Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
Amendment No. 5
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
R D & G HOLDINGS CORPORATION
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(Exact name of registrant as specified in its charter)
Colorado
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(State or other jurisdiction of incorporation or organization)
2300
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(Primary Standard Industrial Classification Code Number)
27-1431569
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(I.R.S. Employer Identification Number)
1885 W. Dartmouth
Unit 1
Englewood, CO 80110
(720) 833-0600
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(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
Timothy Evans
1885 W. Dartmouth
Unit 1
Englewood, CO 80110
(720) 833-0600
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(Name, address, including zip code, and telephone number, including area
code, of agent for service)
As soon as practicable after the effective date of this Registration
Statement (Approximate date of commencement of proposed sale to the public)
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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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
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed
Class of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share (1) Price Fee
---------- ---------- ---------- --------- ------------
Common stock (2)
Total 10,000,000 $0.10 $1,000,000 $136
(1) Offering price computed in accordance with Rule 457 (c).
(2) Shares of common stock offered by the Company.
Pursuant to Rule 416, this Registration Statement includes such
indeterminate number of additional securities as may be required for issuance as
a result of any stock dividends, stock splits or similar transactions.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of l933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS
R D & G HOLDINGS CORPORATION
Common Stock
10,000,000 shares
We provide screen printing and embroidery services to approximately 300
clients. By means of this prospectus we are offering for sale up to 10,000,000
shares of common stock at a price of $0.10 per share.
The shares we are offering will be sold directly by our executive officers.
We will not pay any commissions or other form of remuneration in connection with
the sale of these shares.
The offering of our shares is being conducted on a "self-underwritten"
basis. There is no minimum number of shares required to be sold. All proceeds
from the sale of these shares will be delivered directly to us and will not be
deposited in any escrow account. If all shares are sold, we will receive gross
proceeds of $1,000,000. We plan to end the offering on March 31, 2014. However,
we may, at our discretion, end the offering sooner or extend the offering until
May 31, 2014.
As of the date of this prospectus there was no public market for our common
stock. As of the date of this prospectus, an application had not been made to
have our common stock quoted on the OTC Bulletin Board.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. FOR A
DESCRIPTION OF CERTAIN IMPORTANT FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS
PROSPECTUS.
The date of this prospectus is ___________, 2014
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SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
DESCRIPTIVE INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. PROSPECTIVE
INVESTORS SHOULD CAREFULLY READ THE ENTIRE PROSPECTUS AND SHOULD CONSIDER, AMONG
OTHER FACTORS, THE MATTERS SET FORTH UNDER THE "RISK FACTORS."
Implications of Being an Emerging Growth Company
We qualify as an emerging growth company as that term is used in the JOBS
Act. An emerging growth company may take advantage of specified reduced
reporting and other burdens that are otherwise applicable generally to public
companies. These provisions include:
o a requirement to have only two years of audited financial statements
and only two years of related MD&D,
o reduced disclosure concerning executive compensation arrangements;
o exemption from the auditor attestation requirement in the assessment
of the emerging growth company's internal control over financial
reporting under Section 404 of the Sarbanes-Oxely Act of 2002; and
o No non-binding advisory votes on executive compensation or golden
parachute arrangements.
We have taken advantage of some of these exemptions in this prospectus,
which are also available to us as a smaller reporting company as defined under
Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
In addition, Section 107 of the JOBS act also provides that an emerging
growth company can take advantage of the extended transition period provided in
Section 7(a)(2)(b) of the Securities Act of 1933, as amended (the "Securities
Act") for complying with new or revised accounting standards. We are choosing to
"opt out" of such extended transition period, and as a result, we will comply
with new or revised accounting standards on the relevant dates on which adoption
of such standards is required for non-emerging growth companies. Section 107 of
the JOBS Act provides that our decision to opt out of the extended transition
period for complying with new or revised accounting standards is irrevocable.
We could remain an emerging growth company for up to five years, or until
the earliest of (i) the last day of the first fiscal year in which annual gross
revenue exceeds $1 billion, (ii) the date that we become a "large accelerated
filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the
market value of our common stock that is held by non-affiliates exceeds $700
million as of the last business day of our most recently completed second fiscal
quarter, or (iii) the date on which we have issued more than $1 billion in
non-convertible debt during the preceding three year period.
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General
We were incorporated in Colorado in August 2012. We have been in the
business of providing screen printing and embroidery services since 1992. Prior
to August 2012 we operated through RD & G, LLC, a Colorado limited liability
company formed in December 2009. Prior to December 2009 we operated as River
Graphics, Inc. and River Designs, Inc., both Colorado corporations, established
in 1992 and 2002 respectfully. On December 3, 2009 RD&G, LLC acquired River
Graphics and River Designs. On August 3, 2012 we acquired RD&G, LLC Our
executive offices are located at 1885 W. Dartmouth, Unit 1, Englewood, CO 80110.
Our telephone number is 720-833-0600.
Shown below is a chart illustrating our corporate structure and ownership
interest in each subsidiary.
[RD&G Holdings, Inc.]
[RD&G, LLC]
(wholly owned by RD&G Holdings, Inc)
[River Graphics] [River Designs]
(both wholly owned by RD&G, LLC)
As of December 31, 2013, we had 15,000,000 outstanding shares of common stock.
The Offering
By means of this prospectus:
We are offering to sell up to 10,000,000 shares of common stock at a price
of $0.10 per share.
There is no minimum number of shares required to be sold in this offering
and as a result we cannot guarantee that any funds will be raised in this
offering.
We intend to use the net proceeds, if any, from the sale of the shares we
are offering to expand our operations by purchasing additional equipment, hiring
additional personnel, and improving our warehouse facility.
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The purchase of the securities offered by this prospectus involves a high
degree of risk. Risk factors include our history of losses and the need for
additional capital. See "Risk Factors" beginning on page 3 of this prospectus
for additional Risk Factors.
Forward Looking Statements
This prospectus contains various forward-looking statements that are based
on our beliefs as well as assumptions made by and information currently
available to us. When used in this prospectus, the words "believe", "expect",
"anticipate", "estimate" and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks,
uncertainties and assumptions which could cause actual results to differ
materially from our projections or estimates. Factors which could cause actual
results to differ materially are discussed at length under the heading "Risk
Factors". Should one or more of the enumerated risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, estimated or projected. Investors
should not place undue reliance on forward-looking statements, all of which
speak only as of the date made.
RISK FACTORS
The securities being offered involve a high degree of risk. Prospective
investors should consider the following risk factors which affect our business
and this offering. These risk factors discuss all material risks which pertain
to an investment in us. If any of the risks discussed below materialize, our
common stock could decline in value or become worthless.
Risk Factors Related to our Business
DURING THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND THE YEARS ENDED
DECEMBER 31, 2012 AND 2011 WE HAVE NOT BEEN PROFITABLE. OUR FUTURE OPERATIONS
MAY NOT BE PROFITABLE AND AS A RESULT ANY INVESTMENT IN OUR COMPANY MAY NOT HAVE
ANY VALUE. We incurred a net operating loss of $(140,201) during the nine months
ended September 30, 2013 and net operating losses of $(8,775) and $(152) during
the years ended December 31, 2011 and 2012, respectively. We cannot assure you
that, in the future, we can achieve or sustain profitability. Profits, if any,
will depend upon various factors, including whether we will be able to increase
sales and control costs. Unless and until we are profitable, we will need to
continue to raise enough capital to fund the costs of our operations. There can
be no assurance that we will be profitable or that the securities which may be
sold in this offering will have any value.
A FIRE WHICH OCCURRED IN MARCH 2013 HAS HAD A MATERIAL ADVERSE EFFECT ON
OUR OPERATIONS AND HAS RESULTED IN A LOSS OF REVENUE WHICH WE MAY NEVER BE ABLE
TO REPLACE. In March 2013 we experienced a catastrophic fire which destroyed our
plant, equipment and inventory, resulting in an extraordinary loss of $(50,637).
As a result of the fire, we were unable to operate during April 2013. We were
only able to operate at 50% capacity between May 2013 and August 2013, which
resulted in the loss of two ASI customers, which may or may not return. As of
December 30, 2013, we had received the full amount under the contents portion of
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our fire insurance policy ($210,400), which allowed us to purchase equipment and
raw materials and resume operating at 100% capacity. Even though we have
received enough insurance proceeds to resume operating at full capacity, we
could receive up to an additional $200,000 from our insurance carrier for
start-up costs and loss of income. It is unknown if we will receive any of this
amount.
OUR FAILURE TO OBTAIN CAPITAL MAY SIGNIFICANTLY RESTRICT OUR PROPOSED
OPERATIONS WHICH MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS. We need
additional capital to expand our business and pay amounts we have borrowed. Our
offering is being conducted on a "best efforts" basis. There is no minimum
amount which is required to be raised in our offering and all proceeds from the
sale of the shares will be delivered to us. If only a small number of shares are
sold the amount received from this offering may provide us little benefit. In
addition, the price of the stock purchased by investors may be negatively
impacted because there is no minimum amount of shares which are required to be
sold pursuant to this offering. Even if all shares offered are sold, we may need
additional capital. Our issuance of equity or equity-related securities to raise
capital will dilute the ownership interest of existing shareholders.
