Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
================================================================================
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
OR
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NO. 000-52856
ATOMIC PAINTBALL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 75-2942917
---------------------------- -----------------------
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
510 Trophy Lake Drive, Suite 314, PMB 106
Trophy Club, TX 76262
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(817) 491-8611
(TELEPHONE NUMBER, INCLUDING AREA CODE)
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, NO PAR
VALUE
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [_] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [_] No [x]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [_] No [X]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit to and post such files.) Yes [_] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [_]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of "large accelerated filer," "accelerated filer," and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [_] Accelerated filer [_] Non-accelerated filer [_]
Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes [X] No [_]
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As of April 13, 2010, there were 4,178,549 shares of Common Stock of the
registrant issued and outstanding of which 1,763,545 shares were held by
non-affiliates of the registrant. The aggregate market value of common stock
held by non-affiliates of the registrant as of April 13, 2010 was approximately
$740,689.
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ATOMIC PAINTBALL, INC.
2009 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
ITEM DESCRIPTION
Part I
Item 1 Business
Item 1A Risk Factors
Item 1B Unresolved Staff Comments
Item 2 Description of Properties
Item 3 Legal Proceedings
Item 4 (Removed and Reserved)
Part II
Item 5 Market for Registrant's Common Equity, Related Stockholder
Matters, and Issuer Purchases of Equity Securities
Item 6 Selected Financial Data
Item 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item7A Quantative and Qualitative Disclosures About Market Risk
Item 8 Financial Statements and Supplementary Data
Item 9 Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure
Item 9A Controls and Procedures
Item 9B Other Information
Part III
Item 10 Directors, Executive Officers and Corporate Governance
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Manage-
ment and Related Stockholder Matters
Item 13 Certain Relationships and Related Transactions and
Director Independence
Item 14 Principal Accountant Fees and Services
Part IV
Item 15 Exhibits and Financial Statement Schedules
SIGNATURES
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FORWARD-LOOKING STATEMENTS
In addition to historical information, some of the information presented in this
Annual Report on Form 10-K contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"). Although Atomic Paintball, Inc. ("Atomic Paintball" or the "Company,"
which may also be referred to as "we," "us," or "our") believes that its
expectations are based on reasonable assumptions within the bounds of its
knowledge of its business and operations: there can be no assurance that actual
results will not differ materially from our expectations. Such forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those anticipated, including but not limited
to, our ability to raise sufficient debt or equity financing to fund ongoing
operations and fully implement our proposed business plan, recruit senior
management with the skill and experience to implement our business plan
effectively, identify and acquire real estate in suitable locations on which to
build paintball parks, obtain the necessary planning approvals to build our
paintball parks, build our paintball parks that directly address market demand
in a cost effective manner, identify existing paintball parks we would wish to
acquire, negotiate successfully to acquire existing paintball parks we wish to
acquire, operate our paintball parks, whether we have built them ourselves or
acquired them, on a profitable basis, provide services and products in
connection with paintball sport activities at our facilities and through a
website on a profitable basis within a fiercely competitive market place, avoid,
or effectively insurance against, liability claims for personal injury incurred
by customers at our paintball parks or using paintball equipment we have
provided to them, or be able to identify and successfully negotiate to acquire
assets or businesses in the paintball sector in return for shares of our common
stock. Cautionary statements regarding the risks, uncertainties and other
factors associated with these forward-looking statements are discussed on page
18 below. You are urged to carefully consider these factors, as well as other
information contained in this Annual Report on Form 10-K and in our other
periodic reports and documents filed with the SEC.
PART I
ITEM 1. BUSINESS
INTRODUCTION
We are a development stage corporation that plans to own and operate paintball
facilities and to provide services and products in connection with paintball
sport activities at our facilities and through a website. The Company maintains
a website at www.atomicpaintballparks.com, which is not incorporated in and is
not a part of this report.
It is our current intention, within our existing level of interim funding, to
continue to implement our proposed business. We intend to attempt to build our
business through the purchase of paintball businesses and assets in return for
the issue of shares of our common stock and to achieve further funding through
private placements of stock. There can be no assurance we will be able to
successfully complete any of these proposed transactions.
BUSINESS HISTORY
On May 8, 2001, Atomic Paintball, Inc. was incorporated in the State of
Texas. The Company's plan of operations is to execute its business
plan to own and operate paintball facilities and to provide services and
products in connection with paintball sport activities at our facilities and
through a website. The Company maintains a website at
www.atomicpaintballparks.com, which is not incorporated in and is not a part of
this report.
On June 30, 2009, the Company filed a voluntary petition for relief in the
United States Bankruptcy Court, Northern District of Texas, Dallas District
under Chapter 7 of Title 7 of the U.S. Bankruptcy Code, case number 09-34008-7.
In Under Chapter 7, all claims against the Debtor in existence prior to the
filing of the petition of relief under U.S. Bankruptcy Code are stayed.
On October 1, 2009, David Cutler, the sole officer and director of the Company
and a creditor in the proceeding, and the bankruptcy trustee filed a Motion for
an Order Approving Bondholder Settlement. Such motion was objected to by a group
of the Company's shareholders consisting of J.H. Brech, LLC, Harry McMillan,
Charles Webb, Don Mark Dominey, Mark Armstrong, David Myers and John E. Bradley
("Objecting Shareholders").
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On October 30, 2009, the Objecting Shareholders filed a Motion to Dismiss the
Chapter 7 Case.
On January 20, 2010, the Court dismissed the Chapter 7 proceedings as a result
of the obtainment and execution of a Settlement Agreement (the Settlement
Agreement) between the Company, its existing management and the Objecting
Shareholders of the Company.
The Settlement Agreement provided for the following:
Mr. Stephen Weathers was appointed to the Company's Board of Directors;
Mr. David Cutler, the Company's sole officer and a director of the Company
resigned his position upon the execution the Settlement Agreement;
Mr. Don Mark Dominey was elected the Company's Chief Executive Officer and
President and a Director of the Company;
Mr. David Cutler, surrendered to the Company, 3,530,235 shares of common
stock held by him for retirement to the Company's treasury; and
The Company released and discharged Mr. David Cutler, from all claims by
the Company and the Company was released and discharged from all claims by
Mr. Cutler.
On January 23, 2010, Ms. Shirley Heller was appointed the Secretary of the
Company. On February 18, 2010, the Company entered into Consulting Agreements
with both Mr. Dominey and Mr. Weathers, as discussed in Item 11, Executive
Compensation.
It is our current intention, within our existing level of interim funding, to
continue to accelerate progress on the implementation of our proposed business
in the paintball industry. We cannot make any assurances that we will be able to
raise additional interim financing.
If we are successful in raising further funding, we plan to establish corporate
offices, hire senior management, conduct feasibility studies for real estate
acquisitions for paintball locations, purchase land and equipment for operating
paintball parks, purchase inventory for resale and develop our website for
marketing our paintball games and miscellaneous services via the Internet. We
will consider acquiring existing underperforming paintball parks where we can
create value through new capital expenditure and the application of state of the
art marketing and operating disciplines. We will also consider acquiring
existing, established, profitable paintball parks as a means of establishing
rapidly a critical mass of profitable operations. We would need to raise
substantial funds to complete this business plan and there can be no assurance
that we will be able to raise sufficient funds to fund our strategy.
PLAN OF OPERATIONS
Our plan of operations is to execute our business plan to own and operate
paintball facilities and to provide services and products in connection with
paintball sport activities at our facilities and through a website. We intend to
pursue capital through private placements of shares of our common stock, and we
will also attempt to build our business through the purchase of paintball
businesses and assets in return for the issue of shares of our common stock.
There can be no assurance we will be able to successfully complete any of these
proposed transactions.
OUR OBJECTIVES
Our specific objectives over the next twelve months are to:
i) seek to raise funding in an initial private placement;
ii) establish a database of existing paintball parks and related
businesses;
iii) establish a database of potential locations for new paintball parks;
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iv) create a website in conjunction with an online directory of existing
paintball parks to build our brand identity;
v) identify a management team of experienced paintball executives
committed to implementing our proposed business plan;
vi) develop list of criteria and a formal assessment process for
identifying, evaluating and prioritizing potential acquisition targets
to arrive at a short list of potential acquisitions we would like to
complete, subject to our ability to negotiate acceptable acquisition
terms;
vii) enter into negotiation with the owners of potential acquisition
targets we have short listed as meeting the criteria of the formal
assessment process as developed in item vii above and attempt to agree
purchase terms acceptable to us;
viii)sign purchase agreements, subject to funding, to acquire out
acquisition targets; and
ix) prepare a comprehensive business plan for the proposed acquisition.
Consequently, it is our overall objective that at the end of an initial twelve
month period, we will have developed a comprehensive business plan for a
carefully selected acquisition, supported by a committed management team, as a
basis to seek the funding necessary to complete the proposed acquisition. While
we have not considered any potential acquisitions at this stage, we anticipate
that we shall need to raise approximately another $250,000 to complete an
initial first "pilot" acquisition of a small paintball field and/or a mobile
field system and $1-5 million in funding to complete a more substantial program
of acquisitions.
There can be no assurance we will be able to successfully achieve any of these
initial objectives during the next twelve months or indeed, that if we do
successfully achieve the initial objectives we shall be able to raise the
additional funding required to complete any proposed acquisition.
We do not anticipate generating any revenue in the next twelve months of our
operations. Indeed, we believe we will not generate any revenue from our
operations until we have completed our first acquisition. As we have not
identified any potential acquisition as yet, do not know the nature of our first
acquisition, or indeed whether we will be able to complete any such acquisition,
we have no basis on which to estimate when we will generate our first revenue or
the anticipated amount of revenue to be generated from our first acquisition.
Establish a Database of Existing Paintball Parks and Related Businesses
We will initially obtain information about existing paintball parks from the
limited information available from:
- the existing online directories of paintball parks currently available
on the internet;
- "Yellow Pages" and other "hard copy" directories;
- advertisements by paintball parks in current and back issues of the
various paintball magazines;
- depending on the level of funding we are able to achieve, we may be
able to buy specially compiled marketing / mailing lists of paintball
parks, and similarly;
- depending on the level of funding we are able to achieve, we may run
advertisements in the paintball press soliciting information from
paintball parks to appear in a new, free, online directory of
paintball parks.
We will then contact each paintball park we have identified to request
information to be compiled into a comprehensive online directory of paintball
parks. The existing online directories of paintball parks are extremely
primitive - often out of date, with no more than a list of names, addresses and
a web link to the web page of each individual paintball park. We propose to
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offer a modern, well-designed, highly functional website that provides key
details of each participating paintball park on a single website. In addition to
the standard information of name, address and telephone number, we will also
provide details of the size (acreage), number and size of playing areas,
description of the playing environment, available facilities, opening hours and
prices. Paintball parks will be allowed to add their own advertising / marketing
messages. Players will be encouraged to post comments on the parks they use. We
will aggressively drive traffic to the online directory from online search
engines and links with other general paintball websites.
There will be no charge for paintball parks to appear in the directory.
Consequently, they will benefit from free marketing.
Similarly, players seeking paintball parks where they can play will not be
charged for accessing the site. Consequently, they will benefit from being able
to find detailed information about paintball parks near their homes or in areas
where they intend to take vacations or attend business meetings.
We will benefit by compiling, and effectively leveraging, a database of existing
paintball parks that will allow us to identify and analyze:
- the current product offerings, customer service experiences and
business practices from a wide range of paintball parks;
- paintball parks which are no longer in business and that potentially
could be "revived" with new management and funding;
- underperforming paintball parks where we believe we could create added
value by providing new management expertise and funding;
- highly successful paintball parks where we will seek to learn and
replicate the basis of their success and potentially look to recruit
their senior management for our own operations.
The creation of the online database of existing paintball parks will allow us to
rapidly build knowledge of the paintball park industry, gain exposure to
paintball park management and owners and build a distinctive website with
valuable content for a wide range of users.
The quality of the marketing materials we use to solicit data for the online
directory, the ability to use third party marketing consultants and our use of
part-time or full-time employees to compile the data will all be dependent on
the level of funding that we are able to achieve.
Establish a Database of Potential Locations for New Paintball Parks
We will initially obtain information about potential locations from new
paintball parks by:
- contacting real estate agents to assist us in identifying land owners
who may be interested in developing property they own as a paintball
park;
- depending on the level of our available funding, we may run
advertisements in both paintball and non-paintball magazines
soliciting land owners who may be interested in developing property
they own as a paintball park.
The quality of the marketing materials and the extent of advertising we use to
solicit interested land owners will be dependent on the level of funding that we
are able to achieve.
Create a Website in Conjunction with an Online Directory of Existing Paintball
Parks to Build Our Brand Identity
Our objective is to build a website that builds a brand identity for our
business. We believe that developing our website in conjunction with an online
directory will achieve that. The online directory will create real value for
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existing paintball park owners and players without costing them a cent. It will
prove that we are "in touch" with everything that is going on in the paintball
park sector. We will ensure the website is well designed and highly functional.
We believe it will help us build credibility for our organization.
The speed with which we develop our website, the sophistication of the website,
the use of third party consultants or part-time or full-time employees will all
be dependent on the level of funding that we are able to achieve.
Identify a Management Team of Experienced Paintball Executives Committed to
Implementing Our Proposed Business Plan
Identifying a management team committed to implementing our proposed business
plan as soon as we complete our first acquisition is critical to the success of
our business plan.
We will seek to identify such a management team as follows:
- when we identify highly successful paintball parks, we will attempt to
acquire the park with its existing management in place. We believe
that we may be able to acquire and motivate such a management team by
bringing them into a public company which offers them challenges and
opportunities to practice their profession in a larger, more demanding
role than in their current situation;
- we will search for highly talented executives operating in existing,
under-funded, paintball operations who have not been able to maximize
their potential through lack of opportunity in their current roles. We
believe that these individuals will be excited to seize the
opportunity of working in a public company looking to implement a
rapid growth business plan;
- we will advertise in paintball publications for management candidates;
- we will actively seek a real estate professional with experience of
obtaining planning consents and property development to be part of the
management team;
- if necessary, if we are unable to assemble the management team we are
seeking through our own contacts, depending of the level of funding
available to us, we will consider retaining a third party, head
hunting firm of consultants to identify appropriate candidates.
There is no guarantee that we will be successful in being able to attract the
quality of experienced management that we are seeking who will be prepared to
commit to join our unproven start up operation.
