U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-K

 

(Mark One)

 

x ANNUAL REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2011

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________ to ______________

 

Commission File Number 000-52330

_______________________________________________

 

RFG Acquisition II Inc.

(Exact name of registrant as specified in its charter)

____________________

 

Delaware	35-2277305
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

 

c/o Stamell & Schager, LLP, 1 Liberty Plaza 35^th Floor, New York, NY 10006

---

 (Address of principal executive offices) 

 

(212) 566-4047 

---

(Registrant’s telephone number, including area code) 

  

---

 

Securities registered under Section 12(b) of the Exchange Act:

 

None.

 

Securities registered under Section 12(g) of the Exchange Act:

 

Common Stock, $0.0001 par value per share

---

(Title of Class)

 

Check whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

 

Check whether the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ¨ No x

 

Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 x No ¨

 

 

 

Check 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 (§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 x No ¨

 

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this chapter) contained herein, and no disclosure will 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

 

Check 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
(Do not check if a smaller reporting company.)

  

Check whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

 

As of December 31, 2011, there were no non-affiliate holders of common stock of the Company.

 

APPLICABLE ONLY TO CORPORATE REGISTRANTS

 

As of April 2, 2012, there were 2,500,000 shares of common stock, par value $.0001, outstanding.

 

 

FORWARD-LOOKING STATEMENTS

 

Certain statements made in this Annual Report on Form 10-K are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of RFG Acquisition II, Inc. (the “Company”) to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

 

 

 

 

PART I

 

Item 1. Description of Business.

 

RFG Acquisition II Inc. (“we”, “us”, “our” or the “Company”) was incorporated in the State of Delaware on August 29, 2006 and maintains its principal executive offices at c/o Stamell & Schager, LLP, 1 Liberty Plaza, 35^th Floor, New York, NY 10006. Since inception, the Company has been engaged in organizational efforts and obtaining initial financing. The Company was formed as a vehicle to pursue a business combination through the acquisition of, or merger with, an operating business. The Company filed a registration statement on Form 10-SB with the U.S. Securities and Exchange Commission (the “SEC”) on November 22, 2006, and since its effectiveness, the Company has focused its efforts to identify a possible business combination. The Company selected December 31 as its fiscal year end.

 

The Company is currently considered to be a "blank check" company. The U.S. Securities and Exchange Commission (the “SEC”) defines those companies as "any development stage company that is issuing a penny stock, within the meaning of Section 3 (a)(51) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies." Under SEC Rule 12b-2 under the Exchange Act, the Company also qualifies as a “shell company,” because it has no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. The Company intends to comply with the periodic reporting requirements of the Exchange Act for so long as it is subject to those requirements.

 

The Company was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. The Company’s principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. The Company will not restrict its potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.

 

The analysis of new business opportunities will be undertaken by or under the supervision of Berry F. Cohen and Jared B. Stamell, both officers and directors of the Company. Since our Registration Statement on Form 10-SB went effective, our management has had contact and discussions with representatives of other entities regarding a business combination with us, however, as of this date, the Company has not entered into any definitive agreement with any party. The Company has unrestricted flexibility in seeking, analyzing and participating in potential business opportunities. In its efforts to analyze potential acquisition targets, the Company will consider the following kinds of factors:

 

(a) Potential for growth, indicated by new technology, anticipated market expansion or new products;

 

(b) Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;

 

(c) Strength and diversity of management, either in place or scheduled for recruitment;

 

(d) Capital requirements and anticipated availability of required funds, to be provided by the Company or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;

 

 

 

(e) The cost of participation by the Company as compared to the perceived tangible and intangible values and potentials;

 

(f) The extent to which the business opportunity can be advanced; and

 

(g) The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items.

 

In applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to the Company's limited capital available for investigation, the Company may not discover or adequately evaluate adverse facts about the opportunity to be acquired. In evaluating a prospective business combination, we will conduct as extensive a due diligence review of potential targets as possible given the lack of information which may be available regarding private companies, our limited personnel and financial resources and the inexperience of our management with respect to such activities. We expect that our due diligence will encompass, among other things, meetings with the target business’s incumbent management and inspection of its facilities, as necessary, as well as a review of financial and other information which is made available to us. This due diligence review will be conducted either by our management or by unaffiliated third parties we may engage, including but not limited to attorneys, accountants, consultants or such other professionals. At this time the Company has not specifically identified any third parties that it may engage. The costs associated with hiring third parties to complete a business combination target may be significant and are difficult to determine as such costs may vary depending on a variety of factors, including the amount of time it takes to complete a business combination, the location of the target company and the size and the complexity of the target company. Our limited funds and the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a target business before we consummate a business combination. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if we had more funds available to us, would be desirable. We will be particularly dependent in making decisions upon information provided by the promoters, owners, sponsors or other associated with the target business seeking our participation.

 

The time and costs required to select and evaluate a target business and to structure and complete a business combination cannot presently be ascertained with any degree of certainty. The amount of time it takes to complete a business combination, the location of the target company and the size and complexity of the business of the target company are all factors that determine the costs associated with completing a business combination transaction. The time and costs required to complete a business combination transaction can be ascertained once a business combination target has been identified. Any costs incurred with respect to evaluation of a prospective business combination that is not ultimately completed will result in a loss to us.

 

Competition

 

In identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business objective similar to ours. There are numerous “public shell” companies either actively or passively seeking operating businesses with which to merge in addition to a large number of “blank check” companies formed and capitalized specifically to acquire operating businesses. Additionally, we are subject to competition from other companies looking to expand their operations through the acquisition of a target business. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. Our ability to compete in acquiring certain sizable target businesses is limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of a target business. Further, our outstanding warrants and the future dilution they potentially represent may not be viewed favorably by certain target businesses.

 

 

 

Any of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our management believes, however, that our status as a public entity and potential access to the United States public equity markets may give us a competitive advantage over privately-held entities with a business objective similar to ours to acquire a target business on favorable terms.

