Item 1.BUSINESSOVERVIEW.
We are a multi-faceted company, offering a variety of products and services for members of the financial market community. Our different enterprises include quotation platforms, and a variety of issuer services for small cap public companies. We are also developing a unique financial social media network platform which we believe will transform how businesses and people work and collaborate in the cloud era.
Our vision is to become a financial networking industry leader with the only “All in One Portal” for financial market investment information and services.
Our goal is to provide a place for our members to capitalize on the sharing of knowledge, expertise and interest among one another. Providing full access equally to all our member, we hope to level the playing field by offering a fair and open exchange of information to everyone. We believe this will translate into an ever-expanding database from all over the financial community. In summary, Bulls N Bears will not be just another financial website; rather we will serve as value added business bureau for all level of interested parties, from novices to experts.
Business Model
Our business model includes four interrelated companies:
Bulls N Bears
B N B Quotes
B NBServices
B n B Funding
BullNBears is a financial networking social media platform, serving as a transaction free, neutral business bureau of financial data, where our members - investors, public/private companies, broker/brokerage firms, traders and market makers, SEC attorneys and accounting firms - can gather to exchange ideas and information. It is our hope to create a more fair and open playing field by facilitating the flow of data and ideas between our members, companies and individuals who will populate an ever-expanding database from every sector of the investment community.
BNBQuotes creates the superior next generation products and services needed to invest successfully in today’s fast paced markets. Through our real time stock market quotation services platforms, we provide all inclusive state of the art investment tools and unlimited real time Level 1 or Level 2 quotes, for self-directed investors, traders, and brokers, worldwide. We also design back office solutions for professionals.
BNBQuotes offers two all-inclusive quotation solutions for self-directed investors, traders, and brokers. Our services provide unlimited real time quotes at Level 1 - Basic or Level 2 - Pro, which include investment tools that allow an investor to track up to five securities at the same time, on one screen. All features are fully customizable. The benefits of BNBQuotes include:
·
Advanced charting package
·
Portfolio management
·
Level 2
·
Top lists
·
Option Chains
·
Strategy back testing
·
News and alarms
·
Direct access trading
Our packages are:
·
BNBQuotes Pro- empowers traders by providing latest features in a complete direct access quotations platform
·
BNBQuotes Basic- is our web application developed in Microsoft Silverlight framework
·
BNBQuotes Back Office- is our back office management system that allows desk managers the capability to perform update and risk monitoring
We offer BNBQuotes on a monthly subscription basis at rates from $19.95 to $49.95 per month.
BNBServices is a single source low cost provider of SEC reporting and investor information services for small cap and micro public companies. It offers a streamlined management solution for the preparation and filing of SEC documents, issuance of press releases, and Investor Relations webpage content management. The IR hosting service is cloud based and provides for the embedding of SEC filings, press releases, and a company’s stock quote, chart, and major market indexes, all in real time.
We allow a company to bundle products and services that streamline the SEC financial reporting process and corporate website compliance requirements. We seek, through our single source service solutions, to reduce the burden involved in the preparation and filing of SEC documents, provide press release services at a discount, and host an investor relations webpage. Our content management enhances the investor relations website experience by populating it with SEC filings, news, and real time market information, including a stock quote, chart and major market indexes.
Our services include:
·
SEC Reporting - annual, quarterly and material information reports are converted into electronic documents, in proper EDGAR format, with the required XBRL tagging, and filed with SEC
·
Quotes and Charts - our IR webpage hosting solution will display on one screen company stock quotes, charts, and major market indexes, all in real time
·
Press Releases - as a reseller for leading news services, we offer press releases at a reduced price and embed them into the Investor Relations webpage
·
IR Cloud Hosting - we will host your investor relations webpage and manage them to include all SEC filings, press releases, and real time stock quotes and charts
B n B Funding is focused on providing alternative funding sources to fulfill short term small business capital. Through our relationships with lenders we will assist small business owners in procuring alternative funding sources.we will leverage our marketing, lead generation and sales staff to offer small business owners a competitive pricing alternative for their short term capital needs. Small-business owners who need quick access to capital have a burgeoning industry eager to fund them. Merchant cash advance providers offer businesses a lump sum payment in exchange for a share of future sales.
Capital Needs
Our ability to implement this business model, develop and launch a comprehensive website and market our products and services is dependent upon our ability to raise sufficient capital. As described later in this report, we have determined we need to raise approximately $3,500,000 for general operating capital, including funds necessary to hire and compensate executive and other employees, as well as for IT development, including staffing, support and equipment, advertising and marketing, expansion of business operations, and general working capital. Although we have received approximately $977,200 in net proceeds from the sale of our one-year 10% convertible promissory notes during 2013 and $210,000 in 2014, and an additional $5,000 principal amount of Series “A” 5% Cumulative Convertible Preferred Stock, at a price of $1.25 per Share. These Shares bear annual cumulative dividends of 5%, payable at the option of the Company in cash or Shares of Common Stock. At the option of the holder, beginning one year from the date of issuance the Shares are convertible into Shares of Common Stock at a price of $1.25 per Share. we do not have any firm commitments to provide the balance of this capital and there are no assurances we will be successful in raising the necessary capital. In that event, our ability to fully implement our business model and begin generating revenues from our operations would be in jeopardy.
Competition
Most of our competitors are well-established networks and have substantially greater financial resources than we have. However these large companies, such as LinkedIn, Facebook and Pinterest, serve as providers of information on all subject matters. We will seek to compete in our market by focusing on the financial community niche market. There are no assurances, however, we will ever effectively compete in our target market.
Government regulation
While there are currently relatively few laws or regulations directly applicable to Internet access, commerce, or commercial search activity, there is increasing awareness and concern regarding some uses of the Internet and other online services, leading federal, state, local, and international governments to consider adopting civil and criminal laws and regulations, amending existing laws and regulations, conducting investigations, or commencing litigation with respect to the Internet and other online services covering issues such as:
·
user privacy;
·
trespass;
·
defamation;
·
database and data protection;
·
limitations on the distribution of materials considered harmful to children;
·
liability for misinformation provided over the web;
·
user protection, pricing, taxation, and advertising restrictions (including, for example, limitation on the advertising on Internet gambling websites or of certain products);
·
delivery of contextual advertisements via connected desktop software;
·
intellectual property ownership and infringement, including liability for listing or linking to third-party websites that include materials infringing copyrights or other rights;
·
distribution, characteristics, and quality of products and services; and
·
other consumer protection laws.
Legislation has also been introduced in the U.S. Congress and some state legislatures that is designed to regulate spyware, which does not have a precise definition, but which is often defined as software installed on consumers' computers without their informed consent and designed to gather and, in some cases, disseminate information about those consumers, including personally identifiable information. We do not expect to rely on spyware for any purpose, and it will not be part of our product offerings, but the definition of spyware or proposed legislation relating to spyware may be broadly defined or interpreted to include legitimate ad-serving software, including toolbar offerings and other downloadable software currently provided by our product offerings. Currently, legislation has focused on providing Internet users with notification of and the ability to consent or decline the installation of such software, but there can be no guarantee that future legislation will not provide more burdensome standards by which software can be downloaded onto consumers' computers. We expect that all downloadable software that we will distribute will require an express consent of the consumer and will provide consumers with an easy mechanism to delete the software once downloaded. However, if future legislation is adopted that makes the consent, notice, or uninstall procedures more onerous, we may have to develop new technology or methods to provide our services or discontinue those services in some jurisdictions or altogether. There is no guarantee we will be able to develop this new technology at all or in a timely fashion or on commercially reasonable terms. The adoption of any additional laws or regulations, application of existing laws to the Internet generally or our industry, or any governmental investigation or litigation related to the Internet generally, our industry, or our services may decrease the growth of the Internet or other online services, which could, in turn:
Intellectual property
We rely on a combination of copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. Our success will depend on the protection of the proprietary aspects of our technology as well as our ability to operate without infringing on the proprietary rights of others. We expect to also enter into proprietary information and confidentiality agreements with our employees, consultants and commercial partners and control access to, and distribution of, our software documentation and other proprietary information.