We do not have any commitments or arrangements from any person to provide
us with any additional capital. If additional financing is not available when
needed, we may need to change our business plan.
THE PROMOTIONAL PRODUCTS INDUSTRY IS HIGHLY FRAGMENTED AND COMPETITIVE AND
IF WE ARE UNABLE TO COMPETE WE MAY NOT BE ABLE TO GENERATE INCOME. Certain
competitors in the promotional products industry are affiliated with
significantly larger companies which have greater financial resources than us.
Entry into the promotional products industry is generally not difficult, and new
competitors regularly enter the industry. The promotional products industry also
competes against other advertising media, such as television, radio, newspaper,
magazines, billboards and the Internet.
WE MAY NOT BE ABLE TO DEVELOP NEW PRODUCTS AND AS A RESULT WE MAY NOT BE
ABLE TO GENERATE REVENUE. We believe that the key to our success is our ability
to develop new products. If we are unable to do so, we may not be able to
effectively compete in our industry.
OUR FUTURE SALES COULD BE AFFECTED BY A NUMBER OF FACTORS WHICH ARE BEYOND
OUR CONTROL WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR OPERATIONS. We may
have difficulty increasing our sales as the Promotional Products Industry is
highly competitive. Many of our competitors are substantially larger than we are
and have greater financial resources and broader name recognition. Screen
printing and embroidery services may be purchased from a wide variety of
sources. In addition, the Promotional Products Industry may not be as large as
we think and expected growth in this market may not continue. A decline in the
sales of our services could have a material adverse effect on our business.
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THE LOSS OF EITHER OF OUR OFFICERS WOULD ADVERSELY AFFECT OUR BUSINESS. We
depend on the services of our officers, Larry Parsons and Timothy Evans. We do
not have employment agreements with Mr. Evans or Mr. Parsons and we do not carry
key man life insurance on Mr. Evans or Mr. Parsons. The loss or limitation of
Mr. Evans or Mr. Parsons services would have a material adverse effect upon our
business, financial condition and results of operations.
THE FACT THAT OUR AUDITORS HAVE EXPRESSED DOUBT AS TO OUR ABILITY TO
CONTINUE IN BUSINESS MAY IMPAIR OUR ABILITY TO OBTAIN CAPITAL. In their report
on our December 31, 2012 financial statements, our auditors expressed
substantial doubt as to our ability to continue as a going concern. This
qualification could impair our ability to finance operations through the sale of
debt or equity securities. Our ability to continue as a going concern will
depend, in large part, on our ability to obtain additional financing and
generate positive cash flow from operations, neither of which is certain. If we
are unable to achieve these goals, our business would be jeopardized and we may
not be able to continue operations. If we are unable to continue operations the
common stock sold in this offering may not have any value.
OUR DISCLOSURE CONTROLS AND PROCEDURES, AS WELL AS OUR INTERNAL CONTROL
OVER FINANCIAL REPORTING, MAY NOT BE ADEQUATE. We filed the wrong financial
statements with Amendment number 3 to our registration statement on Form S-1, of
which this prospectus is a part. The incorrect financial statements, which were
for the six months ended June 30, 2013, overstated our net loss for the period
by $12,000 and understated our accounts receivable by the same amount on our
balance sheet as of June 30, 2013. As a result of this error, our disclosure
controls and procedures and internal control over financial reporting were not
adequate, and if not corrected, may result in future incorrect filings with the
Securities and Exchange Commission.
OWNERSHIP COULD BE DILUTED BY FUTURE ISSUANCES OF OUR STOCK, OPTIONS,
WARRANTS OR OTHER SECURITIES WHICH COULD RESULT IN A DECREASE IN EARNINGS PER
SHARE. Ownership in our company may be diluted by future issuances of capital
stock or the exercise of options or warrants, or the conversion of notes we may
issue in the future. In particular, we may sell securities in the future in
order to finance operations, expansions or particular projects or expenditures
without obtaining the approval of the holders of our common stock.
WE COULD INCUR INCREASED COSTS AS A RESULT OF BEING A PUBLICLY TRADED
COMPANY WHICH WOULD ADVERSELY AFFECT OUR CASH FLOW. As a public company, we will
incur significant legal, accounting and other expenses that we did not incur as
a private company. The Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"), as well as
rules subsequently implemented by the Securities and Exchange Commission (the
"SEC"), have required changes in corporate governance practices of public
companies. We expect these rules and regulations to increase our legal and
financial compliance costs and to make some activities more time consuming
and/or costly. In addition, as a public company, we will incur the internal and
external costs of preparing and distributing periodic public reports in
compliance with our obligations under the securities laws.
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Risk Factors Related to this Offering
AS OF THE DATE OF THIS PROSPECTUS THERE WAS NO PUBLIC MARKET FOR OUR COMMON
STOCK AND IF NO PUBLIC MARKET DEVELOPS, PURCHASERS OF THE SHARES OFFERED BY THIS
PROSPECTUS MAY BE UNABLE TO SELL THEIR SHARES. Although we plan to have our
shares quoted on the OTC Bulletin Board after the termination of our offering,
we may not be successful in this regard. Even if a public market for our common
stock develops, trading may be sporadic and the quoted price for our common
stock could be volatile.
SHOULD A MARKET FOR OUR COMMON STOCK EVER DEVELOP, DISCLOSURE REQUIREMENTS
PERTAINING TO PENNY STOCKS MAY REDUCE THE LEVEL OF TRADING ACTIVITY IN THE
MARKET FOR OUR SHARES AND INVESTORS MAY FIND IT DIFFICULT TO SELL THEIR SHARES.
Trades of our common stock, should a market ever develop, will be subject to
Rule 15g-9 of the Securities and Exchange Commission, which rule imposes certain
requirements on broker/dealers who sell securities subject to the rule to
persons other than established customers and accredited investors. For
transactions covered by the rule, brokers/dealers must make a special
suitability determination for purchasers of the securities and receive the
purchaser's written agreement to the transaction prior to sale. The Securities
and Exchange Commission also has rules that regulate broker/dealer practices in
connection with transactions in "penny stocks". Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in that security is provided by the exchange or system). The penny
stock rules require a broker/ dealer, prior to a transaction in a penny stock
not otherwise exempt from the rules, to deliver a standardized risk disclosure
document prepared by the Commission that provides information about penny stocks
and the nature and level of risks in the penny stock market. The broker/dealer
also must provide the customer with current bid and offer quotations for the
penny stock, the compensation of the broker/dealer and its salesperson in the
transaction, and monthly account statements showing the market value of each
penny stock held in the customer's account. The bid and offer quotations, and
the broker/dealer and salesperson compensation information, must be given to the
customer orally or in writing prior to effecting the transaction and must be
given to the customer in writing before or with the customer's confirmation.
BECAUSE THERE IS NO PUBLIC MARKET FOR OUR COMMON STOCK, THE PRICE FOR THE
SHARES WE ARE OFFERING WAS ARBITRARILY ESTABLISHED, DOES NOT BEAR ANY
RELATIONSHIP TO OUR ASSETS, BOOK VALUE OR NET WORTH, AND MAY BE GREATER THAN THE
PRICE WHICH INVESTORS IN THIS OFFERING MAY RECEIVE WHEN THEY RESELL OUR SHARES.
Accordingly, the offering price of our common stock should not be considered to
be any indication of the value of our shares. The factors considered in
determining the offering price include our future prospects and the likely
trading price for our common stock if a public market ever develops.
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EVEN IF ALL SHARES OFFERED BY THIS PROSPECTUS ARE SOLD, OUR TWO OFFICERS
AND DIRECTORS WILL OWN 60% OF OUR OUTSTANDING SHARES AND WILL BE ABLE TO
EXERCISE SIGNIFICANT CONTROL OVER OUR OPERATIONS. As a result, investors in this
offering may not be able to elect any of our directors or adopt any resolution
at any meeting of our shareholders. Refer to the "Principal Shareholders"
section of this prospectus for more information.
DILUTION AND COMPARATIVE SHARE DATA
As of September 30, 2013 we had 15,000,000 outstanding shares of common
stock, which had a net tangible book value per share as of that date of
approximately $0.00. If all shares we are offering are sold (of which there can
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be no assurance), investors will own 10,000,000 shares or 40% of our common
stock, for which they will have paid $1,000,000 and our present shareholders
will own 60% of our common stock. If less than all shares offered are sold, the
percentage ownership of the investors in this offering will be less and the
dilution to the investors will be greater than if all shares offered were sold.
The following table illustrates per share dilution and the comparative
stock ownership of our stockholders as compared to the investors in this
offering, based upon the number of shares sold.
