As filed with the Securities and Exchange Commission on September 15, 2009
Registration No. 333-138184
==============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 3
ON FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
TOMBSTONE TECHNOLOGIES, INC.
(Name of small business issuer in its charter)
COLORADO 2759 51-0541963
-------- ---- ----------
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
5380 Highlands Drive, Longmont, CO 80503 / Phone (303) 684-6644
(Address and telephone number of principal executive offices)
Neil A. Cox
5380 Highlands Drive, Longmont, CO 80503 / Phone (303) 684-6644
(Name, address and telephone number of agent for service)
COPIES OF ALL COMMUNICATIONS TO:
Michael A. Littman, Attorney at Law
7609 Ralston Road, Arvada, CO, 80002 / phone 303-422-8127 / fax 303-431-1567
Approximate date of commencement of proposed sale to the public: As soon as
possible after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
---------------------------- ------------------ ------------------------- --------------------------- ----------------
Title of Each Class of Amount To Be Proposed Maximum Proposed Maximum Amount of
Securities To Be Registered Registered Offering Price Aggregate Offering Registration
Price(1) Fee
---------------------------- ------------------ ------------------------- --------------------------- ----------------
Common Stock by Selling 3,230,000 $0.55 $1,776,500 $54.54(2)
Shareholders
---------------------------- ------------------ ------------------------- --------------------------- ----------------
Common Shares Underlying 600,000 $0.55 $330,000 $10.13(2)
Warrants to Consultants
---------------------------- ------------------ ------------------------- --------------------------- ----------------
Common Shares Underlying 60,000 $0.60 $36,000 $2.01(2)
Placement Agent Warrants
---------------------------- ------------------ ------------------------- --------------------------- ----------------
Common Shares Underlying 150,000 $0.55 $82,500 $2.53(2)
Employee Options
---------------------------- ------------------ ------------------------- --------------------------- ----------------
(1) Estimated solely for the purpose of computing the registration fee pursuant to Rule 457(o) under the Securities Act.
(2) Amount previously paid with the original SB-2 filing.
This Post-Effective Amendment No. 3 to the Registration Statement on Form S-1,
which was previously declared effective by the Securities and Exchange
Commission on May 13, 2008, incorporates by reference the Registrant's current
reports on Form 8-K as filed with the Securities and Exchange Commission on
January 4, 2008, May 21, 2008, August 7, 2008, September 24, 2008, March 5, 2009
and May 28, 2009, the Registrant's Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 2009 and the Registrant's Form
10-Q's filed on May 15, 2009 and August 13, 2009.
ii
(SUBJECT TO COMPLETION)
PROSPECTUS
TOMBSTONE TECHNOLOGIES, INC.
1,500,000 COMMON SHARES OF COMMON STOCK OF SELLING SHAREHOLDERS
1,730,000 COMMON SHARES OF COMMON STOCK OF SELLING SHAREHOLDERS
60,000 SHARES UNDERLYING PLACEMENT AGENT WARRANTS
600,000 COMMON SHARES UNDERLYING CONSULTANT WARRANTS
150,000 EMPLOYEE/CONSULTANT OPTION SHARES
We are registering all securities listed for sale on behalf of selling
shareholders:
(a) 1,500,000 Shares of Common Stock of Selling Shareholders,
(b) 1,730,000 outstanding shares of Common Stock of Selling Shareholders
(c) 60,000 Shares underlying Placement Agent Warrants
(d) 600,000 common shares underlying Consultant Warrants at $0.55 per share
(e) 150,000 Shares underlying Employee/Consultant Options at $0.55 per Share
(the "Offering") of our Company, Tombstone Technologies, Inc., a Colorado
corporation.
In Registration Statement No. 333-138184, we registered Units consisting of 1
share of our common stock and an "A" Warrant and a "B" Warrant. On August 31,
2009, the "A" and "B" warrants will expire and therefore, the Registrant is
removing, thereby deregistering the "A" and "B" warrants and the shares
underlying the warrants from Registration Statement No. 333-138184. Further, as
a result of the removal of the "A" and the "B" Warrants, the Registrant has
removed all references to Units and is updating the document for such items.
A total of $448,500 may be raised by us if all Placement Agent Warrants,
Employee Options and Consultant Warrants and Options described above are
exercised. We will NOT receive any proceeds from sales of Shares by Selling
Shareholders. Furthermore, given that we have no operating history and no
revenues, it is highly unlikely that our Warrants will be exercised at $0.55 or
$0.60 in the foreseeable future.
Each Placement Agent Warrant entitles the holder to purchase one share of Common
Stock at $0.60 during the three-year period commencing August 31, 2006. The
expiration of the Placement Agent Warrant has been extended to August 31, 2012.
Our Common Stock, only, will be transferable immediately after the closing of
this offering. There are no transfer limitations on the Units being registered.
We have undertaken to keep the registration statement, of which this Prospectus
is a part, current during the term of the Warrants and Options to
Employee/Consultants. (See "Description of Securities")
Our Selling Security Holders plan to sell common Shares at such prices as the
market may dictate from time to time. There is a limited trading market for the
common stock and our pricing is arbitrary with no relation to market value,
liquidation value, earnings or dividends. The price was arbitrarily set at a
slight premium to the previous private placement price of $0.50 per Unit. The
Warrant exercise price was arbitrarily determined based on speculative concept
unsupported by any other comparables. We have set the initial fixed prices as
follows:
TITLE PER SHARE/ EXERCISE PRICE
--------------------------------------------- ----------------------------------
Common Stock $0.55
Employee/Consultant Options $0.55
Stock underlying Placement Agent Warrants $0.60
At any time after a market develops, our security holders may sell their
securities at market prices or at any price in privately negotiated
transactions.
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK; SEE "RISK FACTORS" BEGINNING ON
PAGE 6 TO READ ABOUT FACTORS YOU SHOULD CONSIDER BEFORE BUYING SHARES OF THE
COMMON STOCK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") OR ANY STATE OR PROVINCIAL SECURITIES
COMMISSION, NOR HAS THE SEC OR ANY STATE OR PROVINCIAL SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
1
In October 2007, our common stock was approved for trading on the over the
counter bulletin board under the symbol "TMCI". While Units and the "A" Warrants
and "B" Warrants were approved for trading on the over the counter bulletin
board, it appears there was never any trades and the "A" and "B" Warrants have
expired. During the period of October 2007 through December 31, 2007, our Shares
and Units did not trade. During the period of January 1, 2008 through December
31, 2008, our Shares had limited trading activity. Our Units have had no trading
activity during the period of October 2007 through the expiration of the
Warrants.
We are conducting this offering as a "self-underwriting" through our officers
and directors, and therefore, we will pay no underwriting fees or commissions
1. We are not using an underwriter for this offering of Shares.
2. We have no arrangement to place the proceeds from this offering in
an escrow, trust or similar account. Any funds raised from exercise of
Warrants pursuant to this offering will be immediately available to us
for our use and retained by Tombstone regardless of whether or not
there are any additional sales under this offering.
This offering will be on a delayed or continuous basis for sales of selling
Shares and for exercise of Warrants for the period of the Warrants until expiry
or call and exercise.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the date that the registration statement
relating to these securities, which has been filed with the Securities and
Exchange Commission, becomes effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
The date of this Prospectus is September 15, 2009.
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TABLE OF CONTENTS
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Item in Form S-1 Prospectus Caption Page No.
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Front of Registration Statement and Outside Front Cover Page of Prospectus
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Prospectus Cover Page 1
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Prospectus Summary and Risk Factors 4
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Use of Proceeds 13
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Determination of Offering Price 14
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Dilution 14
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Selling Security Holders 15
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Plan of Distribution 19
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Legal Proceedings 19
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Directors, Executive Officers, Promoters and Control Persons 19
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Security Ownership of Certain Beneficial Owners and Management 21
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Description of Securities 22
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Interest of Named Experts and Counsel 22
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Disclosure of Commission Position on Indemnification for Securities Act Liabilities 23
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Organization within Last Five Years 23
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Description of Business 23
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Plan of Operation 25
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Description of Property 31
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Certain Relationships and Related Transactions 31
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Market for Common Equity and Related Stockholder Matters 32
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Executive and Directors Compensation 33
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Financial Statements 35
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Changes In and Disagreements With Accountants on Accounting and Financial Disclosure 35
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3
Securities offered through this prospectus will not be sold through dealers, but
will be sold on a direct participation basis only.
PROSPECTUS SUMMARY AND RISK FACTORS
OUR COMPANY
Tombstone Cards, Inc. ("We," "Us," "Our") was organized under the laws of the
State of Colorado on April 29, 2005, because our management decided to attempt
to build a business to sell customized, professional-quality playing cards via
the Internet.
On July 31, 2008, Tombstone Cards, Inc. amended its' Articles of Incorporation
for the change of its corporate name to Tombstone Technologies, Inc. as approved
at the Annual Shareholder's Meeting held on July 24, 2008.
We have begun initial minimal operations and have recognized minimal revenues
from such operations. Currently, our only employees are our Chief Executive
Officer and Chief Financial Officer, as described on page 20. Through the period
ended June 30, 2006, the executive officers contributed their services and only
recently began to be compensated for their services in 2008. During the year
ended December 31, 2008, Messrs. Harris and Cox's both were paid $18,000 of
their $36,000 salaries. The remaining $18,000 was accrued at December 31, 2008.
During the six months ended June 30, 2009, the Board of Directors of the Company
issued to Messrs. Harris and Cox, in lieu of monies owed for salaries of $18,000
each at December 31, 2008, totaling $36,000, the issuance of a total of 360,000
restricted shares of our common stock (valued at $0.10 per share). These shares
have been accounted for as a contribution of capital.
We are in the developmental stage of our business, and since January 1, 2007, we
have had limited operations and recognized nominal revenues.
During the year ended December 31, 2007, we, as part of our manufacturing and
printing of customized playing cards, created a technology division in order to
handle the development, marketing and licensing of our proprietary OIEPrint(TM)
software, a web to print template driven application. Web to print is the
overall process of integrating technology, from ordering and pre-press to
post-press and delivery in order to reduce time and costs.
During the second and third quarters of 2008, our management made the decision
to focus a majority of our efforts and resources on the development and
marketing of the OIEPrint(TM) software. We will still continue to offer
customized playing cards, but have determined that this will be a smaller part
of our operations. We will continue offering customized playing cards using the
OIEPrint(TM) software to create and print the playing cards.
Our Auditors have issued a going concern opinion and the reasons noted for
issuing the opinion are our lack of revenues and modest capital.
Factors that make this offering highly speculative or risky are:
o There is a limited market for our securities;
o We have recognized minimal revenues;
o We are start up company;
o We have minimal experience in the printing business;
o We may be undercapitalized.
Our executive offices are located at 5380 Highlands Drive, Longmont, CO 80503;
the telephone number is (303) 684-6644; and the facsimile number is (303)
684-0673.
4
SUMMARY OF FINANCIAL INFORMATION
--------------------------------------------------------- ----------------------------------------------------
As at December 31, 2008
--------------------------------------------------------- ----------------------------------------------------
Total Assets $85,644
--------------------------------------------------------- ----------------------------------------------------
Total Liabilities $43,946
--------------------------------------------------------- ----------------------------------------------------
Shareholders' Equity $41,968
--------------------------------------------------------- ----------------------------------------------------
--------------------------------------------------------- ----------------------------------------------------
From April 29, 2005 to December 31, 2008
--------------------------------------------------------- ----------------------------------------------------
Revenues $-0-
--------------------------------------------------------- ----------------------------------------------------
Net Loss for the year ended December 31, 2008 ($380,089)
--------------------------------------------------------- ----------------------------------------------------
Net Loss from April 29, 2005 through December 31, 2008 ($909,499)
--------------------------------------------------------- ----------------------------------------------------
As of December 31, 2008, accumulated deficit for our business was $909,499. As
of June 30, 2009, accumulated deficit for our business was $1,058,333. We
anticipate that we will operate in a deficit position and continue to sustain
net losses for the foreseeable future.
THE OFFERING
We are registering all securities listed for sale on behalf of selling
shareholders:
(a) 1,500,000 Shares of Common Stock of Selling Shareholders,
(b) 1,730,000 outstanding shares of Common Stock of Selling Shareholders
(c) 60,000 Shares underlying Placement Agent Warrants
(d) 600,000 common shares underlying Consultant Warrants at $0.55 per
share
(e) 150,000 Shares underlying Employee/Consultant Options at $0.55 per
Share (the "Offering") of our Company, Tombstone Technologies, Inc., a
Colorado corporation.
A total of $448,500 may be raised by us if all Placement Agent Warrants,
Employee Options and Consultant Warrants and Options described above are
exercised. We will NOT receive any proceeds from sales of Shares by Selling
Shareholders. Furthermore, given that we have no operating history and no
revenues, it is highly unlikely that our Warrants will be exercised at $0.50 or
$0.60 in the foreseeable future.
Each Placement Agent Warrant entitles the holder to purchase one share of Common
Stock at $0.60 during the three-year period commencing August 31, 2006. The
expiration of the Placement Agent Warrant has been extended to August 31, 2012.
Our Common Stock, only, will be transferable immediately after the closing of
this offering. There are no transfer limitations on the Units being registered.
We have undertaken to keep the registration statement, of which this Prospectus
is a part, current during the term of the Warrants and Options to
Employee/Consultants. (See "Description of Securities")
============================================================== ===============
Common Shares Outstanding Before This Offering 3,878,000
-------------------------------------------------------------- ---------------
Maximum Common Shares Being Offered by Selling Shareholders 3,230,000
-------------------------------------------------------------- ---------------
Maximum Common Shares offered by Selling Shareholders 1,790,000
-------------------------------------------------------------- ---------------
Maximum Shares Underlying Employee Options 150,000
-------------------------------------------------------------- ---------------
Maximum Common Shares Outstanding After This Offering (1) 6,567,999
-------------------------------------------------------------- ---------------
Maximum Shares Outstanding if Placement Agent 6,567,999
Warrants are Exercised in this Offering
============================================================== ===============
(1) Assuming exercise of all 810,000 Share purchase Warrants/Options consisting
of 150,000 Employee Options, 60,000 Placement Agent Warrants and 600,000
Consultant Warrants.
5
We are authorized to issue 100,000,000 Shares of Common Stock. Our current
Shareholders, officers and directors collectively own 3,878,000 Shares of
restricted Common Stock. These Shares were issued at a price of $.01 per Share
for 1,500,000 Shares, $0.50 per Share for 1,730,000 Shares and $0.10 per share
for 648,000 Shares.
Our Common Stock is presently traded on the over-the-counter market on the OTC
Bulletin Board maintained by the Financial Industry Regulatory Authority
("FINRA"). In October 2007, we began trading on the over the counter bulletin
board under the symbol "TMCI." During the period of October 2007 through
December 31, 2007, our shares did not trade. During the period January 1, 2008
through December 31, 2008 our common stock had limited trading. On December 31,
2008 our shares of common stock were traded at a high of $0.65 and a low of
$0.65.
In addition to our common stock, in October 2007, we began trading our Units on
the OTC Bulletin Board. A Unit consists of 1 share of our common stock, 1 of our
"A" Warrants and 1 of our "B" Warrants. The Units trade on the over the counter
bulletin board under the symbol "TMCIU". While Units and the "A" Warrants and
"B" Warrants were approved for trading on the over the counter bulletin board,
it appears there was never any trades and the "A" and "B" Warrants have expired.
OUR COMPANY RISK FACTORS
Our securities, as offered hereby, are highly speculative and should be
purchased only by persons who can afford to lose their entire investment in us.
Each prospective investor should carefully consider the following risk factors,
as well as all other information set forth elsewhere in this prospectus, before
purchasing any of the Shares of our Common Stock.
OUR BUSINESS IS A DEVELOPMENT STAGE COMPANY AND UNPROVEN AND THEREFORE RISKY.
We have only very recently been organized to perform the operations described
above. Potential investors should be made aware of the risk and difficulties
encountered by a new enterprise in the card business, especially in view of the
intense competition from existing businesses in the industry.
WE WERE INCORPORATED IN 2005 AND HAVE HAD A LIMITED OPERATING HISTORY.
We have only very recently been organized to perform the operations described
above. Potential investors should be made aware of the risk and difficulties
encountered by a new enterprise in the Web 2 Print business, especially in view
of the intense competition from existing businesses in the industry.
A DECLINE IN ON-LINE PRINTING MAY ADVERSELY AFFECT OUR BUSINESS.
If on-line printing declines in activity, there is significant risk that the
operations of our business will be negatively impacted resulting in lack of
sales revenues, if any are ever developed. This decline could result from
adverse economic conditions, which negatively affect disposable income and
changes in printing habits.
OUR WEAKNESSES MAY AFFECT OUR ABILITY TO SELL, COMPETE AND GENERATE REVENUES.
o Because of our position as a startup, we are not a household name
among prospective customers, and the cost to raise us to "top-of-mind"
awareness will be higher than for an established company.
o Documented processes and procedures, along with the integrated
technology deployment, are still in the development stage and an
unforeseen delay or loss of key personnel could cause delays in our
continued operations.
Any of these could cause our revenue model to be unprofitable and cause failure
of our business.
WE HAVE IDENTIFIED POTENTIAL THREATS TO OUR BUSINESS MODEL.
o The fast-growing interest in poker could be a fad that burns out
quickly, leaving a smaller core than expected.
o A significant downturn in the American economy would reduce the amount
of disposable income available to our target audience.
o Other competitors could move quickly to match our performance by
offering similar products and design amenities, forcing us to invest
more than expected in product development.
o Too much success too quickly could overwhelm our systems, creating
order and fulfillment problems including the increased possibility of
poor work slipping through to the marketplace, resulting in high
levels of customer dissatisfaction.
6
Any of these could cause our revenue model to be unprofitable and cause failure
of our business.
WE MAY HAVE A SHORTAGE OF WORKING CAPITAL IN THE FUTURE WHICH COULD JEOPARDIZE
OUR ABILITY TO CARRY OUT OUR BUSINESS PLAN.
Our capital needs consist primarily of rent, insurance, utilities, marketing
expenses, wages, taxes, etc. and could exceed $500,000 in the next twelve
months. Such funds are not currently committed, and we have cash as of the date
of this post-effective amended Registration Statement of approximately $34,000.
Given that we have a short operating history and minimal revenues, it is highly
unlikely that our Warrants will be exercised at $0.55 and $0.60 in the
foreseeable future, which makes it highly unlikely that we will raise that
additional working capital from this Registration.
OUR OFFICERS AND DIRECTORS MAY HAVE CONFLICTS OF INTEREST WHICH MAY NOT BE
RESOLVED FAVORABLY TO US.
Certain conflicts of interest may exist between us and our officers and
directors. Our Officers and Directors have other business interests to which
they devote their attention and may be expected to continue to do so although
management time should be devoted to our business. As a result, conflicts of
interest may arise that can be resolved only through exercise of such judgment
as is consistent with fiduciary duties to us. See "Directors, Executive
Officers, Promoters and Control Persons" (page 19), and "Conflicts of Interest".
(page 20)
WE WILL NEED ADDITIONAL FINANCING FOR WHICH WE HAVE NO COMMITMENTS, AND THIS MAY
JEOPARDIZE EXECUTION OF OUR BUSINESS PLAN.
We have limited funds, and such funds may not be adequate to carryout the
business plan. Our ultimate success depends upon our ability to raise additional
capital. We have not investigated the availability, source, or terms that might
govern the acquisition of additional capital and will not do so until it
determines a need for additional financing. If we need additional capital, we
have no assurance that funds will be available from any source or, if available,
that they can be obtained on terms acceptable to us. If not available, our
operations will be limited to those that can be financed with our modest
capital.
OUR WARRANTHOLDERS AND OPTIONHOLDERS MAY NOT EXERCISE THEIR PURCHASE RIGHTS.
It is very unlikely that any security holder would exercise either our Warrants
or the Options.
WE HAVE A MINIMAL OPERATING HISTORY, SO INVESTORS HAVE NO WAY TO GAUGE OUR LONG
TERM PERFORMANCE.
