Nevada
|
7948
|
87-0631750
|
State
or Jurisdiction of Incorporation or Organization
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer Identification No.)
|
Title
of Each Class of Securities to be Registered
|
|
Number
of Units/Shares to be Registered
|
|
Proposed
Maximum
Offering
Price Per Unit
|
|
Proposed
Maximum
Aggregate
Offering
Price
|
|
Amount
of
Registration
Fee
|
|
|
|
|
|
|
|
|
|
Common
Stock, par value $.001 per share (1)
|
|
3,778,466(2)
(3)
|
|
$0.109
|
|
$411,853
|
|
$12.65(5)
|
|
|
|
|
|
|
|
|
|
Total
|
|
3,778,466
|
|
|
|
$411,853
|
|
$12.65(5)
|
(1)
|
Represents
3,778,466 shares of common stock issuable in connection with
the
conversion of Callable Secured Convertible Notes in accordance
with the
Securities Purchase Agreement dated July 25, 2006 between us
and AJW
Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC
and New
Millennium Capital Partners II, LLC. The price of $0.109 per
share is
being estimated solely for the purpose of computing the registration
fee
pursuant to Rule 457(c) of the Securities Act and is based on
the
estimated conversion price of the Callable Secured Convertible
Notes
($0.109 was the average of the lowest three (3) intraday trading
prices for our common shares during the twenty (20) trading days
prior to
the date the Notes were issued on July 25, 2006, less a 55%
discount).
|
(2)
|
The
number of shares being registered for the conversion of the Callable
Secured Convertible Notes is 3,778,466 representing approximately
¹/3
of
our 11,335,398 non-affiliate outstanding common shares issued
and
outstanding as of May 31,
2007.
|
(3)
|
None
of the 3,778,466 shares being registered are shares that have
been, or
will be, received as liquidated damages or conversion default
payments.
|
(5)
|
Previously
paid Registration Fee of
$7.32.
|
|
|
Page
|
Summary
Information
|
|
1
|
|
|
|
Disclosure
Concerning Our Recent Financing and Conversion of Notes and Exercise
of
Warrants
|
|
2
|
|
|
|
Risk
Factors
|
|
9
|
|
|
|
Use
of Proceeds
|
|
15
|
|
|
|
Penny
Stock Considerations
|
|
15
|
|
|
|
Selling
Stockholders
|
|
15
|
|
|
|
Plan
of Distribution
|
|
18
|
|
|
|
Legal
Proceedings
|
|
19
|
|
|
|
Directors,
Executive Officers, Promoters and Control Persons
|
|
19
|
|
|
|
Security
Ownership of Certain Beneficial Owners and Management
|
|
20
|
|
|
|
Description
of Securities
|
|
21
|
|
|
|
Interest
of Named Experts And Counsel
|
|
22
|
|
|
|
Disclosure
of Commission Position of Indemnification For Securities Act
Liabilities
|
|
22
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|
|
|
Description
of Business
|
|
22
|
|
|
|
Management's
Discussion and Analysis or Plan of Operations
|
|
26
|
|
|
|
Description
of Property
|
|
29
|
|
|
|
Certain
Relationships And Related Transactions
|
|
29
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|
|
|
Market
for Common Equity and Related Stockholder Matters
|
|
30
|
|
|
|
Executive
Compensation
|
|
30
|
|
|
|
Changes
and Disagreements with Accountant on Accounting and Financial
Disclosure
|
|
32
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|
|
|
Available
Information
|
|
32
|
|
|
|
Financial
Statements
|
|
F-1
|
|
For
the Year Ended December 31, 2006
|
For
the Year Ended December 31, 2005
|
For
the Three Months Ended March 31, 2007
|
|||||||
STATEMENT
OF OPERATIONS
|
|
|
||||||||
|
|
|
||||||||
Revenues
|
$
|
0
|
$
|
88,989
|
$
|
0
|
||||
Net
Income (Loss)
|
$
|
(5,186,557
|
)
|
$
|
(120,635
|
)
|
$
|
(548,571
|
)
|
|
General
and Administrative Expenses
|
$
|
157,320
|
$
|
131,940
|
$
|
70,689
|
||||
Net
Income (Loss) Per Share
|
($0.33
|
)
|
(.03
|
)
|
(.02
|
)
|
As
of
|
||||||||||
|
December
31, 2006
|
December
31, 2005
|
March
31, 2007
|
|||||||
BALANCE
SHEET DATA
|
|
|
||||||||
|
|
|
||||||||
Cash
|
$
|
23,363
|
$
|
379
|
$
|
1,635
|
||||
Total
Current Assets
|
$
|
24,118
|
$
|
379
|
$
|
1,635
|
||||
Total
Assets
|
$
|
467,643
|
$
|
788
|
$
|
444,247
|
||||
Total
Liabilities
|
$
|
422,628
|
$
|
1,167
|
$
|
581,803
|
||||
Stockholders’
Equity (Deficiency)
|
$
|
45,015
|
$
|
(172,298
|
)
|
$
|
(137,556
|
)
|
Common
Stock Offered by Selling Stockholders:
|
|
Up
to 3,778,466 representing approximately ¹/3
of
our 11,335,398 non-affiliate common shares outstanding as of
May 31, 2007.
The convertible notes were issued pursuant to the Securities
Purchase
Agreement dated July 25, 2006. On
July 25, 2006, we entered into a Securities Purchase Agreement
for a total
subscription amount of $2,000,000 that included Stock Purchase
Warrants
and Callable Secured Convertible Notes with AJW Capital Partners,
LLC, AJW
Offshore, Ltd., AJW Qualified Partners, LLC and New Millennium
Capital
Partners II, LLC (Collectively, the Investors"). The initial
funding of
$700,000 of which The Company received net proceeds of $645,000
was
completed on July 26, 2006 with the following parties and evidenced
by
callable secured convertible notes: AJW Capital Partners, LLC
invested
$67,900; AJW Offshore, Ltd. invested $413,000; AJW Qualified
Partners, LLC
invested $210,000; and New Millennium Capital Partners II, LLC
invested
$9,100.
|
|
|
|
Common
Stock to be Outstanding After the Offering:
|
|
Up
to 36,963,864 shares.
|
|
|
|
Use
of Proceeds:
|
|
We
will not receive any proceeds from the sale of the common
stock.
|
|
|
|
OTCBB
Symbol:
|
|
ANRC
|
|
1.
|
At
closing on July 26, 2006 (“Closing”), the Investors purchased Notes
aggregating $700,000 and Warrants to purchase 10,000,000 shares
of CMEG
common stock;
|
|
2.
|
On
September 12, 2006, the Investors purchased Notes aggregating $600,000;
and
|
|
3.
|
Upon
effectiveness of this Registration Statement, the Investors will
purchase
Notes aggregating $700,000.
|
|
1.
|
Issuance
of common stock at a discount to the market price of such
stock;
|
|
2.
|
Issuance
of convertible securities that are convertible into an indeterminate
number of shares of Common Stock; or
|
|
3.
|
Issuance
of warrants during the “Lock-Up Period.” The Lock-up Period begins on the
Closing Date and extends until the later of (i) two hundred seventy
(270)
days from the Closing Date; or, (ii) one hundred eighty (180) days
from
the date the Registration Statement is declared effective (plus
any days
in which sales cannot be made thereunder).
|
|
1.
|
issuances
of securities in a firm commitment underwritten public offering
(excluding
a continuous offering pursuant to Rule 415 under the 1933 Act,
an equity
line of credit or similar financing arrangement) resulting in net
proceeds
to the Company of in excess of $15,000,000; or
|
|
2.
|
issuances
of securities as consideration for a merger, consolidation or purchase
of
assets, or in connection with any strategic partnership or joint
venture
(the primary purpose of which is not to raise equity capital),
or in
connection with the disposition or acquisition of a business, product
or
license by the Company.
|
|
·
|
The
occurrence of an event of default (as defined in the Notes and
listed
below) under the Notes;
|
|
·
|
Any
representation or warranty we made in the Security Agreement or
in the
Intellectual Property Security Agreement shall prove to have been
incorrect in any material respect when made;
|
|
·
|
The
failure by us to observe or perform any of our obligations under
the
Security Agreement or Intellectual Property Security Agreement
for ten
(10) days after receipt of notice of such failure from the Investors;
and
|
|
·
|
Any
breach of, or default under, the
Warrants.