Identify, Evaluate and Prioritize Potential Acquisition Targets
We will attempt to identify potential acquisition targets by:
- direct mail to the paintball parks in our database;
- direct mail to land owners who commercial real estate realtors have
identified as potentially having an interest in developing land they
own as a paintball park;
- contacting business brokers to refer, solicit and refer paintball
business to us on a contingent basis;
- running advertisements in paintball and financial magazines seeking
acquisitions.
When we receive an expression of interest from a potential acquisition target,
we will evaluate the potential target against a list of criteria we will have
established in conjunction with our prospective new management team.
Key factors in evaluating any potential acquisition will be:
- the location of the existing or potential paintball park.
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We believe that proximity and convenient access to a critical
mass of our targeted demographic is critical to the long term
success of any paintball park. Other relevant factors include
proximity to other existing paintball parks and, in respect of
new paintball parks, the likely planning considerations of
establishing a new park;
- anticipated requirement for new capital expenditure.
At one extreme, if we acquire an existing successful, profitable
paintball park, it may require little in the way of additional
capital expenditure. At the other extreme, if we acquire a green
field site, we will have to build an entire new facility,
including infrastructure. In between these two extremes, we
expect to be able to acquire existing, undercapitalized paintball
parks that will need significant upgrades in the existing
facilities to achieve their true operating potential.
Assessing the anticipated risk and returns on these various
levels of potential capital expenditure will be a significant
challenge for our prospective management team;
- existing customer base / brand reputation.
New, green field sites, will need extensive sales and marketing
expenditure to develop customer awareness and establish a stable
growing customer base. For existing paintball parks, we will need
to assess the strength of their reputation and customer / brand
loyalty. We believe that even in existing profitable, successful
paintball businesses, we will be able to increase customer
numbers through carefully targeted marketing aimed at key
demographic groups;
- the quality of existing management.
Particularly in our early acquisitions, the existence of talented
and successful management who wish to continue their employment
with us and rise to the new challenges we have to offer them will
be very attractive to us.
On the basis of a formalized process we will establish for evaluating potential
acquisitions, we will seek to arrive at, and maintain on an updated basis, a
prioritized short list of acquisitions ranked in the order in which we believe
can create the most value for our shareholders.
There is no guarantee that we will be able to locate acquisition targets that we
believe will meet our minimum specified criteria and that we would wish to
acquire.
Our ability to use outside third party consultants to complete feasibility
studies will be dependent on the level of funding that we are able to achieve.
Negotiate with the Owners of Potential Acquisition Targets
Once we have established a short list of acquisitions we would like to make, we
will enter into negotiations with owners of the assets in question to establish
whether it is possible to negotiate terms that are mutually acceptable to both
parties.
At our stage of development, transactions that can be completed with a high
percentage of consideration comprising shares of our common stock and, or, owner
carried loan notes are particularly attractive to us.
At the same time, we recognize that we will be able to purchase businesses more
cheaply for cash we have generated from that sale of shares of our common stock
or from third party debt. We will also need to raise additional funding from
these sources to provide ongoing working capital and additional capital
investment for the businesses we acquire.
There is no guarantee that we will be able to negotiate acceptable acquisition
terms for businesses or assets we would wish to purchase.
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Sign Purchase Agreements, Subject to Funding, to Acquire Our Acquisition Targets
Unless we can complete acquisitions for consideration comprising 100% of shares
of our common stock and, or, owner financed loan notes, we intend to attempt to
enter into binding purchase agreements, subject to funding, to acquire our
acquisition targets.
These agreements will be for a term that will give us sufficient time to
complete a business plan and raise the funding necessary to complete the
acquisition in question.
We recognize that certain owners of assets that we would wish to purchase will
not be prepared to sign such agreements in which case we will do our best to
fund such acquisitions based on the circumstances in which we find ourselves.
Prepare a Comprehensive Business Plan for the Proposed Acquisition.
When we have "locked in" the terms of a specific acquisition, subject to
funding, we will then prepare a business plan as a basis to raise the funding
for the proposed acquisition.
The business plan will include all relevant historic information about the
target acquisition, our proposed business plan for the acquisition target,
profiles of the management team we have assembled to implement our strategy and
details of the funding we are seeking to raise to complete the acquisition.
While we have not considered any potential acquisitions at this stage, we
anticipate that we shall probably need to raise $1-5 million in funding to
complete our first acquisition.
We will seek investment partners in order to raise the necessary funds to
acquire our first paintball park and provide us with the necessary working
capital for the acquired business. Such potential partners will include banks,
investment funds, high net worth individuals and broker dealers.
There is no guarantee that we will be able to raise the funding that we require
to complete our targeted acquisition or provide us with the necessary working
capital for the acquired business.
Anticipated Time Table For Achieving Our Objectives
Given the current difficult market conditions, we are unable to forecast when,
or if, we shall be able to achieve our objectives.
PAINTBALL - THE SPORT
The evolution of paintball into the sport that it is today took place fairly
quickly in comparison to most other sports. Paintball is claimed by some to have
been the most exciting new attraction to hit the amusement industry in 20 years.
Today, the sport has over 9 million participants, male and female, young and
old, playing in more than 50 countries.
The use of paintball guns, or "markers" as they are referred to, began in the
early 1970s, when they were used as a tool for marking trees and livestock.
In 1981, twelve friends played the first recreational paintball game using these
industrial paintball guns on a field measuring over 100 acres. Typically, in
these early years, the sport was played as a small group of friends getting
together in the woods to play total elimination games. Sometimes the friends
broke into teams to play each other, but most games were "every man for
himself." Over the years, recreational paintball has become more sophisticated.
Because more people were playing, and playing in teams rather than as
individuals, team play has become the standard. Different playing variations
began to form, the most popular being "capture the flag," but a variety of
offensive/defensive scenarios have also become popular. Also, as the number of
people interested in paintball grew, so did the development of the commercial
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paintball industry. The development of commercial paintball fields allowed large
groups of people to meet in one place to play, and the business owners were
pushed to develop new and exciting ways to keep these paintballers entertained.
This drove the development of new scenarios and styles of playing. The biggest
style of play change to come about because of commercial fields was the
"bunker-style" game. Smaller fields let players start the action quicker,
instead of having to stalk through the woods for 15 minutes before seeing
anyone. Also, players purchased more paintballs when they were in a constant
firefight, which made the commercial fields more profitable. At its very core,
paintball is a very sophisticated game of "dodge ball" and "capture the flag."
The game is played with two teams starting on opposite ends of the arena trying
to reach two objectives. One, to "mark out" (i.e. hit with a paintball) as many
players from the opposing team as possible and second to "capture the flag" and
to reach other goals set by the parameters of the game. The game can be equated
to a "real world" interactive game of chess with the mental, but additionally a
physical, element of the game. Today, while commercial paintball fields are
commonplace, there are still a large number of people that prefer playing
paintball out in the woods. While "outlaw" paintball is generally much cheaper,
it is also more problematic than paying to play at a commercial field.
The first professional tournament was held in 1983 with the prizes that were
worth $14,000. Today, major tournaments have hundreds of thousands of dollars
worth of prizes.
Paintball - Current Status of Facilities
The first outdoor commercial paintball field started in 1982. The first indoor
paintball field followed in 1984. The fields allowed large groups of people to
meet in one place to play, and the business owners were pushed to develop new
and exciting ways to keep their customers entertained. This drove the
development of new scenarios and styles of play. Today there are more than 1,300
registered paintball fields in the US and it is believed that in total there are
approximately 2,500 paintball fields in the US and Canada.
The majority of these fields are small, family run, undercapitalized, "hobby"
businesses which offer only the most basic, primitive facilities and operate
without adequate marketing support or the operation of best business practices.
We believe that this market structure provides us with the ideal opportunity to
establish a chain of purpose built, aggressively marketed, professionally
operated paintball parks. Customers will be able to play the most innovative
gaming scenarios at the highest quality facilities, purchase all paintball
equipment and supplies they need and have the opportunity to eat, drink and
"hang out" at one convenient paintball park.
Our Proposed Facilities
Our proposed facilities will cover a 5-acre area and will offer 4 fully enclosed
paintball fields (1 tournament-sized and 3 smaller fields), a 2,000 square foot
building housing an onsite shop for equipment and merchandise sales, an
equipment rental facility, a players' lounge, indoor restrooms, an
air-conditioned meeting room, a concession stand and 1,000 square feet of
covered picnic tables for dining and relaxing between games. An all weather
surface parking area for 200 vehicles will be available for customers.
The four netted, outdoor paintball playing areas, each approximately 75 x 150
feet in size, will offer different types of obstacles and various levels of
challenge. The netting will prevent any paintballs from leaving the playing
areas while at the same time reducing the impact of weather conditions on the
playing fields. This will allow the players and spectators to safely enjoy the
outdoor environment and the paintball activities while being sheltered from the
elements. An observation area will be established with bleacher seating between
playing areas so that friends and onlookers can view the games. This will also
provide a vantage point for the field operator to control and monitor the game
and enforce safety regulations.
In the 2,000 square feet building, the onsite shop will display paintball
related products, clothing and accessories for player purchase with attendants
available to answer players' questions about product enhancements, assembly, and
repair of paintball equipment. Our rental facility will be located in the rear
of the building with visibility to the playing fields. The location of the
rental facility will decrease the amount of time a player spends refilling tanks
and purchasing more paint in order to return to play. The rental location will
house 200 to 300 rental guns, paintball masks, paint, and 6, eighty-pound carbon
dioxide tanks for refilling players' air guns.
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Proposed Location for Paintball Facilities
The majority of existing paintball parks are located where they are, largely as
a matter of random chance. An individual with an interest in the sport of
paintball happens to own a piece of property that is not being used for anything
else and decides to make it into a paintball park.
We will build our proposed paintball facilities at locations established by
detailed feasibility studies of key demographic data. We have not yet selected
any site nor obtained financing for the development of these proposed
facilities.
We intend to engage architects and real estate consultants to conduct
feasibility studies that will identify and assess the key logistical and
demographical factors that we need to consider in order to determine the
appropriate locations for each of our proposed facilities. The planned
feasibility studies will address such factors as:
1. major traffic areas;
2. highly populated areas;
3. established community centers;
4. business and governmental facilities;
5. other paintball facilities;
6. direct competitors; and
7. other high-traffic and high-profit companies
One of our goals is to make the sport of paintball more travel-friendly and
logistically convenient for our customers. We believe we can differentiate
ourselves from, and gain a competitive advantage over, the traditional "mom and
pop" and "hobby" operated paintball facilities which are typically located out
in the countryside, sometimes an hour away from the nearest major city, by
locating our facilities in close, convenient proximity to our major customer
demographics.
We also believe that by carefully locating our paintball parks in areas that are
likely to experience significant future appreciation in real estate values that
we will be able to create substantial value for our shareholder based on the
underlying appreciation of our real estate assets over and above the value
created through the creation or purchase of profitable paintball parks.
Proposed Sources of Revenue in the Paintball Industry
We intend to generate revenues through:
Session Fees:
We intend to charge $25 for a 4-hour paintball session.
Equipment Rental:
If a participant does not own their own equipment, they may rent the equipment
for an average fee of $20 per person per session. The standard rental equipment
package will include a paintball gun (referred to as a marker) and a mask.
Paintball Sales:
A large portion of our revenues will be generated through the sale of the
paintballs to be used during each paintball session. We believe that an average
paintball participant will spend $40 on paintballs during each session.
12
Equipment Sales:
Many players prefer to own their own equipment, such as guns (markers) and
masks. The prices for guns range from $40 for a low-end model to $1,600 for a
high-end model. The average price for a mask is $60. We intend to determine the
exact product mix that we will carry in our onsite shops by conducting extensive
research on current sales trends in existing paintball shops and websites.
Merchandise Sales:
Onsite shops will also carry a variety of Atomic Paintball merchandise including
hats, t-shirts, sweatshirts, beer mugs, shot glasses, key chains, etc. The
prices for this merchandise will vary depending on the product.
Concession Stands:
The concessions stands will carry a full range of snack foods typically found in
a convenience store environment including soda and water, chips, candy, etc. The
prices for this merchandise will vary depending on the product.
Website Sales:
Our proposed website will not only sell the equipment and merchandise that is
available in our stores, but will also sell a far broader product range than
will be available at our stores. While our onsite stores will be restricted by
the limited physical space to maintain inventory on hand, the website will have
no such restrictions to the product range we can offer.
We believe that in addition to acting as a profit center in its own right, the
website will perform two other valuable functions for us:
1) The sales data generated by the website will help us to identify and
maintain the optimum product mix for our onsite stores, and
2) The website will serve as a valuable marketing tool for our paint ball
parks by advertising their physical locations, providing driving
directions, allowing potential customers to research our session fees
and rentals, join a league or learn more about the sport of paintball
and our operations.
Other Amenities:
While we shall provide other amenities, such as the players' lounge and picnic
areas, we do not intend to charge for the use of these facilities. We believe
that the provision of these amenities at each of our facilities it is essential
to providing the quality of customer experience to drive repeat business and
valuable referrals.
Anticipated pricing for the sale of our products and services is based on our
initial business plan that is now in the process of being updated. Actual
pricing will vary on a park-by-park basis based on local competitive pressures
and local demographics.
Acquisition Opportunities
----------------------------
We intend to attempt to raise the equity necessary to buy land in carefully
researched locations, in close, convenient proximity to our major customer
demographics, build state of the art paintball facilities, and aggressively
market a professionally operated paintball experience to our targeted
demographic.
We believe that among the 2,500 existing paintball parks in North America and
Canada there may be opportunities to purchase certain existing paintball parks
that can be enhanced to provide the full extent of our proposed product offering
to our targeted demographic for less than it would cost to build an entirely new
facility from scratch. In these situations, we would attempt to acquire these
parks and enhance them rather than look to build an entirely new facility.
13
We will also consider acquiring existing, established profitable paint ball
parks as a means to rapidly establishing a critical mass of profitable
operations. There can be no assurance that we will be able to acquire such parks
at a price that would be acceptable to us.
If we are unable to raise sufficient equity to fully implement our proposed
strategy, we would also seek to acquire paintball assets for shares of our
common stock where we believe we can effectively add value to these paintball
assets in a cost effective manner through effective application of our proposed
process enhancements.
