ITEM 1:
BUSINESS
Syzygy Entertainment Ltd, a Nevada corporation, formerly known as Triple Bay Industries, Inc., (“Syzygy” or “SYZG” or the “Company”), is publicly traded on the Over-The-Counter Bulletin Board market under the ticker symbol SYZG. Syzygy, through its acquisition of Rounders Ltd., a Turks and Caicos company and The Game International TCI, Ltd., a Turks and Caicos company (hereinafter collectively referred to as “Rounders”) is focused on the development and operation of destination gaming and resort facilities in the Turks and Caicos Islands. To date, Rounders has opened “The Players’ Club”, an up-market licensed casino, bar and slot parlor business on the growing tourist based island of Providenciales (known as “Provo”). Rounders has opened a second slot parlor on the island of Grand Turk, the capital of the Turks and Caicos Islands. It is located in Big Daddy’s Beach Shack, adjacent to the Carnival Cruise Line Facility. Subsequent to year end, Rounders has located 3 additional slot locations on North Caicos, as well as two additional locations near the airport on Provo. The Company discontinued operations of the business of manufacturing and selling disposable decontamination systems, which formed the basis of its operations before the acquisition of Rounders.
Rounders, Ltd., a Turks and Caicos corporation and its affiliated company The Game International TCI, Ltd. (the “Company” or “Rounders”), were originally incorporated in 2006. Rounders has been placed in a position to work with a “belonger” (a native islander) associate with the goal of attracting a hotel, casino, gaming and poker room development to the islands. Rounders together with its partners and affiliated companies has identified an appropriately sized site located in the Grace Bay resort district that would be suitable for a gaming operation. Discussions are also underway in regards to the planning, financing, and construction of a destination hotel/gaming resort.
The Island Opportunity
The Turks & Caicos Islands (TCI) lies at the southern tip of the Bahamas, just 75 minutes by air or 575 miles Southeast of Miami and covers 193 square miles in the Atlantic Ocean. The Turks and Caicos Islands enjoy excellent air services from the US, Canada, Europe and the Caribbean, as well as reliable domestic services throughout the island chain. This accessibility combined with its close location to the US along with the fact that the Turks and Caicos Islands has the third largest coral reef system in the world, has led to the development of a very stable, growing, and profitable tourism industry over the last two decades.
Initially focusing on the diving industry, the island now encompasses both family beach vacations and increasing supplies a higher end product that caters to the discerning traveler seeking luxury accommodations. With a proliferation of upscale boutique resorts along with some of the best tropical beaches in the world, this steady incline in tourism and increasing accessibility has boosted property development in Turks & Caicos to an unprecedented scale.
The island currently has two operating casinos with The Players Club being one of them. The Government recognizes the need to broaden the leisure and entertainment options for the visitor to the island. Casino-style activities represent an important amenity necessary to enhance Turks & Caicos Islands reputation as a premium “must visit” destination.
The Players Club
Rounders Ltd opened “The Players’ Club”, an up-market, licensed, casino, bar and slot parlor business on the growing tourist based island of Providenciales (known as “Provo”) in December of 2006. Provo, while having visitor numbers in the region of 160,000 tourists a year, does not have a licensed casino operating at this time, and adult recreational nightlife on island for tourists is limited to bars and restaurants.
Located in the newly opened Queen Angel Resort, a top of the line gaming and poker facility has been completed. This facility has been outfitted with approximately 80 gaming machines providing 150 player seats, and the experience of playing games of chance as Texas Hold Em, Black Jack, Roulette, slots and a variety of other card and dice games. The Players Club provides a gaming experience in the environment of a fully staffed and operational bar.
Licensing for Live Gaming
On February 8, 2008, we received approval for a full-scale casino license, which is a major addition to our current offerings. A live gaming license allows us to operate a full scale casino and has shown a dramatic increase in volume at the current Players’ Club location since introduction. In addition, the live gaming license will allow us to pursue an international clientele and capture further revenue streams associated with that influx of volume. One of only two licenses issued in the country, we believe, with our current strategies, we are poised to seize control of the majority of the gaming dollars in the market.
Licensing for Slot Parlor, 100 Machines for 5 Islands
Rounders has petitioned, and the government has accepted, an application for Rounders to possess a license that would entitle the Company to have 100 gaming machines on Provo, Grand Turk, North, West, and Middle Caicos. In the first few months of operation of The Players Club, the Government has recognized the distinct advantages to facilities like The Players Club, versus games, 4 at a time, located in the bars and restaurants.
Grand Turk, a New Facility
In December 2007, Rounders established the first four slot machines in Big Daddy’s Beach Shack, perfectly positioned next to the Carnival Cruise Line docking station. By partnering with the managers and operators of a newly opened, first class, Caribbean restaurant, located literally where the Carnival Cruise Ships signature blue beach chairs conclude, this restaurant property begins. The future development plans for the facility would hold up to 25 machines and a new building would be constructed to host the remaining machines. Grand Turk is the capital of the island and hosts most of the government operations and facilities. A mere 3,800 residents call Grand Turk home, and for the most part, it has been a “sleepy” little island stretching just 14 miles from north to south. Government officials expect the cruise ship dock to bring an additional 400,000 tourists to the island each year.
Carnival Corp, the parent company of 12 cruise lines, invested $50 million dollars into a cruise ship boat dock, a 13 acre day use resort, featuring the largest Jimmy Buffet Margaritaville themed restaurant in the Caribbean. The newly opened dock can hold two cruise ships at one time. In addition, Carnival provided start up money to local shore excursion companies to help support tourist related activities including tour vehicles, horse back rides, snorkeling, diving, sightseeing, and many other events. Currently, there are approximately 2 cruise ships per week coming into port, carrying up to 3,400 passengers and 1,800 crew members for the larger ships. At the height of the coming tourist and cruise season, the Grand Turk port is expected to have one cruise ship per day coming into port.