We own the domain names www.bullsnbears.com. However, as with phone numbers, we do not have and cannot acquire any property rights in an Internet address. The regulation of domain names in the United States and in other countries is also subject to change. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we might not be able to maintain our domain names or obtain comparable domain names, which could harm our business.
Employees
As of April 21, 2015 we have no full time employees, and Company operations are being conducted by our President.
Our history
We were organized under the laws of the State of Delaware on December 30, 2010 under the name Spicy Gourmet International, Inc. as part of the implementation of the Chapter 11 plan of reorganization of Spicy Gourmet Organics, Inc. ("SGO"), a California corporation. SGO was incorporated in the State of California in 2006 and was formed to import specialty, organic spices from South Asia and sell them in the United States. SGO was under capitalized and sales of its spice products were slow to develop, possibly due to the current recession. As a result SGO lacked sufficient cash flow to meet its current obligations and on October 1, 2010 SGO filed a voluntary petition for bankruptcy under Chapter 11 in the U.S. Bankruptcy Court for the Central District of California. SGO's plan of reorganization was confirmed by the Court on November 19, 2010.
The plan of reorganization provided for the acquisition by SGO of a new, unrelated, retail business and the spin off of all of the various elements of SGO's spice business to four different entities. The plan of reorganization called for the spin off of SGO's manufacturing business to our company, the incorporation of our company, and the distribution of shares of our common stock to the bankruptcy creditors. The plan required us to issue 1,180,000 shares of our common stock and distribute
these to SGO's general unsecured creditors, to its administrative creditors, and to its shareholder. The shares were distributed pursuant to Section 1145 of the U.S. Bankruptcy Code.
The Court also ordered the distribution of warrants to all administrative creditors of SGO, with these creditors to receive five warrants exercisable into shares of our common stock for each $0.05 of SGO's administrative debt which they held. These creditors received an aggregate of 5,000,000 warrants consisting of:
·
1,000,000 "A Warrants" each convertible into one share of common stock at an exercise price of $3.00;
·
1,000,000 "B Warrants" each convertible into one share of common stock at an exercise price of $4.00;
·
1,000,000 "C Warrants" each convertible into one share of common stock at an exercise price of $5.00;
·
1,000,000 "D Warrants" each convertible into one share of common stock at an exercise price of $6.00; and
·
1,000,000 "E Warrants" each convertible into one share of common stock at an exercise price of $7.00.
All warrants are exercisable at any time prior to November 19, 2015. This warrants distribution also took place on December 30, 2010. During October 2012, we agreed to reduce the exercise price of the outstanding warrants to $0.25 per share.
We were a “shell company” as that term is defined in the Securities Act of 1933 from our date of incorporation until October 2012.
On October 20, 2012, we acquired from James M. Palladino, then an unrelated third party, the URL domain name and websites of bullsnbears.com for $150,000. Following this asset purchase we were no longer considered a “shell company.” On October 23, 2012, our former officers and directors resigned and certain of our current officers and directors were appointed, with the balance of our directors being appointed in December 2012.
In November 2012 we changed our name to BullsnBears.com, Inc.
ITEM 1A.
ITEM 1A.RISK FACTORS.
Before you invest in our securities, you should be aware that there are various risks. You should consider carefully these risk factors, together with all of the other information included in this annual report before you decide to purchase our securities. If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected.
Risks Related to Our Business
We have only recently exited shell status, have not operated profitably since inception, and there are no assurances we will ever generate revenues or profits .
Our operations have never been profitable, and it is expected that we will continue to incur operating losses in the future. In 2012, we exited shell status thorough the purchase of the URL domain names and websites, however, those assets had never generated any revenues. We reported revenues of $1,517 in 2013, and our net loss was ($1,104,250).We reported revenues of $106,859 in 2014, and our net loss was ($648,016). At December 31, 2014 we had a working capital deficit of ($1,322,860). There is no assurance that we will be able to fully implement our business model, generate any meaningful revenues or operate profitably in the future. Our failure to generate substantial revenues and achieve profitable operations in future periods will adversely affect our ability to continue as a going concern. If we should be unable to continue as a going concern, you could lose all of your investment in our company.
We will need additional financing which we may not be able to obtain on acceptable terms. If we cannot raise additional capital as needed, our ability to execute our business plan and grow our company will be in jeopardy.
Capital is needed not only to fund our ongoing operations and to pay our existing obligations, but capital is also necessary for the effective implementation of our business plan. As described elsewhere herein, we will need to raise approximately $3,500,000 of additional capital. Our working capital is not sufficient to fund our operations. We do not have any firm commitments to provide capital and we anticipate that we will have certain difficulties raising capital given the current uncertainties in the capital markets. Accordingly, we cannot assure you that additional working capital will be available to us upon terms acceptable to us. If we do not raise funds as needed, our ability to continue to implement our business model is in jeopardy and we may never be able to achieve profitable operations. In that event, our ability to continue as a going concern is in jeopardy and you could lose all of your investment in our company.
Our auditors have raised substantial doubts about our ability to continue as a going concern.
The report of our independent registered public accounting firm on our financial statements at December 31, 2014 and for the year then ended raises substantial doubts about our ability to continue as a going concern based our operating losses and working capital deficit . Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. As described above, our current working capital is not sufficient to sustain our current operations and we need to raise additional working capital in order to continue to implement our business model. If such funds are not available to us as needed, we may be forced to curtail our growth plans and our ability to grow our company will be in jeopardy. In such event, we may not be able to continue as a going concern.
We have $664,200 principal amount outstanding convertible notes payable to non-related parties, a substantial portion of which are presently past due.
Between January 2013 and December 2013 we issued and sold 10% convertible promissory notes in the principal amount of $977,200 in a private offering. These notes mature one year from the date of issuance, and on the maturity date were convertible into Shares of Common Stock of the Company at a price of $1.00 per Share. During the year ended December 31, 2014, we sold an additional $210,000 principal amount of one-year notes, bearing an interest rate of 10% per annum and convertible at any time following issuance into Shares of Common Stock of the Company at a price of $1.00 per Share. During the year ended December 31, 2014, we sold an additional $5,000 principal amount of Series “A” 5% Cumulative Convertible Preferred Stock, at a price of $1.25 per Share. These Shares bear annual cumulative dividends of 5%, payable at the option of the Company in cash or Shares of Common Stock. At the option of the holder, beginning one year from the date of issuance the Shares are convertible into Shares of Common Stock at a price of $1.25 per Share.
In February, 2015, we converted $90,620 of these notes and accrued interest into 90,620 shares of Common Stock. The balance of the notes matured between January 2015 and March 2015 and are now presently due. In the event one or more of the holders should elect to convert the notes, the issuance of shares of our common stock in satisfaction of the notes will be dilutive to our current stockholders. If the notes are not converted, we will be required to satisfy the notes in cash. We do not have sufficient cash to satisfy the presently due notes, nor the balance of these notes when they become due and there are no assurances we will be able to raise the funds if necessary.
We have a limited history of operations upon which an investor could evaluate our company. There are no assurances our business model will prove successful.
We have a limited operating history. Our business is in a new and unproven market, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. This lack of a significant operating history makes it difficult to effectively assess our future prospects. You should consider our business and prospects in light of the risks and difficulties we encounter in this rapidly evolving market. These risks and difficulties include our ability to, among other things:
·
avoid interruptions or disruptions in our service or slower than expected website load times;
·
develop a scalable, high-performance technology infrastructure that can efficiently and reliably handle increased member usage globally, as well as the deployment of new features and products;
·
responsibly use the data that our members share with us to provide solutions that make our members more successful and productive and that are critical to the hiring and marketing needs of enterprises and professional organizations;
·
generate any significant revenues from the solutions we provide;
·
earn and preserve our members’ trust with respect to their professional reputation and information;
·
process, store and use personal data in compliance with governmental regulation and other legal obligations related to privacy;
·
successfully compete with other companies that are currently in, or may in the future enter, the online professional network space;
·
hire, integrate and retain qualified management and employees; and
·
successfully expand our business.