Shares outstanding as of September 30, 2013 15,000,000 15,000,000 15,000,000 15,000,000
Shares to be sold in this offering 2,500,000 5,000,000 7,500,000 10,000,000
Shares to be outstanding upon
completion of offering 17,500,000 20,000,000 22,500,000 25,000,000
Net tangible book value per share
as of September 30, 2013 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Offering price, per share $ 0.10 $ 0.10 $ 0.10 $ 0.10
Net tangible book value after offering $ 0.02 $ 0.03 $ 0.04 $ 0.04
Dilution to investors in this offering $ 0.08 $ 0.07 $ 0.06 $ 0.06
Gain to existing shareholders $ 0.02 $ 0.03 $ 0.04 $ 0.04
Equity ownership by investors in this offering 14% 25% 33% 40%
Equity ownership by present shareholders
after this offering 86% 75% 67% 60%
We do not have any outstanding options, warrants or similar securities
which could allow for the purchase of additional shares of our common stock.
USE OF PROCEEDS
The following table shows the intended use of the proceeds of this
offering, depending upon the number of shares sold:
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Gross Offering Proceeds
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$250,000 $500,000 $750,000 $1,000,000
-------- -------- -------- ----------
12-head embroidery machine
($105,000 each) -- $105,000 $105,000 $210,000
8-head embroidery machine
($65,000 each) 65,000 65,000 65,000 65,000
6 head embroidery machine
($50,000 each) 50,000 50,000 50,000 50,000
Automatic press ($65,000 each) 65,000 65,000 130,000 130,000
Manual press ($15,000 each) 15,000 15,000 45,000
Industrial dryers ($20,000 each) -- -- 40,000 40,000
Computer equipment 15,000 15,000 35,000
Office Manager -- 35,000 35,000 35,000
Warehouse manager -- -- -- 35,000
Salary increases for management (1) -- -- 50,000 100,000
Additional personnel -- -- 70,000 80,000
Repayment of debt (2) -- 40,000 40,000 40,000
Marketing -- 40,000 40,000 40,000
Lease additional warehouse space -- -- 25,000 25,000
Offering expenses 70,000 70,000 70,000 70,000
-------- -------- -------- ----------
$250,000 $500,000 $750,000 $1,000,000
======== ======== ======== ==========
(1) If at least $750,000 is raised in this offering our two officers, who are
also our two directors, will receive salary increases of $25,000 each. If
$1,000,000 is raised in this offering our two officers will receive
additional salary increases of $25,000 each. See "Management Executive
Compensation" for additional information.
(2) During the year ended December 31, 2012 we borrowed $40,000 from an
unrelated third party. The $40,000 borrowed during 2012 was used for
opening expenses, repayment of debt, and the expenses associated with this
offering, including the audit of our financial statements. The $40,000
borrowed from the third party does not bear interest, is unsecured and is
due on demand.
An embroidery machine is used to sew art work, logos, words and phrases on
hats, t-shirts, and similar types of apparel. A 12-head machine can embroider
twelve items at one time, as opposed to an 8-head machine, which can embroider
eight items at one time or a 6-head machine, which can embroider 6 items at one
time.
Automatic and manual presses are used to screen print art work, logos,
words, and phrases on various types of clothing (hats, t-shirts, sweat shirts,
pullovers, etc.). An automatic press can screen print an item 2 to 3 times
faster than a manual press. An automatic press can also screen print twice as
many colors as a manual press.
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If less than $250,000 is raised in this offering, the offering proceeds
will be allocated in the following priority:
o Purchase of embroidery machine (8-head);
o Purchase of automatic press.
The types and quantities of embroidery machines, presses and dryers we may
acquire with the proceeds from this offering are contingent upon the demand for
the type of products our clients may want us to provide and the demands of any
new clients we may acquire.
We may decrease salaries, eliminate planned employment positions or find
it unnecessary to add warehouse space if the demand for our services does not
increase.
Any amount not expended as proposed will be used to fund our operations, if
needed due to operating losses, or if not needed for our operations, to repay
outstanding debt, other than the $40,000 loan we will pay with the proceeds from
this offering.
There is no commitment by any person to purchase any of the shares of
common stock which we are offering and there can be no assurance that any shares
will be sold.
As of the date of this prospectus we did not have any commitments from any
person to provide us with any additional capital and there can be no assurance
that additional capital will be available to us in the future.
Pending expenditure of the proceeds of the offering substantially in the
manner described above, we will make temporary investments in interest-bearing
savings accounts, certificates of deposit, United States government obligations
and/or money market instruments.
MARKET FOR COMMON STOCK.
Our common stock is not quoted on any exchange and there is no public
trading market for our securities.
As of December 31, 2013, we had 15,000,000 outstanding shares of common
stock and two shareholders of record. None of our outstanding shares of common
stock can be sold pursuant to Securities and Exchange Commission Rule 144. We do
not have any outstanding options, warrants or other arrangements providing for
the issuance of additional shares of our capital stock.
Holders of our common stock are entitled to receive dividends as may be
declared by our Board of Directors. The Board of Directors is not obligated to
declare a dividend. No dividends have ever been declared and we do not
anticipate or intend upon paying dividends for the foreseeable future.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS
Executive Overview
We have been in the screen printing and embroidering business since 1992.
During the years ended December 31, 2011 and 2012 we operated as a private
company. As such, the compensation paid to our officers was adjusted so that,
during those years, we would not have any taxable income. With the prospect of
the Company's stock being publicly traded, our focus will be on maximizing net
income.
Our sales increased from $513,612 in 2011 to $565,104 in 2012. Our sales
decreased from $462,941 for the nine months ended September 30, 2012 to $300,694
for the nine months ended September 30, 2013 due to a fire as discussed below.
We incurred net losses of $8,775 and $152 for the years ended December 31, 2011
and 2012, respectively. We recorded net income of $30,372 and $39,882 for the
nine months ended September 30, 2012 and 2013, respectively.
Sales and gross profit, as a percentage of revenue, increased during the
year ended December 31, 2012 compared to the prior year. However, due to a fire
that significantly limited our ability to operate, sales and gross profit for
the year ended December 31, 2013 are expected to decrease. The fire, and its
effect on our operations, is described in greater detail below. We are currently
operating at 100% capacity and expect sales and gross profit to increase during
the year ended December 31, 2014.
As explained in more detail in the section of this prospectus captioned
"Business - ASI and the Promotional Products Business", we plan to expand our
ASI business since we feel that there is significant growth potential in the ASI
market. However, in order to expand our business we will need to acquire
additional equipment, hire additional personnel and lease additional space, all
of which will depend, in part, upon the amount we are able to raise in this
offering. See the section of this prospectus captioned "Use of Proceeds" for
more information.
If we are able to expand our ASI business, we expect our gross profit, as a
percentage of sales, to increase since, in the case of sales to ASI customers,
the customer provides the raw materials. As a result, cost of sales consists
primarily of labor.
Our business is dependent on, among other things, retailer and consumer
demand for our products. We believe that economic uncertainty may negatively
impact the level of consumer spending for discretionary items such as the
products we embroider or silk screen. We cannot predict the direction in which
the current economic environment will move. Continued uncertain conditions may
have a negative impact on our results for fiscal 2014.
We expect to incur additional expenses over the next twelve months as a
result of operating as a public company, including expenses related to
compliance with the rules and regulations of the Securities and Exchange
Commission, investor relations activities and other administrative and
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professional services. We expect our general and administration expenses will
also increase over the next twelve months if we are able to expand our business.
Other than the foregoing, we do not know of any trends, events or
uncertainties that have had, or are reasonably expected to have, a material
impact on our sales, revenues or income from continuing operations, or liquidity
and capital resources.
Results of Operations
Material changes of certain items in our Statement of Operations for the
year ended December 31, 2012, as compared to the same period last year, are
discussed below.
o Gross profit, as a % of sales, increased due to significantly higher
contract sales during the period as opposed to retail sales. In the
case of contract sales, the customer provides the raw materials. As a
result, cost of sales consist primarily of labor.
o Operating expenses increased as a result of higher compensation paid
to our officers ($32,000) and the addition of an employee during the
latter part of the year ($4,000).
Material changes of certain items in our Statement of Operations for the
nine months ended September 30, 2013 as compared to the same period last year,
are discussed below.
o Sales decreased since between April and August 2013 since we could
only operate on a limited basis due to a fire at our plant.
o Gross profit, as a % of sales, decreased since we used third parties
to fill a portion of our orders as a result of the March 2013 fire at
our plant.
o Operating expenses increased due to legal and accounting expenses
associated with this offering.
o Extraordinary Item increased since in March 2013 we recorded an
extraordinary loss of $50,637 from fire damage. During the nine-month
period ended September 30, 2013 we reported a net gain of $180,083
resulting from our receipt of fire insurance proceeds in the amount of
$237,565.
Liquidity and Capital Resources
In March 2013, we experienced a catastrophic fire which destroyed our
plant, equipment and inventory, resulting in an extraordinary loss from of
$50,637. As a result of the fire, we were unable to operate during April 2013.
We were only able to operate at 50% capacity between May 2013 and August 2013,
which resulted in the loss of two ASI clients, which may or may not return.