|
|
|
Price
Decreases By
|
|||||||||||
|
7/26/2006
|
25%
|
50%
|
75%
|
|||||||||
Average
Common Stock Price (as defined above)
|
$
|
0.243
|
$
|
0.182
|
$
|
0.122
|
$
|
0.061
|
|||||
Conversion
Price
|
$
|
0.109
|
$
|
0.082
|
$
|
0.055
|
$
|
0.027
|
|||||
100%
Conversion Shares
|
18,348,624
|
24,390,244
|
36,363,636
|
74,074,074
|
|
·
|
Fail
to pay the principal or interest when
due;
|
|
·
|
Fail
to issue shares of common stock upon receipt of a conversion
notice;
|
|
·
|
Fail
to file a registration statement within 45 days following the Closing
or
fail to have the registration statement effective 135 days following
the
Closing;
|
|
·
|
Breach
any material covenant or other material term or condition in the
Notes or
the Securities Purchase Agreement;
|
|
·
|
Breach
any representation or warranty made in the Securities Purchase
Agreement
or other document executed in connection with the financing
transaction;
|
|
·
|
Fail
to maintain the listing or quotation of our common stock on the
OTCBB or
an equivalent exchange, the Nasdaq National Market, the Nasdaq
SmallCap
Market, the New York Stock Exchange, or the American Stock Exchange;
|
|
·
|
Apply
for or consent to the appointment of a receiver or trustee for
us or any
of our subsidiaries or for a substantial part of our of our subsidiaries'
property or business, or such a receiver or trustee shall otherwise
be
appointed;
|
|
·
|
Have
any money judgment, writ or similar process shall be entered or
filed
against us or any of our subsidiaries or any of our property or
other
assets for more than $50,000, and shall remain unvacated, unbonded
or
unstayed for a period of twenty (20) days unless otherwise consented
to by
the Investors;
|
|
·
|
Institute
or have instituted against us or any of our subsidiaries any bankruptcy,
insolvency, reorganization or liquidation proceedings or other
proceedings
for relief under any bankruptcy law or any law for the relief of
debtors;
or
|
|
·
|
Default
under any Note issued pursuant to the Securities Purchase
Agreement.
|
Finder’s
Fee(1)
|
|
Structuring
and Due Diligence
Fees(2)
|
|
Maximum
Possible
Interest
Payments(3)
|
|
Maximum
Redemption
Premium(4)
|
|
Maximum
Possible
Liquidated
Damages(5)
|
|
Maximum
First
Year Payments(6)
|
|
Maximum
Possible Payments(7)
|
|
Net
Proceeds
to
Company(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$130,000
|
|
$35,000
|
|
$190,379.50
|
|
$876,151.80
|
|
$63,088.16
|
|
$166,026.87
|
|
$418,467.66
|
|
$1,835,000
|
(1)
|
The
Company paid to Earl Ingarfield a fee of $130,000 on July 26,
2006 for arranging the financing pursuant to a Consulting Agreement.
|
|
|
(2)
|
Pursuant
to the Securities Purchase Agreement, the Company paid to The National
Investment Resources, LLC (“NIR”) $30,000 in structuring and due diligence
fees and $5,000 to Ballard Spahr Andrews & Ingersoll, LLP, NIR’s legal
counsel in connection with the transaction.
|
|
|
(3)
|
Maximum
amount of interest that can accrue assuming all Notes aggregating
$2,000,000 were issued on July 25, 2006 and remain outstanding
until the
maturity date. Interest is payable quarterly provided that no interest
shall be due and payable for any month in which the intraday trading
price
is greater than $0.04. The Company, at its option, may pay accrued
interest in either cash or, in shares of its common stock. To date,
no
interest has accrued or been paid since our intraday trading price
has
been greater than $0.04.
|
|
|
(4)
|
Under
certain circumstances we have the right to redeem the full principal
amount of the Notes prior to the maturity date by repaying the
principal
and accrued and unpaid interest plus a redemption premium of 40%.
This
represents the maximum redemption premium the Company would pay
assuming
we redeem all of the Notes twelve (12) months from July 25,
2006.
|
(5)
|
Under
the Stock Purchase Agreement, the maximum amount of liquidated
damages
that the Company may be required to pay for the twelve (12) months
following the sale of all Notes is 3% of the outstanding principal
and
accrued and unpaid interest.
|
|
|
(6)
|
Total
maximum payments that the Company may be required to pay to the
Selling
Stockholders for the twelve (12) months following the sale of
all Notes,
which is comprised of $102,938.71 in first year interest and
$63,088.16 in
liquidated damages. If we redeemed the Notes one year from the
Issuance
Date, then the total payments would be $2,876,151.80,
which
is calculated by adding the outstanding principal ($2,000,000),
plus total
first year interest payments ($102,938.71),
plus liquidated damages ($63,088.16),
plus maximum redemption premium ($710,124.93).
|
|
|
(7)
|
Total
maximum payments payable by Company, includes finder’s fees of $130,000,
structuring and due diligence fees of $35,000, maximum possible
interest
of $190,379.50 and maximum possible liquidated damages of $63,088.16.
We
also incurred $65,000 in legal fees for the transaction and filing
of this
registration statement, which would increase the possible maximum
payments
by Company to $503,467.66 and reduce the net proceeds to Company
to
$1,750,000. In
addition, we were required to place in escrow $20,000 for the
purchase of
keyman insurance for our executives. The premium was $ for a
$ policy,
which would increase the possible maximum payments by Company
to $ and
reduce the net proceeds to Company to $ .
|
|
|
(8)
|
Total
net proceeds to the Company including the $130,000 finder’s fee and
$35,000 structuring and due diligence fees. We also incurred
$65,000 in
legal fees for the transaction and filing of this registration
statement.
|
Market
Price(1)
|
|
Conversion
Price(2)
|
|
Shares
Underlying
Notes(3)
|
|
Combined
Market Price of Shares(4)
|
|
Total
Conversion
Price(5)
|
|
Total
Possible
Discount
to
Market
Price(6)
|
|
|
|
|
|
|
|
|
|
|
|
$0.25
|
|
$0.109
|
|
18,348,624
|
|
$3,424,657.50
|
|
$2,000,000.02
|
|
$1,424,657.48
|
(1)
|
Market
price per share of our common stock on the Issuance Date (July
25,
2006).
|
|
|
(2)
|
The
conversion price per share of our common stock underlying the Notes
on the
Issuance Date is calculated by the average of the lowest three
(3)
intraday trading prices for our common shares during the twenty (20)
trading days prior to the date the Notes were issued on July 25,
2006
($0.243 was the average), less a 40% discount.
|
|
|
(3)
|
Total
number of shares of common stock underlying the Notes assuming
full
conversion as of the Issuance Date. Since the conversion price
of the
Notes may fluctuate as market prices fluctuate, the actual number
of
shares that underlie the Notes will also fluctuate.
|
|
|
(4)
|
Total
market value of shares of common stock underlying the Notes assuming
full
conversion as of the Issuance Date based on the market price on
the
Issuance Date.
|
|
|
(5)
|
Total
value of shares of common stock underlying the Notes assuming full
conversion of the Notes as of the Issuance Date based on the conversion
price.
|
|
|
(6)
|
Discount
to market price calculated by subtracting the total conversion
price
(result in footnote (5)) from the combined market price (result
in
footnote (4)).
|
Market
Price(1)
|
|
Exercise
Price(2)
|
|
Shares
Underlying
Warrants(3)
|
|
Combined
Market Price(4)
|
|
Total
Exercise
Price(5)
|
|
Total
Possible
Discount
to
Market
Price(6)
|
|
|
|
|
|
|
|
|
|
|
|
$0.25
|
|
$0.30
|
|
10,000,000
|
|
$2,500,000
|
|
$3,000,000
|
|
$0
|
$0.45
|
|
$0.50
|
|
1,000,000
|
|
$450,000
|
|
$500,000
|
|
$0
|
Total
|
|
|
|
11,000,000
|
|
$2,950,000
|
|
$3,500,000
|
|
$0
|
(1)
|
Market
price per share of our common stock on the Issuance Date (July
25, 2006)
and Second Issuance Date (April 18, 2007),
respectively.
