Attached files
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of
The
Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported) February 24,
2010
ACROSS
AMERICA REAL ESTATE EXCHANGE, INC.
(Name of
registrant as specified in its charter)
Colorado | 000-525-33 | 20-8097439 |
State of Incorporation | Commision File Number | IRS Employer Identification No |
7660
Goddard Street, Suite 100
Colorado Springs, CO
80920
Address
of principal executive offices
719-265-5821
Telephone
number, including
Area
code
123 North
Colorado Avenue, Suite 200
Fort Collins, CO
80524
Former
name or former address if changed since last report
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01 - Entry into a Material Definitive Agreement.
On February
24, 2010 Across America Real Estate Exchange, Inc. (“AAEX” or “Across America”
or the “Registrant”) entered an Agreement and Plan of Merger and Reorganization
(the “Agreement”) with Accredited Members, Inc. (“AMI”). The
Registrant previously announced the terms of a non-binding letter of intent
between the parties.
Pursuant to the
Agreement on February 24, 2010 AMI merged with and into AAEX Acquisition Corp.,
a wholly owned subsidiary of Across America and was the surviving entity in that
transaction (the “Merger Transaction”). As such, upon closing the
Merger Transaction AMI became a wholly owned subsidiary of Across
America. To effect the transaction Across America, agreed to acquire
all of the outstanding shares of AMI by the issuance of an aggregate of
approximately 25,554,010 shares of Across America common stock, with each single
AMI common share being entitled to receive approximately 2.603 shares of Across
America common stock.
The Agreement
also provides that upon the Merger Transaction being effective, Across America’s
will cause its Board of Directors to be increased to two persons and J.W. Roth
was appointed to fill the vacancy created. Pursuant to the Agreement
Across America expects to appoint two additional persons to its Board of
Directors after the closing, and this is expected to occur in approximately
fifteen days after the completion of the Merger
Transaction. Additionally, the shareholders of Across America have
already approved changing the company’s name to Accredited Members Holding
Corporation. The appointment of the additional directors and the changing of
Across America’s name will be effected and disclosed in accordance with all
applicable regulatory requirements.
The Agreement
also set forth a number of conditions precedent for the completion of the
transaction, and contains other standard provisions for transactions of this
nature, including standard representations, warranties and
covenants.
Item 2.01 - Completion of Acquisition or
Disposition of Assets.
On February
24, 2010, Across America entered into the Agreement, pursuant to which it
completed the Merger Transaction and AMI became a wholly owned subsidiary of
Across America. Further information about the Agreement and the
Merger Transaction is provided above under Item 1.01 of this Current
Report.
Under the
terms of the Agreement AMI merged into AAEX Acquisition Corp., a wholly owned
subsidiary of AAEX. Each share of AMI common stock that was issued
and outstanding share at the closing of the merger transaction was converted
into the right to receive 2.603 shares of Across America’s common
stock.
Certain
entities affiliated with Mr. Klemsz, the president and chief executive officer
of Across America, are significant shareholders of AMI, and prior to the
effective time of the Merger Transaction in the aggregate owned approximately
16% of AMI’s outstanding common stock. Otherwise, there were no
material relationships between Across America or its affiliates and any of the
parties to the Merger Agreement, other than in respect of the Merger
Agreement.
Across
America was a “shell company” (as such term is defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) immediately
before the completion of the Merger Transaction. However as a result
of the Merger Transaction it is no longer a shell
company. Accordingly, pursuant to the requirements of Item 2.01(a)(f)
of Form 8-K, set forth below is the information that would be required if Across
America was filing a general form for registration of securities on Form 10
under the Exchange Act, reflecting Across America’s common stock, which is the
only class of its securities subject to the reporting requirements of Section 13
or Section 15(d) of the Exchange Act upon consummation of the Merger
Transaction.
1
A.
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Description of
Business
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Forward
Looking Statements
The
information in this discussion contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements involve risks and uncertainties, including statements regarding the
Registrant’s capital needs, business strategy and expectations. Any statements
contained herein that are not statements of historical facts may be deemed to be
forward-looking statements. In some cases, forward-looking statements can be
identified by terminology such as “may”, “will,” “should,” “expect,” “plan,”
“intend,” “anticipate,” “believe,” estimate,” “predict,” “potential,” or
“continue,” the negative of such terms or other comparable terminology. Actual
events or results may differ materially. The Registrant disclaims any obligation
to publicly update these statements, or disclose any difference between its
actual results and those reflected in these statements. The information
constitutes forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995.
Except as
otherwise indicated by the context, references in this Current Report on Form
8-K to "we," "us" and "our" are to the business of Across America on
a consolidated basis with AMI.
Overview of the Business:
Across
America is a corporation which was formed under the laws of the State of
Colorado on December 1, 2005. Until March 23, 2007, it was a wholly-owned
subsidiary of Capterra Financial Group, Inc., formerly known as Across America
Real Estate Corp. Across America is a development stage-company, and previously
intended to facilitate the exchange of real estate properties between
individuals through the use of Section 1031 of the Internal Revenue
Code.
AMI is a
Colorado corporation and was incorporated on December 12,
2008. At its inception, the company’s name was Accredited
Members Only, Inc. However, on February 13, 2009 the company filed an amendment
to its Articles of Incorporation changing its name to Accredited Members,
Inc.
In February
2009 AMI acquired the customer contracts and related customer relationships of
EdgeWater Research Partners, LLC a recognized microcap research
firm. AMI is a publisher of research and information regarding
small/microcap companies and provides an online social networking Web Site for
high net-worth investors (www.accreditedmembers.com) (the “Site”) and holds
conferences for investors to meet and build relationships with each other as
well as small/micro cap companies.
AMI is
intended to fill a unique niche by providing institutional and individual
investors with proprietary research on “small-cap” or “micro-cap” companies
(i.e. companies that have a market capitalization of $300 million or
less). The Site went live in early July 2009. AMI’s online community
is designed to provide investors a vital resource to assist in the discovery of
new investment ideas, access independent research and interact with other
successful investors.
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Products and
Services
AMI offers a
range of free and paid subscription services to individual accredited investors
who register as members to the Site as well as paid issuer (profile)
subscription services for small/microcap public and private
companies. AMI focuses on selling subscriptions to
sophisticated individual investors as well as selling issuer profile
subscriptions to small/microcap public and private companies.
Members to
AMI’s Site have access to a range of information that is a part of AMI’s
database as well as other financial information made available through the
Site. Additionally, paid subscribers gain access to an array of tools
for searching, sorting, sharing, selecting and downloading financial and
investment-related information.
AMI believes
that the predictable, recurring revenue streams and operating leverage in its
membership subscription and issuer subscription model as well as the market
opportunity will result in margin expansion and long term revenue growth. AMI
believes there is a large opportunity to convert many of the people who utilize
financial information that is publicly available to paid subscribers of the
Site.
Although AMI
generally requests and receives cash compensation for its products and services,
in its discretion it may (and has) accepted equity compensation from its issuer
profile clients. When AMI accepts equity compensation it
discloses its equity interest in its respective clients as
appropriate.
Memberships
In part, the
Site is intended to provide affluent investors an on-line community to help
generate and research new investment ideas. Upon registering, all
members must represent to AMI that they meet the requirements of an “accredited
investor” (as defined in Rule 501 promulgated under the Securities Act of
1933).
On the Site
members can post comments and other information on a range of investment related
issues, review information posted by other members, and interact with other
members regarding investment and financial market issues. This
exchange of information is done primarily through blogs, chat rooms, and posting
of comments and other information. Members cannot post materials (including
comments) on the Site in an anonymous manner. AMI currently
provides two levels of online memberships to the Site (Free and Full
Access):
1.
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Free Memberships
provide members to the Site services and privileges
including:
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The
ability to network with other members to the
Site;
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Access
to “profiles” published by individual companies (i.e. “”Profiles”” as
further described below);
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The
ability to monitor their portfolio and to explore new investment
opportunities using investment tools, tracking programs and stock
quotes;
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Access
to financial news, market commentary, and live news
feeds;
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Access
to videos, interviews and information about companies (particularly those
in the microcap and small-cap
categories);
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The
ability to connect privately with other members to the
Site;
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The
ability to create discussion groups or personal blogs regarding financial
and investment related information;
and
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The
ability to create and post a member
profile.
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2.
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Full Access Memberships
provide members to the Site all of the services and privileges available
to Free Memberships as well as:
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Full
access to view and download research reports (researched and analyzed by
AMI analysts and staff;
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Full
access to review business certain business valuations with respect to
certain companies;
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Full
Access to attend all investment conferences hosted by AMI;
and
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The
ability to create and post both a member and corporate (Issuer)
profile.
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Profiles Services
AMI also
offers products and services intended for small/microcap companies that are
intended to permit them to post general information about their business on the
Site, to participate as a presenter and/or exhibiter in investment conferences
organized by AMI, and to receive assistance with marketing their
business. The Site is intended to that Profile
clients can utilize it to provide an overview of that particular
company and publish information such as its current and/or proposed business
plans and operations. Here, companies generally post
information such as:
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Their
current business plan;
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A
company overview presentation and/or introductory
video;
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Summary
information regarding their executive
team;
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Historical
financial performance; and
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Hyperlinks
to their company website, SEC filings, press releases, video clips,
interviews, and industry developments if
applicable.
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AMI currently
offers four different tiers of services (or “Profile Service”) to profile
clients (Premium, Platinum,
Valuation and Marketplace Directory Listing). These different
tiers or profiles of services can generally be described as:
§
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Premium Profiles – Provide a
profile client the same benefits as offered to Full Access Members, plus
access to a large database of accredited and institutional investors
through the website. This database contains general information regarding
AMI members, as well as third parties. The individuals and entities that
populate this database range from funds, to individuals, to angel
investors, compiled from a research firm and then licensed to AMI.
Finally, Premium Profile clients are provided a Conference/Exhibitors
table at a conference organized by AMI. AMI charges a flat fee for this
service.
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Platinum Profiles – Provide a
profile client the same benefits as offered to Full Access Members, plus
AMI provides assistance to Platinum Profile clients in navigating and
searching the database of prospective business partners. Based on selected
objective criteria, such as market sector, AMI attempts to match clients
with persons or entities that might be interested in pursuing a business
relationship with that profile client. Finally, Platinum
Profile clients are provided a presentation slot at an investment
conference organized by AMI. AMI charges a flat fee for this
service.
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Valuation Services – AMI provides
companies a service to assist them present information regarding their
company, including marketing materials and valuation
information. The fee charged for this service varies based on
the services actually requested and
provided.
