300,000 and we issued 1,501
shares to these investors. The issuances of the convertible promissory note and
the shares of our common stock qualified for exemption under Section 4(2) of the
Securities Act of 1933 since the issuance shares by us did not involve a public
offering. The offering was not a “public offering” as defined in Section 4(2)
due to the insubstantial number of persons involved in the deal, size of the
offering, manner of the offering and number of shares offered. We did not
undertake an offering in which we sold a high number of shares to a high number
of investors. The stock certificate bearing a legend stating that such shares
are restricted pursuant to Rule 144 of the 1933 Securities Act. This restriction
ensures that these shares would not be immediately redistributed into the market
and therefore not be part of a “public offering.” Based on an analysis of the
above factors, we have met the requirements to qualify for exemption under
Section 4(2) of the Securities Act of 1933 for this transaction.
During
January 2009, all of the convertible debt was converted to equity, resulting in
the issuance of 4,508,000 shares of the Company’s common stock. Related
accrued interest of $23,000 on these loans was also converted to equity,
resulting in the issuance of 92,000 shares of the Company’s common
stock. All shares in this note have been adjusted to reflect the
exchange based on the reorganization of the Company effective on January 28,
2009 pursuant to which all of the issued and outstanding shares of Sellmybusinessnow.com,
Inc. common stock were exchanged on a 2,000-to-1 basis for Halberd
Corporation common stock. Based upon same, a total of 2,300
shares of our common stock were issued as conversion of this convertible debt.
These shares of our common stock qualified for exemption under Section 4(2) of
the Securities Act of 1933 since the issuance shares by us did not involve a
public offering. The offering was not a “public offering” as defined in Section
4(2) due to the insubstantial number of persons involved in the deal, size of
the offering, manner of the offering and number of shares offered. We did not
undertake an offering in which we sold a high number of shares to a high number
of investors. The stock certificate bearing a legend stating that such shares
are restricted pursuant to Rule 144 of the 1933 Securities Act. This restriction
ensures that these shares would not be immediately redistributed into the market
and therefore not be part of a “public offering.” Based on an analysis of the
above factors, we have met the requirements to qualify for exemption under
Section 4(2) of the Securities Act of 1933 for this transaction.
In
January 2009, SellMyBusiness, our wholly-owned subsidiary, completed a
Regulation D Rule 506 offering in which it sold 228 shares of common stock to 39
investors, at a price per share of $500 per share for an aggregate offering
price of $114,000. The following sets forth the identity of the class of persons
to whom we sold these shares and the amount of shares for each
shareholder:
|
Name
of selling stockholder
|
Shares of common stock of
SellMyBusiness owned
|
Shares
of common stock of the Company owned pursuant to the share purchase
agreement
|
|
Bruce
E. Nyberg
|
10
|
20,000
|
|
John
P. Bower Revocable Living Trust UAD 9/27/1999
|
10
|
20,000
|
|
Mary
Jane Bower Revocable Trust UAD 6/19/1999
|
10
|
20,000
|
|
Daniel
Dalton
|
10
|
20,000
|
|
GBS,
LLC
|
10
|
20,000
|
|
BFADM,
LLC
|
10
|
20,000
|
|
David
R. Zimmer
|
10
|
20,000
|
|
Richard
A. Hecker
|
10
|
20,000
|
|
Douglas
Perry Lalone Living Trust
|
10
|
20,000
|
|
Paul
A. Miller
|
10
|
20,000
|
|
Nicholas
S. Ahee
|
10
|
20,000
|
|
Todd
A. Emerson
|
1
|
2,000
|
|
Donna
Kolo
|
10
|
20,000
|
|
Joel
M. Ungar
|
10
|
20,000
|
|
Constance
M David
|
1
|
2,000
|
|
AweComm
Technologies, LLC
|
5
|
10,000
|
|
Marx
Layne & Company
|
5
|
10,000
|
|
Jon
D. Johnson
|
5
|
10,000
|
|
Douglas
Omar Perreault
|
5
|
10,000
|
|
Michael
R. Szudarek
|
2
|
4,000
|
|
Kathryn
E. Lundquist
|
2
|
4,000
|
|
Sunshine
R. Jenkins
|
2
|
4,000
|
|
Dino
S. Rotondo
|
2
|
4,000
|
|
Vianne
Floyd
|
10
|
20,000
|
|
Barrett
Kalellis
|
10
|
20,000
|
|
Shelby
Starnes
|
2
|
4,000
|
|
Michael
P. Crosson
|
10
|
20,000
|
|
Alexandra
A. Crosson
|
10
|
20,000
|
|
Trent
A. Lundquist
|
2
|
4,000
|
|
Andrew
Kulpa
|
1
|
2,000
|
|
David
J. Raska
|
1
|
2,000
|
|
JR
Holdings Group, LLC
|
2
|
4,000
|
|
Philip
W. Thomas, Jr.
|
10
|
20,000
|
|
Scott
P. Batey
|
2
|
4,000
|
|
John
Alexander
|
2
|
4,000
|
|
Michael
R. Szudarek
|
2
|
4,000
|
|
Craig
W. Terry
|
1
|
2,000
|
|
Millicent
D. Sherman
|
1
|
2,000
|
|
Bill
& Joann Batey
|
2
|
4,000
|
|
Total
|
228
|
456,000
|
The
Common Stock issued in our Regulation D, Rule 506 Offering was issued in a
transaction not involving a public offering in reliance upon an exemption from
registration provided by Rule 506 of Regulation D of the Securities Act of 1933.