|
(2)
|
The
exercise price per share of our common stock underlying 10,000,000
Warrants is fixed at $0.30 and 1,000,000 Warrants is fixed at
$0.50, except that the Warrants contain anti-dilution protections
which in certain circumstances may result in a reduction to the
exercise
price.
|
|
|
(3)
|
Total
number of shares of common stock underlying the Warrants assuming
full
exercise as of the Issuance Date and Second Issuance Date. Upon
certain
adjustments of the exercise price of the warrants, the number
of shares
underlying the warrants may also be adjusted such that the proceeds
to be
received by us would remain constant.
|
|
|
(4)
|
Total
market value of shares of common stock underlying the Warrants
assuming
full exercise as of the Issuance Date and Second Issuance Date based
on the market price of the common stock on the Issuance Date
and Second
Issuance Date.
|
|
|
(5)
|
Total
value of shares of common stock underlying the Warrants assuming
full
exercise as of the Issuance Date and Second Issuance Date based on
the exercise price.
|
|
|
(6)
|
Discount
to market price calculated by subtracting the total exercise price
(result in footnote (5)) from the combined market price (result
in
footnote (4)). The result of an exercise of the Warrants at the
exercise
price and a sale at the market price would be a loss to the Selling
Stockholder. Since the closing prices of our common stock on
the Issuance
Date and Second Issuance Date were less than the Warrants’ exercise price,
the Warrants are out of the money and no profit would be realized
as of
the Issuance Date and Second Issuance
Date.
|
Gross
Proceeds Payable to Company(1)
|
|
Maximum
Possible Payments by Company(2)
|
|
Net
Proceeds to Company(3)
|
|
Combined
Total Possible Profit to Investors(4)
|
|
All
Payments + Possible Profit / Net Proceeds(5)
|
|
All
Payments + Possible Profit / Net Proceeds Averaged Over 3
Years(6)
|
|
|
|
|
|
|
|
|
|
|
|
$2,000,000
|
|
$418,467.66
|
|
$1,835,000
|
|
$1,424,657.48
|
|
100.44%
|
|
33.48%
|
(1)
|
Total
amount of the Notes.
|
|
|
(2)
|
Total
maximum payments payable by Company, includes finder’s fees of $130,000,
structuring and due diligence fees of $35,000, maximum possible
interest
of $190,379.50 and maximum possible liquidated damages of $63,088.16.
We
also incurred $65,000 in legal fees for the transaction and filing
of this
registration statement, which would increase the possible maximum
payments
by Company to $503,467.66 and reduce the net proceeds to Company
to
$1,750,000. In
addition, we were required to place in escrow $20,000 for the
purchase of
keyman insurance for our executives. The premium was $ for a
$ policy,
which would increase the possible maximum payments by Company
to $ and
reduce the net proceeds to Company to $ .
|
|
|
(3)
|
Total
net proceeds to the Company including the $130,000 finder’s fee and
$35,000 structuring and due diligence fees. We also incurred
$65,000 in
legal fees for the transaction and filing of this registration
statement,
and paid $ for the purchase of keyman insurance for our executives,
both
of which would increase the possible maximum payments by us to
$ and
reduce the net proceeds to the Company to $ .
|
|
|
(4)
|
Total
possible profit to the Investors is based on the aggregate discount
to
market price of the conversion of the Notes and cashless exercise
of
Warrants. The Notes’ conversion price is calculated by the average of the
lowest three (3) intraday trading prices for our common shares during
the twenty (20) trading days prior to the date the Notes were
issued on
July 25, 2006 ($0.243 was the average), less a 40% discount.
The result of
an exercise of the Warrants at the exercise price and a sale
at the market
price would be a loss to the Selling Stockholder. Since the closing
prices
of our common stock on the Issuance Date and Second Issuance
Date were
less than the Warrants’ exercise price, the Warrants are out of the money
and no profit would be realized.
|
|
|
(5)
|
Percentage
equal to the maximum possible payments by us in the transaction
($418,467.66) plus total possible discount to the market price
of the
shares underlying the convertible debentures ($1,424,657.48),
plus profit
from 11,000,000 Warrants in the money as of the Issuance Date
and Second
Issuance Date ($0), divided by the net proceeds to the Company
resulting
from the sale of the Notes
($1,835,000).
|
(6)
|
Calculated
by dividing 100.44% (footnote 5) by
3.
|
Number
of shares outstanding prior to convertible note transaction held
by
persons other than the Selling Stockholders, affiliates of the
Company and
affiliates of the Selling Stockholders.
|
|
|
11,335,398
|
|
|
|
|
|
|
Number
of shares registered for resale by Selling Stockholders or affiliates
in
prior registration statements.
|
|
|
0
|
|
|
|
|
|
|
Number
of shares registered for resale by Selling Stockholders or affiliates
of
Selling Stockholders that continue to be held by Selling Stockholders
or
affiliates of Selling Stockholders.
|
|
|
0
|
|
|
|
|
|
|
Number
of shares sold in registered resale by Selling Stockholders or
affiliates
of Selling Stockholders.
|
|
|
0
|
|
|
|
|
|
|
Number
of shares registered for resale on behalf of Selling Stockholders
or
affiliates of Selling Stockholders in current transaction.
|
|
|
3,778,466
|
|
|
·
|
uncertainties
in assessing the value, strengths, weaknesses, contingent and other
liabilities and potential profitability of acquisition or other
transaction candidates;
|
|
·
|
the
potential loss of key personnel of an acquired business;
|
|
·
|
the
ability to achieve identified operating and financial synergies
anticipated to result from an acquisition or other transaction;
|
|
·
|
problems
that could arise from the integration of the acquired or new business;
|
|
·
|
unanticipated
changes in business, industry or general economic conditions that
affect
the assumptions underlying the acquisition or other transaction
rationale;
and
|
|
·
|
unexpected
development costs that adversely affect our
profitability.
|
|
·
|
our
ability to retain existing customers, attract new customers and
satisfy
our customers' demands,
|
|
·
|
our
ability to acquire merchandise, manage our inventory and fulfill
orders,
|
|
·
|
changes
in gross margins of our current and future products, services,
and
markets,
|
|
·
|
introduction
of our new sites, services and products or those of
competitors,
|
|
·
|
changes
in usage of the Internet and online services and consumer acceptance
of
the Internet and online commerce,
|
|
·
|
timing
of upgrades and developments in our systems and
infrastructure,
|
|
·
|
the
level of traffic on our Web site,
|
|
·
|
the
effects of acquisitions and other business combinations, and related
integration,
|
|
·
|
technical
difficulties, system downtime or Internet brownouts,
|
|
·
|
our
ability to properly anticipate demand,
|
|
·
|
our
level of merchandise returns,
|
|
·
|
disruption
of our ongoing business,
|
|
·
|
problems
retaining key managerial personnel,
|
|
·
|
expenses
associated with amortization of goodwill and other purchased intangible
assets,
|
|
·
|
additional
operating losses and expenses of acquired businesses, if any,
and
|
|
·
|
impairment
of relationships with existing employees, customers and business
partners.
|
|
·
|
With
a price of less than $5.00 per
share;
|
|
·
|
That
are not traded on a “recognized” national exchange;
|
|
·
|
Whose
prices are not quoted on the NASDAQ automated quotation system
(NASDAQ
listed stock must still have a price of not less than $5.00 per
share); or
|
|
·
|
In
issuers with net tangible assets less than $2.0 million (if the
issuer has
been in continuous operation for at least three years) or $10.0
million (if in continuous operation for less than three years),
or with
average revenues of less than $6.0 million for the last three
years.
|
Name
of Selling Stockholder (11)
|
|
Shares
of Common Stock Owned Prior
to
the
Offering
(1)
|
|
Percent
of Common Shares Owned Prior to the Offering
|
|
Shares
of Common Stock to be Sold in the Offering
|
|
Number
of Shares Owned
After
the Offering
|
|
Percent
of Shares Owned
After
Offering
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
AJW
Capital Partners, LLC (7)
|
|
|
0
|
|
|
0
|
|
|
366,511
|
(2)(3)
|
|
0
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AJW
Offshore, Ltd. (8)
|
|
|
0
|
|
|
0
|
|
|
2,229,295
|
(2)(4)
|
|
0
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AJW
Qualified Partners, LLC (9)
|
|
|
0
|
|
|
0
|
|
|
1,133,540
|
(2)(5)
|
|
0
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New
Millennium Capital Partners II, LLC (10)
|
|
|
0
|
|
|
0
|
|
|
49,120
|
(2)(6)
|
|
0
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
0
|
|
|
0
|
|
|
3,778,466
|
|
|
0
|
|
|
0
|
%
|
(1)
|
Based
on 33,185,398 shares issued and outstanding as of May 31, 2007.
|
(2)
|
The
conversion has been calculated based on the maximum number of
shares the
Investors can receive in accordance with the 6% Callable Secured
Convertible Notes and Rule 415. The number of shares set forth
in the
table for the selling stockholders represents an estimate of
the number of
shares of common stock to be offered by the selling stockholders.