If we fail to address the needs of our target market, our ability to fully implement our business model will be in jeopardy. There are no assurances will be successful in the further implementation of our business model. You should consider our business and prospects in light of the risks and difficulties we encounter as we seek to further expand our operations.
We cannot assure you that we will be able to manage the growth of our organization effectively.
We currently expect to experience rapid growth in demand for our products if we are able to penetrate new markets. Any future successful growth and/or expansion of our business and product offerings will place significant demands on our management and our operational and financial resources. We will be required to manage multiple relations with various merchants, subscribers, technology licensors and other third parties. In the event of further growth of our operations or in the number of our third-party relationships, our information technology systems or our internal controls and procedures may not be adequate to support our operations. To effectively manage our proposed growth, we must continue to implement operational plans and strategies, improve and expand our infrastructure of people and information systems, and train and manage our employee base. There are no assurances our efforts will be effective.
We may face third party intellectual property infringement claims that could be costly to defend and result in the loss of significant rights.
Our current and future business activities may infringe upon the proprietary rights of others, and third parties may assert infringement claims against us, including claims alleging, among other things, copyright, trademark, or patent infringement. We are aware of allegations from time to time concerning these types of claims and in particular in respect of copyright and trademark infringement claims. While we believe that we have defenses to these types of claims under appropriate trademark laws, we may not prevail in our defenses to any intellectual property infringement claims. In addition, we may not be adequately insured for any judgments awarded in connection with any litigation. Any such claims and resulting litigation
could subject us from time to time to significant liability for damages, or result in the invalidation of our proprietary rights, which would have a material adverse effect on our business, financial condition, and results of operations. Even if we were to prevail, these claims could be time-consuming, expensive to defend, and could result in the diversion of management's time and attention.
There are no assurances we will ever effectively compete in our target market.
Competitors may develop or offer products and services that provide significant performance, price or other advantages over the services offered by us. Most of our competitors are larger and better capitalized than we are. We may not have the financial resources, marketing, nor support capabilities to compete successfully. If we fail to gain market share, our financial condition, operating results and business could be adversely affected and the value of the investment in the Company could be reduced significantly.
We may not timely and effectively scale and adapt our existing technology and network infrastructure to ensure that our website is accessible within an acceptable load time.
A key element to our growth strategy is the ability of our members, users (whom we define as anyone who visits our website, regardless of whether or not they are a member), enterprises and financial organizations in all geographies to access our website within acceptable load times. We call this “website performance” due to a variety of factors, including infrastructure changes, human or software errors, capacity constraints due to an overwhelming number of users accessing our website simultaneously, and denial of service or fraud or security attacks. In some instances, we may not be able to identify the cause or causes of these website performance problems within an acceptable period of time. It may become increasingly difficult to maintain and improve our website performance, especially during peak usage times and as our solutions become more complex and our user traffic increases. If our website is unavailable when users attempt to access it or does not load as quickly as they expect, users may seek other websites to obtain the information for which they are looking, and may not return to our website as often in the future, or at all. This would negatively impact our ability to attract members, enterprises and professional organizations and increase engagement on our website. Subject to the availability of sufficient capital, we expect to make significant investments to maintain and improve website performance and to enable rapid releases of new features and products. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business and operating results may be harmed.
Risks Related to Our Common Stock
Subpoena from Office of Financial Regulation State of Florida (“OFR”).
We received a subpoena from OFR in September 2013 requesting, on a confidential basis, the production of documents relating principally to our sale of convertible promissory notes. We complied with the subpoena in all respects. While we do not believe that we have engaged in any conduct that violates Florida Statutes, there are no assurances as to the outcome of the OFR investigation. We have no knowledge as to whether or not this investigation is ongoing.
Our common stock is currently quoted on the OTC Markets, but trading in the securities is extremely limited .
Currently, our common stock is quoted on the OTCQB tier of the OTC Markets. The market for our common stock is extremely limited and there are no assurances an active market for our common stock will ever develop. The OTC Markets is an inter-dealer, over-the-counter market that provides generally significantly less liquidity than a national or regional securities exchange. Securities quoted on the OTC Markets typically have fewer market makers and are not followed by analysts. The quotation of our shares on the OTC Markets may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future. Until an active market for our common stock develops, if ever, an investment in our common stock should be considered illiquid.
Provisions of our certificate of incorporation and bylaws may delay or prevent a take-over which may not be in the best interests of our stockholders.
Provisions of our certificate of incorporation and bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our stockholders may be called, and may delay, defer or prevent a takeover attempt. In
addition, certain provisions of the Delaware General Corporation Law also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation's disinterested stockholders. Further, our certificate of incorporation authorizes the issuance of up to 20,000,000 shares of preferred stock with such rights and preferences as may be determined from time to time by our board of directors in their sole discretion. Our board of directors may, without stockholder approval, issue series of preferred stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of our common stock.
The tradability of our common stock is limited under the penny stock regulations which may cause the holders of our common stock difficulty should they wish to sell the shares.
Because the quoted price of our common stock is less than $5.00 per share, our common stock is considered a “penny stock,” and trading in our common stock is subject to the requirements of Rule 15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchaser’s written consent prior to the transaction. SEC regulations also require additional disclosure in connection with any trades involving a “penny stock,” including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks. These requirements severely limit the liquidity of securities in the secondary market because few broker or dealers are likely to undertake these compliance activities and this limited liquidity will make it more difficult for an investor to sell his shares of our common stock in the secondary market should the investor wish to liquidate the investment. In addition to the applicability of the penny stock rules, other risks associated with trading in penny stocks could also be price fluctuations and the lack of a liquid market.
The majority of our outstanding common shares are “restricted securities” and we have outstanding warrants and convertible notes to purchase approximately 51% of our currently outstanding common stock.
At April 15, 2015 we had12,319,270 shares of common stock outstanding together with outstanding warrants to purchase an aggregate of 5,000,000 shares of common stock at an exercise price of $0.25 per share, and convertible promissory notes to purchase an additional 570,000 shares of our common stock at a conversion price of $1.00 per share. The majority of our outstanding shares of common stock are "restricted securities" and the ability to freely resell those shares is limited by Federal securities laws. Future sales of restricted common stock under Rule 144 or otherwise could negatively impact the market price of our common stock. In addition, in the event of the exercise of the warrants and/or conversion of the convertible notes, the number of our outstanding common stock will increase by almost 51%, which will have a dilutive effect on our existing stockholders.
ITEM 1B.
ITEM 1B.UNRESOLVED STAFF COMMENTS.
Not applicable to a smaller reporting company.
ITEM 2.
ITEM 2.PROPERTIES.
Our corporate offices are located at 6586 West Atlantic Ave., Unit 103, Delray Beach, FL 33446, which are rented on a month-to-month basis. We believe that our current space and arrangement is adequate to meet our current needs.
ITEM 3.
ITEM 3.LEGAL PROCEEDINGS.
A lawsuit was filed against the Company on November 13, 2014, in the Third Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida entitled Thinspace Technology, Inc. v. BullsnBears.com, Inc. The complaint alleges that BullsnBears failed to provide certain services it was contractually committed to provide and seeks damages in excess of $15,000. The Company believes that this claim is without merit and is vigorously defending this action.
The Company received a subpoena from the Florida Office of Financial Regulation [OFR] in September 2013 requesting, on a confidential basis, the production of documents relating principally to our sale of convertible promissory notes. We complied with the subpoena in all respects and have received no further communication from OFR. While we do not believe that we have engaged in any conduct that violates Florida Statutes, there are no assurances as to the outcome of the OFR investigation. We have no knowledge as to whether or not this investigation is ongoing.
ITEM 4.
ITEM 4.MINE SAFETY DISCLOSURES.
Not applicable for our operations.
PART II
ITEM 5.
ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Since October 2, 2012 our shares of common stock are quoted on the OTCQB Tier of the OTC Markets Group Inc. under the symbol “BNBI”. Our shares of common stock are thinly traded. Set forth below are the high and low closing bid prices for our common stock for the for the last two fiscal years. These bid prices were obtained from OTC Markets Group Inc. All prices listed herein reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions.