Slot License
Rounders has recently purchased an additional slot route gaming license in the Turks and Caicos that allows for the deployment of up to 25 gaming machines in a single location. Although the license does not specify which island it is specifically designated for, management believes it can be used on Provo, Grand Turk, or any other island in the Turks and Caicos. Rounders intends to develop a lower scale, “locals” facility to utilize this license. By partnering with an existing building owner, Rounders believes The Players Club, designed more like a traditional gaming facility, may be too formal for a lot of the local players, which have a more “laid back” Caribbean lifestyle. Local play on Provo alone was more than six million dollars in 2006 and is growing each year with the growth in tourism and employment.
Grant of Poker License
Rounders has been granted a one of a kind poker license for the Turks and Caicos. The Government recognized from the public relations success of the Johnny Chan Invitational, poker can be marketed as an internationally branded tourist destination event.
The Players Club Turks and Caicos Classic in Association with the World Poker Tour
From September 24, 2007 until October 1, 2007, Rounders hosted a World Poker Tour event on the island called The Players Club Turks and Caicos Classic. The event was held at Club Med and filmed for the Game Show Network, scheduled to be aired on May 19, 2008. Local partner, Rhynie Campbell came away with the first place prize of nearly $433,000. Since the completion of the event, the World Poker Tour has cancelled its agreement with Rounders, along with most other “foreign location” poker events that they held in 2007.
Other Poker Events
In advance of this proposed hotel/gaming resort development that would carry a branded poker room and as an introduction to poker tournaments on the island, an affiliated event promoter, The Game International Ltd, created and hosted the Johnny Chan TCI Invitational Poker Tournament, which was held in the Turks & Caicos Islands on September 9-16, 2006. The field included three World Series of Poker (“WSOP”) champions, as seen on ESPN, Carlos “The Matador” Mortenson, Johnny Chan, and the most recent champion, crowned on August 11, 2006, Jamie Gold. Mr. Gold won a record 12 Million dollars in this years WSOP event. Other pro players included international names such as David “Devil Fish” Ulliot, Bob “The Butcher” Clark, Jeff Madsen, Bodog player David Williams, Amir Vahedi, Ian Frazer and a host of local players, with Jac Arama, Ashley Hayes and Michael Greco flying in from the UK for the Tournament. The eventual winner was the 2001 World Series of Poker champion, Carlos “The Matador” Mortenson.
In 2007, in an effort to gain a World Poker Tour event, Rounders entered into an agreement with world renowned poker expert, Jack McClelland. Jack has over twenty-five years experience in poker and is currently the tournament director and poker room host at the Bellagio Las Vegas. Prior to this, he was at The World Series of Poker with Jack Binion for fifteen years and the Director for the Commerce Casino in Los Angeles for nine years. Other Las Vegas tournaments include The Grand Prix of Poker (Golden Nugget), Super Bowl of Poker (Caesars Palace), Queens Poker Classic (Four Queens) and Knights of the Round Table (Tropicana). Jack is also in the Poker Dealer Hall of Fame. The agreement with Mr. McClelland has been terminated.
Hotel/Casino, Land and Development
Rounders expects to purchase land that someday will host what would be considered a more traditional, hotel, resort and gaming facility. Although there are no current agreements, management believes partnering with a “name brand” hotel operator that would bring a reservation systems and operational management to the island, would be the best fit possible at this time. The recent approval for a full line class 3 gaming license, which allows live dealing and a reduced tax rate, adds substantial value to the company and in negotiations with hotel operators and brands.
Other Slot Route Opportunities
Rounders is exploring and evaluating other potential opportunities, both in the United States, Caribbean, Bermuda and Central America.
Employees
At December 31, 2007, the Company’s CEO was the only part-time employee at the Company’s headquarters in Charlotte, North Carolina. At December 31, 2007, we had 15 full time and 7 part time employees in our gaming operations in the Turks and Caicos Islands.
Our employees are not represented by a labor union. We have experienced no work stoppage and believe that our employee relationships are good.
ITEM 1A:
ITEM 1A:
RISK FACTORS
Not applicable.
ITEM 2:
ITEM 2:
PROPERTIES
Rounders opened “The Players’ Club,” an up-market, licensed, gaming bar and slot parlor business on the growing tourist based island of Providenciales (known as “Provo”) in December of 2006. The property is subject to a five-year lease which requires a monthly rental of $11,000 for two years commencing August 1, 2006 and $13,000 for the final three years. The Company has an option for an additional five years at a rate which is the greater of $15,000 per month or the then current market rent for similar premises in a similar location.
Rounders leased a facility at White Sands on the island of Grand Turk which includes a restaurant and small gaming room. The property is subject to a five-year lease commencing August 1, 2007 at a monthly rental of $8,000. The restaurant was sub-leased in December 2007 at the rate of $6,000 per month commencing in January 2008 for the remainder of the five-year term of the primary lease.
Effective March 1, 2008, Rounders entered into a one-year lease of a facility at the Turks and Caicos Airport Hotel & Suites on Providenciales. The lease requires a monthly rental of $6,000.
ITEM 3:
ITEM 3:
LEGAL PROCEEDINGS
We are not currently subject to any legal proceedings, nor to our knowledge, is any legal proceeding threatened against us.
ITEM 4:
ITEM 4:
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5:
ITEM 5:
MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our $0.001 par value per share common stock is traded in the over-the-counter market and is quoted on the National Association of Securities Dealers (“NASD”) Over-The Counter Bulletin Board (“OTCBB”) under the symbol “SYZG.OB.”