The
actual number of shares of common stock issuable upon conversion
of the
notes is indeterminate, is subject to adjustment and could be
materially
less or more than such estimated numbers depending on factors
which cannot
be predicted by us at this time including, among other factors,
the future
market price of the common stock. The actual number of shares
of common
stock offered in this prospectus, and included in the registration
statement of which this prospectus is a part, includes such additional
number of shares of common stock as may be issued or issuable
upon
conversion of the notes by reason of any stock split, stock dividend
or
similar transaction involving the common stock, in accordance
with Rule
416 under the Securities Act of 1933 (the “Securities Act”). The
convertible notes are convertible into shares of our common stock
at a
variable conversion price based upon the applicable percentage
of the
average of the lowest three (3) intraday trading prices for the
common
stock during the twenty (20) trading day period prior to conversion.
The
"Applicable Percentage" means 50%; provided, however, that the
Applicable
Percentage shall be increased to (i) 55% in the event that a
Registration
Statement is filed within thirty days of the closing and (ii)
60% in the
event that the Registration Statement becomes effective within
one hundred
and twenty days from the Closing. The “Applicable Percentage” was amended
to 45% on April 18, 2007. Under the terms of the debentures, if
the debentures had actually been converted on July 26, 2006,
the
conversion price would have been $0.109, which is calculated
by using the
average of the three lowest intraday trading prices within 20
days from
July 26, 2006 less a 55% discount. Under the terms of the debentures,
the
debentures are convertible by any holder only to the extent that
the
number of shares of common stock issuable pursuant to such securities,
together with the number of shares of common stock owned by such
holder
and its affiliates (but not including shares of common stock
underlying
unconverted shares of the debentures) would not exceed 4.99%
of the then
outstanding common stock as determined in accordance with Section
13(d) of
the Exchange Act. Accordingly, the number of shares of common
stock set
forth in the table for the selling stockholders exceeds the number
of
shares of common stock that the selling stockholder could beneficially
own
at any given time through their ownership of the debentures.
|
|
|
(3)
|
Represents
366,511 shares of our common stock issuable in connection with
the
conversion of the callable secured convertible note.
|
|
|
(4)
|
Represents
2,229,295 shares of our common stock issuable in connection with
the
conversion of the callable secured convertible note.
|
|
|
(5)
|
Represents
1,133,540 shares of our common stock issuable in connection with
the
conversion of the callable secured convertible note.
|
|
|
(6)
|
Represents
49,120 shares of our common stock issuable in connection with
the
conversion of the callable secured convertible note.
|
|
|
(7)
|
AJW
Capital Partners, LLC is a private investment fund that is owned
by its
investors and managed by SMS Group, LLC. SMS Group, LLC of which
Mr. Corey S. Ribotsky is the fund manager, has voting and investment
control over the shares listed below owned by AJW Partners,
LLC.
|
|
|
(8)
|
AJW
Offshore, Ltd. is a private investment fund that is owned by
its investors
and managed by First Street Manager II, LLC. First Street Manager
II, LLC,
of which Corey S. Ribotsky is the fund manager, has voting and
investment
control over the shares listed below owned by AJW Offshore
Ltd.
|
|
|
(9)
|
AJW
Qualified Partners, LLC is a private investment fund that is
owned by its
investors and managed by AJW Manager, LLC of which Corey S. Ribotsky
and
Lloyd A. Groveman are the fund managers, have voting and investment
control over the shares listed below owned by AJW Qualified Partners,
LLC.
|
|
|
(10)
|
New
Millennium Capital Partners II, LLC is a private investment fund
that is
owned by its investors and managed by First Street Manager II,
LLC. First
Street Manager II LLC of which Corey S. Ribotsky is the fund
manager, has
voting and investment control over the shares listed below owned
by New
Millennium Capital Partners, LLC.
|
|
|
(11)
|
None
of the Selling Stockholders are broker-dealers or affiliates
of
broker-dealers.
|
·
|
ordinary
brokers transactions, which may include long or short
sales,
|
|
|
·
|
transactions
involving cross or block trades on any securities or market where
our
common stock is trading,
|
|
|
·
|
purchases
by brokers, dealers or underwriters as principal and resale by
such
purchasers for their own accounts pursuant to this prospectus,
“at the
market” to or through market makers or into an existing market for the
common stock,
|
|
|
·
|
in
other ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through
agents,
|
|
|
·
|
any
combination of the foregoing, or by any other legally available
means.
|
1.
|
Not
engage in any stabilization activities in connection with our common
stock;
|
|
|
2.
|
Furnish
each broker or dealer through which common stock may be offered,
such
copies of this prospectus from time to time, as may be required
by such
broker or dealer; and
|
|
|
3.
|
Not
bid for or purchase any of our securities or attempt to induce
any person
to purchase any of our securities permitted under the Exchange
Act.
|
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
A.
Robert Koveleski
|
|
52
|
|
Chairman,
Chief Executive Officer, President, Interim Chief Financial Officer,
Principal Accounting Officer
|
|
·
|
the
subject of any bankruptcy petition filed by or against any business
of
which such person was a general partner or executive officer either
at the
time of the bankruptcy or within two years prior to that
time;
|
|
·
|
convicted
in a criminal proceeding or is subject to a pending criminal proceeding
(excluding traffic violations and other minor
offenses);
|
|
·
|
subject
to any order, judgment, or decree, not subsequently reversed, suspended
or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting
his
involvement in any type of business, securities or banking activities;
or
|
|
·
|
found
by a court of competent jurisdiction (in a civil action), the Commission
or the Commodity Futures Trading Commission to have violated a
federal or
state securities or commodities
law.
|
Title
of Class
|
|
Name
and Address of
Beneficial
Owner
|
|
Amount
and Nature of
Beneficial
Owner
|
|
Percent
of Class(2)
|
|
|
|
|
|
|
|
Common
Stock
|
|
A.
Robert Koveleski(1)
|
|
1,850,000
|
|
5.57%
|
|
|
|
|
|
|
|
Common
Stock
|
|
Fairhills
Capital(4)
1275
Fairhills Drive
Ossining,
NY 10562
|
|
8,000,000
|
|
24.11%
|
|
|
|
|
|
|
|
Common
Stock
|
|
SW
International, LLC(5)
2033
Main Street, Suite 600
Sarasota,
FL 34237
|
|
12,000,000
|
|
36.16%
|
|
|
|
|
|
|
|
Common
Stock
|
|
Earl
Ingarfield
15
Paradise Plaza, Suite 265
Sarasota,
FL 34239
|
|
2,352,500
|
|
7.09%
|
|
|
|
|
|
|
|
Common
Stock
|
|
All
officers and directors as a group (1 in number)
|
|
13,850,000
|
|
41.74%
|
|
|
|
|
|
|
|
Series
A Convertible Preferred Stock(3)
|
|
A.
