Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[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 PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _____________
Commission file number: 000-53835
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(Exact name of registrant as specified in its charter)
Colorado 20-1207864
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State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
501 Trophy Lake Drive, Suite 314, PMB 106, Trophy Club, TX 76262
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class registered Name of each exchange
on which registered
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Not Applicable Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
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(Title of class)
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. |_|
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 (section 232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit 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. |X|
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
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check One).
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 Exchange Act). Yes |_| No |X|
There was no aggregate market value of voting stock held by non-affiliates of
the registrant as of December 31, 2009 since the common stock of the
International Paintball Association, Inc. does not trade on any of the markets,
at this time.
There were 10,499,166 shares outstanding of the registrant's Common Stock as of
May 18, 2010.
TABLE OF CONTENTS
PART I
Page
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ITEM 1 Business 1
ITEM 1 A. Risk Factors 17
ITEM 1 B. Unresolved Staff Comments 22
ITEM 2 Properties 22
ITEM 3 Legal Proceedings 22
ITEM 4 Removed and Reserved 22
PART II
ITEM 5 Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities 23
ITEM 6 Selected Financial Data 24
ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations 24
ITEM 7 A. Quantitative and Qualitative Disclosures About Market Risk 28
ITEM 8 Financial Statements and Supplementary Data 28
ITEM 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosures 28
ITEM 9 A. Controls and Procedures 28
ITEM 9 A(T). Controls and Procedures 29
ITEM 9B Other Information 29
PART III
ITEM 10 Directors, Executive Officers, and Corporate Governance 30
ITEM 11 Executive Compensation 32
ITEM 12 Security Ownership of Certain Beneficial Owners and Management and Related
Stockholer Matters 36
ITEM 13 Certain Relationships and Related Transactions, and Director Independence 37
ITEM 14 Principal Accounting Fees and Services 37
PART IV
ITEM 15 Exhibits, Financial Statement Schedules 38
SIGNATURES 39
FORWARD LOOKING STATEMENTS
This document includes forward-looking statements, including, without
limitation, statements relating to International Paintball Association, Inc.
("IPA" or "the Company") plans, strategies, objectives, expectations, intentions
and adequacy of resources. These forward-looking statements involve known and
unknown risks, uncertainties, and other factors that may cause IPA's actual
results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking
statements. These factors include, among others, the following: ability of IPA's
to implement its business strategy; ability to obtain additional financing;
IPA's limited operating history; unknown liabilities associated with future
acquisitions; ability to manage growth; significant competition; ability to
attract and retain talented employees; and future government regulations; and
other factors described in this document or in other of IPA's filings with the
Securities and Exchange Commission. IPA is under no obligation, to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
For further information about these and other risks, uncertainties and factors,
please review the disclosure included in this report under Item 1A "Risk
Factors."
PART I
ITEM 1. BUSINESS
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General
The following is a summary of some of the information contained in this
document. Unless the context requires otherwise, references in this document to
"IPA," "We," Us," or the "Company" are to International Paintball Association,
Inc.
About International Paintball Association, Inc.
International Paintball Association, Inc., a Colorado corporation, was
incorporated in the State of Texas on May 8, 2004 as 4G Paintball, Inc. and was
originally based in Dallas, Texas. We have since moved domicile to Colorado by
merging with International Paintball Association, Inc., our wholly owned
subsidiary in September 2008. We are now based in Trophy Club, Texas.
Our Company was formed for the purpose of providing, services and products for
paintball sport activities. Paintball sport activities are those activities by
persons who are using paintball equipment and accessories for recreational
entertainment in various games and interactions with other paintball enthusiasts
whether organized formally or in ad hoc activities. "Paintball Activities"
includes the shooting of paint pellets with air guns at targets, other players
in competitive individual or team play, and role playing in simulated military
or law enforcement scenarios. The sport/sanctioned activities/competitions we
will sponsor will focus on traditional paramilitary style paintball team or
individual competition.
Our Company filed a Form 10 on a voluntary basis in order to become a 12(g)
registered company under the Securities Exchange Act of 1934, and became
automatically subject to future reporting obligations. We are a development
stage Company with no current revenues, and we have achieved net losses of
approximately $2,047,095 since inception. We have relied solely on sales of our
securities and loans from officers, directors and shareholders to fund our
operations. We are in the process of raising financing to execute our business
plan and fund future operations. As such, we are considered to be a development
stage company. We have had no revenues to date and our net loss for the year
ended December 31, 2009 was $148,848 and for the year ended December 31, 2008
was $205,597. Our auditor has issued a going concern opinion in his audit
opinion which indicates substantial doubt that our Company may continue
operations due to lack of revenues and lack of capital.
1
Our actions taken to date have consisted of organizing our Company, conducting
an initial round of private financing to obtain "seed" capital and designing our
business plan, including interviews with industry participants, visits to
paintball field and retail facilities, evaluating website development firms,
architectural firms, trademark attorneys, and suppliers of paintball markers,
paintballs, and equipment, as well as real estate brokers. We have not engaged
any of these vendors and do not intend to engage them until we have raised
additional funds. We did not spend any funds on research and development
activities in the years ended December 31, 2009 and, 2008.
Description Of Business Plan
When IPA was organized in 2006, the paintball market was a splintered largely
localized sports activity with great unrealized consolidation possibilities. We
identified an opportunity to organize the players by offering them the option of
affiliating with a professionally run, technologically efficient and aggressive
organization, that we believed would lead the paintball sport into a new level
of market exposure and acceptance. From our beginning, our plan has been to
engage talent from the sport and use their experience and contacts to organize
the players into leagues and the products into venues where we had the most
players with the best products on the best fields. That plan was started, talent
was engaged, funds for market tests were raised, proofs of concept tournaments
were held, but in the end, that initial effort was unsuccessful. The time since
that initial effort has been spent unwinding the commitments that were made
during that effort, and analyzing the results to make necessary changes to our
initial business plan. In the time since that initial effort, the unorganized
market opportunity that existed is now being organized and claimed by several
emerging organizations doing certain pieces of what we are now proposing to do.
The success of those organizations efforts has validated our early assessments,
but admittedly now makes the work before us more difficult. That competition
will be discussed in greater detail below.
Our business operations will sell and market products for paintball activities
and will promote our brand identity in paintball. Contemporaneous with those
efforts, we will establish a league based sanctioning body initially for amateur
players, and grow them into semi-professional, and then to professional
paintball leagues and play. As NASCAR is to stock car racing and the PGA is to
Golf, International Paintball Association will seek to become their equivalent
as the sanctioning body of Paintball play. To accomplish this we must establish
our own leagues, and establish our own IPA Uniform Rules of Paintball Tournament
Play. Our initial rules as written are generally consistent and substantially
track standard rules of play applied by other "competing" organizations
identified in the Competition discussion below.
Our success will be determined by our ability to build or acquire branded
products, and to co-market other brands both online and onsite at our
sponsored/sanctioned events. Our success will not be determined by our becoming
the sanctioning body of the paintball industry. However, we believe that
membership in an organization that ties all of these components together with a
sense of competitive community for the members in a way that builds on a
satisfying fan/player experience will generate steady growth in revenues.
IPA Uniform Rules of Play will change based on player input/feedback and as use
may suggest is appropriate or beneficial. IPL Current Rules of Play are framed
around rules from the American Paintball League (APL) Tournament Rules of Play,
and the National Professional Paintball League (NPPL). Just as those
organizations, player input for any changes will be solicited from committees
composed of IPA members. As membership grows to provide the feedback desired to
improve the game experience.
2
To establish a league, we must first build a membership base. We will apply the
lessons learned in the test tournaments sponsored in 2004 which are discussed in
greater detail below to enter the market. We will establish our membership base
and introduce our company to the paintball market by sponsoring tournaments
within the existing market structure at established paintball parks that have an
existing player following. From our test tournaments, we confirmed what works
and what does not, however, we recognize that our cost of entry in different
geographical and demographic markets will vary with the circumstance and
opportunity. Although we have established budgets for this effort, until we
begin that promotional effort, we will not know what may change about the cost
estimates we have made in our forecasts below. Whenever possible, we will use
IPA Rules, but expect that it will be necessary to adapt and compromise to local
field rules to gain exposure and market for the Company. We understand that
until our membership base and following becomes large enough to significantly
impact a tournament's profitability, the local park rules will generally be
applied. With or without the use of IPA Rules, our contribution to advertising
will make the event a "sanctioned" event. An event will be sanctioned because we
claim it as a "sanctioned" event, not because IPA Rules are or are not applied.
Players and fans who attend or participate in the will be a market for
additional membership, and our branded products which will be sold at those
events.
As discussed in greater detail below, a membership that is free is not seen as
having value. Nevertheless, to initially build numbers, we may implement an
initial promotional signup effort at sanctioned/sponsored events that offers a
membership to individual payers in conjunction with player registration, or upon
some combination of payment of event admission fee and purchase of IPA branded
products followed by an online signup registration for spectator non-players.
Sponsored leagues and tournaments will be offered the opportunity to purchase
IPA logo branded merchandise, and sponsoring fields will be distributors of IPA
logo merchandise. As quickly as we determine that the market will permit, or as
our following and membership begins to bring additional attendance, then we will
implement a "membership fee" competitively priced with other "leagues" as
discussed below. At that juncture, our IPA rules and structure can be required
as the applied league and tournament rules for all IPA sanctioned events.
However, there is no assurance that our company can accomplish the goal of
building a successful following or marketing effort for products or memberships.
There is substantial overlap of our business plan with the stated missions of
several other organizations currently servicing the industry. At this time, the
most significantly is with the National Professional Paintball League which in a
recently published open letter it players from its commissioner is committed to
expand its "Feeder League System" downstream from its professional league. This
downstream growth will be fueled by the availability of "professional" players
to interact with the non-professionals. The NPPL current strategy will have
professional players playing on Friday's and available to promote their Feeder
Leagues on Saturday. When not playing, the Professional Players are directed to
be available for teaching, and promoting the sport among the players in the
non-professional leagues. The potential for this competition has existed for
years, but now it is a stated on record plan of action for the NPPL expansion.
As discussed both earlier, and in greater depth below, our initial concentration
will be on the non-professional player group. Our focus will be on the
enthusiast player experience while the NPPL focus is on using that
non-professional group to enhance the benefits to its professional membership.
The NPPL growth strategy is from the top (professional) down (amateur). Our plan
is to grow upward from our amateur base up first into semi-professional then
perhaps into professional. We believe this distinction will make IPA affiliation
more attractive to a public looking for entertainment instead of the more
intense mix associated with the Professional Leagues.
3
Product marketing trends continue to migrate from bricks and mortar fixed base
structures to online traffic at a staggering rate. Forrester Research projected
online retail sales growth from 2008 to 2009 to rise by 17%, and Reuters has
projected online retail growth to increase by 60% in 2014 over 2009. It is
important to note that this is growth projected in the shadow of the greatest
recession to confront our country since the Great Depression of 1929. Online
marketing has dramatically altered the way marketing dollars are spent. Shop.org
reports that more than 50% of marketing budgets are spent on customer
acquisition and another 20+% for customer retention. Search Engine Marketing
(SEM) and Search Engine Optimization (SEO) strategies utilizing paid placement
and inclusion has become standard and a requirement for any serious online sales
effort. A Shop.org survey reported that 90% of their respondents utilize pay for
performance search placement, and 79% of those respondents indicated an
expectation to increase that expense the next year.
Our online marketing site has been inactive for more than a year, and we have
contracted to have it rebuilt. We expect that it will be operational on or
before August 31, 2010. IPA currently has no members, and will initiate its
membership in conjunction with the restart of its new website and sponsorship of
tournaments. SEM and SEO strategies will be outsourced, but will be integrated
into the planning of this new marketing site. This site is discussed in greater
detail below. In the budgets shown herebelow, we have allocated $350,000 for
advertising from the first $1,000,000 raised, and $40,000 of that is allotted
for services web advertising for the first 12 post funding months. The amounts
that will be allocated from the net balance ($310,0000) for product promotion
online vs. paper print and for SEM and SEO services vs. U.S. Mail will be better
evaluated closer in time to the expenditure than now, but because of the online
presence and fluency of our target market, we expect to focus on web based
promotions.
Our primary target market is males aged 13-34, which generation's behavioral,
attributes are considered unique and tough to address by traditional product
marketers. We believe attributes such as, a need for consistent feedback and
recognition, safety, instant gratification, technology based social life and
desire for reality based experiences, are satisfied by the sport of paintball.
For example, the generation that grew up on reality television shows and
considers the "Survivor" model to be the norm, our management believes will be
attracted to realistic paintball scenario play, with the "last man standing" the
winner. We intend to attempt to create a brand that has life-style qualities for
this target market, encouraging daily visits to the website for social
networking, and paintball sport updates, off-field team building, and balanced
work/play lifestyle.
Competition
The Paintball market is dynamic market that transitions rapidly where multiple
organizations are competing for dominance, and the "order" has not yet been
established with any certainty. Organizations that existed and appeared to be
growing and strong several years ago have disappeared or been reorganized. A
recent apparent success is the recent reorganization of the NPPL into the old US
Paintball organization. That shift to focus on the Professional League component
of the industry appears to have significantly stabilized that segment of the
market. With market maturation, there are several other groups within the
existing paintball culture that also appear to have well organized and growing
structures. Significant among them is the American Players Paintball Association
(APPA) which claims 50,000 players on record. APPA's business revolves around
registering players of leagues that use their system for tournaments, and then
using that registration information that they maintain to support the leagues
that utilize their services. Additionally they offer insurance to parks and
tournaments as an enhancement to their market draw and appeal. Leagues that
currently use the APPA system include Paintball Sports Promotions which claims
to be the largest national paintball league, the National Collegiate Paintball
Association which is the major national college paintball league, and the
Carolina Field Owners Organization which is large regional league organization.