The following table sets forth the quarterly high and low daily bids for our common stock as reported by the OTCBB for the period from February 16, 2007 through December 31, 2007, the period during which it has been trading. The bids reflect inter-dealer prices without adjustments for retail mark-ups, mark-downs or commissions and may not represent actual transactions. There has been very limited sales volume in our common stock. Accordingly, the posted prices may represent amounts substantially in excess of the amount for which the stock could be sold.
The OTCBB is a quotation service sponsored by the NASD that displays real-time quotes and volume information in over-the-counter (“OTC”) equity securities. The OTCBB does not impose listing standards or requirements, does not provide automatic trade executions and does not maintain relationships with quoted issuers. A company traded on the OTCBB may face loss of market makers and lack of readily available bid and ask prices for its stock and may experience a greater spread between the bid and ask price of its stock and a general loss of liquidity with its stock. In addition, certain investors have policies against purchasing or holding OTC securities. Both trading volume and the market value of our securities have been, and will continue to be, materially affected by the trading on the OTCBB.
HOLDERS
At February 29, 2008, there were approximately 80 holders of record of our common stock, which includes 1,588,559 shares in the public float.
DIVIDENDS
We have never paid cash dividends on our common stock and intend to utilize current and future resources to implement our plan of operations. Therefore, it is not anticipated that cash dividends will be paid on our common stock in the foreseeable future.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The Company does not have an equity compensation plan at December 31, 2007.
RECENT SALES OF UNREGISTERED SECURITIES
During the three months ended December 31, 2007, we had no sales of our common stock.
ITEM 6:
ITEM 6:
SELECTED FINANCIAL DATA
Not applicable.
ITEM 7:
ITEM 7:
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
From time to time, we may publish forward-looking statements relative to such matters as anticipated financial results, business prospects, technological developments and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. The following discussion and analysis should be read in conjunction with the report on the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements appearing later in this report. All statements other than statements of historical fact included in this Annual Report on Form 10-K are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, the following: our current liquidity needs, as described in our periodic reports; changes in the economy; our inability to raise additional capital; our involvement in potential litigation; volatility of our stock price; the variability and timing of business opportunities; changes in accounting policies and practices; the effect of internal organizational changes; adverse state and federal regulation and legislation; and the occurrence of extraordinary or catastrophic events and terrorist acts. These factors and others involve certain risks and uncertainties that could cause actual results or events to differ materially from management’s views and expectations. Inclusion of any information or statement in this report does not necessarily imply that such information or statement is material. We do not undertake any obligation to release publicly revised or updated forward-looking information, and such information included in this report is based on information currently available and may not be reliable after this date.
LIQUIDITY AND CAPITAL RESOURCES
The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern. Substantially all activity in 2006 revolved around poker tournaments and events until the December 2006 opening of The Players Club. Operations in 2007 included both The Players Club and a World Poker Tour tournament. Based on our results to date, we have decided to delay any new poker tournaments and concentrate our resources on gaming. We also began live gaming in February 2008 and, as a result of our new license, will have substantially lower government gaming taxes in the future.
We have not established a consistent source of revenue sufficient to fund the development of the business, the projected operating expenses and commitments for the next twelve months. However, with the reduction in government gaming tax discussed above, the elimination of the poker tournament loss, the addition of live gaming and the expected reductions in start-up general and administrative expenses, we expect to become profitable during 2008. Until we achieve profitability and positive cash flow, we will need to continue to rely on non-interest bearing advances from shareholders to meet short-term liquidity needs.
Our ability to continue as a going concern during the next year depends on our success in executing these plans. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
RESULTS OF OPERATIONS
Revenue
Total revenues from The Players Club increased to $2,754,914 in 2007 from $145,219 in 2006. This increase is primarily due to an increase in the period of operations. In 2006, we were only open about 3 weeks, whereas, we operated for all of 2007. Revenues are primarily from gaming machines in 2007 and 2006. We introduced live gaming in February 2008 and expect revenues to increase substantially in 2008.
Costs and expenses
Government gaming tax has been 30% of net revenue from gaming machines. With the new license for live gaming starting in February 2008, the tax is calculated on a sliding scale with a maximum of 15%. Accordingly, gaming tax should be no more that 50% of the level in 2007 and 2006 in the future.
Operating expenses amounted to $2,121,277 in 2007 as compared to $491,254 in 2006. The majority of the amount in 2006 relates to the start-up of operations. The 2007 amount includes $173,940 in management fees and commissions paid to the former management firm which we bought out in early May 2007. This amount will not recur in 2008. Current projections indicate that operating expenses should go down by approximately 10% from the 2007 total and that revenues should increase substantially with the addition of live gaming.
General and administrative expenses are primarily the costs incurred in establishing the business. The 2007 amount includes consulting fees in the amount of $800,000 which are not expected to recur.
Other
We expect to concentrate our resources on developing our gaming business. Accordingly, we do not expect to have a poker tournament or the associated loss in the near future.
NEW ACCOUNTING STANDARDS
There are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe any of these accounting pronouncements has had or will have a material impact on the Company’s financial position or operating results.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measures”. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of SFAS No. 157 will change current practice. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, which for us would be our fiscal year beginning January 1, 2008. We are currently evaluating the impact of SFAS No. 157 but do not expect that it will have a material impact on our financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” This statement permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS No. is effective for fiscal years beginning after November 15, 2007, which for the Company would be its fiscal year beginning January 1, 2008. The Company is currently evaluating the impact of SFAS No. 159, but does not expect that it will have a material impact on its financial statements.
CRITICAL ACCOUNTING POLICIES
The SEC issued Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure about Critical Accounting Policies” (“FRR 60”), suggesting companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the SEC defined the most critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition our most critical accounting policy relates to cash management. We handle significant amounts of cash and also extend credit to a number of individuals. We have qualified personnel to manage our operation and use industry standards and guidelines to establish operating controls. The methods, estimates and judgments we use in applying these most critical accounting policies have a significant impact on the results we report in our consolidated financial statements.