We were incorporated on April 29, 2005 based on a concept to sell customized,
professional-quality playing cards via the Internet. During the year ended
December 31, 2008, the Company changed its business focus to the development of
its OIEPrint software. As evidenced by the financial reports we have had minimal
revenue. It must be regarded as a new or development venture with all of the
unforeseen costs, expenses, problems, and difficulties to which such ventures
are subject. The venture must be considered highly speculative.
WE CAN MAKE NO ASSURANCE OF SUCCESS OR PROFITABILITY IN THE FUTURE.
There is no assurance that we will ever operate profitably. There is no
assurance that we will generate revenues or profits in the future, or that the
market price of our Common Stock will be increased thereby.
WE WILL DEPEND UPON MANAGEMENT BUT WE WILL HAVE LIMITED PARTICIPATION OF
MANAGEMENT.
We currently have three individuals who are serving as our officers and
directors for up to 50 hours per week each on a part-time basis. Our directors
are also acting as our officers. We will be heavily dependent upon their skills,
talents, and abilities, as well as several consultants to us, to implement our
business plan, and may, from time to time, find that the inability of the
officers, directors and consultants to devote their full-time attention to our
business results in a delay in progress toward implementing our business plan.
See "Management." Because investors will not be able to manage our business,
they should critically assess the information concerning our officers and
directors.
OUR OFFICERS AND DIRECTORS ARE NOT EMPLOYED FULL-TIME BY US WHICH COULD BE
DETRIMENTAL TO THE BUSINESS.
Our directors and officers are, or may become, in their individual capacities,
officers, directors, controlling shareholder and/or partners of other entities
engaged in a variety of businesses. Thus, there exist potential conflicts
including time and efforts involved in participation with such other business
entities. Each officer and director of our business is engaged in business
7
activities outside of our business, and the amount of time they devote as
Officers and Directors to our business will be up to 50 hours per week. (See
"Executive Team")
We do not know of any reason other than outside business interests that would
prevent them from devoting full-time to us, when the business may demand such
full-time.
OUR OFFICERS AND DIRECTORS MAY HAVE CONFLICTS OF INTERESTS TO CORPORATE
OPPORTUNITIES WHICH OUR COMPANY MAY NOT BE ABLE OR ALLOWED TO PARTICIPATE IN.
Presently no requirement contained in our Articles of Incorporation, Bylaws, or
minutes which requires officers and directors of our business to disclose to us
business opportunities which come to their attention. Our officers and directors
do, however, have a fiduciary duty of loyalty to us to disclose to us any
business opportunities which come to their attention, in their capacity as an
officer and/or director or otherwise. Excluded from this duty would be
opportunities which the person leans about through his involvement as an officer
and director of another company. We have no intention of merging with or
acquiring an affiliate, associate person or business opportunity from any
affiliate or any client of any such person. (See "Conflicts of Interest" at page
20)
WE HAVE AGREED TO INDEMNIFICATION OF OFFICERS AND DIRECTORS AS IS PROVIDED BY
COLORADO STATUTE.
Colorado Revised Statutes provide for the indemnification of our directors,
officers, employees, and agents, under certain circumstances, against attorney's
fees and other expenses incurred by them in any litigation to which they become
a party arising from their association with or activities our behalf. We will
also bear the expenses of such litigation for any of our directors, officers,
employees, or agents, upon such person's promise to repay us therefore if it is
ultimately determined that any such person shall not have been entitled to
indemnification. This indemnification policy could result in substantial
expenditures by us that we will be unable to recoup.
OUR DIRECTOR'S LIABILITY TO US AND SHAREHOLDERS IS LIMITED
Colorado Revised Statutes exclude personal liability of our directors and our
stockholders for monetary damages for breach of fiduciary duty except in certain
specified circumstances. Accordingly, we will have a much more limited right of
action against our directors than otherwise would be the case. This provision
does not affect the liability of any director under federal or applicable state
securities laws.
WE MAY DEPEND UPON OUTSIDE ADVISORS, WHO MAY NOT BE AVAILABLE ON REASONABLE
TERMS AND AS NEEDED.
To supplement the business experience of our officers and directors, we may be
required to employ accountants, technical experts, appraisers, attorneys, or
other consultants or advisors. Our Board without any input from stockholders
will make the selection of any such advisors. Furthermore, it is anticipated
that such persons may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to us. In the event we consider it necessary to
hire outside advisors, we may elect to hire persons who are affiliates, if they
are able to provide the required services.
WE HAVE SUBSTANTIAL COMPETITORS WHO HAVE AN ADVANTAGE OVER US IN RESOURCES AND
MARKETING.
We will be in competition with other products developed and marketed by much
larger corporations, which are better capitalized and have far greater marketing
capabilities than us. We expect to be at a disadvantage when competing with many
firms that have substantially greater financial and management resources and
capabilities than we do now.
RISK FACTORS RELATED TO OUR ON-LINE PRINTING OPERATIONS
ACTUAL OR PERCEIVED SECURITY VULNERABILITIES IN OUR PRODUCT COULD ADVERSELY
AFFECT OUR REVENUES.
Maintaining the security of our software is an issue of critical importance to
customers and for management. There are individuals and groups who develop and
deploy viruses, worms and other malicious software programs that could attack
our products. Although, we take preventative measures to protect our products,
these procedures may not be sufficient to mitigate damage to products. Actual or
perceived security vulnerabilities in software products could lead some
customers to seek to return products, to reduce or delay future purchases or to
purchase competitive products. Customers may also increase their expenditures on
protecting their computer systems from attack, which could delay or reduce
purchases of our product. Any of these actions or responses by customers could
adversely affect our revenues.
8
SYSTEM FAILURES OR SYSTEM UNAVAILABILITY COULD HARM OUR BUSINESS.
We rely on our network infrastructure, internal technology systems and external
websites for development, marketing, operational, support and sales activities.
Our hardware and software systems related to such activities are subject to
damage from malicious code released into the public Internet through recently
discovered vulnerabilities in popular software programs. These systems are also
subject to acts of vandalism and to potential disruption by actions or inactions
of third parties. Any event that causes failures or interruption in hardware or
software systems could harm our business, financial condition and operating
results.
PURCHASERS OF PRODUCTS AND SERVICES MAY NOT CHOOSE TO SHOP ONLINE WHICH WOULD
PREVENT US FROM ACQUIRING NEW CUSTOMERS WHICH ARE NECESSARY TO THE SUCCESS OF
OUR BUSINESS.
The online market for print products and services is less developed than the
online market for other business and consumer products. If this market does not
gain widespread acceptance, our business may suffer. Our success will depend in
part on our bility to attract customers who have historically purchased printed
products and graphic design services through traditional printing operations and
graphic design businesses or who have produced graphic design and printed
products using self-service alternatives. Furthermore, we may have to incur
significantly higher and more sustained advertising and promotional expenditures
or price our services and products more competitively than we currently
anticipate, in order to attract additional online consumers to the websites and
convert them into purchasing customers. Specific factors that could prevent
prospective customers from purchasing from us include:
- Concerns about buying graphic design services and printed products
without face-to-face interaction with sales personnel;
- The inability to physically handle and examine product samples;
- Delivery time associated with Internet orders;
- Concerns about security of online transactions and the privacy of
personal information;
- Delayed shipments or shipments or incorrect or damaged products; and
- Inconvenience associated with returning or exchanging purchased items.
INTERRUPTIONS TO WEBSITE OPERATIONS, INFORMATION TECHNOLOGY SYSTEMS, PRODUCTION
PROCESSES OR CUSTOMER SERVICE OPERATIONS AS A RESULT OF NATURAL DISASTERS,
ERRORS IN TECHNOLOGY, CAPACITY CONSTRAINTS, SECURITY BREACHES OR OTHER CAUSES
COULD DAMAGE OUR REPUTATION AND BRAND AND SUBSTANTIALLY HARM OUR BUSINESS AND
RESULTS OF OPERATIONS.
The satisfactory performance, reliability and availability of our websites,
transaction processing systems, network infrastructure, printing production
facilities and customer service operations are critical to our reputation, and
our ability to attract and retain customers and to maintain adequate customer
service levels. Any future interruptions that result in the unavailability of
our websites reduced order fulfillment performance or interfere with customer
service operations could result in negative publicity, damage our reputation and
brand and cause our business and results of operations to suffer. We may
experience temporary interruptions in operations for a variety of reasons in the
future, including human error, software errors, power loss, telecommunication
failures, fire, flood, extreme weather, political instability, acts of
terrorism, war, break-ins and security breaches, and other events beyond our
control.
Our technology, infrastructure and processes may contain undetected errors or
design faults. These errors or design faults may cause the websites to fail and
result in loss of, or delay in, market acceptance of our products and services.
In the future, we may encounter additional issues, such as scalability
limitations, in current or future technology releases. A delay in the commercial
release of any future version of the technology or implementing improvements in
infrastructure and processes could seriously harm our business. In addition, our
systems could suffer computer viruses and similar disruptions, which could lead
to loss of critical data or the unauthorized disclosure of confidential customer
data.
Our business requires that we have adequate capacity in our computer systems to
cope with the high volume of visits to websites, particularly during promotional
campaign periods. As our operations grow in size and scope, we will need to
improve and upgrade our computer systems and network infrastructure to offer
customers enhanced and new products, services, capacity, features and
functionality. The expansion of our systems and infrastructure may require it to
commit substantial financial, operational and technical resources before the
volume of the business increases, with no assurance that our revenues will
increase.
IF WE ARE UNABLE TO MARKET AND SELL PRODUCTS AND SERVICES BEYOND OUR EXISTING
TARGET MARKETS AND DEVELOP NEW PRODUCTS AND SERVICES TO ATTRACT NEW CUSTOMERS,
OUR RESULTS OF OPERATIONS MAY SUFFER.
We have developed products and services and implemented marketing strategies
designed to attract small business owners and consumers to the websites and
encourage them to purchase our products and services. Management believes they
will need to address additional markets and attract new customers to further
grow the business. To access new markets and customers management expects that
9
they will need to develop, market and sell new products and additional services
that address their needs. We intend to focus on developing new strategic
relationships to expand marketing and sales channels. Any failure to develop new
products and services, expand our business beyond our existing target markets
and customers, and address additional market opportunities could harm the
business, financial condition and our results of operations.
RISK FACTORS RELATED TO OUR STOCK
THE REGULATION OF PENNY STOCKS BY SEC AND FINRA MAY DISCOURAGE THE TRADABILITY
OF OUR SECURITIES.
We are a "penny stock" company. Our securities currently trade on the Over-the
Counter Bulletin Board under the symbol "TMCI." There is a limited public market
for our Common Stock. While our Units and the "A" Warrants and "B" Warrants were
approved for trading on the over the counter bulletin board ("TMCIU"), it
appears there was never any trades and the "A" and "B" Warrants have expired.
Our Securities will be subject to a Securities and Exchange Commission rule that
imposes special sales practice requirements upon broker-dealers who sell such
securities to persons other than established customers or accredited investors.
For purposes of the rule, the phrase "accredited investors" means, in general
terms, institutions with assets in excess of $5,000,000, or individuals having a
net worth in excess of $1,000,000 or having an annual income that exceeds
$200,000 (or that, when combined with a spouse's income, exceeds $300,000). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Effectively, this discourages
broker-dealers from executing trades in penny stocks. Consequently, the rule
will affect the ability of purchasers in this offering to sell their securities
in any market that might develop therefore because it imposes additional
regulatory burdens on penny stock transactions.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange
Act of 1934, as amended. Because our securities constitute "penny stocks" within
the meaning of the rules, the rules would apply to us and to our securities. The
rules will further affect the ability of owners of Shares to sell our securities
in any market that might develop for them because it imposes additional
regulatory burdens on penny stock transactions.
Shareholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
WE WILL PAY NO FORESEEABLE DIVIDENDS IN THE FUTURE.
We have not paid dividends on our Common Stock and do not ever anticipate paying
such dividends in the foreseeable future.
LOSS OF CONTROL BY OUR PRESENT MANAGEMENT AND STOCKHOLDERS MAY OCCUR UPON
ISSUANCE OF ADDITIONAL SHARES.
We may issue further Shares as consideration for the cash or assets or services
out of our authorized but unissued Common Stock that would, upon issuance,
represent a majority of our voting power and equity. The result of such an
issuance would be those new stockholders and management would control us, and
persons unknown could replace our management at this time. Such an occurrence
would result in a greatly reduced percentage of ownership of us by our current
Shareholders.
A LIMITED PUBLIC MARKET EXISTS FOR OUR COMMON STOCK, AT THIS TIME.
Our Common Stock trades on the Over-the Counter Bulletin Board under the symbol
"TMCI." There is a limited public market for our Common Stock and no assurance
can be given that this market will continue to develop or that a Shareholder
ever will be able to liquidate their investment without considerable delay, if
at all. If the market continues to develop, the price may be highly volatile.
Factors such as those discussed in the "Risk Factors" section may have a
significant impact upon the market price of the securities offered hereby. Due
to the low price of our securities, many brokerage firms may not be willing to
effect transactions in our securities. Even if a purchaser finds a broker
willing to effect a transaction in our securities, the combination of brokerage
commissions, state transfer taxes, if any, and any other selling costs may
exceed the selling price. Further, many lending institutions will not permit the
use of such securities as collateral for any loans.
10
RULE 144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE EFFECT ON OUR STOCK PRICE.
All of the outstanding Shares of Common Stock held by our present officers,
directors, and affiliate stockholders are "restricted securities" within the
meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted
Shares, these Shares may be resold only pursuant to an effective registration
statement or under the requirements of Rule 144 or other applicable exemptions
from registration under the Act and as required under applicable state
securities laws. We are registering all of our outstanding Shares so officers,
directors and affiliates will be able to sell their Shares if this
Post-Effective Amendment to the Registration Statement becomes effective. Rule
144 provides in essence that a person who has held restricted securities for six
months may, under certain conditions, sell every three months, in brokerage
transactions, a number of Shares that does not exceed the greater of 1.0% of a
company's outstanding Common Stock or the average weekly trading volume during
the four calendar weeks prior to the sale. A sale under Rule 144 or under any
other exemption from the Act, if available, or pursuant to subsequent
registration of Shares of Common Stock of present stockholders, may have a
depressive effect upon the price of the Common Stock in any market that may
develop.
FUTURE DILUTION MAY OCCUR DUE TO ISSUANCES OF SHARES FOR VARIOUS CONSIDERATION
IN THE FUTURE.
There may be substantial dilution to our Shareholders purchasing in this
Offering as a result of future decisions of the Board to issue Shares without
Shareholder approval for cash, services, acquisitions, or pursuant to our
Employee/Consultant Stock Option Plan for which one million Shares have been
reserved. Award/Earnings/Vesting criteria under the Plan have not been set,
however the price per Share for exercise will be no less than $0.55 per Share.
1,029,999 Options are currently outstanding under the Plan.
OUR STOCK WILL IN ALL LIKELIHOOD BE THINLY TRADED AND AS A RESULT YOU MAY BE
UNABLE TO SELL AT OR NEAR ASK PRICES OR AT ALL IF YOU NEED TO LIQUIDATE YOUR
SHARES.
The Shares of our Common Stock are thinly-traded on the OTC Bulletin Board,
meaning that the number of persons interested in purchasing our common Shares at
or near ask prices at any given time may be relatively small or non-existent.
This situation is attributable to a number of factors, including the fact that
we are a small company which is relatively unknown to stock analysts, stock
brokers, institutional investors and others in the investment community that
generate or influence sales volume, and that even if we came to the attention of
such persons, they tend to be risk-averse and would be reluctant to follow an
unproven, early stage company such as ours or purchase or recommend the purchase
of any of our Securities until such time as we became more seasoned and viable.
As a consequence, there may be periods of several days or more when trading
activity in our Securities is minimal or non-existent, as compared to a seasoned
issuer which has a large and steady volume of trading activity that will
generally support continuous sales without an adverse effect on Securities
price. We cannot give you any assurance that a broader or more active public
trading market for our common Securities will develop or be sustained, or that
any trading levels will be sustained. Due to these conditions, we can give
investors no assurance that they will be able to sell their Shares at or near
ask prices or at all if you need money or otherwise desire to liquidate their
Securities of our Company.
OUR COMMON STOCK MAY BE VOLATILE, WHICH SUBSTANTIALLY INCREASES THE RISK THAT
YOU MAY NOT BE ABLE TO SELL YOUR SECURITIES AT OR ABOVE THE PRICE THAT YOU MAY
PAY FOR THE SECURITY.
Because of the limited developing trading market for our Common Stock, and
because of the possible price volatility, you may not be able to sell your
Warrants or Shares of Common Stock when you desire to do so. The inability to
sell your Securities in a rapidly declining market may substantially increase
your risk of loss because of such illiquidity and because the price for our
Securities may suffer greater declines because of our price volatility.
The price of our Common Stock that will prevail in the market after this
offering may be higher or lower than the price you may pay. Certain factors,
some of which are beyond our control, that may cause our Share price to
fluctuate significantly include, but are not limited to the following:
o Variations in our quarterly operating results;
o Loss of a key relationship or failure to complete significant
transactions;
o Additions or departures of key personnel; and
o Fluctuations in stock market price and volume.
11
Additionally, in recent years the stock market in general, and the
over-the-counter markets in particular, have experienced extreme price and
volume fluctuations. In some cases, these fluctuations are unrelated or
disproportionate to the operating performance of the underlying company. These
market and industry factors may materially and adversely affect our stock price,
regardless of our operating performance. In the past, class action litigation
often has been brought against companies following periods of volatility in the
market price of those companies Common Stock. If we become involved in this type
of litigation in the future, it could result in substantial costs and diversion
of management attention and resources, which could have a further negative
effect on your investment in our stock.
MANY OF OUR SHARES OF COMMON STOCK WILL IN THE FUTURE BE AVAILABLE FOR RESALE.
ANY SALES OF OUR COMMON STOCK, IF IN SIGNIFICANT AMOUNTS, ARE LIKELY TO DEPRESS
THE MARKET PRICE OF OUR SECURITIES.
Assuming all of the Shares of common stock we are offering under this
post-effective amended Registration Statement are sold and all of the Shares of
common stock issued and issuable to the selling security holders are sold, we
would have 3,230,000 Shares that are freely tradable without the requirement of
registration under the Securities Act of 1933. Even our officers and director
have registered Shares owned by them totaling 1,025,000.
Unrestricted sales of 3,230,000 Shares of stock by our selling stockholders
could have a huge negative impact on our Share price, and the market for our
Securities including Shares and Warrants.
OUR NEW INVESTORS WILL SUFFER A DISPROPORTIONATE RISK AND THERE WILL BE
IMMEDIATE DILUTION OF PURCHASERS' INVESTMENTS.
Our present Shareholders have acquired their Securities at a cost significantly
less than that which the investors purchasing pursuant to Warrants will pay for
their stock holdings or at which future purchasers in the market may pay.
Therefore, new investors will bear most of the risk of loss. Further, assuming
all of the Shares offered hereby are sold, of which there can be no assurance,
an investment in our Common Stock by the purchaser will result in an immediate
dilution (in excess of 90%) of the net tangible book value of the Common Stock
from the offering price which the purchasers will have paid for their Shares.
OUR BUSINESS IS HIGHLY SPECULATIVE AND THE INVESTMENT IS THEREFORE RISKY.
Due to the speculative nature of our business, it is possible that an investment
in the Shares offered hereby will result in a total loss to the investor.
Investors should be able to financially bear the loss of their entire
investment. Investment should, therefore, be limited to that portion of
discretionary funds not needed for normal living purposes or for reserves for
disability and retirement.
OUR PRESENT AND FUTURE SHAREHOLDERS WILL SUFFER DILUTION BY SALE OF THIS
OFFERING AND BY NEW ISSUANCES IN THE FUTURE WHICH MAY OCCUR.
Upon the sales of Shares, there may be substantial dilution to our Security
holders. The exercise price of certain of our Options and Warrants $0.55 and
$0.60, is substantially higher than the pro forma current net tangible book
value per Share of our outstanding Common Stock. The net tangible book value
attributable to our Shares as of December 31, 2008 was $(0.004) per Share. Net
tangible book value per Share of Common Stock is determined by dividing the
number of outstanding Shares of Common Stock into the net tangible book value
attributable to our Common Stock, which is our tangible assets less our total
liabilities. After giving effect to possible sale of all of our Shares
registered herein, and after deducting the offering expenses, the adjusted net
tangible book value attributable to our Common Stock will increase. This
represents an immediate increase in net tangible book value per Share to the
holders of our existing Common Stock and an immediate dilution per Share to
Shareholders purchasing Shares of stock at the exercise price of $0.55 per share
for certain Options or $0.60 per share for certain Warrants. See "Dilution
Summary" hereinafter on page 14.