 

If we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the target business. Many of our target business’ competitors are likely to be significantly larger and have far greater financial and other resources than we will. Some of these competitors may be divisions or subsidiaries of large, diversified companies that have access to financial resources of their respective parent companies. Our target business may not be able to compete effectively with these companies or maintain them as customers while competing with them on other projects. In addition, it is likely that our target business will face significant competition from smaller companies that have specialized capabilities in similar areas. We cannot accurately predict how our target business’ competitive position may be affected by changing economic conditions, customer requirements or technical developments. We cannot assure you that, subsequent to a business combination, we will have the resources to compete effectively.

 

Form of Acquisition

 

The manner in which the Company participates in an opportunity will depend upon the nature of the opportunity, the respective needs and desires of the Company and the promoters of the opportunity, and the relative negotiating strength of the Company and such promoters.

 

It is likely that the Company will acquire its participation in a business opportunity through the issuance of common stock or other securities of the Company. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called "tax free" reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code") depends upon whether the owners of the acquired business own 80% or more of the voting stock of the surviving entity. If a transaction were structured to take advantage of these provisions rather than other "tax free" provisions provided under the Code, all prior stockholders would in such circumstances retain 20% or less of the total issued and outstanding shares of the surviving entity. Under other circumstances, depending upon the relative negotiating strength of the parties, prior stockholders may retain substantially less than 20% of the total issued and outstanding shares of the surviving entity. This could result in substantial additional dilution to the equity of those who were stockholders of the Company prior to such reorganization.

 

The present stockholders of the Company will likely not have control of a majority of the voting securities of the Company following a reorganization transaction. As part of such a transaction, the Company’s sole director may resign and one or more new directors may be appointed without any vote by stockholders.

 

In the case of an acquisition, the transaction may be accomplished upon the sole determination of management without any vote or approval by stockholders. In the case of a statutory merger or consolidation directly involving the Company, it will likely be necessary to call a stockholders' meeting and obtain the approval of the holders of a majority of the outstanding securities. The necessity to obtain such stockholder approval may result in delay and additional expense in the consummation of any proposed transaction and will also give rise to certain appraisal rights to dissenting stockholders. Most likely, management will seek to structure any such transaction so as not to require stockholder approval.

 

It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial cost for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation might not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to the Registrant of the related costs incurred.

 

 

We presently have no employees apart from our management. Our officers and sole director are engaged in outside business activities and anticipate that they will devote to our business very limited time until the acquisition of a successful business opportunity has been identified. We expect no significant changes in the number of our employees other than such changes, if any, incident to a business combination.

Item 1A. Risk Factors.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

Item 1B. Unresolved Staff Comments.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

Item 2. Description of Property.

 

The Company neither rents nor owns any properties. The Company utilizes the office space and equipment of its management at no cost. Management estimates such amounts to be immaterial. The Company currently has no policy with respect to investments or interests in real estate, real estate mortgages or securities of, or interests in, persons primarily engaged in real estate activities.

 

Item 3. Legal Proceedings.

 

There are no material pending legal proceedings to which the Company, any executive officer, any owner of record or beneficially of more than five percent of any class of voting securities is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

PART II

 

Item 5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities.

 

Common Stock

 

Our Certificate of Incorporation authorizes the issuance of up to 100,000,000 shares of common stock, par value $.0001 per share (the “Common Stock”). The Common Stock is not listed on a publicly-traded market. As of April 2, 2012, there was 1 holder of record of the Common Stock.

 

 

 

Preferred Stock

 

Our Certificate of Incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock, par value $.0001 per share (the “Preferred Stock”). The Company has not yet issued any of its preferred stock.

 

Dividend Policy

 

          The Company has not declared or paid any cash dividends on its common stock and does not intend to declare or pay any cash dividend in the foreseeable future. The payment of dividends, if any, is within the discretion of the Board of Directors and will depend on the Company’s earnings, if any, its capital requirements and financial condition and such other factors as the Board of Directors may consider.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

The Company does not have any equity compensation plans or any individual compensation arrangements with respect to its common stock or preferred stock. The issuance of any of our common or preferred stock is within the discretion of our Board of Directors, which has the power to issue any or all of our authorized but unissued shares without stockholder approval.

 

Recent Sales of Unregistered Securities

 

On September 16, 2011, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") pursuant to which the Company issued and sold an aggregate of 2,500,000 shares of the common stock, par value $0.0001 per share (the "Common Stock") of the Company to Granite Investor Group, Inc. ("Granite") for an aggregate purchase price equal to $25,000 (the "Purchase Price").

 

The proceeds from the sale were used to repurchase an aggregate of 2,500,000 shares of the Company's Common Stock from John W. Branch, the Company's Secretary and Richard F. Beston, Jr., the Company's President and sole director immediately prior to the transaction, for an aggregate repurchase price equal to $25,000, pursuant to the terms and conditions of a repurchase agreement, dated September 16, 2011 (the "Repurchase Agreement").

 

No brokers or finders were used and no commissions or other fees have been paid by the Company in connection with the sale of securities.  The sale of stock was made in reliance upon the exemption from registration promulgated by Section 4(2) under the Securities Act of 1933, as amended.

 

The descriptions of the Purchase Agreement and the Repurchase Agreement herein are summaries and are qualified in their entirety by the provisions of the Purchase Agreement and the Repurchase Agreement, copies of which were attached as exhibits to the Company’s Current Report on Form 8-K filed with the SEC on September 22, 2011 and incorporated herein by reference.

 

Issuer Purchases of Equity Securities

 

None.

 

Item 6. Selected Financial Data.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

 

 

 

The Company was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. The Company will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.

 

The Company currently does not engage in any business activities that provide cash flow. During the next twelve months we anticipate incurring costs related to:

 

(i)

filing Exchange Act reports, and

(ii)

investigating, analyzing and consummating an acquisition.