Robert Koveleski(1)
|
|
1,000,000
|
|
100.00%
|
|
|
|
|
|
|
|
Series
A Convertible Preferred Stock(3)
|
|
All
officers and directors as a group (1 in number)
|
|
1,000,000
|
|
100.00%
|
|
·
|
Consulting
in specific areas of motor sport,
|
|
·
|
Research,
evaluate and provide strategic planning for entry into
racing,
|
|
·
|
Formulate
high-energy branding platforms to fit motor
sports,
|
|
·
|
Take
the initiative for the motor sport program
management,
|
|
·
|
Initiate
advertising and public relations
exposure,
|
|
·
|
Develop
product licensing and merchandising
agreements,
|
|
·
|
Provide
corporate hospitality and VIP race weekend packages,
and
|
|
·
|
Arrange
on-track activities with famous celebrity
drivers.
|
|
Closing
Bid
|
||||||
YEAR
2005
|
High
Bid
|
Low
Bid
|
|||||
1st
Quarter Ended March 31
|
$
|
0.0045
|
$
|
0.0023
|
|||
2nd
Quarter Ended June 30
|
$
|
0.005
|
$
|
0.0020
|
|||
3rd
Quarter Ended September 31
|
$
|
0.082
|
$
|
0.0033
|
|||
4th
Quarter Ended December 31
|
$
|
0.110
|
$
|
0.0071
|
|||
|
|||||||
YEAR
2006
|
High
Bid
|
Low
Bid
|
|||||
1st
Quarter Ended March 31
|
$
|
0.310
|
$
|
0.250
|
|||
2nd
Quarter Ended June 30
|
$
|
0.350
|
$
|
0.200
|
|||
3rd
Quarter Ended September 31
|
$
|
0.350
|
$
|
0.250
|
|||
4th
Quarter Ended December 31
|
$
|
2.450
|
$
|
0.210
|
YEAR
2007
|
High
Bid
|
Low
Bid
|
|||||
1st
Quarter ended March 31
|
$
|
2.050
|
$
|
0.130
|
|||
Period
Ended May 31
|
$
|
0.730
|
$
|
0.130
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation ($)
|
Non-Qualified
Deferred Compensation Earnings
($)
|
All
Other Compensation
($)
|
Totals
($)
|
||||||||||||||||||||||
A.
Robert Koveleski,(1)
President,
Chief
|
2006
|
120,000
|
0
|
3,000,000
|
0
|
0
|
0
|
0
|
3,120,000
|
||||||||||||||||||||||
Executive
Officer,
|
2005
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
||||||||||||||||||||||
Interim
Chief Financial Officer, Vice-President
|
|
||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||
D.
Davy Jones,(2)
Former
President and Chief Executive
Officer
|
2006
|
120,000
|
0
|
0
|
0
|
0
|
0
|
0
|
120,000
|
||||||||||||||||||||||
|
2005
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||
John
W. Gandy,(3)
Former
President and Chief
Executive Officer
|
2006
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
||||||||||||||||||||||
|
2005
|
105,000
|
0
|
0
|
0
|
0
|
0
|
0
|
105,000
|
||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||
Ron
Hendrix,(4)
Former
Chief Financial Officer
|
2006
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
||||||||||||||||||||||
|
2005
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
(1)
|
Mr.
Koveleski has served as our President and Chief Executive Officer
since
October 27, 2006, and as our Interim Chief Financial Officer since
October
2005. Previously, Mr. Koveleski served as our Vice-President from
October
2005 to October 27, 2006. In July 2006, Mr. Koveleski and the Company
entered into an oral agreement whereby Mr. Koveleski would receive
an
annual salary of $120,000, which compensation would commence upon
the
Company’s obtaining funding. On July 25, 2006, upon the Company obtaining
funding, Mr. Koveleski received $12,500 in compensation. In August
2006,
The Company and Mr. Koveleski entered into a definitive employment
agreement, whereby an additional $20,000 was paid in 2006. The
balance of Mr.
Koveleski’s salary for 2006 is accrued and unpaid. In addition, on July
18, 2006, Mr. Koveleski’s consulting company, SW International LLC,
received as compensation for consulting services rendered 12,000,000
shares of our common stock valued at $0.25, which was the closing
price on
July 13, 2006, the last reported closing price prior to the issuance.
|
(2)
|
Mr.
Jones served as our President and Chief Executive Officer from
October
2005 until October 27, 2006. In July 2006, Mr. Jones and the Company
entered into an oral agreement whereby Mr. Jones would receive
an annual
salary of $120,000, which compensation would commence upon the
Company’s
obtaining funding. On July 25, 2006, upon the Company obtaining
funding,
Mr. Jones received $12,500 in compensation. In August 2006, the
Company
and Mr. Jones entered into a definitive employment agreement, whereby
an
additional $20,000 was paid in 2006. Mr. Jones’ employment agreement was
terminated on October 27, 2006 and is receiving severance pay of
$240,000
over 24 months.
|
(3)
|
Mr.
Gandy resigned as President, Chief Executive Officer and Director
of the
Company on November 18, 2005. During Mr. Gandy’s tenure with the Company,
he served as the Company’s President and Chief Executive Officer. The
Company entered into an employment agreement with Mr. Gandy in
2003, which
was subsequently terminated in 2005. Mr. Gandy was to receive an
annual
salary of $100,000 with a 5% increase each year to a maximum of
$125,000,
if the Company had a profit in the previous year. Beginning July
1, 2003,
Mr. Gandy informed the Board of Directors that he would forego
any
additional salary accruals until such time as the Company improves
its
financial position. In 2004, the Board of Directors voted to reinstate
Mr.
Gandy’s salary beginning January 31, 2005 and pay him an accrued salary
of
$15,000 for the fourth quarter of 2004. In 2005, Mr. Gandy’s salary was
$105,000, of which he received $26,250 per quarter, and a pro rata
amount
up to his resignation from the
Company.
|
(4)
|
On
November 18, 2005, Mr. Hendrix resigned as Chief Financial Officer
and
Director of the Company. During his tenure with the Company, Mr.
Hendrix
was not compensated and spent a limited amount of time on the
business.
|
|
Page
|
|||
March
31, 2007 and 2006 (Unaudited)
|
||||
Consolidated
Balance Sheet
|
F-2
|
|||
Consolidated
Statement of Operations
|
F-3
|
|||
Consolidated
Statement of Cash Flows
|
F-4
|
|||
Notes
to Consolidated Financial Statements
|
F-5
|
|||
December
31, 2006 and 2005 (Audited)
|
||||
Report
of Independent Registered Public Accounting Firm
|
F-6
|
|||
Balance
Sheets
|
F-6
|
|||
Statements
of Operations - years ended December 31, 2006 and
2005
|
F-8
|
|||
Statements
of Stockholders’ Equity - years ended December 31, 2006 and
2005
|
F-9
|
|||
Statements
of Cash Flows - years ended December 31, 2006 and
2005
|
F-10
|
|||
Notes
to Consolidated Financial Statements
|
F-11
|
ASSETS
|
|
|||
CURRENT
ASSETS
|
|
|||
Cash
|
$
|
1,635
|
||
Total
Current Assets
|
1,635
|
|||
OTHER
ASSETS
|
||||
Equity
investment
|
442,612
|
|||
TOTAL
ASSETS
|
$
|
444,247
|
||
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