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Marketplace Directory
Listing – AMI has created
a Marketplace Directory Listing tool on the Site for companies that desire
to present information regarding their business to members to the
Site. AMI charges a flat fee for this service.
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Conferences and Seminars
AMI intends
to host multiple investment conferences across the U.S. each
year. Members to the Site as well as other persons may register to
attend these conferences. Subscribing Issuers to the Site are
given the opportunity to either present a 30 minute overview of their business
to conference attendees and/or to have a Conference/Exhibitors table (depending
on their paid contracted service). During 2009 AMI hosted one
conference. AMI has hosted one investment conference thus far in 2010
and plans to host up to five additional conferences.
Research
AMI provides
financial reports and analysis to its members which it believes is independent
and unbiased. This research and information in large part
focuses on small/microcap companies, as AMI believes that information and
research with respect to these companies is difficult to come by.
Competition
AMI
competes in the market for financial research and information which is a highly
competitive market. AMI competes with other free and fee-based financial
information websites such as yahoo/finance, www.raisecapital.com, and
angelsoft.com with respect to its financial information
services. Additionally, AMI competes with other providers of
financial information and research, including those who provide such information
through more traditional channels such as the radio, television and
print. AMI believes it has a competitive advantage over other
financial information websites because of the reputation of its staff, that it
is targeting a specific group of persons with specific information needs, and
mainly focuses on the micro-cap space which it believes is
underserved.
AMI
believes that through its marketing and branding efforts, quality service
development, and strategic alliances with advertisers, financial analysts, and
others in the financial industry it will be able to develop a loyal client base
in order to compete in the very competitive online marketplace.
5
Dependence on one or a few
major customers
AMI is
dependent on generating traffic to the website and developing a loyal registered
user base (both in terms of members and repeating issuers) in order to draw
advertisers and to generate fees. Because AMI specifically targets sophisticated
investors in the micro-cap space the market of potential users is limited. AMI
is dependent on generating revenue from advertisements and fees from paying
members, companies or organizations.
Distribution
Methods
Upon
acquiring the intangible assets (customer contracts and relationships) of
EdgeWater Research, LLC, AMI acquired a base of subscribers for the research
published by EdgeWater. In additional to promoting its services
through its officers, directors and employees, AMI utilizes independent
contractors to sell memberships to the Site and otherwise promote its products
and services.
Intellectual
Property
AMI owns and
maintains a portfolio of intellectual property assets which it hopes to continue
to build. AMI believes that its intellectual property assets create great value
to the Company and therefore has taken steps to protect it through trademark,
copyright, trade secret, and trademark laws of the United States and through
contractual agreements.
AMI has
and/or plans to enter several licensing and syndication agreements to obtain
content for its website. While AMI has entered agreements with its content
providers to own all rights, including copyrights, in the original content
written by its content providers, AMI believes it may need to license certain
content from third party sources to provide new or additional content to the
site. AMI also has or plans to enter licensing or syndication agreements with
third parties to provide news feeds and stock and market based
information.
Government
Regulation
AMI is
subject, both directly and indirectly, to various laws and governmental
regulations relating to its business. There are currently few laws or
regulations directly applicable to commercial online services or the Internet.
However, due to increasing popularity and use of commercial online services and
the Internet, it is possible that a number of laws and regulations may be
adopted with respect to commercial online services and the Internet. These laws
and regulations may cover issues that include, for example, user privacy,
pricing and characteristics, and quality of products and services. Moreover, the
applicability to commercial online services and the Internet of existing laws
governing issues that include, for example, property ownership, libel and
personal privacy, is uncertain and could expose AMI to substantial liability.
Any new legislation or regulation or the application of existing laws and
regulations to the Internet could have a material and adverse effect on our
business, results of operations and financial condition.
As AMI
services are available over the Internet anywhere in the world, multiple
jurisdictions may claim that we are required to qualify to do business as a
foreign corporation in each of those jurisdictions. AMI’s failure to qualify as
a foreign corporation in a jurisdiction where it is required to do so could
subject the company to taxes and penalties for the failure to qualify. It is
possible that state and foreign governments might also attempt to regulate AMI’s
transmissions of content on its website or on the websites of others or
prosecute us for violations of their laws. AMI cannot assure you that violations
of local laws will not be alleged or charged by state or foreign governments,
that the company might not unintentionally violate these laws or that these laws
will not be modified, or new laws enacted, in the future.
6
The
securities, financial advisory, brokerage services, and financial services
industries are subject to extensive regulation under both federal and state laws
by governmental agencies, supervisory authorities, and self regulatory
organizations. AMI does not believe its business operations subject it or its
officers and directors to this type of regulation. However, if AMI or
its officers and directors are deemed to be subject to the regulations imposed
on the securities, financial advisory, brokerage, and financial services
industries these regulations would impose significant limitations or on AMI’s
ability to implement our business plan and require significant amounts of
corporate resources for compliance with such regulations, some of which have
been included in our budget.
Website
Development
During fiscal
2009 AMI has spent approximately $224,000 of costs on website development
activities with respect to building and developing its database and the
Site. AMI expects to continue to devote a portion of its working
capital to continuing to develop and improve the Site.
Number of total employees
and number of full time employees
AMI currently
has eight employees of which seven are full time.
Report to Security
Holders
Across
America files reports with the Securities and Exchange Commission (“SEC”) as
required by Section 13(a) of the Securities Exchange Act of 1934. The public may
read and copy an materials filed by the Company with the SEC at the SEC’s public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC at www.sec.gov. AMI’s website is
www.accreditedmembers.com.
B.
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Risk
Factors
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The Company’s
securities are highly speculative and involve a high degree of risk, including
among other items the risk factors described below.
RISKS RELATED TO OUR
BUSINESS
AMI has a lack of
operating history and lack of revenues from operations. AMI is
a new enterprise, has limited history of operations and is in the early stage of
growth. AMI is subject to many risks common to enterprises with
limited or no operating history, including potential under-capitalization,
limitations with respect to personnel, financial and other resources, and
limited customers and revenue sources. AMI will need to generate significant
revenues to achieve profitability, and it may not be able to do so.
7
In addition,
AMI expects that it will likely need to raise additional capital in order to
move forward with its projected business operations. Any future
financing would likely be dilutive to the Company’s existing shareholders. There
is no assurance that any additional capital that the Company will require will
be obtainable on terms acceptable to us, if at all. The failure to obtain such
additional financing could result in delays or indefinite postponement of all or
certain of our business operations. Further, especially in
light of on-going recent abnormal volatility of the global markets, a general
tightening of lending standards, and a general decrease in equity financing and
similar type transactions it could be difficult for AMI to obtain funding to
allow it to continue to develop its business operations.
Our financial
statements reflect a “going concern” qualification. As a
result of our losses from operations and limited capital resources, our
independent registered public accounting firm’s report on our financial
statements as of, and for the year ended, December 31, 2009, includes an
explanatory paragraph discussing that these conditions raise substantial doubt
about our ability to continue as a going concern. Our ability to
continue to pursue our plan of operations as described herein is dependent upon
our ability to increase our revenues and/or raise the capital necessary to meet
our financial requirements on a continuing basis.
As a result of
promissory notes previously issued by AMI, AMI is significantly leveraged and
has significant debt service requirements. As a result of a
previous convertible promissory note offering AMI conducted in 2009 it has
significant indebtedness. The notes issued in that offering are not
scheduled to mature until 2014. AMI is not required to establish a sinking fund
for the repayment of these note obligations. AMI’s indebtedness could
adversely affect the company’s overall operations, including among other things
its ability to obtain additional financing if necessary, and a significant
portion of AMI’s cash flow from operations could be dedicated to the repayment
of interest and principal on the promissory notes which would reduce the amount
of funds available for other corporate purposes. AMI’s ability to
meet its debt service obligations and reduce its indebtedness will be dependent
upon the company’s future performance, which will be subject to the success of
its business strategy, general economic conditions, and financial business and
other factors affecting the Company’s operations, many of which are beyond the
AMI’s control. There can be no assurance that AMI’s business
operations will generate sufficient cash flow from operations to meet its debt
service requirements and the potential payment of principal in cash when due,
and if AMI is unable to do so, it may be required to liquidate assets, to
refinance all or a portion of the indebtedness or seek to obtain additional
financing.
AMI’s business plan
is unproven and subject to numerous uncertainties. AMI is
primarily in the business of building and administering an on-line community
that is intended to serve as a gateway for qualified investors and companies to
build business relationships and identify business investment
opportunities. Demand for these services is unproven and there can be
no assurance that investors or companies will adopt or utilize these services.
If AMI is unable to attract and retain a sufficient number of members and
persons to utilize its services, it will have an adverse effect on AMI’s
revenues, profitability and financial condition.
AMI’s results of
operations may be affected by factors that are not within the company’s control.
AMI’s operating results may fluctuate significantly as a
result of a variety of factors, many of which are outside of its control.
These factors include but are not limited to: significant declines in the
securities markets, the individual market and financial performance of issuers
and members that utilize AMI’s services, risks inherent in the financial markets
such as volume and liquidity fluctuations, and overall general economic
conditions. These factors could adversely affect members and issuers that
utilize AMI’s services and cause them to terminate the use of the services AMI
offers through its website. As a result of AMI’s lack of operating
history, and the nature of the industry and markets in which it operates, it is
difficult for AMI to forecast its revenues or earnings accurately. AMI may
be unable to adjust spending in a timely manner to compensate for any unexpected
revenue shortfall. Accordingly, any significant shortfall in revenues
relative to AMI’s planned expenditures would have an immediate adverse effect on
AMI’s business, results of operations and financial condition.
8
New and existing
competitors may enter AMI’s markets and take away market share from the
Company. AMI currently believes
there are limited competitors for the range of services it offers and plans to
offer. These competitors, or new competitors, could potentially have
more efficient systems, better management, successful personnel, and greater
financial backing. If competition increases within AMI’s markets the
company’s financial position could potentially be negatively
impacted.
AMI is reliant on
certain of its suppliers and vendors. In part, AMI’s services
are intended to allow its members to monitor their portfolios, and have access
to real time financial news, market commentary, stock quotes, and other current
financial data and information. AMI believes this is a significant
service offered to its members. AMI is dependent on certain third
party vendors to supply the company with the on-going real time information and
to make the information available to members. Although AMI believes
it can continue to obtain this information and related services at reasonable
rates, if the company is unable to continue to obtain this information at
reasonable rates AMI’s services will be adversely affected and could impact the
company’s ability to generate revenues through membership sales.