 

We believe we will be able to meet these costs through use of funds in our treasury, through deferral of fees by certain service providers and additional amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors. As of the date of the period covered by this report, the Company has no funds in its treasury. There are no assurances that the Company will be able to secure any additional funding as needed. Currently, however our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our ability to continue as a going concern is also dependant on our ability to find a suitable target company and enter into a possible reverse merger with such company. Management’s plan includes obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances, however there is no assurance of additional funding being available.

 

The Company may consider acquiring a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading market for its shares while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.

 

Since our Registration Statement on Form 10-SB went effective, our management has had contact and discussions with representatives of other entities regarding a business combination with us. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks. Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.

 

The Company anticipates that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

 

 

 

Liquidity and Capital Resources

 

As of December 31, 2011, the Company has no assets. This compares with assets of $66, comprised exclusively of cash, as of December 31, 2010. The Company’s liabilities as of December 31, 2011 totaled $10,308, comprised exclusively of loans payable to stockholders. This compares with total liabilities of $124,954, comprised of accounts payable, accrued expenses, loans payable to stockholders and accrued interest payable, as of December 31, 2010. The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months.

 

The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for the years ended December 31, 2011 and 2010, and for the cumulative period from August 29, 2006 (Inception) to December 31, 2011.

 

		Fiscal Year Ended December 31, 2011				Fiscal Year Ended December 31, 2010				For the Cumulative Period from August 29, 2006 (Inception) to December 31, 2011
Net Cash (Used in) Operating Activities		$	(26,274	)		$	(25,715	)		$	(167,718	)
Net Cash (Used in) Investing Activities			-				-				-
Net Cash Provided by Financing Activities		$	26,208			$	24,500			$	167,718
Net Increase (Decrease) in Cash		$	(66	)		$	(1,215	)			-

 

The Company has nominal assets and has generated no revenues since inception. The Company is also dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its business plan of seeking a combination with a private operating company. We believe we will be able to meet these costs through additional borrowing from the existing line of credit agreements. In addition, the Company is dependent upon certain related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.

 

Results of Operations

 

The Company has not conducted any active operations since inception, except for its efforts to locate suitable acquisition candidates. No revenue has been generated by the Company from August 29, 2006 (Inception) to December 31, 2011. It is unlikely the Company will have any revenues unless it is able to effect an acquisition or merger with an operating company, of which there can be no assurance. It is management's assertion that these circumstances may hinder the Company's ability to continue as a going concern.  The Company’s plan of operation for the next twelve months shall be to continue its efforts to locate suitable acquisition candidates. 

 

 

 

For the fiscal year ended December 31, 2011, the Company had a net loss of $29,103, consisting of legal, accounting, audit, and other professional service fees incurred in relation to the preparation and filing of the Company’s periodic reports and general, administrative, and interest expenses.

 

For the fiscal year ended December 31, 2010, the Company had a net loss of $30,732, consisting of legal, accounting, audit, and other professional service fees incurred in relation to the preparation and filing of the Company’s periodic reports and general, administrative, and interest expenses.

 

For the cumulative period from August 29, 2006 (Inception) to December 31, 2011, the Company had a net loss of $183,991 comprised of legal, accounting, audit, and other professional service fees incurred in relation to the formation of the Company, the filing of the Company’s Registration Statement on Form 10-SB in November of 2006, the preparation and filing of the Company’s periodic reports, and general, administrative, and interest expenses.

 

Off-Balance Sheet Arrangements

 

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Contractual Obligations

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

Item 8. Financial Statements and Supplementary Data.

 

            Audited financial statements begin on the following page of this report.

 

 

RFG ACQUISITION II INC.

(A Development Stage Company)

 

Table of Contents

December 31, 2011

 

 

		Page
Report of Independent Registered Public Accounting Firm		F-2
Financial Statements:
Balance Sheets		F-3
Statements of Operations		F-4
Statements of Stockholders’ Equity (Deficiency)		F-5
Statements of Cash Flows		F-6
Notes to Financial Statements		F-7 to F-10

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders of

RFG Acquisition II, Inc.

New York, NY

 

We have audited the accompanying balance sheets of RFG Acquisition II, Inc. (a development stage company) (the “Company”) as of December 31, 2011, and 2010, and the related statements of operations, stockholders’ equity/(deficiency), and cash flows for each of the years in the two-year period ended December 31, 2011, and the cumulative period August 29, 2006 (inception) through December 31, 2011. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of RFG Acquisition II, Inc. as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2011, and the cumulative period August 29, 2006 (inception) through December 31, 2011, 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 3 to the financial statements, the Company is in the development stage and has incurred net losses from inception. This raises substantial doubt about its ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

 

 

/s/ Raich Ende Malter & Co. LLP

Raich Ende Malter & Co. LLP

New York, New York

March 30, 2012

 

 

RFG ACQUISITION II INC.

(A Development Stage Company)

Balance Sheets

 

		December 31, 2011				December 31, 2010
Assets
Current Assets
Cash		$	-			$	66
Total Assets		$	-			$	66
Liabilities and Stockholders' (Deficiency)
Current Liabilities
Accounts payable and accrued expenses		$	-			$	400
Total Current Liabilities			-				400
Long Term Liabilities
Loan payable - stockholders			10,308				111,510
Accrued interest payable			-				13,044
Total Long Term Liabilities			10,308				124,554
Total Liabilities			10,308				124,954
Commitments and Contingencies			-				-
Stockholders' (Deficiency)
Preferred stock, $.0001 par value; 10,000,000 shares authorized;
none issued and outstanding			-				-
Common stock, $.0001 par value; 100,000,000 shares
authorized; 2,500,000 shares issued and outstanding			250				250
Additional paid-in capital			173,433				29,750
Deficit accumulated during the development stage			(183,991	)			(154,888	)
Total Stockholders' (Deficiency)			(10,308	)			(124,888	)
Total Liabilities and Stockholders' Equity/(Deficiency)		$	-			$	66

 

 

See Notes to Financial Statements

 

 

 

 

RFG ACQUISITION II INC.