In accordance with Section 230.506 (b)(1) of the Securities Act of 1933, these
shares qualified for exemption under the Rule 506 exemption for this offering
since it met the following requirements set forth in Reg. §230.506:
|
(A)
|
No
general solicitation or advertising was conducted by us in connection with
the offering of any of the Shares.
|
|
(B)
|
At
the time of the offering we were not: (1) subject to the reporting
requirements of Section 13 or 15 (d) of the Exchange Act; or (2) an
“investment company” within the meaning of the federal securities
laws.
|
|
(C)
|
Neither
we, nor any of our predecessors, nor any of our directors, nor any
beneficial owner of 10% or more of any class of our equity securities, nor
any promoter currently connected with us in any capacity has been
convicted within the past ten years of any felony in connection with the
purchase or sale of any security.
|
|
(D)
|
The
offers and sales of securities by us pursuant to the offerings were not
attempts to evade any registration or resale requirements of the
securities laws of the United States or any of its
states.
|
|
(E)
|
Other
than, our former CFO and Principal Accounting Officer, none of the
investors are affiliated with any of our directors, officers or promoters
or any beneficial owner of 10% or more of our
securities.
|
Please
note that pursuant to Rule 506, all shares purchased in the Regulation D Rule
506 offering completed in January 2009 were restricted in accordance with Rule
144 of the Securities Act of 1933. In addition, each of these shareholders were
either accredited as defined in Rule 501 (a) of Regulation D promulgated under
the Securities Act or sophisticated as defined in Rule 506(b)(2)(ii) of
Regulation D promulgated under the Securities Act.
In March
2009, River Star was issued 1,000,000 shares of our common stock for the
consulting services rendered. These shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933 since the issuance
shares by us did not involve a public offering. The offering was not a “public
offering” as defined in Section 4(2) due to the insubstantial number of persons
involved in the deal, size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we sold a high number
of shares to a high number of investors. The stock certificate bearing a legend
stating that such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. This restriction ensures that these shares would not be
immediately redistributed into the market and therefore not be part of a “public
offering.” Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of the Securities Act
of 1933 for this transaction.
On April
30, 2009, we entered into an Investment Agreement with Dutchess pursuant to
which permits us to “put” up to twenty-five million ($25,000,000) in shares of
our common stock to Dutchess.
On July
2, 2009, we entered into a Chief of Staff Services Extension Agreement with
River Star, LLC, by which River Star would provide various consulting services
in exchange for $7,500 per month through the end of our 2010 fiscal year and
1,000,000 shares of our common stock. The 1,000,000 shares will be issued in
sixteen (16) equal monthly installments beginning August 2009.
On July
2, 2009, we entered into a Services Agreement with Awecomm Technologies, LLC
(“Awecomm”), by which Awecomm would provide webhosting and development services
in exchange for 804,000 shares of our common stock. The 804,000 shares will be
issued to Awecomm up to 43,855 per month beginning August 2009.
On July
2, 2009, we entered into a Services Agreement with Issuers Capital Advisors,
LLC, by which Issuers Capital Advisor LLC would provide Investor and Public
Relations services in exchange for 456,000 shares of our common stock. The
456,000 shares will be issued to Issuers Capital Advisor LLC up to
38,000 per month beginning August 2009.
On July
2, 2009, we entered into a Services Agreement with Marx Layne, Inc., by which
Marx Layne, Inc. would provide marketing and content development
services in exchange for 395,000 shares of our common stock. The 395,000
shares will be issued to Marx Layne, Inc. up to 32,917 per month beginning
August 2009.
On July
6, 2009, we agreed to issue a total of 1,000,000 shares of common stock to
Anslow & Jaclin, LLP, our legal counsel, for legal services. These 1,000,000
shares will be issued to Anslow & Jaclin, LLP up to 62,500 per month for 16
months.
On July
7, 2009, we issued 70,000 shares to members of our Board of Directors for their
services rendered.
The
offering was not a “public offering” as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size of the offering,
manner of the offering and number of shares offered. We did not undertake an
offering in which we sold a high number of shares to a high number of investors.
The stock certificate bearing a legend stating that such shares are restricted
pursuant to Rule 144 of the 1933 Securities Act. This restriction ensures that
these shares would not be immediately redistributed into the market and
therefore not be part of a “public offering.” Based on an analysis of the above
factors, we have met the requirements to qualify for exemption under Section
4(2) of the Securities Act of 1933 for this transaction.