Competition is discussed in greater depth below where we address services and
products marketing.
4
International Paintball Association's Proposed Lines of Business
We are pursuing two major lines of business, the first is sales of branded and
co-marketed products and services, and the second is developing our position as
a leading sanctioning body of the Paintball Sport. With both online and onsite
product sales at sponsored or sanctioned events we will sell "IPA" branded
products and services (detailed hereinafter) to attending spectators, league and
tournament participants (IPA members), and IPA affiliating parks and facilities.
The product sales component of our model will generate revenue projected in the
financial budgets included here after. We do not know when or if the sanctioning
component of our business plan will generate funds sufficient to cover its
costs. However, we expect to see benefit from our sanctioning promotional
efforts through enhanced logo brand sales both online and at events.
By claiming to be a "sanctioning body", we become one. Nothing more is required.
Over time, our member relations and our selection and designation of events as
sanctioned will determine the success and financial benefit we derive from that
claim. Success as a sanctioning body can be measured by several different
standards. If the incremental sales revenues derived as a consequence of our
claim as sanctioned, are material, then we will be considered successful. When a
significant number of parks or tournaments adopt our rules and policies and use
them as a "standard", then our sanctioning can be considered successful. If our
members/affiliates exceed the number of members/affiliates of other organized
paintball associations, then we will be successful. We expect to establish the
"IPA" sanctioned event as a standard which will have value through recognition
of consistent and uniform policies and rules from region to region and in local
areas. While there can be no assurance at this time of the growth or acceptance
of IPA sanctioning we believe it will have promotional value to those parks,
tournaments and vendors which affiliate with IPA.
We believe that our segment penetration revenue shares and time to
implementation may be summarized as follows:
Product Markets
a) Marketing to commence - 8/1/10 first significant rollout
b) Revenue penetration 94% of total revenues within first 9 months down to 80%
of revenues.
c) Products will all use "IPA" logo to create awareness of IPA to carry over
to "Services" side.
Services
a) Marketing to commence 8/30/10
b) Revenue participation 5% of total revenues
c) Services model will cross promote the product side by offering IPA approved
products
Revenue Product Sales Services
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September 2010 94% 6
October 2010 92% 8
November 2010 90% 10
December 2010 88% 12
January 2011 86% 14
February 2011 85% 15
March 2011 84% 16
April 2011 83% 17
May 2011 82% 18
5
As marketing begins its rollout in September and market awareness of IPA builds,
then the tournaments sponsored and sanctioned will become more frequent and
increase in number. We expect that initial tournaments will be less profitable
than later tournaments as we buy into the market. We will maintain our margins
for IPA brand logo from the initial rollout and consequently as tournaments
become more profitable, they will contribute a larger portion against a stable
margin from product sales.
Product Based Business.
As reflected above, our initial revenue stream will be product sale based, with
a growing service contribution. We will offer IPA logo products as well as
co-marketed products from other manufacturers to both promote IPA and to support
our members/customers who participate in the sport. Our clothing line is a tool
we plan to use to help promote the sport as well as show support for the sport.
Participants will purchase IPA logo clothing and articles as part of their play
experience to extend the satisfaction and maintain the memory of the event. Ours
is an activity associated memory and with anticipation of upcoming IPA events,
so players who continue to play at IPA events will accumulate IPA logo branded
event specific merchandise. However, there is no expectation that sales will
occur to any substantial degree until we begin sponsoring IPA sanctioned events.
We are currently in discussions with distributors to secure access for our site
to offer a complete line of paintball items without physically handling
inventory and distribution. We also have products lists, and order information
for three different paintball product lines which are available to us at
wholesale pricing or on a private label basis. We will initiate these agreements
as needed in conjunction with bringing our website online. The following
products and services will be offered to the public via our website and at our
sponsored/sanctioned events:
o Gear, markers (guns), masks, vests, goggles, etc.
o Consumables, i.e. paint balls themselves
o Apparel
o IPA logo items, such as shirts, hats, bags, etc.
o Gifts and gift cards
Clothing. We will provide a line of clothing to our customers. IPA will not
manufacture the clothing it may sell, but will offer designs that are produced
by third party manufacturers. The clothing may be sold through online sales, at
tournaments and through wholesalers, with IPA promoting the clothing at events
and through links on its website. The clothing will carry the official IPA label
and authentication. The clothing's primary purpose is to promote paintball as a
lifestyle, while also giving players a distinctive aggressively clothing styles
as an alternative to other lines available in the market.
Equipment. Various types of private labeled equipment from third parties will
also be sold on our website as well. This equipment will include paintballs,
masks, markers, and accessories. By doing this, we can illustrate the type of
equipment that is expected to be used by players participating within our
tournaments, leagues and events while also seeking to diversify our revenue
generating activities.
As referenced above, we are in discussions with companies that have agreed to
provide product and distribution services on an out-sourced basis with positive
gross margins to the Company. Through those relationships we will be able to
offer to sale from our website a range of paintball related products. This will
allow the Company to selectively introduce its own IPA branded products, and to
have initial buying power in the market place without the cost of establishing
warehouse and distribution facilities. We will also establish a web affiliate
program available to member parks only, that establishes relevant links for web
ranking purposes, while driving volume. As hits build, and traffic increases on
the website, we believe advertising opportunities and sponsorships will become
another source of revenue.
6
Planned Services
The "International Paintball Association" is a membership association that will
be managed by our Company, and will provide services to its members, stimulate
brand loyalty and build brand market share. Association memberships will be sold
for an annual fee. As discussed earlier, Free Membership would have no perceived
value and except in the initial promotion phase will not be offered. We
currently are not providing any tournament or league sanctioning or management.
We plan to begin that activity in the third quarter of 2010 conditioned upon
achieving adequate capital for such operations. We have budgeted $500,000 for
this business segment (See Plan of Operation). We have no committed sources for
this funding required. Our timeline is to implement this phase in the next
twelve months.
Planned Industry Segment Services
The services segment will allow us to build market share and brand recognition,
in anticipation of the creation of farm teams that participate in regional
tournaments and pro leagues, which would allow us to tap into spectator event
generated revenue, as well as media coverage and sponsorships. We intend to
build "Farm Teams" (teams of local paintball players who compete against each
other) in local areas in conjunction with local parks or paintball facilities
starting in third quarter 2010 where we use our brand "IPA" to join with local
businesses as financial sponsors, (generating advertising for the local
business) very similar to other regional league sports providing competition for
local teams.
1. Step-by-Step Players' Guides to IPA Series Paintball Tournaments - These
booklets will include calendars of upcoming events to help teams map out what
events they will want to participate in, a step-by-step guide on what is needed
for all the tournaments, and how to play the different types of tournaments that
we plan to will organize. This guide will provide information on different
courses that competitions will be help at, as well as information on some of the
major professional teams that compete within the Series.
2. Operations Manual - This guide will act as an operations manual to enable
tournament operators to run our tournaments.
3. Event Planning - We intend to provide event planning services in a wide range
of applications that involve paintball play. We will seek to enhance
satisfaction in the areas of appearance, performance, and level of play and will
utilize all available resources to ensure that only the highest quality services
are delivered.
7
Planned Player Services:
o Web store discounts, special pricing on registration
o Online registration for leagues and tournaments
o Paintball news updates, skills tips, tactics, scenarios, etc.
o Free logo items i.e. window cling that acts as parking pass, bag tags
o Access to forums, chats, rankings
o Access to web based education, for consistency in skills, signals, etc.
o IPA player service and regulatory agency for dispute resolution
o Planned Member Park Services
o Professionally created marketing collateral designed/available at volume o
pricing
o Plug-in marketing promotion kits designed/available for park implementation
o Member kit: IPA banner, fill-in-the-blank press release, official rules,
etc.
o Use of IPA online registration
o Volume purchase pricing for pro-shop products
o Web store affiliate program
o Centralized IPA Park Directory
o Regulatory body for leagues and tournaments
o Co-op advertising and brand sponsorship
One early focus of the Company will be to create and sponsor a sanctioning body
of Paintball managed by our Company by providing:
o Tournament and league sanctioning and management
o Membership administration and management
o Web Store & merchandising for products and services
o Marketing and branding services
o Spectator revenue
8
Web Store for Merchandising Products and Services
We intend to develop and operate a Web Store for the purpose of selling, under
the IPA name, paintball products including:
o Paintball Guns
o Accessories
o Consumables (Paint)
o Apparel
o Gifts
o Other Branded Merchandise
Our website will be designed to provide membership registration and product
sales, generating an initial source of revenue. In the future, we intend to
expand the website with added services that include online league/tournament
registration, rules and safety information, realistic game scenarios, forums for
competitive banter, forums to share product recommendations, update on paintball
news, etc., or to just chat. The plan is to drive more traffic to our IPA online
store for gear, accessories, apparel and paint purchases. As visitor volume
increases, advertising opportunities become another source of revenue.
Membership Administration and Management
We intend to offer different membership and competitor - options ranging from
general membership, park and facilities membership up to professional level
membership. These memberships are intended to provide member benefits designed
to drive brand loyalty to the International Paintball Association, traffic to
the web store and visits to our member parks and facilities. Planned membership
benefits are to include:
For Individuals:
o Sense of belonging with peers and with a group of "players"
o Discounts to park admissions and tournament play
o Discounts on merchandise
o Interactive forums, communities to share ideas and connect with others
o Newsletters and training and tactic material
o Access to leagues and associated play
o Ability to track their performance in league play
o Ability to progress and develop into higher categories of play - turn
pro.
9
For Parks and Facilities:
o Access to players in their areas from IPA membership lists
o Traffic driven to their facility
o Market awareness around paintball
o Discounted merchandise for sale in their pro shops
o Website affiliate program access, earn on sales directed to IPA site
o Joint and co-op advertising and marketing opportunities
o Economies of scale in advertising and marketing
o Park Member kit including, press release template, banners, and
marketing
o collateral
o Scalable Operations Plan centrally developed
o Governing Body for dispute resolution and consistent rules
Proposed Marketing Services
Our research indicates that the present paintball industry is characterized by
over 2,000 fields and facilities that are mostly "mom and pop" operations, which
focus on the local market. There were approximately 325 series or league events
held in the past year with little centralized coordination. Participants were
enticed to events through local marketing efforts and word of mouth. Management
believes a paintball sport, "brand" with associated advertising will benefit
affiliated parks and facilities through increased player traffic through
consistent identity to their locations.
Proposed Tournament and League Sanctioning and Management
We have test marketed tournament events, in 2004 in the Dallas and Houston,
Texas area with 2 events, in preparation for larger scale operations. We had
approximately 100 attendees at each event with approximately 40 paying
participants at our Dallas event and 80 participants at our Houston event..
These events were used to test the business concept and to test event structure
in preparation for scalable operations.
The first event in Dallas was unprofitable losing about $6,000 on $12,606 in
revenue. We learned from that unsuccessful experience and our second event (in
Houston, Texas) had $25,921 revenue and approximately $5,092 in gross profit. We
also tested a league system in 2005 in a local paintball facility in Dallas, and
were encouraged by the participation by players. However, it was apparent after
that exercise that success would require a strong member communication channel
with more organizational structure over a larger geographic area.
10
We learned several lessons from our previous events:
o Start earlier with publicizing the event to give people a longer time frame
to get the event on their personal calendar.
o Early enrollment with earlier cut-off deadline so the officials can be
contracted.
o Justify number of officials by participants - no guess work.
o Pre-marketing - use the internet to get the announcement out - website &
e-mail
o Online enrollment with ability to pay on website.
o Use of Pay-Pal to control the cash risk.
o Vendor price reduction on product
o Benefits of the draft was that we had teams with a more equal competitive
level. No team was too far advanced over another. This "leveled the playing
field" and made every participant feel their participation contributed to
the team effort. We learned they would participate again if they were on a
better team than they were individually.
o We determined that we could further the play by developing these leagues
into pods that would lend itself to playoffs and championship games. We
never had an opportunity to test the pod system.
Based on this experience, we have developed our concepts further and drafted
event rules. We believe such a foundation is what could make the tournaments and
league play more consistent and leads to the scalability of league play.
Participants in IPA sanctioned leagues and tournaments will be required to be
members of IPA and the league/tournament events will be at IPA affiliated
facilities. Additional revenue opportunities exist for the sale of expendable
products (paint), event apparel, commemorative items, team uniforms, IPA branded
merchandise, and concessions. We believe tournament and league play provides
three key advantages:
o Drives product sales for IPA branded products;
o Develops players for higher league, semi-pro and professional teams; and
o Drives traffic to IPA affiliating facilities, as part of the marketing
services that IPA is offering.
Organization of Events
We intend to pick quarterly event dates in local areas for local tournaments
which we will promote through advertising in local media, paintball stores, and
to our mailing lists of members and enthusiasts. We will have annual regional
playoffs for local top competitors. Our company will co-sponsor these events
with local paintball facilities and retailers and national merchandisers.