(A Development Stage Company)

Statements of Operations

  

		For the Year Ended December 31, 2011				For the Year Ended December 31, 2010				For the Period August 29, 2006 (Inception) Through December 31, 2011
Revenues		$	-			$	-			$	-
General and administrative expenses		$	29,930			$	25,960			$	171,774
(Loss) before other income/expenses			(29,930	)			(25,960	)			(171,774	)
Other (income)			(4,056	)			-				(4,056	)
Interest expense			3,229				4,772				16,273
Loss before benefit from income taxes			(29,103	)			(30,732	)			(183,991	)
Benefit from income taxes			-				-				-
Net (Loss)		$	(29,103	)		$	(30,732	)		$	(183,991	)
Basic and Diluted (Loss) Per Share		$	(0.01	)		$	(0.01	)
Weighted Average Number of Common Shares Outstanding - Basic and Diluted			2,500,000				2,500,000

  

See Notes to Financial Statements 

 

 

RFG ACQUISITION II INC.

(A Development Stage Company)

Statements of Stockholders’’ Equity/(Deficiency)

For the Period August 29, 2006 (Inception) Through December 31, 2011

 

		Preferred Stock								Common Stock								Subscription				Additional Paid-in				Deficit Accumulated During the Development				Stockholders' Equity/
		Shares				Amount				Shares				Amount				Receivable				Capital				Stage				(Deficiency)
August 29, 2006 - common stock subscription			-			$	-				2,500,000			$	250			$	(250	)		$	-			$	-			$	-
August 31, 2006 – contributed capital			-				-				-				-				250				29,750				-				30,000
Net (Loss)			-																								(28,511	)			(28,511	)
Balance at December 31, 2006			-				-				2,500,000				250				-				29,750				(28,511	)			1,489
Net (Loss)			-				-				-				-				-				-				(34,932	)			(34,932	)
Balance at December 31, 2007			-				-				2,500,000				250								29,750				(63,443	)			(33,443	)
Net (Loss)			-				-				-				-				-				-				(30,801	)			(30,801	)
Balance at December 31, 2008			-				-				2,500,000				250				-				29,750				(94,244	)			(64,244	)
Net (Loss)			-				-				-				-				-				-				(29,912	)			(29,912	)
Balance at December 31, 2009			-				-				2,500,000				250								29,750				(124,156	)			(94,156	)
Net (Loss)			-				-				-				-				-				-				(30,732	)			(30,732	)
Balance at December 31, 2010			-				-				2,500,000				250				-				29,750				(154,888	)			(124,888	)
September 16, 2011- Conversion of Loans Payable and Related Accrued Interest to Additional Paid-In Capital			-				-				-				-				-				143,683				-				143,683
September 16, 2011-Sale of Common Stock			-				-				2,500,000				250				-				24,750				-				25,000
September 16, 2011-Purchase of Common Stock			-				-				(2,500,000	)			(250	)			-				(24,750	)			-				(25,000	)
Net (loss)			-				-				-				-				-				-				(29,103	)			(29,103	)
Balance at December 31, 2011			-			$	-				2,500,000			$	250			$	-			$	173,433			$	(183,991	)		$	(10,308	)

  

See Notes to Financial Statements 

 

 

RFG ACQUISITION II INC.

(A Development Stage Company)

Statements of CASH FLOWS

 

		For the Year Ended December 31, 2011				For the Year Ended December 31, 2010				For the Period August 29, 2006 (Inception) Through December 31, 2011
Cash Flows from Operating Activities
Net (loss)		$	(29,103	)		$	(30,732	)		$	(183,991	)
Adjustments to reconcile net (loss) to net cash used in operating activities:
(Decrease)/increase in accounts payable
and accrued expenses			(400	)			245				-
(Decrease)/ Increase in accrued interest payable			3,229				4,772				16,273
Net cash (used in) operating activites			(26,274	)			(25,715	)			(167,718	)
Cash Flows from Financing Activities
Professional fees paid by related party on behalf of the Company			7,500								7,500
Proceeds from issuance of common stock			25,000				-				55,000
Redemption of common stock			(25,000	)			-				(25,000	)
Proceeds from stockholder loans			18,708				24,500				130,218
Net cash provided by financing activities			26,208				24,500				167,718
Net (decrease) in cash			(66	)			(1,215	)			-
Cash at beginning of period			66				1,281				-
Cash at end of period		$	-			$	66			$	-
Supplemental Disclosures of Cash Flow Information
Non-cash Financing Activities:
Conversion of loan payable - stockholders and related accrued interest to additional paid-in capital		$	136,183			$	-			$	136,183
Conversion of loans payable-related party to additional paid-in capital			7,500			$	-				7,500
		$	143,683			$	-			$	143,683

  

See Notes to Financial Statements 

 

 

RFG ACQUISITION II INC.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2011

 

NOTE 1 -

ORGANIZATION AND BUSINESS:

 

RFG Acquisition II Inc., a Development Stage Company, (the “Company”) was incorporated in the state of Delaware on August 29, 2006 with the objective to acquire, or merge with, an operating business.

 

The Company was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly traded corporation and, to a lesser extent, desires to employ the Company’s funds in its business. The Company’s principal business objective over the next twelve months and beyond will be to achieve long-term growth potential through a combination with a business rather than immediate short-term earnings. The Company will not restrict its potential target companies to any specific business, industry or geographical location. The analysis of business opportunities will be undertaken by, or under the supervision of, the officers and directors of the Company.

 

 

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a)

Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

(b)

Cash Equivalents:

The Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. There are no cash equivalents at the balance sheet dates.

 

(c)

Income Taxes:

The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting basis and the tax basis of the assets and liabilities and are measured using enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized.

 

The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a "more-likely-than-not" threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized.  The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. As December 31, 2011, the Company is unaware of any uncertain tax positions.