||||
|
||||
CURRENT
LIABILITIES
|
||||
Accounts
payable and accrued expenses
|
$
|
303,192
|
||
Convertible
debt payable, net
|
236,111
|
|||
Interest
payable on convertible debt
|
42,500
|
|||
Total
Current Liabilities
|
581,803
|
|||
|
||||
TOTAL
LIABILITIES
|
581,803
|
|||
|
||||
STOCKHOLDERS’
EQUITY (DEFICIT)
|
||||
Preferred
stock 10,000,000 shares authorized at $0.001 par value;
1,000,000
shares issued and outstanding
|
1,000
|
|||
Common
stock 500,000,000 shares authorized at $0.001 par value;
33,185,398
shares issued and outstanding
|
27,991
|
|||
Additional
paid in capital
|
5,744,021
|
|||
Accumulated
deficit
|
(5,910,568
|
)
|
||
|
||||
Total
Stockholders’ Equity (Deficit)
|
(137,556
|
)
|
||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
$
|
444,247
|
||
|
|
March
31,
|
March
31,
|
|||||
|
2007
|
2006
|
|||||
|
|
|
|||||
SALES
|
$
|
-
|
$
|
-
|
|||
|
|||||||
COST
OF SALES
|
-
|
-
|
|||||
Gross
Profit
|
-
|
-
|
|||||
|
|||||||
EXPENSES
|
|||||||
Consulting
and professional fees
|
378,636
|
-
|
|||||
Administrative
|
70,689
|
-
|
|||||
|
|||||||
TOTAL
EXPENSES
|
449,325
|
-
|
|||||
|
|||||||
Loss
from operations
|
(449,325
|
)
|
-
|
||||
|
|||||||
OTHER
INCOME (EXPENSE)
|
|||||||
Interest
expense
|
(98,333
|
)
|
-
|
||||
Equity
loss
|
(913
|
)
|
-
|
||||
|
|||||||
TOTAL
OTHER (EXPENSE)
|
(99,246
|
)
|
-
|
||||
|
|||||||
|
|||||||
Loss
- before discontinued operations
|
(548,571
|
)
|
-
|
||||
Discontinued
operations
|
-
|
(25,120
|
)
|
||||
Net
loss
|
$
|
(548,571
|
)
|
$
|
(25,120
|
)
|
|
|
|||||||
NET
LOSS PER COMMON SHARE
|
|||||||
Basic
and diluted
|
$
|
(0.02
|
)
|
$
|
(0.01
|
)
|
|
|
|||||||
WEIGHTED
AVERAGE OUTSTANDING SHARES
|
|||||||
Basic
and diluted
|
26,444,731
|
4,991,398
|
|
March
31,
|
March
31,
|
|||||
|
2007
|
2006
|
|||||
|
|
|
|||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|||||
Net
loss
|
$
|
(548,571
|
)
|
$
|
(25,120
|
)
|
|
Adjustments
to reconcile net loss to net cash provided by operating
activities
|
|||||||
Depreciation
|
-
|
758
|
|||||
Amortization
of discount on convertible debt
|
83,333
|
-
|
|||||
Common
stock and warrants issued for services
|
366,000
|
-
|
|||||
Equity
loss
|
913
|
-
|
|||||
Changes
in operating assets and liabilities
|
-
|
-
|
|||||
Prepaid
expenses
|
755
|
-
|
|||||
Accounts
payable
|
75,842
|
22,500
|
|||||
|
|||||||
Net
cash used in operating activities
|
(21,728
|
)
|
(1,862
|
)
|
|||
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
-
|
-
|
|||||
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||
|
|||||||
Payments
on notes payable
|
-
|
-
|
|||||
Proceeds
from notes payable-related parties
|
-
|
750
|
|||||
Proceeds
from notes payable
|
-
|
1,000
|
|||||
Payments
on notes payable
|
-
|
-
|
|||||
Net
cash provided by financing activities
|
-
|
1,750
|
|||||
|
|||||||
Net
Increase (Decrease) in Cash
|
(21,728
|
)
|
(112
|
)
|
|||
Cash
at Beginning of Period
|
23,363
|
379
|
|||||
Cash
at End of Period
|
$
|
1,635
|
$
|
267
|
|||
Supplemental
disclosure of cash flow information
|
|||||||
Common
stock issued for services
|
$
|
366,000
|
$
|
-
|
|||
Cash
paid for interest
|
$
|
-
|
$
|
-
|
|||
Cash
paid for income taxes
|
$
|
-
|
$
|
-
|
|||
|
Convertible
Debt Payable
|
$
|
1,000,000
|
||
Discount
|
(763,889
|
)
|
||
Net
|
$
|
236,111
|
|
December
31,
|
||||||
ASSETS
|
2006
|
2005
|
|||||
CURRENT
ASSETS
|
|
|
|||||
|
|
|
|||||
Cash
|
$
|
23,363
|
$
|
379
|
|||
Prepaid
expenses
|
755
|
-
|
|||||
|
|||||||
Total
Current Assets
|
24,118
|
379
|
|||||
|
|||||||
FIXED
ASSETS, net
|
-
|
788
|
|||||
|
|||||||
OTHER
ASSETS
|
|||||||
|
|||||||
Equity
investment
|
443,525
|
-
|
|||||
|
|||||||
TOTAL
ASSETS
|
$
|
467,643
|
$
|
1,167
|
|||
|
|||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|||||||
|
|||||||
CURRENT
LIABILITIES
|
|||||||
|
|||||||
Accounts
payable and accrued expenses
|
$
|
269,850
|
$
|
86,201
|
|||
Convertible
debt payable, net
|
152,778
|
-
|
|||||
Notes
payable
|
-
|
26,500
|
|||||
Notes
payable - related parties
|
-
|
60,764
|
|||||
|
|||||||
Total
Current Liabilities
|
422,628
|
173,465
|
|||||
|
|||||||
TOTAL
LIABILITIES
|
422,628
|
173,465
|
|||||
|
|||||||
STOCKHOLDERS'
EQUITY (DEFICIT)
|
|||||||
|
|||||||
Preferred
stock: 2,000,000 shares authorized;
|
|||||||
$0.001
par value; 1,000,000 and -0- shares issued and
|
|||||||
outstanding,
respectively
|
1,000
|
2,000
|
|||||
Common
stock; 500,000,000 shares authorized,
|
|||||||
$0.001
par value; 26,391,398 and 4,991,398 shares
|
|||||||
issued
and outstanding, respectively
|
26,391
|
4,991
|
|||||
Additional
paid-in capital (deficit)
|
5,379,621
|
(3,849
|
)
|
||||
Deficit
accumulated during the development stage
|
(5,361,997
|
)
|
(175,440
|
)
|
|||
|
|||||||
Total
Stockholders' Equity (Deficit)
|
45,015
|
(172,298
|
)
|
||||
|
|||||||
TOTAL
LIABILITIES AND STOCKHOLDERS'
|
|||||||
EQUITY
(DEFICIT)
|
$
|
467,643
|
$
|
1,167
|
|
For
the Years Ended
December
31,
|
||||||
|
2006
|
2005
|
|||||
REVENUES
|
$
|
-
|
$
|
-
|
|||
|
|||||||
OPERATING
EXPENSES
|
|||||||
|
|||||||
Legal
and professional
|
66,883
|
-
|
|||||
Consulting
expense
|
6,008,581
|
-
|
|||||
Salaries
and wages
|
24,318
|
-
|
|||||
General
and administrative
|
157,320
|
-
|
|||||
|
|||||||
Total
Operating Expenses
|
6,257,102
|
-
|
|||||
|
|||||||
LOSS
FROM OPERATIONS
|
(6,257,102
|
)
|
-
|
||||
|
|||||||
OTHER
EXPENSE
|
|||||||
|
|||||||
Loss
from equity subsidiary
|
6,475
|
-
|
|||||
Interest
expense
|
180,278
|
-
|
|||||
|
|||||||
Total
Other Expense
|
186,753
|
-
|
|||||
|
|||||||
LOSS
FROM CONTINUING OPERATIONS
|
(6,443,855
|
)
|
-
|
||||
|
|||||||
DISCONTINUED
OPERATIONS
|
(82,110
|
)
|
(120,635
|
)
|
|||
GAIN
(LOSS) FROM DISCONTINUED OPERATIONS
|
1,339,408
|
-
|
|||||
|
|||||||
NET
LOSS
|
$
|
(5,186,557
|
)
|
$
|
(120,635
|
)
|
|
|
|||||||
|
|||||||
BASIC
LOSS PER SHARE
|
|||||||
Continuing
operations
|
$
|
(0.41
|
)
|
$
|
0.00
|
||
Discontinued
operations
|
0.08
|
(0.03
|
)
|
||||
Total
|
$
|
(0.33
|
)
|
$
|
(0.03
|
)
|
|
|
|||||||
WEIGHTED
AVERAGE NUMBER OF
|
|||||||
SHARES
OUTSTANDING
|
15,691,398
|
4,516,513
|
|
|
|
|
|
Additional
|
|
|||||||||||||
|
Preferred
Stock
|
Common
Stock
|
Paid-In
|
Accumulated
|
|||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
|||||||||||||
Balance,
December 31, 2004
|
-
|
$
|
-
|
4,042
|
$
|
4,042
|
$
|
-
|
$
|
(54,805
|
)
|
||||||||
|
|||||||||||||||||||
Common
shares issued for cash
|
-
|
-
|
2,000
|
2,000
|
-
|
-
|
|||||||||||||
|
|||||||||||||||||||
Recapitalization
|
2,000,000
|
2,000
|
4,985,356
|
(1,051
|
)
|
(3,849
|
)
|
-
|
|||||||||||