There is no assurance
that AMI will be successful in expanding its operations and, if successful,
managing its future growth. AMI’s payment
obligations for the development and administration of its website and business
operations have, and will, result in significant operating costs. If
AMI is unable to generate revenues that are sufficient to cover its operating
costs, the company’s results of operations will be materially and adversely
affected. In addition, AMI may experience periods of rapid growth,
including increased staffing levels. Such growth will likely place a
substantial strain on management, operational, financial and other
resources. Moreover, AMI will likely need to train, motivate and
manage additional employees and attract sales, technical and other
professionals. Any failure to expand these areas and implement such
procedures and controls in an efficient manner and at a pace consistent with our
business objectives would have a material adverse effect on our business,
financial condition and results of operations.
Performance problems
with AMI’s website could negatively impact our business plan. AMI’s success will
depend greatly on (i) successfully completing the on-going development of its
website that supports the company’s on-line community, and (ii) maintaining the
site to minimize delays and systems problems. The occurrence of
system delays could interrupt data processing or result in the loss of stored
data. In addition, AMI will depend on the efficient operation of web
browsers, internet service providers and internet connections from our customers
to our systems, and the receipt of information and data feeds on a timely basis
from service and content providers. Significant outages or delays in
any of these areas may result in a loss of potential or existing users of our
web site, which if sustained or repeated could reduce the attractiveness of our
site and negatively impact our business plan.
AMI’s intellectual
property rights are valuable, and any inability to protect them could reduce the
value of our brand image and harm our business and our operating results.
AMI intends to create, own and maintain a wide array of intellectual
property assets, including copyrights, trademarks, trade secrets and rights to
certain domain names, which it believes are, or will be, among its most valuable
assets. AMI seeks to protect its intellectual property assets through
copyright, trade secret, trademark and other laws of the United States, and
through contractual provisions. The efforts AMI has taken to protect
its intellectual property and proprietary rights may not be sufficient or
effective at stopping unauthorized use of those rights. In addition,
effective trademark, copyright and trade secret protection may not be available
or cost-effective in every country in which our website and media properties are
distributed or made available through the internet. There may be
instances where AMI is not able to fully protect or utilize its intellectual
property assets in a manner to maximize competitive advantages. Third
parties may, from time to time, copy significant content available on AMI’s
website for use in competitive internet services. Protection of the
distinctive elements of AMI’s website may not be available under copyright
law. If AMI is unable to protect its proprietary rights from
unauthorized use, the value of its brand image may be reduced. Any
impairment of AMI’s brand could negatively impact its business. In
addition, protecting AMI’s intellectual property and other proprietary rights is
expensive and time consuming. Any increase in the unauthorized use of
our intellectual property could make it more expensive to do business and
consequently harm our operating results.
AMI will need to hire
additional personnel. AMI’s future success
depends on its ability to identify, attract, hire, train, retain and motivate
highly skilled executive, technical, sales and marketing and business
development personnel. Competition for qualified personnel may be
intense. If AMI fails to successfully attract, assimilate and retain
a sufficient number of such personnel, its business will suffer.
AMI could be subject
to the extensive government regulations imposed on the financial and securities
industries, and if we are deemed subject to such regulation it would impose
significant obligations and restrictions on our ability to conduct our planned
business operations. The securities, brokerage services, and financial
services industries are subject to extensive regulation under both federal and
state laws by governmental agencies, supervisory authorities, and self
regulatory organizations. AMI does not believe its business operations subject
it or its officers and directors to this type of regulation. However,
if AMI or its officers and directors are deemed to be subject to the regulations
imposed on the securities, brokerage, and financial services industries these
regulations would impose significant limitations or on our ability to implement
our business plan and require significant amounts of corporate resources for
compliance with such regulations, some of which have been included in its
budget.
RISKS RELATED TO OUR
SECURITIES
No
Dividends. The Company does
not intend to declare any dividends in the foreseeable
future. Investors who require income from dividends should not
purchase our common stock.
The vast majority of
our common stock is currently considered restricted stock and our common stock is
not currently eligible to be resold pursuant to Rule 144. A
significant portion of our outstanding common stock is considered either
“restricted shares” or “control shares” as defined in Rule 144 under the
Securities Act. The restricted shares may only be sold if they are
registered under the Securities Act or another exemption from registration under
the Securities Act. However, because Across America was a shell
company our restricted common stock is not currently eligible to be resold
pursuant to Rule 144 until twelve months after the filing of this Form
8-K.
9
The lack of a
broker or dealer to create or maintain a market in our stock could adversely
impact the price and liquidity of our securities. The Company
has no agreement with any broker or dealer to act as a market maker for its
securities and there is no assurance that it will be successful in obtaining any
market makers. Thus, no broker or dealer will have an incentive to make a market
for our stock. The lack of a market maker for our securities could adversely
influence the market for and price of our securities, as well as your ability to
dispose of, or to obtain accurate information about, and/or quotations as to the
price of, our securities.
As our stock is not
listed on a national securities exchange, trading in our shares will be subject
to rules governing "penny stocks," which will impair trading activity in our
shares. Our stock is not on a national securities exchange.
Therefore, our stock is subject to rules adopted by the Commission regulating
broker dealer practices in connection with transactions in "penny stocks." Those
disclosure rules applicable to "penny stocks" require a broker dealer, prior to
a transaction in a "penny stock" not otherwise exempt from the rules, to deliver
a standardized list disclosure document prepared by the Commission. That
disclosure document advises an investor that investment in "penny stocks" can be
very risky and that the investor's salesperson or broker is not an impartial
advisor but rather paid to sell the shares. The disclosure contains further
warnings for the investor to exercise caution in connection with an investment
in "penny stocks," to independently investigate the security, as well as the
salesperson with whom the investor is working and to understand the risky nature
of an investment in this security. The broker dealer must also provide the
customer with certain other information and must make a special written
determination that the "penny stock" is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. Further, the
rules require that, following the proposed transaction, the broker provide the
customer with monthly account statements containing market information about the
prices of the securities.
These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for our common stock. Many brokers may be
unwilling to engage in transactions in our common stock because of the added
disclosure requirements, thereby making it more difficult for stockholders to
dispose of their shares. You will also find it difficult to obtain accurate
information about, and/or quotations as to the price of, our common
stock.
In general, buying
low-priced penny stocks is very risky and speculative. The Company’s
common stock is currently defined as a penny stock under the Securities and
Exchange Act of 1934, and rules thereunder. You may not able to sell your shares
when you want to do so, if at all.
Our shares
are defined as a penny stock under the Securities and Exchange Act of 1934, and
rules of the Commission. The Exchange Act and such penny stock rules
generally impose additional sales practice and disclosure requirements on
broker-dealers who sell our securities to persons other than certain accredited
investors who are, generally, institutions with assets in excess of $5,000,000
or individuals with net worth in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 jointly with spouse, or in transactions not recommended by
the broker-dealer. For transactions covered by the penny stock rules, a
broker-dealer must make a suitability determination for each purchaser and
receive the purchaser's written agreement prior to the sale. In addition, the
broker-dealer must make certain mandated disclosures in penny stock
transactions, including the actual sale or purchase price and actual bid and
offer quotations, the compensation to be received by the broker-dealer and
certain associated persons, and deliver certain disclosures required by the
Commission. Consequently, the penny stock rules may affect the
ability of broker-dealers to make a market in or trade our common stock and may
also affect your ability to resell any shares you may purchase in the public
markets.
10
The
over-the-counter market for stock such as ours is subject to extreme price and
volume fluctuations. You may not be able to resell your shares at or above the
public sale price.
The
securities of companies such as ours have historically experienced extreme price
and volume fluctuations during certain periods. These broad market fluctuations
and other factors, such as new product developments and trends in the our
industry and in the investment markets generally, as well as economic conditions
and quarterly variations in our operational results, may have a negative effect
on the market price of our common stock.
As a company
with a class of securities registered pursuant to the 1934 Act the Company has
significant obligations under the 1934 Act.
Having a
class of securities registered under the 1934 Act is a time consuming and
expensive process and subjects the company to increased regulatory scrutiny and
extensive and complex regulation. Complying with these regulations
would be expensive and could require a significant amount of management’s
time. For example, public companies are obligated to institute and
maintain financial accounting controls and for the accuracy and completeness of
their books and records. These requirements could necessitate
additional corporate spending on procedures and personnel requiring us to
reallocate funds from other business objectives.
C.
|
Financial
Information
|
Overview
On February
24, 2010, Across America entered into the Agreement and Plan of
Merger and Reorganization with AMI pursuant to which AMI became a wholly owned
subsidiary of Across America. Each issued and outstanding share of
AMI common stock was converted into the right to receive 2.603 shares of Across
America common stock. As a result of the merger transaction,
our operations our now focused on the products and services offered by and
through AMI. Consequently, we believe that acquisition has caused us
to cease to be a shell company as we now have more than nominal
operations.
The following
management’s discussion and analysis is with respect to the financial statements
of AMI that are filed with this Form 8-K. For information related to
Across America’s operations prior to the Merger Transaction, please see Across
America’s Annual Report on Form 10-K for the year ended December 31, 2009 and
all other prior reports filed by Across America with the Securities and Exchange
Commission.
As described
above, AMI was formed in December 2008, for the purpose of acquiring customer
contracts and related customer relationships from Edgewater Research LLC
(“Edgewater”). AMI had no operations from its formation date to the
date of the Edgewater acquisition which occurred on March 11,
2009. The financial statements for the year ended December 31, 2008,
and the period from January 1, 2009 through March 10, 2009 reflect the results
of operations of Edgewater, whereas the financial statements for AMI reflect its
results of operations from March 11, 2009 through December 31,
2009.
As a result
of our losses from operations and limited capital resources, our independent
registered public accounting firm’s report on our financial statements as of,
and for the year ended, December 31, 2009, includes an explanatory paragraph
discussing that these conditions raise substantial doubt about our ability to
continue as a going concern. Our ability to continue to pursue our
plan of operations as described herein is dependent upon our ability to increase
our revenues and/or raise the capital necessary to meet our financial
requirements on a continuing basis.
11
Results of
Operations
Upon AMI’s
acquisition of Edgewater’s assets in March 2009, AMI began devoting a
significant amount of time and expenses to growing and further developing
Edgewater’s business. Prior to the acquisition by AMI, Edgewater was
operated by David Lavigne. Upon AMI’s acquisition of Edgewater’s
assets in March 2009, and throughout the remainder of 2009, AMI focused on
significantly growing and expanding upon Edgewater’s business operations,
including the development of the AMI website and devoted significantly more
financial resources to marketing and growing the business and the products and
services offered to clients. As such, the results of operations of
AMI and Edgewater for the periods presented in the financial statements may not
provide a meaningful comparison.