In implementing a structure for a particular business acquisition, we may become
a party to a consolidation, reorganization, joint venture, or licensing
agreement with another company or entity. We may also acquire stock or assets of
an existing business. Upon consummation of a transaction, it is probable that
our present management and stockholders will no longer be in control of us. In
addition, our sole director may, as part of the terms of the acquisition
transaction, resign and be replaced by new directors without a vote of our
stockholders, or sell his stock in us. Any such sale will only be made in
compliance with the securities laws of the country-regionplaceUnited States and
any applicable state.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under applicable federal and
state securities laws. In some circumstances, as a negotiated element of the
transaction, we may agree to register all or a part of such securities
immediately after the transaction is consummated or at specified times
thereafter. If such registration occurs, it will be undertaken by the surviving
entity after it has successfully consummated a merger or acquisition and is no
longer considered an inactive company. The issuance of substantial additional
securities and their potential sale into any trading market which may develop in
our securities may have a depressive effect on the value of our securities in
the future. There is no assurance that such a trading market will develop.
While the actual terms of a transaction cannot be predicted, it is expected that
the parties to any business transaction will find it desirable to avoid the
creation of a taxable event and thereby structure the business transaction in a
so-called "tax-free" reorganization under Sections 368(a)(1) or 351 of the
Internal Revenue Code (the "Code"). In order to obtain tax-free treatment under
the Code, it may be necessary for the owner of the acquired business to own 80%
or more of the voting stock of the surviving entity. In such event, our
stockholders would retain less than 20% of the issued and outstanding shares of
the surviving entity. This would result in significant dilution in the equity of
stockholders.
As part of our investigation, we expect to meet personally with management and
key personnel, visit and inspect material facilities, obtain independent
analysis and verification of certain information provided, check references of
management and key personnel, and take other reasonable investigative measures,
to the extent of our limited financial resources and management expertise. The
manner in which we participate in an opportunity will depend on the nature of
the opportunity, the respective needs and desires of both parties, and the
management of the opportunity.
With respect to any acquisition, and depending upon, among other things, the
target company's assets and liabilities, our stockholders will in all likelihood
hold a substantially lesser percentage ownership interest in us following any
merger or acquisition. The percentage ownership may be subject to significant
reduction in the event we acquire a target company with assets and expectations
of growth. Any merger or acquisition can be expected to have a significant
dilutive effect on the percentage of shares held by our stockholders.
We will participate in a business opportunity only after the negotiation and
execution of appropriate written business agreements. Although the terms of such
agreements cannot be predicted, generally, we anticipate that such agreements
will: (i) require specific representations and warranties by all of the parties;
(ii) specify certain events of default; (iii) detail the terms of closing and
the conditions which must be satisfied by each of the parties prior to and after
such closing; (iv) outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants; (v) set forth remedies
on defaults; and (vi) include miscellaneous other terms.
As stated above, we will not acquire any entity that cannot provide independent
audited financial statements within a reasonable period of time after closing of
the proposed transaction. If such audited financial statements are not available
at closing, or within time parameters necessary to insure our compliance within
the requirements of the 1934 Act, or if the audited financial statements
14
provided do not conform to the representations made by that business to be
acquired, the definitive closing documents will provide that the proposed
transaction will be voidable, at the discretion of our present management. If
such transaction is canceled, the definitive closing documents will also contain
a provision providing for reimbursement of our costs associated with the
proposed transaction.
Competition
------------
The paintball industry is continually changing and very competitive. We expect
competition in this business to intensify in the future. If we fail to attract
and retain a customer base we will not develop significant revenues or market
share. Going into business in the paintball industry is relatively easy and new
competitors enter this market at a relatively low cost. In addition, the market
for paintball gaming and paintball products is very competitive and no clear
leader has been established, although a number of companies have recently
announced plans to open multiple paintball facilities in other parts of the
placecountry-regionUnited States. We will compete with a variety of other
companies, including existing paintball product suppliers and paintball activity
fields and the online retail web sites of some traditional retailers who may
also sell paintball products and services, many of whom have much more money
than we do.
With respect to our proposed sales of paintball equipment and merchandise, there
are other companies across the country that retail paintball merchandise at
competitive prices both online and in retail stores. These companies offer
competitively priced basic paintball equipment, supplies and apparel, and we may
have difficulty competing with them.
We believe we are an insignificant participant among the firms that operate in
the paintball sector. There are many established paintball businesses that have
significantly greater financial and personnel resources and technical expertise
than we have. In view of our limited financial resources and limited management
availability, we will continue to be at a significant competitive disadvantage
compared to our competitors.
INTELLECTUAL PROPERTY
We do not hold any patents or patent applications.
EMPLOYEES
At December 31, 2009, we did not have any salaried employees. The officers and
directors contribute their services as needed.
ITEM 1A. RISK FACTORS
WE ARE A DEVELOPMENT STAGE COMPANY, WITH NO SIGNIFICANT HISTORY OF OPERATIONS.
We were incorporated on May 8, 2001, and are, therefore, a start-up company with
very little operating history. Consequently, our business plan is as yet
unproven.
SOME MAJOR COMPONENTS OF OUR BUSINESS STRATEGY HAVE NOT BEEN FULLY DEVELOPED AS
YET.
We have developed our strategy to own and operate paintball facilities and to
provide services and products in connection with paintball sport activities at
future facilities and through a website. However, due to lack of resources, we
have not been able to complete or execute many components of our strategy at
this time including the demographic studies necessary to identify the optimum
locations for our future parks, the operating procedures to be adopted at our
parks or the marketing strategies necessary to drive foot traffic through the
parks. The development and implementation of these components will be
complicated and time consuming. There can be no assurance that we will
successfully develop all or any of these components. If we do not develop and
implement these components in a timely manner, our operating revenues may never
be developed.
15
COMPETITION IN THE PAINTBALL AND E-COMMERCE BUSINESS IS INTENSE AND WE MAY NOT
BE ABLE TO COMPETE AND SURVIVE.
The paintball industry is relatively new, ever changing and very competitive. We
expect competition in this business to intensify in the future. If we fail to
attract and retain a customer base we will not develop significant revenues or
market share. Going into business in the paintball industry is relatively easy
and new competitors enter this market at a relatively low cost. In addition, the
market for paintball gaming and paintball products is very competitive and no
clear leader has been established. We will compete with a variety of other
companies, including existing paintball product suppliers and paintball activity
fields and the online retail web sites of some traditional retailers who may
also sell paintball products and services, many of whom have many more resources
than we do.
THE CURRENT DECLINE IN PAINTBALL POPULARITY MAY ADVERSELY AFFECT OUR BUSINESS.
Participation in the sport of paintball has decreased in the last few years, if
this decline is permanent, there is significant risk that the demand for
paintball parks and paintball related products will be negatively impacted
resulting in a decline of sales revenues, if any are ever developed. This
decline could result from adverse economic conditions that could negatively
affect disposable income, changes in leisure habits or changes in statutory
regulations effecting paintball parks or products.
WE HAVE A MINIMAL OPERATING HISTORY, SO INVESTORS HAVE NO WAY TO GAUGE OUR LONG
TERM PERFORMANCE.
We were incorporated on May 8, 2001, based on a concept to own and operate
paintball facilities and to provide services and products in connection with
paintball sport activities at our facilities and through a website. Our current
management team has been with us for less than twelve months. As evidenced by
our financial reports, we have generated no revenue. We must be regarded as a
new or development venture with all of the unforeseen costs, expenses, problems,
and difficulties to which such ventures are subject. The venture must be
considered highly speculative.
WE CAN MAKE NO ASSURANCE OF SUCCESS OR PROFITABILITY IN THE FUTURE.
There is no assurance that we will ever operate profitably. There is no
assurance that we will generate revenues or profits in the future, or that the
market price of our shares of common stock will be increased thereby.
WE ARE NOT DIVERSIFIED AND WE WILL BE DEPENDENT ON ONLY ONE BUSINESS.
We currently have no plans to diversify our operations outside the paintball
sector. The concentration of our activities into just one sector may subject us
to economic fluctuations specific to the paintball industry and therefore
increase the risks associated with our operations.
WE HAVE NO ESTABLISHED OPERATING MANAGEMENT.
Our plan is to raise equity and then seek to recruit a management team with the
specific skills and experience required to implement our proposed business plan.
It will be more difficult to raise equity without an established management team
in place than it would have been if we already had such a team in place. Even if
we are successful in raising the necessary equity, it will be difficult to
recruit a high quality team for a small start up operation. Once we have
recruited the management team there can be no guarantee that they will be
successful in implementing our business plan.
BECAUSE OF THE NATURE OF OUR PROPOSED ACTIVITIES, WE MAY BE SUBJECT TO LIABILITY
CLAIMS RESULTING FROM PERSONAL INJURIES AND MAY BE UNABLE TO OBTAIN OR MAINTAIN
ADEQUATE LIABILITY INSURANCE.
We may become involved in various lawsuits incidental to our business, some of
which may relate to claims allegedly resulting in injury or death. Significantly
increased product liability claims continue to be asserted successfully against
16
manufacturers and distributors of sports equipment throughout the United States
resulting in general uncertainty as to the nature and extent of liability for
personal injuries. In recent years, product liability insurance has become much
more expensive, more restrictive and more difficult to obtain. While we intend
to obtain liability insurance, there can be no assurance that we will be able to
obtain or maintain liability insurance coverage sufficient to cover any
successful liability claims made against us. Any claims substantially in excess
of our insurance coverage, or any substantial claim not covered by insurance,
could have a material adverse effect on our financial condition and results of
operations
BECAUSE INSIDERS CONTROL OUR ACTIVITIES, THAT MAY CAUSE US TO ACT IN A MANNER
THAT IS MOST BENEFICIAL TO THEM AND NOT TO OUTSIDE SHAREHOLDERS, WHICH COULD
CAUSE US NOT TO TAKE ACTIONS THAT OUTSIDE INVESTORS MIGHT VIEW FAVORABLY.
Our executive officers, directors, and holders of 5% or more of our outstanding
common stock beneficially own approximately 55% of our outstanding common stock.
As a result, they effectively control all matters requiring director and
stockholder approval, including the election of directors, the approval of
significant corporate transactions, such as mergers and related party
transactions. These insiders also have the ability to delay or perhaps even
block, by their ownership of our stock, an unsolicited tender offer. This
concentration of ownership could have the effect of delaying, deterring or
preventing a change in control of our company that you might view favorably.
OUR DIRECTORS MAY HAVE CONFLICTS OF INTEREST WHICH MAY NOT BE RESOLVED FAVORABLY
TO US.
Certain conflicts of interest may exist between our directors and us. Our
Directors have other business interests to which they devote their attention,
and may be expected to continue to do so although management time should be
devoted to our business. As a result, conflicts of interest may arise that can
be resolved only through exercise of such judgment as is consistent with
fiduciary duties to us. See "Directors, Executive Officers and Corporate
Governance", and "Conflicts of Interest."
WE MAY DEPEND UPON OUTSIDE ADVISORS, WHO MAY NOT BE AVAILABLE ON REASONABLE
TERMS AND AS NEEDED.
To supplement the business experience of our officers and directors, we may be
required to employ accountants, technical experts, appraisers, attorneys, or
other consultants or advisors. Our Board without any input from stockholders
will make the selection of any such advisors. Furthermore, it is anticipated
that such persons may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to us. In the event we consider it necessary to
hire outside advisors, we may elect to hire persons who are affiliates, if they
are able to provide the required services.
WE HAVE INCURRED SIGNIFICANT LOSSES AND ANTICIPATE FUTURE LOSSES, AND OUR
AUDITORS HAVE ISSUED A "GOING CONCERN" QUALIFICATION IN THEIR OPINION.
At December 31, 2009, we had an accumulated deficit of $788,412 and a
stockholders' deficit of $351,622. Future losses are likely to occur as we have
no sources of income to meet our operating expenses. As a result of these, among
other factors, we received a report on our consolidated financial statements for
the years ended December 31, 2009, and 2008 from our Independent Registered
Public Accounting Firms that include an explanatory paragraph stating that there
is substantial doubt about our ability to continue as a going concern.
OUR EXISTING FINANCIAL RESOURCES ARE INSUFFICIENT TO MEET OUR ONGOING OPERATING
EXPENSES.
We have no sources of income at this time and insufficient existing cash
balances to meet our ongoing operating expenses. In the short term, unless we
are able to raise additional debt and, or, equity we shall be unable to meet our
ongoing operating expenses. No assurances can be given that we will be
successful in raising equity, starting or acquiring operations, generating
revenues or reaching or maintaining profitable operations.
WE INTEND TO RAISE CAPITAL.
We need to raise substantial capital to implement our proposed business to own
and operate paintball facilities and to provide services and products in
connection with paintball sport activities at our facilities and through a
17
website. No assurances can be given that we will be successful in raising
equity, starting or acquiring operations, generating revenues or reaching or
maintaining profitable operations.
IF WE FAIL TO RAISE CAPITAL, WE MAY BE UNABLE TO ACQUIRE PAINTBALL BUSINESSES
AND OR ASSETS FOR SHARES OF OUR COMMON STOCK.
Our proposed business is to own and operate paintball facilities and to provide
services and products in connection with paintball sport activities at future
facilities and through a website, within our existing level of interim funding.
No assurances can be given that we will be successful in raising capital,
starting or acquiring operations, generating revenues or reaching or maintaining
profitable operations.
If we fail to raise sufficient capital to fund the organic growth of our
business, our strategy is to acquire an operating business through the purchase
of paintball businesses and assets in return for the issue of shares of our
common stock. Successful implementation of this strategy depends on our ability
to identify a suitable acquisition candidate, acquire such company on acceptable
terms and integrate its operations. In pursuing acquisition opportunities, we
compete with other companies with similar strategies. Competition for
acquisition targets in our chosen sector may result in increased prices of
acquisition targets and a diminished pool of companies available for
acquisition. Acquisitions involve a number of other risks, including risks of
acquiring undisclosed or undesired liabilities, acquired in-process technology,
stock compensation expense, diversion of management attention, potential
disputes with the seller of one or more acquired entities and possible failure
to retain key acquired personnel. Any acquired entity or assets may not perform
relative to our expectations. Our ability to meet these challenges has not been
established.
SCARCITY OF, AND COMPETITION FOR, BUSINESS OPPORTUNITIES AND COMBINATIONS.
We believe we are an insignificant participant among the firms that engage in
the acquisition of business opportunities in the paintball sector. There are
many businesses in the paintball sector that have significantly greater
financial and personnel resources and technical expertise than we have. Nearly
all such entities have significantly greater financial resources, technical
expertise and managerial capabilities than us and, consequently, we will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, we will also compete
in seeking merger or acquisition candidates with numerous other small public
companies. In view of our limited financial resources and limited management
availability, we will continue to be at a significant competitive disadvantage
compared to our competitors.