12
--------------------------------------------------------------------------------------------------------------------
Assuming Exercise of Assuming Exercise of
"Employee" Options @ $0.55 per "Placement Agent"
As of December 31, 2008 share (1) Warrants @ $0.60 per
share
--------------------------------------------------------------------------------------------------------------------
Net tangible book value per share before exercise of ($0.004) ($0.004)
"Employee " Options and/or "Placement Agent" Warrants
--------------------------------------------------------------------------------------------------------------------
Net tangible book value per share after exercise of $0.108 $0.101
"Employee" Options and/or "Placement Agent" Warrants
--------------------------------------------------------------------------------------------------------------------
Increase per share attributable to exercise of "Employee $0.112 $0.104
Option" and/or "Placement Agent Warrants"
--------------------------------------------------------------------------------------------------------------------
Dilution per share to new investors $0.442 $0.449
--------------------------------------------------------------------------------------------------------------------
Dilution per share as percentage of price to new investors 80% 82%
--------------------------------------------------------------------------------------------------------------------
* Assumes 100% exercise and cumulative aggregation of proceeds.
(1) Includes 600,000 Warrants owned by consultants and 150,000 Options owned by employees.
POSSIBLE DEPRESSIVE EFFECT OF FUTURE SALES OF SHARES ISSUED PURSUANT TO WARRANT
EXERCISE.
The Shares and Placement Agent Warrants are being registered in this Offering.
These Warrants cannot be exercised and the underlying shares of Common Stock
issued unless a current registration statement is in effect. (See "Description
of Securities - Selling Warrantholders"). In the event all of the Placement
Agent Warrants are eventually exercised, the resulting 60,000 shares would be
free trading and could be sold into the secondary market. Such sales would most
likely have a depressive effect on the price of the Common Stock in any
over-the-counter market that may develop, since the large supply of shares
available in the market would most likely reduce the price purchasers need to
pay for the stock. The exercise of the Warrants would also reduce the percentage
of our Common Stock owned by the investors in this offering.
ARBITRARY OFFERING PRICE.
The exercise price of the Warrants have been determined arbitrarily by us with
no established criteria of value. There is no direct relationship between these
prices and our assets, book value, lack of earnings, shareholder's equity, or
any other recognized standard of value of our business.
FUTURE DILUTION.
Upon exercise of any of the Warrants, holder of Common Stock will suffer
dilution of their interest in us unless they in turn exercise Warrants which
they hold, if any. In addition, Warrants will be exercisable. (See "Description
of Securities").
NO ASSURANCE OF PUBLIC MARKET FOR ANY OUR SECURITIES.
There is presently a limited market for any of our securities and there can be
no assurance a larger market will develop or that purchasers will be able to
resell their Common Stock a the public offering price or without delay. No one
is obligated to create or make a market in the Common Stock upon completion of
this offering. Should a market for our Securities develop there is no assurance
that such a market will continue. In addition, due to the low price of these
Securities many brokerage firms may not effect transactions in the Common Stock
and banks may not accept them as collateral for loans.
USE OF PROCEEDS
In the event purchasers in this offering elect to exercise any of the Warrants
at the exercise prices set forth in this Prospectus, we will realize net
proceeds. The proceeds from the exercise of Warrants will be contributed to our
working capital and used to build our business. (See "Proposed Business - Plan
of Operation")
If Warrants are exercised we will receive proceeds upon exercise, from exercise
price of the securities underlying Warrants $36,000 from the sale of 60,000
Placement Agent Warrants at $0.60 per share, $82,500 from sale of Shares
underlying Options @ $0.55 per Share to Employee, $330,000 from sale of Shares
to a Consultant underlying Warrants at $0.55 per Share,. We have no intention of
returning any stock sale proceeds to investors if the maximum amount is not
raised, and we will use the proceeds as soon as we receive them.
Although we reserve the right to reallocate the funds according to changing
events, we believe the net proceeds from this Offering and projected cash flow
from operations will be sufficient to fund our initial capital requirements for
a period of twelve months. The foregoing assumes the Offering will be fully
subscribed, but there can be no assurance we will not require additional funds
for operations. The availability and terms of any future financing will depend
on market and other conditions out of our control. The amount of proceeds and
uses are based upon our projections, which may also change according to
unforeseen future events and market changes.
13
TABLE I
PROCEEDS (INCLUDING
PLACEMENT AGENT WARRANTS,
CONSULTANT WARRANTS AND
EMPLOYEE CONSULTANT
OPTIONS)
Salaries $170,000
Equipment $8,500
Marketing $25,000
General and Administrative $25,000
Working Capital $195,000
Website Development $25,000
-----------------------------
TOTAL $448,500
=============================
The monies we have raised thus far from selling stock to our current
Shareholders is anticipated to be sufficient to pay all expenses of this
offering, which is estimated to be $100,000. The total amount of the money
raised from the sale of the Shares underlying Warrants we are offering will be
used for the purpose of furthering our plan of operation, as detailed under the
heading "PLAN OF OPERATION" below.
DETERMINATION OF OFFERING PRICE
Our Common Stock trades on the Over-the Counter Bulletin Board under the symbol
"TMCI." While Units and the "A" Warrants and "B" Warrants were approved for
trading on the over the counter bulletin board, it appears there was never any
trades and the "A" and "B" Warrants have expired.
Our Selling Security Holders plan to sell common Shares at $0.55, until such
time as a market develops for any of the securities and thereafter at such
prices as the market may dictate from time to time. There is no history of a
market price for the stock and our pricing is arbitrary with no relation to
market value, liquidation value, earnings or dividends. The Warrant exercise
price was arbitrarily determined based on speculative concept unsupported by any
other comparables.
TITLE PER SHARE/ EXERCISE PRICE
--------------------------------------------- ----------------------------------
Common Stock $0.55
Employee/Consultant Options $0.55
Stock underlying Placement Agent Warrants $0.60
The 1,500,000 Shares of stock already purchased by officers and directors and
other founding Shareholders were sold for $.01 per Share. We previously sold
1,730,000 Units to investors at $0.50 per Unit, each Unit consisting of one
Share and one "A" Warrant and one "B" Warrant in 2006. The additional major
factors that were included in determining the initial sales price to our
founders and private investors were the lack of liquidity since there is no
present market for our stock and the high level of risk considering our lack of
operating history.
DILUTION
We are registering Shares of existing Shareholders Shares of Common Stock
comprising part of Units for sale through this offering. Since our inception on
April 29, 2005, our officers, directors purchased 1,025,000 shares @ $0.01 per
share and other Shareholders have purchased Shares of our Common Stock for $.01
per Share for 500,000 Shares in 2005 (this number includes William Reilly who
purchased 25,000 shares in April 2005, and who in 2006 became an Officer and a
Director). In 2006 Shareholders purchased 1,730,000 Shares as part of Units
offered for $0.50 per Unit and Garden State Securities received, as
compensation, a Warrant to purchase 60,000 Units each Unit consisting of one
Share and one "A" and one "B" Warrant which Units, Shares and Warrants and
Shares Underlying the Warrants. The "A" and "B" Warrants expired in August 2009.
We are including all of the securities in this Post-Effective Amendment to the
Registration Statement, except for the shares underlying the Warrants and the
Units.
14
COMPARATIVE DATA
The following table sets forth with respect to existing Shareholders and new
investors, a comparison of the number of our Shares of Common Stock purchased
the percentage ownership of such Shares, the total consideration paid, the
percentage of total consideration paid and the average price per Share. All
percentages are computed based upon cumulative Shares and consideration assuming
sale of all Shares in the line items as compared to maximum in each previous
subsection.
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
NUMBER PERCENT AMOUNT PERCENT PRICE/SHARE
=====================================================================
EXISTING SHAREHOLDERS 3,230,000 80% $816,305 65% $0.25
"Other" Warrant Exercise @ $0.55 600,000 15% $330,000 26% $0.30
(assuming 100% sold)
"Other" Warrant Exercise @ $0.60 60,000 1.0% $36,000 3% $0.30
(assuming 100% sold)
Employee Options 150,000 @ $0.55 150,000 4.0% $82,500 6% $0.31
--------------- --------------
Pre Warrant Exercise Capital 100% 100%
"Net tangible book value" is the amount that results from subtracting the total
liabilities and intangible assets from the total assets of an entity. Dilution
occurs because we determined the offering price based on factors other than
those used in computing book value of our stock. Dilution exists because the
book value of Shares held by existing stockholders is lower than the offering
price offered to new investors.
Following is a table detailing dilution to investors if 25%, 50%, 75%, or 100%
of the Shares underlying Warrants in the offering are sold.
25% 50% 75% 100%
============================================ =============== =============== ============== ===============
Net Tangible Book Value Per Share Prior to ($0.004) ($0.004) ($0.004) ($0.004)
Stock Sale(1)
-------------------------------------------- --------------- --------------- -------------- ---------------
Net Tangible Book Value Per Share After $ 0.03 $ 0.06 $ 0.08 $ 0.11
Stock Sale, assuming the Exercise of
Certain Warrants (2)
-------------------------------------------- --------------- --------------- -------------- ---------------
Dilution Per Share 95% 89% 85% 80%
-------------------------------------------- --------------- --------------- -------------- ---------------
Increase in Net Tangible Book Value $ 0.03 $ 0.06 $ 0.08 $ 0.11
(1) Computation of Net Tangible Book Value per Share prior to stock sale includes the deduction of offering costs of $100,000
and proceeds of private placement in July/August 2006
(2) Computation of Net Tangible Book Value per Share prior to stock sale assumes proceeds from the exercise of the following
warrants: 600,000 @ $0.55; 150,000 @ $0.55; 60,000 @ $0.60 Placement Agent Warrants.
SELLING SECURITY HOLDERS
The selling Shareholders, excluding officers and directors, obtained their
Shares of our Stock in either of two private placements of a) 1,730,000 Units
occurring in June, July, August 2006, which consisted of one Share, one "A"
Warrant and one "B" Warrant at $0.50 per share of which the "A" and "B" Warrants
expired in August 2009, or b) in the initial private placement in late 2005 of
500,000 shares (excluding founders, John Harris and Neil Cox) at $0.01 per
share.
Other than the two stock transactions discussed below, we have not entered into
any transaction nor are there any proposed transactions in which any founder,
director, executive officer, significant Shareholder of our company or any
member of the immediate family of any of the foregoing had or is to have a
direct or indirect material interest.
On July 6, 2005, we sold 500,000 Shares of our Common Stock to our
CFO/Secretary/Treasurer (Neil A. Cox) for $5,000, or $.01 per Share. Our Common
Stock had no quoted market value on the date of the transaction. Mr. Cox would
be considered a promoter.
On July 14, 2005, we sold 500,000 Shares of our Common Stock to our President
and Chief Executive Officer (John N. Harris) for $5,000, or $.01 per Share. Our
Common Stock had no quoted market value on the date of the transaction. Mr.
Harris would be considered a promoter.
15
William Reilly became an Officer (COO and CTO) and a Director in early 2006. Mr.
Reilly was previously a shareholder having purchased 25,000 shares @ $0.01 in
April 2005. Mr. Reilly also has 100,000 Employee options exercisable to purchase
shares at $0.55. We sold 500,000 Shares to other Shareholders in 2005 at $.01
per share.
We have engaged as a consultant Capital Merchant Banc under an Agreement which
provides for the vesting of 600,000 Warrants to purchase Shares at $0.55 per
Share based upon performing consulting services for which it is paid $3,000 per
month. When vested, Capital Merchant Banc could acquire an amount of Shares
equal to 15.66% of the issued and outstanding Common Stock prior to exercise of
any Warrants. These Warrants expire August 31, 2009 with an Option to acquire a
new two year Warrant at $0.55 for 600,000 if the stock price has not closed at
$0.50 for 30 days.
The President, CFO and COO/CTO contributed their management services to our
business until June 30, 2006, and were not paid until August 2006. The President
and CFO were paid for July 2006 and August 2006 at the rate of $3,000 per month.
The COO/CTO was paid for July 2006 and August 2006 at the rate of $3,500 per
month. The President and CFO were paid a bonus also of $3,000 for deferring
salaries until August 2006 and the COO/CTO (William Reilly) was paid a bonus of
$3,500 for deferring salaries until August 2006.
During the year ended December 31, 2008, Mr. Reilly was issued an option to
purchase 150,000 shares of the Company's common stock. The option has an
exercise price of $0.65 per share. The option was valued using the Black-Scholes
method. During the year ended December 31, 2006, Mr. Reilly was issued an option
to purchase 100,000 shares of the Company's common stock. The option has an
exercise price of $0.55 per share and a term of 3 years expiring in August 2009.
The value of the option was determined using the exercise price. This option is
not a part of this Registration Statement.
During the six months ended June 30, 2009, Messrs. Harris and Cox, officers and
directors of the Company were issued 180,000 shares of our restricted common
stock (360,000 shares total, each, in lieu of monies owed for salaries at
December 31, 2008 (valued at $0.10 per share). These shares have been accounted
for as a contribution of capital. These shares are not a part of this
Registration Statement.
During the six months ended June 30, 2009, Mr. Michael Willis, our Chief
Executive Officer at the time, was issued 116,170 shares of our restricted
common stock valued at $11,617for his services as an officer. These shares are
not a part of this Registration Statement.
No person who may, in the future, be considered a promoter of this offering,
will receive or expect to receive assets, services or other considerations from
us except those persons who are our salaried employees or directors. No assets
will be, nor expected to be, acquired from any promoter on behalf of us. We have
not entered into any agreements that require disclosure to the Shareholders.
All of the Securities listed below are being registered in this post-effective
amended Registration Statement, which include all of the securities outstanding
as of date hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
16
NAME SECURITIES COMMON % OWNED % OWNED "OTHER" SHARES % OWNED SHARES OWNED
BY EACH SHARES BEFORE BEFORE WARRANTS/ UNDERLYING AFTER AFTER
SHAREHOLDER OFFERED OFFERING WARRANT OPTIONS/ WARRANTS OR OFFERING OF OFFERING
BEFORE FOR EXERCISE FOR SHARES OPTIONS, IF CLASS OF
OFFERING SHAREHOLDERS EXERCISED SECURITIES
ACCOUNT (ASSUMING
ALL
WARRANTS &
OPTIONS ARE
EXERCISED)
---------------- ------------- ------------- -------------- ------------- --------------- --------------- ------------- ------------
Neil A. Cox 500,000 500,000 14% 14% 0% 0
(1) Shares
John N. Harris 500,000 500,000 14% 14% 0% 0
(2) Shares
James C. 25,000 25,000 * * 0% 0
McLennan Shares
Dale Stonedahl 110,000 110,000 3% 3% 0 120,000 0% 0
Shares
50,000 3% 3% 50,000 50,000 0% 0
Options
George W. 75,000 75,000 2% 2% 100,000 0% 0
Wanberg and Shares
Cynthia B.
Wanberg
Jolaine Roth 25,000 25,000 * * 0% 0
Shares
Mark S. 25,000 25,000 * * 0% 0
Kachun Shares
James B. 25,000 25,000 * * 0% 0
Sebastian Shares
William H. 25,000 25,000 * * 100,000 100,000 0% 0
Reilly (3) Shares/
100,000
Options
Douglas F. 200,000 200,000 6% 6% 0% 0
Fleet Shares
Barbara C. 50,000 50,000 1% 1% 0% 0
Kurczodyna Shares
J. Randall 50,000 50,000 1% 1% 0% 0
Thrall Shares
Gary Stonedahl 20,000 20,000 * * 40,000 0% 0
Shares
Lee A. Milo TR 100,000 100,000 3% 3% 200,000 0% 0
UA 12052002, Shares
George Wanberg
TTEE
Matthew Ray 20,000 20,000 * * 40,000 0% 0
Frigm Shares
William J. 30,000 30,000 * * 60,000 0% 0
Clayton Shares
Richard C. 50,000 50,000 1% 1% 100,000 0% 0
Erickson Shares
Carmine Tirone 30,000 30,000 * * 60,000 0% 0
Shares
Willie Gibson 10,000 10,000 * * 20,000 0% 0
Shares
17
NAME SECURITIES COMMON % OWNED % OWNED "OTHER" SHARES % OWNED SHARES OWNED
BY EACH SHARES BEFORE BEFORE WARRANTS/ UNDERLYING AFTER AFTER
SHAREHOLDER OFFERED OFFERING WARRANT OPTIONS/ WARRANTS OR OFFERING OF OFFERING
BEFORE FOR EXERCISE FOR SHARES OPTIONS, IF CLASS OF
OFFERING SHAREHOLDERS EXERCISED SECURITIES
ACCOUNT (ASSUMING
ALL
WARRANTS &
OPTIONS ARE
EXERCISED)
---------------- ------------- ------------- -------------- ------------- --------------- --------------- ------------- ------------
Leroy Padilla 10,000 10,000 * * 20,000 0% 0
Shares
Nagle Family 50,000 50,000 1% 1% 100,000 0% 0
Trust Shares
David W. Lane 100,000 100,000 3% 3% 200,000 0% 0
Shares
Robert E. 100,000 100,000 3% 3% 200,000 0% 0
Maciorowski Shares
James Scanlon 200,000 200,000 6% 6% 400,000 0% 0
Shares
Mike Scanlon 200,000 200,000 6% 6% 400,000 0% 0
Shares
Michael J. 200,000 200,000 6% 6% 400,000 0% 0
Keate Shares
Roland 200,000 200,000 6% 6% 400,000 0% 0
Rosenboom Shares
James V. 100,000 100,000 3% 3% 200,000 0% 0
Bickford Shares
Lawrence M. 50,000 50,000 1% 1% 100,000 0% 0
Elman Shares
Richard Gardner 10,000 10,000 * * 20,000 0% 0
Shares
Robert E. 50,000 50,000 1% 1% 100,000 0% 0
Dettle, Trustee Shares
William H. & 10,000 10,000 * * 20,000 0% 0
Gale S. Kendall Shares
William R. 10,000 10,000 * * 20,000 0% 0
Talbert Shares
John Gersman 10,000 10,000 * * 20,000 0% 0
Shares
Dulcinea A. 10,000 10,000 * * 20,000 0% 0
Hansard Shares
Steve E. Hatch 50,000 50,000 1% 1% 100,000 0% 0
Shares
Garden State
Securities Warrants 60,000** * * 60,000 0% 0
for 60,000
Shares
Capital 600,000 0 0 600,000 600,000
Merchant Banc Warrants
TOTAL 4,390,000
*Less than 1%
MATERIAL RELATIONSHIPS
(1) CFO and Director since inception in 2005
(2) Director and officer since inception in 2005.
(3) COO, CTO and Director since 2006
None of the selling Shareholders are registered broker-dealers except Garden
State Securities which may sell 60,000 Shares underlying Warrants and none of
the selling Shareholders are affiliates of Registered Broker Dealers.
18
PLAN OF DISTRIBUTION
Upon effectiveness of this post-effective Amendment No. 3 to this Registration
Statement, our selling Shareholders, are free to sell their Securities in
private transactions $0.55 per Share or market sales if a market ever develops
hereafter at prices they negotiate or in private transactions. There will be no
underwriters used, no dealers' commissions paid, and no passive market making.
Our officers and directors, John N. Harris, Neil A. Cox and William H. Reilly,
will sell securities on our behalf in this offering. John N. Harris, Neil A. Cox
and William H. Reilly are not subject to a statutory disqualification as such
term is defined in Section (a)(39) of the Securities Exchange Act of 1934. They
will rely on Rule 3a4-1 to sell our securities without registering as
broker-dealers. They are serving as our officers and directors otherwise than in
connection with transactions in securities and will continue to do so at the
conclusion of this offering. They have not been a broker or dealer, or an
associated person of a broker or dealer, within the preceding 12 months, and
have not nor will not participate in the sale of securities for any issuer more
than once every twelve months. Our officers and directors will not receive
commissions or other remuneration in connection with their participation in this
offering based either directly or indirectly on transactions in securities. We
will only use this prospectus in connection with this offering and no other
sales materials.