These two clients accounted for approximately 10% of our revenue. During the
nine month period ended September 30, 2013 we received fire insurance proceeds
of $237,565. As of December 31, 2013 we had replaced all equipment and inventory
12
that was lost in the fire and were operating at full capacity. Even though we
have received enough insurance proceeds to resume operating at 100% capacity, we
still could receive up to an additional $200,000 from our insurance carrier for
new start-up costs and loss of income. It is unknown if we will receive any of
this amount. We expect to replace the loss of our two clients as a result of the
fire by expanding our ASI business. We do not anticipate that the fire will have
any long term impact on our business or operations.
The following is an explanation of our material sources and (uses) of cash
during the years ended December 31, 2013 and 2012:
2011 2012
---- ----
$ $
Cash provided by operations (9,439) 2,760
Purchase of equipment -- (140,102)
Purchase of equipment (975) (900)
Capital lease payments (7,748) (8,350)
Loans 50,000 20,000
Loan payments (25,000) (30,000)
The following is an explanation of our material resources and (uses) of
cash during the nine months ended September 30, 2012 and 2013.
2012 2013
---- ----
Cash (used) provided by operations $ 23,337 $ 110,581
Purchase of equipment -- (140,102)
Capital lease payments (6,204) (7,451)
Loan -- 30,000
Our anticipated cash requirements for the twelve-month period ending
December 31, 2014 are as follows:
Office/manufacturing lease $ 33,000
Capital lease payments $ 5,160
Loan repayments $120,000
On August 6, 2012 we issued 7,500,000 shares of common stock to Larry
Parsons in exchange for his membership interest in RD&G, LLC and 7,500,000
shares of common stock to Timothy Evans in exchange for his membership interest
in RD&G, LLC.
13
As of September 30, 2013, we owed Timothy Evans, one of our officers and
directors, $15,000 for amounts he advanced to us. The loan from Mr. Evans is
unsecured, due on demand, and bears interest at 4% per year. Since January 1,
2011 the principal balance of this note has remained at $15,000. During the two
years and nine months ended September 30, 2013, $1,650 was paid to the
noteholder as interest.
As of September 30, 2013 we owed the father of Timothy Evans $50,000 for
amounts advanced to us. The loan, originally in the amount of $30,000, was
reduced from $30,000 to $20,000 subsequent to January 1, 2011. On September 1,
2013 we borrowed an additional $30,000 from Mr. Evans. The loans from Mr. Evans
are unsecured, due on demand and bear interest at 6% per year. During the two
years and nine months ended September 30, 2013, $3,250 was paid to Mr. Evans as
interest.
During the year ended December 31, 2012 we borrowed $40,000 from an
unrelated third party. The $40,000 borrowed during 2012 was used for opening
expenses, repayment of debt, and the expenses associated with this offering,
including the audit of our financial statements. The $40,000 borrowed from the
third party does not bear interest, is unsecured and is due on demand. There are
no formal documents associated with this loan.
As of September 30, 2013 we had current assets of $88,073 and total
liabilities of $176,867. Included in total liabilities are advances and notes
payable in the amount of $150,000. If at least $500,000 is raised in this
offering, we plan to use a portion of the offering proceeds to repay advances of
$40,000.
We intend to fund our anticipated cash requirements through our operations,
the proceeds from this offering, and/or the private sale of our equity
securities or borrowings from third party lenders. However, we do not have any
commitments or arrangements from any person to provide us with any additional
capital. If additional financing is not available when needed, we may need to
change our business plan. We do not have any plans, arrangements or agreements
to sell or merge with another company.
Contractual Obligations
Our material future contractual obligations as of December 31, 2013 were as
follows:
Amounts due during years ending,
Item Total 2014 2015 2016 2017 Thereafter
---- ----- ---- ---- ---- ---- ----------
Office/manufacturing
lease $ 99,000 $ 33,000 $33,000 $33,000 -- --
Capital lease
payments $ 10,320 $ 10,320 -- -- -- --
Loan repayments $150,000 $150,000 -- -- -- --
14
Accounting Policies
See Note 1 to the financial statements included as part of this prospectus
for a description of our critical accounting policies.
We have evaluated the potential impact of the adoption of any new
accounting pronouncements and have determined that new accounting pronouncements
will not have a material impact on our financial statements.
Resignation of Independent Public Accountant
On November 30, 2013, Ronald R. Chadwick, P.C. ("Chadwick") resigned as the
Company's independent registered public accounting firm.
The reports of Chadwick regarding the Company's financial statements for
the fiscal years ended December 31, 2012 and 2011 did not contain any adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles, except that the Company's
audited financial statements contained in its Form 10-K for the years ended
December 31, 2012 and 2011 included an explanatory paragraph expressing
substantial doubt about the Company's ability to continue as a going concern.
During the years ended December 31, 2012 and 2011, and during the period from
December 31, 2012 through November 30, 2013, the date of resignation, there were
no disagreements with Chadwick on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedures, which
disagreements, if not resolved to the satisfaction of Chadwick would have caused
him to make reference to such disagreement in his reports.
The Company provided Chadwick with a copy of the registration statement, of
which this prospectus is a part, and requested Chadwick furnish the Company with
a letter addressed to the Securities and Exchange Commission stating whether he
agrees with above statements and, if he does not agree, the respects in which he
does not agree. A copy of the letter from Chadwick is filed as an exhibit to
this registration statement.
BUSINESS
General
We were incorporated in Colorado in August 2012. We have been in the
business of providing screen printing and embroidery services since 1992. Prior
to August 2012 we operated through RD & G, LLC, a Colorado limited liability
company formed in December 2009. Prior to December 2009 we operated as River
Graphics, Inc. and River Designs, Inc., both Colorado corporations, established
in 1992 and 2002 respectfully. On December 3, 2009 RD&G, LLC acquired River
Graphics and River Designs. On August 3, 2012 we acquired RD&G, LLC in exchange
for the issuance of 15,000,000 shares of our common stock to our two officers
and directors.
15
Unless otherwise indicated, all references to us include River Graphics,
Inc., River Designs, Inc. and RD&G, LLC.
We are in the business of providing screen printing and embroidery services
to the promotion products industry. Screen printing involves printing an image,
pattern, logo or words onto a cloth, metal or plastic surface. Embroidery
involves stitching an image, pattern, logo or words onto a clothing surface. The
primary pieces of equipment we use in our business are screen printing presses
and embroidery machines. As of September 30, 2013 we were using two screen
printing presses and two embroidery machines.
We print and embroider hats, t-shirts and similar apparel for retail stores
and resorts. We also provide screen printing and embroidering services for
companies associated with the Advertising Specialty Institute ("ASI") called ASI
Distributors. We currently have approximately 300 clients, 10 of which are ASI
distributors that employ, between them, approximately 100 sales representatives.
A promotional product or advertising specialty is any item imprinted with a
logo or slogan and given out to promote a company, organization, products,
services, special achievement or event. T-shirt, mugs, pens and keys are popular
examples, and just about anything can be imprinted or embroidered. However we
only screen print and embroider apparel, bags and hats.
The advantage advertising specialties have over other media is that they
often have practical or functional use, in addition to being effective
advertising and branding tools. Recipients often keep them and the advertiser
benefits from repeat exposures.
Retailers and Resorts
We have developed an extensive line of customized hunting and fishing
outerwear that we provide for our retail and resort clients, including fishing,
hunting and t-shirt shops located throughout the United States. Our most popular
items under this line are hats and t-shirts.
We apply custom graphics to promotional products using silk-screening and
embroidering. We are also available to assist clients in creating original
artwork.
All of the products that we sell to our retail and resort clients are
manufactured in blank (i.e., without decoration) by third party suppliers
according to our specifications. We then screen print or embroider the products
as they are designed by us and our retail and resort clients to reflect their
brand names, logos, trademarks or other corporate slogans.
We purchase shirts, hats and other blank garments mostly from local
suppliers. Our principal suppliers are:
o Imprints Wholesale;
o Sanmar Corp.;
o Delta Apparel;
16
o Rivers End Trading;
o Pacific Fly Group;
o Otto Int'l;
o Midwest SP;
o Rockstar;
o Amann USA; and
o Garb Int'l.
ASI and the Promotional Products Business
The ASI is the largest media and marketing organization serving the
promotional products or advertising specialty industry, with a membership of
approximately 33,000 distributors and 3,500 suppliers. Suppliers market their
blank imprintable products to ASI distributors. ASI distributers then market
their designs to end-buyers. Some of the largest end users are healthcare
providers, banks, insurance agencies, pharmaceutical and high technology
companies, soda companies, beer companies, restaurants, sports teams or other
corporations.
For this business segment, supplies are delivered to us and we screen print
or embroider each piece as directed by the ASI distributor. We screen print and
embroider for our ASI distributors on a contractual "per piece" basis.
We plan to expand our ASI business since we feel that there is significant
growth potential in the ASI market because distributors can sell products to
virtually every company, large or small and in any part of the United States
that desires to have garments and promotional items with a logo for
advertisement purposes.