WE HAVE NOT EXECUTED ANY FORMAL AGREEMENT TO RAISE CAPITAL OR FOR A BUSINESS
COMBINATION OR OTHER TRANSACTION AND HAVE ESTABLISHED NO STANDARDS FOR RAISING
CAPITAL OR COMPLETING BUSINESS COMBINATIONS.
We have not executed any formal arrangement, agreement or understanding with
respect to raising capital, engaging in a merger with, joint venture with or
acquisition of a private or public entity. There can be no assurance that we
will be successful in raising equity or identifying and evaluating suitable
business opportunities or in concluding a business combination. There is no
assurance we will be able to raise capital or negotiate a business combination
on terms favorable, if at all. We have not established a specific length of
operating history or specified level of earnings, assets, net worth or other
criteria which we will require a target business opportunity to have achieved,
and without which we would not consider a business combination. Accordingly, we
may enter into a business combination with a business opportunity having no
significant operating history, losses, limited or no potential for earnings,
limited assets, negative net worth or other negative characteristics.
RISK FACTORS RELATED TO OUR STOCK
THE REGULATION OF PENNY STOCKS BY SEC AND FINRA MAY HAVE AN EFFECT ON THE
TRADABILITY OF OUR SECURITIES.
Our securities are currently listed on the Over the Counter Bulletin Board and
the Pink Sheets. Our shares are subject to a Securities and Exchange Commission
rule that imposes special sales practice requirements upon broker-dealers who
18
sell such securities to persons other than established customers or accredited
investors. For purposes of the rule, the phrase "accredited investors" means, in
general terms, institutions with assets in excess of $5,000,000, or individuals
having a net worth in excess of $1,000,000 or having an annual income that
exceeds $200,000 (or that, when combined with a spouse's income, exceeds
$300,000). For transactions covered by the rule, the broker-dealer must make a
special suitability determination for the purchaser and receive the purchaser's
written agreement to the transaction prior to the sale. Consequently, the rule
may affect the ability of broker-dealers to sell our securities and also may
affect the ability of purchasers in this offering to sell their securities in
any market that might develop therefore.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange
Act of 1934, as amended. Because our securities constitute "penny stocks" within
the meaning of the rules, the rules would apply to us and to our securities. The
rules may further affect the ability of owners of shares to sell our securities
in any market that might develop for them.
Shareholders should be aware that, according to the Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
OUR STOCK IS THINLY TRADED AND, AS A RESULT, YOU MAY BE UNABLE TO SELL AT OR
NEAR ASK PRICES OR AT ALL IF YOU NEED TO LIQUIDATE YOUR SHARES.
The shares of our common stock are thinly-traded on the OTC Bulletin Board and
the Pink Sheets, meaning that the number of persons interested in purchasing our
shares of common stock at or near ask prices at any given time may be relatively
small or non-existent. This situation is attributable to a number of factors,
including the fact that we are a small company which is relatively unknown to
stock analysts, stock brokers, institutional investors and others in the
investment community that generate or influence sales volume, and that even if
we came to the attention of such persons, they tend to be risk-averse and would
be reluctant to follow an unproven, early stage company such as ours or purchase
or recommend the purchase of our shares of common stock until such time as we
became more seasoned and viable. As a consequence, there are periods of several
days or more when trading activity in our shares of common stock is minimal or
non-existent, as compared to a seasoned issuer which has a large and steady
volume of trading activity that will generally support continuous sales without
an adverse effect on Securities price. We cannot give you any assurance that a
broader or more active public trading market for our shares of common stock will
develop or be sustained, or that any trading levels will be sustained. Due to
these conditions, we can give no assurance that shareholders will be able to
sell shares of common stock at or near ask prices or at all.
RULE 144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE EFFECT ON OUR STOCK PRICE.
All of the outstanding shares of common stock held by our present officers,
directors, and affiliate stockholders are "restricted securities" within the
meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted
shares, these shares may be resold only pursuant to an effective registration
statement or under the requirements of Rule 144 or other applicable exemptions
from registration under the Act and as required under applicable state
securities laws. We are registering all of our outstanding shares so officers,
directors and affiliates will be able to sell their shares if this Registration
Statement becomes effective. Rule 144 provides in essence that a person who has
held restricted securities for six months may, under certain conditions, sell
every three months, in brokerage transactions, a number of shares that does not
exceed the greater of 1.0% of a company's outstanding common stock or the
19
average weekly trading volume during the four calendar weeks prior to the sale.
There is no limit on the amount of restricted securities that may be sold by a
non-affiliate after the owner has held the restricted securities for a period of
two years. A sale under Rule 144 or under any other exemption from the Act, may
have a depressive effect upon the price of the common stock in any market that
may develop.
THE PRICE OF OUR COMMON STOCK COULD BE HIGHLY VOLATILE
It is likely that our common stock will be subject to price volatility, low
volumes of trades and large spreads in bid and ask prices quoted by market
makers. Due to the low volume of shares traded on any trading day, persons
buying or selling in relatively small quantities may easily influence prices of
our common stock. This low volume of trades could also cause the price of our
stock to fluctuate greatly, with large percentage changes in price occurring in
any trading day session. Holders of our common stock may also not be able to
readily liquidate their investment or may be forced to sell at depressed prices
due to low volume trading. If high spreads between the bid and ask prices of our
common stock exist at the time of a purchase, the stock would have to appreciate
substantially on a relative percentage basis for an investor to recoup their
investment. Broad market fluctuations and general economic and political
conditions may also adversely affect the market price of our common stock. No
assurance can be given that an active market in our common stock will develop or
be sustained. If an active market does not develop, holders of our common stock
may be unable to readily sell the shares they hold or may not be able to sell
their shares at all.
WE DO NOT ANTICIPATE PAYING CASH DIVIDENDS ON OUR COMMON STOCK
We do not anticipate paying any cash dividends on our common stock in the
foreseeable future.
DILUTION TO STOCKHOLDERS MAY OCCUR THROUGH REDUCTION OF PERCENTAGE SHARE
OWNERSHIP FOLLOWING RAISING ADDITIONAL EQUITY OR SHARE ISSUANCES RELATING TO ANY
BUSINESS COMBINATION.
Our primary plan of operation is based upon raising further equity or completing
a business combination with a private concern which, in all likelihood, would
result in us issuing securities to new stockholders. The issuance of previously
authorized and unissued shares of our common stock would result in reduction in
percentage of shares owned by present and prospective stockholders and may
result in a change in control or management. In addition, any issue of new
equity, merger or acquisition can be expected to have a significant dilutive
effect on the percentage of the shares held by our stockholders.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
ITEM 2. DESCRIPTION OF PROPERTIES
Our mailing address is addressStreet501 Trophy Lake Drive, Suite 314, PMB 106,
Trophy Club, TX 76262. We do not pay rent for the use of this mailing address.
We do not believe it will be necessary to maintain an office at any time in the
foreseeable future in order to carry out our plan of operations described
herein.
ITEM 3. LEGAL PROCEEDINGS
On June 30, 2009, the Company filed a voluntary petition for relief in the
United States Bankruptcy Court, Northern District of Texas, Dallas District
under Chapter 7 of Title 7 of the U.S. Bankruptcy Code, case number 09-34008-7.
Under Chapter 7, all claims against the Debtor in existence prior to the filing
of the petition of relief under U.S. Bankruptcy Code are stayed.
On October 1, 2009, David Cutler, the sole officer and director of the Company
and a creditor in the proceeding, and the bankruptcy trustee filed a Motion for
an Order Approving Bondholder Settlement. Such motion was objected to by a group
of the Company's shareholders consisting of J.H. Brech, LLC, Harry McMillan,
Charles Webb, Don Mark Dominey, Mark Armstrong, David Myers and John E. Bradley
("Objecting Shareholders").
On October 30, 2009, the Objecting Shareholders filed a Motion to Dismiss the
Chapter 7 Case.
20
On January 20, 2010, the Court dismissed the Chapter 7 proceeding as a result of
the obtainment and execution of a Settlement Agreement (the "Settlement
Agreement") between the Company, its existing management and the Objecting
Shareholders of the Company.
The Settlement Agreement provided for the following:
Mr. Stephen Weathers was appointed to the Company's Board of Directors;
Mr. David Cutler, the Company's sole officer and a director of the Company,
resigned his position upon the execution the Settlement Agreement;
Mr. Don Mark Dominey was elected the Company's Chief Executive Officer and
President and a Director of the Company;
Mr. David Cutler, surrendered to the Company, 3,530,235 shares of common
stock held by him for retirement to the Company's treasury;
The Company released and discharged Mr. David Cutler, from all claims by
the Company and the Company was released and discharged from all claims by
Mr. Cutler.
ITEM 4. (REMOVED AND RESERVED)
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
The Company's common stock is presently traded on the over-the-counter market on
the OTC Bulletin Board maintained by the Financial Industry Regulatory Authority
("FINRA"). In October 2008, Atomic Paintball received approval from FINRA to
begin trading on the over-the-counter bulletin board under the symbol "ATOC."
The shares of the Company's stock were not publicly traded prior to October
2008.
The following table sets forth the range of high and low sales prices for the
Company's common stock since it was approved for trading. These prices represent
inter-dealer prices without adjustments for mark-up, mark-down, or commission
and do not necessarily reflect actual transactions.
Stock Quotations
High Low
2009
Quarter Ended December 31, 2009 $0.40 $0.20
Quarter Ended September 30, 2009 $0.38 $0.11
Quarter Ended June 30, 2009 $0.65 $0.25
Quarter Ended March 31, 2009 $0.55 $0.125
2008
Quarter Ended December 31, 2008 $0.35 $0.25
Holders
There are approximately 70 holders of record of Atomic Paintball's common stock
as of December 31, 2009.
Our transfer agent is Mountain Share Transfer, Inc., 1625 Abilene Drive,
Broomfield, Colorado, 80020. The telephone number is 303-460-1149.
21
Dividends
We have not paid or declared cash distributions or dividends on our shares of
common stock and do not intend to pay cash dividends in the foreseeable future.
Future cash dividends will be determined by our board of directors based upon
our earnings, financial condition, capital requirements and other relevant
factors.
Recent Sales of Unregistered Securities
We made no unregistered sales of our securities in year ended December 31, 2009.
Penny Stock
Penny Stock Regulation Broker-dealer practices in connection with transactions
in "penny stocks" are regulated by certain penny stock rules adopted by the
Securities and Exchange Commission. Penny stocks generally are equity securities
with a price of less than $5.00. Excluded from the penny stock designation are
securities registered on certain national securities exchanges or quoted on
NASDAQ, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange/system or sold to
established customers or accredited investors.
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the risks
in the penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in connection with the transaction, and the
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker-dealer 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.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules. As our securities have become subject to the penny stock
rules, investors may find it more difficult to sell their securities.
Stock Incentive Plans -- details concerning the activities and status of our
stock incentive plans during the period are set out in Note 7. Stockholders'
Deficit of our Financial Statements below.
Items Submitted for Shareholder Approval
On January 8, 2010, the Company filed an Information Statement Pursuant to
Section 14(f) of the Securities Exchange Act of 1934, Notice of a Change in the
Majority of Directors with the SEC. Such Information Statement, provided the
shareholders with notice that Mr. Cutler had resigned as an officer and director
of the Company and that Messrs. Don Mark Dominey and Stephen Weathers were
appointed to the Company's Board of Directors, pursuant to the Settlement
Agreement approved by the Bankruptcy Court.
ITEM 6. SELECTED FINANCIAL AND OPERATING DATA
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are
not required to provide information required by this Item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto and the other financial information
included elsewhere in this report. This discussion contains forward-looking
22
statements that involve risks and uncertainties. We believe that our
expectations are based on reasonable assumptions within the bounds of our
knowledge of our business and operations: there can be no assurance that actual
results will not differ materially from our expectations. Such forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those anticipated, including but not limited
to, our ability to raise sufficient debt or equity financing to fund ongoing
operations and fully implement our proposed business plan, recruit senior
management with the skill and experience to implement our business plan
effectively, identify and acquire real estate in suitable locations on which to
build paintball parks, obtain the necessary planning approvals to build our
paintball parks, build our paintball parks that directly address market demand
in a cost effective manner, identify existing paintball parks we would wish to
acquire, negotiate successfully to acquire existing paintball parks we wish to
acquire, operate our paintball parks, whether we have built them ourselves or
acquired them, on a profitable basis, provide services and products in
connection with paintball sport activities at our facilities and through a
website on a profitable basis within a fiercely competitive market place, avoid,
or effectively insure against, liability claims for personal injury incurred by
customers at our paintball parks or using paintball equipment we have provided
to them, or be able to identify and successfully negotiate to acquire assets or
businesses in the paintball sector in return for shares of our common stock .
You are urged to carefully consider these factors, as well as other information
contained in this Annual Report on Form 10-K and in our other periodic reports
and documents filed with the SEC.
OVERVIEW
We are a development stage corporation, incorporated on May 8, 2001 in the State
of Texas, which plans to own and operate paintball facilities and to
provide services and products in connection with paintball sport activities at
our facilities and through a website. The website has not been developed at this
time.
On June 30, 2009, the Company filed a voluntary petition for relief in the
United States Bankruptcy Court, Northern District of Texas, Dallas District
under Chapter 7 of Title 7 of the U.S. Bankruptcy Code, case number 09-34008-7.
Under Chapter 7, all claims against the Debtor in existence prior to the filing
of the petition of relief under U.S. Bankruptcy Code are stayed.
On October 1, 2009, David Cutler, the sole officer and director of the Company
and a creditor in the proceeding, and the bankruptcy trustee filed a Motion for
an Order Approving Bondholder Settlement. Such motion was objected to by a group
of the Company's shareholders consisting of J.H. Brech, LLC, Harry McMillan,
Charles Webb, Don Mark Dominey, Mark Armstrong, David Myers and John E. Bradley
("Objecting Shareholders").
On October 30, 2009, the Objecting Shareholders filed a Motion to Dismiss the
Chapter 7 Case.
On January 20, 2010, the Court dismissed the Chapter 7 proceedings as a result
of the obtainment and execution of a Settlement Agreement (the "Settlement
Agreement") between the Company, its existing management and the Objecting
Shareholders of the Company.