11
Affiliations with Parks & Facilities
We intend to offer affiliation with or association to paintball facilities and
local retailers and national merchandisers. By such affiliation we will
co-market events at such facilities with the advertising participation of local
retailers and national merchandisers to create the market perception of an
industry collaborating at supporting the sport. These affiliating facilities
have not yet been identified. Our affiliation will be based on market surveys
that have not yet been performed and which will not be performed until a more
proximate time, and consequently on fees that cannot yet be determined. Our
affiliations with retailers and merchandisers will be based on such factors as
location, synergy with our goals, and consumer recognition of the affiliate.
Until a larger number of these factors can be evaluated as costs associated with
the events, we cannot project who we will affiliate with, or what the associated
fees associated with that transaction will be. Fees that we determine can be
charged will be determined by local market conditions at the time of the
agreement. Local market conditions and pricing will vary depending on local
economy at that specific time, and costs of that local field. Those costs will
vary with location, size and field finish or equipment. Some fields may be
suitable for charging fees to non-participants, and others may not. The
determination of how these fees will be apportioned will be made initially as we
are able to negotiate at the time. Experience only will allow us to find a
pattern for charges and allocation. None of these are constants and all will
require specific analysis at the time of negotiations to arrive at a pricing
where both IPA and the affiliate are able to make a profit on the event or
relationship.
Plans for owned or Managed Facilities
We do not currently have any plans to acquire "owned facilities", or to manage
facilities, as that would require an entirely new management structure and
conflict through competition with our partnering or affiliating park plan.
Spectator Revenue Goal
We believe non-player spectator revenues are the ultimate goal of the business
plan. Our plan capitalizes on the collection non-player enthusiasts with friends
and families of members competing in leagues and tournaments to build skill and
name recognition. Our plan builds a "farm" system, developing players who
ultimately form teams to compete, first in higher division recreational leagues,
then finally in semi-pro and professional leagues. Once professional play is
implemented, we believe additional revenue opportunities that may be driven by
media offerings are possible.
The sources of these revenues may include:
o Viewer Admission fees
o Increased Concession Sales
o Commemorative Event Programs, with team bio's, advertising, etc.
o Product merchandising
o Television
o Sponsorship
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Planned Tournaments
The tournaments that IPA intends to organize have been given the name IPA
Tournament Series. This series includes different tournaments that may be
schedule all over the states of Texas California and Florida. There will be
three different skill levels that different teams will be able to participate
in. These skill levels are as follows:
o Rookie: these are the beginners of the tournament. They have only
participated in tournament play for a limited time and are working on
gaining critical experience required to compete in the higher skill
levels.
o Novice: The players on a novice team have been participating in
tournament play for one to three years and are generally better than
the rookie players, but do not have the required skill to participate
successfully on the pro level.
o Open or Professional: These are players that have been participating in
tournament play for over three years and are generally the best players
in the game. Many teams play constantly in as many tournaments as
possible, no matter where they have to travel.
The price will vary depending on the rental price of the different facilities
that we will be using, but generally, the price will be $125 for a rookie team,
$250 for a novice team, and $300 for a pro team.
Each team will consist of nine players, of which only seven can play at any one
time. Each team in each difficulty level can have two players that are
classified in the category higher than theirs. For example, a rookie team can
have two novice players on their team and still be considered a rookie team. Any
more than two players in a higher difficulty class will force the team to
register in the higher difficulty level.
Sales Literature
We will use various forms of sales literature to help increase awareness of our
tournaments and also to recruit teams of all skill levels. We will have
specialty brochures developed that specifically outline all events that will be
organized by us and these brochures will be directly mailed out to registered
users of our website as well as teams and spectators in the audience who sign up
on our mailing list at our tournaments. We will have contact numbers as well as
information detailed on what future tournaments or products will be available
from us. We will also distribute brochures to help in the promotion of our
unique and innovative clothing line. In addition, we plan in the future on
promoting their events via radio advertising, television spots, cable TV,
newspapers, industry publications, public relations and internet via the company
website as well as electronic mailing to registered players and paintball
enthusiasts throughout our entire target market.
Competitive Strengths
We believe we will have a competitive edge within the industry in that we are
focused on the largest market (amateurs), and we have refined our mission to
concentrate on the development and organization of paintball tournament leagues
and events. There are several other paintball associations as discussed
previously which can be considered peripherally competitive to our company, but
we are not aware of any other organizations seeking to become recognized as a
Paintball "sanctioning body". Many people and groups may organize one or perhaps
a few paintball tournaments, but we are not aware of any that have built a
series setting on on the scale that we plan. Our planned IPA Tournament Series
will refine and refocus the way paintball players think about tournaments,
leagues, and events and will help to develop the sport to become more organized
and well known within local communities where there is little organization for
the sport. We plan on being a driver in the industry in the markets that we
serve, and expect to be the initial and only governing body, giving us a first
to market advantage.
13
Business Strategy for Association Business
Our business strategy is to position the "International Paintball Association"
as the official governing body of the sport of paintball. As such, it will not
only be the final arbiter in issues involving rules and professional play, but
also will be a consolidating influence in a fragmented sport, thus raising the
level of spectator participation, sponsorships and media attention. We hope to
attain this strategic objective with aggressive membership building campaigns
and a family of branded products and services offered to both players and member
parks including:
o Member discounts and website privileges
o Website social network with inter- team rivalries, and daily posts
o League and tournament support
o Member newsletters for scenarios, skills, tactics, league news, etc.
o Farm team feeder system to paintball professional teams
o Park member gear discounts and website affiliate program
o Marketing materials generated centrally with economies of
scale/professionalism
o Benefit of centrally executed campaigns
o Pre-designed local campaigns for member park use
o Rules and regulations centrally administered
Pricing Strategy
Our membership pricing below is in line with competition. Paintball Sports
Promotion (PSP) is the largest non-professional organization in the national
tournament business, and their pretournament online annual player registration
fee is $40.00 with an increase to $50.00 if the signup is on the day of a
participant's tournament. This is an annual fee for a player ID card issued
through the American Paintball Players League (APPL) that is required for player
participation in any PSP event.
We will price our tournament services appropriately to appeal principally to the
rookie and novice players. Tournament entry fees and product offerings will vary
with a view to local historic pricings, and the broader then current industry /
market prices.
Targeted Player Registration Fee:
Annual Novice Fees $ 50/yr.
Competitors Annual Fees up to 5 years
or until tournament (region) achieves pro $150
Pro (after 5 yrs) $250
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Promotion Strategy
Our demographic target market generally prefers to obtain its information
electronically. Our promotions strategy will reflect that preference in its
promotional communications focused on 13-34 year old males. IPA's website will
be a primary avenue for internal team and interleague communication, product
promotions member specials, forum product reviews, or any promotional online
marketing opportunities that may arise. We will offer member parks use of IPA
promotion designs for local implementation, as well as the ability to tap into
volume buying power through IPA affiliate purchase programs.
Market share and market presence to build brand identity will be our initial
goal. We currently have no brand awareness and consequently cannot be considered
a "brand". Our promotions will be centered on registering members from a
targeted region. Local TV and radio ads, print media, direct mail, public
relations, and contests will be utilize, all driving traffic to IPA's website.
During strategic promotional efforts, IPA will offer discounted, park membership
to approved facilities who generate a minimum number of IPA members from their
existing customers, thus tapping into their customer base, and enlisting the
park's help in securing memberships.
Product promotions are planned to these same lists. The IPA web store will
promote aggressively with Search Engine Marketing (SEM)and Search Engine
Optimization (SEO) strategies utilizing paid placement and inclusion to drive
visits that convert to sales. Member parks that join our affiliate program will
benefit from our inventory and volume buying power, while driving additional
page views on our site, and sales conversions. As product becomes a greater
revenue contributor to IPA, we plan to expand into IPA logo items, and then to
expand to custom team apparel, as well. These items will be sold at tournaments,
on our website, and be worn by IPA sponsored players and teams.
Fees will be paid by Tournament participants that are higher than standard play
fees. Because of increased play parks will price the facility use to IPA below
their standard play rate, and that incremental excess will be revenue of IPA.
Also IPA will be selling IPA logo at the event. Those sales will be handled by
IPA personnel paid for by IPA. However, a portion of those IPA administered
sales will go to the facility as a fee. All sales by the facility from its
inventory stock will not be shared by IPA. Parks will benefit and will be
willing to share the fees in the above manner or some hybrid version of the
above because of the increase in volume generated by the additional event
marketing and promotion monies spent by IPA and because of the introduction of
new IPA members to that facility. Varying degrees of capital investment in
different facilities as well as different market demographics dictate that the
fee split structure will differ with different parks. Understandably, the IPA
split will become stronger as the IPA brand builds in strength, so the IPA side
of the split the first year will likely be smaller than the split we will expect
in subsequent years.
Sales Strategy
IPA's sales strategy will focus upon the brand awareness generated by the
marketing techniques referenced above, supplementing with limited use of inside
sales where appropriate. Inside sales will be utilized to some degree utilizing
both inbound and outbound sales calls. While we will focus on product sales at
events and with online marketing efforts detailed elsewhere herein, we
acknowledge that there remains a significant but shrinking segment of the buying
market that continues to prefer phone calls for purchasing instead of
online/internet orders. Because of this until our experience proves us wrong, we
will maintain an inbound call services for purchasers who wish to call in
orders. Also, outbound calls to parks to promote their stocking the IPA product
lines and to both parks and targeted individuals to promote IPA affiliation will
be utilized to promote and build IPA name recognition. We currently do not have
any brand awareness. Targets generated by market research and made aware of IPA
through marketing, may be personally invited to participate in an IPA event.
Member park targets may be called upon directly by a paintball professional or
ex-military sharp shooter, for example, acting on IPA's behalf. IPA expects to
hire professional and semi-professional paintball players, and retired police
and military, as sales representatives.
15
Competition
Our "International Paintball Association" is intended to serve the same function
in the sport of paintball as NASCAR is to car racing or PGA is to golf.
Competition in the Product Segment
Competition includes companies currently selling paintball gear via ecommerce,
in local paintball shops, and big box retail, paintball online forums, existing
paintball tournaments and/or leagues, and existing paintball associations. The
Company's products will be distinguishable from our competition by the use of
the IPA brand and logo.
The competitive manufacturers of gear and distributors operate both from retail
outlets and also through the internet. Some of the direct competition to
International Paintball Association include: KEE Action Sports, Tippman, Jarden
JT Sports, DYE Paintball, ActionVillage.com, NXe, Planeteclipse.com, Procaps,
smartparts.com, specialopspaintball.com, and angelpaintballsports.com.
Paintball supplies and gear can also be purchased from such recognized retailers
as Sports Authority, Dicks Sporting Goods, Kmart, and Target. We currently are
not competing with these retailers because we have not commenced a significant
operation.
Competition in the Services Segment
We believe that one of IPA's competitive advantages is that no other entity in
the sport has secured a market position that include the benefits of a national
governing body combined with player and park membership recruitment. Each
segment of the industry has successful participants, but none of these have
stepped up to the role of branding and consolidating the sport, with centralized
economies for members and ecommerce gear sales, and online forum social
networking, and farm system for players, combined. IPA intends to recruit
members, while highlighting the benefits of membership. Currently Existing
Competition Paintball Associations:
American Paintball Players Association, APPA: An online league and event sign-up
system with 50 leagues, and a membership consisting of approximately 45,000
players. While members get an ID number, its true purpose is to provide
registration for events.
The Paintball Sports Trade Association, PSTA, was established in October 2007.
The goal of this association is to "increase awareness, participation and
acceptance of Paintball all over the world". (PSTA website home page May 2008
www.paintball.org) While the PSTA has "members", the list includes gear vendors
and tournaments. Their website provides safety and player "getting started"
information, as well as resources to start a paintball business. PSTA is
currently a business "trade association" and does not appear to be planning to
recruit parks and players as members, or to provide centralized economies of
scale in gear purchases and marketing to parks. With its member list however,
PSTA has the endorsement of some important industry players and therefore poses
a competitive threat to IPA.
There are several existing online forums such as, Warpig.com, PBNation,
Paintballforum.com, pbcentral.com, pbstar.com, pbreview.com and
specialopspaintball.com.
Existing Tournaments include: NPPL, NXL, World Cup, Spyder Cup, Millennium
Series in Europe, XPSL League
16
Employees
As of May 18, 2010, International Paintball Association had no full time
employees. The officers and directors of the Company currently provide certain
services dedicated to current corporate and business development activities on
an as needed part-time basis.
Administrative Offices
The Company's principal address is 501 Trophy Lake Drive, Suite 314, PMB 106,
Trophy Club, Texas 76262, and the telephone number is (817)491-8611; and the
facsimile number is (817)491-4955. The Company does not currently pay monthly
rent for the use of this address, which is the office of the Company's
President.
ITEM 1A. RISK FACTORS
----------------------
FORWARD LOOKING STATEMENTS
This document includes forward-looking statements, including, without
limitation, statements relating to IPA's plans, strategies, objectives,
expectations, intentions and adequacy of resources. These forward-looking
statements involve known and unknown risks, uncertainties, and other factors
that may cause IPA actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. These factors include, among others,
the following: ability of IPA to implement its business strategy; ability to
obtain additional financing; IPA's limited operating history; unknown
liabilities associated with future acquisitions; ability to manage growth;
significant competition; ability to attract and retain talented employees; and
future government regulations; and other factors described in this document or
in other of IPA filings with the Securities and Exchange Commission. IPA is
under no obligation, to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
GENERAL BUSINESS RISK FACTORS
OUR COMPANY RISK FACTORS
Each prospective investor should carefully consider the following risk factors,
as well as all other information set forth elsewhere in this prospectus, before
purchasing any of the shares of our common stock.