OFF-BALANCE SHEET ARRANGEMENTS
Rounders Ltd opened “The Players’ Club”, an up market, licensed, gaming bar and slot parlor business on the growing tourist based island of Providenciales (known as “Provo”) in December of 2006. The property is subject to a five-year lease which requires a monthly rental of $11,000 for two years commencing August 1, 2006 and $13,000 for the final three years. The Company has an option for an additional five years at a rate which is the greater of $15,000 per month or the then current market rent for similar premises in a similar location.
Rounders leased a facility at White Sands on the island of Grand Turk which includes a restaurant and small gaming room. The property is subject to a five-year lease commencing August 1, 2007 at a monthly rental of $8,000. The restaurant was sub-leased in December 2007 at the rate of $6,000 per month commencing in January 2008 for the remainder of the five-year term of the primary lease.
Effective March 1, 2008, Rounders entered into a one-year lease of a facility at the Turks and Caicos Airport Hotel & Suites on Providenciales. The lease requires a monthly rental of $6,000.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
ITEM 7A:
ITEM 7A:
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8:
ITEM 8:
FINANCIAL STATEMENTS
The Consolidated Financial Statements of Syzygy Entertainment, Ltd. and Subsidiaries together with the report thereon of Moore & Associates, Chartered. for the year ended December 31, 2007 and the period from inception (April 4, 2006) through December 31, 2006, is set forth as follows:
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
SYZYGY Entertainment, Ltd. and Subsidiaries
We have audited the accompanying balance sheet of SYZYGY Entertainment, Ltd. and Subsidiaries as of December 31, 2007 and December 31, 2006, and the related statements of operations, stockholders’ equity and cash flows for the year ended December 31, 2007 and period from inception on April 4, 2006 through December 31, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SYZYGY Entertainment, Ltd. and Subsidiaries as of December 31, 2007 and December 31, 2006, and the related statements of operations, stockholders’ equity and cash flows for the year ended December 31, 2007 and period from inception on April 4, 2006 through December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 10 to the financial statements, the Company has significant working capital deficit of $2,378,969 at December 31, 2007, which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 10. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Moore & Associates, Chartered
Moore & Associates Chartered
Las Vegas, Nevada
March 25,
S. Jones Blvd. Suite 109, Las Vegas, NV 89146 (702) 253-7499 Fax (702) 253-7501
SYZYGY ENTERTAINMENT, LTD. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2007 and 2006
See accompanying notes to consolidated financial statements.
SYZYGY ENTERTAINMENT, LTD. AND SUBSIDIARIES
Consolidated Statements of Operations
Year Ended December 31, 2007 and period from inception (April 4, 2006) through December 31, 2006
See accompanying notes to consolidated financial statements.
SYZYGY ENTERTAINMENT, LTD. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity (Deficit)
Year Ended December 31, 2007 and period from inception (April 4, 2006) through December 31, 2006
See accompanying notes to consolidated financial statements.
SYZYGY ENTERTAINMENT, LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Year Ended December 31, 2007 and period from inception (April 4, 2006) through December 31, 2006
SYZYGY ENTERTAINMENT, LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
Year Ended December 31, 2007 and from inception (April 4, 2006) through December 31, 2006
SYZYGY ENTERTAINMENT, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 1:
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and organization
The consolidated financial statements include the accounts of Syzygy Entertainment, Ltd. (“Syzygy”) (formerly Triple Bay Industries, Inc.) and its wholly-owned subsidiaries Rounders Ltd. (“Rounders”), and The Game International TCI, Ltd. (“The Game”) collectively referred to herein as “the Company” or “the Companies.” All significant intercompany balances and transactions have been eliminated in consolidation.
Syzygy was originally incorporated in Florida on January 12, 2006, to acquire the shares of Triple Bay Industries, Inc. (“Triple Bay Ohio”), an Ohio corporation incorporated on May 14, 1993. The acquisition was completed on August 11, 2006, and was recorded using Triple Bay Ohio’s historical cost.
Rounders is a Turks and Caicos Islands company incorporated pursuant to the Companies Ordinance 1981 as a Limited Liability Company on April 4, 2006. The Game was incorporated pursuant to the Companies Ordinance 1981 in the Turks and Caicos Islands as a Limited Liability Company on April 11, 2006.
On February 16, 2007, Syzygy completed its acquisition of Rounders and The Game pursuant to a Stock Exchange Agreement dated February 7, 2007. Pursuant to the Agreement, shareholders of Rounders received 30,000,000 shares and the sole shareholder of The Game received 100,000 shares. For accounting purposes, the acquisition was treated as the acquisition of Rounders and The Game by Syzygy with Rounders as the acquirer (reverse acquisition). Accordingly, the financial information prior to February 16, 2007, is that of Rounders and The Game.
Nature of business
Rounders and The Game
Rounders and its affiliated event promoter, The Game were placed in a position to work with a native island associate with the goal of attracting a hotel/gaming and poker room development to the islands. To date, Rounders has opened “The Players’ Club”, an up-market licensed gaming, bar and slot parlor business on the growing tourist based island of Providenciales (known as “Provo”) and a location in Big Daddy’s Beach Shack on the island of Grand Turk. Provo, while having visitor numbers in the region of 160,000 tourists a year, did not have a licensed casino, and adult recreational nightlife on island for tourists was limited to bars and restaurants. The Players Club had its grand opening on December 9, 2006 by hosting a black tie affair with an exclusive invitation list.
Located in the newly opened 45 suite Queen Angel Resort, a top of the line gaming and poker facility has been completed. This facility has been outfitted with approximately 80 gaming machines providing 150 player seats, and the experience of playing games of chance, such as Texas Hold Em’, Black Jack, Roulette, slots and a variety of other card and dice games. The Players Club provides a gaming experience in the environment of a fully staffed and operational bar. On February 8, 2008, The Players Club began live gaming and operating as a full line casino.