There is a limited market for the securities at this time and our pricing is
arbitrary with no relation to market value, liquidation value, earnings or
dividends. We are registering our securities at the following prices:
TITLE PER SHARE/ EXERCISE PRICE
--------------------------------------------- ----------------------------------
Common Stock $0.55
Employee/Consultant Options $0.55
Stock underlying Placement Agent Warrants $0.60
The prices were arbitrarily set based upon a slight premium to the previous
private placement price of $0.50 per Unit and the components of the Unit, at
that time.
There can be no assurance that we will achieve any Warrant exercise from our
Shareholders. We have no arrangement or guarantee that we will achieve any
Warrant or Option exercise proceeds from anyone. All subscription checks for
Warrant or Option exercises will be made payable to us. We will receive NO
proceeds from sales of securities by our Selling Shareholders. Proceeds to
Company will be limited to exercises price of Options and Warrants.
Our Selling Shareholders may be deemed underwriters in this offering.
Any funds received from the Warrant exercise will immediately be made available
for our use and retained by us regardless of whether or not we sell any
additional Shares under this offering. Any funds not immediately used for
corporate purposes will be deposited into an interest bearing account in our
name, and interest accrued on such funds will be retained by us.
LEGAL PROCEEDINGS
We are not a party to any pending legal proceedings, nor are we aware of any
civil proceeding or government authority contemplating any legal proceeding.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our officers are spending up to 50 hours per week on our business.
CHAIRMAN OF THE BOARD AND CHIEF FINANCIAL OFFICER
Neil A. Cox, 60
Mr. Cox has more than 30 years experience in the securities and financial
industry. He brings enthusiasm, energy, and a solid base of understanding in
acquisitions, strategic planning, and public and private financing. Mr. Cox is a
former officer and director of a regional broker-dealer and has been involved
with structuring, financing, and investment banking activities for dozens of
companies. In 1999, as chief financial officer of IDMedical.com, Mr. Cox
coordinated the efforts for the company to become a publicly traded software
company that tried to pioneer computerized medical records on the Internet. Mr.
Cox received a Bachelor of Business Administration (BBA) from West Texas A&M
University (formerly known as West Texas State University) in 1971. He served in
the United States Army as an Infantry Lieutenant, and is also a licensed
insurance broker. Mr. Cox had been self-employed with Rocky Mountain Securities
and Investments, Inc. until 2002, a registered broker-dealer; and from
2002-2004, Mr. Cox was self-employed with Moloney Securities Co., Inc., a
registered broker-dealer. Since 2004, Mr. Cox has been an independent insurance
broker (Life, Health, & Accident) who has represented many Life and Health
Insurance Companies and is also an independent business consultant.
19
CHIEF EXECUTIVE OFFICER, PRESIDENT AND DIRECTOR
John N. Harris, 63
Mr. Harris began his career in the securities industry in 1971 with Newhard Cook
& Co., a St. Louis based NYSE member firm. Licensed both as a broker and
principal, he ultimately managed brokerage offices for several regional NASD
brokerage firms. Since 1985, he has been self-employed as a business consultant
and as a private investor. For the last 5 years Mr. Harris has been an
independent financial consultant. Mr. Harris brings us experience in the public
securities market.
CHIEF OPERATIONS OFFICER/CHIEF TECHNOLOGY OFFICER AND DIRECTOR
William H. Reilly, 56
Mr. Reilly has spent the past 25 years working with technology in support of
communications and business operations. He co-founded the Frontline Group
Technology Center, where he guided day-to-day operations as chief operating
officer. He also served as the parent company's chief technology officer,
overseeing the installation of one of the nation's first VoIP systems, serving
14 offices in 11 states. After three years he started his own consulting
business, offering services to young companies that wanted to establish the
necessary systems to support measured and profitable growth, including strategic
marketing, consultative sales, and customer service support. He earned his
undergraduate degree at Wilkes College in Pennsylvania and completed his
postgraduate work at Montclair State University. Mr. Reilly has headed his own
consulting company, MountainTop Back Office, since 2002 and provides technology
integration and marketing services to established companies.
FORMER CHIEF EXECUTIVE OFFICER
MICHAEL WILLIS,
Mr. Willis was appointed the Chief Executive Officer of the Company on April 6,
2009 and resigned the position on September 1, 2009. Mr. Willis has served in
leadership positions in Internet technology companies for the past fifteen
years. He was one of the founders of Digital Directions International, Inc.
worked with them from March 2000 through June 2008 and served as president and
COO of Paragon Solutions, a Chicago-based technology services company
specializing in Web-based software solutions. Mr. Willis has served on the
Information Systems faculties at the University of Southern California, the
University of Denver and the University of Colorado. Mr. Willis received his
Bachelor Science from Bradley University and his Masters from Johns Hopkins
University. He has completed graduate programs in Applied Mathematics at George
Washington University and in Statistical Research, The American University.
CONFLICTS OF INTEREST - GENERAL.
Our directors and officers are, or may become, in their individual capacities,
officers, directors, controlling shareholder and/or partners of other entities
engaged in a variety of businesses. Thus, there exist potential conflicts of
interest including, among other things, time, efforts and corporation
opportunity, involved in participation with such other business entities. While
each officer and director of our business is engaged in business activities
outside of our business, the amount of time they devote to our business will be
up to approximately 50 hours per week.
CONFLICTS OF INTEREST - CORPORATE OPPORTUNITIES
Presently no requirement contained in our Articles of Incorporation, Bylaws, or
minutes which requires officers and directors of our business to disclose to us
business opportunities which come to their attention. Our officers and directors
do, however, have a fiduciary duty of loyalty to us to disclose to us any
business opportunities which come to their attention, in their capacity as an
officer and/or director or otherwise. Excluded from this duty would be
opportunities which the person learns about through his involvement as an
officer and director of another company. We have no intention of merging with or
acquiring an affiliate, associate person or business opportunity from any
affiliate or any client of any such person.
PROJECTED STAFF
STAFFING
Our development team recognizes that additional staff is required to properly
support marketing, sales, research, and support functions.
Currently, our only employees are our Chief Executive Officer and Chief
Financial Officer and are non-salaried. This lean staffing is possible in this
phase because of our determination to outsource noncore functions. Our staff
positions will be filled as business demands require, and the positions may be
altered in response to business needs.
20
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AS OF SEPTEMBER
1, 2009
(a) Beneficial owners of five percent (5%) or greater, of our Common Stock.
(No Preferred Stock is outstanding at the date of this Offering.)
There are currently 100,000,000 common Shares authorized of which 3,878,000 were
outstanding, at September 1, 2009.
The following sets forth information with respect to ownership by holders of
more than five percent (5%) of our Common Stock currently known by us and if all
Options exercisable within 60 days pursuant to Rule 13d-3(d)(1) are exercised:
TITLE OF CLASS NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF CLASS(1)
BENEFICIAL OWNER BENEFICIAL OWNER
------------------------------- ---------------------------- ---------------------------- ----------------------------
John Harris
CEO, President & Director
Common shares PO Box 1547
Lyons, CO 80540 680,000 10.35%
Neil Cox
CFO & Director
Common shares 5380 Highlands Drive 680,000 10.35%
Longmont, CO 80503
-------------------------------
(1) Based upon 3,878,000 shares of common stock issued and outstanding on
September 1, 2009, options exercisable for 1,689,999 shares of common
stock and $100,000 in convertible promissory notes convertible into
1,000,000 shares of our common stock, there would be 6,567,999 shares
of our common stock issued and outstanding, on a fully diluted basis.
(b) The following sets forth information with respect to our Common Stock
beneficially owned by each Officer and Director, and by all Directors and
Officers as a group as of September 1, 2009 and assuming exercise of all Options
and Warrants.
TITLE OF CLASS NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF CLASS(1)
BENEFICIAL OWNER BENEFICIAL OWNER
------------------------------- ---------------------------- ---------------------------- ----------------------------
John Harris
CEO, President & Director
Common shares PO Box 1547
Lyons, CO 80540 680,000 10.35%
Neil Cox
CFO & Director
Common shares 5380 Highlands Drive 680,000 10.35%
Longmont, CO 80503
William H. Reilly(2)
COO/CTO & Director
Common shares 4859 Dakota Blvd 275,000 4.19%
Boulder, CO 80304
---------------------------- ----------------------------
All Directors and Executive 1,635,000 24.89%
Officers as a Group (3
persons)
-------------------------------
(1) Based upon 3,878,000 shares of common stock issued and outstanding on
September 1, 2009, options exercisable for 1,689,999 shares of common
stock and $100,000 convertible promissory notes convertible into
1,000,000 shares of our common stock, there would be 6,567,999 shares
of our common stock issued and outstanding, on a fully diluted basis.
(2) Consists of 25,000 shares of common stock and an option exercisable
for 250,000 shares of common stock.
21
DESCRIPTION OF SECURITIES
The Securities being registered and/or offered by this Prospectus are Shares,
Warrants and Options.
COMMON STOCK
We are presently authorized to issue one hundred million (100,000,000) Shares of
our Common Stock. A total of three million, eight hundred seventy-eight thousand
(3,878,000) common Shares are issued and outstanding at September 1, 2009.
COMMON SHARES
All Shares are equal to each other with respect to voting, liquidation, and
dividend rights. Special Shareholders' meetings may be called by the officers or
director, or upon the request of holders of at least one-tenth (1/10th) of the
outstanding Shares. Holders of Shares are entitled to one vote at any
Shareholders' meeting for each Share they own as of the record date fixed by the
board of directors. There is no quorum requirement for Shareholders' meetings.
Therefore, a vote of the majority of the Shares represented at a meeting will
govern even if this is substantially less than a majority of the Shares
outstanding. Holders of Shares are entitled to receive such dividends as may be
declared by the board of directors out of funds legally available therefore, and
upon liquidation are entitled to participate pro rata in a distribution of
assets available for such a distribution to Shareholders. There are no
conversion, pre-emptive or other subscription rights or privileges with respect
to any Shares. Reference is made to our Articles of Incorporation and our
By-Laws as well as to the applicable statutes of the State of Colorado for a
more complete description of the rights and liabilities of holders of Shares. It
should be noted that the board of directors without notice to the Shareholders
may amend the By-Laws. Our Shares do not have cumulative voting rights, which
means that the holders of more than fifty percent (50%) of the Shares voting for
election of directors may elect all the directors if they choose to do so. In
such event, the holders of the remaining Shares aggregating less than fifty
percent (50%) of the Shares voting for election of directors may not be able to
elect any director.
WARRANTS
CONSULTANT, PLACEMENT AGENT, AND EMPLOYEE WARRANTS
The Warrants offered by this Prospectus are issued pursuant to a Warrant
Agreement between us and Corporate Stock Transfer, Inc. (the "Warrant Agent").
We have authorized and reserved for issuance the underlying Shares of Common
Stock issuable upon exercise of the Warrants.
We have 600,000 outstanding common stock purchase Warrants exercisable at $0.55
per Share expiring August 31, 2012, 60,000 Warrants exercisable at $0.60 per
Share expiring August 31, 2012, and 150,000 Employee Options exercisable at
$0.55/per Share.
PREFERRED STOCK
PREFERRED SHARES
In July 2008, we amended our Articles of Incorporation to authorize the issuance
of up to 1,000,000 shares of preferred stock. The shares can be issued with such
designations and terms as to be determined by our Board of Directors. No shares
have been issued at this time.
TRANSFER AND WARRANT AGENT
The transfer agent and the Warrant agent for our securities is Corporate Stock
Transfer, Inc., 3200 Cherry Creek Drive South, Suite 430, Denver, Colorado
80209.
INTEREST OF NAMED EXPERTS AND COUNSEL
We have not hired or retained any experts or counsel on a contingent basis, who
would receive a direct or indirect interest in us, or who is, or was, our
promoter, underwriter, voting trustee, director, officer or employee.
22
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES LIABILITIES
The Colorado Business Corporation Act requires us to indemnify officers and
directors for any expenses incurred by any officer or director in connection
with any actions or proceedings, whether civil, criminal, administrative, or
investigative, brought against such officer or director because of his or her
status as an officer or director, to the extent that the director or officer has
been successful on the merits or otherwise in defense of the action or
proceeding. The Colorado Business Corporation Act permits a corporation to
indemnify an officer or director, even in the absence of an agreement to do so,
for expenses incurred in connection with any action or proceeding if such
officer or director acted in good faith and in a manner in which he or she
reasonably believed to be in or not opposed to the best interests of us and such
indemnification is authorized by the stockholders, by a quorum of disinterested
directors, by independent legal counsel in a written opinion authorized by a
majority vote of a quorum of directors consisting of disinterested directors, or
by independent legal counsel in a written opinion if a quorum of disinterested
directors cannot be obtained.
The Colorado Business Corporation Act prohibits indemnification of a director or
officer if a final adjudication establishes that the officer's or director's
acts or omissions involved intentional misconduct, fraud, or a knowing violation
of the law and were material to the cause of action. Despite the foregoing
limitations on indemnification, the Colorado Business Corporation Act may permit
an officer or director to apply to the court for approval of indemnification
even if the officer or director is adjudged to have committed intentional
misconduct, fraud, or a knowing violation of the law.
The Colorado Business Corporation Act also provides that indemnification of
directors is not permitted for the unlawful payment of distributions, except for
those directors registering their dissent to the payment of the distribution.
According to our bylaws, we are authorized to indemnify our directors to the
fullest extent authorized under Colorado Law subject to certain specified
limitations.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and persons controlling
us pursuant to the foregoing provisions or otherwise, we are advised that, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
ORGANIZATION WITHIN LAST FIVE YEARS
We were incorporated on April 29, 2005 and have had only limited operations to
date relating to structure and capital formation. Also see "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS" at page 31.
DESCRIPTION OF BUSINESS
CONCEPT AND FORMATION
In early 2005, our founders Neil A. Cox and John Harris explored a business
opportunity: customized playing cards. They believed that by working with
state-of-the-art printers that fully utilize digital technologies, that they
could reduce cycle times for full-color customized printing from a standard
three to five weeks to just three to five days. In addition, they believed that
digital presses could allow product runs in small quantities and at lower
prices.
In view of the continued growth surrounding poker, we were formed by Mr. Cox and
Mr. Harris as Stack the Deck, Inc. a Colorado corporation in 2005, and we
changed the name to Tombstone Cards, Inc. With the initial team in place and
capital secured, we are now preparing to finalize production processes, develop
Internet presence, secure necessary design elements, and arrange for the launch
for business.
On July 31, 2008, Tombstone Cards, Inc. amended its Articles of Incorporation
for the change of its corporate name to Tombstone Technologies, Inc. ("We,"
"Us," "Our") as approved at our Annual Shareholders' Meeting on July 24, 2008.
We are located at 5380 Highlands Dr., Longmont, Colorado 80503. We maintain a
website at www.tombstonetechnologies.com, which is not incorporated in and is
not a part of this report.
CHANGE OF OPERATIONAL FOCUS
We have had limited operations over the last two years. Those operations have
focused on the structure and capital formation of our Company, as our operations
have focused on the manufacturing and marketing of customized playing cards.
23
During the year ended December 31, 2007, we, as part of our manufacturing and
printing of customized playing cards, created a technology division in order to
handle the development, marketing and licensing of its proprietary OIEPrint(TM)
software, a Web-2-Print (W2P) template driven application. Web-2-Print is the
overall process of integrating technology, from ordering and pre-press to
post-press and delivery, in order to reduce time and costs.
While developing customization playing cards operations, we discovered that the
software tools needed to support its operations did not exist at that time.
We discovered difficulties which are inherent in constructing a tool that
requires no downloading, can function on Macs, PCs and even Linux based machines
and that can provide high-resolution graphics that are suitable for printing.
For example, while graphics on the Web can appear clear, they are only 72 dpi
(dots per inch) and, therefore, would appear fuzzy when printed. Print graphics
must be 300 dpi for full clarity.
The combination of the Web and the still-unrealized changes that are being
brought by the explosion of professional digital printing is part of what the
print industry calls "Web-2-Print" (W2P). Because digital printing does not
require specialized inks, color separations and individual printing plates,
standard PDF files can move from the desktop to the print head without
intervention. This means that the digital print industry is no longer restricted
by the size of the job. For example, while it may not be profitable (or even
possible) to create small runs on a traditional press, digital printing not only
permits it, it encourages it.
In addition, end-users are now accustomed to being able to handle many of their
business and personal tasks online: from browsing and ordering to getting
customizable quotes, managing their accounts and making payments. However,
because of the complexity of creating print orders online due to the number of
unique options involved, along with the expense involved in creating and/or
maintaining a Web-based system, the print industry has been, for the most part,
unable to fully enter this world.
During the second and third quarters of 2008, our management made the decision
to focus a majority of our efforts and resources on the development and
marketing of the OIEPrint(TM) software. While we will continue to offer
customized playing cards, we have determined that this will be a smaller part of
our operations.
In connection with the development of the OIEPrint(TM) software, on December 27,
2007, we filed a provisional patent application with the United States Patent
and Trademark Office (USPTO) titled Internet Application for the Design of High
Resolution Digital Graphics.
OIEPRINT(TM) 3.0 SOFTWARE
OIEPrint software is a W2P template driven application that allows the users to
personalize and customize designs. The software will be available to be licensed
through either purchase or as a hosted solution. A full purchase allows the
customer to license the software, while the hosted solution allows the user to
use the software through our website at www.tombstonetechnologies.com.
We offer our OIEPrint software product through the Internet. The software has
been developed to be used with several platforms. We intend for the product to
help meet the needs of printers, specialty product producers and others to
satisfy the growing customer demand for personalization of products.
We will offer the following products:
o OIEPrint - A platform independent, browser-based RIA that supports
template driven design and provides high-resolution PDF files to the
printer.
o OIEPrint Store - An advanced e-commerce solution that supports
multiple customization options (e.g. paper color, paper weight, paper
finish, collating, binding, shipping, etc.) and dependent variables
(e.g. If you choose "A," you cannot choose "B" but can choose "C")
o OIEPrint VDP (2010) - An easy-to-use tool for linking database mining
with custom printing and 1:1 marketing.
We are offering a fully hosted solution for a monthly fee. We believe, and
research underscores this belief, that printers do not have the in-house
staffing to support the complexity inherent in a Web-based system. Added to that
the database requirements (all products have database back-ends for data
storage) and the ongoing maintenance, and it becomes clear that a hosted
solution, properly priced, becomes quite attractive. Customization and
implementation fees are also anticipated.
Our technology has been successfully employed since July 2007 on the prior
Tombstone Cards' website, allowing customers to design and order full color
custom playing cards.
24
During this "proof of concept" period, we worked with the actual printing
processes involved in digital printing, as well as verifying order and inventory
systems, the OIEPrint Web design tool, the ecommerce system, independent credit
verification systems and direct links to shipping providers.
COMPETITION
Our competition includes:
o Electronics For Imaging, Inc. (EFI)
o Firesprint
o Print Science; and
o Print Via.
All four of these companies offer services for printing similar to the ones
offered by us. We are the only one to offer an integrated design system and
therefore allow the customer to design the document through our software.
SALES STRATEGY
Our products will be available through us, via an outbound sales staff that
utilizes Web-based demos and Web-video in order to engage customers.
We are considering setting up independent, commission only sales affiliates,
based on a regional distribution. Because the OIEPrint Suite has been developed
to handle languages from around the world, overseas partnerships are also a
possibility.
We have identified three key market segments for our initial product line:
o Regional chains of print shops that want to offer cutting-edge,
Web-based solutions to their franchises.
o Small and medium sized digital printers who want to offer Web-based
solutions to their clients.
o Medium and large printers who want to offer customized features to
their corporate clients, allowing them to more easily manage their
accounts and purchasing via a Web interface.
PRODUCTION AND DELIVERY
Production will be provided through in-house capabilities. We own our own
servers and can easily "clone" the software package for new clients.
We anticipate hiring and training recent college graduates for the job of
working with clients during the consultation stage, gathering information about
the clients and our product offerings in order to populate the client's
e-commerce store.
At this time, we expect that we will hold no inventory.