From March
11, 2009 through December 31, 2009 AMI recognized a net loss of $(1,589,056),
whereas during 2008, Edgewater recognized net income of
$11,193. However, AMI’s net loss for the period ended December 31,
2009 was primarily the result of the significant amount of expenditures
associated with marketing and promoting its new and expanded business operations
and services to current and prospective clients. AMI believes these
types of expenses are common for start-up business. Included in the
$931,767 in the general administrative expenses AMI incurred during the period
ended December 31, 2009 were expenses of $451,474 for staffing and employment
related expenses which are related to the increased business operations
conducted by AMI as compared to Edgewater. Similarly, AMI incurred
$677,581 in selling and marketing related expenses during the period ended
December 31, 2009, which were primarily expended to promote and market AMI’s
website and investment conferences (the first of which was held in September
2009). Also, as of December 31, 2009 AMI had seven full time
employees, including its President, and Chief Executive Officer whereas as of
December 31, 2008 Edgewater only had one full time employees. As a
result AMI recognized an operating loss of $(1,570,396) during the period ended
December 31, 2009.
On the other
hand, during 2008 Edgewater offered fewer products and services to its clients,
had only utilized three contractors and one full-time employee, and engaged in
very limited activities with respect to promoting and marketing its
services. As such, Edgewater’s operating expenses during the year
ended December 31, 2008 were only $170,127.
During the
period ended December 31, 2009, AMI recognized $226,783 in
revenue. These revenues were primarily generated through a single
conference hosted by AMI as well as through its premium profile sales. In 2008
Edgewater recognized $302,167 in revenues which it primarily generated through
two conferences. AMI believes that the revenues it recognized during
2009 were hampered in part as a result of the general economic conditions and
turbulent market conditions which reduced the demand for the products and
services if offers. AMI is optimistic that as it continues to grow
and promote its business, it will expand the number of conferences it
hosts to at least four-to-six per year, and if general market conditions
continue to show signs of stabilizing, its revenues during fiscal 2010 will grow
in comparison to 2009.
12
Liquidity and
Capital Resources
As of
December 31, 2009 the AMI had working capital of $533,270, and had $564,883 of
cash on-hand. AMI began generating
revenues through its website in June, 2009. However, in large part
during 2009 AMI funded its operations through funds raised through the sale of
its securities. During 2009 AMI received $170,000 through the
issuance of common stock to its founding members in March 2009; received
$300,000 upon the exercise of two warrants in June 2009; and completed two
private placements of its securities – both of which are described
below.
Commencing in
March 2009 AMI conducted a private placement of 10% convertible promissory notes
(the “Notes”). That private placement concluded in July
2009. In total AMI
issued Notes in a total face amount of $587,800. The Notes are
unsecured and are due in full within five years of their date of
issuance. The Notes bear interest at 10% per annum with the interest
being payable on the 15th day
of each month. AMI may prepay the Notes in whole or in part without
penalty at any time after the Company’s common stock trades at or above $0.60
per share for more than 20 consecutive trading days so long as the cumulative
trading volume is at least 500,000 shares in that 20 trading day
period. Additionally, a holder of the Notes may convert the
outstanding balance into shares of Company common stock at a price per share of:
(i) $0.30 per share if the conversion is effected prior to the close of the
third consecutive calendar month in which the Company is cash flow positive; or
(ii) $0.60 per share if the conversion is effected after the close of the third
consecutive calendar month in which the Company is cash flow
positive. The conversion price of the Notes is subject to adjustment
in certain circumstances. As of December 31, 2009 an aggregate
of $237,500 in principal and interest is due pursuant to the Notes and Notes
totaling $350,300 had been converted by certain holders into 1,166,666 shares of
common stock at a conversion rate of $0.30 per share. The $237,500
due to the Note holders is reflected on AMI’s balance sheet as a long-term
liability.
In December
2009 AMI completed a private placement of its common stock, issuing a total of
931,341 shares for aggregate gross proceeds of $679,500. The shares
were issued at $0.75 per share.
AMI believes
that the proceeds from the issuance of its securities, coupled with its cash on
hand and projected revenues, will be sufficient to cover its costs and expenses
for approximately six months. However, estimates for expenses may
change, in which case the Company’s capital would not be sufficient for this
time period. AMI anticipates that it will need to raise additional
capital to fund its projected business expenditures and operations. There can be
no assurance that additional financing will be available to AMI on reasonable
terms, if at all.
During the
period ended December 31, 2009 AMI recognized $226,783 in revenue. These
revenues were primarily generated through by AMI in the second half of the year
through the investment conference AMI held in September 2009 along with the
limited online membership sales to its new social networking environment.
In 2008 Edgewater recognized $302,167 in revenues which it primarily generated
through two conferences with an established recurring subscriber
base. AMI is optimistic that as it continues to grow and promote its
business, and if general market conditions continue to show signs of
stabilizing, its revenues during fiscal 2010 will grow in comparison to
2009. During fiscal 2010 AMI anticipates holding six investment
conferences whereas during fiscal 2009 we only held one such conference as we
spent much of 2009 focusing on developing our initial business operations.
The Company believes that as its business continues to mature and more people
are exposed to, and utilize, the services it offers, AMI’s revenues and business
operations will grow.
13
Off Balance
Sheet Arrangements
We have no
significant off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to our
stockholders.
Critical
Accounting Policies
The preparation of
financial statements in conformity with U. S. generally accepted accounting
principles requires management to make a variety of estimates and assumptions
that affect (i) the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and
(ii) the reported amounts of revenues and expenses during the reporting periods
covered by the financial statements.
Our
management routinely makes judgments and estimates about the effect of matters
that are inherently uncertain. As the number of variables and assumptions
affecting the future resolution of the uncertainties increase, these judgments
become even more subjective and complex. Although we believe that our estimates
and assumptions are reasonable, actual results may differ significantly from
these estimates. Changes in estimates and assumptions based upon actual results
may have a material impact on our results of operation and/or financial
condition. Our significant accounting policies are disclosed in Note 2 to the
Financial Statements included in this Form 8-K.
While all of
the significant accounting policies are important to the Company’s financial
statements, the following accounting policies and the estimates derived
therefrom, have been identified as being critical:
Revenue
recognition:
The Company
recognizes revenue pursuant to SEC Staff Accounting Bulletin No. 104, Revenue Recognition and
Accounting Standards Codification (ASC) 605-25 (formerly known as Emerging
Issues Task Force Issue No. (EITF) 00-21, Revenue Arrangements with Multiple
Deliverables. The Company recognizes revenue when persuasive evidence of
an arrangement exists, delivery has occurred, the sale price is fixed or
determinable and collectibility is reasonably assured. Membership service
contracts typically consist of multiple deliverables, including web-based
services over the membership term and participation in
conferences. The Company defers the revenue associated with any
undelivered elements. The amount of revenue deferred in connection with the
undelivered elements is determined using the relative fair value of each
element, which is generally based on each element's relative retail price. For
valuation products that are sold to customers, such as valuation reports,
revenues are recorded upon delivery and acceptance of the product to the
customer. Deferred revenue represents contractual billings in excess of revenue
recognized.
Website
development costs:
The Company
applies accounting standards which specify the appropriate accounting for costs
incurred in connection with the development and maintenance of web sites. Costs
related to certain web site development activities are expensed as incurred
(such as planning and operating stage activities). Costs relating to certain
website application and infrastructure development are generally capitalized,
and are amortized over their estimated useful life. Through December 31, 2009,
the Company has capitalized approximately $224,000 of costs, which are being
amortized over a five-year period.
14
Impairment of long-lived
assets
Long-lived
tangible and intangible assets that do not have indefinite lives, such as
property and equipment and acquired customer contracts and related 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.
Stock-based
compensation:
The Company’s
accounting for stock-based compensation requires the recognition of the cost of
employee services received in exchange for an award of equity instruments in the
financial statements and is measured based on the grant date fair value of the
award. SFAS 123(R) also requires the stock option compensation expense to be
recognized over the period during which an employee is required to provide
service in exchange for the award (usually the vesting period).
Recent accounting
pronouncement:
In
October 2009, the Financial Accounting Standards Board (“FASB”) issued new
revenue recognition standards which eliminates the requirement to establish the
fair value of undelivered products and services and instead provides for
separate revenue recognition based upon management’s estimate of the selling
price for an undelivered item when there is no other means to determine the fair
value of that undelivered item. These standards are effective prospectively for
revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010. The Company is currently evaluating the
impact, if any, that the adoption of this standard may have on its consolidated
financial statements.
D.
|
Properties.
|
On May 15,
2009 AMI entered into a Lease Agreement for the lease of office space at 7660
Goddard Street, Suite 100, Colorado Springs, CO 80920 which AMI utilizes as its
corporate office. The lease is scheduled to terminate on June 30,
2010. AMI pays $5,272 per month under the terms of the lease. AMI
does not own any real estate and does not currently have plans to acquire any
real estate.
E.
|
Security Ownership of
Certain Beneficial Owners and
Management.
|
Security
Ownership of Management
As a result
of the Merger Transaction on February 24, 2010 Across America had 28,654,010
shares of its common stock issued and outstanding. The following
table sets forth the beneficial ownership of Across America’s common stock as of
February 24, 2010 by each person who now serves as a director and an executive
officer of the Company and the number of shares beneficially owned by all of the
Company’s directors and named executive officers as a group. The
information relating to the ownership interests of such shareholders is provided
after giving effect to the Merger.
15
Name
and Address of
Beneficial
Owner
|
Position
|
Amount
and Nature of
Beneficial
Ownership(1)
|
Percent
of
Common
stock
|
|||
Brian
Klemsz
700
17th
Street, Suite 1200
Denver,
CO 80201
|
Director
|
574,300
(3)
|
2.0%
|
|||
J.W.
Roth
c/o
AMI
7660
Goddard Street, Suite 100,
Colorado
Springs, CO 80920
|
Co-
Chairman of the Board
|
5,206,000
(4)
|
18%
|
|||
David
Lavigne
c/o
AMI
7660
Goddard Street, Suite 100,
Colorado
Springs, CO 80920
|
Co-Chairman
of the Board (2)
|
3,904,000
|
13.5%
|
|||
Delray
Wannemacher
c/o
AMI
7660
Goddard Street, Suite 100,
Colorado
Springs, CO 80920
|
President
and Director (2)
|
3,036,832
|
10.5%
|
|||
Kent
Kiefer
c/o
AMI
7660
Goddard Street, Suite 100,
Colorado
Springs, CO 80920
|
Chief
Executive Officer
|
488,497
(5)
|
**
|
|||
All
current directors, executive officers and named executive officers as a
group
(five
persons)
|
13,209,629
|
45%
|
**
Indicates less than one percent.
(1) Calculated
in accordance with rule 13d-3 under the Securities Exchange Act of
1934.