In 2007, the Company consummated an agreement with Carib Gaming, Ltd. (“Carib”), a Turks and Caicos gaming provider on June 1, 2007, to acquire the profit participation in The Players Club from Carib in exchange for 400,000 restricted shares of the Company’s common stock and $691,000 in cash. The cash payment included cash on hand at The Players Club of $70,000, equipment and other capital items of $461,000 and $160,000 for management fees due Carib.
The Turks & Caicos Islands (TCI) lies at the southern tip of the Bahamas, just 75 minutes by air or 575 miles Southeast of Miami and covers 193 square miles in the Atlantic Ocean. The Turks and Caicos Islands enjoy excellent air services from the US, Canada, Europe and the Caribbean, as well as reliable domestic services throughout the island chain. This accessibility combined with its close location to the US along with the fact that the Turks and Caicos Islands has the third largest coral reef system in the world, has led to the development of a very stable, growing, and profitable tourism industry over the last two decades.
Initially focusing on the diving industry, the island now encompasses both family beach vacations and increasingly supplies a higher end product that caters to the discerning traveler seeking luxury accommodations. With a proliferation of upscale boutique resorts catering to this requirement, along with some of the best tropical beaches in the world, this steady incline in tourism and increasing accessibility has boosted property development in Turks & Caicos to an unprecedented scale.
The island currently has two operating casinos, with The Players Club being one of them. The Government recognized the need to broaden the leisure and entertainment options for the visitor to the island, and that casino-style activities represent an important amenity necessary to enhance Turks & Caicos Islands reputation as a premium “must visit” destination. To this extent, Rounders Ltd has been placed in a position to work with a “belonger” (a native islander) associate with the goal of attracting a hotel/gaming and poker room development to the islands.
Cash and cash equivalents
The Company considers all cash on hand, cash in banks and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.
Deposits with agents
A provision of their gaming licenses did not allow the Company to maintain a cash account until June 1, 2007. Accordingly, Rounders had arrangements with four agents to collect revenues and process payments.
Revenue recognition
Revenue from gaming services is recognized when the services are performed. Revenue from product sales is recognized when the related goods are shipped or delivered and all significant obligations have been satisfied.
Income taxes
The Turks and Caicos Islands do not have any income tax. Accordingly, no deferred income taxes are provided for temporary differences between financial and tax reporting in accordance with the liability method under the provisions of SFAS No. 109, “Accounting for Income Taxes.” The Company does not file a consolidated income tax return. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets associated with domestic net operating loss carryforwards, since management believes that it is more likely than not that such assets will not be realized.
Earnings (loss) per common share
Earnings (loss) per common share are calculated under the provisions of SFAS No. 128, “Earnings per Share” (“SFAS No. 128”), which established new standards for computing and presenting earnings per share. SFAS No. 128 requires the Company to report both basic earnings per share, which is based on the weighted-average number of common shares outstanding, and diluted earnings per share, which is based on the weighted-average number of common shares outstanding plus all potential dilutive shares outstanding. At September 30, 2007, there were no common stock equivalents. Accordingly, basic and diluted earnings per share are the same for all periods presented.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recent accounting pronouncements
There are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe any of these accounting pronouncements has had or will have a material impact on the Company’s financial position or operating results.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measures”. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of SFAS No. 157 will change current practice. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, which for us would be our fiscal year beginning January 1, 2008. The Company is currently evaluating the impact of SFAS No. 157 but does not expect that it will have a material impact on its financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” This statement permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS No. is effective for fiscal years beginning after November 15, 2007, which for the Company would be its fiscal year beginning January 1, 2008. The Company is currently evaluating the impact of SFAS No. 159, but does not expect that it will have a material impact on its financial statements.
Inventory
Inventories are stated at the lower of cost or market determined by the first-in, first-out (FIFO) method.
Property and equipment
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the respective assets (generally two to five years). Maintenance and repairs are charged to operations when incurred. Betterments and renewals are capitalized. When property and equipment are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in operations.
Fair value determination
Financial instruments consist of cash, marketable securities, accounts and notes receivable, accounts payable, accrued expenses and short-term borrowings. The carrying amount of these financial instruments approximates fair value due to their short-term nature or the current rates at which the Company could borrow funds with similar remaining maturities.
Advertising costs
The Company expenses advertising costs over the period receiving the benefit. The Company recorded advertising and promotion costs of $173,450 and $129,585 during 2007 and 2006, respectively.
Reclassifications
Certain prior year amounts have been reclassified to conform to current year presentation.
NOTE 2:
ACQUISITION
On February 16, 2007, Syzygy completed its acquisition of Rounders and The Game pursuant to a Stock Exchange Agreement dated February 7, 2007. Pursuant to the Agreement, shareholders of Rounders received 30,000,000 shares and the sole shareholder of The Game received 100,000 shares. For accounting purposes, the acquisition was treated as the acquisition of Rounders and The Game by Syzygy with Rounders as the acquirer (reverse acquisition). Accordingly, the financial information prior to February 16, 2007, is that of Rounders and The Game.
NOTE 3:
DISCONTINUED OPERATIONS
Triple Bay manufactured and sold disposable decontamination systems. The primary market Triple Bay served was for asbestos removal projects. This market arises when a building owner has asbestos in his building and wants to remove it in order to eliminate complying with asbestos regulations. In addition, Triple Bay’s disposable decontamination systems could be used in lead abatement projects, PCB decontamination and other remediation projects. The Company recorded a loss of $22,377 when it sold the Triple Bay operations effective April 1, 2007, in exchange for assumption of the existing debt.