GENERAL BUSINESS RISK FACTORS
We are a development stage business which is highly risky.
International Paintball Association, Inc., through its predecessor, commenced
operations in 2004 and is organized as a corporation under the laws of the State
of Colorado. Accordingly, we have only a limited history upon which an
evaluation of our prospects and future performance can be made. Our proposed
operations are subject to all business risks associated with new enterprises.
The likelihood of our success must be considered in light of the problems,
expenses, difficulties, complications, and delays frequently encountered in
connection with the expansion of a business, operation in a competitive
industry, and the continued development of advertising, promotions and a
corresponding customer base. There is a possibility that we could sustain losses
in the future. There can be no assurances that we will ever operate profitably.
17
We will depend on management, and if we lose management, our Company may be at
risk if we cannot replace them.
Our business is significantly dependent upon our management team. Our success
will be particularly dependent upon our leadership: Ms. Brenda Webb our CEO and
acting CFO. The loss of Ms. Webb could have a material adverse effect on our
Company. Management is not working full time for us and devotes about twenty
hours per week to our operations. If we are successful in our funding plan, then
full time management will be engaged and transitioned into management. We have
begun discussions with several different individuals who we believe can fill
that role, but those individuals will not engage, and will not permit the
discussions beyond their present level until our funding has begun. Ms. Webb has
no prior experience as an officer or director in a registered company, but among
our directors, Mr. Greene and Mr. Davenport both have served in management or as
directors with several public companies in multiple industries. Mr. Compton has
considerable experience specific to our industry, but has no prior public
company experience as an officer or director.
Over the last year, we have had several changes in management and we cannot
provide any assurances that we will be able to continue to retain current
management, especially due to our current liquidity issues. The inability to
retain management could have an adverse impact on our continuing operations.
Our auditors have issued a "going concern" opinion which is cautionary to
potential shareholders.
In our most recent audit our auditors expressed an opinion commonly called the
"Going Concern Opinion", in which the auditors indicate substantial doubt that
our company can continue due to lack of capital and revenues. This should
indicate to potential investors that business could fail in its current
condition.
We have incurred net losses and may never operate profitably.
Our shareholder may be at risk of our business failing because, since inception
we have had net losses totaling $2,047,095. During the year ended December 31,
2009, we incurred a net loss of $148,848. There is no assurance we will ever
operate profitably and continued net losses would eventually cause us to cease
business.
We are a public company with significant annual expenses to maintain the public
SEC reporting status of the Company.
The annual expenses of legal accounting and audits for an SEC Reporting company
are significant and such expenses may erode or eliminate the profits, if any
ever are generated, which could jeopardize any investment in the Company.
We may be exposed to risks of borrowing, due to which, if secured by assets, in
event of default we could lose our assets.
We have incurred indebtedness, totaling $992,444 at December 31, 2009 and a
portion of our cash flow will have to be dedicated to the payment of principal
and interest on such indebtedness, Our indebtedness at December 31, 2009,
consists of $217,667 accounts payable, $95,743 in accrued liabilities, $478,500
notes payable and $200,534 in convertible notes payable. Currently, we do not
have adequate capital to cover the payment of this debt and future cash flows
may not be adequate to cover payments.
18
The $478,500 in notes payable are all currently overdue. While overtures to
holders proposing extensions of the due dates have been sent, there can be no
assurance that these efforts will be successful. The $200,534 convertible note
payable is due on April 11, 2011, and is convertible in part or in whole into
shares of common stock at a conversion price of $.50 per share (401,068 shares).
All notes are unsecured.
A default judgment under a loan agreement or for any of our existing
indebtedness could result in the loan becoming immediately due and payable, and
then if unpaid, a judgment in favor of such lender which would be senior to the
rights of shareholders of our Company. A judgment creditor would have the right
to foreclose on any of our assets resulting in a material adverse effect on our
business, operating results or financial condition.
We have convertible debt which is convertible into our common stock. A
conversion of such debt could have a dilutive effect to existing shareholders.
At December 31, 2009, we have an outstanding convertible promissory note of
$200,534. Such note payable is due on April 11, 2011 and is convertible into
Shares of our common stock in whole or in part at a conversion price of $.050
per share. When the note payable is converted into shares of our common stock,
this could have a dilutive effect to the holdings of our existing shareholders
We have all of the risk of new untested venture, and investors could lose their
investment as a result of any of such risks.
We are a development stage business. We have a limited history of operation and
no history of earnings. As a new development stage business, we will be subject
to all of the difficulties associated with establishing a new business
enterprise, including the following: hiring and retaining skilled employees or
contractors; licensing, permitting, and operating problems; competing with
established operators; and implementing the business infrastructure and support
systems to effectively carryout the business plan.
We are subject to general economic conditions which, as they are turning
downward, could make our venture less likely to succeed.
The financial success of our Company may be sensitive to adverse changes in
general economic conditions in the United States, such as recession, inflation,
unemployment, and interest rates. Such changing conditions could reduce demand
in the marketplace for our services and the paintball industry overall.
Current economic conditions have resulted in individuals having less disposable
income, which could result in less potential players and a decreased interest in
paintball sports. As a result we could see fewer participants and reduced cash
flows that may result in delays in execution of our business plan. We cannot
confirm this expectation as we have no active operations to measure or compare,
however, industry reports are that the rapid growth in this industry has
stabilized or slowed to a point of no growth as a consequence of the economy. We
cannot know whether the growth seen in the sport before the current economic
slowdown will revive, or whether another sport or interest will replace it.
We will continue to have a need for additional financing, and without adequate
financing to carry out our business plan, we could fail.
We have limited funds and such funds will not be adequate to carry out the
business plan without borrowing significant funds. Our ultimate success may
depend upon our ability to raise additional capital. We will have to seek funds
through loans or equity placements to cover such cash needs. No commitments to
provide additional funds have been made by shareholders or management.
Accordingly, there can be no assurance that additional funds will be available
to the Company to allow us to pay existing debt and cover future cash
expenditures contemplated by our business plan.
19
We have no revenue history and investors have no way to gauge the business based
upon history of revenue.
We were incorporated under the laws of the State of Texas in 2004 and
redomiciled to Colorado in 2008. We were organized for the purpose of organizing
the emerging sport of Paintball into league and tournament play and positioning
ourselves as managing the governing body of the sport. We have not earned
significant revenues from our limited operations. We are not profitable and the
business effort is considered to be in an early development stage. We must be
regarded as a new or development venture with all of the unforeseen costs,
expenses, problems, risks and difficulties to which such ventures are subject.
We can offer no assurance of success or profitability, and investors will have a
high risk of loss.
There is no assurance that we will ever operate profitably. There is no
assurance that it will generate revenues or profits, or that the value of our
shares will be increased thereby.
RISK FACTORS RELATED TO OUR STOCK
Our stock is a highly speculative investment.
Due to the highly speculative nature of our business, Investors should not
invest unless they can financially bear the loss of their entire investment.
Investment should, therefore, be limited to that portion of discretionary funds
not needed for normal living purposes or for reserves for disability and
retirement.
The regulation of penny stocks by SEC and FINRA may discourage the tradability
of our securities.
We are a "penny stock" company. None of our securities currently trade in any
market and, if ever available for trading, will be subject to a Securities and
Exchange Commission rule that imposes special sales practice requirements upon
broker-dealers who sell such securities to persons other than established
customers or accredited investors. For purposes of the rule, the phrase
"accredited investors" means, in general terms, institutions with assets in
excess of $5,000,000, or individuals having a net worth in excess of $1,000,000
or having an annual income that exceeds $200,000 (or that, when combined with a
spouse's income, exceeds $300,000). For transactions covered by the rule, the
broker-dealer must make a special suitability determination for the purchaser
and receive the purchaser's written agreement to the transaction prior to the
sale. Effectively, this discourages broker-dealers from executing trades in
penny stocks. Consequently, the rule will affect the ability of purchasers in
this offering to sell their securities in any market that might develop
therefore because it imposes additional regulatory burdens on penny stock
transactions.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange
Act of 1934, as amended. Because our securities constitute "penny stocks" within
the meaning of the rules, the rules would apply to us and to our securities. The
rules will further affect the ability of owners of shares to sell our securities
in any market that might develop for them because it imposes additional
regulatory burdens on penny stock transactions.
20
Shareholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
We will pay no foreseeable dividends in the future.
We have not paid dividends on our common stock and do not ever anticipate paying
such dividends in the foreseeable future.
No public market exists for our common stock at this time, and there is no
assurance of a future market.
There is no public market for our common stock, and no assurance can be given
that a market will develop or that a shareholder ever will be able to liquidate
his investment without considerable delay, if at all. If a market should
develop, the price may be highly volatile. Factors such as those discussed in
the "Risk Factors" section may have a significant impact upon the market price
of the shares offered hereby. Due to the low price of our securities, many
brokerage firms may not be willing to effect transactions in our securities.
Even if a purchaser finds a broker willing to effect a transaction in our
shares, the combination of brokerage commissions, state transfer taxes, if any,
and any other selling costs may exceed the selling price. Further, many lending
institutions will not permit the use of our shares as collateral for any loans.
Our investors may suffer future dilution due to issuances of shares for various
considerations in the future.
There may be substantial dilution to our shareholders as a result of future
decisions of the Board to issue shares without shareholder approval for cash,
services, or acquisitions.
We are a reporting company, but our stock is not publicly traded.
There is no trading market for our common stock. We are subject to the reporting
requirements under the Securities and Exchange Act of 1934, Section 13a,
pursuant to Section 15d of the Securities Act and we are registered under
Section 12(g). As a result, shareholders will have access to the information
required to be reported by publicly held companies under the Exchange Act and
the regulations thereunder. We intend to provide our shareholders with quarterly
unaudited reports and annual reports containing financial information prepared
in accordance with generally accepted accounting principles audited by
independent certified public accountants and we intend to be registered under
the Securities Exchange Act, Section 12(g).
21
We are not registered in states under blue sky laws, which may make our stock
unmarketable.
Because the securities registered hereunder have not been registered for resale
under the blue sky laws of all states, the holders of such shares and persons
who desire to purchase them in any trading market, should be aware that there
may be significant state blue-sky law restrictions upon the ability of investors
to sell the securities and of purchasers to purchase the securities in any
particular state. Some jurisdictions may not under any circumstances allow the
trading or resale of blind-pool or "blank-check" securities. Accordingly,
investors should consider the secondary market for our securities to be a
limited one.
We can give no assurance of success or profitability, and we have no revenue
history to show values or success.
There is no-assurance that we will develop our business to profitability. Even
if the Company executes on our business plan, there is no assurance that we will
generate revenues or profits, or that the market price of our common stock will
be increased thereby.
We may place investors at risk due to a lack of diversification.
Because of the limited financial-resources that we have, it is unlikely that we
will be able to diversify its acquisitions or operations. Our probable inability
to diversify our activities into more than one area will subject us to economic
fluctuations within a particular business or industry and therefore increase the
risks associated with our operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
----------------------------------
On January 27, 2010, we filed a second Amended Registration Statement on Form
10/A with the Securities and Exchange Commission ("SEC"). On February 6, 2010,
in connection with the filing on Form 10/A we received a comment letter from the
SEC regarding the disclosures in the filing on Form 10/A. We have been in the
process of preparing our response to such comments and amending our Form 10/A
filing for such comments and will be filing such documents with the SEC in the
near future.
ITEM 2. PROPERTIES
-------------------
Our principal mailing address is 501 Trophy Lake Drive, Suite 314, PMB 106,
Trophy Club, Texas 76262, and the telephone number is (817)491-8611; and the
facsimile number is (817)491-4955. Effective June 1, 2008, the Company does not
currently pay monthly rent for the use of this mailing address or other offices.
We will office out of the offices or homes of its executive officers until
additional capital is raised. We do not own any real estate, trademarks or
patents. Prior to June 1, 2008, J.H. Brech, LLC, a related party, charged the
Company $800 a month plus office related expenses. These expenses are included
in accrued expenses payable to related parties.
ITEM 3. LEGAL PROCEEDINGS
--------------------------
IPA anticipates that it (including any future subsidiaries) will from time to
time become subject to claims and legal proceedings arising in the ordinary
course of business. It is not feasible to predict the outcome of any such
proceedings and IPA cannot assure that their ultimate disposition will not have
a materially adverse effect on IPA's business, financial condition, cash flows
or results of operations. As of the filing of this document, we are not a party
to any pending legal proceedings, nor are we aware of any civil proceeding or
government authority contemplating any legal proceeding.
ITEM 4. (REMOVED AND RESERVED)
------------------------------
Not applicable.
22
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
-------------------------------------------------------------------------------
ISSUER PURCHASES OF EQUITY SECURITIES
-------------------------------------
Market Information
Currently there is no public trading market for our stock, and we have not
applied to have the common stock quoted for trading in any venue. We intend to
apply to have the common stock quoted on the OTC Bulletin Board immediately
after the effectiveness of our Form 10 filing. No trading symbol has yet been
assigned.
Rules Governing Low-price Stocks That May Affect Our Shareholders' Ability to
Resell Shares of Our Common Stock
Our stock currently is not traded on any stock exchange or quoted on any stock
quotation system. We intend to solicit a broker to apply for quotation of common
stock on the FINRA's OTC/BB, after the effectiveness of our Form 10 filing.