PLAN OF OPERATION
At June 30, 2009, we had cash on hand of $8,589. We intend to use our cash funds
to continue operations. We intend to continue to develop the business
opportunities presented by our OIEPrint(TM) software and our business in the
printing of custom playing cards. The development of the business opportunities
includes continued marketing efforts and product testing over the next twelve
months.
In July of 2007, our web site went live with our proprietary design tool and the
e-commerce functionality needed to support sales over the Internet. We
instituted a "soft rollout" in order to test the functionality and performance
of the system. Based on results and feedback, we have made modifications the
site and our processes. We also have taken the results from our sales analysis,
combined with our PR and media research and determine placement of our first
spot buys in poker magazines.
In December of 2007, we created our Tombstone Technologies Division (the
Technology Division). The Technology Division was created in order to handle the
development, marketing and licensing of our proprietary OIEPrint(TM) software, a
web to print template driven application. On December 27, 2007, we filed a
provisional patent application with the United States Patent and Trademark
Office (USPTO) titled Internet Application for the Design of High Resolution
Digital Graphics.
25
During the year ended December 31, 2008, we focused our attention on the
continued development of our OIEPrint software and conducted the beta testing of
such software. With the completion of the testing of the software, we began to
offer our software for sale starting in October 2008. We offer two products:
o OIEPrint - is a platform, independent browser-based R (RIA) that
supports template driven design and provides high-resolution PDF files
to the printer; and
o OIEPrint Store - An advanced e-commerce solution that supports
multiple customization options (e.g. paper color, paper weight, paper
finish, collating, binding, shipping, etc.) and dependent variables
(e.g. If you choose "A," you cannot choose "B" but can choose "C").
Over the next twelve months we intend to develop a third software product,
OIEPrint VDP, a tool for linking database mining with custom printing and 1:1
marketing and release it for sales.
While each product will be available as a stand-alone license, we are offering a
fully hosted solution for a monthly fee. Customization and implementation fees
are also anticipated. We will offer the products through our Company, via an
outbound sales staff that utilizes Web-based demos and Web-video in order to
engage customers.
During the third quarter of the year ended December 31, 2008, our Board of
Directors resolved to abandon the manufacture and marketing of customized
playing cards and to concentrate on the development, marketing and licensing of
software for the local printers industry. As a result, we have impaired the
value of the of our playing card property to zero and have accounted for such
properties and operations as discontinued operations.
In the continuance of our business operations we do not intend to purchase or
sell any significant assets and we do not expect a significant change in the
number of our employees.
We are dependent on raising additional equity and/or, debt to fund any
negotiated settlements with our outstanding creditors and meet our ongoing
operating expenses. There is no assurance that we will be able to raise the
necessary equity and/or debt that we will need to be able to negotiate
acceptable settlements with our outstanding creditors or fund our ongoing
operating expenses. We cannot make any assurances that we will be able to raise
funds through such activities.
In addition, the United States and the global business community is experiencing
severe instability in the commercial and investment banking systems which is
likely to continue to have far-reaching effects on the economic activity in the
country for an indeterminable period. The long-term impact on the United States
economy and our operating activities and ability to raise capital cannot be
predicted at this time, but may be substantial.
The following table presents the projected Budget for the next twelve months. We
anticipate using any funds raised by the exercise of Warrants for which Shares
are registered in this registration statement to pay listed categories as shown
in Tables V and VI, without any priority to category. Management will have
complete discretionary control over the actual utilization of said funds and
there can be no assurance as to the manner or time in which said funds will be
utilized.
Computer systems, including software and servers required for back-office
operations are already purchased and in place and are being hosted in a secure
data center in Lafayette, Colorado. While our Internet servers will remain
there, the third server will be placed in our office and support the network and
computer infrastructure including VPN (Virtual Private Network) links to the
data center and our ecommerce software. Our monthly costs for hosting and IT
support is currently running less than $1000 per month.
We will continue to make adjustments to the advertising buys and ad placements
based on continuing analysis.
The following table presents the projected Budget for the period of September
2009 through August 2010, of which we have approximately $34,000 on hand at
September 1, 2009, and budget for expanded operations funded through our
offering of Shares underlying Warrants. Management will have complete
discretionary control over the actual utilization of said funds and there can be
no assurance as to the manner or time in which said funds will be utilized.
26
LIMITED OPERATIONS BUDGET
(ASSUMING NO OTHER CAPITAL IS RAISED)
From Cash On Hand
Salaries $170,000
Equipment $ 8,500
Marketing $ 25,000
General and Administrative $ 25,000
Working Capital $195,000
Website Development $ 25,000
--------------------------------
TOTAL $448,500
================================
We reserve the right to reallocate the funds according to changing events. We
believe the cash on hand is insufficient to fund our initial limited capital
requirements on a limited budget for a period of twelve months. There can be no
assurance we will not require additional funds. The availability and terms of
any future financing will depend on market and other conditions. The amount of
proceeds and uses are based upon the projections by our Management, which may
also change according to unforeseen future events and market changes.
The Company currently has no plans to raise additional capital other than
through Warrant or Option exercises. Based upon the launching of our web site
and marketing efforts in July 2007, it is anticipated that revenues resulting in
positive cash flow will generate sufficient funds for current operations and
projected growth. If additional capital is required, the Company could create a
debt instrument, a private placement offering targeting accredited investors.
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2009 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2008
During the three months ended June 30, 2009, we did not recognize any sales from
its operational activities. During the three months ended June 30, 2008, we
recognized $12,366 in sales from its operational activities in customized
playing cards, which is recognized as a part of discontinued operations as a
result of the Company's discontinuance of its customized playing card activities
and a focus on the development of our OIE Print software.
During the three months ended June 30, 2009, we incurred $100,030 in selling and
general administrative expenses compared to $140,810 during the June 30, 2008.
The decrease of $40,780 was a result of the decrease in our activities in
connection with the customized playing cards combined as discussed above.
During the three months ended June 30, 2009, we recognized a net loss of
$120,519 compared to $145,999 for the three months ended June 30, 2008. The
decrease of $25,480 was a result of the decreases of $40,780 offset by an
increase of $19,583 in interest expenses and amortization expenses as a result
of the issuance of convertible promissory notes.
FOR THE SIX MONTHS ENDED JUNE 30, 2009 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2008
During the six months ended June 30, 2009, we did not recognize any sales from
our operational activities. During the six months ended June 30, 2008, we
recognized sales of $48,151 during the six months ended June 30, 2008 from the
sale of our customized playing cards, which is recognized as a part of
discontinued operations as a result of the Company's discontinuance of its
customized playing card activities and a focus on the development of our OIE
Print software.
During the six months ended June 30, 2009, we incurred general and
administrative expenses of $128,215 compared to $209,383 during the six months
ended June 30, 2008. The decrease of $81,168 is a result of a $67,050 decrease
in professional fees combined with smaller decreases in the general and
administrative expenses resulting from the discontinuance of the customized card
printing operations as of December 31, 2008
During the six months ended June 30, 2009, we recognized a net loss of $148,834
compared to a net loss of $261,272 during the six months ended June 30, 2008.
The decrease of $112,438 is a result of the $81,168 decrease in general and
administrative expenses and the $54,869 decrease in losses from discontinued
expenses offset by an increase of $19,583 in interest expenses as a result of
the issuance of convertible promissory notes.
27
LIQUIDITY
At June 30, 2009, we had total current assets of $9,509, consisting of cash on
hand of $8,589 and $920 in prepaid expenses. At June 30, 2009, we had total
current liabilities of $30,867, consisting of accounts payable of $6,074,
accrued liabilities of $2,754, convertible promissory notes of $60,000, discount
on convertible promissory note of ($40,417) and the current portion of lease
obligations of $2,456.
Net cash used in operating activities during the six months ended June 30, 2009
was $57,171, compared to net cash used in operating activities during the six
months ended June 30, 2008 of $203,391.
During the six months ended June 30, 2009, we used net cash of $5,000 in
investing activities to complete the purchase of our software. Net cash used in
investing activities during the six months ended June 30, 2008 was $3,486.
During the six months ended June 30, 2008, we used $3,086 in the purchase of
property and equipment.
During the six months ended June 30, 2009, we received $58,878 from our
financing activities. During the six months ended June 30, 2008, we used funds
of $1,472 in our financing activities.
During the six months ended June 30, 2009, we raised funds through a private
financing consisting of $60,000 in Convertible Notes that will mature after one
year. Payments of interest at the rate of 8.0% per annum will be accrued and
paid each quarter to each investor beginning June 30, 2009. We paid the
convertible promissory note holders on June 30, 2009, the sum of $1,041, which
included $15 of accrued interest for the quarter ended March 31, 2009, and
$1,026 of interest for the quarter ended June 30, 2009. The final principle
payment to the investors will be payable to the investor one year from their
investment date. The convertible promissory notes provide for the holder to
convert the promissory note into restricted shares of the Company's common stock
at a rate of $0.10 per share, at any time prior to the payment of the
convertible promissory note by the Company. These funds are to be used to
support operations of the Company.
During the six months ended June 30, 2009, the Board of Directors of the Company
issued to the officers and directors (2 individuals), in lieu of monies owed for
salaries at December 31, 2008 total $36,000, the issuance of a total of 360,000
restricted shares of our common stock (valued at $0.10 per share). These shares
have been accounted for as a contribution of capital and have been accounted for
in additional paid in capital.
During the six months ended June 30, 2009, we issued 116,170 shares of our
restricted stock to an employee in lieu of accrued salary from April 6, 2009
through June 30, 2009 of $11,617. These shares have been accounted for as a
contribution of capital and have been accounted for in additional paid in
capital.
During the three months ended March 31, 2008, we issued 140,000 shares of our
restricted common stock to Indis Baltic for the completion of their work on the
development of the OIE Print Software. The shares had a value of $37,870.
FOR THE YEAR ENDED DECEMBER 31, 2008 COMPARED TO THE YEAR ENDED DECEMBER 31,
2007
During the year ended December 31, 2008 and 2007, we did not recognize any
revenues from our continuing operations.
During the year ended December 31, 2008, we incurred general and administrative
expenses of $323,760 compared to $318,994 during the year ended December 31,
2007. The increase of $4,766 was due in part to our increased operational
activities compared to the prior period. During the year ended December 31,
2008, general and administrative expenses included $52,862 in stock compensation
expenses, $23,441 accounting and $144,037 payroll expense.
During the year ended December 31, 2008, we recognized a loss before
discontinued operations of $320,355 compared to $297,048 during the year ended
December 31, 2007. The increase of $23,307 is a result of decrease of $18,054 in
interest income combine with the $4,766 increase in general and administrative
expenses discussed above.
During the year ended December 31, 2008, we incurred a net loss of $380,089
compared to a net loss of $342,425 for the year ended December 31, 2007. The
decrease of $37,664 was due to the $18,054 decrease in operational losses from
continuing operations combined with the $12,758 in losses from the abandonment
of the playing card component.
During the year ended December 31, 2008, we recognized a net loss per share of
$0.12 compared to a net loss per share of $0.11 per share during the year ended
December 31, 2007.
28
LIQUIDITY AND CAPITAL RESOURCES FOR THE YEAR ENDED DECEMBER 31, 2008 AND THE
PERIOD FROM APRIL 29, 2005(INCEPTION) THROUGH DECEMBER 31, 2008
At December 31, 2008, we had cash and cash equivalents of $11,882 and total
current assets of $14,119 and current liabilities of $42,404. At December 31,
2008, current liabilities exceed current assets by $28,205.
Net cash used in operating activities during the year ended December 31, 2008
was $252,007, compared to net cash used in operating activities during the year
ended December 31, 2007 of $293,449. During the year ended December 31, 2008,
the net cash used represented a net loss of $380,089, was adjusted for certain
non-cash items consisting of stock based compensation of $52,862 and
depreciation expense of $10,237.
During the year ended December 31, 2007, the net cash used represented a net
loss of $342,425, adjusted certain non-cash items consisting of stock based
compensation of $48,205 and depreciation expense of $8,168.
During the year ended December 31, 2008, we used $47,080 in our investing
activities. Investing activities during the year ended December 31, 2008,
included $6,750 for property and equipment, $484 of patent application costs and
$39,846 in the purchase of software. During the year ended December 31, 2007, we
used cash of $27,453 in our investing activities to purchase equipment.
During the year ended December 31, 2008, we used $2,529 in our financing
activities consisting solely of payments on our capital lease. During the year
ended December 31, 2007, we neither received nor used in our financing
activities.
During the year ended December 31, 2008, we granted vested options exercisable
for 600,000 shares of our common stock in exchange for consulting services. We
recognized compensation expenses of $52,862 in connection with the grant.
GOING CONCERN
The independent registered public accounting firm's report on our financial
statements as of December 31, 2008 and 2007 includes a "going concern"
uncertainty paragraph that describes substantial doubt about our ability to
continue as a going concern.
We are dependent on raising additional equity and/or debt to fund any negotiated
settlements with our outstanding creditors and meet our ongoing operating
expenses. There is no assurance that we will be able to raise the necessary
equity and/or debt that we will need to be able to negotiate acceptable
settlements with our outstanding creditors or fund our ongoing operating
expenses. We cannot make any assurances that we will be able to raise funds
through such activities.
CRITICAL ACCOUNTING POLICIES
We have identified the policies below as critical to our business operations and
the understanding of our results from operations. The impact and any associated
risks related to these policies on our business operations is discussed
throughout Management's Discussion and Analysis of Financial Conditions and
Results of Operations where such policies affect our reported and expected
financial results. For a detailed discussion on the application of these and
other accounting policies, see Note 1 in the Notes to the Consolidated Financial
Statements beginning on page F-7 for the years ended December 31, 2008 and 2007.
Note that our preparation of this document requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of our financial
statements, and the reported amounts of expenses during the reporting periods.
There can be no assurance that actual results will not differ from those
estimates.
REVENUE RECOGNITION
We follow very specific and detailed guidelines in measuring revenue; however,
certain judgments may affect the application of our revenue policy. Revenue
results are difficult to predict, and any shortfall in revenue or delay in
recognizing revenue could cause our operating results to vary significantly from
quarter to quarter and could result in future operating losses.
We recognize revenue pursuant to Securities and Exchange Commission, Staff
Accounting Bulletin ("SAB") No. 101, Revenue Recognition in Financial
Statements, as amended by SAB No. 104 Revenue Recognition. Consistent with the
requirements of these SABs, revenue is recognized only when: a) persuasive
evidence of arrangement exists, b) delivery has occurred, c) the seller's price
to the buyer is fixed, and d) collection is reasonably assured.
29
STOCK-BASED COMPENSATION
In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 123R, which addresses
the accounting for share-based payment transactions. SFAS No. 123R eliminates
the ability to account for share-based compensation transactions using APB No.
25 and generally requires instead that such transactions be accounted and
recognized in the statement of operations based on their fair value. Application
of SFAS 123R requires the use of significant estimates, including expected
volatility, expected term, risk-free interest rate and forfeiture rate. SFAS
123R was effective for us beginning July, 2006.
IMPAIRMENT OF OTHER LONG-LIVED ASSETS
Long-lived assets that do not have indefinite lives, such as property and
equipment and acquired customer relationships, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. Determination of recoverability is based on
an estimate of undiscounted future cash flows resulting from the use of the
assets and their eventual disposition. Measurement of an impairment loss for
such long-lived assets is based on the fair value of the assets.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2007, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141 (R), BUSINESS COMBINATIONS ("SFAS 141 (R)"), which becomes effective for
fiscal periods beginning after December 15, 2008. SFAS No. 141 (R) requires all
business combinations completed after the effective date to be accounted for by
applying the acquisition method (previously referred to as the purchase method).
Companies applying this method will have to identify the acquirer, determine the
acquisition date and purchase price, and recognize at their acquisition date
fair values of the identifiable assets acquired, liabilities assumed, and any
non-controlling interests in the acquiree. In the case of a bargain purchase,
the acquirer is required to reevaluate the measurements of the recognized assets
and liabilities at the acquisition date and recognize a gain on that date if an
excess remains. We do not expect the adoption of this statement to have a
material impact on our financial statements.
In December 2007, the FASB issued SFAS No. 160, NONCONTROLLING INTERESTS IN
CONSOLIDATED FINANCIAL STATEMENTS AN AMENDMENT OF ARB 51 ("SFAS 160") which
becomes effective for fiscal periods beginning after December 15, 2008. This
statement amends ARB 51 to establish accounting and reporting standards for
non-controlling interests in a subsidiary and for the deconsolidation of a
subsidiary. The statement requires ownership interests in subsidiaries held by
parties other than the parent be clearly identified, labeled, and presented in
the consolidated statement of financial position within equity, but separate
from the parent's equity. The statement also requires consolidated net income to
be reported at amounts that include the amounts attributable to both the parent
and the non-controlling interest, with disclosure on the face of the
consolidated statement of income of the amounts of consolidated net income
attributable to the parent and to the non-controlling interest. In addition,
this statement establishes a single method of accounting for changes in a
parent's ownership interest in a subsidiary that do not result in
deconsolidation and requires that a parent recognize a gain or loss in net
income when a subsidiary is deconsolidated. We do not expect the adoption of
this statement to have a material impact on our financial statements.
In February 2007, the FASB issued SFAS No. 159, THE FAIR VALUE OPTION FOR
FINANCIAL ASSETS AND FINANCIAL LIABILITIES - INCLUDING AN AMENDMENT TO FASB
STATEMENT NO. 115. This statement permits companies to choose to measure many
financial instruments and other items at fair value. The objective is to improve
financial reporting by providing entities with the opportunity to mitigate
volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. This statement is expected to expand the use of fair value
measurement of accounting for financial instruments, and the fair value option
established by this statement permits all entities to measure eligible items at
fair value at specified election dates. This statement was effective for us on
January 1, 2008. We did not apply the fair value option to any of our
outstanding instruments and therefore SFAS No. 159 did not have an impact on our
financial statements.
In March 2008, the FASB issued SFAS No. 161 DISCLOSURES ABOUT DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No. 161 requires additional disclosure
related to derivatives instruments and hedging activities. The provisions of
SFAS No. 161 are effective for fiscal years and interim periods beginning after
November, 15, 2008, and we are currently evaluating the impact of adoption.
In April 2008, the FASB issued FASB Staff Position (FSP) FAS 142-3,
DETERMINATION OF THE USEFUL LIFE OF INTANGIBLE ASSETS. This FSP amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under FASB
Statement No. 142, "Goodwill and Other Intangible Assets." The intent of this
FSP is to improve the consistency between the useful life of a recognized
intangible asset under Statement 142 and the period of expected cash flows used
to measure the fair value of the asset under FASB Statement No. 141 (Revised
2007), "Business Combinations," and other U.S. generally accepted accounting
principles (GAAP). This FSP is effective for financial statements issued for
30
fiscal years beginning after December 15, 2008, and interim periods within those
fiscal years. Early adoption is prohibited. We do not expect the adoption of FSP
142-3 to have a material effect on our results of operations and financial
condition.
In May 2008, the FASB issued SFAS No. 162, THE HIERARCHY OF GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (SFAS 162). SFAS 162 identifies the sources of accounting
principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (the GAAP
hierarchy). SFAS 162 will become effective 60 days following the SEC's approval
of the Public Company Accounting Oversight Board amendments to AU Section 411,
"The Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles." We do not expect the adoption of SFAS 162 to have a material effect
on our results of operations and financial condition.
In May 2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1 ACCOUNTING
FOR CONVERTIBLE DEBT INSTRUMENTS THAT MAY BE SETTLED IN CASH UPON CONVERSION
(INCLUDING PARTIAL CASH SETTLEMENT) (FSP APB 14-1). FSP APB 14-1 requires the
issuer of certain convertible debt instruments that may be settled in cash (or
other assets) on conversion to separately account for the liability (debt) and
equity (conversion option) components of the instrument in a manner that
reflects the issuer's non-convertible debt borrowing rate. FSP APB 14-1 is
effective for fiscal years beginning after December 15, 2008 on a retroactive
basis and will be adopted by tus in the first quarter of fiscal 2009. We do not
expect the adoption of FSP APB 14-1 to have a material effect on our results of
operations and financial condition.
OFF BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements.