NOTE 4:
ACCOUNTS RECEIVABLE
Accounts receivable consists of the following at December 31, 2007 (none at December 31, 2006):
NOTE 5:
PROPERTY AND EQUIPMENT
Property and equipment at December 31, 2007 and 2006 consisted of the following:
NOTE 6:
CONVERTIBLE DEBENTURES
Effective May 31, 2007, convertible debentures consisting of 8% subordinated debentures due December 31, 2007, with a face value of $850,090 and related accrued interest of $26,753 were converted into 1,096,055 shares of the Company’s common stock.
NOTE 7:
INCOME TAXES
The Company has not recorded a deferred tax benefit or expense for the year ended December 31, 2007 or the period from inception (April 6, 2006) through December 31, 2006, as all net deferred tax assets have a full valuation allowance.
Actual income tax benefit applicable to net loss before income taxes is reconciled with the “normally expected” federal income tax as follows:
The Company has available unused net operating loss carryforwards and capitalized start-up costs of $183,000 which will expire in various periods from 2026 to 2027, some of which may be limited as to the amount available on an annual basis.
The Company’s operations are principally in the Turks and Caicos Islands and are not subject to income tax.
NOTE 8:
STOCKHOLDERS’ EQUITY
Amendment to Articles of Incorporation and Bylaws
On February 6, 2007, the majority shareholder of the Company took stockholder action by its written consent without calling a meeting of all stockholders. The purpose of such action was to approve a Plan of Conversion pursuant to which the Company was converted from a Florida corporation known as Triple Bay Industries, Inc., into a Nevada corporation known as Syzygy Entertainment, Ltd. Shares representing the Nevada Corporation have been issued upon surrender of existing shares of the Florida Corporation to the Company’s transfer agent.
Redemption of Control Shares and Stock Split
Upon converting to a Nevada corporation, the Company had 15,262,000 common shares outstanding, of which 15,000,000 were controlled by the Company’s president. Pursuant to agreement, the Company’s president returned approximately 14,977,000 shares to the Company for cancellation.
A stock split of 30 shares for each share owned was previously approved and resulted in 8,577,980 outstanding shares before the acquisition of Rounders and The Game.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred stock, par value $.001. At December 31, 2007, there are no shares issued or outstanding.
Common Stock
The Company is authorized to issue 200,000,000 shares of common stock, par value $.001. At December 31, 2007, there were 40,194,035 shares issued and outstanding.
NOTE 9:
RELATED PARTY TRANSACTIONS
TRANSACTIONS
At December 31, 2007, the Company has accounts receivable for markers in the amount of $227,397 from two of Rounders’ directors.
One of Rounders’ directors was paid $500,000 in consulting fees during 2007.
At December 31, 2007, the Company had received non-interest bearing advances from shareholders in the amount of $2,375,971, of which $216,982 is due to a Rounders director.
TRANSACTIONS
At December 31, 2006, the Company had received non-interest bearing advances from stockholders in the amount of $167,257.
NOTE 10:
COMMITMENTS AND CONTINGENCIES
Leases
The Company has entered into one lease agreement for The Players’ Club which requires monthly rental of $11,000 beginning August 1, 2006 for two years and monthly rental of $13,000 for the following three years. There is an option for years six through ten at a rate which is the greater of $15,000 per month or the then current market rent for similar premises in a similar location.
The Company entered into a lease for restaurant space and a small gaming room at a cost of $8,000 per month for five years, commencing on August 1, 2007. The Company completed a sub-lease on the restaurant space at $6,000 per month commencing January 1, 2008. The Company now operates four gaming machines at the facility and plans to build out a gaming facility attached to the restaurant to house up to 25 gaming machines.
Effective March 1, 2008, Rounders entered into a one-year lease of a facility at the Turks and Caicos Airport Hotel & Suites on Providenciales. The lease requires a monthly rental of $6,000.
The future minimum obligation under operating leases having a non-cancelable term in excess of one year as of December 31, 2007, is as follows: 2008 - $238,000; - 252,000; 2010 - $252,000; 2011 - $200,000; and 2012 - $56,000. The Company has sub-lease income pursuant to a sub-lease in the amount of $330,000 which is due at the rate of $72,000 per year through 2011 and $42,000 in 2012.
Expansion
The Company is in process of developing several possible expansion plans which include an operating casino and other gaming machine sites. Funding for these possible expansions will require additional funding which management of the Company believes should be available either through additional debt or a private placement of equity.
NOTE 11:
GOING CONCERN
At December 31, 2007, the Company has a significant working capital deficit of $2,378,969. The major component of the working capital deficit is the $2,375,971 in advances from stockholders. The principal current assets include $86,454 in cash, accounts receivable of $327,604 and $85,306 in deposits and prepaid expenses. The Company has now developed a revenue source which should be sufficient to meet its obligations currently due within the next 12 months, although, the Company could continue to require advances from shareholders to meet short term cash flow requirements. In addition, the Company plans to expand its operations, which will require new capital. These conditions raise doubt about the Company’s ability to continue as a going concern. The Company plans on raising additional funds through loans or private placements of its common stock to continue to expand the business. If the Company is unable to improve its operating cash flows or is unable to raise additional funds through private placement sales of its common stock, then the Company may be unable to continue as a going concern. There can be no assurance that additional financing will be available when needed or, if available, that it will be on terms favorable to the Company and its stockholders. If the Company is not successful in generating sufficient cash flows from operations, or in raising additional capital when required in sufficient amounts and on terms acceptable to the Company, these failures would have a material adverse effect on the Company’s business, results of operations and financial condition. If additional funds are raised through the issuance of equity securities, the percentage ownership of the Company’s current shareholders would be diluted. These financial statements do not include any adjustments that may result from the outcome of these uncertainties.
ITEM 9:
ITEM 9:
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On April 18, 2007, the Company dismissed its former independent registered public accountants, Malone & Bailey, PC (“Malone & Bailey”), Certified Public Accountants, of Houston, Texas and engaged Moore & Associates, Chartered (“Moore”), Certified Public Accountants, of Las Vegas, Nevada, as its independent registered public accounting firm. The decision to change accountants was approved by the Board of Directors of the Company.