Quotations on the OTC/BB reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not reflect actual transactions. Our common stock
will be subject to certain rules adopted by the SEC that regulate broker-dealer
practices in connection with transactions in "penny stocks." Penny stocks
generally are securities with a price of less than $5.00, other than securities
registered on certain national exchanges or quoted on the Nasdaq system,
provided that the exchange or system provides current price and volume
information with respect to transaction in such securities. The additional sales
practice and disclosure requirements imposed upon broker-dealers are and may
discourage broker-dealers from effecting transactions in our shares which could
severely limit the market liquidity of the shares and impede the sale of shares
in the secondary market.
The penny stock rules require broker-dealers, prior to a transaction in a penny
stock not otherwise exempt from the rules, to make a special suitability
determination for the purchaser to receive the purchaser's written consent to
the transaction prior to sale, to deliver standardized risk disclosure documents
prepared by the SEC that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer must also
provide the customer with current bid and offer quotations for the penny stock.
In addition, the penny stock regulations require the broker-dealer to deliver,
prior to any transaction involving a penny stock, a disclosure schedule prepared
by the SEC relating to the penny stock market, unless the broker-dealer or the
transaction is otherwise exempt. A broker-dealer is also required to disclose
commissions payable to the broker-dealer and the registered representative and
current quotations for the securities. Finally, a broker-dealer is required to
send monthly statements disclosing recent price information with respect to the
penny stock held in a customer's account and information with respect to the
limited market in penny stocks.
Holders
As of May 18, 2010, we have approximately 97 shareholders of record of our
common stock. Sales under Rule 144 are also subject to manner of sale provisions
and notice requirements and to the availability of current public information
about us. Under Rule 144(k), a person who has not been one of our affiliates at
any time during the three months preceding a sale, and who has beneficially
owned the shares proposed to be sold for at least 6 months, is entitled to sell
shares without complying with the manner of sale, volume limitation or notice
provisions of Rule 144.
23
Dividend Policy
Holders of IPA common stock are not entitled to receive dividends. International
Paintball Association, Inc. has not declared or paid any dividends on IPA common
shares and it does not plan on declaring any dividends in the near future. IPA
currently intends to use all available funds to finance the operation and
expansion of its business.
Recent Sales of Unregistered Securities
During the period of January 1, 2009 through December 31, 2009, we did not make
any sales of or issuances of our unregistered securities.
Issuer Purchases of Equity Securities
IPA did not repurchase any shares of its common stock during the year ended
December 31, 2009.
ITEM 6. SELECTED FINANCIAL DATA
--------------------------------
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF OPERATIONS
-------------
MANAGEMENTS' DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with our audited
financial statements and notes thereto included herein.
This discussion contains forward-looking statements, such as statements relating
to our financial condition, results of operations, plans, objectives, future
performance and business operations. These statements relate to expectations
concerning matters that are not historical facts. These forward-looking
statements reflect our current views and expectations based largely upon the
information currently available to us and are subject to inherent risks and
uncertainties. Although we believe our expectations are based on reasonable
assumptions, they are not guarantees of future performance and there are a
number of important factors that could cause actual results to differ materially
from those expressed or implied by such forward-looking statements. By making
these forward-looking statements, we do not undertake to update them in any
manner except as may be required by our disclosure obligations in filings we
make with the Securities and Exchange Commission under the Federal securities
laws. Our actual results may differ materially from our forward-looking
statements.
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2009 includes a "going concern"
explanatory paragraph that describes substantial doubt about the Company's
ability to continue as a going concern.
Plan of Operations
The Company was formed for the purpose of providing, services and products for
paintball sport activities. Paintball sport activities are those activities by
persons who are using paintball equipment and accessories for recreational
entertainment in various games and interactions with other paintball enthusiasts
whether organized formally or in ad hoc activities. "Paintball Activities"
includes the shooting of paint pellets with air guns at targets, other players
in competitive individual or team play, and role playing in simulated military
or law enforcement scenarios. The sport/sanctioned activities/competitions we
will sponsor will focus on traditional paramilitary style paintball team or
individual competition.
24
Our Company filed this Form 10 on a voluntary basis in order to become a 12(g)
registered company under the Securities Exchange Act of 1934, and by filing we
are automatically subject to future reporting obligations.
Plan Of Operations With 12 Month Budget And Quarterly Goals
We intend to commence a private offering in 2010 to fund the budget below.
We intend to raise $1,000,000 in a private placement to finance the following
twelve months of operations. With current economic conditions as they are, there
is no assurance that we will be able to complete a $1,000,000 private placement
in 2010.
Our operating budget, based on the intended $1,000,000 Capital raise is:
Enhanced Web Site Development and Operations $50,000
Conference and Travel 25,000
Legal and Accounting 65,000
Branding, Marketing & Advertising 350,000
General and Administrative Expense 150,000
Rent and Facilities Expense 45,000
Insurance and Risk Management 50,000
Working Capital and Tournament Operations 265,000
-----------------------------------------------------------------------
Total $1,000,000
If we are unable to complete the placement of $1,000,000, we will reduce certain
of the above categories as discussed below.
The following is a more detailed breakdown of our proposed activities and goals,
we expect to achieve with our initial raise of $1,000,000.
Phase One: We intend to initiate discussion with and engage experienced industry
advisors to assist our management team to begin our management search effort. We
will utilize our existing personal relationships in that selection, but have not
yet reached a decision on which individual or group we will associate for that
effort. We expect to issue invitation for interviews during this time.
Phase Two: We will begin our management interviews with the intent of hiring
immediately.
Phase Three: If new management hires are not complete, then that will have
priority at this time. Our new corporate management team will be responsible for
development and implementation of the following additional items:
1. Establish initial operating policies and procedures corporately and for
multiple paintball league and tournament operations
2. Establish accounting structure and policies for multiple paintball
league and tournament operations.
3. Continue funding efforts if not yet complete.
4. Assist in recruiting additional promotional talent for IPA marketing
efforts both in both product sales and in league/tournament building
In the event are not successful in raising any of the funds sought with our
initial $1,000,000 placement, we will continue our work to maintain our status
as a reporting company with limited travel and the minimum of administrative
expenses while we continue to pursue funding. We will continue activities where
costs are not incurred, but where costs would be incurred, we will not engage in
any of the other activities set forth in Phase One.
25
Results of Operations for Years Ended December 31, 2009 and 2008.
During the years ended December 31, 2008 and 2009, we did not recognize any
revenue. We are a development stage company and are pre-revenue.
During the year ended December 31, 2008, we incurred total operating expenses of
$159,605 compared to $101,847 for the year ending December 31, 2009. The
decrease of $57,071 is a result of a decrease in general expenses, as a result
of a decrease in operational activities in 2008 and a focus on the filing of the
Company's registration statement on Form 10-12g. The decrease in operating
expense was also a result of management reducing payments for board services
utilizing fewer consulting services an overall reduced operational
expenditures..
During the year ended December 31, 2009, we recognized an interest expense of
$47,001 compared to $45,992 during the year ended December 31, 2008. The
increase of $41,009 was a result of a increase in notes payable during the year
ended December 31, 2009.
During the year ended December 31, 2009, we recognized a net loss of $148,848
compared to a net loss of $205,597 during the year ended December 31, 2008. The
decrease of $56,749 was a result of the $57,071 decrease in operational expenses
combined with the $1,009 increase in interest expense, along with the $687
decrease in depreciation and amortization.
Liquidity and Capital Resources
From inception through December 31, 2009, we have funded our operations
primarily from the following sources:
o Equity proceeds through private placements of International
Paintball Association securities;
o Loans and lines of credit; and
o Sales of equity investments.
For the Years Ended December 31, 2008 and 2009
Cash flow from operations has not historically been sufficient to sustain our
operations without the above additional sources of capital. As of December 31,
2009, the Company had total assets of $61 consisting solely of cash and cash
equivalents of $38 and total liabilities of $992,444, consisting of accounts
payable of $176,834, accounts payable related parties of $40,833, accrued
interest payable of $95,743 and notes payable of $679,034. The working capital
deficit as of December 31, 2008 was $837,415.
Cash used by the Company's operating activities during the year ended December
31, 2009 was $38 compared to $119,206 during the year ended December 31, 2008.
During the year ended December 31, 2009, net losses of $148,848, were reconciled
of non-cash activities of $61 in amortization and depreciation expense with an
increase in accounts payable by $101,919 and a decrease in accounts receivable
of $46,923 comprising most of the balance. During the year ended December 31,
2008, net losses of $205,597 were reconciled by non-cash activities of $748 in
amortization and depreciation expense and $21,600 in compensatory stock
expenses, with the balance largely from an increase in accounts payable and
accrued liabilities.
During the years ended December 31, 2008 and 2009, the Company did not receive
or use funds in its investing activities.
26
During the year ended December 31, 2009, the Company received no funds from
financing activities, but during the year ended December 31, 2008, the Company
received $119,000 from its financing activities. The Company received $122,500
from notes payables and made payments of $3,500 on notes payable during the year
ended December 31, 2008
At December 31, 2009, the Company had $478,500 in outstanding notes payable to
various individuals, unsecured, bearing interest at 6% - 9% per annum, due in
full on term expiration, with all amounts at each date either presently due or
due within one year. The Company incurred interest expense under the notes
during the year ended December 31, 2009 and 2008 of $38,265 and $45,992,
respectively.
In April 2009, a related party owed $200,534 for accounts payable agreed to
convert the amount owed to it into a Convertible Promissory Note. The
Convertible Promissory note is unsecured, has an interest rate of 6% and a due
date of April 10, 2010. The promissory note provides the holder with the right
to convert part or all of the outstanding principal and/or interest into shares
of the Company's common stock at a rate of $0.50 per share. At December 31,
2009, $200,534 was outstanding. During the year ended December 31 2009, interest
of $8,736 had been accrued.
Need for Additional Financing
We do not have capital sufficient to meet our cash needs. We will have to seek
loans or equity placements to cover such cash needs. As our operations expand,
our need for additional financing is likely to increase substantially. No
commitments to provide additional funds have been made by our management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to us to allow it to cover our expenses as they may be
incurred. There is no guarantee that we will be able to obtain any additional
financing.
Going Concern
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2009 and 2008 includes a "going concern"
explanatory paragraph that describes substantial doubt about the Company's
ability to continue as a going concern.
The Company is dependent on raising additional equity and/or, debt to fund any
negotiated settlements with its outstanding creditors and meet its ongoing
operating expenses. There is no assurance that the Company will be able to raise
the necessary equity and/or debt that the Company will need to be able to
negotiate acceptable settlements with its outstanding creditors or fund its
ongoing operating expenses. The Company cannot make any assurances that the
Company will be able to raise funds through such activities.
Critical Accounting Policies
The Company has identified the policies below as critical to its business
operations and the understanding of the Company's results from operations. The
impact and any associated risks related to these policies on the Company's
business operations is discussed throughout Management's Discussion and Analysis
of Financial Conditions and Results of Operations where such policies affect the
Company's reported and expected financial results. For a detailed discussion on
the application of these and other accounting policies, see Note 1 in the Notes
to the Financial Statements for the years ended December 31, 2009 and 2008.
27
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Net Loss Per Share
Net loss per share is based on the weighted average number of common shares
outstanding during the period. This number has not been adjusted for outstanding
options since the average would be anti-dilutive.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------
IPA's operations do not employ financial instruments or derivatives which are
market sensitive. Short term funds are held in non-interest bearing accounts and
funds held for longer periods are placed in interest bearing accounts. Large
amounts of funds, if available, will be distributed among multiple financial
institutions to reduce risk of loss. Our cash holdings do not generate any
significant interest income.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------
The audited financial statements of International Paintball Association, Inc.
for the years ended December 31, 2009 and 2008, period from May 25, 2004
(inception) through December 31, 2009 start at page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
--------------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
--------------------------------
The Company maintains a system of disclosure controls and procedures that are
designed for the purposes of ensuring that information required to be disclosed
in the Company's SEC reports is recorded, processed, summarized, and reported
within the time periods specified in the SEC rules and forms, and that such
information is accumulated and communicated to the Company's management,
including the Chief Executive Officer as appropriate to allow timely decisions
regarding required disclosure.
Management, after evaluating the effectiveness of the Company's disclosure
controls and procedures as defined in Exchange Act Rules 13a-14(c) as of
December 31, 2009 (the "Evaluation Date") concluded that as of the Evaluation
Date, the Company's disclosure controls and procedures were effective to ensure
that material information relating to the Company would be made known to them by
individuals within those entities, particularly during the period in which this
annual report was being prepared and that information required to be disclosed
in the Company's SEC reports is recorded, processed, summarized, and reported
within the time periods specified in the SEC's rules and forms.
28
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.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
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
---------------------------
Not applicable.
29
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
----------------------------------------------------------------
The following table sets forth information as to persons who currently serve as
IPA's directors or executive officers, including their ages as of May 18, 2010.