  

 

RFG ACQUISITION II INC.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2011

 

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued):

 

(d)

Loss per Common Share:

Basic loss per share is calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period. The Company did not have any potentially dilutive instruments during fiscal 2011 and 2010.

 

NOTE 3 -

GOING CONCERN:

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a development stage entity and has incurred a cumulative net loss from inception of approximately $184,000, which, among other factors, raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon management’s plan to find a suitable acquisition or merger candidate, raise additional capital from the sale of stock, receive additional loans from its stockholder, and ultimately, income from operations. The accompanying financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

.

NOTE 4 -

COMMON STOCK:

 

The Company is authorized to issue one hundred million (100,000,000) shares of common stock. On August 29, 2006 the Company sold two million five hundred thousand (2,500,000) shares of common stock to two investors for $250, which was paid on August 31, 2006.

 

NOTE 5 -

PREFERRED STOCK:

 

The Company is authorized to issue ten million (10,000,000) shares of $.0001 par value preferred stock with designations, voting and other rights and preferences as may be determined from time to time by the board of directors of the Company.

 

 

 

RFG ACQUISITION II INC.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2011

 

NOTE 6 -

INCOME TAXES:

 

As of December 31, 2011, the Company has net operating loss carryforwards of approximately $184,000 to reduce future federal and state taxable income through 2031.

 

The Company has approximately $55,000 and $44,000 in deferred tax assets at December 31, 2011 and 2010, respectively, resulting from net operating loss carryforwards. At December 31, 2011 and 2010, a valuation allowance has been recorded to fully offset these deferred tax assets because the future realization of the related income tax benefits is uncertain. The difference between the statutory tax rate of 34% and the effective tax rate of 0% is due to the surtax exemption and the change in the valuation allowance.

 

The Company currently has no federal or state tax examinations in progress nor has it had any federal or state examinations since its inception.

 

The earliest tax years that are subject to examination by taxing authorities by jurisdictions are as follows:

 

	Jurisdiction	Fiscal Year
	Federal	2008
	Delaware	2008

 

 

NOTE 7 -

LOAN PAYABLE STOCKHOLDERS:

 

On November 20, 2006, the Company entered into a line of credit agreement with its two stockholders, who were also officers of the Company. At September 16, 2011, the balance outstanding under these agreements was $119,910 plus accrued interest of $16,273. On September 16, 2011, the line of credit agreements were cancelled and the outstanding balance and accrued interest was converted to additional paid-in capital.

 

NOTE 8 -

RELATED PARTY TRANSACTIONS:

 

The Company utilizes the office space and equipment of its management at no cost.

 

On May 16, 2011, the Company entered into an agreement with Granite Investor Group, Inc. (“Granite”), that provided Granite, or an affiliate of Granite, with an option to purchase such number of common shares of the Company as shall be required to obtain control of the Company for an aggregate purchase price of $25,000, which would be used by the Company to repurchase the shares of common stock currently issued and outstanding. In accordance with the agreement, Granite agreed to reimburse the Company for expenses incurred after May 16, 2011, the date of the agreement, that relate to complying with reporting obligations pursuant to the Securities Exchange Act of 1934.

 

 

RFG ACQUISITION II INC.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2011

 

NOTE 8 -

RELATED PARTY TRANSACTIONS: (Continued):

 

Prior to the exercise of the option, Granite reimbursed the company a total of $4,056 which is reported as other income during the year ended December 31, 2011.

 

In connection with the exercise of the option, on September 16, 2011, the Company issued and sold an aggregate of 2,500,000 shares of Common Stock to Granite for an aggregate purchase price equal to $25,000, which amount was used to repurchase 2,500,000 shares of Common Stock held by Richard F. Beston, the Company's President and a director immediately prior to the transaction and  John W. Branch, the Company's Secretary immediately prior to the transaction, for an aggregate purchase price equal to $25,000. The repurchased shares were then cancelled. A change of control of the Company resulted upon the closing of the transaction. New officers were appointed to serve as President, Treasurer, and Secretary, effective upon resignation of Mr. Beston and Mr. Branch.

 

Professional fees in the amount of $7,500 were paid on behalf of the Company by Ten X Holdings, LLC (“Ten X”), an affiliate of the Company. The amount was unsecured, non-interest bearing and had no stipulated repayment terms. In accordance with the agreement entered into with Granite, a non-refundable deposit of $5,000, paid by Granite, was received by Ten X and applied to the outstanding loan balance. As of September 16, 2011, the outstanding balance of $2,500 was converted to paid-in capital.

 

As of September 16, 2011, the liability to Granite for the non-refundable deposit of $5,000, paid by Granite, was converted to additional paid-in capital.

 

During the year ended December 31, 2011, professional fees in the amount of $10,308 were paid on behalf of the Company by Granite. The outstanding balance of $10,308 is reported as loan payable – stockholder at December 31, 2011. The amount is unsecured, non-interest bearing and has no stipulated repayment terms.

 

NOTE 9 -

RECENT ACCOUNTING PRONOUNCEMENTS:

 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

 

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

There are not and have not been any disagreements between the Company and its accountants on any matter of accounting principles, practices or financial statement disclosure.

 

Item 9A. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

The Company’s management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

In accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was completed under the supervision and with the participation of the Company’s management, including the Company’s President, Principal Financial Officer and Secretary, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Annual Report. Based on that evaluation, the Company’s management including the President, Principal Financial Officer and Secretary, concluded that the Company’s disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms.

 

Evaluation of Internal Controls and Procedures

 

Our management is also responsible for establishing and maintaining adequate internal control over financial reporting.  The Company’s 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:

 

·

Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

·

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 only in accordance with authorizations of the Company’s management and sole director; and

·

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control over Financial Reporting – Guidance for Smaller Public Companies. Based on our assessment of those criteria, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2011.

 

 

 

This annual report does not include an attestation report of our registered public accounting firm regarding our internal controls over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to Section 404(c) of the Sarbanes-Oxley Act that permits us to provide only management’s report in this annual report.