(2) Messrs.
Lavigne and Wannemacher each serve as officers and directors of
AMI. Messrs Lavigne and Wannemacher are expected to be appointed as
directors of Across America subject to the filing and mailing of a Schedule 14f
information statement. They are expected to begin serving as
directors of Across America on the 10th day following the filing and
mailing of a Schedule 14f information statement.
(3) A
total of 194,000 of these shares are owned of record by Sarmat, LLC, which is
controlled by Mr. Brian Klemsz, our President. A total of 120,000 shares are
owned in the name of family members of Mr. Klemsz.
(4) Includes
2,603,000 shares held beneficially held by Mr. Roth’s spouse.
16
(5)
Includes 98,047 shares of common stock. Also includes 390,450 options
that either are vested or vest within sixty days; but does not include 650,750
options that vest on July 1, 2010 and thereafter. The numbers used to
report Mr. Kiefer’s stock options in the above table and in this footnote
reflect the stock option granted to Mr. Kiefer by AMI on October 1, 2009 but
adjusted to reflect the Merger Transaction.
Security
Ownership of Certain Beneficial Owners
As a result
of the Merger Transaction on February 24, 2010 Across America had 28,654,010
shares of its common stock issued and outstanding. The following table sets
forth the beneficial ownership of the Registrant’s common stock as of February
24, 2010 by each person (other than the directors and executive officers) who
owned of record, or was known to own beneficially, more than 5% of the
outstanding voting shares of common stock. The information relating to the
ownership interests of such shareholders is provided after giving effect to the
Merger Transaction.
Name
and Address of
Beneficial
Owner
|
Amount
and Nature of
Beneficial
Ownership(1)
|
Percent
of
Common
stock
|
||
BOCO
Investments, LLC
262
E. Mountain Ave.
Fort
Collins, CO 80524
|
2,789,768
(2)
|
9.6%
|
||
David
Nahmias
14
Lynnfield St.
Memphis,
TN 38120
|
1,952,250
|
6.7%
|
||
WestMountain
Prime LLC
123
North College Ave. #200
Fort
Collins, CO 80254
|
1,955,227
|
6.8%
|
____________
(1)
|
Calculated
in accordance with rule 13d-3 under the Securities Exchange Act of
1934.
|
(2)
|
Does
not include 1,955,227 shares held by WestMountain Prime, LLC an
entity in which Boco Investments, LLC is the majority interest
holder.
|
Change
in Control Arrangements
Except for
the Merger Agreement, there are currently no arrangements that would result in a
change in control of the Registrant.
F.
|
Directors
and Executive Officers
|
Officers and
Directors
Below are the
names, titles, and ages of the Company’s directors and executive officers
following the closing of the Merger Transaction. There are no family
relationships among any of the directors or executive officers. There
is no agreement or understanding between the Company and each director or
executive officer pursuant to which he was selected as an officer or
director.
17
Name
|
Age
|
Position
|
Brian
Klemsz(1)
|
50
|
Director
|
J.W.
Roth
|
46
|
Co-Chairman
of the Board
|
David
Lavigne (2)
|
47
|
Co-Chairman
of the Board
|
Delray
Wannemacher (2)
|
36
|
President
and Director
|
Kent
Kiefer
|
42
|
Chief
Executive Officer and
Secretary
|
(1) Mr. Klemsz will remain as a
director of the Company subject to the filing and mailing of a Schedule 14f
information statement and is expected to resign as a director of the Company,
effective on the 10th day following the filing and mailing of a Schedule 14f
information statement.
(2) Messrs. Lavigne and
Wannemacher are expected to been appointed as directors of the Company subject
to the filing and mailing of a Schedule 14f information statement and are
expected to begin serving as directors of the Company on the 10th day following
the filing and mailing of a Schedule 14f information statement.
Brian Klemsz has been
Across America’s President, Secretary-Treasurer, and a Director since its
inception. Since March, 2007, he has been the Chief Investment Officer of BOCO
Investments, LLC, one of Across America’s shareholders. He was Chief
Investment Officer for GDBA Investments, LLC, a private investment partnership
and the principal shareholder of the Company, from May, 2000 until March, 2007.
Mr. Klemsz received a Masters of Science in Accounting and Taxation in 1993 and
a Masters of Science in Finance in 1990 from Colorado State University. He
received his Bachelor of Science degree from the University of Colorado in
1981.
J.W. Roth is a
co-founder of AMI and will serve as the Company’s Co-Chairman of AMI’s Board of
Directors following the merger transaction. Mr. Roth is involved in
all aspects of AMI’s business. Mr. Roth served as AMI’s Chief
Executive Officer until October 1, 2009. Mr. Roth served as a
director of Disaboom, Inc. (OTC-Pink Sheets DSBO.PK) from its
inception through May 2009.. Since 1997 Mr. Roth has
served as the as the President of JW Roth & Company, Inc., a consulting
company. Prior to founding JW Roth & Company, Mr. Roth worked in
the financial sales industry for American National Insurance Company and the
Prudential Insurance Company. Additionally, Mr. Roth has worked for,
and been associated with, the business development of several companies such as
Fear Creek Ranches, IMI Global, Inc., CattleNetwork, Inc., Front Porch Direct,
and AspenBio Pharma, Inc.
David L. Lavigne is
the sole founder of EdgeWater Research Partners LLC. EdgeWater Research was
started in 2002 and was a subscription based service providing
micro-cap and small-cap research to institutions, brokers and individual
investors. Because of his experience both with EdgeWater in the micro-cap
and small-cap research business Mr. Lavigne has served as an officer and
director of AMI since its inception. Mr. Lavigne has
spent approximately 25 years in the financial and investment industry
primarily employed by small regional sell-side broker-dealers involved in the
provisioning of both investment banking and research services with respect
to micro cap and small cap issuers. Mr. Lavigne’s experience includes
creating research and analysis for retail and institutional clients, as well as
research that augments the due diligence process of the corporate finance
departments of his respective employers. His generalist research has
encompassed several dozen public companies. Mr. Lavigne graduated
from the University of Idaho in 1984 with a BS degree in
Finance.
18
Delray Wannemacher
was appointed to AMI’s Board of Directors and as AMI’s President on July 1,
2009. Mr. Wannemacher has been working with communications-based
startup companies for over 17 years. Over the past eight years, he founded,
financed, and sold two companies; one being InSolutions, a network integration
company, incorporating voice, security, and data; the second was a spinoff of
InSolutions named Delaine Security Services, built and sold within one year
after its inception.
Kent Kiefer began
serving as AMI’s Chief Executive Officer on October 1, 2009. Mr.
Kiefer has a range of business experience, most recently serving as the Senior
Vice President, Operations for Focus on the Family from 2005 until
2009. At Focus on the Family Mr. Kiefer’s duties included
coordinating and overseeing fund-raising activities, communicating with major
donors and foundations, the oversight of a business unit, and the integration of
Focus on the Family offices in multiple locations. Prior to Focus on
the Family Mr. Kiefer has held a range of other professional positions including
serving as a Lead Financial Analyst for Quest Communications, International,
Inc., serving as a Financial Services Advisor at Prudential – Financial, and
serving as the Director of Operations of Employee Solutions, Inc. Mr.
Kiefer received a MBA Operations & Financial Management from Arizona State
University in 1994.
Legal
Proceedings
None of the directors or executive
officers of the Registrant or AMI have been involved in any legal proceedings
that are material to an evaluation of their ability or integrity and otherwise
required to be disclosed pursuant to Item 401 of Regulation S-K, within the past
ten years.
Board of
Directors – Composition.
AMI’s Board of Directors seeks to
ensure that it is composed of members whose particular experience,
qualifications, attributes, and skills, when taken together, will allow the
Board of Directors to satisfy its oversight obligations
effectively. Currently, AMI does not have a separate nominating
committee as to date it does not believe that the Company as an early stage
company with limited personnel required such a committee. However, as
the Company grows AMI may consider establishing a separate nominating
committee. As such, currently the Board of Directors as a whole is in
charge of identifying and appointing appropriate persons to add to the Board of
Directors when necessary. In identifying Board candidates it is the
Board’s goal to identify persons whom it believes have appropriate expertise and
experience to contribute to the oversight of a company of AMI’s nature while
also reviewing other appropriate factors.
AMI believes that each of the persons
that currently comprise its Board of Directors (and who are expected to comprise
Across America’s Board of Directors) have the experience, qualifications and
attributes and skills taken as a whole to enable the Board of Directors to
satisfy its oversight responsibilities effectively. In particular, AMI believes
that because Mr. Roth has over twenty years of experience working with private
and public companies in the early and start-up stages, including experience as
an officer and director of such companies, that he is a valuable member of our
Board of Directors. Also, Mr. Lavigne was the founder of
Edgewater Research Partners and as a result is very familiar with AMI’s business
plan and its clientele. Further, Mr. Lavigne has significant
experience with respect to drafting and distributing research and information on
micro-cap companies and AMI believes he is well respected in that
arena. With respect to Mr. Wannemacher, AMI believes that his
experience with business development for a variety of early stage companies, as
well experience including involvement in their ultimate sale process, makes him
a valuable member of AMI’s Board of Directors.
19
G.
|
Executive
Compensation.
|
Compensation and other
Benefits of Executive Officers
The following
table sets out the compensation received during the previous two fiscal years,
in respect to each of the individuals who served as Across America’s or AMI’s
chief executive officer at any time during the last fiscal year and for both
companies most highly compensated executive officers whose total salary and
bonus exceeded $100,000 (the “Named Executive Officers”).
SUMMARY
COMPENSATION TABLE
Non-Equity
|
||||||||||||||
Option
|
Incentive
Plan
|
All
Other
|
||||||||||||
Name
and
|
Fiscal
|
Salary
|
Bonus
|
Awards
|
Compensation
|
Compensation
|
Total
|
|||||||
Principal
Position
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||
Brian
L. Klemsz
President,
CEO and CFO of Across America (1)
|
2009
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
|||||||
2008
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
||||||||
JW
Roth (2)
Co-Chairman
of
AMI Board
of Directors
|
2009
|
$70,000
|
$10,000
|
$0
|
$0
|
$12,452
(3)
|
$92,450
|
|||||||
|
2008
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
|||||||
Kent
Kiefer (2)
CEO
of AMI
|
2009
|
$25,000
|
$5,000
|
$38,475
(4)
|
$0
|
$9,750
(5)
|
$39,750
|
|||||||
2008
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
||||||||
|
(1)
|
During
fiscal 2008 and fiscal 2009 Across America did not pay Mr. Klemsz and form
ofcompensation. Effective
February 24, 2010 Mr. Klemsz resigned from all executive offices he held
with Across America.
|
|
(2)
|
Mr.