As of April 15, 2015, the last day our common stock traded before the filing date of this report, the last sale price of our common stock as reported on the OTC Markets was $.20 per share. As of April 15, 2015 there are approximately106 record holders of our common stock.
Dividends
We have never paid cash dividends on our common stock. Under Delaware law, we may declare and pay dividends on our capital stock either out of our surplus, as defined in the relevant Delaware statutes, or if there is no such surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. If, however, the capital of our company, computed in accordance with the relevant Delaware statutes, has been diminished by depreciation in the value of our property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, we are prohibited from declaring and paying out of such net profits and dividends upon any shares of our capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets shall have been repaired.
Recent Sales of Unregistered Securities
Between September 2013 and December 2013, we issued and sold to 15 accredited investors a total of $139,200 principal amount one year 10% convertible promissory notes in a private offering exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(a)(2) and Regulation D of that act. We received gross proceeds of $139,200. We did not pay any commissions or finder’s fees and are using the net proceeds for working capital. The notes bear interest at the rate of 10% per annum, accrued and paid on the six-month anniversary of the date of issuance, and at the maturity date. At the maturity date, the holder of a note has the right to convert the unpaid principal and accrued interest due under the note into shares of our common stock at a conversion price of $1.00 per share.
Between January 2014 and December 2014, we issued and sold to four accredited investors a total of $210,000 principal amount one year 10% convertible promissory notes in a private offering exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(a)(2) and Regulation D of that act. We received gross proceeds of $210,000. We did not pay any commissions or finder’s fees and are using the net proceeds for working capital. The notes bear interest at the rate of 10% per annum, accrued and paid on the six-month anniversary of the date of issuance, and at the maturity date. At the maturity date, the holder of a note has the right to convert the unpaid principal and accrued interest due under the note into shares of our common stock at a conversion price of $1.00 per share.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
ITEM 6.
ITEM 6.SELECTED FINANCIAL DATA.
Not required for smaller reporting companies.
ITEM 7.
ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion of our financial condition and results of operations for 2014 and 2013 should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Item 1A. Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this Form 10-K. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
OVERVIEW
Prior to our acquisition in October 2012, of the URL domain names and websites of bullsnbears.com we were a “shell company” as that term is defined in Federal securities laws. We are now in the process of developing a financial networking portal to fill the gap we believe that currently exists between the financial community and investors. We expect that the financial social media network will provide information and business gathering place for investors, public and private companies, brokers, Securities and Exchange Commission attorneys and accounting firms, all in one location. We expect to generate revenue predominantly through advertising, subscription and e-commerce revenues.
Following the closing of the acquisition of these assets, during the balance of the fourth quarter we commenced the design and development of our system. In order to provide the funds necessary to fully implement our business model and properly capitalize our company through the first stages of our business development plan and satisfy our obligations as they become due, we will need to raise approximately $3,500,000. We expect to use those funds to provide funds for general operating capital, including funds necessary to hire and compensate executive and other employees, as well as for IT development, including staffing, support and equipment, advertising and marketing, expansion of business operations, and general working capital.
Although we have received approximately $977,200 in net proceeds from the sale of our one-year unsecured 10% convertible promissory notes in 2013 and $210,000 in 2014, we do not have any firm commitments to provide the balance of this capital and there are no assurances we will be successful in raising the necessary capital. Holders of $639,270 principal amount of these notes have delivered conversion notices to us. Approximately $664,200 principal amount of these notes matured between January 2014 and March 31, 2014 and have been issued their common shares and the balance of these notes mature between April 2014 and December 2014.
Between January 2013 and December 2013 we issued and sold 10% convertible promissory notes in the principal amount of $977,200 in a private offering. These notes mature one year from the date of issuance, and on the maturity date were convertible into Shares of Common Stock of the Company at a price of $1.00 per Share. During the year ended December 31, 2014, we sold an additional $210,000 principal amount of one-year notes, bearing an interest rate of 10% per annum and convertible at any time following issuance into Shares of Common Stock of the Company at a price of $1.00 per Share. During the year ended December 31, 2014, we sold an additional $5,000 principal amount of Series “A” 5% Cumulative Convertible Preferred Stock, at a price of $1.25 per Share. These Shares bear annual cumulative dividends of 5%, payable at the option of the Company in cash or Shares of Common Stock. At the option of the holder, beginning one year from the date of issuance the Shares are convertible into Shares of Common Stock at a price of $1.25 per Share.
In February, 2015, we converted $90,620 of these notes and accrued interest into 90,620 shares of Common Stock. The balance of the notes matured between January 2015 and March 2015 and are now presently due. In the event one or more of the holders should elect to convert the notes, the issuance of shares of our common stock in satisfaction of the notes will be dilutive to our current stockholders. If the notes are not converted, we will be required to satisfy the notes in cash. We do not have sufficient cash to satisfy the presently due notes, nor the balance of these notes when they become due and there are no assurances we will be able to raise the funds if necessary.
In addition, as of December 31, 2014 we owe Mr. Palladino, our Chief Executive Officer, approximately $375,799 for funds he has advanced us for working capital. We do not have sufficient funds to repay these obligations, which will likely make our ability to raise additional capital more difficult. If we are unable to raise the necessary capital in that event, our ability to fully implement our business model and begin generating revenues from our operations would be in jeopardy.
GOING CONCERN
We have incurred net losses of ($2,110,880) since inception through December 31, 2014. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2014 contains an explanatory paragraph regarding our ability to continue as a going concern based upon our loss from operations and working capital deficit. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to generate revenues or report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.
RESULTS OF OPERATIONS - DECEMBER 31, 2014 COMPARED TO DECEMBER 31, 2013
We generated $106,859 in revenues during 2014, compared to $1,517 in 2013. While we reasonably expect to report an increase in our revenues in 2015 as a result of the continued implementation of our business plan, our company is still in its early stages of operations. Given the significant amount of competition we face and our limited access to working capital which hinders our ability to market our products and services, there are no assurances we will be able to report any material increase in revenues during 2015.
During 2014, our operating expenses decreased by approximately 57% from 2013, which included:
·
in 2014 we reported subscription content expense of $8,129 for which there was comparable expense of $36,760 in 2013. This expense, which represents the costs to us of various content which appears on our website, is expected to increase in 2015 as we continue to expand our products and services; however, we are not able at this time to quantify the amount of expected increase ,
·
our general and administrative expenses decreased to $541,518 from $960,238 in 2013. During 2014 decreases in general and administrative expenses were primarily related to decreases in compensation and consulting expenses and advertising, marketing, travel and entertainment expenses, as well as legal and accounting fees.
During 2014, our interest expense increased significantly to $184,994 as compared to $71,521 in 2013. During 2014 we issued and sold an aggregate of $210,000principal amount 10% convertible notes, we sold an additional $5,000 principal amount of Series “A” 5% Cumulative Convertible Preferred Stock, at a price of $1.25 per Share. These Shares bear annual cumulative dividends of 5%, payable at the option of the Company in cash or Shares of Common Stock. At the option of the holder, beginning one year from the date of issuance the Shares are convertible into Shares of Common Stock at a price of $1.25 per Share. the proceeds of which were used for working capital, compared to $977,200 raised in 2013.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash. At December 31, 2014 we had a cash on hand of $0 and a working capital deficit of $1,322,860 as compared to cash on hand of $829 and a working capital deficit of $1,376,128 at December 31, 2013. Our total assets decreased by approximately 71% at December 31, 2014 as compared to December 31, 2013, mainly due to a $30,000 decrease in intangible assets due to amortization and a $971.00 decrease in cash. We have been dependent upon funds borrowed from both third parties as well as related parties to provide capital for our operations. Our current liabilities were essentially unchanged, at $1,323,453 for December 31, 2014 as compared to $1,377,692 at December 31, 2013
We do not have any external sources of working capital and have been materially dependent upon the sale of convertible promissory notes to third parties as well as advances and loans from Mr. Palladino, our Chief Executive Officer and Chairman of the Board. Our working capital is not sufficient to fund our operations for the next 12 months and satisfy our obligations as they become due. As described earlier in this report, we need to raise significant capital to provide funds to implement our business model and pay our operating expenses. If we are not successful in raising the necessary capital, we will be unable to continue to expand our business and operations and satisfy our obligations as they become due. In that event, our ability to continue as a going concern will be in jeopardy and investors in our company could lose their entire investment.