Name Age Position
------------------------------------ ------------------------- ---------------------------
Brenda D. Webb 63 CEO, President, CFO &
Chairman of the Board
Jeffrey Compton 33 Director
Malcolm C. Davenport, V 58 Director
Redgie T. Green 57 Director
Changes in Management
During the year ended December 31, 2009, IPA had the following changes in
management:
o On January 8, 2009, Mr. Wesley F. Whiting resigned as a director.
o On March 18, 2009, Ms. Joy Gibbons resigned as CEO/President and
Director
o On April 8, 2009, Mr. Jeffrey Huitt resigned as the Chief Financial
Officer and Acting CEO of International Paintball. Mr. Jeffrey
Compton, was appointed acting interim Chief Executive Officer.
o On April 13, 2009, Mr. David Martinez resigned as Chief Operating
Officer.
o On April 13, 2009, Mr. Malcolm Davenport, IV was appointed as a
Director.
o On May 8, 2009, Mr. Jeffrey Huitt resigned as a Director.
o On June 16, 2009, Mr. Jeffrey Compton resigned as the Chief Executive
Officer.
o On June 17, 2009, Ms. Brenda Webb was appointed the Chief Executive
Officer & CFO of the Company.
Biographical Information
BRENDA D. WEBB, age 63, Chief Executive Officer, President, Chief Financial
Officer and Chairman of the Board
Ms. Webb has served as a Board Member of International Paintball since 2004. On
June 17, 2009, she was appointed the Chief Executive Officer of International
Paintball. Ms. Webb was employed with the Trust Company of Georgia where she
worked exclusively in the stock transfers department. She later spent nine years
as the Executive Assistant to the President at Bridan Industries, Inc. followed
by fourteen years in real estate sales and marketing. Ms. Webb is also and
entrepreneur as the owner of Picture This, a retailer and manufacturer of custom
picture framing products and services.
30
JEFF COMPTON, age 33, Director
Mr. Compton has experience in the management and banking sectors. He has more
recently focused his efforts in the electronic commerce and credit card
processing industry and currently is the managing partner of Stonestreet
Management. Before co-founding Stonestreet Management, He held executive
management positions in the private sector. He was Sr. V. P., Director of
Strategic Partnerships within the ISO Network for Paymentech Merchant
Services/Visa MasterCard. He was also responsible for National Sales, Agent
Recruiting, Association Services, Agent Bank / Partnership Development for a top
Processor in the NPC ISO Network. After co-founding Stonestreet Management in
early 2004, Stonestreet began to grow its corporate real estate holdings and
property management division. In 2006 after acquiring a modest portfolio of
merchant processing clients, the partners began a program to attract new sales
and clients. Mr. Compton attended Indiana University - Bloomington, University
of Southern Indiana - Evansville, and holds several professional licenses in
Indiana. From April 18, 2009 through June 16, 2009, Mr. Compton served as the
Chief Executive Officer of International Paintball.
MALCOLM C. DAVENPORT, V, CPA and JD, age 58, Director
Mr. Davenport previously served as a director of ITC Holding Company, Inc., a
West Point, Georgia-based private technology investment company. Some of the
companies which it founded and grew include Powertel, Inc., (acquired by Deutche
Telkom for $5.89 billion + assumption of $1.2 billion debt), Mindspring, Inc.
(merged with EarthLink {NASDAQ: ELNK}), E-Company Store, Inc., PreSolutions,
Inc., ASYNC, Inc., and Knology, Inc. {symbol NASDAQ: KNOL}. He also served as a
director for ITC DeltaCom, Inc. {OTC BB: ITCD}, a Competitive Local Exchange
Carrier (CLEC) company that is regionally significant in both the fiber and
direct long distance sale business in the southeast United States. Mr. Davenport
is licensed and active as an Attorney in the State of Georgia, and holds an
inactive license in Alabama as both an Attorney and as a Certified Public
Accountant.
REDGIE GREEN, age 57, Director
Mr. Green has served as a director of the Company, since March 2006. Mr. Green
has been Secretary and Director of Sun River Energy, Inc. since 1998. In January
2009, he was appointed the President of Sun River Energy, Inc. He has been an
investor in small capital and high-tech ventures since 1987. Mr. Green was a
director of Colorado Gold & Silver, Inc. in 2000. He was a director for Houston
Operating Company in late 2004 until December 2004. He served as a director for
Mountains West Exploration, Inc. in 2005-2006. He is a director of Concord
Ventures, Inc. (formerly Cavion Technologies, Inc.) (2006) and was appointed as
an officer and director of Captech Financial, Inc. in May 2006. He served as a
director of Baymark Technologies, Inc. 2005 to July 2007. He was appointed as a
director of Aspeon, Inc. since 2007 through December 2009. He has been appointed
a director of INTREorg Systems, Inc.
Our officers are spending up to 20 hours per week on our business at this time.
At such time as the Company is financially capable of paying salaries, it is
anticipated that management will assume full time roles in the Company's
operations and be paid accordingly or find additional managers that will be
accordingly.
Terms of Officers & Directors
Our directors hold office until the next special meeting of the shareholders and
until their successors have been duly elected and qualified. Our officers are
elected at the special meeting of the Board of Directors and hold office until
their successors are chosen and qualified or until their death, resignation, or
removal.
31
Committees of the Board of Directors
Our Company is managed under the direction of its board of directors. Our board
of directors plans to establish an audit and executive committees as soon as
practicable.
Conflicts of Interest
Our officers and directors will not devote more than a portion of their time to
our affairs. There will be occasions when the time requirements of our business
conflict with the demands of their other business and investment activities.
Such conflicts may require that we attempt to employ additional personnel. There
is no assurance that the services of such persons will be available or that they
can be obtained upon terms favorable to the Company.
Conflicts of Interest - General.
Certain of our officers and directors may be directors, officers and/or
principal shareholders of other companies and, therefore, could face conflicts
of interest with respect to potential acquisitions. In addition, our officers
and directors may in the future participate in business ventures, which could be
deemed to compete directly with us. Additional conflicts of interest and
non-arms length transactions may also arise in the future in the event our
officers or directors are involved in the management of any firm with which we
transact business. Our Board of Directors has adopted a policy that we will not
seek a merger with, or acquisition of, any entity in which management serve as
officers or directors, or in which they or their family members own or hold a
controlling ownership interest. Although the Board of Directors could elect to
change this policy, the Board of Directors has no present intention to do so.
Annual Meeting
Our annual meeting of our stockholders is expected to be held at a future date.
This will be an annual meeting of stockholders for the election of directors.
The annual meeting will be held at our principal office or at such other place
as permitted by the laws of the State of Colorado and on such date as may be
fixed from time to time by resolution of our board of directors.
ITEM 11. EXECUTIVE COMPENSATION
--------------------------------
The following table sets forth the officer compensation received during the last
three fiscal years, including salary, bonus and certain other compensation to
our Chief Executive Officer and named executive officers for the past three
fiscal years. In April 2009, Ms. Brenda Webb became the acting CEO/CFO of the
Company. She has not received any compensation for her services.
(REMAINDER OF PAGE LEFT BLANK INTENTIONALLY)
32
SUMMARY EXECUTIVES COMPENSATION TABLE
Non-equity Non-qualified
incentive deferred
Stock Option plan compensation All other
Salary Bonus awards awards compensation earnings compensation Total
Name & Position Year ($) ($) ($) ($) ($) ($) ($) ($)
------------------- ---------- -------- -------- -------- -------- ------------- --------------- -------------- --------
Brenda D. Webb,
CEO, President, 2009 0 0 0 0 0 0 0 0
CFO (1) 2008 0 0 $0 0 0 0 $2,000 $2,000
Joy Gibbons, 2009 0 0 0 0 0 0 0 0
Chief Executive 2008 0 0 $1,250 0 0 0 0 $1,250
Officer (2) 2007 0 0 $0 0 0 0 0 0
Jeff Huitt, CFO 2009 0 0 0 0 0 0 0 0
and Director and 2008 0 0 $1,000 0 0 0 0 $1,000
Acting 2007 0 0 $0 0 0 0 0 0
CEO/President (3)
David Martinez, 2009 0 0 0 0 0 0 0 0
Chief Operating 2008 0 0 $3,000 0 0 0 0 $3,000
Officer(4) 2007 0 0 $0 0 0 0 0 0
(1) On June 17, 2009, Ms. Brenda Webb was appointed the Chief Executive Officer
& CFO of the Company. During the year ended December 31, 2008, Ms. Webb received
200,000 shares of restricted common stock at $0.01 per share for $2,000 for her
services as a director of the Company.
(2) Ms. Gibbons received 125,000 restricted shares of common stock at $0.01 per
Share for services as CEO/President, during the year ended December 31, 2008.
Ms. Gibbons provided her services through her consulting company J H Gibbons,
LLC. The rate for these services was $ 50 per hour. Ms. Gibbons resigned as the
Chief Executive Officer and a director of the Company on March 18, 2009.
(3) Mr. Huitt received 300,000 restricted shares of common stock at $0.01 per
Share for his services as CEO, during the year ended December 31, 2008. Mr.
Huitt provided his services through Huitt Consulting which is the consulting
company under which CFO services are provided by Jeff Huitt. The rate for these
services was $50 per hour. Mr. Huitt resigned as an officer of the Company on
April 8, 2009.
(4) Mr. Martinez received 100,000 restricted shares of common stock at $0.01 per
share, during the year ended December 31, 2008. On April 13, 2009, Mr. David
Martinez resigned as Chief Operating Officer
Ms. Webb does not have an employment agreement with the Company.
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
IPA does not have a stock option plan as of the date of this filing. There was
no grant of stock options to the Chief Executive Officer and other named
executive officers during the fiscal years ended December 31, 2008 and 2009.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
There are no employment contracts, compensatory plans or arrangements, including
payments to be received from us, with respect to any of our directors or
executive officers which would in any way result in payments to any such person
because of his or her resignation, retirement or other termination of employment
with us, any change in control of us, or a change in the person's
responsibilities following such a change in control.
33
Compensation Committee Interlocks and Insider Participation
The IPA board of directors in its entirety acts as the compensation committee
for IPA.
Stock Option Plan
The Company does not have a stock option plan at this time.
Director Compensation
The following table sets forth certain information concerning compensation paid
to our directors for services as directors, but not including compensation for
services as officers reported in the "Summary Executives Compensation Table"
during the year ended December 31, 2009:
Non-equity
Fees incentive Nonqualified
earned Stock Option plan deferred
Name or paid awards ($) awards ($) compensation compensation All other
in cash ($) earnings compensation Total
($) ($) ($) ($)
---------------- ---------- ------------ ------------ ------------ ----------------- -------------- ---------
Redgie T. $ -0- $-0- -0- $ -0- $-0- $ -0- $ -0-
Green
Jeff Compton $ -0- $-0- -0- $ -0- $-0- $ -0- $-0-
Brenda D. Webb $ -0- $-0- -0- $ -0- $-0- $ -0- $-0-
Malcolm C. $ -0- $-0- -0- $ -0- $-0- $ -0- $-0-
Davenport
Joy Gibbons (1) $ -0- $-0- -0- $ -0- $-0- $ -0- $-0-
David Martinez $ -0- $-0- -0- $ -0- $-0- $ -0- $-0-
(2)
Jeffrey Huitt $ -0- $-0- -0- $ -0- $-0- $ -0- $-0-
(3)
Wesley Whiting $ -0- $-0- -0- $ -0- $-0- $ -0- $-0-
(4)
(1) Ms. Gibbons resigned as the Chief Executive Officer and a director of
the Company on March 18, 2009.
(2) Mr. Martinez resigned as an officer and director of the Company on
April 13, 2009.
(3) Mr. Huitt resigned as a director of the Company on May 8, 2009.
(4) Mr. Whiting resigned as a director in January 2009.
All of our officers and/or directors will continue to be active in other
companies. All officers and directors have retained the right to conduct their
own independent business interests.
34
It is possible that situations may arise in the future where the personal
interests of the officers and directors may conflict with our interests. Such
conflicts could include determining what portion of their working time will be
spent on our business and what portion on other business interest. To the best
ability and in the best judgment of our officers and directors, any conflicts of
interest between us and the personal interests of our officers and directors
will be resolved in a fair manner which will protect our interests. Any
transactions between us and entities affiliated with our officers and directors
will be on terms which are fair and equitable to us. Our Board of Directors
intends to continually review all corporate opportunities to further attempt to
safeguard against conflicts of interest between their business interests and our
interests.
We have no intention of merging with or acquiring an affiliate, associated
person or business opportunity from any affiliate or any client of any such
person.
We have agreed to pay $500 for Directors fees for meeting attendance, however,
the payment of those fees are waived when the cash financial situation of the
Company does not have funds to pay. Stock maybe issued in lieu of cash payments
from time to time. An Audit Committee has yet to be established therefore no
compensation has been paid for this function.
Indemnification Of Directors And Officers
Under our Articles of Incorporation and By-Laws, we may indemnify an officer or
director who is made a party to any proceeding, including a lawsuit, because of
his position, if he acted in good faith and in a manner he reasonably believed
to be in our best interest. No officer or director may be may be indemnified,
however, where the officer or director acted committed intentional misconduct,
fraud, or an intentional violation of the law.
We may advance expenses incurred in defending a proceeding. To the extent that
the officer or director is successful on the merits in a proceeding as to which
he is to be indemnified, our must indemnify him against all expenses incurred,
including attorney's fees. With respect to a derivative action, indemnity may be
made only for expenses actually and reasonably incurred in defending the
proceeding, and if the officer or director is judged liable, only by a court
order. The indemnification is intended to be to the fullest extent permitted by
the laws of the State of Colorado.
Regarding the indemnification for liabilities arising under the Securities Act
of 1933, which may be permitted to officers and directors under Colorado law, we
are informed that, in the opinion of the Securities and Exchange Commission,
indemnification is against public policy, as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities is asserted by our officer(s), director(s), or controlling
person(s) in connection with the securities being registered, we will, unless in
the opinion of our legal counsel the matter has been settled by controlling
precedent, submit the question of whether such indemnification is against public
policy to a court of appropriate jurisdiction. We will then be governed by the
court's decision.