During the fiscal years ended December 31, 2006 and 2005 and the subsequent interim periods until the change, there were no disagreements with Malone & Bailey on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Malone & Bailey would have caused them to make reference in connection with their report to the subject matter of the disagreement, and Malone & Bailey has not advised the Company of any reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.
The report of independent registered public accounting firm of Malone & Bailey as of and for the years ended December 31, 2006 and 2005, did not contain any adverse opinion or disclaimer of opinion, nor was it qualified or modified as to audit scope or accounting principle. The report contained a “going concern” modification.
During the years ended December 31, 2006 and 2005, and through April 18, 2007, the Company did not consult with Moore regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.
ITEM 9A(T):
ITEM 9A(T):
CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that are filed under the Exchange Act is accumulated and communicated to management, including the principal executive officer, as appropriate to allow timely decisions regarding required disclosure. Under the supervision of and with the participation of management, including the principal executive officer and principal financial officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of December 31, 2007, and, based on its evaluation, our principal executive officer and our principal financial officer have concluded that these controls and procedures are effective.
(b) Changes in Internal Controls
There have been no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation described above, including any corrective actions with regard to significant deficiencies and material weaknesses.
(c) Management’s Annual Report on Internal Control Over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. As defined by the SEC, internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting is supported by written policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations which may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007. In making this assessment, management used the framework set forth in the report entitled “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2007, due to a lack of segregation of duties.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permits us to provide only management’s report in this annual report.
ITEM 9B:
ITEM 9B:
OTHER INFORMATION
None.
PART III
ITEM 10:
ITEM 10:
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Executive Officers and Directors
The following section sets forth the names, ages and current positions with the Company held by the Directors, Executive Officers and Significant Employees; together with the year such positions were assumed. There is no immediate family relationship between or among any of the Directors, Executive Officers or Significant Employees, and we are not aware of any arrangement or understanding between any Director or Executive Officer and any other person pursuant to which he was elected to his current position. Each Executive Officer will serve until he or she resigns or is removed or otherwise disqualified to serve, or until his or her successor is elected and qualified. We currently have one Director.
Name
Age
Position and Term
Michael D. Pruitt
CEO, President, CFO and director since
February
Michael D. Pruitt
Michael Pruitt, a long-time entrepreneur with a proven track record, possesses the expertise to evaluate potential investments, form key relationships and recognize a strong management team. Mr. Pruitt founded Avenel Financial Group, a boutique financial services firm concentrating on emerging technology company investments. The business succeeded immediately, and in order to grow Avenel Financial Group to its full potential and better represent the company's ongoing business model, he formed Avenel Ventures, an innovative technology investment and business development company. In the late 1980s, Mr. Pruitt owned Southern Cartridge, Inc., which he eventually sold to MicroMagnetic, Inc., where he continued working as Executive Vice President and a Board member until Southern Cartridge was sold to Carolina Ribbon in 1992. From 1992 to 1996, Mr. Pruitt worked in a trucking firm where he was instrumental in increasing revenues from $6 million to $30 million. The firm was sold in 1996 to Priority Freight Systems. Between 1997 and 2000, Mr. Pruitt assisted several public and private companies in raising capital, recruiting management and preparing companies to go public or be sold. He was the CEO, President and Chairman of the Board of Onetravel Holdings, Inc. (formerly RCG Companies), a publicly traded holding company formerly listed on the AMEX. Mr. Pruitt received a Bachelor of Arts degree from Coastal Carolina University in Conway, South Carolina, where he sits on the Board of Visitors of the Wall School of Business. He is also Managing Director of Cain Capital Advisors. Mr. Pruitt is currently CEO and director of Chanticleer Holdings, Inc. (CEEH.OB).
Audit Committee
The Board of Directors currently serves as the audit committee.
The registrant has not established a separately designated standing audit committee in accordance with Section 3(a)(58)(A) of the Exchange Act, but expects to during 2008 when the Board of Directors is expanded.
Compliance with Section 16(a) Of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s executive officers, directors and persons who own more than ten percent of the Company’s common stock to file initial reports of ownership and changes in ownership with the SEC. Additionally, SEC regulations require that the Company identify any individuals for whom one of the referenced reports was not filed on a timely basis during the most recent fiscal year or prior fiscal years. To the Company’s knowledge, based solely on a review of reports furnished to it, the Director was late filing his Form 5 to report his Form 3 obligation.
Code of Ethics
The Company initially became a reporting company during 2007 and expects to include the adoption of a code of ethics on its agenda during 2008.
Nominating Committee
The Company does not currently have a standing nominating committee or committee performing similar functions. The full Board of Directors participates in the consideration of director nominees.
ITEM 11:
ITEM 11:
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors deliberates executive compensation matters to the extent they are not delegated to the Chief Executive Officer.
The following table shows the compensation of the Company’s Chief Executive Officer and each executive officer whose total cash compensation exceeded $100,000 for the period from inception (April 4, 2006) through December 31, 2007.
Columns for bonus, option awards, non-equity incentive plan compensation and nonqualified deferred compensation earnings have been omitted from the table above as all amounts are zero.
Narrative disclosure to summary compensation table
Mr. Pruitt became President, Chief Executive Officer and Chief Financial Officer of the Company in February 2007. Mr. Pruitt received 664,980 shares of SYZG common stock as part of the original purchase of Rounders by SYZG. The stock was not trading at the time and was valued at its par value of $665. Mr. Pruitt will also be reimbursed for all reasonable out of pocket expenses.
There are no outstanding equity awards at December 31, 2007 or 2006.