Roth served as the Chief Executive Officer of AMI from its inception until
October 1, 2009 when Mr. Kiefer was appointed to that
position.
|
|
(3)
|
Comprised
of commissions paid to Mr. Roth during 2009 in the amount of
$7,202. Mr. Roth recieves a commission of up to 20% of the
revenue attributable to each of AMI’s issuer profile sales that were
initiated by Messrs. Roth, Lavigne, or Wannemancher and then divided among
those same three persons. The remaining $5,250 relates to a
monthly health insurance allowance of $750 given to all
employees
|
|
(4)
|
Upon
being hired by AMI Mr. Kiefer was granted an option to purchase 400,000
shares of AMI’s common stock, which by its original terms was exercisable
at $0.75 per share (the number of shares underlying the option and the
exercise price listed in this footnote reflect the original terms of the
option, however, the option has been proportionately adjusted to reflect
the Merger Transaction with and between AMI and Across
America). 50,000 shares underlying the option vested
immediately upon grant and the remaining 350,000 shares are to vest
quarterly on a pro-rata basis over a two year term. See Footnote #8 of the
Financial Statements as of December 31, 2009 for detail on the assumptions
used in the valuation of these
options.
|
|
(5)
|
Comprised
of commissions paid to Mr. Kiefer during 2009 in the amount of
$7,500. Mr. Kiefer is entitled to receive a commission equal to
$250 for each issuer profile AMI sells and delivers. The
remaining $2,250 relates to a monthly health insurance allowance of $750
given to all employees.
|
20
AMI’s executive officers are
compensated primarily through cash compensation. Additionally, AMI
executive officers are entitled to receive commissions for certain AMI sales
that they are involved in originating. Currently, Mr. Roth receives a
salary of $120,000 and Mr. Kiefer a salary of $100,000. Depending on
the individual’s, as well as the Company’s, performance, each of AMI’s executive
officers are entitled to receive an annual cash
bonus. Further, each of Mr. Roth and Kiefer (as well as
other AMI executive officers) are entitled to commissions for sales of “issuer
profiles” to the AMI website that each of them originates. Within AMI
different persons are compensated through slightly different commission
structures. AMI believes that compensating its executive officers in
part through commissions provides additional incentive to the executives to help
promote and build AMI revenues.
AMI believes that as relatively new
company its compensation structure is fair to its executive officers as it is
intended to balance the Company’s need to minimize its overhead costs yet reward
its executives for performance and company
performance. AMI intends to review and evaluate the
compensation structure of its executive officers on a quarterly basis, and
depending on the financial, operational and strategic targets established by the
Board of Directors may adjust the compensation of its executive
officers.
Option
Grants To Our Named Executive Officers.
The following table sets forth the
outstanding equity awards for each named executive officer of the
Company. The numbers reflected below are being reported as of the
closing of the Merger Transaction.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
Option
Awards
|
||||||||||
Number
of Securities
|
||||||||||
Underlying
Unexercised
|
||||||||||
Options
|
Option
|
Option
|
||||||||
Exercise
|
Expiration
|
|||||||||
Name
and Principal Position
|
Exercisable
|
Un-exercisable
|
Price
($)
|
Date
|
||||||
Kent
Kiefer,
|
260,300
|
780,900
|
$0.28
|
10/1/2012
|
||||||
Chief
Executive Officer
|
|
(1)
|
On
October 1, 2009 Mr. Kiefer was granted an option to purchase 400,000
shares of AMI’s common stock with an exercise price of $0.75 per share,
with 50,000 of the shares vesting immediately upon grant, and the
remainder of the option to vest quarterly on a pro rata basis over a two
year term with the option being exercisable for a three year term until
October 1, 2012. At the closing of the Merger Transaction
the number of shares underlying the option was multiplied by the 2.603
exchange ratio and the exercise price divided by the exchange
ratio. The numbers reflected in the above table reflect the as
adjusted/post Merger Transaction
numbers.
|
21
Compensation of
Directors
To date
neither AMI nor AMI has provided separate cash, equity or other compensation to
any persons in consideration for their services as directors.
Compensation Committee
Interlocks and Insider Participation
The Company
does not have a separately designated compensation committee. AMI’s board
of directors as a whole served as the body making executive compensation related
decisions. During fiscal 2009 Each of Mr. Roth, Mr. Lavigne,
and Mr. Wannemacher served on AMI’s Board of Directors and also served as
executive officers of the company.
H.
|
Certain Relationships
and Related Transactions, and Director
Independence.
|
AMI - Related Party
Transactions
There have
not been any transactions, or proposed transactions, to which AMI was or is to
be a party, in which any AMI director, officer, or any member of the immediate
family of the aforementioned persons had or is to have a direct or indirect
material interest, except for:
|
(i)
|
The
assignment of assets (customer contracts and related customer
relationships) from EdgeWater Research Partners LLC to
AMI.
|
|
(ii)
|
The
funds advanced to AMI by J.W. Roth were converted into shares of AMI
common stock.
|
|
(iii)
|
An
agreement entered into in May 2009 between AMI and AMI Partners, LLC, an
entity controlled by Mr. Wannemacher, whereby AMI
|
Partners
LLC agreed to serve as a non-exclusive sales representative on behalf of
AMI. This agreement was terminated in June
2009. However, pursuant to the agreement AMI Partners LLC was
issued a warrant to purchase one million shares of AMI common stock which
was exercised in full at $0.15 per share on June 30,
2009.
|
|
(iv)
|
AMI
Processing maintains an account with a third party bank that currently is
utilized solely by AMI Processing solely for the purpose of processing AMI
credit card transactions and/or merchant
transactions. AMI Processing provides this service to AMI
at no cost. AMI Processing is an entity controlled by Mr.
Wannemacher who also serves as AMI’s President and on its Board of
Directors.
|
Across America Real Estate
Exchange, Inc. - Related Party Transactions
In January,
2006, an organization named Safe Harbor I, LLC, formerly known as Safe Harbor
Business Development Company (“Safe Harbor”), which is controlled by our former
President, Mr. Brent Backman, agreed to provide operating capital in the form of
a loan of $250,000 to cover operating expenses. This loan was evidenced by an
unsecured promissory note which was due January 23, 2010.
22
Effective
October 16, 2008, we paid off the principal and accrued interest due on our loan
to Safe Harbor Development Company, as assigned to Safe Harbor 1, LLC. At the
same time, we entered into a loan arrangement with West Mountain Prime, LLC,
which is affiliated with our President, Mr. Klemsz. We borrowed $185,000 from
West Mountain Prime, LLC to provide operating capital to cover operating
expenses. This loan is evidenced by unsecured promissory notes (the “Notes”)
which are now due October 16, 2010, unless converted. All principal and interest
accrues until the Notes are due or converted. The applicable interest rate on
the Notes is 12% per annum except in the event that we fail to convert any
portion of the principal and pay the interest due in which case the applicable
rate on the Notes shall thereafter be 18% per annum. At any time prior to the
due date of the Notes, all outstanding principal under the Notes may, at the
sole option of the Holder, be converted into our common shares equal to the
outstanding principal amount of the notes divided by .22.
As the fair
market value of common stock was determined to be $0.26 and $1.50 per share at
time of the convertible notes issuance, the convertible promissory notes carry
an imbedded beneficial conversion feature. The intrinsic value of the
beneficial conversion feature related to the notes holder’s option for
conversion into the Company’s common stock totals $24,000 at December 31, 2008
and $77,000 at December 31, 2009. As the conversion feature is
available at any time before the notes become due, the full amount of the
beneficial conversion feature has been recorded as interest expense, beneficial
conversion at the time of issuance. Total interest expense recorded
for the beneficial conversion feature for the year ended December 31, 2009 was
$53,000.
We issued
have a total of 200,000 warrants to Safe Harbor, exercisable at a price of $0.01
per share subject to adjustment, for a period of five years from the date of
issuance. These warrants were issued as an additional inducement for Safe Harbor
to loan us $250,000. The warrants are subject to registration
rights.
GDBA
Investments, LLC holds 1,178,144 shares of our issued and outstanding stock,
representing approximately 65% of our issued and outstanding common stock. Mr.
Backman is a beneficiary of GDBA Investments, LLC and controls this entity. GDBA
Investments, LLC may be deemed a “parent” as defined under the rules and
regulations promulgated under the Securities Act.
Transactions between AMI and Across America
Real Estate Exchange
As part of a
private placement transaction, on June 16, 2009 West Mountain Prime LLC was
issued a $125,000 convertible promissory note by AMI. West Mountain
Prime LLC converted that promissory note into 416,666 shares of AMI common
stock. West Mountain Prime, LLC., is affiliated with Across America Real Estate
Exchange’s President, Mr. Klemsz. Further, immediately prior to the effective
date of the transaction AMI’s single largest shareholder (other than its
officers and/or directors) was BOCO Investments, LLC which then held 1,033,334
shares of AMI common stock. Boco Investments LLC is affiliated with
Mr. Klemsz.
Director
Independence
The Company’s
Board of Directors currently consists of Messrs. Klemsz and Roth. It
is expected that Messrs. Lavigne and Wannemacher will be appointed to the Board
of Directors. The Company currently utilizes the definition of
“independent” as it is set forth in Section 803A of the NYSE Amex Company
Guide. Further, the board considers all relevant facts and
circumstances when determining whether its directors are indenpendent(including
any relationships). None of the current, or anticipated, board
members are considered independent.
23
I.
|
Legal
Proceedings.
|
There are no
legal proceedings, to which AAEX or AMI is a party, which could have a material
adverse effect on its business, financial condition or operating
results. Further, neither AAEX nor AMI is aware of any such
contemplated or threatened proceedings.
J.
|
Market Price of and
Dividends on the Registrant’s Common Equity and Related Stockholder
Matters.
|
Shares of
AAEX common stock began trading on the NASD – OTC Bulletin Board in December,
2007. The table below sets forth the high and low bid
prices of AAEX common stock during the periods indicated as reported on Yahoo
Finance (http://finance.yahoo.com). The quotations reflect inter-dealer prices
without retail mark-up, mark-down or commission and may not reflect actual
transactions.
Quarter ended | High | Low |
December 30, 2009 | $1.50 | $0.60 |
September 30, 2009 | $1.01 | $0.30 |
June 30, 2009 | $1.00 | $1.00 |
March 31, 2009 | $1.00 | $1.00 |
December 31, 2008 | $1.00 | $0.26 |
September 30, 2008 | $1.50 | $0.26 |
June 30, 2008 | $1.01 | $0.52 |
March
31, 2008
|
$0.52 | $0.25 |
The closing sales price of AAEX’s
common stock as reported on January 29, 2010, was $0.60.per share, which was the
last reported trade of AAEX’s common stock on the OTC – Bulletin
Board.