We believe that the growth of the industry in recent years has resulted
from the greater acceptance by advertisers of promotional products as an
important form of advertising and an increase in the number of ASI distributors.
Promotional product advertising generally represents a lower cost alternative to
more traditional advertising and, because promotional products are designed for
use or display, they provide repeat exposure of an advertiser's message to a
targeted audience.
However, in order to expand our business we will need to acquire additional
equipment such as screen printing presses, embroidery machines and dryers as
well as hire additional personnel and lease additional space. See the section of
this prospectus captioned "Use of Proceeds" for more information.
Competition
The promotional producer industry and business of screen printing and
embroidery services is highly competitive and fragmented. Numerous distributors
and operators compete for end buyers. In addition, entry into the promotional
products industry is generally not difficult, and new competitors regularly
17
enter the industry. The promotional products industry also competes against
other advertising media, such as television, radio, newspapers, magazines,
billboards and the Internet. Many of our competitors are substantially larger
than we are and have greater financial resources and broader name recognition.
Our market is highly sensitive to the introduction of new products that may
rapidly capture a significant share of end buyers.
We may not be able to effectively compete in this intensely competitive
environment. In addition, promotional products and screen printing and
embroidery services can be purchased of globally. Our products are relatively
few compared to the wide variety of products offered by many of our competitors.
As a result, our ability to remain competitive depends in part upon the
successful introduction of new products and enhancements of existing products.
Leading competitors in the screen printing and embroidery services business
in the Denver, Colorado metropolitan area include Mile High Embroidery and
Action Screen Printing. Custom ink is our largest national competitor.
Product Development
We believe that the key to our success is our ability to expand product
offerings by developing new products, imprinting techniques and by applying
existing imprinting and decorating methods to create new products.
We will continue to work with suppliers and distributors in all product
categories to identify opportunities to add value to best-selling products
without increasing the cost to the distributor.
We also evaluate materials and processes from other industries for
adaptation into our products. Research into emerging imprint technologies,
including digital direct printing, laser imaging, heat applied graphics and
photopolymer through dimensional graphics, is ongoing.
New overseas supplier relationships are continually being developed to
decrease costs of existing products and assist in the development of new
products and additional lines.
Distribution
After garments are screen printed or embroidered, we ship the order
directly to customers via third party carriers.
Environmental Matters
Our facilities are subject to federal, state and local environmental laws
and regulations, including those relating to discharges to air, water and land,
the treatment, storage and disposal of solid and hazardous waste and the cleanup
of properties affected by hazardous substances. We believe that we are in
compliance with such laws and regulations and do not anticipate any material
adverse effect on our operations or financial condition as a result of our
efforts to comply with, or our liabilities under, such laws and regulations. We
do not anticipate any material capital expenditures for environmental control
facilities or equipment. Some risk of environmental liability is inherent in our
18
business, however, and there can be no assurance that material environmental
costs will not arise in the future. In particular, we might incur capital and
other costs to comply with increasingly stringent environmental laws and
enforcement policies. We do not expect such capital and other costs to have a
material adverse effect on our net cash flows.
Employees
As of December 31, 2013 we had six full time employees and no part time
employees. Our full time employees include our officers, Larry Parsons, and
Timothy Evans.
Facilities
Our offices, plant and warehouse are located at 1885 W. Dartmouth, Unit 1,
Englewood, CO 80110 and consist of 5,000 square feet which we rent for
approximately $2,775 per month. The lease on this space expires on July 31,
2016. We do not conduct business at any other location.
MANAGEMENT
Name Age Title
---- --- -----
Larry Parsons 65 President, Chief Executive Officer and a Director
Timothy Evans 63 Secretary, Treasurer, Chief Financial and
Accounting Officer and a Director
Larry Parsons has been our President, Chief Executive Officer and a
director since August 2012. Between December 2009 and August 2012 Mr. Parsons
was the managing member of RD & G, LLC. Between April 1992 and December 2009 Mr.
Parsons was the President of River Graphics, Inc. RD&G, LLC (2009-2012) and
River Graphics, Inc. (1992-2009) were both screen printing and embroidery
services businesses.
Timothy Evans has been our Secretary, Treasurer, Chief Financial Officer,
Chief Accounting Officer and a director since August 2012. Between December 2009
and August 2012 Mr. Evans was the managing member of RD & G, LLC. Between
October 2002 and December 2009 Mr. Evans was the President of River Designs,
Inc. R&DG, LLC (2009-2012) and River Designs, Inc. (2002-2009) were both screen
printing and embroidery services businesses.
We believe that Mr. Parsons and Mr. Evans are qualified to serve as
directors due to their experience in the promotional products industry.
Our two directors are not independent as that term is defined in section
803 of the listing standards of the NYSE MKT. None of our directors qualify as a
financial expert as that term is defined by the Securities and Exchange
Commission. We do not believe a financial expert is necessary since our revenues
for the year ended December 31, 2012 were less than $575,000.
19
We have not adopted a Code of Ethics applicable to our principal executive,
financial, and accounting officers and persons performing similar functions. We
do not believe a Code of Ethics is needed at this time since we have only two
officers.
We do not have a compensation committee. Our two directors serve as our
audit committee.
Our directors are elected to hold office until the next annual meeting of
shareholders and until their successors have been elected and qualified. Our
executive officers are elected by the Board of Directors and hold office until
resignation or removal by the Board of Directors.
Executive Compensation
The following table sets forth in summary form the compensation received by
our officers during the three-year period ended December 31, 2013.
Stock Option All Other
Name and Principal Salary Bonus Awards Awards Compensation
Position Period (1) (2) (3) (4) (5) Total
------------------ ------ ------ ------ ------- ------- ------------ -----
Larry Parsons 2013 $51,300 -- -- -- -- $51,300
President and 2012 $51,300 -- -- -- -- $51,300
Chief Executive 2011 $35,300 -- -- -- -- $35,300
Officer
Timothy Evans 2013 $51,300 -- -- -- -- $51,300
Secretary, Treasurer 2012 $51,300 -- -- -- -- $51,300
and Chief Financial 2011 $35,300 -- -- -- -- $35,300
Officer
We do not have any consulting or employment agreements with any of our
officers or directors. None of the proceeds from this offering will be used to
pay our officers for compensation which is accrued but unpaid as of the date of
this prospectus. As of the date of this prospectus, we have no immediate plans
to pay compensation for past services.
Our board of directors may increase the compensation paid to our officers
depending upon a variety of factors, including the results of our future
operations.
The following table shows the amount which we expect to pay to our
executive officers during the twelve months ending December 31, 2014 and the
amount of time these officers expect to devote to our business.
Percentage of Time
Projected to be Devoted
Name Compensation (1) to Our Operations
---- ---------------- -------------------
Larry Parsons $50,000 100%
Timothy Evans $50,000 100%
20
(1) If $750,000 is raised in this offering, our two officers will receive
salary increases of $25,000 each. If $1,000,000 is raised, our two officers
will receive additional salary increases of $25,000 each.
Stock Options. We have not granted any stock options as of the date of this
prospectus. In the future, we may grant stock options to our officers,
directors, employees or consultants.
Long-Term Incentive Plans. We do not provide our officers or employees with
pension, stock appreciation rights, long-term incentive or other plans and have
no intention of implementing any of these plans for the foreseeable future.
Employee Pension, Profit Sharing or other Retirement Plans. We do not have a
defined benefit, pension plan, profit sharing or other retirement plan, although
we may adopt one or more of such plans in the future.
Compensation of Directors. Our directors do not receive any compensation
pursuant to any standard arrangement for their services as directors. Although
our bylaws permit us to pay our directors for attending meetings, we do not
compensate our directors for attending meetings.
Transactions with Related Parties and Recent Sales of Securities
On August 6, 2012 we issued 7,500,000 shares of common stock to Larry
Parsons in exchange for his membership interest in RD&G, LLC and 7,500,000
shares of common stock to Timothy Evans in exchange for his membership interest
in RD&G, LLC.
As of September 30, 2013, we owed Timothy Evans, one of our officers and
directors, $15,000 for amounts he advanced to us. The loan from Mr. Evans is
unsecured, due on demand, and bears interest at 4% per year. Since January 1,
2011 the principal balance of this note has remained at $15,000. During the two
years and nine months ended September 30, 2013, $1,650 was paid to the
noteholder as interest.
As of September 30, 2013 we owed the father of Timothy Evans $50,000 for
amounts advanced to us. The loan, originally in the amount of $30,000, was
reduced from $30,000 to $20,000 subsequent to January 1, 2011. On September 1,
2013 we borrowed an additional $30,000 from Mr. Evans. The loans from Mr. Evans
are unsecured, due on demand and bear interest at 6% per year. During the two
years and nine months ended September 30, 2013, $3,250 was paid to Mr. Evans as
interest.
PRINCIPAL SHAREHOLDERS
The following table shows the ownership of our common stock as of the date
of this prospectus by each shareholder known by us to be the beneficial owner of
more than 5% of our outstanding shares of common stock, each director and
executive officer and all directors and executive officers as a group. Except as
otherwise indicated, each shareholder has sole voting and investment power with
respect to the shares they beneficially own.