Cash Flows from Operating Activities
During the year ended December 31, 2014, the Company used $275,966 of cash flow from operating activities compared with use of $921,262 during the year ended December 31, 2013. The increase in the use of cash flow from operating activities is mainly due to the increase in overall operating expenses from 2013 when the Company had minimal operating activities.
Cash Flows from Investing Activity
During the year ended December 31, 2014, the Company expended $0 on capital purchases, compared to $6,364 for the year ended December 31, 2013.
Cash Flows from Financing Activities
During the years ended December 31, 2014, and 2013, the Company received $210,000 and $977,200, respectively, in proceeds from the issuance of convertible notes payable and , we sold an additional $5,000 principal amount of Series “A” 5% Cumulative Convertible Preferred Stock, at a price of $1.25 per Share. These Shares bear annual cumulative dividends of 5%, payable at the option of the Company in cash or Shares of Common Stock. At the option of the holder, beginning one year from the date of issuance the Shares are convertible into Shares of Common Stock at a price of $1.25 per Share.
and in 2013 repaid $203,318 in notes payable and convertible notes payable - related party. Additionally, the Company received cash advances and expenses paid on its behalf by a related party totaling $63,062 and $143,900, respectively.
Critical Accounting Policies
Certain accounting policies which are critical to our financial statement presentation are described under Note 1 of the Notes to Financial Statements appearing later in this report.
Recent Accounting Pronouncements
The recent accounting standards that have been issued or proposed by the Financial Accounting Standards Board (FASB) or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.
Off Balance Sheet Arrangements
As of the date of this report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
SUBSEQUENT EVENTS
Since January 1, 2015, the Company received proceeds of $17,500 from the issuance of three convertible promissory notes. The notes bear interest at 15% per annum, are unsecured, and are due six months from the date of issuance. At maturity, the holders of the notes will receive any unpaid principal and accrued interest The note holders will also receive two shares of restricted common stock for every $1.00 borrowed by the company into shares of the common stock of the Company at a conversion price of $ 0.00 per share.
In February, 2015, the Company converted an aggregate of $90,620 of principal and accrued interest on 10% convertible notes into 90,620 shares of Common Stock.
The Company leased office space under a long-term operating lease through February 27, 2015, on which date the lease was cancelled and the office space returned to the landlord.
ITEM 7A.
ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for smaller reporting companies.
ITEM 8.
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
C O N T E N T S
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
BullsnBears.com, Inc
Delray Beach, Florida
We have audited the accompanying balance sheets of BullsnBears.com, Inc. as of December 31, 2014 and 2013 and the related statements of operations, stockholders’ equity (deficit) and cash flows for each of the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit 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 BullsnBears.com, Inc. as of December 31, 2014 and 2013, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that BullsnBears.com, Inc. will continue as a going concern. As discussed in Note 7 to the financial statements, the Company suffered losses from operations and has working capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to this matter are also described in Note 7. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
April 23, 2015
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
BULLSNBEARS.COM, INC.
Notes to Financial Statements
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The financial statements presented are those of BullsnBears.com, Inc. (the Company) (Formerly Spicy Gourmet Manufacturing, Inc.), a Delaware corporation. The Company was incorporated on December 30, 2010, under the laws of the State of Delaware. During November 2012, The Company changed its name from Spicy Gourmet Manufacturing, Inc. to BullsnBears.com, Inc.
The Company owns the Universal Resource Locators (URL) domain name and websites of bullsnbears.com and is in the process of developing a Financial Networking portal to fill the gap that currently exists between the financial community and investors. The financial social media network will provide information and business gathering place for investors, public and private companies, brokers, Securities and Exchange Commission attorneys and accounting firms all in one location.
Accounting Methods
The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a calendar year-end.
Basic and Diluted Loss Per Share
The Company presents both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including convertible debt, stock options, and warrants, using the treasury stock method, and convertible securities, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. The Company had net losses as of December 31, 2014 and 2013, so the diluted EPS excluded all dilutive potential shares in the diluted EPS because their effect is anti-dilutive.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.
Use of Estimates
The preparation of financial statements 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.
Revenue Recognition
The Company recognizes revenues and the related costs when persuasive evidence of an arrangement exists, delivery and acceptance has occurred or service has been rendered, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Amounts invoiced or collected in advance of product delivery or providing services are recorded as deferred revenue. The Company accrues for warranty costs, sales returns, bad debts, and other allowances based on its historical experience. The Company has recognized minimal revenue since inception.
Income Taxes
The Company files income tax returns in the U.S. federal jurisdiction, and the state of Florida. The Company’s policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Net deferred tax assets consist of the following components as of December 31, 2014 and 2013:
The Company had net operating losses of approximately $2,100,000 that expire in years through 2033. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.
Stock-Based Compensation
The Company records stock-based compensation using the fair value method. Equity instruments issued to employees and the cost of the services received as consideration are accounted for in accordance with ASC 718 “Stock Compensation” and are measured and recognized based on the fair value of the equity instruments issued. All transactions with non-employees in which goods or services are the consideration received for the issuance of equity instruments are accounted for in accordance with ASC 515 “Equity-Based Payments to Non-Employees”, based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
New Accounting Pronouncements
Effective December 31, 2014, the Company elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the Company to remove the inception to date information and all references to development stage.
Long Lived Assets
Periodically the Company assesses potential impairment of its long-lived assets, which include property, equipment and acquired intangible assets, in accordance with the provisions of ASC Topic 360, “Property, Plant and Equipment.” The Company recognizes impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying values. An impairment loss would be recognized in the amount by which the recorded value of the asset exceeds the fair value of the asset, measured by the quoted market price of an asset or an estimate based on the best information available in the circumstances. There were no such losses recognized during 2014 or 2013.
Property, Equipment and Intangible Assets
Property and equipment are carried at cost, less accumulated depreciation. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Intangible assets consist of acquired web site domains and web site content and are carried at cost, less accumulated amortization.
Depreciation and amortization is provided principally on the straight-line basis method over the estimated useful lives of the assets.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment are carried at cost, less accumulated depreciation and includes expenditures that substantially increase the useful lives of existing assets. Maintenance and repairs are charged to current operations as incurred. Upon sale, retirement, or other disposition of these assets, the costs and related accumulated depreciation are removed from the respective accounts, and any gain or loss on the disposition is included in other income. Depreciation expense is computed using the straight-line method over lives from three to five years.
Property and equipment and accumulated depreciation are as follows:
Depreciation expense for the years ended December 31, 2014 and 2013 was $7,373 and $7,248, respectively.
NOTE 3 - INTANGIBLE ASSETS
During October 2012, the Company entered into an Asset Purchase Agreement and a Promissory Note (see Note 4) in the amount of $150,000 for the URL domain names and websites of the Company with a current officer and director of the Company, prior to joining the Company.The assets were capitalized and are being amortized over their estimated useful of 5 years. The website was placed into service during October 2012. Amortization expense for the years ended December 31, 2014 and 2013 was $30,000 and $30,000, respectively.
NOTE 4 - RELATED PARTY TRANSACTIONS
Notes and Convertible Notes Payable
On October 20, 2012, in accordance with an Asset Purchase Agreement (see Note 3), the Company and a current officer and director of the Company entered into a one year, 6% Promissory Note for $150,000, prior to joining the Company. During the year ended December 31, 2013, the Company repaid the note and a total of $2,405 in accrued interest. On October 31, 2012, the Company and an officer and director of the Company entered into a one year, 10% Senior Convertible Note for office equipment totaling $20,955 and supplies totaling $761, or a total of $21,716. The principal amount of the Senior Convertible Note can be convertible, at the sole option of the holder and in whole or in part, into shares of common stock of the Company at a conversion price to be determined by the Board of Directors of the Company. The company borrows funds from an officer and director as needed, they are unsecured and there are no defined terms of repayment at this time, the loans are to be considered Senior convertible debt. The Senior Convertible Note and the payment of the principal thereof and interest thereon shall at all times and in all respects constitute the Senior Indebtedness of the Company and shall not be junior or subordinate in right of payment to any other indebtedness of the Company. Accrued interest on the Senior Convertible Note totaled $4,707 and $2,535 at December 31, 2014 and December 31, 2013, respectively.