Mr. Pruitt became Chief Executive Officer, President, Chief Financial Officer and the sole Director of the Company in February 2007. He did not receive separate compensation for his services as a Director.
ITEM 12:
ITEM 12:
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table indicates all persons who, as of February 29, 2008, the most recent practicable date, are known by us to own beneficially more than 5% of any class of our outstanding voting securities. As of February 29, 2008, there were 40,194,035 shares of our common stock outstanding. Except as otherwise indicated below, to the best of our knowledge, each person named in the table has sole voting and investment power with respect to the securities beneficially owned by them as set forth opposite their name.
Security Ownership of Certain Beneficial Owners
Name and Address of
Amount and Nature of
Title of Class
Beneficial Owner
Beneficial Owner
% of Class
Common
Cornucopia, Ltd.
2,360,000
5.87%
C/O Miller and Simon Trust Co
P.O. Box 260
Butterfield Sq
Providenciales, BWI
Common
Kojak TC, Ltd.
6,300,000
15.67%
PO Box 228
Temple Financial Centre
Leeward Highway
Providenciales, BWI
Common
TCI Global Trading, Ltd
3,069,431
7.64%
P.O. Box 915
Graceway House
Providenciales, BWI
Common
Mark Lindberg (a)
2,698,800
6.71%
Congress Street, Ste 145
Charlotte, NC 28209
(a)
Includes 898,800 shares owned by Malianal Group, Ltd. which is owned 49.5% by Mr. Lindberg and 49.5% by his wife; and includes 1,800,000 shares owned by Cassinova Investments which is 100% owned by Mr. Lindberg.
In addition, Cassinova Investments owns 85% of Premier Regard which owns 1,800,000 shares. Mr. Lindberg did not control Premier Regard and disclaims beneficial ownership at December 31, 2007.
Three Monkeys owns 1,500,000 shares. An entity owned and controlled by Mr. Lindberg, Dustin Capital is the rightful owner of 500,000 of these shares. Mr. Lindberg does not control Three Monkeys and disclaims beneficial ownership at December 31, 2007.
Security Ownership of Management
The following table indicates the beneficial ownership of the Company’s voting securities of all Directors of the Company and all Executive Officers who are not Directors of the Company, and all officers and directors as a group, as of February 29, 2008, the most recent practicable date. As of February 29, 2008, there were 40,194,035 shares of the Company’s common stock outstanding. Except as otherwise indicated below, to the best of the Company’s knowledge, each person named in the table has sole voting and investment power with respect to the securities beneficially owned by them as set forth opposite their name. All options are currently exercisable, unless otherwise indicated.
Title
Name and Address of
Amount and Nature of
% of
of Class
Beneficial Owner
Beneficial Owner
Class
Common
Michael D. Pruitt
(a)
664,980
1.65%
Congress Street, Suite 145
Charlotte, NC 28208
Common
All current officers and directors as a
Group (1 persons)
664,980
1.65%
(a)
Includes 122,166 shares owned by Avenel Financial Group, Inc. which is 100% owned by Mr. Pruitt and includes 542,814 shares owned by Chanticleer Holdings, Inc. of which Mr. Pruitt is CEO and a director and which is 19.59% owned by Mr. Pruitt.
Equity Compensation Plan Information
The Company did not have an equity compensation plan as of December 31, 2007.
ITEM 13:
ITEM 13:
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
TRANSACTIONS
At December 31, 2007, the Company has accounts receivable for markers in the amount of $227,397 from two of Rounders’ directors.
One of Rounders’ directors was paid $500,000 in consulting fees during 2007.
At December 31, 2007, the Company had received non-interest bearing advances from shareholders in the amount of $2,375,971, of which $216,982 is due to a Rounders director.
TRANSACTIONS
At December 31, 2006, the Company had received non-interest bearing advances from stockholders in the amount of $167,257.
Corporate Governance - Director Independence
Mr. Pruitt became Chief Executive Officer, President, Chief Financial Officer and the sole Director of the Company in February 2007.
ITEM 14:
ITEM 14:
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees - The aggregate fees billed as of February 29, 2008 for professional services rendered by the Company’s accountant was $4,000 for the audit of the Company’s annual financial statements and $4,500 for the quarterly reviews for the fiscal year ended December 31, 2007.
Audit-Related Fees - None.
Tax Fees - None for 2007 or 2006.
All Other Fees - Other than the services described above, no other fees were billed for services rendered by the principal accountant during fiscal 2007 or fiscal 2006.
Audit Committee Policies and Procedures - The audit committee pre-approves audit and review services.
If greater than 50 percent, disclose the percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees - Not applicable.
PART IV
ITEM 15:
ITEM 15:
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as part of this report:
1.
Financial Statements - The following financial statements of Syzygy Entertainment, Ltd. are contained in Item 8 of this Form 10-K:
·
Report of Independent Registered Public Accountant
·
Consolidated Balance Sheets at December 31, 2007 and
·
Consolidated Statements of Operations - For the years ended December 31, 2007 and the period from inception (April 4, 2006) through December 31,
·
Consolidated Statements of Stockholders’ Equity (Deficit) - For the years ended December 31, 2007 and the period from inception (April 4, 2006) through December 31, 2006
·
Statements of Cash Flows - For the years ended December 31, 2007 and the period from inception (April 4, 2006) through December 31,
·
Notes to the Financial Statements
2.
Financial Statement Schedules were omitted, as they are not required or are not applicable, or the required information is included in the Financial Statements.
3.
Exhibits - The following exhibits are filed with this report or are incorporated herein by reference to a prior filing, in accordance with Rule 12b-32 under the Securities Exchange Act of 1934.
Exhibit
Description
31.1
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of
32.1
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
SIGNATURES
In accordance with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
In accordance with the Exchange Act, this report has been signed below by the following person on behalf of the registrant and in the capacities and on the dates indicated.