21
Shares Percent of Percent of
Name and Address of Beneficially Class Before Class After
Beneficial Owner Owned Offering Offering (1)
-------------------------- ------------- ------------ --------------
Larry Parsons 7,500,000 50% 30%
1885 W. Dartmouth Ave. #1
Englewood, CO 80110
Timothy Evans 7,500,000 50% 30%
1885 W. Dartmouth Ave. #1
Englewood, CO 80110
All Executive officers and
directors as a group
(2 persons) 15,000,000 100% 60%
(1) Assumes that all shares in this offering are sold. There is no minimum
number of shares to be sold in this offering and as a result there is no
guarantee that any shares will be sold.
PLAN OF DISTRIBUTION
By means of this prospectus we are offering to the public up to 10,000,000
shares of our common stock at a price of $0.10 per share. We arbitrarily
determined the $0.10 offering price and this price does not bear any
relationship to our assets, book value or any other generally accepted criteria
of value for investment. There is no minimum number of shares to be sold in this
offering and as a result we cannot guarantee that any funds will be raised in
this offering.
We will offer the shares through our officers, Timothy Evans and Larry
Parsons, on a "best efforts" basis. Timothy Evans and Larry Parsons are not
registered with the Securities and Exchange Commission as brokers or dealers.
Mr. Evans and Mr. Parsons are not required to be registered as brokers or
dealers since neither Mr. Evans nor Mr. Parsons are engaged in the business of
buying or selling securities for others.
In addition, Mr. Evans and Mr. Parsons will be relying on the exemption
provided by Rule 3a4-1 of the Securities and Exchange Commission with respect to
their participation in this offering. Rule 3a4-1 provides, in part, that an
officer of an issuer of securities will not be deemed to be a broker solely by
reason of his participation in the sale of the securities of the issuer if the
officer:
(1) Is not subject to a statutory disqualification, as that term is
defined in Section 3(a)(39) of the Securities Exchange Act of 1934, at the time
of his participation;
(2) Is not compensated in connection with his participation by the payment
of commissions or other remuneration based either directly or indirectly on
transactions in securities;
(3) Is not at the time of his participation an associated person of a
broker or dealer;
22
(4) The officer primarily performs, or is intended primarily to perform at
the end of the offering, substantial duties for or on behalf of the issuer
otherwise than in connection with transactions in securities;
(5) The officer was not a broker or dealer, or an associated person of a
broker or dealer, within the preceding twelve months; and
(6) The officer does not participate in selling an offering of securities
for any issuer more than once every twelve months.
Mr. Evans and Mr. Parsons meet the requirements of Rule 3a4-1 since
neither of them:
o are subject to a statutory disqualification, as that term is defined
in Section 3(a)(39) of the Securities Exchange Act of 1934;
o will be compensated in connection with their participation in the
offering by the payment of commissions or other remuneration based
either directly or indirectly on the sale of our common stock; and
o are an associated person of a broker or dealer.
In addition, both Mr. Evans and Mr. Parsons:
o perform, and will perform at the end of the offering, substantial
duties for or on behalf of us otherwise than in connection with the
offering;
o have not been a broker or dealer, or an associated person of a broker
or dealer, within the preceding twelve months, and
o have not participated in selling an offering of securities for any
issuer during the past twelve months.
We will not employ any brokers or sales agents to sell these shares and we
will not compensate any officer or third party for their participation in this
offering. There is no firm commitment by any person to purchase or sell any of
these shares and there is no assurance that any such shares offered will be
sold. All proceeds from the sale of the shares will be promptly delivered to us.
We plan to end the offering on March 31, 2014. However, we may at our discretion
end the offering sooner or extend the offering to May 31, 2014.
We have the right to refuse to accept subscriptions from any person for
any reason whatsoever. No subscription shall be deemed to be binding upon us
until accepted in writing by our President.
23
DESCRIPTION OF SECURITIES
Our authorized capital consists of 250,000,000 shares of common stock. As
of December 31, 2013, we had 15,000,000 outstanding shares of common stock. We
have not issued any shares of preferred stock and we do not have any plans to
issue any shares of preferred stock.
Common Stock
All shares of common stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to be
voted upon by shareholders. The shares of common stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as
fully-paid and non-assessable shares. Cumulative voting in the election of
directors is not permitted; which means that the holders of a majority of the
issued and outstanding shares of common stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose. In that event, the holders of the remaining shares of common
stock will not be able to elect any directors. In the event of our liquidation,
each shareholder is entitled to receive a proportionate share of the assets
available for distribution to shareholders after the payment of liabilities and
after distribution in full of preferential amounts, if any, to be distributed to
holders of the preferred stock.
Holders of shares of common stock are entitled to share pro rata in
dividends and distributions with respect to the common stock when, as and if
declared by the Board of Directors out of funds legally available for dividends.
This is after requirements with respect to preferential dividends on, and other
matters relating to, the preferred stock, if any, have been met. We have not
paid any dividends on our common stock and intend to retain earnings, if any, to
finance the development and expansion of our business. Future dividend policy is
subject to the discretion of the Board of Directors and will depend upon a
number of factors, including future earnings, capital requirements and our
financial condition.
Transfer Agent
Transhare Corporation
4626 S. Broadway
Englewood, CO 80113
Phone: 303-662-1112
LEGAL PROCEEDINGS
We know of no legal proceedings to which we are a party or to which any of our
property is the subject that are pending, threatened or contemplated.
INDEMNIFICATION
Pursuant to Section 7-109-102 of the Colorado Revised Statutes, we may
indemnify our officers and directors for various expenses and damages resulting
from their acting in these capacities. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to our
officers or directors pursuant to those provisions, we have been informed that
24
in the opinion of the U.S. Securities and Exchange Commission the
indemnification is against public policy as expressed in the Securities Act of
1933, and is therefore unenforceable.
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission a Registration
Statement on Form S-1 (together with all amendments and exhibits) under the
Securities Act of 1933, as amended, with respect to the Securities offered by
this prospectus. This prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Securities and Exchange
Commission. For further information, reference is made to the Registration
Statement which may be read and copied at the Commission's Public Reference Room
at 100 F Street, NE, Washington, DC 20549. The public may obtain information on
the operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. The registration statement is also available at www.sec.gov, the
website of the Securities and Exchange Commission.
25
RD&G HOLDINGS CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2011 and 2012,
& September 30, 2013 (Unaudited)
RD&G Holdings Corporation
Consolidated Financial Statements
TABLE OF CONTENTS
Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheets 2
Consolidated statements of operation 3
Consolidated statements of stockholders' equity 4
Consolidated statements of cash flows 5
Notes to consolidated 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
RD&G Holdings Corporation
CityplaceDenver, StateColorado
I have audited the accompanying consolidated balance sheets of RD&G Holdings
Corporation as of December 31, 2011 and 2012 and the related consolidated
statements of operations, stockholders' equity and cash flows for the years then
ended. 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 (country-regionplaceUnited 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of RD&G
Holdings Corporation as of December 31, 2011 and 2012, and the consolidated
results of its operations and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 5 to the
financial statements the Company has suffered an extraordinary fire loss that
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to this matter is also described in Note 5. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Aurora, Colorado
/s/ Ronald R. Chadwick, P.C.
June 20, 2013
RONALD R. CHADWICK, P.C.
F-1
RD&G HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS
Sept. 30,
Dec. 31, Dec. 31, 2013
2011 2012 (Unaudited)
---------- -------- -------------
ASSETS
Current assets
Cash $ 13,757 $ 37,267 $ 30,295
Accounts receivable 35,331 50,557 51,542
Inventory 12,603 7,801 6,236
-------- -------- --------
Total current assets 61,691 95,625 88,073
-------- -------- --------
Fixed assets - net 64,746 52,755 134,397
Deposits 3,465 3,465 3,465
-------- -------- --------
Total Assets $ 129,902 $151,845 $225,935
========= ======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 3,981 $ 3,601 $ 8,315
Advances payable -- 40,000 40,000
Income taxes payable -- -- 6,845
Capital lease obligation -
current portion 8,350 8,998 1,547
Notes payable - current
portion 90,000 80,000 110,000
Accrued interest payable 375 1,200 1,300
-------- -------- --------
Total current liabilities 102,706 133,799 168,007
-------- -------- --------
Capital lease obligation 17,858 8,860 8,860
-------- -------- --------
Total Liabilities 120,564 142,659 176,867
-------- -------- --------
Stockholders' Equity
Common stock, no par value;
250,000,000 shares authorized;
15,000,000 shares issued and
outstanding 29,784 29,784
Additional paid in capital -- -- --
Retained earnings (deficit) (20,446) (20,598) 19,284
-------- -------- --------
Total Stockholders' Equity 9,338 9,186 49,068
-------- -------- --------
Total Liabilities and
Stockholders' Equity 129,902 151,845 225,935
========= ======== ========
The accompanying notes are an integral part of
the consolidated financial statements.