On December 31, 2012, the Company and an officer and director of the Company entered into a one-year, 10% Senior Convertible Note for cash advances totaling $20,700 and expenses paid on behalf of the company totaling $9,508, or a total of $30,208. During the year ended December 31, 2013, the Company repaid the note and a total of $375 in accrued interest.
During the year ended December 31, 2013, the Company borrowed a total of $143,900 in unsecured short-term loans from an officer and director of the Company and repaid $23,110. At December 31, 2013, $120,790 of the short-term loans was outstanding and are accruing interest at 6% per annum. During the year ended December 31, 2013, the Company repaid $23,110 principal and $2,166 in accrued interest.
During the year ended December 31, 2014, the Company borrowed a total of $63,062 in unsecured short-term loans from an officer and director of the Company and repaid $2,925. At December 31, 2014, $180,927 of the short-term loans was outstanding and are accruing interest at 6% per annum. Accrued interest totaled $7,786 and $0 at December 31, 2014 and December 31, 2013 respectively.
Consulting Expense
At December 31, 2014 and 2013, the Company owes an officer $375,799 and $207,800, respectively, for consulting expense which is included in accounts payable, related party. Consulting expense for the years ended December 31, 2014 and 2013 was $168,000 and $201,342 respectively.
NOTE 5 - CONVERTIBLE PROMISSORY NOTES PAYABLE
During the year ended December 31, 2013, the Company issued Convertible Promissory Notes (the “Notes”) for cash totaling $977,200. The Notes bear interest at 10% per annum, are unsecured and due in one year from the date of issuance. At the maturity date, the holders of the Notes have the right to convert the unpaid principal and accrued interest into shares of common stock of the Company at a price of $1.00 per share. Accrued interest on the Notes was $32,199 at December 31, 2013. As a result we recognized $127,400 in beneficial conversion feature expense for the year ended December 31, 2014.
During the year ended December 31, 2014, we sold an additional $210,000 principal amount of one-year notes, bearing an interest rate of 10% per annum and convertible at any time following issuance until maturity into Shares of Common Stock of the Company at a price of $1.00 per Share. Accrued interest on all outstanding Notes was $39,643 at December 31, 2014. No beneficial conversion feature expense was recorded in 2014 as the fair value of the stock is less than the conversion price.
During the year ended December 31, 2014, we issued 548,650 common shares for the conversion of $528,000 of convertible notes payable and $20,650 of accrued interest. A gain of $17,139 was recorded associated with the settlement of the accrued interest.
In February, 2015, we converted $90,620 of these notes and accrued interest into 90,620 shares of Common Stock. The balance of the notes matured between January 2015 and March 2015 and are now presently due. In the event one or more of the holders should elect to convert the notes, the issuance of shares of our common stock in satisfaction of the notes will be dilutive to our current stockholders. If the notes are not converted, we will be required to satisfy the notes in cash. We do not have sufficient cash to satisfy the presently due notes, nor the balance of these notes when they become due and there are no assurances we will be able to raise the funds if necessary.
NOTE 6 - COMMON STOCK,COMMON STOCK WARRANTS, AND PREFERRED STOCK
Preferred Stock
During the year ended December 31, 2014, we sold an additional $5,000 principal amount of Series “A” 5% Cumulative Convertible Preferred Stock, at a price of $1.25 per Share. These Shares bear annual cumulative dividends of 5%, payable at the option of the Company in cash or Shares of Common Stock. At the option of the holder, beginning one year from the date of issuance the Shares are convertible into Shares of Common Stock at a price of $1.25 per Share.
Common Stock Warrants
On December 30, 2010, The Court also ordered the distribution of warrants in the Company to all administrative creditors of SGO, with these creditors to receive five warrants in the company for each $0.05 of SGO's administrative debt which they held. These creditors received an aggregate of 5,000,000 warrants consisting of 1,000,000 "A Warrants" each convertible into one share of common stock at an exercise price of $3.00; 1,000,000 "B Warrants" each convertible into one share of common stock at an exercise price of $4.00; 1,000,000 "C Warrants" each convertible into one share of common stock at an exercise price of $5.00; 1,000,000 "D Warrants" each convertible into one share of common stock at an exercise price of $6.00; and 1,000,000 "E Warrants" each convertible into one share of common stock at an exercise price of $7.00. All warrants are exercisable at any time prior to November 19, 2015.
The following table summarizes the outstanding warrants and associated activity for the years ended December 31, 2013 through 2014:
The aggregate intrinsic value of the above warrants as of December 31, 2014 and 2013 was $ 0 and $12,500,000 respectively, based on a quoted market price of the Company’s common stock of $0.20 and $2.50 per share, respectively.
Preferred Stock
The Company has authorized 20,000,000 Shares of Preferred Stock, $.001 par value, which may be issued from time to time and bearing such rights, privileges and preferences as shall be designatedby the Board of Directors. As of December 31, 2014, the Company had issued 4,000 Shares of Preferred Stock, designated as “Cumulative Preference ‘A’”, at a price of $1.25 per Share. The Shares bear an annual coupon of 5%, and are convertible into Shares of Common Stock of the Company at any time commencing one (1) year from the date of issuance at a conversion price of $1.25 per Share.
NOTE 7 - GOING CONCERN
The Company's financial statements are prepared using Generally Accepted Accounting Principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has recently accumulated significant losses and has negative working capital. All of these items raise substantial doubt about its ability to continue as a going concern. Management's plans with respect to alleviating the adverse financial conditions that caused management to express substantial doubt about the Company's ability to continue as a going concern are as follows:
The Company is currently trying to raise new debt or equity to continue developing and marketing the BullsnBear.com social media website. No conclusion can be drawn at this time about the commercial viability of the website and the Company has not generated any revenue from its operation. In order to support continued development of the website and concept, the Company plans on raising additional funding during 2015. If the Company is not successful in the development and implementation of a concept which produces positive cash flows from operations, the Company may be forced to continue to raise additional equity or debt financing to fund its ongoing obligations or risk ceasing doing business.
There can be no assurance that the Company will be able to achieve its business plans, raise any more required capital or secure the financing necessary to achieve its current operating plan. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
The Company leased office space under a long-term operating lease through February 27, 2015, on which date the lease was cancelled and the office space returned to the landlord. This office space was being rented from an officer of the Company until it was assigned to the Company on December 4, 2013.
NOTE 9 - SUBSEQUENT EVENTS
Since January 1, 2015, the Company received proceeds of $17,500 from the issuance of three convertible promissory notes. The notes bear interest at 15% per annum, are unsecured, and are due six months from the date of issuance. At maturity, the holders of the notes will receive any unpaid principal and accrued interest The noteholders will also receive two shares of restricted common stock for every $1.00 lent to the company into shares of the common stock of the Company at a conversion price of $0.00 per share.
In February, 2015, the Company converted an aggregate of $90,620 of principal and accrued interest on 10% convertible notes into 90,620 shares of Common Stock.
The Company leased office space under a long-term operating lease through February 27, 2015, on which date the lease was cancelled and the office space returned to the landlord.
Item 9.
Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A.
ITEM 9A.
CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Our management, with the participation of our principal executive and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report. Based on that evaluation, our Chief Executive Officer who also serves as our Chief Financial Officer, concluded that our disclosure controls and procedures as of the end of the period covered by the Annual Report were not effective to ensure that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer who also serves as our Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure as a result of material weaknesses in our internal control over financial reporting. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
Our management, with the participation of our Chief Executive Officer who also serves as our Chief Financial Officer assessed the effectiveness of our internal control over financial reporting as of December 31, 2014. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework. Based on this assessment, our management concluded that, as of December 31, 2014, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (GAAP) as a result of material weaknesses. In arriving at that conclusion, management identified as materials weaknesses in our internal control over financial reporting: (1) the lack of accounting proficiency of our Chief Executive Officer who is our sole officer and also serves as our Chief Financial Officer which has resulted in a reliance on part-time outside consultants to perform substantially all of our accounting functions, and (2) a lack of adequate segregation of duties and necessary corporate accounting resources in our financial reporting process and accounting function, also arising from our Chief Executive Officer’s lack of accounting training and service in multiple roles as well as our limited financial resources to support hiring of personnel and implementation of accounting systems. During 2015 we expect to engage an outside accounting firm with expertise in both GAAP and SEC reporting requirements to assist us in the preparation of our financial statements. However, until such time as we expand our staff to include additional accounting personnel and hire a full time chief financial officer, it is likely we will continue to report material weaknesses in our internal control over financial reporting.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
ITEM 9B.
ITEM 9B.
OTHER INFORMATION.
None.
PART III
ITEM 10.
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
Identification of Directors and Executive Officers
The following table sets forth the names of all current directors and executive officers of the Company. These persons will serve until the next annual meeting of the stockholders or until their successors are elected or appointed and qualified, or their prior resignation or termination.
James M. Palladino. Mr. Palladino has been our Chairman, Secretary and a member of our board of directors since October 2012 and as our Chief Executive Officer, President, Chief Financial Officer and Treasurer since June 2013. Mr. Palladino brings over 18 years of financial services experience, starting his career as a retail stock broker on Wall Street where he successfully managed individual and corporate clients. Mr. Palladino was also instrumental in raising several million dollars for various institutional public and private offerings, while still maintaining his client base. Upon exiting Wall Street he then established himself in the public investor relations arena where he successfully designed and implemented over a dozen digital, print and telephone marketing campaigns, assisted In bringing approximately half of them public, creating shareholder value as well as investor enthusiasm. Prior to joining us, from May 2011 to August 2012 Mr. Palladino was the founder and majority shareholder of Statewide Life and Health, Inc., a provider of life and health insurance, licensed in 38 states. Prior to Statewide Life, from April 2009 to April 2011, Mr. Palladino was the President and Secretary of Financial Media Net, Inc., a public relations and investor relations firm with a call center in Boca Raton, Florida. From May 2007 to March 20009 Mr. Palladino was the Managing Director of ProMark Financial, Inc., an investor relations and public relations company creating investment awareness campaigns for public companies. Mr. Palladino received his technical training and an electronics degree from what is now known as DeVry University in New Jersey.
Daniel C. Masters, Esq . Mr. Masters has been a member of our board of directors since our inception in December 2010. He also served as Secretary and Treasurer of our company from December 2010 until October 2012. Mr. Masters is an attorney practicing business law with an emphasis on corporate reorganizations. Before establishing his current law practice in 2002, Mr. Masters served as an independent investment banker and corporate finance consultant from 1990 to 2002. Between 1978 and 1989 he worked as an investment banker with L.F. Thompson & Co. and at Capital Technology Group; as Vice President of Finance with the Trilon Group, a private holding company with over a billion dollars in assets; and as President of Golden Gate Capital, a venture capital group. Prior to 1978 Mr. Masters held positions as a legislative aid on the staff of the U.S. Congress and as executive assistant to the President of the University of California. Mr. Masters received his Bachelor of Arts Degree (A.B.) from Harvard University and a Juris Doctorate (J.D.) from Thomas Jefferson School of Law where he served on the Editorial Board of the Law Review.
Ali Balaban . Mr. Balaban has served as a member of our board of directors since December 2012. He previously served as our President, Chief Executive Officer, and a member of the board of directors from our inception in December 2010 until October 2012. Mr. Balaban has been an officer, director, or founder of several businesses engaged in internet based sales, and he currently serves as a consultant on European Union policies and programs for Information Technology, especially the E-Content and Sixth Framework Programs which offer grants and funding for European IT companies. In 2012 he founded Taksit USA, an inter2net portal through which subscribers in Turkey can purchase goods in the U.S. from sites such as Amazon and Ebay, pay with the company’s U.S. credit card, and have the purchase shipped to a U.S. fulfillment center from which it is sent to Turkey. Since many internet-based sellers will not accept foreign credit cards or ship outside the U.S. and Canada this solves a major problem for Turkish, and, eventually, other foreign consumers. Since 2010 Mr. Balaban has been a Director of the Yonja Group A.S. Yonja sells European and U.S. food supplements and beauty products via the Internet in Turkey. From 2000 to 2012 he was also the Chief Financial Officer of Homedrom Direct Response TV International, a retailer of consumer products through direct response television advertising and Internet websites in several European and Asian countries including Germany, Turkey, Ukraine, Kazakhstan, Georgia, Azerbaijan, and Cyprus. From 2009 through 2011 he was also the Managing Director of Unite Technologies, a Ukraine based business which provides IT management services to major GSM (cell phone) network operators and call centers in Easter European countries. He remains a Director of that company. Prior to 2000 Mr. Balaban was an executive at a leading software outsourcing company and at an apparel manufacturer. He earned his BA in Business Administration and his MA in Strategy from Universite de Paul Valery in Montpellier, France and an MBA in International Business from the University of California Los Angeles (UCLA).
Anthony Turnbull . Mr. Turnbull has been a member of our board of directors since December 2012. Mr. Turnbull holds an MBA and is a CPA with experience in financial management, manufacturing accounting, management reporting, payroll, and taxation. Since 2012 he has been the Chief Financial Officer of You Everywhere Now, LLC, a publishing firm, which also provides seminars and webinars on publishing. From 2007 through 2011 he was CFO of KOJO Worldwide a $52,000,000 upholstery and bedding manufacturing company selling to major hotels in the US and Mexico. From 2006 to 2007 he was CFO of Countryside Hospice Care, a hospice company with branches in Georgia and Alabama, and in from 2004 to 2005 he was CFO of Prolong Super Lubricants, an $8,000,000 manufacturing company. From 2001 to 2004 he was Vice President Finance of Molecular Imaging Corporation, a $21,000,000 molecular imaging service company serving more than 75 hospitals throughout the US. Prior to 2001 he served as CFO to Casa de lasCampanas, McCain Traffic Supply, Inc., Ride Manufacturing, Inc. and Kuma Sport, Inc. He has also held accounting positions with Stauffer Chemicals, General Foods, Kraft Foods, Commonwealth Bank in Sydney, Australia and Midland Bank Limited in London, England.
There are no family relationships among our directors and executive officers.
Director Qualifications, Committees of our Board of Directors and the Role of our Board in Risk Oversight
Director qualifications
The following is a discussion for each director of the specific experience, qualifications, attributes or skills that led our Board to conclude that the individual should be serving as a director of our company.
James M. Palladino - Mr. Palladino’s more than 18 years of experience in the financial services industry and his more recent experience in public investor relations were factors considered by the Board in making their recommendation.
Daniel Masters - Mr. Master’s extensive experience as an independent investment banker and his corporate legal experience were factors considered by the Board in making their recommendation.
Ali Balaban - Mr. Balaban’s successful track record as officer, director, or founder of Internet-based sales companies and his international consulting experience were factors considered by the Board in making their recommendation.
Anthony Turnbull - Mr. Turnbull’s extensive experience as a chief financial officer and his knowledge of financial management were factors considered by the Board in making their recommendation.
In addition to the each of the individual skills and background described above, the Board also concluded that each of these individuals will continue to provide knowledgeable advice to our other directors and to senior management on numerous issues facing our company and on the development and execution of our strategy.
Committees of our Board of Directors
We have not established any committees of our board of directors, including an Audit Committee, a Compensation Committee or a Nominating Committee, any committee performing a similar function. The functions of those committees are being undertaken by Board of Directors as a whole. We have only recently expanded our Board and we expect to establish Audit, Compensation and Nominating Committees in the future.
We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees, nor do we have a policy regarding director diversity. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies, as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees. In considering a director nominee, it is likely that our Board will consider the professional and/or educational background of any nominee with a view towards how this person might bring a different viewpoint or experience to our Board.