These
shares of our common stock qualified for exemption under Section 4(2) of the
Securities Act of 1933 since the issuance shares by us did not involve a public
offering.
|
EXHIBIT
NUMBER
|
DESCRIPTION
|
|
3.1
|
Articles
of Incorporation of Halberd Corporation*
|
|
3.2
|
By-Laws
of Halberd Corporation*
|
|
5.1
|
Opinion
of Anslow & Jaclin, LLP
|
|
10.1
|
Form
of Convertible Promissory Notes*
|
|
10.2
|
Form
of Stock Conversion Agreement*
|
|
10.3
|
Consulting
Agreement by and between the Company and River Star, LLC, dated November
14, 2008*
|
|
10.4
|
Employment
Agreement between the Company and John C. Maddox, dated January 2,
2009*
|
|
10.5
|
Employment
Agreement between the Company and Mark Lundquist, dated January 2,
2009*
|
|
10.6
|
Share
Purchase Agreement by and between the Company and SellMyBusinessNow.Com,
Inc., dated January 28, 2009*
|
|
10.7
|
Investment
Agreement by and between the Company and Dutchess Private Equities Fund
Ltd.
|
|
10.8
|
Registration
Rights Agreement by and between the Company and Dutchess Private Equities
Fund Ltd.
|
|
10.9
|
Chief
of Staff Services Extension Agreement by and between the Company and River
Star, LLC, dated July 2, 2009
|
|
10.10
|
Services
Agreement by and between the Company and Awecomm Technologies, LLC, dated
July 2, 2009
|
|
10.11
|
Services
Agreement by and between the Company and Issuers Capital Advisors, LLC,
dated July 2, 2009
|
|
10.12
|
Services
Agreement by and between the Company and Marx Layne, Inc., dated July 2,
2009
|
|
14.1
|
Code
of Business Conduct and Ethics
|
|
21.1
|
Subsidiary*
|
|
23.1
|
Consent
of Rehmann Robson, P.C.
|
|
23.2
|
Consent
of Counsel, as in Exhibit 5.1
|
|
24.1
|
Power
of Attorney (filed herewith on signature
page)
|
* Filed
as an exhibit to the S-1 Registration Statement filed with the SEC on March 13,
2009
Item
17. Undertakings.
The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
i. To
include any prospectus required by section 10(a)(3) of the Securities Act of
1933;
ii. To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective
registration statement.
iii. To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement;
(2)
That, for the purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(5)
That, for the purpose of determining liability under the Securities Act of 1933
to any purchaser:
i.
Each prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements relying on
Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be
deemed to be part of and included in the registration statement as of the date
it is first used after effectiveness. Provided, however, that no
statement made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document
immediately prior to such date of first use.
(6) That,
for the purpose of determining liability of the registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the securities: The
undersigned registrant undertakes that in a primary offering of securities of
the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if
the securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
i. Any
preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
ii. Any
free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned
registrant;
iii. The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
iv. Any
other communication that is an offer in the offering made by the undersigned
registrant to the purchaser
In
accordance with the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and authorized this registration statement
to be signed on its behalf by the undersigned on July 7, 2009.
|
HALBERD
CORPORATION
|
||
|
By:
|
/s/ Mark
Lundquist
|
|
|
Mark
Lundquist
|
||
|
Chief
Executive Officer and Director
|
||
POWER
OF ATTORNEY
KNOW ALL
MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Mark Lundquist and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for his and in his name, place and stead, in any and all
capacities (including his capacity as a director and/or officer of Halberd
Corporation) to sign any or all amendments (including post-effective amendments)
to this registration statement and any and all additional registration
statements pursuant to rule 462(b) of the Securities Act of 1933, as amended,
and to file the same, with all exhibits thereto, and all other documents in
connection therewith, with the SEC, granting unto each said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated:
|
July
7, 2009
|
By:
|
/s/ Mark
Lundquist
|
|
Mark
Lundquist
|
||
|
CEO,
Secretary and Director
|
||
|
July
7, 2009
|
By:
|
/s/John C.
Maddox
|
|
John
C. Maddox
|
||
|
President,
Interim CFO,
Principal
Accounting Officer, COO,
Treasurer
and Director
|
||
|
July
7, 2009
|
By:
|
/s/ Leland
M. Thomas
|
|
Leland
M. Thomas
|
||
|
Chairman
of the Board of Directors
|
||
|
July
7, 2009
|
By:
|
/s/ Nicholas
Cocco
|
|
Nicholas
Cocco
|
||
|
Director
|
||
|
July
7, 2009
|
By:
|
/s/ Lizabeth
Ardisana
|
|
Lizabeth
Ardisana
|
||
|
Director
|
||
|
July
7, 2009
|
By:
|
/s/ Michael
Burns
|
|
Michael
Burns
|
||
|
Director
|
||
|
July
7, 2009
|
By:
|
/s/ Bruce
Nyberg
|
|
Bruce
Nyberg
|
||
|
Director
|
37