As of December 31, 2009, Across America
had a total of 1,810,476 shares of common stock outstanding. The number of
holders of record of Across America common stock at that date was one hundred
and does not include persons who may hold our common stock in brokerage accounts
and otherwise in ‘street name.’
Since
their inception neither AAEX nor AMI have not declared or paid cash or other
dividends on its Common Stock. The company has no plans to pay any
dividends, although it may do so if it’s financial position
changes. There are no restrictions in the Registrant’s articles of
incorporation or bylaws that restrict it from declaring dividends. The Colorado
Revised Statutes, however, do prohibit the Registrant from declaring dividends
where, after giving effect to the distribution of the dividend:
1.
|
We
would not be able to pay our debts as they become due in the usual course
of business; or
|
2.
|
Our
total assets would be less than the sum of our total liabilities, plus the
amount would be needed to satisfy the rights of shareholders who have
preferential rights superior to those receiving the
distribution.
|
24
Securities Authorized for
Issuance Under Equity Compensation Plan
AMI has
adopted, and its shareholders have approved, the AMI 2009 Stock Option Plan (the
“Plan”). AMI’s shareholders approved the Plan on March 11,
2009. Under the Plan, AMI may grant stock options, restricted and
other equity awards to any employee, consultant, independent contractor,
director or officer of the Company. As originally adopted a total of
one million shares of common stock may be issued under the Plan (which number is
subject to adjustment as described in the Plan). The purpose of the
Plan is to provide financial incentives for selected employees, consultants and
advisors, and directors of AMI, thereby promoting the long-term growth and
financial success of AMI.
Plan
Category
|
Number
of securities to be
issued
upon exercise of
outstanding
options, warrants
and rights
|
Weighted
average exercise
price
of outstanding
options, warrants and
rights
|
Number
of securities
remaining
available for
future issuance
|
|||
Equity
compensation plans
approved by security
holders
|
690,000
(1)
|
$0.72
|
310,000
|
|||
Equity
compensation plans
not approved by security holders
|
400,000
(2)
|
$0.75
|
--
|
|||
Total
|
1,090,000
|
$0.72
|
--
|
____________
(1) Upon the closing of the Merger
Transaction the number of shares underlying these options was multiplied by the
2.603 exchange ratio and the exercise price was divided by that ratio. However,
the numbers reflected in the above table for the outstanding options, warrants
and rights, as well as the exercise price thereof are being reported without
giving effect to the Merger Transaction.
(2) Consists
of a warrant issued to a consultant for business development
services. The warrant was originally issued to purchase 400,000
shares of AMI common stock at $0.75 per share. 100,000 of the warrant
shares vested upon the issuance of the warrant and the remaining 300,000 were to
vest quarterly over a one year period and but only if the consultant met certain
performance objectives. The number of shares underlying the warrant has been
multiplied by the 2.603 exchange ratio and the exercise price divided by the
exchange ratio. However, the numbers reflected in the above table for
the outstanding options, warrants and rights, as well as the exercise price
thereof are being reported without giving effect to the Merger
Transaction.
K.
|
Recent Sales of
Unregistered Securities.
|
Across America Sales of Unregistered
Securities
1. On
February 22, 2010, Across America issued 870,061 shares of its common stock to
WestMountain Prime LLC, in settlement of principal and interest on two
promissory notes in the aggregate principal amount of $185,000; 329,463 shares
of common stock to WestMountain Asset Management, Inc.; 70,000 shares to David
Wagner & Associates, P.C.; and 20,000 shares to Ms. Joni
Troska. The value of the shares in these transactions was $0.22 per
share, all for past services. In connection with these issuances, the Registrant
relied on Section 4(2) of the Securities Act, as amended. All of
these persons are sophisticated investors who represented that they were
acquiring the shares for investment purposes only. The certificates
representing the shares will bear restrictive legends.
25
2. On
February 24, 2010 Across America issued 25,554,010 shares of its common stock to
the shareholders of AMI to effect the Merger Transaction with
AMI. Because AMI shareholder represented that they qualified as an
accredited investor Across America relied on the exemptions from registration
provided by Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated
thereunder for this issuance. No commissions or other remuneration
were paid in connection with this issuance.
AMI Unregistered Sales of
Securities
1. On March 11, 2009 AMI issued 5,250,000
shares of its common stock to its four founding members (each an accredited
investor). In consideration AMI received: $147,500 in cash; $40,000
in cash advanced to AMI by Mr. Roth was repaid in the form of stock; and 1.5
million of the shares were issued in consideration for EdgeWater Research
Partners assigning its assets to AMI. AMI relied on the
exemptions from registration provided by Section 4(2) and 4(6) under the
Securities Act of 1933 for this transaction. No commissions or other remuneration
was paid in connection with this issuance.
2. On
March 31, 2009 AMI issued 450,000 shares of its common stock. AMI
received an aggregate of $22,500 in cash consideration for the issuance of the
shares. AMI relied on the exemption from registration provided by
Section 4(2) under the Securities Act of 1933 for the issuance because AMI: (i)
did not engage in any public advertising or general solicitation in connection
with the issuance; (ii) made available to each investor disclosure regarding all
aspects of its business; (iii) believed that the investors obtained all
information regarding AMI he requested (or believed appropriate) and received
answers to all questions he (and their advisors) posed, and otherwise understood
the risks of accepting AMI securities for investment purposes; and (iv) believed
that each investor acquired the shares for investment purposes. No commissions
or other remuneration was paid in connection with this issuance.
3. In
May, 2009 AMI issued two warrants to purchase an aggregatge of 2,000,000 shares
of its common stock. By their initial terms the warrants were
exercisable at $0.30 per share, however the shares underlying the warrants were
to vest only in accordance with the achievement of certain performance
objectives of the holders. The warrants were issued in consideration
for services. The warrants were issued in reliance on the exemption
from registration provided by Section 4(2) under the Securities Act of 1933
because AMI: (i) did not engage in any public advertising or general
solicitation in connection with the issuance; (ii) made available to each
investor disclosure regarding all aspects of its business; (iii) believed that
the investors obtained all information regarding AMI he requested (or believed
appropriate) and received answers to all questions he (and their advisors)
posed, and otherwise understood the risks of accepting AMI securities for
investment purposes; and (iv) believed that each investor acquired the shares
for investment purposes. No commissions or other remuneration was paid in
connection with this issuance.
4. On
May 13, 2009 AMI conducted an initial closing of a private placement and issued
10% convertible promissory notes (each a “Note” and collectively referred to
herein as the “Note Offering”) in a total principal amount of $265,000. AMI
relied on the exemptions from registration provided by Section 4(2) under the
Securities Act of 1933 and Rule 506 promulgated there under for this
transaction. The Notes are convertible into shares of AMI common
stock at a price per share of: (i) $0.30 per share if the conversion is effected
prior to the
close of the third consecutive calendar month in which AMI is cash flow
positive; or (ii) $0.60 per share if the conversion is effected after the close of
the third consecutive calendar month in which AMI is cash flow positive. No
commissions or other remuneration was paid in connection with this
issuance.
26
5. On
June 16, 2009 AMI conducted a second closing under the Note Offering and issued
Notes in a total principal amount of $235,000. AMI relied on the
exemptions from registration provided by Section 4(2) under the Securities Act
of 1933 and Rule 506 promulgated there under for this
transaction. The Notes are convertible into shares of AMI common
stock at a price per share of: (i) $0.30 per share if the conversion is effected
prior to the
close of the third consecutive calendar month in which AMI is cash flow
positive; or (ii) $0.60 per share if the conversion is effected after the close of
the third consecutive calendar month in which AMI is cash flow positive. No
commissions or other remuneration was paid in connection with this
issuance.
6. On
June 30, 2009 AMI issued an aggregate of 2,000,000 shares of its common stock
upon the exercise of two warrants that were originally issued in May
2009. Pursuant to an agreement between AMI and the warrant holders
the warrants were exercised at $0.15 per share resulting in aggregate cash
proceeds of $300,000 toAMI. The shares were issued in reliance on the
exemption from registration provided by Section 4(2) under the Securities Act of
1933 because AMI: (i) did not engage in any public advertising or general
solicitation in connection with the issuance; (ii) made available to each
investor disclosure regarding all aspects of its business; (iii) believed that
the investors obtained all information regarding AMI he requested (or believed
appropriate) and received answers to all questions he (and their advisors)
posed, and otherwise understood the risks of accepting AMI securities for
investment purposes; and (iv) believed that each investor acquired the shares
for investment purposes. No commissions or other remuneration was paid in
connection with this issuance.
7. On
July 7, 2009 AMI conducted a third closing under the Note Offering and issued
Notes in a total principal amount of $87,500. AMI relied on the
exemptions from registration provided by Section 4(2) under the Securities Act
of 1933 and Rule 506 promulgated there under for this
transaction. The Notes are convertible into shares of AMI common
stock at a price per share of: (i) $0.30 per share if the conversion is effected
prior to the
close of the third consecutive calendar month in which AMI is cash flow
positive; or (ii) $0.60 per share if the conversion is effected after the close of
the third consecutive calendar month in which AMI is cash flow positive. No
commissions or other remuneration was paid in connection with this
issuance.
8. On
July 31, 2009 AMI conducted a final closing under the Note Offering and issued
Notes in a total principal amount of $300. AMI relied on the
exemptions from registration provided by Section 4(2) under the Securities Act
of 1933 and Rule 506 promulgated thereunder for this transaction. The
Notes are convertible into shares of AMI common stock at a price per share of:
(i) $0.30 per share if the conversion is effected prior to the close of the
third consecutive calendar month in which AMI is cash flow positive; or (ii)
$0.60 per share if the conversion is effected after the close of the third
consecutive calendar month in which AMI is cash flow positive. No commissions or
other remuneration was paid in connection with this issuance.
9. On
October 1, 2009 pursuant to its 2009 Stock Option Plan, AMI granted a stock
option to purchase 400,000 shares of AMI’s common stock to its then incoming
Chief Executive Officer. The option is exercisable at $0.75 per share
and is exercisable for a three year term. 50,000 of the shares
underlying the option vested immediately upon grant and the remaining 350,000
shares vest quarterly on a pro rata basis over a two year term. AMI
relied on Sections 4(2) and 4(6) of the Securities Act of 1933 for this option
grant. No commissions or other remuneration was paid in connection
with this option grant.