Mr. Turnbull is considered an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:
·
understands generally accepted accounting principles and financial statements,
·
is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,
·
has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,
·
understands internal controls over financial reporting, and
·
understands audit committee functions.
Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.
Board oversight in risk management
Prior to the termination of our prior Chief Executive Officer in June 2013 the offices of Chairman of the Board and Chief Executive Officer were separated. Commencing in June 2013 Mr. James Palladino, our then Chairman, assumed the position of Chief Executive Officer. The balance of our board is comprised of three independent directors, but we do not have a “lead” independent director. Our Board believes our current structure provides independence and oversight and facilitates the communication between senior management and the full board of directors regarding risk oversight, which the Board believes strengthens its risk oversight activities.
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including liquidity risk, operational risk, strategic risk and reputation risk. Because our Board is comprised of members of our management, these individuals are responsible for both the day-to-day management of the risks we face as well as the responsibility for the oversight of risk management.
Code of Ethics and Business Conduct
We have adopted a Code of Business Conduct and Ethics, which applies to our Board of Directors, our executive officers and our employees, outlines the broad principles of ethical business conduct we adopted, covering subject areas such as:
·
compliance with applicable laws and regulations,
·
handling of books and records,
·
public disclosure reporting,
·
insider trading,
·
discrimination and harassment,
·
health and safety,
·
conflicts of interest,
·
competition and fair dealing, and
·
protection of company assets.
We have filed a copy of our Code of Business Conduct and Ethics as an exhibit to this report. A copy of our Code of Business Conduct and Ethics is available without charge, to any person desiring a copy of the Code of Business Conduct and Ethics, by written request to us at our principal offices at 6586 West Atlantic Ave., Unit 103,Delray Beach, FL 33446.
Director compensation
We have not established standard compensation arrangements for our directors and the compensation payable to each individual for their service on our Board is determined from time to time by our board of directors based upon the amount of time expended by each of the directors on our behalf. None of our directors were compensated for their services in 2014.
Compliance with Section 16(a) of the Exchange Act
Our shares of common stock are registered under the Securities Exchange Act of 1934, and therefore our executive officers and directors and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during 2014.
ITEM 11.
ITEM 11.
EXECUTIVE COMPENSATION.
The following table summarizes all compensation recorded by us in 2014 and 2013 for:
·
our principal executive officer or other individual serving in a similar capacity,
·
our two most highly compensated executive officers other than our principal executive officer who were serving as executive officers at December 31, 2014 as that term is defined under Rule B-7 of the Securities Exchange Act of 1934, and
·
up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at December 31, 2014.
For definitional purposes, these individuals are sometimes referred to as the “named executive officers.”
SUMMARY COMPENSATION TABLE
-------
(1)
Mr. Palladino has served as our Chief Executive Officer since June 2013. All other compensation in 2014, 2013 and 2012 represents consulting fees paid to Mr. Palladino as compensation for his services to us.
(2)
Mr. Arroyo served as our Chief Executive Officer from October 2012 until June 2013. Included in his compensation for 2012 was $22,500 of accrued but unpaid compensation.
How the executive’s compensation is determined
We are not a party to an employment agreement with Mr. Palladino, our Chief Executive Officer. His compensation, which is paid in the form of a consulting fee, is determined by our board of directors of which he is a member. The Board considered a number of factors in determining Mr. Palladino’s compensation including the scope of his duties and responsibilities to our company and the time he devotes to our business. The Board did not consult with any experts or other third parties in fixing the amount of Mr. Palladino’s compensation. The amount of compensation payable to Mr. Palladino can be increased at any time upon the determination of the board of directors.
Outstanding Equity Awards at Fiscal Year End
The following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding as of December 31, 2014:
ITEM 12.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
At April 21, 2015, we had12,319,270shares of our common stock issued and outstanding which is our only class of voting securities. The following table sets forth information regarding the beneficial ownership of our common stock as ofApril 21, 2015by:
·
each person known by us to be the beneficial owner of more than 5% of our common stock;
·
each of our directors;
·
each of our named executive officers; and
·
our named executive officers, directors and director nominees as a group.
Unless otherwise indicated, the business address of each person listed is in care of6586 W. Atlantic Ave., Unit 103, Delray Beach, FL 33446. The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.
-------
(1)
The number of shares beneficially owned by Mr. Palladino includes 100,000 shares owned by his spouse but excludes shares of our common stock issuable upon the conversion of an outstanding 10% senior convertible note in the principal amount of $21,176. See Item 13.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Transactions with Related Persons
On October 20, 2012, we entered into an Asset Purchase Agreement with James M. Palladino pursuant to which we acquired URL domain names and websites for $150,000. Mr. Palladino, who was not a related party at the time of the transaction, was appointed a director and officer of our company on October 23, 2012 following this transaction.
On October 31, 2012, we purchased $21,176 in office furniture and equipment, computers, and supplies from Mr. Palladino, under the terms of a one-year, 10% senior convertible note. The principal amount of the note can be convertible, at the sole option of the holder and in whole or in part, into shares of common stock of the Company at a conversion price to be determined by our Board of Directors, of which Mr. Palladino is a member, at or prior to the maturity date. This note, which is presently past due, remains outstanding.
On December 31, 2012, we entered into a one year $30,208 principal amount 10% senior convertible note with Mr. Palladino representing amounts he had provided to us for cash advances and expenses paid on our behalf. The principal amount of the note can be converted, at the sole option of the holder and in whole or in part, into shares of common stock of the Company at a conversion price to be determined by our Board of Directors, of which Mr. Palladino is a member, at or prior to the maturity date. This note, together with interest, was paid during 2013.
From October 2012 until November 2013 we rented our principal executive offices from Mr. Palladino on a month-to-month basis under an oral agreement for a monthly rental of $3,113.75.
During the year ended December 31, 2014, the Company borrowed a total of $59,637 in unsecured short-term loans from Mr. Palladino and repaid him $ 0. At December 31, 2014, $59,637 of the short-term loans was outstanding and are accruing interest at 6% per annum.
At December 31, 2014 and 2013 we owed Mr. Palladino $339,799and $207,800 , respectively, for consulting expense, representing compensation to him for his services to our company.
Director Independence
Messrs. Masters, Balaban and Turnbull are considered “independent” within the meaning of meaning of Rule 5605 of the NASDAQ Marketplace Rules.
ITEM 14.
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES.
The following is a summary of the fees billed to us by our principal accountants during 2014 and 2013:
Audit Fees - Consists of fees for professional services rendered by our principal accountants for the audit of our annual financial statements and review of the financial statements included in our Forms 10-Q or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.
Audit-related Fees - Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.”
Tax Fees - Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.
All Other Fees - Consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit fees,” “Audit-related fees,” and “Tax fees” above.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
We have not adopted an Audit Committee; therefore, there is no Audit Committee policy in this regard. However, we do require approval in advance of the performance of professional services to be provided to us by our principal accountant. Additionally, all services rendered by our principal accountant are performed pursuant to a written engagement letter between us and the principal accountant.
PART IV
ITEM 15.
ITEM 15.
EXHIBITS.FINANCIAL STATEMENT SCHEDULES.
(a)(2)
Financial Statements. See the audited financial statements for the years ended December 31, 2014 and 2013 contained in Item 8 above.
(b)
Exhibits. The following exhibits are filed as part of this Annual Report or incorporated by reference:
Exhibits
-------
*
filed herewith.
**
In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 to this report shall be deemed furnished and not filed.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints James M. Palladino his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including amendments) to this Annual Report on Form 10-K for the year ended December 31, 2014, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.
Name
Positions
Date
/s/ James M. Palladino
Chairman of the Board of Directors, Chief Executive Officer, President, Secretary, Treasurer, principal executive officer and principal financial and accounting officer
April 23, 2015
James M. Palladino
/s/ Daniel C. Masters
Director
April 23, 2015
Daniel C. Masters
/s/ Ali Balaban
Director
April 23, 2015
Ali Balaban
/s/ Anthony Turnbull
Director
April 23, 2015
Anthony Turnbull