EQUITY COMPENSATION PLAN INFORMATION
The Company has not established an equity compensation plan or Incentive Stock
Option Plan.
35
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
--------------------------------------------------------------------------------
RELATED STOCKHOLDER MATTERS.
---------------------------
The following table sets forth information with respect to the beneficial
ownership of IPA outstanding common stock by:
o each person who is known by IPA to be the beneficial owner of five
percent (5%) or more of IPA common stock;
o IPA chief executive officer, its other executive officers, and each
director as identified in the "Management -- Executive Compensation"
section; and
o all of the Company's directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock and options, warrants
and convertible securities that are currently exercisable or convertible within
60 days of the date of this document into shares of IPA common stock are deemed
to be outstanding and to be beneficially owned by the person holding the
options, warrants or convertible securities for the purpose of computing the
percentage ownership of the person, but are not treated as outstanding for the
purpose of computing the percentage ownership of any other person.
The information below is based on the number of shares of IPA common stock that
IPA believes was beneficially owned by each person or entity as of December 31,
2009.
There are currently 100,000,000 common shares authorized of which 10,499,166 are
outstanding.
Number of Shares of
Name and Address of Common Stock Percent of Class
Beneficial Owner (1) Beneficially Owned Beneficially Owned
--------------------------------------------------------- ------------------------ -----------------------
Brenda D. Webb, CEO, President, CFO and Chairman of the 1,300,000 12.38%
Board (2)
Jeff Compton, Director 25,000 0.24%
Malcolm Davenport, IV, Director 0 0%
Redgie Green, Director 25,000 0.24%
J.H. Brech, LLC (3) 1,000,000 9.53%
------------------------ -----------------------
All directors and executive officers as a group (four 1,350,000 12.86%
persons)
---------------------------------------------------------
(1) Except as noted above the business address for all listed individuals or
entities is International Paintball Association, Inc., 501Trophy Lake Drive, Ste
314, PMB 106, Trophy Club, TX 76262.
36
(2) Brenda Webb is a member of JH Brech, LLC, which owns 1,000,000 shares of
common stock and a convertible promissory note convertible into 418,540 shares
of the Company's common stock at December 31, 2009. Brenda Webb personally owns
300,000 shares. If all notes were converted Ms. Webb would own directly 300,000
shares and beneficially 1,418,540 for a total of 1,718,540.
(3) J. H. Brech, LLC owns 1,000,000 shares of common stock and holds a
convertible promissory note in the principal amount of $200,534. The convertible
promissory note provides for conversion of principal and accrued interest at
$0.50 per share. If such principal and accrued interest where converted at
December 31, 2009, J.H. Brech would receive 418,540 shares of common stock.
*Rule 13d-3 under the Securities Exchange Act of 1934 governs the determination
of beneficial ownership of securities. That rule provides that a beneficial
owner of a security includes any person who directly or indirectly has or shares
voting power and/or investment power with respect to such security. Rule 13d-3
also provides that a beneficial owner of a security includes any person who has
the right to acquire beneficial ownership of such security within sixty days,
including through the exercise of any option, warrant or conversion of a
security. Any securities not outstanding which are subject to such options,
warrants or conversion privileges are deemed to be outstanding for the purpose
of computing the percentage of outstanding securities of the class owned by such
person. Those securities are not deemed to be outstanding for the purpose of
computing the percentage of the class owned by any other person. The Company
does not have an options or warrants outstanding at December 31, 2009.
. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------
No current officer or director of our Company has or proposes to have any direct
or indirect material interest in any asset proposed to be acquired by us through
security holdings, contracts, options, or otherwise. There are no agreements
with the board of directors regarding potential business opportunities that may
become available with companies that may be affiliated with any member of the
board.
Prior to June 1, 2008, a related party, of which Ms. Webb, and officer and
director of the Company, is a member (JH Brech LLC) charged the Company $800 per
month plus direct expenses for office space. The Company terminated this
agreement on June 1, 2008 to reduce the expenses associated with office space.
As of December 31, 2009, the Company owed approximately $40,833 in accounts
payable to a related party, JH Brech LLC for consulting services J.H. Brech
consulting services included such activities as corporate development and
financial advisement.
Ms. Webb, an officer and director of the Company, is owed $5,833 at December 31,
2008 for services. In addition, Ms. Webb is a member of J.H. Brech, LLC, which
holds a convertible promissory note as discussed below.
In April 2009, a related party owed $200,534 for accounts payable agreed to
convert the amount owed to it into a Convertible Promissory Note. The
Convertible Promissory note is unsecured, has an interest rate of 6% and a due
date of April 10, 2010. The promissory note provides the holder with the right
to convert part or all of the outstanding principal and/or interest into shares
of the Company's common stock at a rate of $0.50 per share. At December 31,
2009, $200,534 was outstanding. During the year ended December 31 2009, interest
of $8,736 had been accrued.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
-----------------------------------------------
GENERAL. Ronald R. Chadwick, P.C. ("Chadwick") is the Company's principal
auditing accountant firm. The Company's Board of Directors has considered
whether the provisions of audit services are compatible with maintaining
Chadwick's independence.
37
The following table represents aggregate fees billed to the Company for the
years ended December 31, 2009 and December 31, 2008 by Ronald R. Chadwick, P.C.
Year Ended December 31,
2009 2008
----------------------------- ----------------------------
Audit Fees $10,750 $9,040
Audit-related Fees $0 $0
Tax Fees $0 $0
All Other Fees $0 $0
----------------------------- ----------------------------
Total Fees $10,750 $9,040
All audit work was performed by the auditors' full time employees.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
-------------------------------------------------
The following is a complete list of exhibits filed as part of this Form 10K.
Exhibit number corresponds to the numbers in the Exhibit table of Item 601 of
Regulation S-K.
(a) Audited financial statements for years ended December 31, 2009 and
2008
(b) Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation of International Paintball Association, Inc. (1)
3.2 Bylaws of International Paintball Association, Inc. (1)
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act (2)
32.1 Certification of Principal Executive/Accounting Officer pursuant to Section
906 of the Sarbanes-Oxley Act (2)
--------------------------------------------------------------------------------
(1) Incorporated by reference from the exhibits included in the Company's
Registration Statement on Form 10-12g filed with the Securities and Exchange
Commission (www.sec.gov), dated October 16, 2008. A copy can be provided by
mail, free of charge, by sending a written request to International Paintball
Association, Inc., 1510 Trophy Lake Drive, Suite 314, PMB 106, Trophy Club,
Texas 76262
(2) Filed herewith.
38
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(formerly 4-G PAINTBALL, INC.)
(A Development Stage Company)
Financial Statements
TABLE OF CONTENTS
Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS
Balance sheets 2
Statements of operations 3
Statements of cash flows 4
Statements of stockholders' equity 5
Notes to financial statements 7
RONALD R. CHADWICK, P.C.
Certified Public Accountant
2851 South Parker Road, Suite 720
Aurora, Colorado 80014
Telephone (303)306-1967
Fax (303)306-1944
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
International Paintball Association, Inc.
Trophy Club, Texas
I have audited the accompanying balance sheets of International Paintball
Association, Inc. (a development stage company) as of December 31, 2009 and 2008
and the related statements of operations, stockholders' equity and cash flows
for the years then ended and for the period from May 24, 2004 (inception of the
development stage) through 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 audit.
I conducted my audit in accordance with the 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 audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of International Paintball
Association, Inc. as of December 31, 2009 and 2008, and the results of its
operations and its cash flows for the years then ended and for the period from
May 24, 2004 (inception of the development stage) through December 31, 2009 in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements the Company has suffered recurring losses from operations
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Aurora, Colorado
R. Chadwick, P.C.
April 30, 2010
RONALD R. CHADWICK, P.C.
/s/Ronald R. Chadwick, P.C.
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(A Development Stage Company)
Balance Sheets
December 31,
---------------------------------
2009 2008
--------------- ----------------
(Audited) (Audited)
ASSETS:
Current Assets:
Cash $ 38 $ -
--------------- ----------------
Total Current Assets 38 -
Furniture & Fixtures (Net) - 61
--------------- ----------------
Total Fixed Assets - 61
--------------- ----------------
TOTAL ASSETS $ 38 $ 61
=============== ================
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities
Bank over draft $ - $ 17
Accounts Payable 176,834 148,934
Accounts Payable, related parties 40,833 167,348
Accrued liabilities 95,743 48,820
Notes payable 478,500
Note payable, convertible 200,534 478,500
--------------- ----------------
Total Current Liabilities 992,444 843,619
--------------- ----------------
Total liabilities 992,444 843,619
--------------- ----------------
--------------- ----------------
Stockholders' Deficit
Common Stock, no par value; 100,000,000 shares authorized
10,449,166 issued and outstanding at December 31, 2009 and 2008, respectively 930,358 930,358
Preferred Class A stock, no par value 240,000 shares authorized
No shares issued and outstanding at December 31, 2009 and 2008, respectively - -
Preferred Class B stock, no par value 1,600,000 shares authorized
No shares issued and outstanding at December 31, 2009 and 2008, respectively - -
Additional Paid-in Capital 124,371 124,371
Treasury Stock (40) (40)
Deficit accumulated during the development stage (2,047,095) (1,898,247)
--------------- ----------------
Total Stockholders' Deficit (992,406) (843,558)
--------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 38 $ 61
=============== ================
The accompanying notes are an integral part of these financial statements.
2
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(A Development Stage Company)
Statements of Operations
(Audited)
24-May-04
For the Year Ended (Inception) to
December 31, December 31,
2009 2008 2009
----------------- -------------- ------------------
Revenue $ - $ - $ 63,723
Cost of Goods Sold - - 36,479
----------------- -------------- ------------------
Gross Profit - - 27,244
Amortization and Depreciation 61 748 8,364
Write offs - - 109,415
General and administrative 101,786 158,857 1,803,737
----------------- -------------- ------------------
Total Expenses 101,847 159,605 1,921,516
----------------- -------------- ------------------
Net Operating Loss (101,847) (159,605) (1,894,272)
----------------- -------------- ------------------
Other Income (Expense)
Miscellaneous Income - - 4,052
Gain on debt settlement - - 15,100
Interest (47,001) (45,992) (171,975)
----------------- -------------- ------------------
Total Other Income (Expense) (47,001) (45,992) (152,823)
----------------- -------------- ------------------
Net Loss $ (148,848) $(205,597) $(2,047,095)
================= ============== ==================
Net Income/Loss per common share
equivalent $ (0.01) $ (0.02)
================= ==============
Weighted average number of common
shares equivalent outstanding 10,449,166 9,228,583
================= ==============
* Less than ($0.01) per share.
The accompanying notes are an integral part of these financial statements.
3
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Audited)
May 24, 2004
For the Year Ended (Inception) to
December 31, December 31,
2009 2008 2009
----------------- ----------------- -----------------
Cash Flows from Operating Activities
Net Profit (Loss) $ (148,848) $ (205,597) $ (2,047,095)
Depreciation 61 748 8,364
Compensatory stock issuances - 21,600 591,525
Option expense - 47,992
Write offs - 109,415
Adjustments to reconcile net loss to net cash used
by operating activities
Changes in operating assets and liabilities
Bank overdraft (17) 17 $ -
Increase in Accounts Payable and accrued liabilities 101,919 64,026 629,318
(Increase) / Decrease receivables and accruals 46,923 - 46,923
----------------- ----------------- -----------------
Net Cash Flows Used by Operating Activities 38 (119,206) (613,558)
----------------- ----------------- -----------------
Cash Flows from Investing Activities
Acquisition of Fixed Assets - - (8,364)
Notes receivable - - 12,000
----------------- ----------------- -----------------
Net Cash Flows Provided (Used) by Investing Activities - - 3,636
----------------- ----------------- -----------------
Cash Flows from Financing Activities
Funds received from note payables - 122,500 561,450
Payments of note payables - (3,500) (51,950)
Sales of common stock - - 100,500
Repurchase of treasury stock - - (40)
----------------- ----------------- -----------------
Net Cash Flows Provided by Financing Activities - 119,000 609,960
----------------- ----------------- -----------------
Net Increase (Decrease) in Cash 38 (206) 38
----------------- ----------------- -----------------
Cash at Beginning of Period - 206 -
----------------- ----------------- -----------------
Cash at End of Period $ 38 $ - $ 38
================= ================= =================
Supplemental Disclosure of Cash Flow Information
Cash paid for interest $ - $ 1,738 $ 15,129
================= ================= =================
Cash paid for taxes $ - $ - $ -
================= ================= =================
Supplemental Disclosure of Non-Cash Investing and Financing
Activities:
Common stock issued for services $ - $ 9,500 $ 530,500
================= ================= =================
Common stock issued for interest $ - $ 16,100 $ 61,025
================= ================= =================
Common stock issued for assets $ - $ - $ 100,000
================= ================= =================
Debt converted to capital $ - $ - $ 214,712
================= ================= =================
Accounts payable transferred to
convertible note payable $ 200,534 $ - $ -
================= ================= =================
The accompanying notes are an integral part of these financial statements.