F-2
RD&G HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Nine Months
Ended Ended
Year Ended Year Ended Sept. 30, Sept. 30,
Dec. 31, Dec. 31, 2012 2013
2011 2012 (Unaudited) (Unaudited)
----------- ---------- ------------ -----------
Sales $ 513,612 $ 565,104 $ 462,941 $ 300,694
Cost of goods sold 339,769 342,782 263,275 236,234
---------- ---------- --------- ---------
Gross profit 173,843 222,322 199,666 64,460
---------- ---------- --------- ---------
Operating expenses:
Depreciation 12,745 12,891 9,628 8,948
General and administrative 162,580 201,776 154,250 191,279
---------- ---------- --------- ---------
175,325 214,667 163,878 200,227
---------- ---------- --------- ---------
Income (loss) from operations (1,482) 7,655 35,788 (135,767)
---------- ---------- --------- ---------
Other income (expense):
Interest revenue 4 - - -
Interest expense (7,297) (7,807) (5,416) (4,434)
---------- ---------- --------- ---------
(7,293) (7,807) (5,416) (4,434)
---------- ---------- --------- ---------
Income (loss) before
provision for income taxes (8,775) (152) 30,372 (140,201)
Provision for income tax - - - -
---------- ---------- --------- ---------
Net income (loss) before
extraordinary item (8,775) (152) 30,372 (140,201)
Extraordinary item - fire
gain (loss) net of tax - - - 180,083
---------- ---------- --------- ---------
Net income (loss) $ (8,775) $ (152) $ 30,372 $ 39,882
========== ========== ========= =========
Net income (loss) per share
(Basic and fully diluted):
Operations $ (0.00) $ (0.00) $ 0.00 $ (0.01)
Extraordinary item - - - 0.01
---------- ---------- --------- ---------
$ (0.00) $ (0.00) $ 0.00 $ 0.00
========== ========== ========= =========
Weighted average number of
common shares outstanding 15,000,000 15,000,000 15,000,000 15,000,000
========== ========== ========== ==========
The accompanying notes are an integral part
of the consolidated financial statements.
F-3
RD&G HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock Stock-
Amount Paid in Retained holders'
Shares (1) No Par Capital Earnings Equity
---------- ---------- --------- --------- --------
Balances at December 31,
2010 15,000,000 $ 29,784 $ - $ (11,671) $ 18,113
Net income (loss) for
the year (8,775) (8,775)
---------- -------- ------- --------- --------
Balances at December 31,
2011 15,000,000 $ 29,784 $ - $ (20,446) $ 9,338
Net income (loss) for
the year (152) (152)
---------- -------- ------- --------- --------
Balances at December 31,
2012 15,000,000 $ 29,784 $ - $ (20,598) $ 9,186
Net income (loss) for
the period 39,882 39,882
---------- -------- ------- --------- --------
Balances at Sept. 30, 2013 -
unaudited 15,000,000 $ 29,784 $ - $ 19,284 $ 49,068
========== ========= ======= ========= ========
(1) As retroactively restated for a common control acquisition effective
August 3, 2012
The accompanying notes are an integral part of
the consolidated financial statements.
F-4
RD&G HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Nine Months
Ended Ended
Year Ended Year Ended Sept. 30, Sept. 30,
Dec. 31, Dec. 31, 2012 2013
2011 2012 (Unaudited) (Unaudited)
------------- ------------- ------------- --------------
Cash Flows From Operating Activities:
Net income (loss) $ (8,775) $ (152) $ 30,372 $ 39,882
Adjustments to reconcile net loss to
net cash provided by (used for)
operating activities:
Depreciation 12,745 12,891 9,628 8,948
Extraordinary gain - - - (186,928)
Accounts receivable 825 (15,226) (27,269) (985)
Inventory 1,015 4,802 3,600 440
Insurance proceeds - - - 237,565
Taxes payable - - - 6,845
Accrued payables (15,249) 445 7,006 4,814
-------- -------- --------- --------
Net cash provided by (used for)
operating activities (9,439) 2,760 23,337 110,581
-------- -------- --------- --------
Cash Flows From Investing Activities:
Fixed asset purchases (975) (900) - (140,102)
-------- -------- --------- --------
Net cash provided by (used for)
investing activities (975) (900) - (140,102)
-------- -------- --------- --------
(Continued On Following Page)
The accompanying notes are an integral part
of the consolidated financial statements.
F-5
RD&G HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued From Previous Page)
Nine Months Nine Months
Ended Ended
Year Ended Year Ended Sept. 30, Sept. 30,
Dec. 31, Dec. 31, 2012 2013
2011 2012 (Unaudited) (Unaudited)
------------- ------------- ------------- --------------
Cash Flows From Financing Activities:
Capital lease obligation - payments (7,748) (8,350) (6,204) (7,451)
Advances payable - 40,000 - -
Notes payable - borrowings 50,000 20,000 - 30,000
Notes payable - payments (25,000) (30,000) - -
-------- -------- --------- --------
Net cash provided by (used for)
financing activities 17,252 21,650 (6,204) 22,549
-------- -------- --------- --------
Net Increase (Decrease) In Cash 6,838 23,510 17,133 (6,972)
Cash At The Beginning Of The Period 6,919 13,757 13,757 37,267
-------- -------- --------- --------
Cash At The End Of The Period $ 13,757 $ 37,267 $ 30,890 $ 30,295
======== ======== ========= ========
Schedule Of Non-Cash Investing And Financing Activities
None
Supplemental Disclosure:
Cash paid for interest $ 6,922 $ 6,982 $ 2,591 $ 4,434
Cash paid for income taxes - - - -
The accompanying notes are an integral part
of the consolidated financial statements.
F-6
RD&G HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RD&G Holdings Corporation, was incorporated in the State of Colorado on August
3, 2012. The Company was formed to act as a holding corporation for RD&G, LLC,
which was formed in the State of Colorado on December 3, 2009 and provides
custom decorated apparel to resort retail shops, and decorates apparel for
specialty products companies. Effective August 3, 2012, in an acquisition
classified as a transaction between parties under common control, RD&G Holdings
Corporation acquired all the outstanding membership interests of RD&G, LLC in
exchange for 15,000,000 RD&G Holdings Corporation common shares, making RD&G,
LLC a wholly owned subsidiary of RD&G Holdings Corporation. The combined
entities are referred to hereinafter as the "Company". The activity of the
Company as reported in financial statements is that of RD&G, LLC through August
2, 2012, and RD&G Holdings Corporation and RD&G, LLC consolidated from August 3,
2012 forward, with equity retroactively restated for the share exchange.
Principles of consolidation
The accompanying consolidated financial statements include the accounts of RD&G
Holdings Corporation and its subsidiary. All intercompany accounts and
transactions have been eliminated in consolidation.
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.
Accounts receivable
The Company reviews accounts receivable periodically for collectability and
establishes an allowance for doubtful accounts (or writes off delinquent
accounts) and records bad debt expense when deemed necessary. At December 31,
2011 and 2012, and September 30, 2013 the Company had no balance in its
allowance for doubtful accounts since all accounts considered to be
uncollectible were written off and expensed. Bad debt expense (included in
general and administrative expense on the consolidated statements of operations)
in 2011 and 2012, and for the nine months ended September 30, 2013 was $3,886,
$2,025 and $4,980.
F-7
RD&G HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
Property and equipment
Property and equipment are recorded at cost and depreciated under accelerated or
straight line methods over each item's estimated useful life.
Revenue recognition
Revenue is recognized on an accrual basis as earned under contract terms. More
specifically, upon receipt of an order the details are processed and the work
scheduled. All direct costs associated with the order are recorded to cost of
goods sold. When work is completed on the order, the product is shipped, and the
sale recorded. The Company does not require down payments on orders, and payment
terms are generally due in full 30 days after shipment. Returns, which are rare,
are charged back to sales.
Advertising costs
Advertising costs are expensed as incurred. The Company had advertising and
marketing costs in 2011 and 2012, and for the nine months ended September 30,
2013 of $9,125, $9,423 and $845.
Inventories
Inventories, consisting of apparel supplies and finished goods, are stated at
the lower of cost or market (first-in, first-out method). Costs capitalized to
inventory include the purchase price, transportation costs, and any other
expenditures incurred in bringing the goods to the point of sale and putting
them in saleable condition. Costs of good sold include those expenditures
capitalized to inventory.
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.
F-8
RD&G HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
Prior to August 2012 the Company operated as a limited liability company, and
therefore a pass-through entity for income tax purposes paying no income tax at
the corporate level. At end 2012 the Company had no material tax assets or
liabilities, current or deferred.
Financial Instruments
The carrying value of the Company's financial instruments, as reported in the
accompanying balance sheets, approximates fair value.
Long-Lived Assets
In accordance with ASC 350, 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 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.