The Settlement Agreement provided for the following:
Mr. Stephen Weathers was appointed to the Company's Board of Directors;
Mr. David Cutler, the Company's sole officer and a director of the Company,
resigned his position upon the execution of the Settlement Agreement;
Mr. Don Mark Dominey was elected the Company's Chief Executive Officer and
President and a Director of the Company;
Mr. David Cutler, surrendered to the Company, 3,530,235 shares of common
stock held by him for retirement to the Company's treasury;
The Company released and discharged Mr. David Cutler from all claims by the
Company and the Company was released and discharged from all claims by Mr.
Cutler.
23
If we are successful in raising capital, we plan to establish corporate offices,
hire senior management, conduct feasibility studies for real estate acquisitions
for paintball locations, purchase land and equipment for operating paintball
parks, purchase inventory for resale and develop our website for marketing our
paintball games and miscellaneous services via the Internet. We will consider
acquiring existing underperforming paintball parks where we can create value
through new capital expenditure and the application of state of the art
marketing and operating disciplines. We will also consider acquiring existing,
established, profitable paintball parks as a means of establishing rapidly a
critical mass of profitable operations. We would need to raise substantial funds
to complete this business plan and there can be no assurance that we will be
able to raise sufficient equity to fund our strategy.
There can be no assurance we will be able to raise sufficient debt or equity
financing to fund ongoing operations and implement our proposed business plan,
recruit senior management with the skill and experience to implement our
business plan effectively, identify and acquire real estate in suitable
locations on which to build paintball parks, obtain the necessary planning
approvals to build our paintball parks, build our paintball parks that directly
address market demand in a cost effective manner, identify existing paintball
parks we would wish to acquire, negotiate successfully to acquire existing
paintball parks we wish to acquire, operate our paintball parks, whether we have
built them ourselves or acquired them, on a profitable basis, provide services
and products in connection with paintball sport activities at our facilities and
through a website on a profitable basis within a fiercely competitive market
place, avoid, or effectively insure against, liability claims for personal
injury incurred by customers at our paintball parks or using paintball equipment
we have provided to them, be able to identify or successfully negotiate to
acquire assets or businesses in the paintball sector in return for shares of our
common stock, or that any stockholder will realize any return on their shares
after any such transactions have been completed.
Liquidity and Capital Resources
At December 31, 2009, we had no assets, no operating business or other source of
income, outstanding liabilities totaling $351,622 and a stockholders' deficit of
$351,622.
In our financial statements for the fiscal years ended December 31, 2009 and
2008, the Report of the Independent Registered Public Accounting Firm includes
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern. Our financial statements for the fiscal years ended
December 31, 2009 and 2008 have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. At December 31, 2009, we had a
working capital deficit of $351,622 and reported an accumulated deficit of
$788,412.
It is our current intention to seek to raise the debt and/or equity financing to
meet ongoing operating expenses and fully implement our proposed business plan.
There is no assurance that this series of events will be satisfactorily
completed.
The United States and the global business community is experiencing severe
instability in the commercial and investment banking systems which is likely to
continue to have far-reaching effects on the economic activity in the country
for an indeterminable period. The long-term impact on the
placecountry-regionUnited States economy and the Company's operating activities
and ability to raise capital cannot be predicted at this time, but may be
substantial.
RESULTS OF OPERATIONS
FISCAL YEAR ENDED DECEMBER 31, 2009 COMPARED TO THE FISCAL YEAR ENDED DECEMBER
31, 2008
During the years ended December 31, 2009 and 2008, we did not recognize any
revenues from our operations.
During the year ended December 31, 2009, we incurred $172,252 in general and
administrative expenses compared to $105,905 in the year ended December 31,
2008, an increase of $66,347. The increase in general and administrative
expenses was a result of the increased legal activity resulting from our filing
for relief under Chapter 7 of Title 7 of the U.S. Bankruptcy Code.
During the year ended December 31, 2009, we recognized interest expenses of
$9,305 compared to $6,868 during the year ended December 31, 2009. There was an
increase of $2,437 in interest expense.
24
During the year ended December 31, 2009, we recognized a net loss of $181,557
compared to a net loss of $112,774 during the year ended December 31, 2008. The
increase of $68,783 was a result of the increase of $66,347 in general and
administrative expenses combined with the $2,437 increase in interest expense
over the prior year.
CASH FLOW INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2009 COMPARED TO THE YEAR
ENDED DECEMBER 31, 2008
At December 31, 2009, we had no assets, no operating business or other source of
income, outstanding liabilities totaling $351,622 and a stockholder' deficit of
$351,622.
In our financial statements for the fiscal years ended December 31, 2009 and
2008, the Report of the Independent Registered Public Accounting Firm includes
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern. Our financial statements for the fiscal years ended
December 31, 2009 and 2008, have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. At December 31, 2009, we had a
working capital deficit of $351,622 and reported an accumulated deficit of
$788,412.
It is our current intention to seek to raise the debt and/or equity financing to
meet ongoing operating expenses and fully implement our proposed business plan.
There is no assurance that this series of events will be satisfactorily
completed.
Net cash used in operations in the year ended December 31, 2009 was $56,834
compared to $80,600 in the year ended December 31, 2008. In the year ended
December 31, 2009, we recognized a net loss of $181,557, without any need for
adjustment for non-cash items. During the year ended December 31, 2009, we
incurred a $118,735 increase in accounts payable and a $5,987 increase in
accrued liabilities. During the year ended December 31, 2008, we recognized a
net loss of $112,774, without any need for adjustment for non-cash items. During
the year ended December 31, 2009, we incurred a $24,993 increase in accounts
payable and a $6,819 increase in accrued liabilities.
No cash was provided by or used in investing activities during the years ended
December 31, 2009 and 2008.
During the year ended December 31, 2009, cash provided from financing activities
was $54,434 all from shareholder loans. During the year ended December 31, 2009,
cash provided from financing activities was $68,875 all from shareholder loans.
Our first President and then sole director, Barbara J. Smith, loaned us a total
of $10,900 between April and July 2002 to pay for further research and
development and for general corporate overhead. This loan bears interest at an
annual rate of 6.5% and was repayable in full in July 15, 2004 and was
convertible at Ms. Smith's option into shares of our common stock at $0.125 per
share. This loan has not been repaid and Ms. Smith has declined to convert the
outstanding balance into shares. Accordingly, the entire balance of the loan
continues to be outstanding and we continue to accrue interest on the balance
outstanding. As of December 31, 2009, accrued interest amounted to $4,816.
Since his appointment on August 31, 2006 and through December 31, 2008, Mr.
Cutler, our then sole officer and a director, has made advances to us of
$237,687 by way of a loan. These funds are used to support our ongoing operating
costs and settle certain outstanding liabilities. In December 2006, Mr. Cutler
converted $30,000 of his loan into 697,674 shares of common stock. In March
2007, Mr. Cutler converted an additional $30,000 of his loan into an additional
697,674 shares of our common stock. At December 31, 2009 and 2008, the Company
owed Mr. Cutler $168,060 and $113,486, respectively. There can be no assurance
that Mr. Cutler will continue to provide such financing on an ongoing basis. As
of December 31, 2009, accrued interest amounted to $4,816.
Consequently, we are now dependent on raising additional equity and/or debt to
fund any negotiated settlements with our outstanding creditors and meet our
ongoing operating expenses. There is no assurance that we will be able to raise
the necessary equity and/or debt that we will need to be able to negotiate
acceptable settlements with our outstanding creditors or fund our ongoing
operating expenses.
25
EFFECTS OF INFLATION
Although we cannot accurately anticipate the effect of inflation on our
operations, we do not believe that inflation has had, or is likely in the future
to have, a material effect on our results or financial condition.
Critical Accounting Policies
On an on-going basis, we evaluate our critical accounting policies and
estimates. We base our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the circumstances, the
results of which form our basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or
conditions.
Our significant accounting policies are described in Note 1 to the financial
statements. These policies were selected because they represent the more
significant accounting policies and methods that are broadly applied in the
preparation of our financial statements. However, it should be noted that we
intend to acquire a new operating business. The critical accounting policies and
estimates for such new operations will, in all likelihood, be significantly
different from our current policies and estimates.
Off Balance Sheet Arrangements, Contractual Obligations and Commercial
Commitments
Requires all companies to include a discussion to address, among other things,
liquidity, off-balance sheet arrangements, contractual obligations and
commercial commitments. Details of the arrangements, contractual obligations and
commercial commitments are described in the financial statements.
ITEM 7A. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are
not required to provide information required by this Item.
ITEM 8. FINANCIAL STATEMENTS
Our financial statements are included herein commencing on page 35.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
We have not had any disagreements with our auditors.
ITEM 9A. CONTROLS and PROCEDURES
Evaluation of Disclosure Controls and Procedures
We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act") that are designed to ensure that
information required to be disclosed in our reports under the Exchange Act, is
recorded, processed, summarized and reported within the time periods required
under the SEC's rules and forms and that the information is gathered and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer), as
appropriate, to allow for timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b), our Chief Executive Officer carried out an
evaluation under the supervision and with the participation of our management,
of the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period
covered by this report.
26
The Company, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and the Chief
Financial Officer, performed an evaluation of the effectiveness of the design
and operation of the Company's disclosure controls and procedures as of December
31, 2009. Based on that evaluation, the Chief Executive Officer and the Chief
Financial Officer concluded that the Company's disclosure controls and
procedures were effective as of December 31, 2009.
ITEM 9A(T). CONTROLS AND PROCEDURES
Management's Annual Report on Internal Control Over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control
over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles. Our internal control over financial reporting includes
those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of our
assets;
(ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts
and expenditures are being made on in accordance with authorizations
of our management and directors; and
(iii)provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of our assets that
could have a material effect on our financial statements.
Management's assessment of the effectiveness of the registrant's internal
control over financial reporting is as of the year ended December 31, 2009. In
making this assessment, Management used the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control--Integrated Framework. Management believes that internal control over
financial reporting is effective. The Company has not identified any, current
material weaknesses, considering the nature and extent of the Company's current
operations and any risks or errors in financial reporting under current
operations.
This annual report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the SEC that
permit the Company to provide only management's report in this annual report.
There was no change in our internal control over financial reporting that
occurred during the fiscal year ended December 31, 2009 that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
Item 9B. OTHER INFORMATION
None.
27
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our directors and officers during the year ended December 31, 2009 were:
NAME AGE POSITION
Don Mark Dominey 49 President, CEO, CFO, Director*
David J. Cutler 54 Former President, CEO, CFO, and
Director*
Jeffrey L. Perlmutter 53 Former Director**
*On December 31, 2009, Mr. Cutler resigned as the President, Chief Executive
Officer and Chief Financial Officer of the Company. On December 31, 2009, Mr.
Don Mark Dominey was appointed as the President, Chief Executive Officer and
Chief Financial Officer and a Director of the Company. On January 20, 2010, Mr.
Cutler resigned as a director of the Company and Mr. Stephen Weathers was
appointed as a Director of the Company.
**On March 31, 2009, Mr. Perlmutter resigned as a director of the Company.
Don Mark Dominey - Chief Executive Officer, President, Chief Financial Officer
and Director.
Mr. Dominey became the sole officer and a director of the Company on December
31, 2009. Mr. Dominey is currently employed by a major network equipment vendor
but is not an officer, director, or principal shareholder there. Mr. Dominey has
been responsible for vision, strategy, and alignment in technologies and
services between the major network equipment vendor and a large global
outsourcing company. Mr. Dominey has worked for the major network equipment
provider for over a dozen years and has served as engineer, architect, alliance
manager, and business development manager. In his work, Mr. Dominey is directly
responsible for developing joint network architectures and solutions that
address critical business needs for the services provider while meeting or
exceeding customer requirements.
Stephen W. Weathers - Director
Mr. Weathers was appointed as a director of the Company on January 20, 2010. He
earned his B. S. in Geology from Boise State University. He has worked as an
environmental geologist both in the mining industry and oil and gas industry.
His duties included permitting, environmental compliance, environmental
remediation/reclamation and natural gas asset acquisitions both in the United
States and Canada. Mr. Weathers worked for Maxxim Environmental/Terracon from
1995 through 1999 and presently works in the environmental
remediation/transactional support for a DCP Midstream L.P. formerly Duke Energy
Field Services, a natural gas processing company, (1999-Present). Mr. Weathers
has served as a director of Sun River Energy, Inc. since 2002. He was a director
of Industrial Minerals, Inc. from 2002 - 2007.
Shirley L. Heller - Corporate Secretary
Ms. Heller was appointed the Corporate Secretary on January 23, 2010. Ms. Heller
is Senior Executive Assistant to the Managing General Counsel and Securities
Counsel for Fluor Corporation, a Fortune 500 company headquartered in Irving,
Texas. Fluor provides services on a global basis in the fields of engineering,
procurement, construction, operations, maintenance and project management. Ms.
Heller joined Fluor in April 2006. Ms. Heller is currently attending Kaplan
University pursuing her Bachelor of Science Degree in Business. Her projected
graduation date is December, 2010.
Former Officers and Directors
David J. Cutler - former President, former Chief Executive Officer, former Chief
Financial Officer and former Director. Mr. Cutler became director and officer of
Atomic Paintball, Inc. in August 2006. Mr. Cutler has more than 20 years of
experience in international finance, accounting and business administration. He
held senior positions with multi-national companies such as Reuters Group Plc
and the Schlumberger Ltd. and has served as a director for two British
previously publicly quoted companies -- Charterhall Plc and Reliant Group Plc.
From March 1993 until 1999, Mr. Cutler was a self-employed consultant providing
accounting and financial advice to small and medium-sized companies in the
United Kingdom and the United States. Mr. Cutler was Chief Financial Officer and
subsequently Chief Executive Officer of Multi-Link Telecommunications, Inc., a
publicly quoted voice messaging business, from 1999 to 2005. Since April 2005
through the fall of 2009, Mr. Cutler has been Chief Executive Officer, Chief
Financial Officer and a director of ASPI, Inc. (formerly Aspeon, Inc.), a
publicly listed shell company. Since March 2006, Mr. Cutler has been Chief
Executive Officer, Chief Financial Officer and a director of Concord Ventures,
Inc. (formerly Cavion Technologies, Inc.), a publicly listed shell company. Mr.