4
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From May 24, 2004 (Inception) through December 31, 2009
Additional Deferred
Common Stock Preferred A Stock Preferred B Stock Paid-in Offering
# of Shares Amount # of Shares Amount # of Shares Amount Capital Expense
---------------------- --------------------- -------------------- --------- -----------
Balances - May 24, 2004 - $ - - $ - - $ - $ - $ -
June 2004 Stock issued for assets 200,000 100,000
June 2004 Stock issued for cash 8,000 1,000
June 2004 Stock issued for cash 240,000 30,000 139,000 69,500
Aug 2004 H Hill accrued salary 166,666 20,833
settlement for stock
Deferred options 50,714 (3,720)
Net Loss for period
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Balance - December 31, 2004 374,666 121,833 240,000 30,000 139,000 69,500 50,714 (3,720)
Stock for services, several @$.10-$.50 1,958,000 343,000
Stock for debt/settlement, several 235,000 117,500
@ $.50
Stock for interest, several @ $0.01 450,000 4,500
Treasury stock (200,000)
Deferred Offering Expense - Vested
Options 882
Vested options - Cancellations (2,722) 2,722
Paid-in Capital RP Debt Cancellation 76,379
Net Loss for period
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Balance - December 31, 2005 2,817,666 586,833 240,000 30,000 139,000 69,500 124,371 (116)
Stock for services, several @ $.50 350,000 175,000
Stock for interest, several @ $various 2,382,500 23,825
Deferred Offering Expense - Vested
Options 116
Net Loss for period
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Balance - December 31, 2006 5,550,166 785,658 240,000 30,000 139,000 69,500 124,371 -
Stock for interest, several @ $.01 2,060,000 20,600
Stock for services, several @ $.01 300,000 3,000
Net Loss for period
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Balance - December 31, 2007 7,910,166 809,258 240,000 30,000 139,000 69,500 124,371 -
Stock for interest, several @ $.01
@3/31/08 200,000 2,000
Stock for interest, several @ $.01
@6/30/08 170,000 1,700
Stock for interest, several @ $.01
@9/30/08 640,000 6,400
Stock for interest, several @ $.01
@12/31/08 200,000 2,000
Stock for services, several @ $.01
@ 3/31/08 700,000 7,000
Stock for services, several @ $.01
@ 9/30/08 250,000 2,500
03/12/08 Conversion of Class A & B to
common -
by Directors Meeting, one for one 379,000 99,500 (240,000) (30,000) (139,000) (69,500)
Net Loss for period
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Balances - December 31, 2008 10,449,166 930,358 - - - - 124,371 -
Net Loss for period
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Balances - December 31, 2009 10,449,166 $930,358 - $ - - $ - $124,371 $ -
=========== ========== ========== ========== ========= ========= ========= =========
5
The accompanying notes are an integral part of these financial statements.
(Continued)
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From May 24, 2004 (Inception) through December 31, 2009
Deficit
Accum. During
Treasury the Development
Stock Stage Totals
--------- ----------- ----------
Balances - May 24, 2004 $ - $ - $ -
June 2004 Stock issued for assets 100,000
June 2004 Stock issued for cash 1,000
June 2004 Stock issued for cash 99,500
Aug 2004 H Hill accrued salary 20,833
settlement for stock -
Deferred options 46,994
-
Net Loss for period (326,910) (326,910)
--------- ----------- ----------
Balance - December 31, 2004 - (326,910) (58,583)
Stock for services, several @$.10-$.50 343,000
Stock for debt/settlement, several 117,500
@ $.50 -
Stock for interest, several @ $0.01 4,500
Treasury stock (40) (40)
Deferred Offering Expense - Vested
Options 882
Vested options - Cancellations -
Paid-in Capital RP Debt Cancellation 76,379
-
Net Loss for period (690,979) (690,979)
--------- ----------- ----------
Balance - December 31, 2005 (40) (1,017,889) (207,341)
Stock for services, several @ $.50 175,000
Stock for interest, several @ $various 23,825
Deferred Offering Expense - Vested
Options 116
Net Loss for period (363,762) (363,762)
--------- ----------- ----------
Balance - December 31, 2006 (40) (1,381,651) (372,162)
Stock for interest, several @ $.01 20,600
Stock for services, several @ $.01 3,000
Net Loss for period (310,999) (310,999)
--------- ----------- ----------
Balance - December 31, 2007 (40) (1,692,650) (659,561)
Stock for interest, several @ $.01
@3/31/08 2,000
Stock for interest, several @ $.01
@6/30/08 1,700
Stock for interest, several @ $.01
@9/30/08 6,400
Stock for interest, several @ $.01
@12/31/08 2,000
Stock for services, several @ $.01
@ 3/31/08 7,000
Stock for services, several @ $.01
@ 9/30/08 2,500
03/12/08 Conversion of Class A & B to
common
by Directors Meeting, one for one -
Net Loss for period (205,597) (205,597)
--------- ----------- ----------
Balances - December 31, 2008 (40) (1,898,247) (843,558)
Net Loss for period (148,848) (148,848)
--------- ----------- ----------
Balances - December 31, 2009 $ (40) $(2,047,095) $(992,406)
========= =========== ==========
The accompanying notes are an integral part of these financial statements.
6
INTERNATIONAL PAINTBALL ASSOCIATION, INC.
(A Development Stage Company)
Notes to the Financial Statements
For the Years Ended December 31, 2009 and 2008
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
4-G Paintball, Inc. was incorporated in the State of Texas on May 24, 2004, and
on September 16, 2008 was redomiciled as a Colorado corporation through a one
for one share exchange with its wholly owned subsidiary International Paintball
Association, Inc., which was incorporated in the State of Colorado on June 19,
2008. 4-G Paintball, Inc. and International Paintball Association, Inc. are
referred to hereinafter as (the "Company"). The Company was organized to further
the interest and participation in the sport of paintball competition and to
operate paintball competition arenas. Also, the Company may pursue any other
lawful business opportunity as decided upon by the board of directors.
The Company's fiscal year end is December 31.
Basis of presentation - development stage company
-------------------------------------------------
The Company has not earned significant revenues from limited operations.
Accordingly, the Company's activities have been accounted for as those of a
"Development Stage Enterprise" as set forth in ASC 915. Among the disclosures
required by ASC 915 are that the Company's financial statements be identified as
those of a development stage company, and that the statements of operations,
stockholders' equity and cash flows disclose activity since the date of the
Company's inception.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Cash and cash equivalents
-------------------------
The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
7
Accounts receivable
-------------------
The Company reviews accounts receivable periodically for collectability and
establishes an allowance for doubtful accounts and records bad debt expense when
deemed necessary. At December 31, 2009 and 2008 the Company had no balance in
its allowance for doubtful accounts.
Property and equipment
----------------------
Property and equipment are recorded at cost and depreciated under straight line
methods over each item's estimated useful life. The Company uses a five year
life for furniture and fixtures, and three years for computer equipment.
Revenue recognition
-------------------
Revenue is recognized on an accrual basis after services have been performed or
products sold under contract terms, the price to the client is fixed or
determinable, and collectibility is reasonably assured.
Advertising costs
-----------------
Advertising costs are expensed as incurred. The Company did not record any
advertising costs during the year ended December 31, 2009 and 2008.
Income tax
----------
The Company accounts for income taxes pursuant to ASC 740. Under ASC 740
deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss
carryforwards and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
Net income (loss) per share
---------------------------
The net income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon the conversion of the Company's
preferred stock (if any), are not included in the computation if the effect
would be anti-dilutive and would increase the earnings or decrease loss per
share.
Financial Instruments
---------------------
The carrying value of the Company's financial instruments, as reported in the
accompanying balance sheets, approximates fair value.
8
Long-Lived Assets
-----------------
In accordance with FASB ASC No.'s 350 and 360, the Company regularly reviews the
carrying value of intangible and other long-lived assets for the existence of
facts or circumstances, both internally and externally, that may suggest
impairment. If impairment testing indicates a lack of recoverability, an
impairment loss is recognized by the Company if the carrying amount of a
long-lived asset exceeds its fair value.
Segment information
-------------------
The Company is structured to operate primarily in a single operating segment,
namely the competition arena of paintball sports and the furthering of private
and commercial interests in the activity.
Stock based compensation
------------------------
The Company follows FASB Accounting Standards Codification No. 718 -
Compensation - Stock Compensation for share based payments to employees. The
Company follows FASB Accounting Standards Codification No. 505 for share based
payments to Non-Employees, whereby equity instruments issued to employees for
services are recorded based on the fair value of the instrument issued and those
issued to non-employees are recorded based on the fair value of the
consideration received or the fair value of the equity instrument, whichever is
more reliably measurable.
Recent Accounting Pronouncements
--------------------------------
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. measurable.
NOTE 2. GOING CONCERN
The Company has suffered recurring losses from operations and has a working
capital deficit and stockholders' deficit, and in all likelihood will be
required to make significant future expenditures in connection with continuing
marketing efforts along with general administrative expenses. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern.
The Company may raise additional capital through the sale of its equity
securities, through an offering of debt securities, or through borrowings from
individuals and financial institutions. By doing so, the Company hopes through
increased marketing efforts to generate revenues from the operation of
competition paintball arenas and sales of related products. Management believes
that actions presently being taken to obtain additional funding provide the
opportunity for the Company to continue as a going concern.
NOTE 3. FIXED ASSETS
Fixed asset values recorded at cost are as follows:
December 31, December 31,
2009 2008
---- ----
Computer equipment $ 4,622 $ 4,622
Furniture and fixtures 3,742 3,742
----------- ------------
8,364 8,364
Less accumulated depreciation (8,634) (8,303)
------------ ------------
Total $ - $ 61
============= =============
9
During the year ended December 31, 2009, the Company fully depreciated its fixed
assets.
NOTE 4. INCOME TAXES
Deferred income taxes arise from the temporary differences between financial
statement and income tax recognition of net operating losses. These loss
carryovers are limited under the Internal Revenue Code should a significant
change in ownership occur.
At December 31, 2009 and 2008 the Company had net operating loss carryforwards
of approximately $2,000,000 and $1,900,000 which begin to expire in 2024. The
deferred tax asset of $667,000 and $609,000 created by the net operating losses
has been offset by a 100% valuation allowance. The change in the valuation
allowance in 2009 and 2008 was $58,000 and $79,000.
NOTE 5. NOTES PAYABLE
At December 31, 2009, the Company had $478,500 in outstanding notes payable to
various individuals, unsecured, bearing interest at 6% - 9% per annum, due in
full on term expiration, with all amounts at each date either presently due or
due within one year. The Company incurred interest expense under the notes
during the year ended December 31, 2009 and 2008 of $38,265 and $45,992,
respectively.
NOTE 6. NOTES PAYABLE, CONVERTIBLE
In April 2009, a related party owed $200,534 for accounts payable agreed to
convert the amount owed to it into a Convertible Promissory Note. The
Convertible Promissory note is unsecured, has an interest rate of 6% and a due
date of April 10, 2010. The promissory note provides the holder with the right
to convert part or all of the outstanding principal and/or interest into shares
of the Company's common stock at a rate of $0.50 per share. At December 31,
2009, $200,534 was outstanding. During the year ended December 31 2009, interest
of $8,736 had been accrued.
NOTE 7. STOCKHOLDERS' EQUITY
Common stock
------------
The Company has 100,000,000 shares of authorized common stock, no par value,
with 10,449,166 shares issued and outstanding as of December 31, 2009 and
December 31, 2008, with 200,000 shares in treasury at each date.
Stock options
-------------
At December 31, 2009 and 2008, the Company had stock options outstanding as
described below.
Non-employee stock options
The Company accounts for non-employee stock options under FASB Accounting
Standards Codification No. 505 whereby option costs are recorded based on the
fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable. Unless otherwise
provided for, the Company covers option exercises by issuing new shares. The
Company has no non-employee stock options outstanding.
10
Employee stock options
----------------------
The Company accounts for employee stock options under FASB Accounting Standards
Codification No. 718 - Compensation - Stock Compensation. Unless otherwise
provided for, the Company covers option exercises by issuing new shares. At the
beginning of 2008 the Company had 5,000 options outstanding and exercisable.
During the years ended December 31, 2009 and 2008, no options were granted,
exercised or cancelled, leaving a balance at December 31, 2009 and 2008 of 5,000
outstanding employee stock options.
NOTE 8. CONTINGENCIES
A law firm which has represented the Company on various matters, has asserted
that the Company owes the firm approximately $13,000 more in legal fees than the
Company has recorded. The Company and the law firm are currently in discussions
over what, if any additional fees are owed.
A former director claims the Company owes her an additional $24,425 over what
the Company has recorded. The Company disputes the assertion.
NOTE 9. SUBSEQUENT EVENTS
The Company evaluated events through April 30, 2010 for subsequent events to be
included in its December 31, 2009 financial statements herein, and has
determined that there are no subsequent events that require disclosure.
11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
/s/ Brenda D. Webb May 24, 2010
------------------------------------------------------------
Brenda D. Webb
(Principal Executive Officer/ Principal
Accounting Officer/ Chief Executive Officer and President,
Chief Financial Officer )
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
/s/ Brenda D. Webb May 24, 2010
------------------------------------------------------------
Brenda D. Webb, Chairman of the Board
/s/ Jeff Compton May 24, 2010
------------------------------------------------------------
Jeff Compton, Director
/s/ Malcolm C. Davenport, V May 24, 2010
------------------------------------------------------------
Malcolm C. Davenport, V, Director
/s/ Redgie T. Green May 24, 2010
------------------------------------------------------------
Redgie T. Green, Director
3