NOTE 2. FIXED ASSETS
Fixed asset values recorded at cost are as follows:
September 30,
2011 2012 2013
------------- ------------- -------------
Office equipment $ 2,000 $ 2,000 $ -
Machinery 87,065 87,065 140,102
---------- ---------- ---------
89,065 89,965 140,102
Less accumulated depreciation (24,319 (37,210) (5,705)
---------- ---------- ---------
Total $ 64,746 $ 52,755 $ 134,397
========== ========== =========
The Company's fixed assets at end March 2013 were destroyed by fire. Replacement
purchasing began in 2nd quarter 2013.
Depreciation expense in 2011 and 2012, and for the nine months ended September
30, 2013, was $12,745, $12,891, and $8,948.
F-9
RD&G HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. NOTES PAYABLE
The Company at end 2011 and 2012, and September 30, 2013 had $90,000, $80,000
and $110,000 in notes payable outstanding, unsecured save for one $25,000 note
secured by Company machinery, due on demand, and bearing interest at 4% - 6% per
annum, with $45,000 (2011), $35,000 (2012), and $65,000 (2013) due to an officer
and his parent. Accrued interest payable due on the notes at end 2011 and 2012,
and September 30, 2013 was $375, $1,200 and $1,300, and interest expense for
2011 and 2012, and for the nine months ended September 30, 2013 was $5,013,
$6,125 and $3,525.
In 2012 an individual advanced the Company $40,000 for working capital needs, on
a non-interest bearing, due on demand basis.
NOTE 4. LEASE COMMITMENTS
The Company through June 2013 rented building space under a lease with an
original term through February 2016. The lease was terminated by mutual consent
near the end of the second quarter due to an on-site fire in March 2013. No
material costs were paid in the second quarter of 2013. Rent expense incurred
under the lease in 2011 and 2012, and for the six months ended June 30, 2013 was
approximately $30,000, $33,000 and $8,000. The Company subsequent to the March
2013 fire then leased space at a temporary site on a month to month basis,
incurring rent costs through June 2013 of approximately $4,400. In July 2013 the
Company entered into a building lease expiring in July 2016, which is
noncancellable and carries no additional renewal option. The required monthly
payment ranges from $1,870 - $1,975 over the lease life. Subsequent to September
30, 2013 future minimum payments under the lease are approximately: 2013 $3,800,
2014 $22,700, 2015 $23,300, 2016 $13,800, Total $63,600. The Company also
carries an equipment lease which runs through December 2013, requiring monthly
payments of $307 per month. The equipment lease is classified as an operating
lease. Rent expense incurred under the lease in 2011, 2012 and for the nine
months ended September 30, 2013 was approximately $3,700, $3,700 and $2,775.
Subsequent to September 30, 2013 future minimum payments under the equipment
lease are approximately $925 in 2013.
The Company has a capital lease on screen printing equipment recorded to fixed
assets at $41,146. Depreciation expense attributable to the capital lease in
2011 and 2012 was $5,878 each year, and $1,470 for the nine months ended
September 30, 2013. The total future minimum lease payments at end 2011, 2012
and September 30, 2013 were $29,260, $19,228, and $10,868, with imputed interest
needed to reduce the net minimum lease payments to present value at each date of
$3,052, $1,370, and $461. Minimum lease payments by year subsequent to September
30, 2013 are: 2013 $1,672, 2014 $9,196, Total $10,407.
F-10
RD&G HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. GOING CONCERN
The Company at the end of March 2013 experienced a catastrophic fire which
destroyed the Company's plant, equipment and inventory. The Company recognized a
loss from fire damage of $50,637, but in the second and third quarters of 2013
received $237,565 from insurance resulting in a gain of $186,928, and a net gain
after $6,845 in estimated taxes of $180,083. The Company has replaced some
equipment pieces and currently is attempting to fulfill orders partially through
internal operations and through third parties. The Company is conducting
business on a limited basis. This condition raises substantial doubt about the
Company's ability to continue as a going concern.
The Company may raise additional capital to resume full operations through the
sale of its equity securities, through an offering of debt securities, or
through borrowings from financial institutions. By doing so, the Company hopes
to fully rebuild its business and conduct profitable operations. Management
believes that actions presently being taken to obtain additional funding provide
the opportunity for the Company to continue as a going concern.
NOTE 6. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date of issuance of
these financial statements of November 22, 2013 and determined that there are no
reportable subsequent events, save for the fire damage described above.
F-11
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY .................................................. 2
RISK FACTORS ........................................................ 3
DILUTION AND COMPARATIVE SHARE DATA.................................. 5
USE OF PROCEEDS ..................................................... 6
MARKET FOR COMMON STOCK ............................................. 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS ....... 7
BUSINESS............................................................. 9
MANAGEMENT .......................................................... 12
PRINCIPAL SHAREHOLDERS............................................... 14
PLAN OF DISTRIBUTION................................................. 15
DESCRIPTION OF SECURITIES............................................ 16
LEGAL PROCEEDINGS.................................................... 17
INDEMNIFICATION ..................................................... 17
AVAILABLE INFORMATION................................................ 18
FINANCIAL STATEMENTS................................................. 19
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this prospectus, and
if given or made, such information or representations must not be relied upon as
having been authorized by RD&G Holdings Corporation. This prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, any of the
securities offered in any jurisdiction to any person to whom it is unlawful to
make an offer by means of this prospectus.
Until _______, 2014 all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
PART II
Information Not Required in Prospectus
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses payable by us in
connection with the issuance and distribution of the securities being
registered.
SEC Filing Fee $ 136
Blue Sky Fees and Expenses 1,000
Legal Fees and Expenses 40,000
Accounting Fees and Expenses 25,000
Miscellaneous 3,864
---------
TOTAL $ 70,000
=========
All expenses other than the SEC filing fee are estimated.
Item 14. Indemnification of Officers and Directors
Section 7-109-102 of the Colorado Revised Statues and our bylaws provide
that we may indemnify any and all of our officers, directors, employees or
agents or former officers, directors, employees or agents, against expenses
actually and necessarily incurred by them, in connection with the defense of any
legal proceeding or threatened legal proceeding, except as to matters in which
such persons shall be determined to not have acted in good faith and in our best
interest.
Item 15. Recent Sales of Unregistered Securities.
On August 6, 2012 we issued 7,500,000 shares of common stock to Larry
Parsons in exchange for his membership interest in RD&G, LLC and issued
7,500,000 shares of common stock to Timothy Evans in exchange for his membership
interest in RD&G, LLC.
We relied upon the exemption from registration provided by Section 4(2) of
the Securities Act of 1933 with respect to the sale of the shares. The
purchasers of these securities were sophisticated investors who were provided
full information regarding our business and operations. There was no general
solicitation in connection with the offer or sale of these securities. The
purchasers acquired these securities for their own accounts. The shares cannot
be sold unless pursuant to an effective registration statement or an exemption
from registration.
Item 16. Exhibits
The following Exhibits are filed with this Registration Statement:
Exhibit
Number Exhibit Name
------ ------------
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
5 Opinion of Counsel (2)
10.1 Promissory Note (Timothy Evans) (1)
10.2 Promissory Notes (Arthur Evans) (1)
10.3 Promissory Note (James Horning) (1)
10.4 Promissory Note (Mark Rodenbeck) (1)
10.5 Promissory Note (Arthur Evans) (1)
10.6 Loan Agreement (Mark Rodenbeck) (1)
10.7 Lease (1)
16 Letter regarding change in certifying accountant
21 Subsidiaries (1)
23.1 Consent of Attorneys (2)
23.2 Consent of Accountants
(1) Filed with Amendment No. 3 to this registration statement.
(2) Filed with Amendment No. 4 to this registration statement.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section l0 (a)(3) of the
Securities Act:
(ii) To reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities that remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of l933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such 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 (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(4) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser:
(i) If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to Rule
424(b)(3) shall be deemed to be part of the registration statement as of
the date the filed prospectus was deemed part of and included in the
registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule
430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or
(x) for the purpose of providing the information required by section 10(a)
of the Securities Act of 1933 shall be deemed to be part of and included in
the registration statement as of the earlier of the date such form of
prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the prospectus.
As provided in Rule 430B, for liability purposes of the issuer and any
person that is at that date an underwriter, such date shall be deemed to be
a new effective date of the registration statement relating to the
securities in the registration statement to which that prospectus relates,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof. Provided, however, that no statement
made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such effective date, supersede or modify
any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each prospectus
filed pursuant to Rule 424(b) as part of a registration statement relating to an
offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and
included in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use, supersede or
modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities:
The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser bye means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared
by or on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to
the offering containing material information about the undersigned registrant or
its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made
by the undersigned registrant to the purchaser.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Denver, Colorado on the 10th day of
February, 2014.
RD & G HOLDINGS CORPORATION
By: /s/ Larry Parsons
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Larry Parsons, Principal Executive Officer
In accordance with the requirements of the Securities Act of l933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Larry Parsons
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Larry Parsons Principal Executive, February 10, 2014
Officer and a Director
/s/ Timothy Evans
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Timothy Evans Principal Financial and February 10, 2014
Accounting Officer and
a Director
RD & G HOLDINGS CORPORATION
FORM S-1
AMENDMENT NO. 5
EXHIBITS