Cutler has a masters degree from St. Catherine College in Cambridge, England and
qualified as a British Chartered Accountant and as Chartered Tax Advisor with
28
Arthur Andersen & Co. in London. He was subsequently admitted as a Fellow of the
UK Institute of Chartered Accountants. Since arriving in the
country-regionUnited States Mr. Cutler has qualified as a Certified Public
Accountant, a Fellow of the AICPA Institute of Corporate Tax Management, a
Certified Valuation Analyst of the National Association of Certified Valuation
Analysts and obtained an executive MBA from Colorado State University. Mr.
Cutler resigned as CEO, President, and CFO of the Company on December 31, 2009.
He resigned as a director of the Company on January 20, 2010.
Jeffrey L. Perlmutter - Director. Mr. Perlmutter became our director in December
2006. Mr. Perlmutter co-founded Pursuit Marketing, Inc., a $85 million
manufacturer and distributor of paintball game products, and sold his interest
in Pursuit Marketing, Inc. in November 2006 and will now assist us in
implementing our proposed business plan. Prior to founding Pursuit Marketing,
Inc., Mr. Perlmutter was a business analyst at Dunn & Bradstreet and
subsequently an account executive at M. Lowenstein Corp selling textiles to
clothing manufacturers in the midwest region of the United States. Mr.
Perlmutter has a Bachelor of Science degree from Syracuse University School of
Management. Mr. Perlmutter resigned as a director of the Company on March 31,
2009.
CONFLICTS OF INTEREST - GENERAL.
Our directors and officers are, or may become, in their individual capacities,
officers, directors, controlling shareholder and/or partners of other entities
engaged in a variety of businesses. Thus, there exist potential conflicts of
interest including, among other things, time, efforts and corporation
opportunity, involved in participation with such other business entities. While
each officer and director of our business is engaged in business activities
outside of our business, they devote to our business such time as they believe
to be necessary.
CONFLICTS OF INTEREST - CORPORATE OPPORTUNITIES
Presently no requirement contained in our Articles of Incorporation, Bylaws, or
minutes which requires officers and directors of our business to disclose to us
business opportunities that come to their attention. Our officers and directors
do, however, have a fiduciary duty of loyalty to us to disclose to us any
business opportunities that come to their attention, in their capacity as an
officer and/or director or otherwise. Excluded from this duty would be
opportunities which the person learns about through his involvement as an
officer and director of another company. We have no intention of merging with or
acquiring an affiliate, associate person or business opportunity from any
affiliate or any client of any such person.
COMMITTEES OF THE BOARD OF DIRECTORS
In the ordinary course of business, the board of directors maintains a
compensation committee and an audit committee.
The primary function of the compensation committee is to review and make
recommendations to the board of directors with respect to the compensation,
including bonuses, of our officers and to administer the grants under our stock
option plan.
The functions of the audit committee are to review the scope of the audit
procedures employed by our independent auditors, to review with the independent
auditors our accounting practices and policies and recommend to whom reports
should be submitted, to review with the independent auditors their final audit
reports, to review with our internal and independent auditors our overall
accounting and financial controls, to be available to the independent auditors
during the year for consultation, to approve the audit fee charged by the
independent auditors, to report to the board of directors with respect to such
matters and to recommend the selection of the independent auditors.
In the absence of a separate audit committee, our board of directors functions
as audit committee and performs some of the same functions of an audit
committee, such as recommending a firm of independent certified public
accountants to audit the annual financial statements; reviewing the independent
auditors independence, the financial statements and their audit report; and
reviewing management's administration of the system of internal accounting
controls.
29
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires our Officers and
Directors, and persons who own more than 10% of a registered class of our equity
securities, to file reports of ownership and changes in ownership with the SEC.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file. Based
solely on our review of copies of such reports received, and representations
from certain reporting persons, we believe that, during the fiscal year ended
December 31, 2009, all Section 16(a) filing requirements applicable to our
officers, directors and greater than 10% beneficial owners were filed in
compliance with all applicable requirements.
CODE OF ETHICS
Due to the limited scope of our current operations, we have not adopted a
corporate code of ethics that applies to our principal executive officer,
principal accounting officer, or persons performing similar functions
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation paid
by the Company to the President and the Company's two most highly compensated
executive officers for the years ended December 31, 2009, 2008 and 2007 (the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS STOCK OPTIONS NONQUALIFIED ALL TOTAL
AWARDS AWARDS ($) DEFERRED OTHER ($)
COMPENSATION COMP
($)
----------------------------- --------- ------------- --------- ----------- ------------ --------------- --------- ----------
David J Cutler (1) 2009 $- - - - - - $-
2008 $60,000 - - - - - $60,000
2007 $90,000 - - - - - $90,000
Don Mark Dominey (2) 2009 $- - - - - - $-
(1) On December 31, 2009, Mr. Cutler resigned as the Chief Executive
Officer, President and Chief Financial Officer of the Company. As part
of the Settlement Agreement, Mr. Cutler released the Company from any
and all monies owed to him and return to the Company, 3,530,235 shares
of common stock held by him.
(2) On December 31, 2009, Mr. Dominey was appointed the Chief Executive
Officer, President and Chief Financial Officer of the Company. On
February 18, 2010, Mr. Dominey entered into a Consulting Agreement
with the Company that provides for him to earn up to 100,000 shares of
the Company's common stock and to be reimbursed for reasonable
expenses.
DIRECTORS' COMPENSATION
The following table sets forth certain information concerning compensation paid
to the Company's directors during the year ended December 31, 2009:
Fees Earned Stock Options Non-Equity Nonqualified All Other
Or Paid-in Awards Awards Incentive Plan Deferred Compensation
Cash ($) ($) Compensation Compensation ($) Total
Name Year ($) ($) ($) ($)
-------------------------- -------- -------------- --------- --------- ----------------- ----------------- -------------- --------
David J Cutler (1) 2009 0 0 0 0 0 0 0
Jeffrey L Perlmutter (2) 2009 0 0 0 0 0 0 0
Don Mark Dominey (3) 2009 0 0 0 0 0 0 0
30
(1) On December 31, 2009, Mr. Cutler resigned as the Chief Executive
Officer, President and Chief Financial Officer of the Company. As part
of the Settlement Agreement, Mr. Cutler released the Company from any
and all monies owed to him and return to the Company, 3,530,235 shares
of common stock held by him. On January 20, 2010, Mr. Cutler resigned
as a director of the Company.
(2) On March 31, 2009, Mr. Perlmutter resigned as a director of the
Company.
(3) On December 31, 2009, Mr. Dominey was appointed as a director of the
Company.
Consulting Agreements
On December 3, 2009, Mr. Dominey entered into an Agreement with the Board of
Directors with the Company that provides for the Company to pay a director a fee
at the rate of $500 per quarter, which shall be paid in accordance with the
Company's regularly established practices regarding the payment of Directors'
fees. In addition, the Agreement with the Board of Directors provides that the
Company will issue Mr. Dominey 100,000 shares of its common stock in exchange
for services. In February 2010, Mr. Dominey waived the payment of the $500
quarterly fee.
On February 18, 2010, Mr. Dominey entered into a Consulting Agreement with the
Company that provides for him to earn up to 100,000 shares of the Company's
common stock and the be reimbursed for reasonable expenses. The Consulting
Agreement has a term of one year.
On December 3, 2009, Mr. Weathers entered into an Agreement with the Board of
Directors with the Company that provides for the Company to pay Director a fee
at the rate of $500 per quarter which shall be paid in accordance with Company's
regularly established practices regarding the payment of Directors' fees. In
addition, the Agreement with the Board of Directors provides that the Company
will issue Mr. Weathers 100,000 shares of its common stock in exchange for
services. In February 2010, Mr. Weathers waived the payment of the $500
quarterly fee.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information regarding beneficial
ownership of our common stock, as of December 31, 2009 by:
o each person who is known by us to own beneficially more than 5% of our
outstanding common stock,
o each of our named executive officers and directors, and
o all executive officers and directors as a group.
NAME AND NUMBER OF PERCENTAGE OF
ADDRESS OF BENEFICIAL OWNER SHARES OUTSTANDING (1)
---------------------------------- ------------- ---------------
Mark A. Armstrong 615,162 8.21%
J. H. Brech, LLC 405,162 5.41%
1101 E. Duke Street
Hugo, OK 74743
Mark Margolis 400,500 5.35%
3395 Forest Trace Drive,
Dacula, GA 30019
David J. Cutler (2) 3,925,724 52.42%
2460 W. 26th Avenue, Suite 380-C
Denver, CO 80211
Jeffrey L. Perlmutter (3) 600,000 8.01%
279 Moraine Road
Highland Park, IL, 60035
31
Don Mark Dominey (4) 208,000 2.77%
CEO, President & CFO
------------ ------------
All officers and directors as
a group (2 individuals) 4,133,724 55.20%
(1) Based upon 7,488,804 shares of common stock issued and outstanding, on
December 31, 2009.
(2) On December 31, 2009, Mr. Cutler resigned as an officer of the Company.
Upon approval of the Settlement Agreement by the Bankruptcy Court in
January 2010, Mr. Cutler surrendered 3,530,255 shares of common stock to
the Company.
(3) On March 31, 2009, Mr. Perlmutter resigned as a director of the Company.
(4) On December 31, 2009, Mr. Dominey was appointed as the Chief Executive
Officer, President and Chief Financial Officer.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Bankruptcy Settlement Agreement
On June 30, 2009, the Company filed a voluntary petition for relief in the
United States Bankruptcy Court, Northern District of Texas, Dallas District
under Chapter 7 of Title 7 of the U.S. Bankruptcy Code, case number 09-34008-7.
Under Chapter 7, all claims against the Debtor in existence prior to the filing
of the petition of relief under U.S. Bankruptcy Code are stayed.
On October 1, 2009, David Cutler, the sole officer and director of the Company
and a creditor in the proceeding, and the bankruptcy trustee filed a Motion for
an Order Approving Bondholder Settlement. Such motion was objected to by a group
of the Company's shareholders consisting of J.H. Brech, LLC, Harry McMillan,
Charles Webb, Don Mark Dominey, Mark Armstrong, David Myers and John E. Bradley
("Objecting Shareholders").
On October 30, 2009, the Objecting Shareholders filed a Motion to Dismiss the
Chapter 7 Case.
On January 20, 2010, the Court dismissed the Chapter 7 proceedings as a result
of the obtainment and execution of a Settlement Agreement (the "Settlement
Agreement") between the Company, its existing management and the Objecting
Shareholders of the Company.
The Settlement Agreement provided for the following:
Mr. Stephen Weathers was appointed to the Company's Board of Directors;
Mr. David Cutler, the Company's sole officer and a director of the Company
resigned his position upon the execution the Settlement Agreement;
Mr. Don Mark Dominey was elected the Company's Chief Executive Officer and
President and a Director of the Company;
Mr. David Cutler, surrendered to the Company, 3,530,235 shares of common
stock held by him for retirement to the Company's treasury; and
The Company released and discharged Mr. David Cutler, from all claims by
the Company and the Company was released and discharged from all claims by
Mr. Cutler.
Consulting Agreements
On December 3, 2009, Mr. Dominey, an officer and director of the Company,
entered into an Agreement with the Board of Directors with the Company that
provides for the Company to pay a director a fee at the rate of $500 per
quarter, which shall be paid in accordance with the Company's regularly
established
32
practices regarding the payment of Directors' fees. In addition, the Agreement
with the Board of Directors provides that the Company will issue Mr. Dominey
100,000 shares of its common stock in exchange for services. In February 2010,
Mr. Dominey waived the payment of the $500 q quarterly fee.
On February 18, 2010, Mr. Dominey, an officer and director of the Company,
entered into a Consulting Agreement with the Company that provides for him to
earn up to 100,000 shares of the Company's common stock and the be reimbursed
for reasonable expenses. The Consulting Agreement has a term of one year.
On December 3, 2009, Mr. Weathers, a director of the Company, entered into an
Agreement with the Board of Directors with the Company that provides for the
Company to pay Director a fee at the rate of $500 per quarter, which shall be
paid in accordance with Company's regularly established practices regarding the
payment of Directors' fees. In addition, the Agreement with the Board of
Directors provides that the Company will issue Mr. Weathers 100,000 shares of
its common stock in exchange for services. In February 2010, Mr. Weathers waived
the payment of the $500 quarterly fee.
On February, 18, 2010, the Company entered into a Consultant Agreement with J.H.
Brech, LLC, an affiliate of the Company. The Consulting Agreement provides for
J.H. Brech, LLC to be retained as a Consultant and as an advisor business
matters, consistent with Consultant's expertise and ability, and Consultant
agrees to consult with the Company during the term of this Agreement. The
Consultant Agreement provides for no compensation other then the reimbursement
of expenses.
At March 29, 2010, the Company had outstanding accounts payables owed to J.H.
Brech for the expenses incurred on its behalf totaling $143,733. On March 29,
2010, the Company's Board of Directors approved the issuance of a Convertible
Promissory note to J.H. Brech, LLC in the amount of $143,733 with annual
interest rate of 6% and a due date of March 29, 2012. The Convertible Promissory
Note provides for a conversion of all or part of principal amount the Promissory
Note at a rate of $0.50 per share.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
We incurred $3,540 audit fees with our auditor, Larry O'Donnell, CPA, PC, during
the fiscal year ended December 31, 2009 ($3,885- 2008).
Tax Fees
We did not incur any tax fees with our auditor, Larry O'Donnell, CPA, PC, in the
fiscal years ended December 31, 2009 and 2008.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed as part of this Annual Report on Form 10-K, in
accordance with Item 601 of Regulation S-K:
EXHIBIT
NUMBER DESCRIPTION AND METHOD OF FILING
10.1 Release Agreement (1)
10.2 Agreement Board of Directors with Don Mark Dominey, dated December 3, 2009(2)
10.3 Agreement Board of Directors with Stephen Weathers, dated December 3, 2009 (2)
33
10.4 Consulting Agreement with Don Mark Dominey, dated February 18, 2010 (3)
10.5 Consulting Agreement with J.H. Brech, LLC, dated February 18, 2010 (3)
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act*
32.1 Certification of Principal and Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act *
-------------
(1) Incorporated herewith from the Current Report on Form 8-K filed with the SEC
on January 13, 2010. (2) Incorporated herewith from the Current Report on Form
8-K filed with the SEC on February 10, 2010. (3) Incorporated herewith from the
Current Report on Form 8-K filed with the SEC on March 19, 2010.
* Filed herewith.