27
10. On
November 1, 2009 AMI pursuant to its 2009 Stock Option Plan, AMI granted a
consultant an option to purchase 165,000 shares of AMI’s common
stock. The option was granted in consideration for services provided
by the consultant. The option is exercisable at $0.75 per share, vested in full
on the date of grant, and is exercisable for a three year term. The
option was granted in reliance on the exemption from registration provided by
Section 4(2) under the Securities Act of 1933 because AMI: (i) did not engage in
any public advertising or general solicitation in connection with the option
grant; (ii) made available to the grantee disclosure regarding all aspects of
its business; (iii) believed that the grantee obtained all information regarding
AMI he requested (or believed appropriate) and received answers to all questions
he (and his advisors) posed, and otherwise understood the risks of accepting AMI
securities for investment purposes; and (iv) believed that the consultant
acquired the option for investment purposes. No commissions or other
remuneration was paid in connection with this option grant.
11. On
November 30, 2009 AMI issued 891,341 shares of common stock in a private
placement transaction. The shares were issued at $0.75 for total
proceeds of $668,500. Because each investor represented they
qualified as an accredited investor AMI relied on the exemptions from
registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506
promulgated thereunder for this issuance. AMI paid a finders’ fee of
$13,600 as part of this private placement and paid the fee through the issuance
of 18,134 shares of its common stock.
12. On
November 30, 2009 AMI issued a warrant to purchase 400,000 shares of AMI’s
common stock. The warrant is exercisable at $0.75 per share, however
the shares underlying the warrant only vest in accordance with the achievement
of certain performance objectives of the holders. The warrant was
issued in consideration for services. The warrant was issued in
reliance on the exemption from registration provided by Section 4(2) under the
Securities Act of 1933 because AMI: (i) did not engage in any public advertising
or general solicitation in connection with the issuance; (ii) made available to
the investor disclosure regarding all aspects of its business; (iii) believed
that the investor obtained all information regarding AMI he requested (or
believed appropriate) and received answers to all questions he (and his
advisors) posed, and otherwise understood the risks of accepting AMI securities
for investment purposes; and (iv) believed that the investor acquired the
warrant for investment purposes. No commissions or other remuneration was paid
in connection with this issuance.
13. On
December 28, 2010 AMI issued 40,001 shares of common stock in a private
placement transaction. The shares were issued at $0.75 for total
proceeds of $30,000. Because each investor represented they qualified
as an accredited investor AMI relied on the exemptions from registration
provided by Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated
thereunder for this issuance. No commissions or other remuneration
were paid in connection with this issuance.
14. Between
May 2009 and November 2009 AMI issued an aggregate of 1,167,662 shares of its
common stock upon the conversion of $350,300 in principal amount of the
Notes. The Notes were converted at $0.30 per
share. Although AMI did not receive cash proceeds upon the conversion
of the Notes, $350,300 in debt was retired through these
conversions. AMI relied on the exemptions from registration provided
by Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated
thereunder for these issuances. No commissions or other remuneration
was paid in connection with these issuances.
28
L.
|
Description of
Registrant’s Securities to be
Registered.
|
The authorized capital of
Across America consists of 51,000,000 shares, of which 1,000,000 shares
are preferred stock, par value of $.01 per share ("Preferred Stock"), and
50,000,000 shares are common stock, par value of $.001 per share ("Common
Stock").
Each
share of Common Stock is entitled to share pro rata in dividends and
distributions, if any, with respect to the common stock when, as and if declared
by the Board of Directors from funds legally available for such purpose. No
holder of any shares of Common Stock has any preemptive rights to subscribe for
any securities of the Registrant. Upon liquidation, dissolution or
winding up of the Registrant, each share of the Common Stock is entitled to
share ratably in the amount available for distribution to holders of common
stock. All shares of Common Stock presently outstanding are fully
paid and non-assessable.
Each
shareholder is entitled to one vote for each share of Common Sock
held. There is no right to cumulate votes for the election of
directors. This means that holders of more than 50% of the shares
voting for the election of directors can elect all of the directors if they
choose to do so, and in such event, the holders of the remaining less than 50%
of the shares voting for the election of directors will not be able to elect any
person or persons to the Board of Directors.
The
Registrant has no plans to declare cash dividends on its common stock in the
future and has not declared any thus far during fiscal year 2010 or during the
last two completed fiscal years.
M.
|
Indemnification of
Directors and Officers.
|
Across America’s Articles of
Incorporation limit the liability of our directors to the fullest extent
permitted by Colorado law. Specifically, our directors will not be personally
liable to our company or any of its shareholders for monetary damages for breach
of fiduciary duty as directors, except liability for (i) any breach of the
director’s duty of loyalty to the corporation or its shareholders;
(ii) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) voting for or assenting to
a distribution in violation of Colorado Revised Statutes Section 7-106-401
or the articles of incorporation if it is established that the director did not
perform his duties in compliance with Colorado Revised Statutes
Section 7-108-401, provided that the personal liability of a director in
this circumstance shall be limited to the amount of distribution which exceeds
what could have been distributed without violation of Colorado Revised Statutes
Section 7-106-401 or the articles of incorporation; or (iv) any
transaction from which the director directly or indirectly derives an improper
personal benefit. Nothing contained in the provisions will be construed to
deprive any director of his right to all defenses ordinarily available to the
director nor will anything herein be construed to deprive any director of any
right he may have for contribution from any other director or other
person.
At
present, there is no pending litigation or proceeding involving any of our
directors, officers, employees or agents where indemnification will be required
or permitted. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, we have
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
29
N. Financial Statements and
Supplementary Data.
See Financial Statements of
AMI for the years ended December 31, 2008 and December 31,
2009, following the signature page of this Form 8-K.
See Pro-Forma Financial
Information for the year ended December 31, 2009 filed herewith as Exhibit
99.2.
O. Changes in and Disagreements
with Accountants.
During
its last two fiscal years there has not been any material disagreement between
AAEX (nor AMI) and its independent registered public accounting firm on any
matter regarding accounting or financial disclosure.
Item
3.02 Unregistered Sales of Equity Securities
See Item
2.01 in this Current Report.
Item
4.01 Changes in Registrant's Certifying Accountant.
(a) Previous
Independent Registered Public Accounting Firm
(i)
On February 23, 2010, Across America’s Board of Directors voted to dismiss its
independent registered public accounting firm, Cordovano and Honeck LLP., of
Englewood, Colorado, effective February 24, 2010, and to replace them
with GHP Horwath, P.C., of Denver, Colorado.Cordovano and Honeck LLP. has
rendered an independent auditor’s report on Across
America’s financial statements as of December 31, 2009 and 2008, and
for the years then ended.
(ii) The
dismissal of Cordovano and Honeck LLP. was approved by Across
America’s Board of Directors.
(iii) During
the year ended December 31, 2009 and through February 24, 2010, there were no
disagreements between Across America and Cordovano and Honeck LLP.
with respect to its accounting principles or practices, financial statement
disclosure or audit scope or procedure, which, if not resolved to the
satisfaction of Cordovano and Honeck LLP. would have caused them to make
reference to the subject matter of the disagreement in connection with their
report. Further, the reports of Cordovano and Honeck LLP. for the past two years
did not contain an adverse opinion or disclaimer of opinion, nor were they
modified as to uncertainty, audit scope, or accounting principles, except for an
explanatory paragraph describing substantial doubt about our ability
to continue as a going concern.
(iv) During
the years ended December 31, 2009 and 2008 and through February 24, 2010 there
have been no reportable events (as defined in Item 304(a)(1)(v) of Regulation
S-K).
Across
America furnished Cordovano and Honeck LLP. with a copy of this Report on Form
8-K prior to filing with the U.S. Securities and Exchange Commission
(SEC). Across America also requested that Cordovano and Honeck LLP.
furnish it with a letter addressed to the SEC stating whether or not it agrees
with the above statements. A copy of the letter furnished by
Cordovano and Honeck LLP. in response to that request dated February 24, 2010,
is filed as Exhibit 16.1 to this Report on Form 8-K.
Across
America have authorized Cordovano and Honeck LLP. to respond fully to inquiries
of GHP Horwath, P.C. concerning our financial statements.
30
(b) New
Independent Registered Public Accounting Firm
Across
America engaged GHP Horwath, P.C. as our new independent registered public
accounting firm as of February 24, 2010. During the two most recent
fiscal years and through February 24, 2010, Across America has not consulted
with GHP Horwath, P.C. regarding any of the following:
(1)
|
The
application of accounting principles to a specific transaction, either
completed or proposed or the type of audit opinion that might be rendered
on the Company's consolidated financial statements, and neither a written
report nor oral advice was provided to the Company by GHP Horwath, P.C.
that GHP Horwath, P.C. concluded was an important factor considered by the
Company in reaching a decision as to an accounting, auditing or financial
reporting issue;
|
(2)
|
Any
matter that was the subject of a disagreement, as that term is defined in
Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item
304 of Regulation S-K; or
|
(3)
|
Any
matter that was a reportable event, as that item is defined in Item
304(a)(1)(v) of Regulation S-K.
|
Item
5.01 Changes in Control of the Registrant.
\ See Item 2.01
of this Current Report.
Item
5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
On February
24, 2010 Mr. Klemsz resigned as the Chief Executive Officer, President and Chief
Financial Officer of Across America. However, Mr. Klemsz is remaining
on the Board of Directors, although it is expected that he will resign as a
director after the appointment of additional directors to the Company can be
effected. .
On February
24, 2010 Kent Kiefer was appointed as the Chief Executive officer of Across
America and Delray Wannemacher was appointed as Across America’s
President. Also on February 24, 2010 J.W. Roth was appointed to the
Board of Directors of Across America. Information regarding Messrs.
Roth, Kiefer and Wannemacher and their background and business experience are
provided in Item 2.01 of this Form 8-K.
Item
5.06 Change in Shell Company Status
As described
in Item 2.01 of this report, on February 24, 2010 the Merger Transaction
was completed. As
a result of this transaction, Across America is
no longer a shell company as defined in Rule 12b-2 of
the Securities Exchange Act of 1934,
as amended.
31
Item
9.01 Exhibits.
(a)
|
Financial
Statements of Business Acquired.
|
|
Filed
herewith as Exhibit 99.1
|
(b)
|
Pro
Forma Financial Information.
|
|
Filed
herewith as Exhibit 99.2
|
(d)
|
Exhibits.
|
Exhibit
Number
|
Description
|
4.1
|
Warrant dated January 23, 2007
for Safe Harbor Business Development Company.
(1)
|
16.1 | |
(1)
|
Incorporated
by reference from Form SB-2 Registration Statement, filed by Across
America on January 29, 2007.
|
32
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 26th day of February 2010.
Across American Real Estate Exchange Inc. | |||
|
By:
|
/s/ Kent Kiefer | |
Chief Executive Officer | |||
33