DESCRIPTION OF PROPERTY
We do not own any property, real or otherwise. For the first year, we conducted
administrative affairs from the office located in the home of our Chairman and
CFO, Neil A. Cox, at no cost to us. Our current office address is 5380 Highlands
Dr., Longmont, Colorado 80503. The space is provided by Mr. Cox at no cost to
the Company
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the stock transactions discussed below, we have not entered into any
transaction nor are there any proposed transactions in which any of our
founders, directors, executive officers, Shareholders or any members of the
immediate family of any of the foregoing had or is to have a direct or indirect
material interest.
During the six months ended June 30, 2009, the Board of Directors of the Company
issued 180,000 shares of our restricted common stock (valued at $0.10 per share)
to Mr. Harris, in lieu of monies owed for accrued of salary of $18,000 at
December 31, 2008.
During the six months ended June 30, 2009, the Board of Directors of the Company
issued 180,000 shares of our restricted common stock (valued at $0.10 per share)
to Mr.Cox, in lieu of monies owed for accrued of salary of $18,000 at December
31, 2008.
In 2006, we engaged as a consultant, Capital Merchant Banc under an Agreement
which provides for the vesting of 600,000 Warrants to purchase Shares at $0.55
per Share based upon performing consulting services for which it is paid $3,000
per month. When vested Capital Merchant Banc could acquire an amount of Shares
equal to 15.66% of the issued and outstanding Common Stock prior to exercise of
any Warrants. These Warrants were to expire on August 31, 2009, the Board of
Directors has extended the expiration date to August 31, 2012. The Warrants have
an Option to acquire a new two year Warrant at $0.55 for 600,000 if the stock
price has not closed at $0.50 for 30 days. Capital Merchant Banc Warrants are
vested upon completion of the consulting services for: 1. Product Public
Relations Program; 2. Sales Program design; 3. Corporate Awareness Program and
structure advice which we deem to be substantially complete. In March 2008,
Capital Merchant Banc assigned 300,000 warrants to unrelated third parties.
In July 2009, the Board of Directors of the Company issued 123,000 shares of our
restricted common stock (valued at $0.10) to Mr. Willis, our Chief Executive
Officer for his services valued at $12,300. On September 1, 2009, Mr. Willis
resigned as our Chief Executive Officer.
There are no promoters being used in relation to this offering. No person who
may, in the future, be considered a promoter of this offering, will receive or
expect to receive assets, services or other considerations from us. No assets
will be, nor expected to be, acquired from any promoter on behalf of us. We have
not entered into any agreements that require disclosure to the Shareholders.
31
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
Our Common Stock is presently traded on the over-the-counter market on the OTC
Bulletin Board maintained by the Financial Industry Regulatory Authority
("FINRA"). In October 2007, we began trading on the over the counter bulletin
board under the symbol "TMCI." During the period of October 2007 through
December 31, 2007, our shares did not trade.
During the period January 1, 2008 through December 31, 2008 our common stock had
limited trading. On December 31, 2008 our shares of common stock were traded at
a high of $.65 and a low of $.65.
While Units and the "A" Warrants and "B" Warrants were approved for trading on
the over the counter bulletin board, it appears there was never any trades and
the "A" and "B" Warrants have expired.
The offering of the Shares registered hereby could have a material negative
effect on the market price for the stock.
RULES GOVERNING LOW-PRICE STOCKS THAT MAY AFFECT OUR SHAREHOLDERS' ABILITY TO
RESELL SHARES OF OUR COMMON STOCK
Our stock currently is traded on the OTC Bulletin Board.
Quotations on the OTC/BB reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not reflect actual transactions. Our Common Stock
will be subject to certain rules adopted by the SEC that regulate broker-dealer
practices in connection with transactions in "penny stocks." Penny stocks
generally are securities with a price of less than $5.00, other than securities
registered on certain national exchanges or quoted on the Nasdaq system,
provided that the exchange or system provides current price and volume
information with respect to transaction in such securities. The additional sales
practice and disclosure requirements imposed upon broker-dealers are and may
discourage broker-dealers from effecting transactions in our Shares which could
severely limit the market liquidity of the Shares and impede the sale of Shares
in the secondary market.
The penny stock rules require broker-dealers, prior to a transaction in a penny
stock not otherwise exempt from the rules, to make a special suitability
determination for the purchaser to receive the purchaser's written consent to
the transaction prior to sale, to deliver standardized risk disclosure documents
prepared by the SEC that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer must also
provide the customer with current bid and offer quotations for the penny stock.
In addition, the penny stock regulations require the broker-dealer to deliver,
prior to any transaction involving a penny stock, a disclosure schedule prepared
by the SEC relating to the penny stock market, unless the broker-dealer or the
transaction is otherwise exempt. A broker-dealer is also required to disclose
commissions payable to the broker-dealer and the registered representative and
current quotations for the securities. Finally, a broker-dealer is required to
send monthly statements disclosing recent price information with respect to the
penny stock held in a customer's account and information with respect to the
limited market in penny stocks.
HOLDERS
As of the filing of this prospectus, we have 47 Shareholders of record of our
Common Stock. Sales under Rule 144 are also subject to manner of sale provisions
and notice requirements and to the availability of current public information
about us. Under Rule 144(k), a person who is not one of our affiliates at any
time during the three months preceding a sale, and who has beneficially owned
the Shares proposed to be sold for at least 6 months, is entitled to sell Shares
without complying with the manner of sale, public information, volume limitation
or notice provisions of Rule 144.
As of the date of this prospectus, persons who are our affiliates hold 1,025,000
Shares, which may be sold pursuant to this post-effective amended Registration
Statement
DIVIDENDS
As of the filing of this prospectus, we have not paid any dividends to
Shareholders. There are no restrictions which would limit our ability to pay
dividends on common equity or that are likely to do so in the future. The
Colorado Revised Statutes, however, do prohibit us from declaring dividends
where, after giving effect to the distribution of the dividend; we would not be
able to pay our debts as they become due in the usual course of business; or our
total assets would be less than the sum of the total liabilities plus the amount
that would be needed to satisfy the rights of Shareholders who have preferential
rights superior to those receiving the distribution.
32
EXECUTIVE AND DIRECTORS COMPENSATION
COMPENSATION
The following table sets forth certain information concerning compensation of
the President and the Company's three most highly compensated executive officers
for the years ended December 31, 2008, 2007 and 2006 (the "Named Executive
Officers"):
SUMMARY EXECUTIVES' COMPENSATION TABLE
NON-EQUITY NON-QUALIFIED
INCENTIVE DEFERRED
STOCK OPTION PLAN COMPEN- COMPENSATION ALL OTHER
NAME & POSITION SALARY BONUS AWARDS AWARDS SATION EARNINGS COMPENSATION TOTAL
YEAR ($) ($) ($) ($) ($) ($) ($) ($)
John N. Harris, 2008 36,000 0 0 0 0 0 0 36,000
President(1) 2007 36,000 0 0 0 0 0 0 36,000
2006 18,000 3,000 0 0 0 0 0 21,000
Neil A. Cox, 2008 36,000 0 0 0 0 0 0 36,000
Chief Financial 2007 36,000 0 0 0 0 0 0 36,000
Officer(1) 2006 18,000 3,000 0 0 0 0 0 21,000
William H. 2008 42,000 0 0 150 0 0 0 42,150
Reilly, 2007 42,000 0 0 0 0 0 0 42,000
COO/CTO(1) 2006 21,000 3,500 0 2,500 0 0 0 27,000
(2)
----------------
(1) Payroll was made for the months of July-December 2006, therefore the actual
salaries paid were: Neil Cox-$18,000, John Harris-$18,000 and William
Reilly-$21,000, and Messrs. Cox and Harris each received a $3,000 bonus, and Mr.
Reilly received a $3,500 bonus. The executives forgave any salary obligation for
January - June of 2006 in consideration of the bonus paid in August of 2006.
Messrs. Harris and Cox each forwent $15,000, and Mr. Reilly forwent $17,500.
During the year ended December 31, 2008, Messrs. Harris and Cox's both were paid
$18,000 of their $36,000 salaries. The remaining $18,000 was accrued at December
31, 2008.
The President, CFO and COO/CTO contributed their management services to our
business until June 30, 2006, and were not paid until August 2006. The President
and CFO were paid for July 2006 and August 2006 at the rate of $3,000 per month.
The COO/CTO was paid for July 2006 and August 2006 at the rate of $3,500 per
month. The President and CFO were paid a bonus also of $3,000 for deferring
salaries until August 2006 and the COO/CTO (William Reilly) was paid a bonus of
$3,500 for deferring salaries until August 2006.
(2) During the year ended December 31, 2008, Mr. Reilly was issued an option to
purchase 150,000 shares of our common stock. The option has an exercise price of
$0.65 per share. The option was valued using the Black-Scholes method. Mr.
Reilly was issued an option to purchase 100,000 shares of the Company's common
stock. The option has an exercise price of $0.55 per share and a term of 3 years
expiring in August 2009. The value of the option was determined using the
exercise price.
Up until June 30, 2006, our officers had served without salary and contributed
their services, and thereafter we have paid the President and CFO at a rate of
$3,000 per month on a month-to-month basis without contract. The COO/CTO is paid
at a rate of $3,500 per month on a month-to-month basis without contract.
33
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table sets forth certain information concerning outstanding equity
awards held by the President and the Company's three most highly compensated
executive officers for the fiscal year ended December 31, 2008 the "Named
Executive Officers"):
OPTION AWARDS STOCK AWARDS
------------------------------------------------------------------------------------------------------------------------------------
Equity
incentive
Equity plan
incentive Equity awards:
plan incentive Market or
awards: plan payout
Number of Number of Number of Number of Market awards: value of
securities securities securities shares or value of Number of unearned
underlying underlying underlying units of shares of unearned shares,
unexercised unexercised unexercised Option Option stock that units of shares, units or
options options (#) unearned exercise expiration have not stock that units or others
Name (#) unexercisable options price date vested have not other rights that
exercisable (#) ($) (#) vested rights have not
($) that have vested
not vested ($)
(#)
--------------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ------------ -----------
Neil A. Cox -0- -0- -0- $ -0- - -0- $ -0- -0- -0-
John N. Harris -0- -0- -0- $ -0- - -0- $ -0- -0- -0-
William H. 150,000 -0- -0- $ 0.65 8/2009 -0- $ -0- -0- -0-
Reilly 100,000 -0- -0- $ 0.55 8/2009 -0- $ -0- -0- -0-
DIRECTOR COMPENSATION
The following table sets forth certain information concerning compensation paid
to the Company's directors for services as directors, but not including
compensation for services as officers reported in the "Summary Executives'
Compensation Table" during the year ended December 31, 2008:
Non-qualified
Non-equity deferred
Fees earned or incentive compensation All other
paid in cash Stock awards Option awards plan earnings compensation Total
Name ($) ($) ($) compensation ($) ($) (1) ($)
($)
------------------ ---------------- ---------------- ---------------- --------------- ---------------- ---------------- ------------
Neil A. Cox $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
John N. Harris $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
William H. $ -0- $150 $ -0- $ -0- $ -0- $ -0- $150
Reilly (2)
-----------------
(1) Messrs. Cox, Harris and Reilly serve as our officers for which they
receive compensation, as set forth in the Executive Compensation
Table.
(2) Mr. Reilly was granted an option exercisable for 150,000 shares in
August 2008. The Option has an exercise price of $0.65 per share. The
Option was valued using the Black-Scholes Method at $0.001 per share
for $150.
All of our officers and/or directors will continue to be active in other
companies. All officers and directors have retained the right to conduct their
own independent business interests.
It is possible that situations may arise in the future where the personal
interests of the officers and directors may conflict with our interests. Such
conflicts could include determining what portion of their working time will be
spent on our business and what portion on other business interest. To the best
ability and in the best judgment of our officers and directors, any conflicts of
interest between us and the personal interests of our officers and directors
will be resolved in a fair manner which will protect our interests. Any
transactions between us and entities affiliated with our officers and directors
will be on terms which are fair and equitable to us. Our Board of Directors
intends to continually review all corporate opportunities to further attempt to
safeguard against conflicts of interest between their business interests and our
interests.
34
We have no intention of merging with or acquiring an affiliate, associated
person or business opportunity from any affiliate or any client of any such
person.
Directors receive no compensation for serving.
FINANCIAL STATEMENTS
The audited financial statements of Tombstone Technologies, Inc. (fka Tombstone
Cards, Inc.) for the year ended December 31, 2008 appear on pages F-1 through
F-10 and the unaudited financial statements for the period ended June 30, 2009
appear as pages F-11 through F-25.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES
Not applicable.
35
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
FINANCIAL STATEMENTS
PERIOD ENDED JUNE 30, 2009
(UNAUDITED)
F-1
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
(A Development Stage Company)
Condensed Balance Sheets
(Unaudited)
June 30, 2009 December 31, 2008
(unaudited) (Derived from
audited statements)
--------------------- ----------------------
Assets
Current assets
Cash and cash equivalents $ 8,589 $ 11,882
Accounts receivable -- 383
Prepaid expenses 920 1,854
--------------------- ----------------------
Total current assets 9,509 14,119
Property and equipment 32,803 32,803
Accumulated depreciation (22,617) (15,212)
Deferred charges 106,177 53,450
Intangible assets 484 484
--------------------- ----------------------
Total assets $ 126,355 $ 85,644
===================== ======================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 6,074 $ 953
Accrued payroll -- 36,000
Other current liabilities 2,754 2,754
Convertible promissory note 60,000 --
Discount on convertible promissory note (40,417) --
Current portion - capital lease obligation 2,456 2,697
--------------------- ----------------------
Total current liabilities 30,867 42,404
Capital lease obligation, less current portion 661 1,542
--------------------- ----------------------
Total liabilities $ 31,528 $ 43,946
--------------------- ----------------------
Shareholders' equity:
Preferred stock -- --
Common stock 939,886 816,305
Additional paid-in capital 213,275 134,892
Deficit accumulated during development stage (1,058,333) (909,499)
--------------------- ----------------------
Total shareholders' equity 94,828 41,698
--------------------- ----------------------
Total liabilities and shareholders' equity $ 126,355 $ 85,644
===================== ======================
See accompanying notes to unaudited condensed financial statements
F-2
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
For the Six Months Ended For the Three Months Ended January 1, 2009
June 30, June 30, (inception) to
-------------------------- ------------------------------
2009 2008 2009 2008 June 30, 2009
------------ ----------- --------------- ------------ ----------------
Continuing operations:
Selling, general and administrative expenses $ 128,215 $ 209,383 $ 100,030 $ 140,810 $ 128,215
------------ ------------- ------------ ------------ -------------
Loss from continuing operations (128,215) (209,383) (100,030) (140,810) (128,215)
Other income and (expense):
Interest income 5 3,332 -- 952 5
Interest expense
Interest expense-amortization of discount
on promissory notes (19,583) -- (19,583) -- (19,583)
Interest expense-other (1,041) (352) (906) (168) (1,041)
------------ ------------- ------------ ------------ -------------
(20,619) 2,980 (20,489) 784 (20,619)
Loss before income taxes and discontinued
operations (148,834) (206,403) (120,519) (140,026) (148,834)
Income tax provision -- -- -- -- --
------------ ------------- ------------ ------------ -------------
Loss before discontinued operations (148,834) (206,403) (120,519) (140,026) (148,834)
------------ ------------- ------------ ------------ -------------
Discontinued operations:
Loss from operations of playing card
component, net of taxes -- (54,869) -- (5,973) --
------------ ------------- ------------ ------------ -------------
Net loss $ (148,834) $ (261,272) $ (120,519) $ (145,999) $ (148,834)
============ ============= ============ ============ =============
Basic and diluted loss per share $ (0.04) $ (0.08) $ (0.03) $ (0.05) $ (0.04)
============ ============= ============ ============ =============
Basic and diluted weighted average
common shares outstanding 3,319,341 3,230,000 3,449,362 3,230,000 3,319,341
============ ============= ============ ============ =============
See accompanying notes to unaudited condensed financial statements
F-3
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
For the Six Months Ended January 1, 2009
June 30, (inception) to
-----------------------------------
2009 2008 June 30, 2009
---------------- ---------------- ----------------
Cash flows from operating activities:
Net cash flows used in operating activities $ (57,171) $ (203,391) $ (57,171)
---------------- ---------------- ----------------
Cash flows from investing activities:
Purchase of property and equipment -- (3,086) --
Purchase of intangible asset (5,000) (400) (5,000)
---------------- ---------------- ----------------
Net cash flows used in investing activities (5,000) (3,486) (5,000)
---------------- ---------------- ----------------
Cash flows from financing activities:
Proceeds from convertible promissory notes 60,000 -- 60,000
Cash payments on capital lease (1,122) (1,472) (1,122)
---------------- ---------------- ----------------
Net cash flows from financing activities 58,878 (1,472) 58,878
---------------- ---------------- ----------------
Net change in cash and cash equivalents (3,293) (208,349) (3,293)
---------------- ---------------- ----------------
Cash and Cash Equivalents:
Beginning of period 11,882 313,498 11,882
---------------- ---------------- ----------------
End of period $ 8,589 $ 105,149 $ 8,589
================ ================ ================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes $ -- $ -- $ --
================ ================ ================
Interest $ 1,041 $ 352 $ 1,041
================ ================ ================
Noncash investing and financing transactions:
Common stock issued for deferred software development $ 37,870 $ -- $ 37,870
================ ================ ================
See accompanying notes to un audited condensed financial statements
F-4
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
(A Developoment Stage Company)
Condensed Statement of Changes in Shareholders' Equity
(Unaudited)
Additional
Common Stock Paid-in Accumulated
--------------------------------
Shares Amount Capital Deficit Total
-------------- -------------- ------------- -------------- ---------------
Balance at January 1, 2009 3,230,000 $ 816,305 $ 134,892 $ (909,499) $ 41,698
March 2009, shares issued for
software development 140,000 37,870 -- -- 37,870
June 2009, shares issued for
services by officers 476,170 85,711 -- -- 85,711
Stock options issued and extended -- -- 18,383 -- 18,383
Discount on convertible promissory
notes -- -- 60,000 -- 60,000
Net loss -- -- -- (148,834) (148,834)
-------------- -------------- ------------- -------------- ---------------
Balance at June 30, 2009 3,846,170 $ 939,886 $ 213,275 $ (1,058,333) $ 94,828
============== ============== ============= ============== ===============
See accompanying notes to unaudited condensed financial statements
F-5
TOMBSTONE TECHNOLOGIES, INC.
Notes to the Condensed Financial Statements
June 30, 2009
(Unaudited)
Note 1: Basis of Presentation
-----------------------------
The accompanying unaudited condensed financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
and Regulation S-K. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of the
Company, the accompanying unaudited condensed financial statements contain all
adjustments (consisting of only normal recurring accruals) necessary to present
fairly the financial position as of June 30, 2009, the results of operations for
the six months and three months ended June 30, 2009 and 2008, and cash flows for
the six months ended June 30, 2009. These financial statements should be read in
conjunction with the audited financial statements and notes thereto contained in
the Company's annual report on Form 10-K for the year ended December 31, 2008.
There have been no updates or changes to our audited financial statements for
the year ended December 31, 2008.
The Company had returned to a development stage company due to the change of
business plan and strategies in January, 2009.
There is no provision for dividends for the quarter to which this quarterly
report relates.
The results of operations for the six months ended June 30, 2009 are not
necessarily indicative of the results to be expected for the full year.
Going Concern
The Company's financial statements for the six months ended June 30, 2009, have
been prepared on a going concern basis, which contemplates the realization of
assets and the settlement of liabilities and commitments in the normal course of
business. The Company reported an accumulated deficit of $1,058,333 as of June
30, 2009. The Company did not recognize revenues from its activities during the
six months ended June 30, 2009. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
Note 2: Related Parties
-----------------------
On June 30, the Company issued to two officers a total of 360,000 shares of
common stock in lieu of $36,000 accrued salaries ($0.10 per share).
On June 30, the Company issued to one officer a total of 116,170 shares of
common stock in lieu of $11,617 salaries ($0.10 per share).
F-6
TOMBSTONE TECHNOLOGIES, INC.