34
INDEX TO FINANCIAL STATEMENTS
PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 47
BALANCE SHEET
As of December 31, 2009 and 2008 48
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2009 and 2008 and the Period
from Inception (May 8, 2001) Through December 31, 2009 49
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
The Period From Inception (May 8, 2001) Through December
31, 2009 50
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2009 and 2008 and the Period
from Inception (May 8, 2001) Through December 31, 2009 51
NOTES TO FINANCIAL STATEMENTS 52
35
O'Donnell, CPA, P.C.
Telephone (303) 745-4545 2228 South Fraser Street
Fax (303) 369-9384 Unit I
Email larryodonnellcpa@msn.com Aurora, Colorado 80014
www.larryodonnellcpa.com
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Atomic Paintball, Inc.
I have audited the accompanying balance sheets of Atomic Paintball, Inc. as of
December 31, 2009 and 2008 and the related statements of operations,
stockholders' deficit, and cash flows for each of the years then ended and for
the period from inception May 8, 2001 to December 31, 2009. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audits provide a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the fianancial position of Atomic Paintball, Inc. as of
December 31, 2009 and 2008 and the results of its operations and cash flows for
each of the years then ended and for the period from inception May 8, 2001 to
December 31, 2009 in conformity with accounting principles generally accepted in
the United States.
The accompanying financial statements have been presented on the basis that it
is a going concern. As discussed in Note 2 to the financial statements, had
suffered significant losses, had a working capital deficit as of December 31,
2009 and 2008 andno ongoing source of income. Management's plans to address
these matters are also included in Note 2 to the financial statements. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. The financial statementds do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Larry O'Donnell, CPA, P.C.
Larry O'Donnell, CPA, P.C.
April 15, 2010
36
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31,
2009 2008
----------- ------------
ASSETS
Current Assets
Cash & Cash Equivalents $ - $ 2,492
----------- ------------
Total Current Assets - 2,492
----------- ------------
TOTAL ASSETS $ - $ 2,492
=========== ============
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable $ 150,742 $ 32,007
Accrued Interest 20,973 14,986
Loans from Shareholders 179,907 125,564
----------- ------------
Total Liabilities, all current 351,622 172,557
----------- ------------
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' (DEFICIT)
Preferred Stock, no par value: 2,000,000 shares authorized
Series A Convertible Preferred Stock, no par value; 400,000 shares authorized - -
no shares issued and outstanding as at December 31, 2009 and 2008 and
188,000 shares issued and outstanding at December 31, 2006 with a
$0.25 per share liquidation preference.
Common Stock, no par value: 10,000,000 shares authorized, 436,790 436,790
7,488,804 shares issued and outstanding as at December 31, 2009 and 2008
Deficit accumulated during the development stage. (788,412) (606,855)
----------- ------------
Total Stockholders' Deficit (351,622) (170,065)
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ - $ 2,492
=========== ============
See accompanying Notes to Financial Statements.
37
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FROM INCEPTION
YEAR ENDED (May 8, 2001)
DECEMBER 31, THROUGH DECEMBER 31,
2009 2008 2009
---------------------- ------------------ --------------------------------
OPERATING EXPENSES
General and Administrative $ 172,252 $ 105,905 $ 765,573
Depreciation and amortization - - 6,835
Gain on Settlement of Liabilities - - (13,600)
---------------------- ------------------ --------------------------------
Total Operating Expenses 172,252 105,905 758,807
OPERATING LOSS (172,252) (105,905) (758,807)
OTHER INCOME (EXPENSE)
Interest Expense (9,305) (6,868) (29,605)
---------------------- ------------------ --------------------------------
Net Loss before Income Taxes (181,557) (112,774) (788,412)
Income tax expense - - -
---------------------- ------------------ --------------------------------
NET LOSS $ (181,557)$ (112,774) $ (788,412)
====================== ================== ================================
NET LOSS PER COMMON SHARE
Basic & Diluted ($0.02) ($0.02)
====================== ==================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic & Diluted 7,488,804 7,488,804
====================== ====================
See accompanying Notes to Financial Statements.
38
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FROM INCEPTION (MAY 8, 2001) THROUGH DECEMBER 31, 2009
Accumulated
Preferred Stock Common Stock deficit during
------------------------------------
Shares Amount Shares Amount Develop. Stage Total
# $ # $ $ $
--------- ------ ---------- -------- ------------ ----------
Balance at May 8, 2001 (date of inception) - - - - - -
Issuance of common stock for cash on May - - 200,000 1,000 - 1,000
8, 2001 at $0.005 per share
Issuance of common stock for services - - 600,000 6,000 - 6,000
on June 20, 2001 at $0.01 per share
Net loss for the period from inception - - - - (6,815) (6,815)
(May 8, 2001) through December 31, 2001
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2001 - - 800,000 7,000 (6,815) 185
Net loss for the year ended December 31, - - - - (4,155) (4,155)
2002
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2002 - - 800,000 7,000 (10,970) (3,970)
Issuance of Series A Convertible Preferred 116,000 29,000 - - - 29,000
for cash during October and November
2003 at $0.25 per share
Net loss for the year ended December 31, 2003 - - - - (47,656) (47,656)
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2003 116,000 29,000 800,000 7,000 (58,626) (22,626)
Issuance of Series A Convertible Preferred 184,000 46,000 - - - 46,000
Stock for cash during February 2004 at
$0.25 per share
Net loss for the year ended December 31, - - - - (62,156) (62,156)
2004
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2004 300,000 75,000 800,000 7,000 (120,782) (38,782)
Net loss for the year ended December - - - - (6,148) (6,148)
31, 2005
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2005 300,000 75,000 800,000 7,000 (126,930) (44,930)
Issuance of common stock for services - - 2,780,376 119,159 - 119,159
on August 31, 2006 at $0.042857 per share
Issuance of common stock in settlement of - - 323,080 13,846 - 13,846
of debt on September 8, 2006 at $0.042857
per share
Conversion of Series A Convertible (112,000) (28,000) 224,000 28,000 - 0
Preferred into Common Stock on a 1:2
basis during September 2006
Issuance of common stock for services on - - 100,000 4,286 - 4,286
December 1, 2006 at $0.042857 per share
Issuance of common stock for services on - - 100,000 4,286 - 4,286
December 8, 2006 at $0.042857 per share
Issuance of common stock for services on - - 150,000 6,429 - 6,429
December 18, 2006 at $0.042857 per share
Issuance of common stock in settlement of - - 697,674 30,000 - 30,000
debt on December 19, 2006 at $0.042857
per share
Issuance of common stock for services on - - 100,000 4,286 - 4,286
December 22, 2006 at $0.042857 per share
Net loss for the year ended December 31, - - - - (200,182) (200,182)
2006
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2006 188,000 47,000 5,275,130 217,290 (327,112) (62,822)
Conversion of Series A Convertible (144,000) (36,000) 288,000 36,000 - -
Preferred into Common Stock on a 1:2
basis on January 18 & 23, 2007
Conversion of Series A Convertible (36,000) (9,000) 72,000 9,000 - -
Preferred Stock into Common Stock on a
1:2 basis on February 5, 2007
Issuance of common stock in settlement - - 697,674 30,000 - 30,000
of debt on March 29, 2007 at $0.042857
per share
Issuance of common stock for cash in April - - 400,000 50,000 - 50,000
2007 at $0.125 per share
Issuance of common stock for cash on May - - 400,000 50,000 - 50,000
2007 at $0.125 per share
Issuance of common stock for cash in - - 40,000 5,000 - 5,000
November 2007 at $0.125 per share
Issuance of common stock for services in - - 300,000 37,500 - 37,500
November 2007 at $0.125 per share
See accompanying Notes to Financial Statements.
39
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FROM INCEPTION (MAY 8, 2001) THROUGH DECEMBER 31, 2009
Accumulated
Preferred Stock Common Stock deficit during
------------------------------------
Shares Amount Shares Amount Develop. Stage Total
# $ # $ $ $
--------- ------ ---------- -------- ------------ ----------
Conversion of Series A Convertible (8,000) (2,000) 16,000 2,000 - -
Preferred Stock into Common Stock on a
1:2 basis on February 5, 2007
Net loss for the year ended December 31, - - - - (166,969) (166,969)
2007
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2007 - - 7,488,804 436,790 (494,082) (57,291)
Net loss for the year ended December 31, - - - - (112,774) (112,774)
2008
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2008 - 7,488,804 $436,790 $ (606,855) $(170,065)
Net loss for the year ended December 31, - - - - (181,557) (181,557)
2009
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2009 - - 7,488,804 $436,790 $ (788,412) $(351,622)
========= ====== ========== ======== ============ ==========
40
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FROM INCEPTION
Year Ended (May 8, 2001)
DECEMBER 31, THROUGH DECEMBER 31,
2008 2008 2009
--------------------------- -------------
CASH FLOW FROM OPERATING ACTIVITIES
NET LOSS $ (181,557)$ (112,774) $ (788,412)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES
Depreciation - - 6,835
Loss on Disposal of Fixed Assets - - 3,464
Issuance of Common Stock For Services - - 181,944
Gain on Settlement of Liabilities - - (13,600)
CHANGES IN OPERATING ASSETS & LIABILITIES
Decrease in Prepaid Expenses - 362 -
Decrease in Other Receivables - - -
Increase (Decrease) in Accounts Payable 118,735 24,993 164,342
Increase in Accrued Expenses 5,987 6,819 20,973
--------------------------- -------------
Total Cash Flow Used In Operating Activities (56,834) (80,600) (424,454)
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets - - (10,299)
------------ ----------- -------------
Total Cash Flow Used In Investing Activities - - (10,299)
CASH FLOW FROM FINANCING ACTIVITIES
Advances Under Loans From Shareholders 54,343 68,875 253,753
Net Proceeds from Issuance of Common Stock - - 106,000
Net Proceeds from Issuance of Preferred Stock - - 75,000
------------ ----------- -------------
Total Cash Flow Provided By Financing Activities 54,343 68,875 434,753
NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS $ (2,492)$ (11,725) $ 0
============ =========== =============
Cash and Cash Equivalents at the beginning of the
period $ 2,492 $ 14,217 $ -
============ =========== =============
Cash and Cash Equivalents at the end of the period $ - $ 2,492 $ -
============ =========== =============
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid for interest $ - $ - $ 207
============ =========== =============
Cash paid for income tax $ - $ - $ -
============ =========== =============
See accompanying Notes to Financial Statements.
41
ATOMIC PAINTBALL, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 2009 AND 2008
1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations -- We are a development stage corporation incorporated on
May 8, 2001 in the State of Texas which plans to own and operate paintball
facilities and to provide services and products in connection with paintball
sport activities at our facilities and through a website. The Company has
established a website at www.atomicpaintballparks.com.
During the years ended December 31, 2008 and 2009, we focused on completing
those actions necessary to the implement our business plan.
On June 30, 2009, the Company filed a voluntary petition for relief in the
United States Bankruptcy Court, Northern District of Texas, Dallas District
under Chapter 7 of Title 7 of the U.S. Bankruptcy Code, case number 09-34008-7.
In Under Chapter 7, all claims against the Debtor in existence prior to the
filing of the petition of relief under U.S. Bankruptcy Code are stayed.
On October 1, 2009, David Cutler, the sole officer and director of the Company
and a creditor in the proceeding, and the bankruptcy trustee filed a Motion for
an Order Approving Bondholder Settlement. Such motion was objected to by a group
of the Company's shareholders consisting of J.H. Brech, LLC, Harry McMillan,
Charles Webb, Don Mark Dominey, Mark Armstrong, David Myers and John E. Bradley
("Objecting Shareholders").
On October 30, 2009, the Objecting Shareholders filed a Motion to Dismiss the
Chapter 7 Case.
On January 20, 2010, the Court dismissed the Chapter 7 proceedings as a result
of the obtainment and execution of a Settlement Agreement (the Settlement
Agreement) between the Company, its existing management and the Objecting
Shareholders of the Company.
The Settlement Agreement provided for the following:
Mr. Stephen Weathers was appointed to the Company's Board of Directors;
Mr. David Cutler, the Company's sole officer and a director of the Company
resigned his position upon the execution the Settlement Agreement;
Mr. Don Mark Dominey was elected the Company's Chief Executive Officer and
President and a Director of the Company;
Mr. David Cutler, surrendered to the Company, 3,530,235 shares of common
stock held by him for retirement to the Company's treasury; and
The Company released and discharged Mr. David Cutler, from all claims by
the Company and the Company was released and discharged from all claims by
Mr. Cutler.
On January 23, 2010, Ms. Shirley Heller was appointed the Secretary of the
Company.
On February 18, 2010, the Company entered into Consulting Agreements with both
Mr. Dominey and Mr. Weathers, as discussed in Note 10 Subsequent Events.
It is our current intention, within our existing level of interim funding, to
continue to accelerate progress on the implementation of our proposed business.
42
Significant Accounting Policies
Cash and Cash Equivalents -- Cash and cash equivalents consist of cash and
highly liquid debt instruments with original maturities of less than three
months.
Property and Equipment -- Property and equipment are recorded at cost.
Depreciation is provided using the straight line method over the estimated
useful lives of the related assets. Amortization of leasehold improvements is
computed using the straight-line method over the shorter of the remaining lease
term or the estimated useful life of the improvement.
The useful lives of property and equipment for purposes of computing
depreciation are:
Leasehold Improvements 1 year
Equipment 7 years
Computer Equipment 5 years
Expenditures for maintenance and repairs are charged to operations as incurred,
while betterments that extend the useful lives of the assets are capitalized.
Assets held by the Company are periodically reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.
Deferred Costs and Other -- Offering costs with respect to issue of common
stock, warrants or options by us were initially deferred and ultimately offset
against the proceeds from these equity transactions if successful or expensed if
the proposed equity transaction is unsuccessful.
Impairment of Long-Lived and Intangible Assets -- In the event that facts and
circumstances indicated that the cost of long-lived and intangible assets may be
impaired, an evaluation of recoverability was performed. If an evaluation was
required, the estimated future undiscounted cash flows associated with the asset
were compared to the asset's carrying amount to determine if a write-down to
market value or discounted cash flow value was required.
Financial Instruments -- The estimated fair values for financial instruments was
determined at discrete points in time based on relevant market information.
These estimates involved uncertainties and could not be determined with
precision. The carrying amounts of notes receivable, accounts receivable,
accounts payable and accrued liabilities approximated fair value because of the
short-term maturities of these instruments. The fair value of notes payable
approximated to their carrying value as generally their interest rates reflected
our effective annual borrowing rate.