 

Changes in Internal Controls over Financial Reporting

 

There have been no significant changes to the Company’s internal controls over financial reporting that occurred during our last fiscal quarter of the year ended December 31, 2011, that materially affected, or were reasonably likely to materially affect, our internal controls over financial reporting.

 

Item 9B. Other Information.

 

None

 

PART III

 

Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act.

 

(a) Identification of Directors and Executive Officers.

 

On September 16, 2011 (the “Closing Date”), we experienced a change in our board of directors and management pursuant to the terms and conditions of the Purchase Agreement. Pursuant to the Purchase Agreement, Richard F. Beston, the Company’s sole director prior to the Closing Date appointed Barry F. Cohen to serve as the President and Jared B. Stamell to serve as the Secretary and Treasurer of the Company, effective upon the resignation of Mr. Beston’s position as President of the Company, Mr. Branch’s resignation as Secretary of the Company and David Matre’s resignation a Chief Financial Officer of the Company.  Additionally, Mr. Cohen and Mr. Stamell were appointed to serve as the directors of the Company effective immediately upon Mr. Beston’s resignation as director on the Closing Date.

 

The following table sets forth certain information regarding the Company’s current directors and executive officers:

 

Name		Age		Position		Term
Barry Cohen		72		President and Director		September 16, 2011 through Present
Jared B. Stamell		65		Secretary, Treasurer, Chief Financial Officer and Director		September 16, 2011 through Present

 

The Company’s officers and sole director are elected annually for a one year term or until their respective successors are duly elected and qualified or until their earlier resignation or removal.

 

Barry Cohen, the Company’s President and a director since September 16, 2011 has served as President and Chief Executive Officer of Granite Investor Group, Inc. since its founding in 2009.  Between 2006 and 2008, Mr. Cohen was a private investor and founded Avra Surgical, Inc. in 2009, a medical technology company.  From approximately 1979 to 1983 he served as director of Synalloy Corp., a manufacturer of pipe, piping systems and specialty chemicals after which he was appointed to serve as President from 1984-1985.  Mr. Cohen also served as Chairman of the Executive Board of Wolverine Technologies, Inc., a NYSE listed company from 1979 to 1983 and President of Barry F. Cohen & Co., and NASD member. Mr. Cohen has 50 years experience in managing private and public industrial companies, and 47 years experience as a securities executive which will be an asset to the Company as it seeks a business combination transaction.

 

Jared B. Stamell, the Company’s Secretary, Treasurer and a director since September 16, 2011 and Chief Financial Officer since November 18, 2011, has served as Secretary, Treasurer and General Counsel of Granite Investor Group, Inc. since 2009. He has served as a Partner in the New York law firm, Stamell & Schager, LLP since 1989. Mr. Stamell is admitted to practice before the United States Supreme Court, in many United States Courts of Appeal and District Courts, and he is a member of the bar of the States of New Jersey, New York, Massachusetts and the District of Columbia. He is a graduate of the University of Michigan and received his law degree, J.D., Cum Laude, from Harvard Law School which awarded him a Frank Knox Fellowship to do graduate work in economics. Mr. Stamell received an M.Sc. in Economics from the London School of Economics. Mr. Stamell’s experience with representing industrial and financial businesses in litigation and financing and organizing companies will be beneficial to the Company as it seeks a business combination transaction.

 

  

(b) Significant Employees.

 

As of the date hereof, the Company has no significant employees.

 

(c) Family Relationships.

 

There are no family relationships among directors, executive officers, or persons nominated or chosen by the issuer to become directors or executive officers.

 

(d) Involvement in Certain Legal Proceedings.

 

There have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of Registrant during the past ten years.

 

Compliance with Section 16(a) of the Exchange Act

 

Section 16(a) of the Exchange Act requires the Company’s directors and officers, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of beneficial ownership and changes in beneficial ownership of the Company’s securities with the SEC on Forms 3, 4 and 5. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.

 

Based solely on the Company’s review of the copies of the forms received by it during the fiscal year ended December 31, 2011 and written representations that no other reports were required, the Company believes that no persons who, at any time during such fiscal year, was a director, officer or beneficial owner of more than 10% of Common Stock failed to comply with all Section 16(a) filing requirements during such fiscal year.

 

Code of Ethics

 

On December 31, 2007, Company adopted a formal code of ethics statement for senior officers and director (the “Code of Ethics”) that is designed to deter wrongdoing and to promote ethical conduct and full, fair, accurate, timely and understandable reports that the Company files or submits to the Securities and Exchange Commission and others.  A form of the Code of Ethics has been filed as an exhibit to the Company’s annual report on Form 10-KSB filed with the Securities and Exchange Commission on March 5, 2008. Requests for copies of the Code of Ethics should be sent in writing to RFG Acquisition II Inc., Attention: President, c/o Stamell & Schager, LLP, 1 Liberty Plaza, 35^th Floor, New York, NY 10006.

 

 

 

Nominating Committee

 

We have not adopted any procedures by which security holders may recommend nominees to our Board of Directors.

 

Audit Committee

 

The Board of Directors acts as the audit committee. The Company does not have a qualified financial expert at this time because it has not been able to hire a qualified candidate. Further, the Company believes that it has inadequate financial resources at this time to hire such an expert. The Company intends to continue to search for a qualified individual for hire.

 

Item 11. Executive Compensation.

 

The following table sets forth the cash and other compensation paid by the Company to executive officers and directors during the fiscal years ended December 31, 2010, 2011 and through the date of this filing.

 

Name and Position	Year	Salary	Bonus	Option Awards	All Other Compensation	Total
Richard F. Beston, Jr., President and Director(1)	2011 2010	None None	None None	None None	None None	None None
John W. Branch, Secretary(1)	2011 2010	None None	None None	None None	None None	None None
David W. Matre, Chief Financial Officer(1)	2011 2010	None None	None None	None None	None None	None None
Barry Cohen President and Director(2)	2011 2010	None None	None None	None None	None None	None None
Jared B. Stamell, Secretary, Treasurer, Chief Financial Officer and Director(2)	2011 2010	None None	None None	None None	None None	None None

(1)

Resigned on September 16, 2011.