Notes to the Condensed Financial Statements
June 30, 2009
(Unaudited)
Note 3: Intangible Assets
-------------------------
On May 15, 2008, Tombstone Technologies, Inc. (Tombstone) entered into an
Intellectual Property Transfer Agreement with InDis Baltic, a Lithuania company,
to purchase all of the rights, title and interest in and to the technology,
intellectual property and the proprietary technology contained in the computer
software known as OIEPrint. OIEPrint was developed as part of a development
agreement between Tombstone and InDis Baltic. As part of the Intellectual
Property Transfer Agreement, Tombstone agreed to pay the following:
1. $7,500 immediately upon mutual acceptance of Transfer Agreement,
2. $7,500 upon final acceptance of the Technology,
3. 140,000 shares of restricted common stock of Tombstone upon final
acceptance of the Technology, and
4. $10,000 in 90 days from the final acceptance of the Technology.
On March 3, 2009, Tombstone issued 140,000 shares of restricted common stock of
Tombstone to InDis Baltic as indicated in the above agreement and recorded it as
a deferred charge. On June 30, 2009, Tombstone recorded half of the final
payment $5,000 for OIEPrint, which is a deferred charge in the accompanying
financial statements. In addition, Tombstone agreed to issue 25,000 shares of
common stocks to InDis Baltic as the other half of the final payment in an
agreement signed on July 6, 2009. (See Note 7)
Note 4: Convertible Promissory Notes
------------------------------------
During the six months ended June 30, 2009, Tombstone issued Convertible
Promissory Notes payable to unrelated third parties totaling $60,000 with
interest accruing at 8% per annum (paid quarterly) maturing twelve months from
date of issuance. The notes are immediately convertible to restricted shares of
common stock at $0.10 per share.
A beneficial conversion feature (difference between conversion price and the
quoted stock price on the date of commitment) embedded in the convertible
promissory notes was measured and recorded as $40,417 discount on convertible
promissory notes and $19,583 interest expense in the accompanying financial
statements for the six-month period ended June 30, 2009.
The following is a summary of convertible promissory notes at June 30, 2009 and
December 31, 2008:
June 30, 2009 December 31, 2008
------------------- ----------------------
Notes issued in March 2009 $ 7,500 $ -
Notes issued in April 2009 25,000 -
Notes issued in May 2009 27,500 -
------------------------------------------
Total convertible promissory notes $ 60,000 $ -
=================== ======================
F-7
TOMBSTONE TECHNOLOGIES, INC.
Notes to the Condensed Financial Statements
June 30, 2009
(Unaudited)
Note 5: Shareholders' Equity
----------------------------
Shares of Common Stock for Software Development
-----------------------------------------------
In March, 2009, we issued 140,000 shares of common stock for software
development.
Stock Options
-------------
Pursuant to our Employee/Consultant Stock Option Plan, stock options generally
are granted with an exercise price equal to the market price of our common stock
at the date of grant. Substantially all of the options granted to employees and
consultants are exercisable pursuant to an immediate vesting schedule with a
maximum contractual term of 5 years. The fair value of these options is
estimated using the Black-Scholes option pricing model which incorporates the
assumptions noted in the table below. The risk-free interest rate for periods
within the expected life of the option is based on the U.S. Treasury bond rate
in effect at the time of grant. We do not pay dividends and do not expect to do
so in the future. Expected volatilities are based on the historical volatilities
of appropriate industry sector index. The expected term of the options granted
during 2009 is approximately 3 years calculated using the simplified method
allowed under Staff Accounting Bulletin No. 107 Share-Based Payment, or SAB No.
107.
We use historical volatility of appropriate industry sector index as we believe
it is more reflective of market conditions and a better indicator of volatility.
We use the simplified calculation of expected life described in the SAB No. 107.
If we determined that another method used to estimate expected volatility was
more reasonable than our current methods, or if another method for calculating
these input assumptions was prescribed by authoritative guidance, the fair value
calculated for share-based awards could change significantly. Higher volatility
and longer expected lives result in an increase to share-based compensation
determined at the date of grant.
A summary of changes in the number of stock options outstanding for the six
months ended June 30, 2009 is as follows:
Weighted Weighted
Average Average
Exercise Remaining Aggregate
Number of Exercise Price Price Per Contractual Intrinsic
Shares Per Share Share Life Value
Outstanding at December 31, 2008 5,020,000 $0.65 - $1.50 $0.95 1.83 years --
Granted 129,999 $0.10 - $0.20 -- 1.72 years $8,000
Exercised -- -- -- -- --
Cancelled/Expired --- --- --- --- --
--------------- ----------------- ------------- --------------- -------------
Outstanding at June 30, 2009 5,149,999 $0.20 - $1.50 $0.65 2.04 years $6,000
=============== ================= ============= =============== =============
F-8
TOMBSTONE TECHNOLOGIES, INC.
Notes to the Condensed Financial Statements
June 30, 2009
(Unaudited)
New Stock Options Granted
-------------------------
During the second quarter of 2009, we granted to two consultants and one
officer, options to purchase 129,999 shares of our common stock at an exercise
price of $0.10 to $0.20 per share, in exchange for services. The option to
purchase 129,999 shares of our common stock vested immediately on grant date in
April 2009 and expires in August 2012. Our Board of Directors valued our common
stock at $0.20 and $0.26 per share on the grant date. We, utilizing appropriate
option pricing software, estimated the fair value of the options at $0.05 to
$0.26 per share for an aggregate grant-date fair value of $8,009. We recorded
$8,009 in stock-based compensation in the accompanying financial statements for
the six-month period ended June 30, 2009.
The fair values of grants made in the six months ended June 30, 2009 were
computed using the following assumptions for our stock option plans:
Risk-free interest rate 0.16% to 0.41%
Dividend yield 0.00%
Volatility factor 25.00%
Weighted average expected life 0.04 to 0.08 years
Amendment to Stock Option Plan
------------------------------
On May 27, 2009, our Board of Directors approved an amendment to the Company's
Employee/Consultant Stock Option Plan to increase the number of shares
authorized from 1,000,000 to 1,500,000.
Modification to Existing Options
--------------------------------
The Board also modified 1,029,999 outstanding stock options under the Company's
Employee/Consultant Stock Option Plan by extending their terms until August 31,
2012. Based on the grant-date fair value estimated in accordance with the
provisions of SFAS No. 123(R), the fair value of the modification totaled
$10,374, which is being recognized as stock-based compensation expense in the
accompanying financial statements for the six-month period ended June 30, 2009.
The fair values of modifications made in the six months ended June 30, 2009 were
computed using the following assumptions for our stock option plans:
Risk-free interest rate 1.50%
Dividend yield 0.00%
Volatility factor 25.00%
Weighted average expected life 2.29 years
Note 6: Income Taxes
--------------------
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109 (SFAS No. 109), "Accounting for Income Taxes." The
Company incurred net operating losses during the periods shown on the condensed
financial statements resulting in a deferred tax asset, which was reserved;
therefore the net benefit and expense resulted in $-0- income taxes.
F-9
TOMBSTONE TECHNOLOGIES, INC.
Notes to the Condensed Financial Statements
June 30, 2009
(Unaudited)
Note 7: Subsequent Events
-------------------------
Convertible Promissory Notes
----------------------------
In July 2009, the Company issued Convertible Promissory Notes payable to
unrelated third parties totaling $40,000 with interest accruing at 8% per annum
(paid quarterly) due for repayment twelve months from date of issuance. The
notes are immediately convertible to restricted shares of common stock at $0.10
per share.
Intangible Assets
-----------------
On July 6, 2009, the Company recorded 25,000 shares of restricted stock issued
to Indis Baltic along with a final payment of $5,000 to complete the
Intellectual Property Transfer Agreement dated May 15, 2008. (See Note 3)
F-10
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2008 AND 2007
F-11
Index to Financial Statements
Page
------
Independent Auditors' Report..............................................F-13
Balance Sheets at December 31, 2008 and 2007..............................F-14
Statements of Operations for the Years Ended December 31, 2008
and 2007..............................................................F-15
Statement of Changes in Shareholders' Equity for the
period from January 1, 2007 through December 31, 2008.................F-16
Statements of Cash Flows for the Years Ended December 31, 2008
and 2007..............................................................F-17
Notes to Financial Statements.............................................F-18
F-12
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Tombstone Technologies, Inc.:
We have audited the accompanying balance sheet of Tombstone Technologies, Inc.
as of December 31, 2008 and 2007, and the related statements of operations,
changes in shareholders' equity, and cash flows for each of the years in the
two-year period ended December 31, 2008. 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 the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tombstone Technologies, Inc. as
of December 31, 2008 and 2007, and the results of its operations and its cash
flows for each of the years in the two-year period ended December 31, 2008, in
conformity with accounting principles generally accepted in the United States of
America.
As shown in the financial statements, the Company incurred a net loss of
$380,089 for 2008 and has incurred substantial net losses for each of the past
three years. At December 31, 2008, current liabilities exceed current assets by
$28,285. These factors, and the others discussed in Note 1, raise substantial
doubt about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded assets, or the amounts and classification of
liabilities that might be necessary in the event the company cannot continue in
existence
/s/ Cordovano and Honeck LLP
Cordovano and Honeck LLP
Englewood, Colorado
March 13, 2009
F-13
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Balance Sheets
December 31,
--------------------------------------
2008 2007
------------------ ------------------
Assets
Current assets
Cash and cash equivalents.................................................... $ 11,882 $ 313,498
Accounts receivable, net..................................................... 383 9,256
Prepaid expenses............................................................. 1,854 1,494
------------------ ------------------
Total current assets............................................... 14,119 324,248
Property and equipment, net of accumulated depreciation (Note 3)............. 17,591 21,078
Net assets of discontinued operations (Note 4)............................... -- 17,789
Deferred software development costs (Note 3)................................. 53,450 13,604
Intangible assets, net of accumulated amortization........................... 484 --
------------------ ------------------
Total assets....................................................... $ 85,644 $ 376,719
================== ==================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities..................................... $ 39,707 $ 578
Unearned revenue............................................................. -- 448
Current portion - capital lease obligation................................... 2,697 1,992
------------------ ------------------
Total current liabilities.......................................... 42,404 3,018
Capital lease obligation, less current portion (Note 1 and Note 3).............. 1,542 4,776
------------------ ------------------
Total liabilities.................................................. 43,946 7,794
------------------ ------------------
Shareholders' equity:
Preferred stock, no par value; 1,000,000 shares authorized,
-0- and -0- shares issued and outstanding.................................. -- --
Common stock, no par value; 100,000,000 shares authorized,
3,230,000 and 3,230-,000 shares issued and outstanding..................... 816,305 816,305
Additional paid-in capital................................................... 134,892 82,030
Deficit accumulated during development stage................................. (909,499) (529,410)
------------------ ------------------
Total shareholders' equity......................................... 41,698 368,925
------------------ ------------------
Total liabilities and shareholders' equity......................... $ 85,644 $ 376,719
================== ==================
See accompanying notes to financial statements
F-14
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Statements of Operations
For the Years
Ended
December 31,
----------------------------------
2008 2007
---------------- ----------------
Continuing operations:
Selling, general and administrative expenses..............$ 323,760 $ 318,994
---------------- ----------------
Loss from continuing operations................ (323,760) (318,994)
Other income and (expense):
Interest income........................................... 3,893 21,947
Interest expense.......................................... (488) --
---------------- ----------------
3,405 21,947
Loss before income taxes and
discontinued operations................................. (320,355) (297,048)
Income tax provision.......................................... -- --
---------------- ----------------
Loss before discontinued operations..................... (320,355) (297,048)
Discontinued operations:
Loss from operations of playing card
component, net of taxes................................. (46,976) (45,377)
Loss from abandonment of playing card
component, net of taxes................................. (12,758) --
---------------- ----------------
Net loss.......................................$ (380,089) $ (342,425)
================ ================
Basic and diluted loss per share..............................$ (0.12) $ (0.11)
================ ================
Basic and diluted weighted average
common shares outstanding................................. 3,230,000 3,230,000
================ ================
See accompanying notes to financial statements
F-15
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Statement of Changes in Shareholders' Equity
Additional
Common Stock Paid-in Accumulated
-----------------------------------
Shares Amount Capital Deficit Total
---------------- ---------------- ----------------- ----------------- -------------
Balance at December 31, 2006............... 3,230,000 $ 816,305 $ 33,825 $ (186,985) $ 663,145
Stock options and warrants vested...... -- -- 48,205 -- 48,205
Net loss............................... -- -- -- (342,42 342,425)
---------------- ---------------- ----------------- ----------------- -------------
Balance at December 31, 2007............... 3,230,000 816,305 82,030 (529,410) 368,925
---------------- ---------------- ----------------- ----------------- -------------
Stock options and warrants vested...... -- -- 52,862 -- 52,862
Net loss............................... -- -- -- (380,089) (380,089)
---------------- ---------------- ----------------- ----------------- -------------
Balance at December 31, 2008............... 3,230,000 $ 816,305 $ 134,892 $ (909,499) $ 41,698
================ ================ ================= ================= =============
See accompanying notes to financial statements
F-16
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Statements of Cash Flows
For the Years
Ended
December 31,
------------------------------------
2008 2007
----------------- -----------------
Cash flows from operating activities:
Net loss......................................................$ (380,089) $ (342,425)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock-based compensation...................................... 52,862 48,205
Depreciation Expense.......................................... 10,237 8,168
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable................ 8,873 (9,256)
Decrease (increase) in prepaid expenses................... (360) 7,918
Decrease (increase) in inventories........................ -- (4,760)
Loss on write off of assets of discontinued
playing card component (Note 4)......................... 17,789 --
(Decrease) increase in accounts payable................... 38,681 (1,299)
----------------- -----------------
Net cash flows used in
operating activities............................. (252,007) (293,449)
----------------- -----------------
Cash flows from investing activities:
Purchase of property and equipment............................ (6,750) (27,453)
Patent application costs...................................... (484) --
Purchase of software.......................................... (39,846) --
----------------- -----------------
Net cash flows used in
investing activities............................. (47,080) (27,453)
----------------- -----------------
Cash flows from financing activities:
Cash payments on capital lease................................ (2,529) --
----------------- -----------------
Net cash flows used in
financing activities............................. (2,529) --
----------------- -----------------
cash equivalents................................. (301,616) (320,902)
Cash and cash equivalents:
Beginning of year............................................. 313,498 634,400
----------------- -----------------
End of year...................................................$ 11,882 $ 313,498
================= =================
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes................................................$ -- $ --
================= =================
Interest....................................................$ -- $ --
================= =================
See accompanying notes to financial statements
F-17
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Notes to Financial Statements
(1) Summary of Significant Accounting Policies
Organization and Basis of Presentation
Tombstone Technologies, Inc. (referenced as "we", "us", "our" in the
accompanying notes) was incorporated in the State of Colorado on April 29, 2005.
We were organized to engage in the business of manufacturing and selling
personalized playing cards. We changed our name in 2008 from Tombstone Cards,
Inc. to Tombstone Technologies, Inc. to reflect our current operations (See also
Note 4).
We have had limited operations since inception. Those operations have focused on
the structure and capital formation of the Company and on the manufacturing and
marketing of customized playing cards.
In 2007, as part of our manufacturing and printing of customized playing cards
business, we researched the technology to handle the development, marketing and
licensing of software targeting the local printers industry.
During the third quarter of 2008, our board of directors made the decision to
revise our business plan to direct the Company's efforts and resources toward
the development and marketing of the local printer's industry software. We are
no longer promoting our customized playing cards and we have abandoned, for all
intents and purposes, the customized playing card business.
We plan to offer the following products to local printers:
o OIEPrint - a platform independent, browser-based RIA that supports
template driven design and provides high-resolution PDF files to the
printer.
o OIEPrint Store - an advanced e-commerce solution that supports
multiple customization options (e.g. paper color, paper weight, paper
finish, collating, binding, shipping, etc.) and dependent variables
(e.g. If you choose "A," you cannot choose "B" but can choose "C")
o OIEPrint VDP - an easy-to-use tool for linking database mining with
custom printing and 1:1 marketing.
In connection with the development of the OIEPrint(TM) software, on December 27,
2007, the Company filed a provisional patent application with the United States
Patent and Trademark Office (USPTO) titled Internet Application for the Design
of High Resolution Digital Graphics.
There is no assurance, of course, of market acceptance, or that, if accepted,
the new products will be profitable.
Development Stage Company
During 2007, we emerged from the development stage.
Uncertainties:
We have suffered losses from operations since inception and at December 31,
2008, we have a deficit in working capital such that we are unable to meet our
obligations as they come due without raising additional debt or equity capital.
Currently, we have negative trends.
We have plans in place for dealing with the effects of the above adverse
conditions and events. We plan to launch our first two products during the 2nd
quarter of 2009. In addition to the proceeds from the sale of our products, we
F-18
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Notes to Financial Statements
plan to raise $150,000 through the sale of convertible promissory notes payable.
We commenced the offering of such notes in the first quarter of 2009. As of
March 25, 2009, we have raised $5,000 in proceeds from the offering. The
proceeds from this offering, assuming we sell out, should alleviate substantial
doubt about of ability to continue as a going concern through July 2009. We plan
to raise additional funds before August 2009, if necessary. We plan to
periodically raise capital until we cash flow from operations.
Use of Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and Cash Equivalents
We consider all highly liquid securities with original maturities of three
months or less when acquired to be cash equivalents. We had $-0- and $304,489
cash equivalents at December 31, 2008 and 2007, respectively.
Accounts Receivable:
The allowance for doubtful accounts, which is $-0- and $-0- at December 31, 2008
and 2007, respectively, is based on an assessment of the collectibility of
customer accounts. We review the allowance by considering factors such as
historical experience, credit quality, and age of the accounts receivable
balances, and current economic conditions that may affect a customer's ability
to pay.
Inventories
Inventories are stated at the lower of cost (determined on an average cost) or
market value. (See discontinued operations).
Equipment
Equipment is recorded at cost. Expenditures that extend the useful lives of
equipment are capitalized. Repairs, maintenance and renewals that do not extend
the useful lives of the equipment are expensed as incurred. Depreciation is
provided on the straight-line method over 3 years.
Unamortized Software Development Costs
Software development costs include payments made to independent software
developers under agreement. We account for software development costs in
accordance with Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." Software development
costs are capitalized once the technological feasibility of a software program
is established and such costs are determined to be recoverable. Technological
feasibility is evaluated on a program-by-program basis. We evaluate the future
recoverability of capitalized amounts on a quarterly basis. The recoverability
of capitalized software development costs is evaluated based on the expected
performance of the specific program for which the costs relate.
Significant management judgments and estimates are utilized in the assessment of
when technological feasibility is established, as well as in the ongoing
assessment of the recoverability of capitalized costs. We evaluate the future
recoverability of capitalized software development costs on a quarterly basis.
F-19
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Notes to Financial Statements
Long-lived assets
Long-lived assets include property and equipment, equity investments and
intangible assets. Whenever events or changes in circumstances indicate that the
carrying amounts of long-lived assets may not be recoverable, we estimate the
future cash flows, undiscounted and without interest charges, expected to result
from the use of those assets and their eventual disposition. If the sum of the
expected future cash flows is less than the carrying amount of those assets, we
recognize an impairment loss based on the excess of the carrying amount over the
fair value of the assets.
Financial Instruments
The Company has determined, based on available market information and
appropriate valuation methodologies, that the fair value of its financial
instruments approximates carrying value. The carrying amounts of cash and cash
equivalents, and accounts payable approximate fair value due to the short-term
maturity of the instruments.
Income Taxes
We account for income taxes under the provisions of SFAS No. 109, Accounting for
Income Taxes (SFAS 109). SFAS 109 requires recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
Advertising Costs
All advertising costs are expensed as incurred. Advertising expenses were $9,574
and $32,275, respectively, for the years ended December 31, 2008 and 2007,
respectively.
Earnings (Loss) per Common Share
Basic earnings per share are computed by dividing income available to common
shareholders (the numerator) by the weighted-average number of common shares
(the denominator) for the period. The computation of diluted earnings per share
is similar to basic earnings per share, except that the denominator is increased
to include the number of additional common shares that would have been
outstanding if potentially dilutive common shares had been issued.