|
|||||||||||||||||||
Net
loss for the year ended
|
|||||||||||||||||||
December
31, 2005
|
-
|
-
|
-
|
-
|
-
|
(120,635
|
)
|
||||||||||||
|
|||||||||||||||||||
Balance,
December 31, 2005
|
2,000,000
|
2,000
|
4,991,398
|
4,991
|
(3,849
|
)
|
(175,440
|
)
|
|||||||||||
|
|||||||||||||||||||
Common
shares issued for services
|
-
|
-
|
22,900,000
|
22,900
|
5,688,610
|
-
|
|||||||||||||
|
|||||||||||||||||||
Fair
value of beneficial conversion feature
|
-
|
-
|
-
|
-
|
1,047,871
|
-
|
|||||||||||||
|
|||||||||||||||||||
Common
shares cancelled for discontinued operations
|
(1,000,000
|
)
|
(1,000
|
)
|
(1,500,000
|
)
|
(1,500
|
)
|
(1,353,011
|
)
|
-
|
||||||||
|
|||||||||||||||||||
Net
loss for the year ended
|
|||||||||||||||||||
December
31, 2005
|
-
|
-
|
-
|
-
|
-
|
(5,186,557
|
)
|
||||||||||||
|
|||||||||||||||||||
Balance,
December 31, 2005
|
1,000,000
|
$
|
1,000
|
26,391,398
|
$
|
26,391
|
$
|
5,379,621
|
$
|
(5,361,997
|
)
|
|
For
the Years Ended
|
||||||
|
December
31,
|
||||||
|
2006
|
2005
|
|||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|||||
Net
loss
|
$
|
(5,186,557
|
)
|
$
|
(120,635
|
)
|
|
Adjustments
to reconcile net loss to
|
|||||||
net
cash used by operating activities:
|
|||||||
Depreciation
expense
|
788
|
3,034
|
|||||
Amortization
of discount on convertible debt
|
152,778
|
-
|
|||||
Loss
from equity investment
|
6,475
|
-
|
|||||
Common
stock issued for services
|
5,711,510
|
||||||
Gain
on discontinued operations
|
(1,339,408
|
)
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
(Increase)
in prepaid expenses
|
(755
|
)
|
|||||
Increase
in accounts payable
|
183,649
|
79,971
|
|||||
|
|||||||
Net
Cash Provided (Used) by Operating
|
|||||||
Activities
|
(471,520
|
)
|
(37,630
|
)
|
|||
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||||
Purchase
of equity investment
|
(450,000
|
)
|
-
|
||||
Purchase
of fixed assets
|
-
|
(919
|
)
|
||||
|
|||||||
Net
Cash Used by Investing
|
|||||||
Activities
|
(450,000
|
)
|
(919
|
)
|
|||
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||
Discontinued
operations
|
(55,496
|
)
|
-
|
||||
Proceeds
from notes payable - related parties
|
-
|
9,877
|
|||||
Proceeds
from notes payable
|
1,000,000
|
26,500
|
|||||
Common
stock issued for cash
|
-
|
2,000
|
|||||
|
|||||||
Net
Cash Provided by Operating Activities
|
944,504
|
38,377
|
|||||
|
|||||||
NET
(DECREASE) INCREASE IN CASH
|
22,984
|
(172
|
)
|
||||
|
|||||||
CASH
AT BEGINNING OF YEAR
|
379
|
551
|
|||||
|
|||||||
CASH
AT END OF YEAR
|
$
|
23,363
|
$
|
379
|
|||
|
|||||||
CASH
PAID FOR:
|
|||||||
Interest
|
$
|
-
|
$
|
-
|
|||
Taxes
|
$
|
-
|
$
|
-
|
|||
|
|||||||
NON
CASH FINANCING ACTIVITIES
|
|||||||
Common
stock cancelled for discontinued
|
|||||||
operations
|
$
|
1,355,511
|
$
|
-
|
|
For
the year ended December 31, 2006
|
For
the year ended December 31, 2005
|
|||||
Loss
(numerator)
|
$
|
(5,186,557
|
)
|
$
|
(120,635
|
)
|
|
Shares
(denominator)
|
15,691,398
|
4,516,513
|
|||||
Per
share amount
|
$
|
(0.33
|
)
|
$
|
(0.03
|
)
|
NOTE
2 - GOING CONCERN
|
|
|
The
Company entered into a Share Exchange Agreement, dated October
17, 2005,
by and among the Company, American Racing Capital, Inc., a Nevada
corporation (“ARCI”) and the shareholders of ARCI (the “ARCI
Shareholders”). Pursuant the Share Exchange Agreement, the ARCI
Shareholders exchanged with, and delivered to the Company all of
the
issued and outstanding common stock of ARCI in exchange for 1,500,000
shares of the Company’s common stock, par value $0.001 (the “Common
Stock”) and 1,000,000 shares of Series A Convertible Preferred Stock,
par
value $0.001 per share (the “Series A Preferred Stock”). The 1,000,000
shares of Series A Preferred Stock can be converted at any time
into three
hundred (300) fully paid, nonassessable shares of the Company’s Common
Stock. As a result of the Share Exchange Agreement, and upon the
filing of
the required Plan and Exchange with the Secretary of State of the
State of
Nevada on October 19, 2005, ARCI became a wholly-owned subsidiary
of the
Company.
|
|
For
the Years Ended
December
31,
|
||||||
|
2006
|
2005
|
|||||
Revenues
|
$
|
5,375
|
$
|
88,989
|
|||
General
and administrative
|
(87,485
|
)
|
209,624
|
||||
Other
income (expense)
|
-
|
-
|
|||||
Net
loss before income taxes
|
(82,110
|
)
|
(120,635
|
)
|
|||
Income
tax expense
|
-
|
-
|
|||||
Net
gain
|
$
|
(82,110
|
)
|
$
|
(120,635
|
)
|
Balance
Sheet:
|
|
|||
Cash
|
$
|
181,469
|
||
Property
and equipment
|
15,021
|
|||
Total
Assets
|
$
|
196,490
|
||
Accounts
payable and accrued expenses
|
$
|
53,050
|
||
Related
party payables
|
200,000
|
|||
Stockholders’
equity (deficit)
|
(56,560
|
)
|
||
Total
Liabilities and Equity
|
$
|
196,490
|
||
Statement
of Operations:
|
||||
Revenues
|
$
|
876,374
|
||
Operating
expenses
|
1,245,071
|
|||
Net
Loss
|
$
|
(368,697
|
)
|
Convertible
Debt Payable
|
$
|
1,000,000
|
||
Discount
|
(847,222
|
)
|
||
Net
|
$
|
152,778
|
Item
24. Indemnification of Directors and
Officers.
|
Item
25. Other Expenses of Issuance and
Distribution.
|
Securities
and Exchange Commission registration fee
|
$
|
12.65
|
||
Transfer
Agent Fees (1)
|
$
|
10,000.00
|
||
Accounting
fees and expenses (1)
|
$
|
1,500.00
|
||
Legal
fees and expenses (1)
|
$
|
50,000.00
|
||
Total
(1)
|
$
|
61,512.65
|
(1)
Estimated
|
Item
26. Recent Sales of Unregistered
Securities.
|
Item
27. Exhibits.
|
Exhibit
No.
|
|
Description
|
|
Location
|
|
|
|
|
|
2.1
|
|
Share
Exchange Agreement, dated October 17, 2005, by and among the Company,
American Racing Capital, Inc., and the shareholders of American
Racing
Capital, Inc.
|
|
Incorporated
by reference as Exhibit 99.1 to Form 8-K filed on October 17,
2005
|
|
|
|
|
|
2.2
|
|
Share
Exchange Agreement, dated October 18, 2005, by and among the Company,
ARC
Development Corporation, and the shareholders of ARC Development
Corporation
|
|
Incorporated
by reference as Exhibit 99.1 to Form 8-K filed on October 19,
2005
|
|
|
|
|
|
3.1.1
|
|
Articles
of Incorporation as filed with the Nevada Secretary of State on
or about
September 8, 1998
|
|
Incorporated
by reference as Exhibit 3.1.1 to Form 10-SB filed on January 1,
2000
|
|
|
|
|
|
3.1.2
|
|
Certificate
of Amendment to the Articles of Incorporation as filed with the
Nevada
Secretary of State on or about June 23, 1999
|
|
Incorporated
by reference as Exhibit 3.1.2 to Form 10-SB filed on January 1,
2000
|
|
|
|
|
|
3.1.3
|
|
Certificate
of Designation of the Series A Convertible Preferred Stock of American
Racing Capital, Inc.