Income Taxes - Our deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. Valuation allowances are established
when necessary to reduce deferred tax assets to the amount expected to be
realized.
Revenue Recognition - We expect to generate revenue from providing facilities,
services and products in connection with paintball sport activities. Revenues
will be recognized as services and products are delivered. We are currently in
the development stage and had no revenue during the years ended December 31,
2009 and 2008.
Comprehensive Income (Loss) -- Comprehensive income is defined as all changes in
stockholders' equity (deficit), exclusive of transactions with owners, such as
capital investments. Comprehensive income includes net income or loss, changes
in certain assets and liabilities that are reported directly in equity such as
translation adjustments on investments in foreign subsidiaries and unrealized
gains (losses) on available-for-sale securities.
There were no differences between our comprehensive loss and net loss during the
years ended December 31, 2009 and 2008.
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Income (Loss) Per Share -- The income (loss) per share is presented with a
presentation of basic earnings (loss) per share (EPS) and diluted EPS. Basic EPS
is calculated by dividing the income or loss available to common stockholders by
the weighted average number of common stock outstanding for the period. Diluted
EPS reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
Diluted EPS was the same as Basic EPS for during the years ended December 31,
2009 and 2008 as we had losses in all periods since our inception and,
therefore, the effect of all additional potential common stock would be
antidilutive.
Stock-Based Compensation - Stock compensation expense is recorded on the date of
grant if the current market price of the underlying stock exceeds the exercise
price. Certain pro forma net income and EPS disclosures for employee stock
option grants are also included in the notes to the financial statements as if
the fair value method. Transactions in equity instruments with non-employees for
goods or services are accounted for by the fair value method.
Use of Estimates -- The preparation of our consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in these
financial statements and accompanying notes. Actual results could differ from
those estimates. Due to uncertainties inherent in the estimation process, it is
possible that these estimates could be materially revised within the next year.
Recently Issued Accounting Policies - In June 2009, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 105,
"Generally Accepted Accounting Principals" (formerly Statement of Financial
Accounting Standards ("SFAS") No. 168, "The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles").
ASC 105 establishes the FASB ASC as the single source of authoritative
nongovernmental U.S. GAAP. The standard is effective for interim and annual
periods ending after September 15, 2009. We adopted the provisions of the
standard on September 30, 2009, which did not have a material impact on our
financial statements.
There were various other accounting standards and interpretations issued in
2009, none of which are expected to have a material impact on the Company's
financial position, operations or cash flows.
2. GOING CONCERN AND LIQUIDITY:
At December 31, 2009, we had total assets of $0, no operating business or other
source of income, outstanding liabilities totaling $351,622 and a stockholder'
deficit of $351,622.
In our financial statements for the fiscal years ended December 31, 2009 and
2008, the Report of the Independent Registered Public Accounting Firm includes
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern. Our financial statements for the fiscal years ended
December 31, 2009 and 2008 have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. At December 31, 2009, we had a
working capital deficit of $351,622 and reported an accumulated deficit of
$788,412.
It is our current intention to seek to raise the debt and/or equity financing to
meet ongoing operating expenses and fully implement our proposed business plan.
There is no assurance that this series of events will be satisfactorily
completed.
3. ACCOUNTS PAYABLE
The balances of Accounts Payable at December 31, 2009 and 2008 include certain
liabilities that were substantially over due as at the date of these balance
sheets but were still outstanding as we did not have the necessary funding in to
pay these liabilities.
No interest accrual has been made in respect of these outstanding accounts
payable as we believe they will be settled at or below their current carrying
value on our balance sheet.
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4. ACCRUED EXPENSES
The balances of Accrued Expenses at December 31, 2009 and 2008 represents
accrued interest on loan notes provided to us by certain of our shareholders.
5. LOANS FROM SHAREHOLDERS
Our first President and then sole director, Barbara J. Smith, loaned us a total
of $10,900 between April and July 2002 to pay for further research and
development and for general corporate overhead. This loan bears interest at an
annual rate of 6.5% and was repayable in full in July 15, 2004 and was
convertible at Ms. Smith's option into shares of our common stock at $0.125 per
share. This loan has not been repaid and Ms. Smith has declined to convert the
outstanding balance into shares. Accordingly, the entire balance of the loan
continues to be outstanding and we continue to accrue interest on the balance
outstanding. As of December 31, 2009, accrued interest amounted to $4,816.
Since his appointment on August 31, 2006 and through June 30, 2009, Mr. Cutler,
our former sole officer and a director, has made advances to us of $237,687 by
way of a loan. These funds are used to support our ongoing operating costs and
settle certain outstanding liabilities. In December 2006, Mr. Cutler converted
$30,000 of his loan into 697,674 shares of common stock. In March 2007, Mr.
Cutler converted an additional $30,000 of his loan into an additional 697,674
shares of our common stock. At December 31, 2009 and 2008, the Company owed Mr.
Cutler $168,060 and $113,486, respectively.. As of December 31, 2009, accrued
interest amounted to $4,816. In January 2010, Mr. Cutler, as part of the
Settlement Agreement reached in the Bankruptcy proceedings agreed to release the
Company from such debt.
6. RELATED PARTY TRANSACTIONS
Our first President and then sole director, Barbara J. Smith, loaned us a total
of $10,900 between April and July 2002 to pay for further research and
development and for general corporate overhead. This loan bears interest at an
annual rate of 6.5% and was repayable in full in July 15, 2004 and was
convertible at Ms. Smith's option into shares of our common stock at $0.125 per
share. This loan has not been repaid and Ms. Smith has declined to convert the
outstanding balance into shares. Accordingly, the entire balance of the loan
continues to be outstanding and we continue to accrue interest on the balance
outstanding. As of December 31, 2009, accrued interest amounted to $4,816.
Since his appointment on August 31, 2006 and through June 30, 2009, Mr. Cutler,
our former sole officer and a director, has made advances to us of $237,687 by
way of a loan. These funds are used to support our ongoing operating costs and
settle certain outstanding liabilities. In December 2006, Mr. Cutler converted
$30,000 of his loan into 697,674 shares of common stock. In March 2007, Mr.
Cutler converted an additional $30,000 of his loan into an additional 697,674
shares of our common stock. At December 31, 2009 and 2008, the Company owed Mr.
Cutler $168,060 and $113,486, respectively.. As of December 31, 2009, accrued
interest amounted to $4,816. In January 2010, Mr. Cutler, as part of the
Settlement Agreement reached in the Bankruptcy proceedings agreed to release the
Company from such debt.
7. STOCKHOLDERS' DEFICIT:
Preferred Stock
In October 2003, our Board of Directors adopted a resolution to authorize the
issuance (in series) of up to 2,000,000 shares of preferred stock with no par
value. Our board of directors may determine to issue shares of our preferred
stock. If done, the preferred stock may be created and issued in one or more
series and with such designations, rights, preference and restrictions as shall
be stated and expressed in the resolution(s) providing for the creation and
issuance of such preferred stock. If preferred stock is issued and we are
subsequently liquidated or dissolved, the preferred stock would be entitled to
our assets, to the exclusion of the common stockholders, to the full extent of
the preferred stockholders' interest in us. At December 31, 2009, there are no
preferred shares issued and outstanding.
Common Stock
We are authorized to issue 10,000,000 shares of common stock, no par value per
share. The holders of common stock are entitled to one vote per share for the
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election of directors and with respect to all other matters submitted to a vote
of stockholders. Shares of common stock do not have cumulative voting rights,
which means that the holders of more than 50% of such shares voting for the
election of directors can elect 100% of the directors if they choose to do so.
Our common stock does not have preemptive rights, meaning that our common
shareholders' ownership interest would be diluted if additional shares of common
stock are subsequently issued and the existing shareholders are not granted the
right, in the discretion of the Board of Directors, to maintain their ownership
interest in us.
Upon any liquidation, dissolution or winding-up of us, our assets, after the
payment of debts and liabilities and any liquidation preferences of, and unpaid
dividends on, any class of preferred stock then outstanding, will be distributed
pro-rata to the holders of the common stock. The holders of the common stock do
not have preemptive or conversion rights to subscribe for any of our securities
and have no right to require us to redeem or purchase their shares.
The holders of Common Stock are entitled to share equally in dividends, if and
when declared by our Board of Directors, out of funds legally available
therefore, subject to the priorities given to any class of preferred stock which
may be issued.
During the years ended December 31, 2009 and 2008, we did not issue any shares
of our common stock.
Stock Options
On October 21, 2003, we adopted a stock purchase plan entitled "2003 Stock
Incentive Plan" to attract and retain selected directors, officers, employees
and consultants to participate in our long-term success and growth through an
equity interest in us. We have been authorized to make available up to 2,000,000
shares of our common stock for grant as part of the long term incentive plan.
No stock options were issued or outstanding during the years ended December 31,
2009 and 2008.
8. COMMITMENTS AND CONTINGENCIES:
No legal proceedings are pending or threatened to the best of our knowledge.
9. INCOME TAX
We have had losses since our Inception (May 8, 2001) through December 31, 2009
and therefore have not been subject to federal or state income taxes. We have
accumulated tax losses available for carry forward of approximately $778,000.
The carry forward is subject to examination by the tax authorities and expires
at various dates through the year 2028. The Tax Reform Act of 1986 contains
provisions that limits the NOL carry forwards available for use in any given
year upon the occurrence of certain events, including significant changes in
ownership interest. Consequently, following the issue of 55.1% of our total
authorized and issued share capital in August 2006 to Mr. Cutler, one of our
former directors, our ability to use these losses is substantially restricted by
the impact of section 382 of the Internal Revenue Code.
10. SUBSEQUENT EVENTS
On June 30, 2009, Atomic Paintball, Inc. ("the Company") filed a voluntary
petition for relief in the United States Bankruptcy Court, Northern District of
Texas, Dallas District under Chapter 7 of Title 7 of the U.S. Bankruptcy Code,
case number 09-34008-7. The Chapter 7 Bankruptcy of Atomic Paintball, Inc. has
been dismissed as of January 20, 2010.
On December 31, 2010, David J. Cutler resigned as the Chief Executive Officer
and Chief Financial Officer of the Company and Mr. Don Mark Dominey was
appointed the Chief Executive Officer, Chief Financial Officer and a director of
the Company.
As of January 20, 2010, David J. Cutler, a former officer and director, has
surrendered 3,530,255 shares of the common stock of the Company for retirement
to treasury.
As of January 20, 2010, David J. Cutler, a former officer and director, is
released and discharged of from all claims by the Company and that the Company
is released and discharged from all claims by Mr. Cutler.
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That effective on January 19, 2010, after the mailing of the Information
Statement Pursuant to Section 14(f) of the Securities and Exchange Act of 1934,
David Cutler has resigned as a director of the Company and Mr. Stephen Weathers
is appointed a director of the Company. The Information Statement Pursuant to
Section 14(f) was mailed to the Company's shareholders of record on January 8,
2010.
David J. Cutler, a former officer and majority shareholder of the Company
returned 3,530,255 shares of the Company's common stock held by him to the
Company, to be retired to treasury. Prior to the return of the common shares,
the Company had 7,488,804 shares of common stock issued and outstanding, of
which Mr. Cutler held 3,925,724 shares representing approximately 52% of the
issued and outstanding shares of common stock After the return of the shares,
the Company will have 3,958,549 shares of common stock issued and outstanding.
Mr. Cutler will retain 395,469 shares of the Company's common stock,
approximately 10% of the Company's issued and outstanding common stock, at that
time.
On January 20, 2010, David J. Cutler's resignation as a Director of the Company
was effective.
Effective January 20, 2010, 10 days after the mailing of an Information
Statement Pursuant to Section 14(f) of the Securities and Exchange Act of 1934,
Mr. Stephen Weathers is appointed a director of the Company.
Consulting Agreements
Effective December 3, 2009, Mr. Dominey, an officer and director of the Company,
entered into an Agreement with the Board of Directors with the Company that
provides for the Company to pay Director a fee at the rate of $500 per quarter,
which shall be paid in accordance with the Company's regularly established
practices regarding the payment of Directors' fees. In addition, the Agreement
with the Board of Directors provides that the Company will issue Mr. Dominey
100,000 shares of its common stock in exchange for services. In February 2010,
Mr. Dominey waived the payment of the $500 quarterly fee.
On February 18, 2010, Mr. Dominey, an officer and director of the Company,
entered into a Consulting Agreement with the Company that provides for him to
earn up to 100,000 shares of the Company's common stock and the be reimbursed
for reasonable expenses. The Consulting Agreement has a term of one year.
On December 3, 2009, Mr. Weathers, a director of the Company, entered into an
Agreement with the Board of Directors with the Company that provides for the
Company to pay Director a fee at the rate of $500 per quarter, which shall be
paid in accordance with Company's regularly established practices regarding the
payment of Directors' fees. In addition, the Agreement with the Board of
Directors provides that the Company will issue Mr. Weathers 100,000 shares of
its common stock in exchange for services. In February 2010, Mr. Weathers waived
that payment of the $500 quarterly fee.
On February, 18, 2010, the Company entered into a Consultant Agreement with J.H.
Brech, LLC, an affiliate of the Company. The Consulting Agreement provides for
J.H. Brech, LLC to be retained as a Consultant as an advisor and consultant on
business matters, consistent with Consultant's expertise and ability, and
Consultant agrees to consult with the Company during the term of this Agreement.
The Consultant Agreement provides for no compensation other then the
reimbursement of expenses.
At March 29, 2010, the Company had outstanding accounts payables owed to J.H.
Brech for the expenses incurred on its behalf totaling $143,733. On March 29,
2010, the Company's Board of Directors approved the issuance of a Convertible
Promissory note to J.H. Brech, LLC in the amount of $143,733 with annual
interest rate of 6% and a due date of March 29, 2012. The Convertible Promissory
Note provides for a conversion of all or part of principal amount the Promissory
Note at a rate of $0.50 per share.
The Company evaluated subsequent events through April 14, 2010, the date the
condensed financial statements were issued and concluded there are no other
material subsequent events.
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SIGNATURES
In accordance with the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
ATOMIC PAINTBALL, INC.
Date: April 15, 2010 By: /s/ Don Mark Dominey
----------------------------
Don Mark Dominey
Chief Executive Officer &
Chief Financial Officer
In accordance with the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Don Mark Dominey Chief Executive Officer, April 15, 2010
Chief Financial Officer,
Principal Financial and
Accounting Officer, and
Director
/s/ Stephen Weathers Director April 15, 2010
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