(2)

Appointed on September 16, 2011.

 

The following compensation discussion addresses all compensation awarded to, earned by, or paid to the Company’s officers and directors for services rendered in all capacities during the noted periods. None of the Company’s officers and directors have received any compensation since inception. They will not receive any compensation until the consummation of an acquisition. Our officers and directors intend to devote very limited time to our affairs.

 

It is possible that, after the Company successfully consummates a business combination with an unaffiliated entity, that entity may desire to employ or retain our management for the purposes of providing services to the surviving entity.

 

No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees.

 

There are no understandings or agreements regarding compensation our management will receive after a business combination.

 

 

Compensation Committee and Insider Participation

 

The Company does not have a standing compensation committee or a committee performing similar functions, since the Board of Directors has determined not to compensate the officers and directors until such time that the Company completes a reverse merger or business combination.

 

Compensation Committee Report

 

The Company does not have a standing compensation committee or a committee performing similar functions; therefore, it does not have a compensation committee report.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

(a) The following tables set forth certain information as of April 2, 2012, regarding (i) each person known by the Company to be the beneficial owner of more than 5% of the outstanding shares of Common Stock, (ii) each director and executive officer of the Company and (iii) all officers and directors as a group.

 

Unless otherwise specified, the address of each of the persons set forth below is c/o Stamell & Schager, LLP, 1 Liberty Plaza, 35^th Floor, New York, NY 10006.

 

Name of Beneficial Owner	Amount and Nature of Beneficial Ownership(1)	Percentage of Class(2)
Granite Investor Group Inc.	2,500,000	100%
Barry F. Cohen (3)	1,650,000 (6)	66%
Jared Stamell (4)	600,000 (6)	24%
Nikhil L. Shah (5)	250,000 (6)	10%
All Directors and Officers as a Group (2 individuals)	2,250,000	90%

_______

(1)

Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to our Common Stock. For each beneficial owner above, any options exercisable within 60 days have been included in the denominator.

 

(2)

Based on 2,500,000 shares of Common Stock (the “Shares”) issued and outstanding as of the date of this filing. On September 16, 2011, Granite Investor Group, Inc. (“Granite”) purchased an aggregate of 2,500,000 shares of Common Stock (the “Shares”) of the Issuer for an aggregate purchase price equal to $25,000, resulting in 100% of the Shares owned of record by Granite.

 

(3)

Barry F. Cohen is the President and a director of the Company. Mr. Cohen owns 66% of the issued and outstanding Common Stock owned of record by Granite and therefore may be deemed to have voting and investment control over 66% of any securities of the Issuer owned by Granite.

 

(4)

Jared Stamell is Secretary, Treasurer, Chief Financial Officer, and a director of the Company.  Mr. Stamell owns 24% of the issued and outstanding Common Stock owned of record by Granite and therefore may be deemed to have voting and investment control over 24% of the securities of the Issuer owned by Granite.

 

(5)

Nikhil Shah owns 10% of the issued and outstanding Common Stock owned of record by Granite and therefore may be deemed to have voting and investment control over 10% of the securities of the Issuer owned by Granite.

 

(6)

Represents shares of Common Stock owned of record by Granite.

 

(b) The Company currently has not authorized any compensation plans or individual compensation arrangements.

 

 

 

Item 13. Certain Relationships and Related Transactions.

 

On November 20, 2006, the Company entered into a line of credit agreement with each of its two stockholders (the “Loan Agreements”). The Loan Agreements each provide the Company with a revolving credit line up to a maximum of $6,255, for an aggregate credit line of $12,510 (the “Credit Line”). The Credit Line may be increased or amended from time to time. The outstanding amount due under the Credit Line will accrue interest at a rate of 4.75% per annum and will be calculated based on actual days outstanding and a 360-day year. Outstanding principal and accrued interest shall be repaid in full upon the earlier of the completion of a merger or December 31, 2011. On February 26, 2007, the Loan Agreements were amended to increase the Credit Line to an aggregate of $30,000. The Loan Agreements were further amended on June 1, 2007 to increase the interest rate charged on outstanding loan borrowings from 4.75% per annum to the Prime Rate of Interest, as listed in the Wall Street Journal, plus 1% per annum. In addition, the default rate of interest was changed from 10.0% to the prime rate of interest, as reported in the Wall Street Journal, plus 6.0% per annum. On September 24, 2007, the Loan Agreements were amended to further increase the Credit Line to an aggregate of $50,000. On June 20, 2008, the agreements were amended to increase the maximum aggregate principal amount to $100,000. On March 5, 2010 the Loan Agreements were amended to increase the maximum aggregate principal amount to $200,000. This maximum principal amount may be further amended from time to time. Interest on outstanding loans is calculated based on actual days outstanding and a 360 day year. Outstanding principal and accrued interest is to be repaid in full upon the earlier of the completion of a merger or December 31, 2013. At September 16, 2011, the balance outstanding under these agreements was $119,910 plus accrued interest of $16,273. On September 16, 2011, the line of credit agreements were cancelled and the outstanding balance and accrued interest was converted to additional paid-in capital.

 

On May 16, 2011, the Company entered into an option agreement (the “Option Agreement”) with Granite Investor Group, Inc. (“Granite”), the sole stockholder of the Company, that provided Granite, or an affiliate of Granite, with an option to purchase such number of common shares of the Company as shall be required to obtain control of the Company for an aggregate purchase price of $25,000, which would be used by the Company to repurchase the shares of common stock currently issued and outstanding. In accordance with the agreement, Granite agreed to reimburse the Company for expenses incurred after May 16, 2011, the date of the agreement, that relate to complying with reporting obligations pursuant to the Securities Exchange Act of 1934.