|
|
Incorporated
by reference as Exhibit 3.2 to Form 8-K filed on December 5,
2005
|
|
|
|
|
|
3.1.4
|
|
Amended
and Restated Certificate of Designation of Series A Convertible
Preferred
Stock of American Racing Capital, Inc.
|
|
Incorporated
by reference as Exhibit 3.1 to Form 10-QSB filed on January 31,
2006
|
|
|
|
|
|
3.2
|
|
Bylaws
|
|
Incorporated
by reference as Exhibit 3.2 to Form 10-SB filed on January 1,
2000
|
|
|
|
|
|
4.1
|
|
Securities
Purchase Agreement dated July 25, 2006, by and among the Company
and New
Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
AJW
Offshore, Ltd. and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.1 to Form 8-K filed on August 4,
2006
|
|
|
|
|
|
4.2
|
|
Form
of Callable Convertible Secured Note by and among New Millennium
Capital
Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd.
and AJW
Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.2 to Form 8-K filed on August 4,
2006
|
|
|
|
|
|
4.3
|
|
Form
of Stock Purchase Warrant issued to New Millennium Capital Partners
II,
LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners,
LLC
|
|
Incorporated
by reference as Exhibit 4.3 to Form 8-K filed on August 4,
2006
|
|
|
|
|
|
4.4
|
|
Registration
Rights Agreement dated July 25, 2006 by and among New Millennium
Capital
Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd.
and AJW
Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.4 to Form 8-K filed on August 4,
2006
|
Exhibit
No.
|
|
Description
|
|
Location
|
|
|
|
|
|
4.5
|
|
Security
Agreement dated July 25, 2006 by and among the Company and New
Millennium
Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
Ltd.
and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.5 to Form 8-K filed on August 4,
2006
|
|
|
|
|
|
4.6
|
|
Intellectual
Property Security Agreement dated July 25, 2006 by and among
the Company
and New Millennium Capital Partners II, LLC, AJW Qualified Partners,
LLC,
AJW Offshore, Ltd. and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.6 to Form 8-K filed on August 4,
2006
|
|
|
|
|
|
4.7
|
|
Amendment
of Notes dated April 18, 2007
|
|
Incorporated
by reference as Exhibit 4.7 to Form SB-2 filed April 26,
2007
|
|
|
|
|
|
5.1
|
|
Opinion
of legality and consent of Anslow & Jaclin, LLP
|
|
Filed
herewith
|
|
|
|
|
|
10.1
|
|
Consulting
Agreement, dated August 21, 2002, by and between the Company
and Earl
Ingarfield
|
|
Incorporated
by reference as Exhibit 10.1 to Form 10-QSB filed November 14,
2006
|
|
|
|
|
|
10.2
|
|
Employment
Agreement between D. Davy Jones and ANRC
|
|
Incorporated
by reference as Exhibit 10.2 to Form 10-QSB filed November 14,
2006
|
|
|
|
|
|
10.3
|
|
Employment
Agreement between A. Robert Koveleski and ANRC
|
|
Incorporated
by reference as Exhibit 10.3 to Form 10-QSB filed November 14,
2006
|
|
|
|
|
|
10.4
|
|
Shareholders
Agreement, as of November 21, 2006, by and among Motorsports &
Entertainment of Tennessee, Inc., a Nevada corporation, American
Racing
Capital, Inc., a Nevada corporation and LJ&J Enterprises, Inc., a
Pennsylvania corporation
|
|
Incorporated
by reference as Exhibit 10.1 to Form 8-K filed on December 20,
2006
|
|
|
|
|
|
10.5
|
|
Stock
Purchase Agreement, as of November 21, 2006, by and between
Motorsports & Entertainment of Tennessee, Inc., a Nevada corporation
and LJ&J Enterprises of Tennessee, Inc., a Tennessee
corporation
|
|
Incorporated
by reference as Exhibit 10.2 to Form 8-K filed on December 20,
2006
|
|
|
|
|
|
10.6
|
|
Settlement
Agreement and General Release, dated October 27, 2006, by and between
ANRC and D. Davy Jones
|
|
Incorporated
by reference as Exhibit 10.12 to Form 8-A filed on February 6,
2007
|
|
|
|
|
|
14.1
|
|
Code
of Ethics
|
|
Incorporated
by reference as Exhibit 99.1 to Form 10-KSB filed on March 31,
2005
|
|
|
|
|
|
10.6
|
|
Settlement
Agreement and General Release, dated October 27, 2006, by and between
ANRC and D. Davy Jones
|
|
Incorporated
by reference as Exhibit 10.12 to Form 8-A filed on February 6,
2007
|
|
|
|
|
|
23.1
|
|
Consent
of Moore & Associates, Chartered
|
|
Filed
herewith
|
Item
28. Undertakings.
|
(a)
|
Rule
415 Offering:
Undertaking
pursuant to Item 512(a) of Regulation S-B
|
|
|
||
The
undersigned registrant hereby undertakes:
|
||
|
||
1.
|
To
file, during any period in which offers or sales are being made,
a
post-effective amendment to this registration
statement:
|
|
|
||
|
(a)
|
To
include any prospectus required by Section 10(a)(3) of the Securities
Act;
|
|
||
|
(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 notwithstanding the foregoing, any increase or decrease
in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation
From
the low or high end of the estimated maximum offering range may
be
reflected in the form of prospects filed with the Commission pursuant
to
Rule 424(b) if, in the aggregate, the changes in the volume and
price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the
effective 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.
|
|
||
2.
|
That,
for the purpose of determining any liability under the Securities
Act,
each such 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.
|
|
|
||
3.
|
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.
|
|
|
||
4.
|
For
determining liability of the undersigned small business issuer
under the
Securities Act to any purchaser in the initial distribution of
the
securities, the undersigned small business issuer undertakes that
in a
primary offering of securities of the undersigned small business
issuer
pursuant to this registration statement, regardless of the underwriting
method used to sell the securities to he purchaser, if the securities
are
offered or sold to such purchaser by means of any of the following
communications, the undersigned small business issuer will be a
seller to
the purchaser and will be considered to offer or sell such securities
to
such purchaser:
|
|
|
||
|
(a)
|
Any
preliminary prospectus or prospectus of the undersigned small business
issuer relating to the offering required to be filed pursuant to
Rule 424
(Sec. 230. 424);
|
|
||
|
(b)
|
Any
free writing prospectus relating to the offering prepared by or
on behalf
of the undersigned small business issuer or used or referred to
by the
undersigned small business issuer;
|
|
||
|
(c)
|
The
portion of any other free writing prospectus relating to the offering
containing material information about the undersigned small business
issuer or its securities provided by or on behalf of the undersigned
small
business issuer; and
|
|
||
|
(d)
|
Any
other communication that is an offer in the offering made by the
undersigned small business issuer to the
purchaser.
|
(b)
|
Request
for Acceleration of Effective Date:
Undertaking
pursuant to Item 512(e) of Regulation S-B
|
|
|
Insofar
as indemnification for liabilities arising under the Securities
Act may be
permitted to our 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 our directors, officers, or controlling
persons
in the successful defense of any action, suit or proceeding, is
asserted
by one of our directors, officers, or controlling persons in connection
with the securities being registered, we will, unless in the opinion
of
our 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.
|
(c)
|
For
Purposes of Determining Liability under the Securities
Act:
Undertaking
pursuant to Item 512(g) of Regulation S-B
|
|
|
The
undersigned registrant hereby undertakes that, for the purpose
of
determining liability under the Securities Act to any
purchaser:
|
|
|
|
|
Each
prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements
relying on Rule 430B or other than prospectuses filed in reliance
on Rule
430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness.
Provided,
however, that no statement made in a registration statement or
prospectus
that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement
will,
as to a purchaser with a time of contract of sale prior to such
first use,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement
or
made in any such document immediately prior to such date of first
use.
|
|
|
|
|
AMERICAN
RACING CAPITAL, INC.
|
|
|
|
|
By:
|
/s/
A. Robert Koveleski
|
|
|
A.
Robert Koveleski
|
|
|
Chief
Executive Officer, President, Interim Principal Accounting
Officer
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
/s/
A. Robert Koveleski
A. Robert Koveleski |
|
Chairman,
Chief Executive Officer, President, Interim Principal Accounting
Officer
|
|
June
8, 2007
|