At December 31, 2008 and 2007, there were no variances between basic and diluted
loss per share as the impact of options and warrants outstanding to purchase a
total of 5,020,000 shares of our common stock at December 31, 2008 and 4,570,000
shares of our common stock at December 31, 2007 would have been anti-dilutive.
Share-Based Awards
Share-based compensation awards are recognized at fair value in accordance with
SFAS 123(R), "Accounting for Share-Based Payment."
New Accounting Standards
In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" (SFAS 162). SFAS 162 is intended to improve financial
reporting by identifying a consistent framework, or hierarchy, for selecting
accounting principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with U.S. generally
F-20
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Notes to Financial Statements
accepted accounting principles (GAAP). SFAS 162 directs the GAAP hierarchy to
the entity, not the independent auditors, as the entity is responsible for
selecting accounting principles for financial statements (2) Related Party
Transactions.
The Company is indebted to two officers for accrued but unpaid compensation
totalling $36,000 at December 31, 2008.
(3) Balance Sheet Components
Property and equipment
At December 31, 2008 and 2007, major classes of property and equipments were:
December 31,
-----------------------------------
2008 2007
-----------------------------------
Furniture and fixtures.......................$ 1,421 $ 1,421
Office equipment............................. 24,612 21,526
Leased equipment............................. 6,768 6,768
Less: accumulated depreciation............... (15,210) (8,637)
$ 17,591 $ 21,078
Depreciation expense was $10,237 and $8,168, respectively, for the years ended
December 31, 2008 and 2007.
Unamortized Software Development Costs
At December 31, 2008 and 2007, unamortized software development costs were:
December 31,
--------------------------------
2008 2007
---- ----
OEI Print.................................... $ 26,725 $ 13,604
OEI Storefront............................... 26,725 --
We plan to amortize the software development costs over their useful lives once
the software is placed into service.
(4) Discontinued Operations- Playing Card Component
Our playing card component lost $46,976 and $45,377 in 2008 and 2007,
respectively.
During the third quarter of 2008, the Board of Directors resolved to abandon the
manufacture and marketing of customized playing cards and to concentrate on the
development, marketing and licensing of software for the local printers
industry.
In the fourth quarter 2008, we wrote-off the value of our playing card property
as follows:
F-21
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Notes to Financial Statements
Unamortized website costs......................$ 6,014
Packaging supplies inventory................... 6,744
--------------
$ 12,758
==============
Results for the discontinued operations were as follows:
Year Ended
December 31,
----------------
2008 2007
--------- --------
Net sales.................................... $ 55,438 $ 43,759
Cost of sales................................ (36,414) (22,886)
Allocated overhead expense................... (66,000) (66,250)
----------- -----------
$ (46,979) $ (45,377)
=========== ===========
The net liabilities of discontinued operations that are included on the Balance
Sheet consisted of the following:
Year Ended
December 31,
----------------
2008 2007
--------- --------
Unamortized website costs.................... $ -- $ 7,732
Shipping containers.......................... -- 3,025
Card decks................................... -- 7,032
----------- -----------
$ -- $ 17,789
=========== ===========
(5) Shareholders' Equity
Preferred Stock
The Company has authorized 1,000,000 shares of preferred stock. To date there
have been no issuance of preferred stock. Upon issuance the Board of Directors
will determine the terms and conditions.
Common Stock
The Company is authorized to issue 100,000,000 shares of no par value common
stock.
Common Stock Options and Warrants
During 2008, we granted to consultants, options to purchase 600,000 shares of
our common stock at an exercise prices ranging from $0.65 per share to $1.50 per
share, in exchange for consulting services. The options vested immediately and
expired from 2009 to 2013. Our Board of Directors, utilizing appropriate
software, estimated the fair value of the options at values ranging from $0.001
per share to $0.2981 per share, or $52,863, which was recorded as stock
compensation cost included in general and administrative expenses in the
accompanying financial statements at December 31, 2008.
Using the Black-Scholes option-pricing software, the Board of Directors assumed
the following in estimating the fair value of the warrant at the grant date:
F-22
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Notes to Financial Statements
From To
Risk-free interest rate............................ 0.70% 2.37%
Dividend yield..................................... 0.00% 0.00%
Volatility factor.................................. 22.00% 50.00%
Weighted average expected life..................... 0.07% 5.00%
On October 1, 2007, we granted to consultants, options to purchase 280,000
shares of our common stock at an exercise price of $0.75 per share, in exchange
for consulting services. The options vest immediately and expire on August 31,
2009. Our Board of Directors, utilizing appropriate software, estimated the fair
value of the options at $.1256 per share, or $35,168, which was recorded as
stock compensation cost included in general and administrative expenses in the
accompanying financial statements at December 31, 2007.
Using the Black-Scholes option-pricing software, the Board of Directors assumed
the following in estimating the fair value of the warrant at the grant date:
Risk-free interest rate............................ 4.02%
Dividend yield..................................... 0.00%
Volatility factor.................................. 50.00%
Weighted average expected life..................... 3 years
On December 7, 2007, we granted to an employee, an option to purchase 20,000
shares of our common stock at an exercise price of $1.00 per share, in reward
for employee services. The option vests immediately and expires on August 31,
2009. Our Board of Directors, utilizing appropriate software, estimated the fair
value of the warrant at $0.0831 per share, or $1,662, which was recorded as
stock compensation cost included in general and administrative expenses in the
accompanying financial statements at December 31, 2007.
Using the Black-Scholes option-pricing software, the Board of Directors assumed
the following in estimating the fair value of the warrant at the grant date:
F-23
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Notes to Financial Statements
Weighted Weighted
Average Average
Exercise Exercise Remaining
Number Price Price Contractual
of Shares Per Share Per Share Life
-------------- --------------- -------------- ---------------
Outstanding at January 1, 2007................................ 4,270,000 - $ - N/A
Granted....................................................... 300,000 $0.75 - $1.00 $ 0.77 1.83 years
Exercised..................................................... -- -- -- N/A
Cancelled/Expired............................................. -- -- -- N/A
-------------- ------------------------------ ---------------
Outstanding at December 31, 2007.............................. 4,570,000 $0.75 - $1.00 $ 0.77 1.83 years
Granted....................................................... 600,000
Exercised..................................................... -- -- -- N/A
Cancelled/Expired............................................. (150,000) -- -- N/A
-------------- ------------------------------ ---------------
Outstanding at December 31, 2008.............................. 5,020,000 $0.65 - $1.50 $ 0.95 1.35 years
============== ==============
Excerisable at December 31, 2008.............................. 5,020,000 $0.65 - $1.50 $ 0.89 1.35 years
============== ============================== ===============
Year Ended
December 31,
-----------------------
2008 2007
---- ----
Total fair value of options vested during the period $ 52,863 $ 48,205
(6) Income Taxes
A reconciliation of U.S. statutory federal income tax rate to the effective rate
follows:
Year Ended
December 31,
--------------------------------
2008 2007
-------- --------
U.S. statutory federal rate...................... 25% 27.50%
State income tax rate............................ 5% 3.36%
Permanent difference - Contributed services...... -1.90% -1.90%
Net operating loss for which no tax
benefit is currently available................. -28.10% -28.96%
-------- --------
0.00% 0.00%
-------- --------
F-24
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Notes to Financial Statements
At December 31, 2008, deferred tax assets consisted of a net tax asset of
$148,149 due to operating loss carryforwards of $909,499 which was fully allowed
for, in the valuation allowance of $148,149. The valuation allowance offsets the
net deferred tax asset for which there is no assurance of recovery. The change
in the valuation allowance for the year ended December 31, 2008 totaled
$380,089. The net operating loss carryforward expires through the year 2028.
At December 31, 2007, deferred tax assets consisted of a net tax asset of
$196,177 due to operating loss carryforwards of $529,410 which was fully allowed
for, in the valuation allowance of $196,177. The valuation allowance offsets the
net deferred tax asset for which there is no assurance of recovery. The change
in the valuation allowance for the year ended December 31, 2007 totaled
$149,078. The net operating loss carryforward expires through the year 2027.
The valuation allowance is evaluated at the end of each year, considering
positive and negative evidence about whether the deferred tax asset will be
realized. At that time, the allowance will either be increased or reduced;
reduction could result in the complete elimination of the allowance if positive
evidence indicates that the value of the deferred tax assets is no longer
impaired and the allowance is no longer required.
Should the Company undergo an ownership change as defined in Section 382 of the
Internal Revenue Code, the Company's tax net operating loss carryforwards
generated prior to the ownership change will be subject to an annual limitation,
which could reduce or defer the utilization of these losses.
(7) Subsequent Event
Through March 25, 2009, we have raised $5,000 in connection with a convertible
promissory note at 8%.
F-25
[OUTSIDE BACK COVER PAGE OF PROSPECTUS]
DEALER PROSPECTUS DELIVERY REQUIREMENTS
Until ninety (90) days from the effective date of this Post-Effective Amendment
No. 3 to the registration statement, all dealers that effect transactions in
these securities, whether or not participating in this offering, may be required
to deliver a prospectus. This is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the Colorado Revised
Statutes and the bylaws.
Under the Colorado Revised Statutes, director immunity from liability to a
company or its Shareholders for monetary liabilities applies automatically
unless it is specifically limited by a company's Articles of Incorporation. Our
Articles of Incorporation do not specifically limit the directors' immunity.
Excepted from that immunity are: (a) a willful failure to deal fairly with the
company or its Shareholders in connection with a matter in which the director
has a material conflict of interest; (b) a violation of criminal law, unless the
director had reasonable cause to believe that his or her conduct was lawful or
no reasonable cause to believe that his or her conduct was unlawful; (c) a
transaction from which the director derived an improper personal profit; and (d)
willful misconduct.
Our bylaws provide that it will indemnify the directors to the fullest extent
not prohibited by Colorado law; provided, however, that the company may modify
the extent of such indemnification by individual contracts with the directors
and officers; and, provided, further, that we shall not be required to indemnify
any director or officer in connection with any proceeding, or part thereof,
initiated by such person unless such indemnification: (a) is expressly required
to be made by law, (b) the proceeding was authorized by the board of directors,
(c) is provided by us, in sole discretion, pursuant to the powers vested under
Colorado law or (d) is required to be made pursuant to the bylaws.
Our bylaws provide that it will advance to any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director or officer of the company, or is
or was serving at the request of us as a director or executive officer of
another company, partnership, joint venture, trust or other enterprise, prior to
the final disposition of the proceeding, promptly following request therefore,
all expenses incurred by any director or officer in connection with such
proceeding upon receipt of an undertaking by or on behalf of such person to
repay said amounts if it should be determined ultimately that such person is not
entitled to be indemnified under the bylaws or otherwise.
Our bylaws provide that no advance shall be made by it to an officer of the
company except by reason of the fact that such officer is or was a director of
the company in which event this paragraph shall not apply, in any action, suit
or proceeding, whether civil, criminal, administrative or investigative, if a
determination is reasonably and promptly made: (a) by the board of directors by
a majority vote of a quorum consisting of directors who were not parties to the
proceeding, or (b) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, that the facts known to the decision-making party at the time
such determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the company.
36
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We have expended, or will expend fees in relation to this registration statement
as detailed below:
================================================================= ==========
EXPENDITURE ITEM AMOUNT
----------------------------------------------------------------- ----------
Attorney Fees $35,000
----------------------------------------------------------------- ----------
Audit Fees $20,000
----------------------------------------------------------------- ----------
Transfer Agent Fees $2,500
----------------------------------------------------------------- ----------
SEC Registration and Blue Sky Registration fees (estimated) $5,000
----------------------------------------------------------------- ----------
Printing Costs and Miscellaneous Expenses (estimated) $6,000
----------------------------------------------------------------- ----------
TOTAL $68,500
================================================================= ==========
RECENT SALES OF UNREGISTERED SECURITIES
We have sold securities within the past three years without registering the
securities under the Securities Act of 1933 as shown in the following table:
NAME COMMON SHARES "A" WARRANTS "B" WARRANTS "OTHER" ($) PAID DATE OF EXEMPTION
WARRANTS PER PURCHASE
SECURITY
----------------------------------------------------------------------------------------------------------------------
Dale Stonedahl 60,000 60,000 60,000 $.50 3/10/06 Rule 506
(1)(2)
George W. 50,000 50,000 50,000 $.50 2/22/06 Rule 506
Wanberg and
Cynthia B.
Wanberg (1)
Gary Stonedahl 20,000 20,000 20,000 $.50 3/10/06 Rule 506
Lee A. Milo TR UA 100,000 100,000 100,000 $.50 3/13/06 Rule 506
12052002, George
Wanberg TTEE
Matthew Ray Frigm 20,000 20,000 20,000 $.50 3/14/06 Rule 506
William J. Clayton 30,000 30,000 30,000 $.50 3/17/06 Rule 506
Richard C. 50,000 50,000 50,000 $.50 3/19/06 Rule 506
Erickson
Carmine Tirone 30,000 30,000 30,000 $.50 3/20/06 Rule 506
Willie Gibson 10,000 10,000 10,000 $.50 3/21/06 Rule 506
Leroy Padilla 10,000 10,000 10,000 $.50 3/30/06 Rule 506
Nagle Family Trust 50,000 50,000 50,000 $.50 5/31/06 Rule 506
David W. Lane 100,000 100,000 100,000 $.50 7/13/06 Rule 506
Robert E. 100,000 100,000 100,000 $.50 7/28/06 Rule 506
Maciorowski
James Scanlon 200,000 200,000 200,000 $.50 7/28/06 Rule 506
Mike Scanlon 200,000 200,000 200,000 $.50 7/31/06 Rule 506
Michael J. Keate 200,000 200,000 200,000 $.50 7/31/06 Rule 506
Roland Rosenboom 200,000 200,000 200,000 $.50 7/31/06 Rule 506
James V. Bickford 100,000 100,000 100,000 $.50 7/31/06 Rule 506
Lawrence M. Elman 50,000 50,000 50,000 $.50 7/31/06 Rule 506
Richard Gardner 10,000 10,000 10,000 $.50 8/1/06 Rule 506
37
NAME COMMON SHARES "A" WARRANTS "B" WARRANTS "OTHER" ($) PAID DATE OF EXEMPTION
WARRANTS PER PURCHASE
SECURITY
----------------------------------------------------------------------------------------------------------------------
Robert E. Dettle, 50,000 50,000 50,000 $.50 8/4/06 Rule 506
Trustee
William H. & Gale 10,000 10,000 10,000 $.50 8/7/06 Rule 506
S. Kendall
William R. Talbert 10,000 10,000 10,000 $.50 8/29/06 Rule 506
John Gersman 10,000 10,000 10,000 $.50 8/30/06 Rule 506
Dulcinea A. 10,000 10,000 10,000 $.50 8/30/06 Rule 506
Hansard
Steve E. Hatch 50,000 50,000 50,000 $.50 8/30/06 Rule 506
Capital Merchant 600,000 $.00001 8/31/06 Section
Banc 4(2)
Garden State 60,000 $.00001 8/31/06 Section
Securities 4(2)
Dale Stonedahl(2) 50,000 50,000 50,000 $.001 8/31/06 Section
4(2)
William Reilly(2) 100,000 100,000 100,000 $.001 8/31/06 Section
4(2)
Indis Baltic 140,000 $.27 3/3/2009 Section
4(2)
Neil A. Cox 180,000 $0.10 6/30/09 Section
4(2)
John Harris 180,000 $0.10 6/30/09 Section
4(2)
Michael Willis 116,170 $0.10 6/30/09 Section
4(2)
Michael Willis 6,830 $0.10 7/31/09 Section
4(2)
---------------------
(1) Mr. Dale Stonedahl and Mr. George Wanberg were both purchasers of
stock ($0.01) in 2005 and both also purchased units ($0.50) in the
Private Placement Memorandum in 2006.
(2) In addition, Dale Stonedahl and William Reilly have Employee Stock
Options of 50,000 Shares and 250,000 Shares, respectively, at $0.55
per Share. The Stock Options have not been exercised.
EXEMPTIONS FROM REGISTRATION FOR UNREGISTERED SALES
1. Common Shares sold at $.01 were sold to the initial founding shareholders
under Section 4(2) and to private investors at $0.01 per Share pursuant to an
exemption under Rule 504 of Regulation D in 2005.
2. Units consisting of Common Shares and Warrants were sold at $0.50 per Unit
pursuant to an exemption under Rule 506 of Reg. D in 2006.
A Private Placement Memorandum was used together with a Subscription Agreement
for the Offering in which the investors represented thus understood the
securities were unregistered and that they had no liquidity and must be held for
an indefinite period of time, and that they were not purchasing with the intent
to resell promptly.
3. The Warrants issued to Capital Merchant Banc, Garden State Securities and
certain Employee Stock Options were issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933 in 2006. Each of
the recipients of Warrants or Stock Options received such in consideration of
services rendered:
1. Capital Merchant Banc -consulting services on business model and plan,
sales implementation and product public relations design program -
600,000 Warrants at $0.55
2. Garden State Securities - additional compensation to Registered Broker
Dealer for acting as Placement Agent - 60,000 Warrants at $0.60
3. Employees received Options for services rendered to our Company.
50,000 - Dale Stonedahl / 100,000 - William Reilly
38
EXHIBITS
-------- ---------------------------------------------------- -----------------
NUMBER DESCRIPTION
-------- ---------------------------------------------------- -----------------
3.1 Articles of Incorporation. *
3.2 Articles of Amendment - Name Change *
3.3 Articles of Amendment - Name Change ***
3.4 Bylaws of Tombstone Cards, Inc. *
5 Opinion re: Legality Filed Herewith
10.1 "A" Warrant Form *
10.2 "B" Warrant Form *
10.3 Capital Merchant Banc Warrant Form *
10.4 Employee Stock Warrant Form *
10.5 William H. Reilly Warrant Form *
10.6 Dale Stonedahl Warrant Form *
10.7 Revised Garden State Securities Warrant Form **
10.8 Consulting Agreement with Capital Merchant Banc, *
LLC
10.9 Garden State Securities Finder's Fee Agreement *
10.10 2006 Tombstone Cards, Inc. Option Plan *
23.1 Consent of Attorney Filed Herewith
23.2 Consent of Accountant Filed Herewith
-------- ---------------------------------------------------- -----------------
* Incorporated by reference to the Form SB-2 Registration Statement
(#333-138184) filed with the Securities and Exchange Commission on October 23,
2006.
** Incorporated by reference to the Form SB-2/A Registration Statement
(#333-138184) filed with the Securities and Exchange Commission on January 8,
2007.
*** Incorporated by reference to the Form 8-A12G filed with the Securities and
Exchange Commission on December 3, 2008.
39
UNDERTAKINGS
Tombstone Technologies, Inc. hereby undertakes the following:
To file, during any period in which offers or sales are being made, a
Post-Effective Amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after the
effective date of this registration statement, or most recent
post-effective amendment, which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement
or any material change to such information in the registration
statement.
That, for the purpose of determining any liability under the Securities Act,
each post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
To remove from registration by means of a post-effective amendment any of the
securities being registered hereby which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to the directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of the directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of the directors, officers, or controlling
persons in connection with the securities being registered, we will unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
For determining liability under the Securities Act, to treat the information
omitted from the form of prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant under Rule 424(b) (1) or (4) or 497(h) under the Securities Act as
part of this Registration Statement as of the time the Commission declared it
effective.
40
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-1 and authorized this Post-Effective
Amendment No. 3 to the Registration Statement to be signed on our behalf by the
undersigned, thereunto duly authorized, in the City of Boulder, Colorado, on
September 15, 2009.
TOMBSTONE TECHNOLOGIES, INC.
/s/ John N. Harris September 15, 2009
--------------------------------------------
John N. Harris
(Principal Executive Officer, President
and Chief Executive Officer)
/s/ Neil A. Cox September 15, 2009
--------------------------------------------
Neil A. Cox
(Chief Financial Officer/Principal
Accounting Officer)
/s/ William H. Reilly September 15, 2009
--------------------------------------------
William H. Reilly
(Chief Operating Officer, Chief Technology
Officer)
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
/s/ John N. Harris September 15, 2009
--------------------------------------------
John N. Harris, Director
/s/ Neil A. Cox September 15, 2009
--------------------------------------------
Neil A. Cox, Director
/s/ William H. Reilly September 15, 2009
--------------------------------------------
William H. Reilly, Director
41