 

In connection with the exercise of the option, on September 16, 2011, the Company issued and sold an aggregate of 2,500,000 shares of Common Stock to Granite for an aggregate purchase price equal to $25,000, which amount was used to repurchase 2,500,000 shares of Common Stock held by Richard F. Beston, the Company's President and a director immediately prior to the transaction and  John W. Branch, the Company's Secretary immediately prior to the transaction, for an aggregate purchase price equal to $25,000. The repurchased shares were then cancelled. A change of control of the Company resulted upon the closing of the transaction. New officers were appointed to serve as President, Treasurer, and Secretary, effective upon resignation of Mr. Beston and Mr. Branch.

 

Professional fees in the amount of $7,500 were paid on behalf of the Company by Ten X Holdings, LLC (“Ten X”), an affiliate of the Company former officers and directors. The amount was unsecured, non-interest bearing and had no stipulated repayment terms. The $5,000 deposit paid by Granite, in connection with the Option Agreement, was received by Ten X and applied to the outstanding loan balance.

 

During the year ended December 31, 2011, professional fees in the amount of $10,308 were paid by Granite, the Company’s sole stockholder on behalf of the Company. The outstanding balance of $10,308 is reported as loan payable and is unsecured, non-interest bearing with no stipulated repayment terms.

 

Company utilizes the office space and equipment of its management at no cost. Management estimates such amounts to be immaterial.

 

 

 

Except as otherwise indicated herein, there have been no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-K.

 

Director Independence

 

The Company is not a listed issuer whose securities are listed on a national securities exchange, or an inter-dealer quotation system which has requirements that a majority of the board of directors be independent. Under NASDAQ Rule 5605(a)(2)(A), a director is not considered to be independent if he or she also is an executive officer or employee of the corporation. Under such definition, Richard F. Beston, our sole director would not be considered independent as he is also an executive officer of the Company.

 

Item 14. Principal Accounting Fees and Services

 

Raich Ende Malter & Company LLP (“Raich Ende”) is the Company's independent registered public accounting firm.

 

Audit Fees

 

The aggregate fees billed by Raich Ende for professional services rendered for the audit of our annual financial statements and review of financial statements included in our quarterly reports on Form 10-Q or services that are normally provided in connection with statutory and regulatory filings were $16,000 for the fiscal year ended December 31, 2011 and $15,500 for the fiscal year ended December 31, 2010.

 

Audit-Related Fees

 

There were no fees billed by Raich Ende for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements for the fiscal years ended December 31, 2011 and 2010.

 

Tax Fees

 

The aggregate fees billed by Raich Ende for professional services for tax compliance, tax advice, and tax planning were $500 for the fiscal year ended December 31, 2011 and $500 for the period ended December 31, 2010.

 

All Other Fees

 

There were no fees billed by Raich Ende for other products and services for the fiscal years ended December 31, 2011 and 2010.

 

Audit Committee’s Pre-Approval Process

 

The Board of Directors acts as the audit committee of the Company, and accordingly, all services are approved by all the members of the Board of Directors.

  

Part IV

 

Item 15. Exhibits, Financial Statement Schedules

 

(a) We set forth below a list of our audited financial statements included in Item 8 of this annual report on Form 10-K.

 

 

 

Statement	Page*
Index to Financial Statements	F-1
Report of Independent Registered Public Accounting Firm	F-2
Balance Sheets	F-3
Statements of Operations	F-4
Statement of Changes in Stockholder’s Equity (Deficit)	F-5
Statements of Cash Flows	F-6
Notes to Financial Statements	F-7

 ________

*Page F-1 follows page 11 to this annual report on Form 10-K.

 

 

(b) Index to Exhibits required by Item 601 of Regulation S-K.

 

Exhibit	Description
3.1*	Certificate of Incorporation
3.2*	By-laws
10.1**	Securities Purchase Agreement, dated September 16, 2011
10.2**	Repurchase Agreement, dated September 16, 2011
10.3***	Option Agreement by and between the Company and Granite Investor Group, Inc., dated May 16, 2011
14.1****	Code of Ethics
31.1	Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2011
31.2	Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2011
32.1	Certification of the Company’s Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
32.2	Certification of the Company’s Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

 

 

 

101.INS	XBRL INSTANCE DOCUMENT
101.SCH	XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
101.CAL	XBRL TAXONOMY CALCULATION LINKBASE DOCUMENT
101.DEF	XBRL TAXONOMY DEFINITION LINKBASE DOCUMENT
101.LAB	XBRL TAXONOMY LABEL LINKBASE DOCUMENT
101.PRE	XBRL TAXONOMY PRESENTATION LINKBASE DOCUMENT

  

*

Filed as an exhibit to the Company's registration statement on Form 10-SB, as filed with the Securities and Exchange Commission (“SEC”) on November 22, 2006 and incorporated herein by this reference.

 

**

Filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on September 22, 2011 and incorporated herein by this reference.

 

***

Filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on May 19, 2011 and incorporated herein by this reference.

 

****

Filed as an exhibit to the Company’s annual report on Form 10-KSB filed with the SEC on March 5, 2008, and incorporated herein by this reference.

 

 

 

SIGNATURES

 

In accordance with 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.

 

	RFG ACQUISITION II INC.
Dated: April 3, 2012	By:	/s/ Barry F. Cohen
		Barry F. Cohen
		President and Director
		Principal Executive Officer
Dated: April 3, 2012	By:	/s/ Jared B. Stamell
		Jared B. Stamell
		Secretary, Treasurer and Director
		Chief Financial Officer
		Principal Financial Officer

 

In accordance with Section 13 or 15(d) 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.

 

	Title	Date
/s/  Barry F. Cohen	President and Director	April 3, 2012
Barry F. Cohen
/s/ Jared B. Stamell	Secretary, Treasurer, Chief Financial	April 3, 2012
Jared B. Stamell	Officer and Director